Amendment No. 1 to
SEC File No. 70-8495
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM U-1
APPLICATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 ("Act")
JERSEY CENTRAL POWER & LIGHT COMPANY ("JCP&L")
300 Madison Avenue
Morristown, New Jersey 07962
(Name of company filing this statement and address
of principal executive office)
GENERAL PUBLIC UTILITIES CORPORATION ("GPU")
(Name of top registered holding company parent of applicant)
T.G. Howson, Vice President and Douglas E. Davidson, Esq.
Treasurer Berlack, Israels & Liberman
M. A. Nalewako, Secretary 120 West 45th Street
GPU Service Corporation New York, New York 10036
100 Interpace Parkway
Parsippany, New Jersey 07054
Richard S. Cohen, Esq.,
Secretary
Jersey Central Power & Light
Company
300 Madison Avenue
Morristown, New Jersey 07962
(Names and addresses of agents for service)<PAGE>
JCP&L hereby amends its Application on Form U-1, docketed in
SEC File No. 70-8495, as follows:
1. By adding the following sentence at the end of
Paragraph A of Item 1 thereof:
Prior to the closing of the sale of Preferred
Securities, an officer of JCP&L will act as the sole limited
partner of JCP&L Capital to satisfy the requirement under
Delaware law that a limited partnership have at least one limited
partner. Upon such closing, such individual limited partner will
withdraw and the holder(s) of the Preferred Securities will
become the limited partner(s) of JCP&L Capital.
2. By amending Item 2 thereof to read in its entirety
as follows:
ITEM 2. FEES, COMMISSIONS AND EXPENSES.
The estimated fees, commissions and expenses expected
to be incurred in connection with the proposed transactions are
as follows:
Filing fees - Securities and Exchange
Commission $ 45,104
Printing and engraving 30,000
New York Stock Exchange listing fee 47,800
Legal fees:
Berlack, Israels & Liberman 70,000
Richard S. Cohen, Esq. 15,000
Carter, Ledyard & Milburn 15,000
Richards, Layton & Finger 10,000
Blue Sky fees and expenses 15,000
Accounting fees:
Coopers & Lybrand 15,000
Indenture Trustee fees and expenses 20,000
Rating agencies fees and expenses 48,125
Miscellaneous 28,971
Total $360,000
1<PAGE>
3. By filing the following exhibits in Item 6(a)
thereof:
(a) Exhibits:
A-1 - Certificate of Incorporation of JCP&L
Preferred Capital, Inc. (Investment
Sub).
A-2 - Form of By-Laws of JCP&L Preferred
Capital, Inc. (Investment Sub).
A-3 - Certificate of Limited Partnership of
JCP&L Capital.
A-4 - Form of Limited Partnership Agreement of
JCP&L Capital.
A-5 - Form of Amended and Restated Limited
Partnership Agreement of JCP&L Capital.
A-6 - Form of Action creating initial series
of Preferred Securities.
A-7 - Form of Preferred Securities certificate
- Incorporated by reference to Exhibit A
to Exhibit A-5 hereto.
A-8 - Form of Subordinated Debenture
Indenture.
A-9 - Form of Subordinated Debenture -
Incorporated by reference to form of
Subordinated Debenture included in
Exhibit A-8 hereto.
A-10 - Form of demand promissory note from
JCP&L to Investment Sub.
B-1 - Form of Payment and Guarantee Agreement.
D-1 - Copy of Petition filed by JCP&L with the
NJBPU.
D-2 - Copy of relevant portion of the
transcript of NJBPU Agenda Meeting held
on February 8, 1995, at which the
Petition was approved.
F-1 - Opinion of Berlack, Israels & Liberman.
F-2 - Opinion of Richard S. Cohen, Esq.
F-3 - Opinion of Richards, Layton & Finger.
2<PAGE>
SIGNATURE
PURSUANT TO THE REQUIREMENTS OF THE PUBLIC UTILITY
HOLDING COMPANY ACT OF 1935, THE UNDERSIGNED COMPANY HAS DULY
CAUSED THIS STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.
JERSEY CENTRAL POWER & LIGHT COMPANY
By: ________________________________
T. G. Howson, Vice President and
Treasurer
Date: February 22, 1995<PAGE>
EXHIBITS TO BE FILED BY EDGAR
Exhibits:
A-1 - Certificate of Incorporation of JCP&L
Preferred Capital, Inc. (Investment
Sub).
A-2 - Form of By-Laws of JCP&L Preferred
Capital, Inc. (Investment Sub).
A-3 - Certificate of Limited Partnership of
JCP&L Capital.
A-4 - Form of Limited Partnership Agreement of
JCP&L Capital.
A-5 - Form of Amended and Restated Limited
Partnership Agreement of JCP&L Capital.
A-6 - Form of Action creating initial series
of Preferred Securities.
A-8 - Form of Subordinated Debenture
Indenture.
A-10 - Form of demand promissory note from
JCP&L to Investment Sub.
B-1 - Form of Payment and Guarantee Agreement.
D-1 - Copy of Petition filed by JCP&L with the
NJBPU.
D-2 - Copy of relevant portion of the
transcript of NJBPU Agenda Meeting held
on February 8, 1995, at which the
Petition was approved.
F-1 - Opinion of Berlack, Israels & Liberman.
F-2 - Opinion of Richard S. Cohen, Esq.
F-3 - Opinion of Richards, Layton & Finger.<PAGE>
Exhibit A-1
CERTIFICATE OF INCORPORATION
OF
JCP&L PREFERRED CAPITAL, INC.
It is hereby certified that:
FIRST: The name of the corporation (hereinafter called
the "corporation") is JCP&L Preferred Capital, Inc.
SECOND: The address, including street, number, city and
county, of the registered office of the corporation in the State
of Delaware is 32 Loockerman Square, Suite L-100, City of Dover,
County of Kent; and the name of the registered agent of the
corporation in the State of Delaware at such address is The
Prentice-Hall Corporation System, Inc.
THIRD: The nature of the business or purposes to be
conducted or promoted by the corporation are as follows:
(1) To subscribe for and be a holder of general
partner interests of JCP&L Capital, L.P., a limited
partnership formed under the laws of the State of Delaware
("JCP&L Capital"), to be a general partner of JCP&L Capital
and to discharge such duties and take any and all such
actions as may be necessary, appropriate or desirable in
such capacity as may from time to time be provided in JCP&L
Capital's limited partnership agreement and applicable
provisions of law.
(2) To issue and sell its capital stock in exchange
for cash or other consideration to fund its acquisition of
such general partner interests and to enable it to have
sufficient net worth for JCP&L Capital to be treated as a
partnership for federal income tax purposes, and/or to lend
such cash or other consideration to the entity which
acquires such capital stock.
(3) The corporation shall not conduct any other
business except with respect to and incident to the
activities provided for in clauses (1) and (2) of this
Article THIRD.
FOURTH: The total number of shares of stock which the
corporation shall have authority to issue is one hundred (100)
shares, all of which are without par value. All such shares are
of one class and are shares of Common Stock.
1<PAGE>
FIFTH: The name and the mailing address of the incorporator
are as follows:
NAME MAILING ADDRESS
Terrance G. Howson c/o GPU Service Corporation
100 Interpace Parkway
Parsippany, New Jersey 07054
SIXTH: The corporation is to have perpetual existence.
SEVENTH: The personal liability of the directors of the
corporation is hereby eliminated to the fullest extent permitted
by paragraph (7) of subsection (b) of Section 102 of the General
Corporation Law of the State of Delaware, as the same may be
amended and supplemented from time to time.
EIGHTH: Notwithstanding any other provision of law that
may otherwise so empower the corporation, the corporation shall
not, without the prior written consent of Jersey Central Power &
Light Company, a New Jersey corporation, do any of the following:
(1) dissolve or liquidate, in whole or in part;
(2) merge or consolidate with, or sell all or
substantially all of its assets to, any person, firm,
corporation, partnership or other entity unless, in the case
of a merger or consolidation, the surviving corporation in
such merger or the corporation resulting from such
consolidation shall have a certificate of incorporation
containing provisions substantially identical to the
provisions of Article THIRD and this Article EIGHTH and, in
the case of a sale of assets, the acquiring corporation
shall have assumed all of the liabilities and obligations of
this corporation and shall have a certificate of
incorporation containing provisions substantially identical
to the provisions of Article THIRD and this Article EIGHTH;
(3) to the extent permitted by law, file or consent to
or acquiesce in a petition seeking an order under the
Federal Bankruptcy Code, as amended, make an assignment for
the benefit of creditors or consent to or fail to contest
the appointment of a custodian or receiver of all or any
substantial part of its property, or file a petition or
answer seeking, consenting to or acquiescing in the granting
of relief under any other applicable bankruptcy, insolvency
or similar law or statute of the United States of America or
any state thereof;
(4) amend this Certificate of Incorporation to alter
in any manner or delete Article THIRD or this Article
EIGHTH; or
(5) incur any indebtedness.
2<PAGE>
NINTH: From time to time any of the provisions of this
Certificate of Incorporation may, subject to the provisions of
paragraph (4) of Article EIGHTH, be amended, altered or repealed,
and other provisions authorized by the laws of the State of
Delaware at the time in force may be added or inserted in the
manner and at the time prescribed by said laws, and all rights at
any time conferred upon the stockholders of the corporation by
this Certificate of Incorporation are granted subject to the
provisions of this Article NINTH.
TENTH: Unless and except to the extent that the By-Laws
of the corportion so require, the election of directors of the
corporation need not be by written ballot.
ELEVENTH: In furtherance and not in limitation of the powers
conferred by the laws of the State of Delaware, the Board of
Directors is expressly authorized and empowered to make, alter
and repeal the By-Laws of the corporation, subject to the power
of the stockholders of the corporation to alter or repeal any By-
Laws made by the Board of Directors.
IN WITNESS WHEREOF, I have hereunto set my hand this 21st
day of February, 1995.
/s/ Terrance G. Howson
Terrance G. Howson
Sole Incorporator
3<PAGE>
Exhibit A-2
_________________________________________________________________
_________________________________________________________________
________________________
JCP&L PREFERRED CAPITAL, INC.
By-Laws
(_________, 1995)
________________________
________________________________________________________________
________________________________________________________________<PAGE>
BY-LAWS
Offices
1. The principal office of JCP&L PREFERRED CAPITAL, INC.
(the "Corporation") shall be in Mellon Bank Center, Second Floor,
919 N. Market Street, Wilmington, DE 19801. The Corporation may
also have offices at such other places as the Board of Directors
may from time to time designate or the business of the
Corporation may require.
Seal
2. The corporate seal shall have inscribed thereon the
name of the Corporation, the year of its organization, and the
words "Corporate Seal" and "Delaware". If authorized by the
Board of Directors, the corporate seal may be affixed to any
certificates of stock, bonds, debentures, notes or other
engraved, lithographed or printed instruments, by engraving,
lithographing or printing thereon such seal or a facsimile
thereof, and such seal or facsimile thereof so engraved,
lithographed or printed thereon shall have the same force and
effect, for all purposes, as if such corporate seal had been
affixed thereto by indentation.
Stockholders' Meetings
3. All meetings of stockholders shall be held at the
principal office of the Corporation or at such other place as
shall be stated in the notice of the meeting. Such meetings
shall be presided over by the chief executive officer of the
1<PAGE>
Corporation, or, in his absence, by such other officer as shall
have been designated for the purpose by the Board of Directors,
except when by statute the election of a presiding officer is
required.
4. Annual meetings of stockholders shall be held during
the month of May in each year on such day and at such time as
shall be determined by the Board of Directors and specified in
the notice of the meeting. At the annual meeting, the
stockholders entitled to vote shall elect by ballot a Board of
Directors and transact such other business as may properly be
brought before the meeting.
5. Except as otherwise provided by law or by the
Certificate of Incorporation, the holders of a majority of the
shares of stock of the Corporation issued and outstanding and
entitled to vote, present in person or by proxy, shall be
requisite for, and shall constitute a quorum at, any meeting of
the stockholders. If, however, the holders of a majority of such
shares of stock shall not be present or represented by proxy at
any such meeting, the stockholders entitled to vote thereat,
present in person or by proxy, shall have power, by vote of the
holders of a majority of the shares of capital stock present or
represented at the meeting, to adjourn the meeting from time to
time without notice other than announcement at the meeting, until
the holders of the amount of stock requisite to constitute a
quorum, as aforesaid, shall be present in person or by proxy. At
any adjourned meeting at which such quorum shall be present, in
2<PAGE>
person or by proxy, any business may be transacted which might
have been transacted at the meeting as originally noticed.
6. At each meeting of stockholders each holder of record
of shares of capital stock then entitled to vote shall be
entitled to vote in person, or by proxy appointed by instrument
executed in writing by such stockholders or by his duly
authorized attorney; but no proxy shall be valid after the
expiration of eleven months from the date of its execution unless
the stockholder executing it shall have specified therein the
length of time it is to continue in force, which shall be for
some specified period. Except as otherwise provided by law or by
the Certificate of Incorporation, each holder of record of shares
of capital stock entitled to vote at any meeting of stockholders
shall be entitled to one vote for every share of capital stock
standing in his name on the books of the Corporation. Shares of
capital stock of the Corporation belonging to the Corporation or
to a corporation if a majority of the shares entitled to vote in
the election of directors of such other corporation is held,
directly or indirectly, by the Corporation, shall neither be
entitled to vote nor be counted for quorum purposes. All
elections shall be determined by a plurality vote, and, except as
otherwise provided by law or by the Certificate of Incorporation
all other matters shall be determined by a vote of the holders of
a majority of the shares of the capital stock present or
represented at a meeting and voting on such questions.
3<PAGE>
7. A complete list of the stockholders entitled to vote
at any meeting of stockholders, arranged in alphabetical order,
with the residence of each, and the number of shares held by
each, shall be prepared by the Secretary and filed in the
principal office of the Corporation at least ten days before the
meeting, and shall be open to the examination of any stockholder
at all times prior to such meeting, during the usual hours for
business, and shall be available at the time and place of such
meeting and open to the examination of any stockholder.
8. Special meetings of the stockholders for any purpose
or purposes, unless otherwise prescribed by law, may be called by
the Chairman or by the President, and shall be called by the
chief executive officer or Secretary at the request in writing of
any three members of the Board of Directors, or at the request in
writing of holders of record of ten percent of the shares of
capital stock of the Corporation issued and outstanding.
Business transacted at all special meetings of the stockholders
shall be confined to the purposes stated in the call.
9. Notice of every meeting of stockholders, setting
forth the time and the place and briefly the purpose or purposes
thereof, shall be mailed, not less than ten nor more than sixty
days prior to such meeting, to each stockholder of record (at his
address appearing on the stock books of the Corporation, unless
he shall have filed with the Secretary of the Corporation a
written request that notices intended for him be mailed to some
other address, in which case it shall be mailed to the address
4<PAGE>
designated in such request) as of a date fixed by the Board of
Directors pursuant to Section 41 of the By-Laws. Except as
otherwise provided by law, the Certificate of Incorporation or
the By-Laws, items of business, in addition to those specified in
the notice of meeting, may be transacted at the annual meeting.
Directors
10. The business and affairs of the Corporation shall be
managed by or under the direction of its Board of Directors,
which shall consist of not less than one nor more than nine
directors as shall be fixed from time to time by a resolution
adopted by a majority of the entire Board of Directors; provided,
however, that no decrease in the number of directors constituting
the entire Board of Directors shall shorten the term of any
incumbent director. Each director shall be at least twenty-one
years of age. Directors need not be stockholders of the
Corporation. Directors shall be elected at the annual meeting of
stockholders, or, if any such election shall not be held, at a
stockholders' meeting called and held in accordance with the
provisions of the General Corporation Law of the State of
Delaware. Each director shall serve until the next annual
meeting of stockholders and thereafter until his successor shall
have been elected and shall qualify or until his earlier death,
resignation or removal.
11. In addition to the powers and authority by the By-
Laws expressly conferred upon it, the Board of Directors may
exercise all such powers of the Corporation and do all such
5<PAGE>
lawful acts and things as are not by law or by the Certificate of
Incorporation, or by the By-Laws directed or required to be
exercised or done by the stockholders.
12. No contract or transaction between the Corporation
and one or more of its directors or officers, or between the
Corporation and any other corporation, partnership, association
or other organization in which one or more of its directors or
officers are directors or officers, or have a financial interest,
shall be void or voidable solely for this reason, or solely
because the director or officer is present at or participates in
the meeting of the Board of Directors or committee thereof which
authorizes the contract or transaction, or solely because his
votes are counted for such purpose, if: (1) the material facts
as to his relationship or interest and as to the contract or
transaction are disclosed or are known to the Board or the
committee, and the Board or committee in good faith authorizes
the contract or transaction by the affirmative votes of a
majority of the disinterested directors, even though the
disinterested directors be less than a quorum; or (2) the
material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the
stockholders entitled to vote thereon, and the contract or
transaction is specifically approved in good faith by vote of the
stockholders; or (3) the contract or transaction is fair as to
the Corporation as of the time it is authorized, approved or
ratified, by the Board, a committee thereof or the stockholders.
Common or interested directors may be counted in determining the
6<PAGE>
presence of a quorum at a meeting of the Board of Directors or of
a committee which authorizes the contract or transaction.
7<PAGE>
Meetings of the Board of Directors
13. The first meeting of the Board of Directors, for the
purpose of organization, the election of officers, and the
transaction of any other business which may come before the
meeting, shall be held on call of the President within one week
after the annual meeting of stockholders. If the President shall
fail to call such meeting, it may be called by the Vice President
or by any director. Notice of such meeting shall be given in the
manner prescribed for Special Meetings of the Board of Directors.
14. Regular meetings of the Board of Directors may be
held without notice except for the purpose of taking action on
matters as to which notice is in the By-Laws required to be
given, at such time and place as shall from time to time be
designated by the Board, but in any event at intervals of not
more than three months. Special meetings of the Board of
Directors may be called by the President or in the absence or
disability of the President, by a Vice President, or by any two
directors, and may be held at the time and place designated in
the call and notice of the meeting.
15. Except as otherwise provided by the By-Laws, any item
of business may be transacted at any meeting of the Board of
Directors, whether or not such item of business shall have been
specified in the notice of meeting. Where notice of any meeting
of the Board of Directors is required to be given by the By-Laws,
the Secretary or other officer performing his duties shall give
notice either personally or by telephone or telecopy at least
8<PAGE>
twenty-four hours before the meeting, or by mail at least three
days before the meeting. Meetings may be held at any time and
place without notice if all the directors are present or if those
not present waive notice in writing either before or after the
meeting.
16. At all meetings of the Board of Directors a majority
of the directors in office shall be requisite for, and shall
constitute, a quorum for the transaction of business, and the act
of a majority of the directors present at any meeting at which
there is a quorum shall be the act of the Board of Directors,
except as may be otherwise specifically provided by law or by the
Certificate of Incorporation, as amended, or by the By-Laws.
17. Any regular or special meeting may be adjourned to
any time or place by a majority of the directors present at the
meeting, whether or not a quorum shall be present at such
meeting, and no notice of the adjourned meeting shall be required
other than announcement at the meeting.
Committees
18. The Board of Directors may, by the vote of a majority
of the directors in office, create an Executive Committee,
consisting of two or more members, of whom one shall be the chief
executive officer of the Corporation. The other members of the
Executive Committee shall be designated by the Board of Directors
from their number, shall hold office for such period as the Board
of Directors shall determine and may be removed at any time by
9<PAGE>
the Board of Directors. When a member of the Executive
Committee ceases to be a director, he shall cease to be a member
of the Executive Committee. Except as otherwise provided by
applicable law, the Executive Committee shall have all the powers
specifically granted to it by the By-Laws and, between meetings
of the Board of Directors, may also exercise all the powers of
the Board of Directors. The Executive Committee shall have no
power to revoke any action taken by the Board of Directors, and
shall be subject to any restriction imposed by law, by the By-
Laws, or by the Board of Directors.
19. The Executive Committee shall cause to be kept
regular minutes of its proceedings, which may be transcribed in
the regular minute book of the Corporation, and all such
proceedings shall be reported to the Board of Directors at its
next succeeding meeting. A majority of the Executive Committee
shall constitute a quorum at any meeting. The Board of Directors
may by vote of a majority of the total number of directors
provided for in Section 10 of the By-Laws fill any vacancies in
the Executive Committee. The Executive Committee shall designate
one of its number as Chairman of the Executive Committee and may,
from time to time, prescribe rules and regulations for the
calling and conduct of meetings of the Committee, and other
matters relating to its procedure and the exercise of its powers.
20. From time to time the Board of Directors may appoint
any other committee or committees for any purpose or purposes,
which committee or committees shall have such powers and such
10<PAGE>
tenure of office as shall be specified in the resolution of
appointment. The President of the Corporation shall be a member
ex officio of all committees of the Board.
Compensation and Reimbursement of Directors
and Members of the Executive Committee
21. Directors, other than salaried officers of the
Corporation or its affiliates, shall receive compensation and
benefits for their services as directors, at such rate or under
such conditions as shall be fixed from time to time by the Board,
and all directors shall be reimbursed for their reasonable
expenses, if any, of attendance at each regular or special
meeting of the Board of Directors.
22. Directors, other than salaried officers of the
Corporation or its affiliates, who are members of any committee
of the Board, shall receive compensation for their services as
such members as shall be fixed from time to time by the Board,
and all directors shall be reimbursed for their reasonable
expenses, if any, in attending meetings of the Executive
Committee or such other Committees of the Board and of otherwise
performing their duties as members of such Committees.
Officers
23. The officers of the Corporation shall be chosen by a
vote of a majority of the directors in office and shall be a
President and a Secretary and, in the discretion of the Board of
Directors, one or more Vice Presidents, a Treasurer, and a
11<PAGE>
Comptroller, one or more Assistant Secretaries, one or more
Assistant Treasurers, and one or more Assistant Comptrollers.
The President shall be the chief executive officer of the
Corporation. The President shall be chosen from among the
directors. Neither the Comptroller nor any Assistant Comptroller
may occupy any other office. With the above exceptions, any two
or more offices may be occupied and the duties thereof may be
performed by one person, but no officer shall execute,
acknowledge or verify any instrument in more than one capacity.
24. The salary and other compensation of the chief
executive officer of the Corporation shall be determined from
time to time by the Board of Directors. The salaries and other
compensation of all other officers of the Corporation shall be
determined from time to time by the President.
25. The salary or other compensation of all employees
other than officers of the Corporation shall be fixed by the
President of the Corporation or by such other officer as shall be
designated for that purpose by the Board of Directors.
26. The Board of Directors may appoint such officers and
such representatives or agents as shall be deemed necessary, who
shall hold office for such terms, exercise such powers, and
perform such duties as shall be determined from time to time by
the Board of Directors.
12<PAGE>
27. The officers of the Corporation shall hold office
until the first meeting of the Board of Directors after the next
succeeding annual meeting of stockholders and until their
respective successors are chosen and qualify or until their
earlier death, resignation or removal. Any officer elected
pursuant to Section 23 of the By-Laws may be removed at any time,
with or without cause, by the vote of a majority of the directors
in office. Any other officer and any representative, employee or
agent of the Corporation may be removed at any time, with or
without cause, by action of the Board of Directors, by the
Executive Committee, or the President of the Corporation, or such
other officer as shall have been designated for that purpose by
the President of the Corporation.
The President
29. (a) The President shall preside at all meetings of
the Board at which he shall be present.
(b) The President of the Corporation:
(i)shall have supervision, direction and control of
the conduct of the business of the Corporation,
subject, however, to the control of the Board of
Directors and the Executive Committee if there be
one;
(ii)may sign in the name and on behalf of the
Corporation any and all contracts, agreements or
13<PAGE>
other instruments pertaining to matters which arise
in the ordinary course of business of the
Corporation, and, when authorized by the Board of
Directors or the Executive Committee, if there be
one, may sign in the name and on behalf of the
Corporation any and all contracts, agreements, or
other instruments of any nature pertaining to the
business of the Corporation;
(iii)may, unless otherwise directed by the Board of
Directors pursuant to Section 38 of the By-Laws,
attend in person or by substitute or proxy
appointed by him and act and vote on behalf of the
Corporation at all meetings of the stockholders of
any corporation in which the Corporation holds
stock and grant any consent, waiver, or power of
attorney in respect of such stock;
(iv)shall, whenever it may in his opinion be
necessary or appropriate, prescribe the duties of
officers and employees of the Corporation whose
duties are not otherwise defined; and
(v)shall have such other powers and perform such
other duties as may be prescribed from time to time
by law, by the By-Laws, or by the Board of
Directors.
14<PAGE>
Vice President
30. (a) The Vice President shall, in the absence or
disability of the President, have supervision, direction and
control of the conduct of the business of the Corporation,
subject, however, to the control of the Directors and the
Executive Committee, if there be one.
(b) He may sign in the name of and on behalf of the
Corporation any and all contracts, agreements or other
instruments pertaining to matters which arise in the ordinary
course of business of the Corporation, and when authorized by the
Board of Directors or the Executive Committee, if there be one,
except in cases where the signing thereof shall be expressly
delegated by the Board of Directors or the Executive Committee to
some other officer or agent of the Corporation.
(c) He may, at the request or in the absence or
disability of the President or in case of the failure of the
President to appoint a substitute or proxy as provided in
Subsection 29(b)(iii) of the By-Laws, unless otherwise directed
by the Board of Directors pursuant to Section 38 of the By-Laws,
attend in person or by substitute or proxy appointed by him and
act and vote on behalf of the Corporation at all meetings of the
stockholders of any corporation in which the Corporation holds
stock and grant any consent, waiver or power of attorney in
respect of such stock.
15<PAGE>
(d) He shall have such other powers and perform
such other duties as may be prescribed from time to time by law,
by the By-Laws, or by the Board of Directors.
(e) If there be more than one Vice President, the
Board of Directors may designate one or more of such Vice
Presidents as an Executive Vice President or a Senior Vice
President. The Board of Directors may assign to such Vice
Presidents their respective duties and may designate the order in
which the respective Vice Presidents shall have supervision,
direction and control of the business of the Corporation in the
absence or disability of the President.
The Secretary
31. (a) The Secretary shall attend all meetings of the
Board of Directors and all meetings of the stockholders and
record all votes and the minutes of all proceedings in books to
be kept for that purpose; and he shall perform like duties for
the Executive Committee and any other committees created by the
Board of Directors.
(b) He shall give, or cause to be given, notice of
all meetings of the stockholders, the Board of Directors, or the
Executive Committee of which notice is required to be given by
law or by the By-Laws.
16<PAGE>
(c) He shall have such other powers and perform
such other duties as may be prescribed from time to time by law,
by the By-Laws, or the Board of Directors.
(d) Any records kept by the Secretary shall be the
property of the Corporation and shall be restored to the Corpora-
tion in case of his death, resignation, retirement or removal
from office.
(e) He shall be the custodian of the seal of the
Corporation and, pursuant to Section 45 of the By-Laws and in
other instances where the execution of documents on behalf of the
Corporation is authorized by the By-Laws or by the Board of
Directors, may affix the seal to all instruments requiring it and
attest the ensealing and the execution of such instruments.
(f) He shall have control of the stock ledger,
stock certificate book and all books containing minutes of any
meeting of the stockholders, Board of Directors, or Executive
Committee or other committee created by the Board of Directors,
and of all formal records and documents relating to the corporate
affairs of the Corporation.
(g) Any Assistant Secretary or Assistant Secretar-
ies shall assist the Secretary in the performance of his duties,
shall exercise his powers and duties at his request or in his
absence or disability, and shall exercise such other powers and
duties as may be prescribed by the Board of Directors.
17<PAGE>
The Treasurer
32. (a) The Treasurer shall be responsible for the
safekeeping of the corporate funds and securities of the Corpora-
tion, and shall maintain and keep in his custody full and
accurate accounts of receipts and disbursements in books
belonging to the Corporation, and shall deposit all moneys and
other funds of the Corporation in the name and to the credit of
the Corporation, in such depositories as may be designated by the
Board of Directors.
(b) He shall disburse the funds of the Corporation
in such manner as may be ordered by the Board of Directors,
taking proper vouchers for such disbursements.
(c) Pursuant to Section 45 of the By-Laws, he may,
when authorized by the Board of Directors, affix the seal to all
instruments requiring it and shall attest the ensealing and
execution of said instruments.
(d) He shall exhibit at all reasonable times his
accounts and records to any director of the Corporation upon
application during business hours at the office of the
Corporation where such accounts and records are kept.
(e) He shall render an account of all his
transactions as Treasurer at all regular meetings of the Board of
Directors, or whenever the Board may require it, and at such
18<PAGE>
other times as may be requested by the Board or by any director
of the Corporation.
(f) If required by the Board of Directors, he shall
give the Corporation a bond, the premium on which shall be paid
by the Corporation, in such form and amount and with such surety
or sureties as shall be satisfactory to the Board, for the
faithful performance of the duties of his office, and for the
restoration to the Corporation in case of his death, resignation,
retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his
possession or under his control belonging to the Corporation.
(g) He shall perform all duties generally incident
to the office of Treasurer, and shall have other powers and
duties as from time to time may be prescribed by law, by the By-
Laws, or by the Board of Directors.
(h) Any Assistant Treasurer or Assistant Treasurers
shall assist the Treasurer in the performance of his duties,
shall exercise his powers and duties at his request or in his
absence or disability, and shall exercise such other powers and
duties as may be prescribed by the Board of Directors. If
required by the Board of Directors, any Assistant Treasurer shall
give the Corporation a bond, the premium on which shall be paid
by the Corporation, similar to that which may be required to be
given by the Treasurer.
19<PAGE>
Comptroller
33. (a) The Comptroller of the Corporation shall be the
principal accounting officer of the Corporation and shall be
accountable and report directly to the Board of Directors. If
required by the Board of Directors, the Comptroller shall give
the Corporation a bond, the premium on which shall be paid by the
Corporation in such form and amount and with such surety or
sureties as shall be satisfactory to the Board, for the faithful
performance of the duties of his office.
(b) He shall keep or cause to be kept full and
complete books of account of all operations of the Corporation
and of its assets and liabilities.
(c) He shall have custody of all accounting records
of the Corporation other than the record of receipts and
disbursements and those relating to the deposit or custody of
money or securities of the Corporation, which shall be in the
custody of the Treasurer.
(d) He shall exhibit at all reasonable times his
books of account and records to any director of the Corporation
upon application during business hours at the office of the
Corporation where such books of account and records are kept.
(e) He shall render reports of the operations and
business and of the condition of the finances of the Corporation
at regular meetings of the Board of Directors, and at such other
20<PAGE>
times as he may be requested by the Board or any director of the
Corporation, and shall render a full financial report at the
annual meeting of the stockholders, if called upon to do so.
(f) He shall receive and keep in his custody an
original copy of each written contract made by or on behalf of
the Corporation.
(g) He shall receive periodic reports from the
Treasurer of the Corporation of all receipts and disbursements,
and shall see that correct vouchers are taken for all
disbursements for any purpose.
(h) He shall perform all duties generally incident
to the office of Comptroller, and shall have such other powers
and duties as from time to time may be prescribed by law, by the
By-Laws, or by the Board of Directors.
(i) Any Assistant Comptroller or Assistant
Comptrollers shall assist the Comptroller in the performance of
his duties, shall exercise his powers and duties at his request
or in his absence or disability and shall exercise such other
powers and duties as may be conferred or required by the Board of
Directors. If required by the Board of Directors, any Assistant
Comptroller shall give the Corporation a bond, the premium on
which shall be paid by the Corporation, similar to that which may
be required to be given by the Comptroller.
21<PAGE>
Vacancies
34. If the office of any director becomes vacant by
reason of death, resignation, retirement, disqualification, or
otherwise, the remaining directors, by the vote of a majority of
those then in office at a meeting, the notice of which shall have
specified the filling of such vacancy as one of its purposes may
choose a successor, who shall hold office for the unexpired term
in respect of which such vacancy occurs. If the office of any
officer of the Corporation shall become vacant for any reason,
the Board of Directors, at a meeting, the notice of which shall
have specified the filling of such vacancy as one of its
purposes, may choose a successor who shall hold office for the
unexpired term in respect of which such vacancy occurred.
Pending action by the Board of Directors at such meeting, the
Board of Directors or the Executive Committee may choose a
successor temporarily to serve as an officer of the Corporation.
Resignations
35. Any officer or any director of the Corporation may
resign at any time, such resignation to be made in writing and
transmitted to the Secretary. Such resignation shall take effect
at the time specified therein, and unless otherwise specified
therein no acceptance of such resignation shall be necessary to
make it effective. Nothing herein shall be deemed to relieve any
officer from liability for breach of any contract of employment
resulting from any such resignation.
22<PAGE>
Duties of Officers May be Delegated
36. In case of the absence or disability of any officer
of the Corporation, or for any other reason the Board of
Directors may deem sufficient, the Board, by vote of a majority
of the total number of directors provided for in Section 10 of
the By-Laws may, notwithstanding any provisions of the By-Laws,
delegate or assign, for the time being, the powers or duties, or
any of them, of such officer to any other officer or to any
director.
23<PAGE>
Indemnification of Directors, Officers and Employees
37. (a) The Corporation shall indemnify any person who
was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, whether
formal or informal, and whether brought by or in the right of the
Corporation or otherwise ("proceeding"), by reason of the fact
that he was a director, officer or employee of the Corporation
(and may indemnify any person who was an agent of the
Corporation), or a person serving at the request of the
Corporation as a director, officer, partner, fiduciary or trustee
of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, to the fullest extent
permitted by law, including without limitation indemnification
against expenses (including attorneys' fees and disbursements),
damages, punitive damages, judgments, penalties, fines and
amounts paid in settlement actually and reasonably incurred by
such person in connection with such proceeding to the fullest
extent permitted by applicable law.
(b) The Corporation shall pay the expenses
(including attorneys' fees and disbursements) actually and
reasonably incurred in defending a proceeding on behalf of any
person entitled to indemnification under subsection (a) in
advance of the final disposition of such proceeding upon receipt
of an undertaking by or on behalf of such person to repay such
amount if it shall ultimately be determined that he is not
entitled to be indemnified by the Corporation, and may pay such
24<PAGE>
expenses in advance on behalf of any agent on receipt of a
similar undertaking. The financial ability of such person to
make such repayment shall not be a prerequisite to the making of
an advance.
(c) For purposes of this Section: (i) the
Corporation shall be deemed to have requested an officer,
director, employee or agent to serve as fiduciary with respect to
an employee benefit plan where the performance by such person of
duties to the Corporation also imposes duties on, or otherwise
involves services by, such person as a fiduciary with respect to
the plan; (ii) excise taxes assessed with respect to any
transaction with an employee benefit plan shall be deemed
"fines"; and (iii) action taken or omitted by such person with
respect to any employee benefit plan in the performance of duties
for a purpose reasonably believed to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be
for a purpose which is not opposed to the best interests of the
Corporation.
(d) To further effect, satisfy or secure the
indemnification obligations provided herein or otherwise, the
Corporation may maintain insurance, obtain a letter of credit,
act as self-insurer, create a reserve, trust, escrow, cash
collateral or other fund or account, enter into indemnification
agreements, pledge or grant a security interest in any assets or
properties of the Corporation, or use any other mechanism or
arrangement whatsoever in such amounts, at such costs, and upon
25<PAGE>
such other terms and conditions as the Board of Directors shall
deem appropriate.
(e) All rights of indemnification under this
Section shall be deemed a contract between the Corporation and
the person entitled to indemnification under this Section
pursuant to which the Corporation and each such person intend to
be legally bound. Any repeal, amendment or modification hereof
shall be prospective only and shall not limit, but may expand,
any rights or obligations in respect of any proceeding whether
commenced prior to or after such change to the extent such
proceeding pertains to actions or failures to act occurring prior
to such change.
(f) The indemnification, as authorized by this
Section, shall not be deemed exclusive of any other rights to
which those seeking indemnification or advancement of expenses
may be entitled under any statute, agreement, vote of
shareholder, or disinterested directors or otherwise, both as to
action in an official capacity and as to action in any other
capacity while holding such office. The indemnification and
advancement of expenses provided by, or granted pursuant to, this
Section shall continue as to a person who has ceased to be an
officer, director, employee or agent in respect of matters
arising prior to such time, and shall inure to the benefit of the
heirs, executors and administrators of such person.
26<PAGE>
Stock of Other Corporations
38. The Board of Directors may authorize any director,
officer or other person on behalf of the Corporation to attend,
act and vote at meetings of the stockholders of any corporation
in which the Corporation shall hold stock, and to exercise
thereat any and all of the rights and powers incident to the
ownership of such stock and to execute waivers of notice of such
meetings and calls therefor.
Certificate of Stock
39. The certificates of stock of the Corporation shall be
numbered and shall be entered in the books of the Corporation as
they are issued. They shall exhibit the holder's name and number
of shares and may include his address. No fractional shares of
stock shall be issued. Certificates of stock shall be signed by
the President or a Vice President and by the Treasurer or an
Assistant Treasurer or the Secretary or an Assistant Secretary,
and shall be sealed with the seal of the Corporation. Where any
certificate of stock is signed by a transfer agent or transfer
clerk, who may be but need not be an officer or employee of the
Corporation, and by a registrar, the signature of any such
President, Vice President, Secretary, Assistant Secretary,
Treasurer, or Assistant Treasurer upon such certificate who shall
have ceased to be such before such certificate of stock is
issued, it may be issued by the Corporation with the same effect
as if such officer had not ceased to be such at the date of its
issue.
27<PAGE>
Transfer of Stock
40. Transfers of stock shall be made on the books of the
Corporation only by the person named in the certificate or by
attorney, lawfully constituted in writing, and upon surrender of
the certificate therefor.
Fixing of Record Date
41. The Board of Directors is hereby authorized to fix a
time, not exceeding fifty (50) days preceding the date of any
meeting of stockholders or the date fixed for the payment of any
dividend or the making of any distribution, or for the delivery
of evidences of rights or evidences of interests arising out of
any change, conversion or exchange of capital stock, as a record
time for the determination of the stockholders entitled to notice
of and to vote at such meeting or entitled to receive any such
dividend, distribution, rights or interests as the case may be;
and all persons who are holders of record of capital stock at the
time so fixed and no others, shall be entitled to notice of and
to vote at such meeting, and only stockholders of record at such
time shall be entitled to receive any such notice, dividend,
distribution, rights or interests.
Registered Stockholders
42. The Corporation shall be entitled to treat the holder
of record of any share or shares of stock as the holder in fact
thereof and accordingly shall not be bound to recognize any
equitable or other claim to, or interest in, such share on the
part of any other person, whether or not it shall have express or
28<PAGE>
other notice thereof, save as expressly provided by statutes of
the State of Delaware.
Lost Certificates
43. Any person claiming a certificate of stock to be lost
or destroyed shall make an affidavit or affirmation of that fact,
whereupon a new certificate may be issued of the same tenor and
for the same number of shares as the one alleged to be lost or
destroyed; provided, however, that the Board of Directors may
require, as a condition to the issuance of a new certificate, the
payment of the reasonable expenses of such issuance or the
furnishing of a bond of indemnity in such form and amount and
with such surety or sureties, or without surety, as the Board of
Directors shall determine, or both the payment of such expenses
and the furnishing of such bond, and may also require the
advertisement of such loss in such manner as the Board of
Directors may prescribe.
Inspection of Books
44. The Board of Directors may determine whether and to
what extent, and at what time the places and under what
conditions and regulations, the accounts and books of the
Corporation (other than the books required by statute to be open
to the inspection of stockholders), or any of them, shall be
open to the inspection of stockholders, and no stockholder shall
have any right to inspect any account or book or document of the
Corporation, except as such right may be conferred by statutes of
29<PAGE>
the State of Delaware or by the By-Laws or by resolution of the
Board of Directors or of the stockholders.
Checks, Notes, Bonds and Other Instruments
45. (a) All checks or demands for money and notes of
the Corporation shall be signed by such person or persons (who
may but need not be an officer of officers of the Corporation) as
the Board of Directors may from time to time designate, either
directly or through such officers of the Corporation as shall, by
resolution of the Board of Directors, be authorized to designate
such person or persons. If authorized by the Board of Directors,
the signatures of such persons, or any of them, upon any checks
for the payment of money may be made by engraving, lithographing
or printing thereon a facsimile of such signatures, in lieu of
actual signatures, and such facsimile signatures so engraved,
lithographed or printed thereon shall have the same force and
effect as if such persons had actually signed the same.
(b) All bonds, mortgages and other instruments
requiring a seal, when required in connection with matters which
arise in the ordinary course of business or when authorized by
the Board of Directors, shall be executed on behalf of the
Corporation by the President or a Vice President, and the seal of
the Corporation shall be thereupon affixed by the Secretary or an
Assistant Secretary or the Treasurer or an Assistant Treasurer,
who shall, when required, attest the ensealing and execution of
said instrument. If authorized by the Board of Directors, a
facsimile of the seal may be employed and such facsimile of the
30<PAGE>
seal may be engraved, lithographed or printed and shall have the
same force and effect as an impressed seal. If authorized by the
Board of Directors, the signatures of the President or a Vice
President and the Secretary or an Assistant Secretary or the
Treasurer or Assistant Treasurer upon any engraved, lithographed
or printed bonds, debentures, notes or other instruments may be
made by engraving, lithographing or printing thereon a facsimile
of such signatures, in lieu of actual signatures, and such
facsimile signatures so engraved, lithographed or printed thereon
shall have the same force and effect as if such officers had
actually signed the same. In case any officer who has signed, or
whose facsimile signature appears on, any such bonds, debentures,
notes or other instruments shall cease to be such officer before
such bonds, debentures, notes or other instruments shall have
been delivered by the Corporation, such bonds, debentures, notes
or other instruments may nevertheless be adopted by the
Corporation and be issued and delivered as though the person who
signed the same, or whose facsimile signature appears thereon,
had not ceased to be such officer of the Corporation.
Receipts for Securities
46. All receipts for stocks, bonds or other securities
received by the Corporation shall be signed by the Treasurer or
an Assistant Treasurer, or by such other person or persons as the
Board of Directors or Executive Committee shall designate.
31<PAGE>
Fiscal Year
47. The fiscal year shall begin the first day of January
in each year.
Dividends
48. (a) Dividends in the form of cash or securities,
upon the capital stock of the Corporation, to the extent
permitted by law may be declared by the Board of Directors at any
regular or special meeting.
(b) The Board of Directors shall have power to fix
and determine, and from time to time to vary, the amount to be
reserved as working capital; to determine whether any, and if
any, what part of any, surplus of the Corporation shall be
declared as dividends; to determine the date or dates for the
declaration and payment or distribution of dividends; and, before
payment of any dividend or the making of any distribution to set
aside out of the surplus of the Corporation such amount or
amounts as the Board of Directors from time to time, in its
absolute discretion, may think proper as a reserve fund to meet
contingencies, or for equalizing dividends, or for such other
purpose as it shall deem to be in the interest of the
Corporation.
Directors' Annual Statement
49. The Board of Directors shall upon request present or
cause to be presented at each annual meeting of stockholders, and
when called for by vote of the stockholders at any special
32<PAGE>
meeting of the stockholders, a full and clear statement of the
business and condition of the Corporation.
Notices
50. (a) Whenever under the provisions of the By-Laws
notice is required to be given to any director, officer of
stockholder, it shall not be construed to require personal
notice, but, except as otherwise specifically provided, such
notice may be given in writing, by mail, by depositing a copy of
the same in the U.S. mail, postage prepaid, addressed to such
stockholder, officer or director, at his address as the same
appears on the books of the Corporation.
(b) A stockholder, director or officer may waive in
writing any notice required to be given to him by law or by the
By-Laws.
Participation in Meetings by Telephone
51. At any meeting of the Board of Directors or the
Executive Committee or any other committee designated by the
Board of Directors, one or more directors may participate in such
meeting in lieu of attendance in person by means of the
conference telephone or similar communications equipment by means
of which all persons participating in the meeting will be able to
hear and speak.
33<PAGE>
Oath of Judges of Election
52. The judges of election appointed to act at any
meeting of the stockholders shall, before entering upon the
discharge of their duties, be sworn faithfully to execute the
duties of judge at such meeting with strict impartiality and
according to the best of their ability.
Amendments
53. The By-Laws may be altered or amended by the
affirmative vote of the holders of a majority of the capital
stock represented and entitled to vote at a meeting of the
stockholders duly held, provided that the notice of such meeting
shall have included notice of such proposed amendment. The By-
Laws may also be altered or amended by the affirmative vote of a
majority of the directors in office at a meeting of the Board of
Directors, the notice of which shall have included notice of the
proposed amendment. In the event of the adoption, amendment, or
repeal of any By-Law by the Board of Directors pursuant to this
Section, there shall be set forth in the notice of the next
meeting of stockholders for the election of directors the By-Law
so adopted, amended, or repealed together with a concise
statement of the changes made. By the affirmative vote of the
holders of a majority of the capital stock represented and
entitled to vote at such meeting, the By-Laws may, without
further notice, be altered or amended by amending or repealing
such action by the Board of Directors.
34<PAGE>
Exhibit A-3
CERTIFICATE OF LIMITED PARTNERSHIP
OF
JCP&L CAPITAL, L.P.
This Certificate of Limited Partnership of JCP&L
Capital, L.P. (the "Partnership") is being duly executed and
filed by the undersigned general partner of the Partnership for
the purpose of forming a limited partnership pursuant to the
Delaware Revised Uniform Limited Partnership Act.
1. The name of the Partnership is JCP&L Capital, L.P.
2. The address of the registered office of the
Partnership in Delaware is 32 Loockerman Square, Suite L-100,
Dover, Kent County, Delaware 19904. The Partnership's registered
agent at that address is The Prentice-Hall Corporation System,
Inc.
3. The name and mailing address of the sole general
partner of the Partnership are:
NAME ADDRESS
JCP&L Preferred Second Floor
Capital, Inc. 919 N. Market Street
Wilmington, Delaware 19801
IN WITNESS WHEREOF, the undersigned, constituting the
sole general partner of the Partnership, has caused this
Certificate of Limited Partnership to be duly executed as of the
21st day of February, 1995.
JCP&L PREFERRED CAPITAL, INC.,
as General Partner
By: /s/ Dennis Baldassari
Name: Dennis Baldassari
Its President<PAGE>
Exhibit A-4
LIMITED PARTNERSHIP
AGREEMENT
OF
JCP&L CAPITAL, L.P.
The undersigned General Partner and Initial Limited Partner
(jointly, the "Partners") hereby form a limited partnership
pursuant to and in accordance with the Delaware Revised Uniform
Limited Partnership Act (6 Del. C. Section 17-101, et seq.) (the
"Delaware Act"), and hereby agree as follows:
1. Name. The name of the limited partnership formed
hereby is JCP&L CAPITAL, L.P. (the "Partnership").
2. Purpose. The purpose and business of the Partnership
shall be to engage in any lawful activity for which limited
partnerships may be organized under the Delaware Act.
3. Registered Office. The registered office of the
Partnership in the State of Delaware is 32 Loockerman Square,
Suite L-100, City of Dover, County of Kent.
4. Registered Agent. The name and address of the
registered agent of the Partnership for service of process on the
Partnership in the State of Delaware is The Prentice-Hall
Corporation System, Inc., 32 Loockerman Square, Suite L-100, City
of Dover, County of Kent, Delaware.
5. Partners. The names and mailing addresses of the
General Partner and the Initial Limited Partner are as follows:<PAGE>
General Partner: JCP&L Preferred Capital, Inc.
Second Floor
919 N. Market Street
Wilmington, Delaware 19801
Initial Limited Partner: Terrance G. Howson
c/o GPU Service Corporation
100 Interpace Parkway
Parsippany, New Jersey 07054
6. Powers. The powers of the General Partner include
all powers, statutory and otherwise, possessed by general
partners under the laws of the State of Delaware.
7. Dissolution. The Partnership shall dissolve, and its
affairs shall be wound up, on May 1, 2060 or at such earlier time
as (a) all of the partners of the Partnership approve in writing,
(b) an event of withdrawal of a general partner has occurred
under the Delaware Act, or (c) an entry of a decree of judicial
dissolution has occurred under Section 17-802 of the Delaware
Act; provided, however, the Partnership shall not be dissolved or
required to be wound up upon an event of withdrawal of a general
partner described in Section 7(b) if (i) at the time of such
event of withdrawal, there is at least one (1) other general
partner of the Partnership who carries on the business of the
Partnership (any remaining general partner being hereby
authorized to carry on the business of the Partnership), or (ii)
within ninety (90) days after the occurrence of such event of
withdrawal, a majority in interest of the remaining partners (or
such greater percentage as is required by the Delaware Act) agree
in writing to continue the business of the Partnership and to the
appointment, effective as of the date of the event of withdrawal,
of one (1) or more additional general partners of the
Partnership.
2<PAGE>
8. Capital Contributions. The Partners have contributed
the following amounts, in cash, property or services rendered, or
in a promissory note or other obligation to contribute cash or to
perform services:
General Partner . . . . . . . . . . . . . . . $99.00
Initial Limited Partner . . . . . . . . . . . $ 1.00
9. Allocations of Profit and Losses. The Partnership's
profits and losses shall be allocated in proportion to the
capital contributions of the Partners which shall be reflected in
a capital account for each of the Partners.
10. Distributions. Distributions to the Partners shall
be in the same proportion as their then capital account balances.
11. Assignments.
(a) The Initial Limited Partner
may transfer all or any part of his partnership interest only
with the consent of the General Partner, and any transferee may
be admitted as a substitute limited partner of the Partnership
only with the consent of the General Partner, whose consent in
either case may be withheld in the sole discretion of the General
Partner.
(b) The General Partner may
transfer all or any part of its partnership interest without the
consent of the Initial Limited Partner, and such transferee shall
have all the rights and powers of the General Partner.
12. Withdrawal. Except as provided in Sections 11 and
13, no right is given to the Initial Limited Partner to withdraw
from the Partnership. The General Partner may withdraw from the
Partnership without the consent of the Initial Limited Partner,
3<PAGE>
but no such withdrawal shall be effective until the filing with
the Secretary of State of the State of Delaware of an amendment
to the Partnership's Certificate of Limited Partnership naming a
successor general partner of the Partnership.
13. Additional Partners.
(a) The General Partner may admit
additional limited partners of the Partnership. Immediately
following the admission of one or more additional limited
partners of the Partnership, the Initial Limited Partner shall
withdraw from the Partnership and shall be entitled to receive
forthwith the return of its capital contribution, without
interest or deduction.
(b) The Partnership shall continue
as a limited partnership under the Delaware Act after the
admission of any additional limited partners of the Partnership
pursuant to this Section 13.
(c) The admission of additional
limited partners of the Partnership pursuant to this Section 13
may be accomplished by the amendment and restatement of this
Limited Partnership Agreement and, if required by the Delaware
Act, the filing of an amendment and/or restatement to the
Partnership's Certificate of Limited Partnership with the
Secretary of State of the State of Delaware.
14. Merger. The approval of the Initial Limited Partner
shall not be required with respect to any merger of an entity
into the Partnership.
IN WITNESS WHEREOF, the undersigned have duly executed this
Limited Partnership Agreement as of February , 1995.
4<PAGE>
GENERAL PARTNER:
JCP&L PREFERRED CAPITAL, INC.,
a Delaware corporation
By:____________________________
Name: Dennis Baldassari
President
INITIAL LIMITED PARTNER:
______________________________
TERRANCE G. HOWSON
5<PAGE>
Exhibit A-5
AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
OF JCP&L CAPITAL, L.P.
This AMENDED AND RESTATED LIMITED PARTNERSHIP
AGREEMENT, dated as of _______, 1995, of JCP&L Capital, L.P., a
Delaware limited partnership (the "Partnership") is made by and
among JCP&L Preferred Capital, Inc., as General Partner, Terrance
G. Howson, as Class A Limited Partner, and the Persons (as
defined below) who become limited partners of the Partnership in
accordance with the provisions hereof.
WHEREAS, JCP&L Preferred Capital, Inc. and Terrance G.
Howson have heretofore formed a limited partnership pursuant to
the Delaware Act (as defined below), by filing a Certificate of
Limited Partnership (as defined below) with the Secretary of
State of the State of Delaware on _________, 1995, and entering
into a Limited Partnership Agreement of the Partnership dated as
of _______, 1995 (the "Limited Partnership Agreement"); and
WHEREAS, the parties hereto desire to continue the
Partnership as a limited partnership under the Delaware Act and
to amend and restate the original Limited Partnership Agreement
in its entirety.
NOW, THEREFORE, the parties hereto, intending to be
legally bound hereby, agree to amend and restate the Limited
Partnership Agreement in its entirety as follows:
ARTICLE I - Definitions
For purposes of this Agreement, each of the following
terms shall have the meaning set forth below (such meaning to be
equally applicable to both singular and plural forms of the terms
so defined).
"Action" shall have the meaning set forth in Section
13.01.(b).
"Additional Amounts" shall have the meaning set forth
in Section 13.01(b)(ix).
"Affiliate" shall mean, with respect to the Person to
which it refers, a Person that directly or indirectly through one
or more intermediaries, controls or is controlled by, or is under
common control with, such subject Person.
"Agreement" shall mean this Amended and Restated
Limited Partnership Agreement, as amended, modified, supplemented
or restated from time to time, including, without limitation, by
any Action establishing a series of Preferred Partner Interests.
1<PAGE>
"Book Entry Interests" shall mean a beneficial interest
in the Certificates, ownership and transfers of which shall be
made through book entries by a Clearing Agency as described in
Section 14.04.
"Business Day" shall mean any day other than a day on
which banking institutions in The City of New York are authorized
or required by law to close.
"Capital Account" shall have the meaning set forth in
Section 4.01. For purposes of determining the Capital Accounts
as set forth in Article IV, partnership items shall be computed
in the same manner as the Partnership computes its income for
Federal income tax purposes, rather than generally accepted
accounting principles, except that (1) a distribution in kind of
Partnership property shall be treated as a taxable disposition of
such property for its fair market value (taking into account
Section 7701(g) of the Code) on the date of distribution, and (2)
adjustments shall be made in accordance with Treasury Regulation
Section 1.704-1(b)(2)(iv), which adjustments shall include any
income which is exempt from United States Federal income tax, all
Partnership losses and all expenses properly chargeable to the
Partnership, whether deductible or non-deductible and whether
described in Section 705(a)(2)(B) of the Code, treated as so
described pursuant to Treasury Regulation Section
1.704-1(b)(2)(iv)(i), or otherwise.
"Certificate" shall mean a certificate substantially in
the form attached hereto as Exhibit A, evidencing a Preferred
Partner Interest.
"Certificate of Limited Partnership" shall mean the
Certificate of Limited Partnership of the Partnership and any and
all amendments thereto and restatements thereof filed with the
Secretary of State of the State of Delaware.
"Class A Limited Partner" shall mean Terrance G. Howson
in his capacity as a limited partner of the Partnership.
"Clearing Agency" shall mean an organization registered
as a "Clearing Agency" pursuant to Section 17A of the Exchange
Act.
"Clearing Agency Participant" shall mean a broker
dealer, bank, other financial institution or other Person for
whom from time to time a Clearing Agency effects book entry
transfers and pledges of securities deposited with the Clearing
Agency.
"Code" shall mean the United States Internal Revenue
Code of 1986 and (unless the context requires otherwise) the
rules and regulations promulgated thereunder, as amended from
time to time.
2<PAGE>
"Commission" shall mean the Securities and Exchange
Commission.
"Covered Person" shall mean any Partner, any Affiliate
of a Partner or any officers, directors, shareholders, partners,
members, employees, representatives or agents of a Partner or
their respective Affiliates, or any employee or agent of the
Partnership or its Affiliates.
"Definitive Certificate" shall have the meaning set
forth in Section 14.04.
"Delaware Act" shall mean the Delaware Revised Uniform
Limited Partnership Act, 6 Del. C. Section 17-101, et seq., as
amended from time to time or any successor statute thereto.
"Economic Risk of Loss" shall mean the "economic risk
of loss" that any Partner is treated as bearing under Treasury
Regulation Section 1.752-2 with respect to any Partnership
liability.
"Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
"Fiscal Year" shall have the meaning set forth in
Section 7.01.
"General Partner" shall mean JCP&L Preferred, in its
capacity as general partner of the Partnership, together with any
successor thereto that becomes a general partner of the
Partnership pursuant to the terms of this Agreement.
"Guarantee" shall mean the Payment and Guarantee
Agreement to be dated as of ______, 1995 of JCP&L, as amended or
supplemented from time to time, and any additional Payment and
Guarantee Agreements entered into by JCP&L for the benefit of the
Preferred Partners.
"Indenture" shall mean the Indenture to be dated as of
______, 1995, as amended or supplemented from time to time,
between JCP&L and United States Trust Company of New York as
Trustee and any additional Indentures entered into by JCP&L
pursuant to which Subordinated Debentures of JCP&L are to be
issued.
"Indemnified Person" shall mean the General Partner,
any Affiliate of the General Partner or any officers, directors,
shareholders, partners, members, employees, representatives or
agents of the General Partner, or any employee or agent of the
Partnership or its Affiliates.
"Interest" shall mean the entire partnership interest
of a Partner in the Partnership at any particular time, including
the right of such Partner to any and all benefits to which a
Partner may be entitled as provided in this Agreement, together
3<PAGE>
with the obligations of such Partner to comply with all of the
terms and provisions of this Agreement.
"Investment Company Act Event" shall mean the
occurrence of a change in law or regulation or a change in an
official interpretation of law or regulation by any legislative
body, court, governmental agency or regulatory authority (a
"Change in 40 Act Law") to the effect that the Partnership is or
will be considered an "investment company" required to be
registered under the 1940 Act, which Change in 40 Act Law becomes
effective on or after the date of issuance of any series of
Preferred Partner Interests; provided that no Investment Company
Act Event shall be deemed to have occurred if the Partnership
shall have received an opinion of counsel (which may be regular
counsel to JCP&L or an Affiliate, but not an employee thereof),
to the effect that JCP&L and/or the Partnership have taken
reasonable measures, in their discretion, to avoid such Change in
40 Act Law so that in the opinion of such counsel,
notwithstanding such Change in 40 Act Law, the Partnership is not
required to be registered as an "investment company" within the
meaning of the 1940 Act.
"Limited Partners" shall mean the Class A Limited
Partner, if any, and the Preferred Partners.
"Liquidating Distributions" shall mean distributions of
Partnership property made upon a liquidation and dissolution of
the Partnership as provided in Article XII.
"Liquidation Distribution" shall mean the liquidation
preference of each series of Preferred Partner Interests as set
forth in the Action for such series.
"Liquidating Trustee" shall have the meaning set forth
in Section 12.01.
"JCP&L" shall mean Jersey Central Power & Light Company
and its successors.
"JCP&L Preferred" shall mean JCP&L Preferred Capital,
Inc. and its successors.
"1940 Act" shall mean the Investment Company Act of
1940, as amended.
"Partners" shall mean the General Partner and the
Limited Partners.
"Partnership" shall mean JCP&L Capital, L.P., a limited
partnership formed under the laws of the State of Delaware.
"Person" shall mean any individual, general
partnership, limited partnership, corporation, limited liability
company, joint venture, trust, business trust, cooperative or
association and the heirs, executors, administrators, legal
4<PAGE>
representatives, successors and assigns of such Person where the
context so admits.
"Preferred Partner" shall mean a limited partner of the
Partnership who holds one or more Preferred Partner Interests.
"Preferred Partner Interest Owner" shall mean, with
respect to a Book Entry Interest, a Person who is the beneficial
owner of such Book Entry Interest, as reflected on the books of
the Clearing Agency, or on the books of a Person maintaining an
account with such Clearing Agency (directly as a Clearing Agency
Participant or as an indirect participant, in each case in
accordance with the rules of such Clearing Agency).
"Preferred Partner Interests" shall mean the Interests
described in Article XIII.
"Purchase Price" shall mean the amount paid for each
Preferred Partner Interest.
"Securities Act" shall mean the Securities Act of 1933,
as amended.
"Special Event" shall mean a Tax Event or an Investment
Company Act Event.
"Special Representative" shall have the meaning set
forth in Section 13.02(d).
"Subordinated Debentures" shall mean the Deferrable
Interest Subordinated Debentures of JCP&L issued under the
Indenture.
"Tax Event" shall mean that the Partnership shall have
obtained an opinion of counsel (which may be regular tax counsel
to JCP&L or an Affiliate, but not an employee thereof) to the
effect that, as a result of any amendment to, or change
(including any announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein affecting
taxation, or as a result of any official administrative
pronouncement or judicial decision interpreting or applying any
applicable laws or regulations, which amendment or change is
effective, or which pronouncement or decision has been issued or
rendered, on or after the date of issuance of any series of
Preferred Partner Interests, there is more than an insubstantial
risk that (i) the Partnership will be subject to Federal income
tax with respect to interest received on the related Subordinated
Debentures or the Partnership will otherwise not be taxed as a
partnership or (ii) interest payable by JCP&L to the Partnership
on the related Subordinated Debentures will not be deductible for
Federal income tax purposes, or (iii) the Partnership is subject
to more than a de minimus amount of other taxes, duties or other
governmental charges.
5<PAGE>
"Tax Matters Partner" shall have the meaning set forth
in Section 7.05.
"Transfer" shall mean any transfer, sale, assignment,
gift, pledge, hypothecation or other disposition or encumbrance
of an interest in the Partnership.
"Treasury Regulations" shall mean the final and
temporary income tax regulations, as well as the procedural and
administrative regulations, promulgated by the United States
Department of the Treasury under the Code, as amended from time
to time.
"Trustee" shall mean United States Trust Company of New
York or any other trustee under the Indenture.
"Underwriting Agreement" shall mean the Underwriting
Agreement entered into on _______, 1995 among the Partnership,
JCP&L and the underwriters named therein with regard to the sale
of Preferred Partner Interests and related securities, and any
additional Underwriting Agreements entered into by the
Partnership and JCP&L with regard to the sale of additional
Preferred Partner Interests and related securities.
ARTICLE II - Continuation; Name; Purposes; Term; Definitions
Section 2.01. Formation. The parties hereto hereby
join together to continue the heretofore formed limited
partnership which shall exist under and be governed by the
Delaware Act. The Partnership shall make any and all filings or
disclosures required under the laws of Delaware or otherwise with
respect to its continuation as a limited partnership, its use of
a fictitious name or otherwise as may be required. The
Partnership shall be a limited partnership among the Partners
solely for the purposes specified in Section 2.03 hereof, and
this Agreement shall not be deemed to create a partnership among
the Partners with respect to any activities whatsoever other than
the activities within the business purposes of the Partnership as
specified in Section 2.03. No Partner shall have any power to
bind any other Partner with respect to any matter except as
specifically provided in this Agreement. No Partner shall be
responsible or liable for any indebtedness or obligation of any
other Partner incurred either before or after the execution of
this Agreement. The assets of the Partnership shall be owned by
the Partnership as an entity, and no Partner individually shall
own any direct interest in the assets of the Partnership.
Section 2.02. Name and Place of Business. The name of
the Partnership is "JCP&L Capital, L.P." The Partnership may
operate under the name of "JCP&L Capital" and such name shall be
used for no purposes other than those set forth herein. The
principal place of business of the Partnership shall be Mellon
Bank Center, Tenth and Market Streets, Wilmington, Delaware, or
6<PAGE>
at such other place as may be selected by the General Partner in
its sole and absolute discretion.
Section 2.03. Purposes. The sole purposes of the
Partnership are to issue and sell Interests in the Partnership,
including, without limitation, Preferred Partner Interests, and
to use the proceeds of all sales of Interests in the Partnership
to purchase Subordinated Debentures issued by JCP&L pursuant to
the Indenture and to effect other similar arrangements permitted
by this Agreement, and to engage in any and all activities
necessary, convenient, advisable or incidental thereto. The
Partnership shall not incur debt for borrowed money.
Section 2.04. Term. The Partnership was formed on
______, 1995 and shall continue without dissolution through June
30, 2060, unless sooner dissolved as provided in Article XI
hereof.
Section 2.05. Qualification in Other Jurisdictions.
The General Partner shall cause the Partnership to be qualified
or registered under assumed or fictitious name statutes or
similar laws in any jurisdiction in which the Partnership
transacts business. The General Partner shall execute, deliver
and file any certificates (and any amendments and/or restatements
thereof) necessary for the Partnership to qualify to do business
in a jurisdiction in which the Partnership may wish to conduct
business.
Section 2.06. Admission of Preferred Partners.
Without execution of this Agreement, upon receipt by a Person of
a Certificate and payment for the Preferred Partner Interest
being acquired by such Person, which shall be deemed to
constitute a request by such Person that the books and records of
the Partnership reflect its admission as a Preferred Partner,
such Person shall be admitted to the Partnership as a Preferred
Partner and shall become bound by this Agreement.
Section 2.07. Records. The name and mailing address
of each Partner and the amount contributed to the capital of the
Partnership shall be listed on the books and records of the
Partnership. The Partnership shall keep such other records as
are required by Section 17-305 of the Delaware Act. The General
Partner shall update the books and records from time to time as
necessary to accurately reflect the information therein.
ARTICLE III - Capital Contributions
Section 3.01. Capital Contributions. As of the date
of this Agreement, the General Partner has contributed the amount
of $99 to the capital of the Partnership and shall make any
further contributions required to satisfy its obligations under
Section 3.04. Each Preferred Partner, or its predecessor in
interest, will contribute to the capital of the Partnership the
7<PAGE>
amount of the Purchase Price for the Preferred Partner Interests
held by it.
Section 3.02. Additional Capital Contributions. No
Partner shall be required to make any additional contributions or
advances to the Partnership except as provided in Section 3.04.
or by law.
Section 3.03. No Interest or Withdrawals. No interest
shall accrue on any capital contribution made by a Partner, and
no Partner shall have the right to withdraw or to be repaid any
portions of its capital contributions so made, except as
specifically provided in this Agreement.
Section 3.04. Minimum Capital Contribution of General
Partner. Whenever any Limited Partner makes a capital
contribution, the General Partner shall immediately make a
capital contribution sufficient to cause the aggregate capital
contribution of the General Partner to equal 3% of the aggregate
capital contributed by all Partners at such time. Any such
additional contributions shall constitute additional capital
contributions made by the General Partner.
Section 3.05. Partnership Interests. Unless otherwise
provided herein, the percentage interests of the Partners shall
be determined in proportion to the capital contributions of the
Partners.
Section 3.06. Interests. Each Preferred Partner's
respective Preferred Partner Interests shall be set forth on the
books and records of the Partnership. Each Partner hereby agrees
that its Interests shall for all purposes be personal property.
No Partner has an interest in specific Partnership property. The
Partnership shall not issue any additional interest in the
Partnership after the date hereof other than General Partner
Interests or Preferred Partner Interests.
ARTICLE IV - Capital Accounts
Section 4.01. Capital Accounts. There shall be
established on the books of the Partnership a capital account
("Capital Account") for each Partner that shall consist of the
initial capital contribution to the Partnership made by such
Partner (or such Partner's predecessor in interest), increased
by: (a) any additional capital contributions made by such
Partner, (b) the agreed value of any property subsequently
contributed to the capital of the Partnership by such Partner;
and (c) items of income and gain allocated to any Partner (or
predecessor thereof). A Partner's Capital Account shall be
decreased by: (a) items of loss and deduction allocated to any
Partner (or predecessor thereof); and (b) any distributions made
to such Partner. In addition to and notwithstanding the
foregoing, Capital Accounts shall be otherwise adjusted in
8<PAGE>
accordance with the tax accounting principles set forth in
Treasury Regulation Section 1.704-1(b)(2)(iv).
Section 4.02. Compliance With Treasury Regulations.
The foregoing provisions and the other provisions of this
Agreement relating to the maintenance of Capital Accounts are
intended to comply with Section 704(b) of the Code and Treasury
Regulation Section 1.704-1(b) and shall be interpreted and
applied in a manner consistent with such regulations. In the
event that the General Partner shall determine that it is prudent
to modify the manner in which the Capital Accounts, or any debits
or credits thereto, are determined in order to comply with such
regulations, the General Partner may make such modification.
ARTICLE V - Allocations
Section 5.01. Profits and Losses. Each fiscal period,
items of income, gain, loss, deduction or credit of the
Partnership shall be allocated (i) first, items of income of the
Partnership to the Preferred Partners, pro rata in proportion to
the number of Preferred Partner Interests held by each Preferred
Partner and at the distribution rate specified in the Action for
each series of Preferred Partner Interests, in an amount equal to
the excess of (a) the distributions accrued on such Preferred
Partner Interests (other than Additional Amounts) since their
date of issuance through and including the close of the current
fiscal period (whether or not paid) over (b) the items of income
of the Partnership allocated to the Preferred Partners pursuant
to this Section 5.01(i) in all prior fiscal periods; (ii) second,
items of income of the Partnership to each Preferred Partner to
whom Additional Amounts were paid during a fiscal period, in an
amount equal to such Additional Amounts; and (iii) thereafter,
all remaining items of income, gain, loss, deduction or credit to
the General Partner; provided however, that the percentage of
items of income, gain, loss, deduction or credit of the
Partnership allocated to the General Partner for any fiscal
period shall at least equal three percent.
Section 5.02. Allocation Rules. For purposes of
determining the profits, losses or any other items allocable to
any period, profits, losses and any such other items shall be
determined on a daily, monthly or other basis, as determined by
the General Partner in its sole and absolute discretion using any
method that is permissible under Section 706 of the Code and the
Treasury Regulations thereunder. The Partners are aware of the
income tax consequences of the allocations made by this Article V
and hereby agree to be bound by the provisions of this Article V
in reporting their shares of Partnership income and loss for
income tax purposes.
Section 5.03. Adjustments to Reflect Changes in
Interests. Notwithstanding the foregoing, with respect to any
Fiscal Year during which any Partner's percentage interest in the
Partnership changes, whether by reason of the admission of a
9<PAGE>
Partner, the withdrawal of a Partner, a non-pro rata contribution
of capital to the Partnership or any other event described in
Section 706(d)(1) of the Code and the Treasury Regulations issued
thereunder, allocations of the items of income, gain, loss,
deduction or credit of the Partnership shall be adjusted
appropriately to take into account the varying interests of the
Partners during such Fiscal Year. The General Partner shall
consult with the Partnership's accountants and other advisors and
shall select the method of making such adjustments, which method
shall be used consistently thereafter.
Section 5.04. Tax Allocations. For purposes of
Article V and Federal, state and local income tax purposes,
Partnership income, gain, loss, deduction or credit (or any item
thereof) for each Fiscal Year shall be determined in accordance
with Federal tax accounting principles rather than generally
accepted accounting principles and shall be allocated to and
among the Partners in order to reflect the allocations made
pursuant to the provisions of this Article V for such Fiscal Year
(other than allocations of items which are not deductible or are
excluded from taxable income), taking into account any variation
between the adjusted tax basis and book value of Partnership
property in accordance with the principles of Section 704(c) of
the Code.
Section 5.05. Qualified Income Offset. Notwithstanding
any other provision hereof, if any Partner unexpectedly receives
an adjustment, allocation or distribution described in Treasury
Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5), and (6) which
creates or increases a deficit in the Capital Account of such
Partner (and, for this purpose, the existence of a deficit shall
be determined by reducing the Partner's Capital Account by the
items described in Treasury Regulation Section
1.704-1(b)(2)(ii)(d)(4), (5), and (6)), the next available gross
income of the Partnership shall be allocated to the Partners
having such deficit balances, in proportion to the deficit
balances, until such deficit balances are eliminated as quickly
as possible. The provisions of this Section 5.05 are intended to
constitute a "qualified income offset" within the meaning of
Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted and implemented as therein provided.
ARTICLE VI - Distributions
Section 6.01. Distributions. Preferred Partners shall
receive periodic distributions, if any, in accordance with the
applicable terms of the Preferred Partner Interests, as and when
declared by the General Partner. Subject to the rights of the
holders of the Preferred Partner Interests, the General Partner
shall receive such distributions, if any, as may be declared from
time to time by the General Partner.
Section 6.02. Certain Distributions Prohibited.
Notwithstanding anything in this Agreement to the contrary, all
10<PAGE>
Partnership distributions shall be subject to the following
limitations:
(a) No distribution shall be made to any Partner if,
and to the extent that, such distribution would not be permitted
under Section 17-607 of the Delaware Act or other applicable law.
(b) No distribution shall be made to any Partner to
the extent that such distribution, if made, would create or
increase a deficit balance in the Capital Account of such
Partner.
(c) Other than Liquidating Distributions, no
distribution of Partnership property shall be made in kind.
Notwithstanding anything in the Delaware Act or this Agreement to
the contrary, in the event of a Liquidating Distribution, a
Partner may be compelled in accordance with Section 12.01 to
accept a distribution of Subordinated Debentures, cash or of any
other asset in kind from the Partnership even if the percentage
of the asset distributed to it exceeds a percentage of that asset
which is equal to the percentage in which such Partner shares in
distributions from the Partnership.
ARTICLE VII - Accounting Matters; Banking
Section 7.01. Fiscal Year. The fiscal year ("Fiscal
Year") of the Partnership shall be the calendar year, or such
other year as is required by the Code.
Section 7.02. Certain Accounting Matters. (a) At all
times during the existence of the Partnership, the General
Partner shall keep, or cause to be kept, full books of account,
records and supporting documents, which shall reflect in
reasonable detail, each transaction of the Partnership. The
books of account shall be maintained on the accrual method of
accounting, in accordance with generally accepted accounting
principles, consistently applied. The Partnership shall use the
accrual method of accounting for United States Federal income tax
purposes. The books of account and the records of the
Partnership shall be examined by and reported upon as of the end
of each Fiscal Year by a firm of independent certified public
accountants selected by the General Partner.
(b) The General Partner shall cause to be prepared and
delivered to each of the Partners, within 90 days after the end
of each Fiscal Year of the Partnership, annual financial
statements of the Partnership, including a balance sheet of the
Partnership as of the end of such Fiscal Year and the related
statements of income or loss and a statement indicating such
Partner's share of each item of Partnership income, gain, loss,
deduction or credit for such Fiscal Year for income tax purposes.
(c) Notwithstanding anything in this Agreement to the
contrary, the General Partner may, to the maximum extent
11<PAGE>
permitted by applicable law, keep confidential from the Partners
for such period of time as the General Partner deems reasonable
any information which the General Partner reasonably believes to
be in the nature of trade secrets or other information the
disclosure of which the General Partner in good faith believes is
not in the best interest of the Partnership or could damage the
Partnership or its business or which the Partnership is required
by law or by an agreement with a third party to keep
confidential.
(d) The General Partner may make, or revoke, in its
sole and absolute discretion, any elections for the Partnership
that are permitted under tax or other applicable laws, including
elections under Section 704(c) of the Code, provided that the
General Partner shall not make any elections pursuant to Section
754 of the Code.
Section 7.03. Banking. The Partnership shall maintain
one or more bank accounts in the name and for the sole benefit of
the Partnership. The signatories for such accounts shall be
designated by the General Partner. Reserve cash, cash held
pending the expenditure of funds for the business of the
Partnership or cash held pending a distribution to one or more of
the Partners may be invested in any manner at the sole and
absolute discretion of the General Partner.
Section 7.04. Right to Rely on Authority of General
Partner. No Person that is not a Partner, in dealing with the
General Partner, shall be required to determine such General
Partner's authority to make any commitment or engage in any
undertaking on behalf of the Partnership, or to determine any
fact or circumstance bearing upon the existence of the authority
of the General Partner.
Section 7.05. Tax Matters Partner. The "tax matters
partner," as defined in Section 6231 of the Code, of the
Partnership shall be the General Partner (the "Tax Matters
Partner"). The Tax Matters Partner shall receive no compensation
from the Partnership for its services in that capacity. The Tax
Matters Partner is authorized to employ such accountants,
attorneys and agents as it, in its sole and absolute discretion,
deems necessary or appropriate. Any Person who serves as Tax
Matters Partner shall not be liable to the Partnership or to any
Partner for any action it takes or fails to take as Tax Matters
Partner with respect to any administrative or judicial proceeding
involving "partnership items" (as defined in Section 6231 of the
Code) of the Partnership.
ARTICLE VIII - Management
Section 8.01. Management. (a) The General Partner
shall have full and exclusive authority with respect to all
matters concerning the conduct of the business and affairs of the
Partnership, including (without limitation) the power, without
12<PAGE>
the consent of the Limited Partners, to make all decisions it
deems necessary, advisable, convenient or appropriate to
accomplish the purposes of the Partnership. The acts of the
General Partner acting alone shall serve to bind the Partnership
and shall constitute the acts of the Partners.
(b) The Limited Partners, in their capacity as such,
shall not take part in the management, operation or control of
the business of the Partnership or transact any business in the
name of the Partnership. In addition, the Limited Partners, in
their capacity as such, shall not be agents of the Partnership
and shall not have the power to sign or bind the Partnership to
any agreement or document. The Limited Partners shall have the
right to vote only with respect to those matters specifically
provided for in this Agreement. Notwithstanding anything herein
to the contrary, the Preferred Partners may exercise all rights
provided to them, if any, under the Indenture and the Guarantee.
(c) The General Partner is authorized and directed to
use its best efforts to conduct the affairs of, and to operate,
the Partnership in such a way that the Partnership would not be
deemed to be an "investment company" required to be registered
under the 1940 Act or taxed as a corporation for Federal income
tax purposes and so that the Subordinated Debentures will be
treated as indebtedness of JCP&L for Federal income tax purposes.
In this connection, the General Partner is authorized to take any
action not inconsistent with applicable law, the Certificate of
Limited Partnership or this Agreement that does not materially
adversely affect the interests of holders of Preferred Partner
Interests that the General Partner determines in its sole and
absolute discretion to be necessary, advisable or desirable for
such purposes.
Section 8.02. Fiduciary Duty. (a) To the extent that,
at law or in equity, an Indemnified Person has duties (including
fiduciary duties) and liabilities relating thereto to the
Partnership or to any other Covered Person, an Indemnified Person
acting under this Agreement shall not be liable to the
Partnership or to any other Covered Person for its good faith
reliance on the provisions of this Agreement or the advice of
counsel selected by the Indemnified Person in good faith. The
provisions of this Agreement, to the extent that they restrict
the duties and liabilities of an Indemnified Person otherwise
existing at law or in equity, are agreed by the parties hereto to
replace such other duties and liabilities of such Indemnified
Person.
(b) Unless otherwise expressly provided herein,
(i) whenever a conflict of interest exists or arises between
Covered Persons, or (ii) whenever this Agreement or any other
agreement contemplated herein or therein provides that an
Indemnified Person shall act in a manner that is, or provides
terms that are, fair and reasonable to the Partnership or any
Partner, the Indemnified Person shall resolve such conflict of
interest, taking such action or providing such terms, considering
13<PAGE>
in each case the relative interest of each party (including its
own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such
interests, any customary or accepted industry practices, the
advice of counsel selected by the Indemnified Person in good
faith, and any applicable generally accepted accounting practices
or principles. In the absence of bad faith by the Indemnified
Person, the resolution, action or term so made, taken or provided
by the Indemnified Person shall not constitute a breach of this
Agreement or any other agreement contemplated herein or of any
duty or obligation of the Indemnified Person at law or in equity
or otherwise.
(c) Whenever in this Agreement an Indemnified Person
is permitted or required to make a decision (i) in its
"discretion" or under a grant of similar authority or latitude,
the Indemnified Person shall be entitled to consider only such
interests and factors as it desires, including its own interests,
and shall have no duty or obligation to give any consideration to
any interest of or factors affecting the Partnership or any other
Person, or (ii) in its "good faith" or under another express
standard, the Indemnified Person shall act under such express
standard and shall not be subject to any other or different
standard imposed by this Agreement or other applicable law.
Section 8.03. Specific Obligations of the General
Partner. The General Partner hereby undertakes:
(a) to devote to the affairs of the Partnership so
much of its time as shall be necessary to carry on properly the
Partnership's business and its responsibilities hereunder;
(b) to cause the Partnership to do or refrain from
doing such acts as shall be required by Delaware law in order to
preserve the valid existence of the Partnership as a Delaware
limited partnership and to preserve the limited liability of the
Limited Partners; and,
(c) the General Partner shall pay directly all, and
the Partnership shall not be obligated to pay, directly or
indirectly, any, of the costs and expenses of the Partnership
(including, without limitation, costs and expenses relating to
the organization of, and offering of Preferred Partner Interests
in, the Partnership and costs and expenses relating to the
operation of the Partnership, including without limitation, costs
and expenses of accountants, attorneys, statistical or
bookkeeping services and computing or accounting equipment,
paying agent(s), registrar(s), transfer agent(s), duplicating,
travel and telephone and costs and expenses incurred in
connection with the acquisition, financing, and disposition of
Partnership assets).
Section 8.04. Powers of the General Partner. The
General Partner shall have the right, power and authority, in the
management of the business and affairs of the Partnership, to do
14<PAGE>
or cause to be done any and all acts deemed by the General
Partner to be necessary or appropriate to effectuate the
business, purposes and objectives of the Partnership. Without
limiting the generality of the foregoing, the General Partner
shall have the power and authority without any further act,
approval or vote of any Partner to:
(a) issue Interests, including Preferred Partner
Interests, and classes and series thereof, in accordance with
this Agreement;
(b) act as, or appoint another Person to act as,
registrar and transfer agent for the Preferred Partner Interests;
(c) establish a record date with respect to all
actions to be taken hereunder that require a record date to be
established, including with respect to allocations, distributions
and voting rights and declare distributions and make all other
required payments on General Partner, Class A Limited Partner and
Preferred Partner Interests as the Partnership's paying agent;
(d) enter into and perform one or more
Underwriting Agreements and use the proceeds from the issuance of
the Interests to purchase the Subordinated Debentures, in each
case on behalf of the Partnership;
(e) bring and defend on behalf of the Partnership
actions and proceedings at law or in equity before any court or
governmental, administrative or other regulatory agency, body or
commission or otherwise;
(f) employ or otherwise engage employees and
agents (who may be designated as officers with titles) and
managers, contractors, advisors and consultants and pay
reasonable compensation for such services;
(g) redeem each series of Preferred Partner
Interests (which shall constitute a return of capital and not a
distribution of income) in accordance with its terms and/or to
the extent that the related series of Subordinated Debentures is
redeemed or reaches maturity; and,
(h) execute all documents or instruments, perform
all duties and powers and do all things for and on behalf of the
Partnership in all matters necessary, convenient, advisable or
incidental to the foregoing.
The expression of any power or authority of the General
Partner in this Agreement shall not in any way limit or exclude
any other power or authority which is not specifically or
expressly set forth in, or precluded by, this Agreement.
Section 8.05. Independent Affairs. Any Partner or
Affiliate thereof may engage in or possess an interest in any
other business venture of whatever nature and description,
15<PAGE>
independently or with others, wherever located and whether or not
comparable to or in competition with the Partnership or the
General Partner, or any Affiliate thereof, and neither the
Partnership nor any of the Partners shall, by virtue of this
Agreement, have any rights with respect to, or interests in, such
independent ventures or the income, profits or losses derived
therefrom. No Partner or Affiliate thereof shall be obligated to
present any particular investment opportunity to the Partnership
even if such opportunity is of a character that, if presented to
the Partnership, could be taken by the Partnership, and any
Partner or Affiliate thereof shall have the right to take for its
own account (individually or as a partner or fiduciary) or to
recommend to others any such particular investment opportunity.
Section 8.06. Meetings of the Partners. Meetings of
the Partners of any class or series or of all classes or series
of the Partnership's Interests may be called at any time by the
Partners holding 10% in liquidation preference of such class or
series of Interests, or of all classes or series of Interests, as
the case may be, or as provided in any Action establishing a
series of Preferred Partner Interests. Except to the extent
otherwise provided in any such Action, the following provisions
shall apply to meetings of Partners.
(a) Notice of any meeting shall be given to all
Partners not less than ten (10) business days nor more than sixty
(60) days prior to the date of such meeting. Partners may vote
in person or by proxy at such meeting. Whenever a vote, consent
or approval of Partners is permitted or required under this
Agreement, such vote, consent or approval may be given at a
meeting of Partners or by written consent.
(b) Each Partner may authorize any Person to act
for it by proxy on all matters in which a Partner is entitled to
participate, including waiving notice of any meeting, or voting
or participating at a meeting. Every proxy must be signed by the
Partner or its attorney-in-fact. No proxy shall be valid after
the expiration of eleven (11) months from the date thereof unless
otherwise provided in the proxy. Every proxy shall be revocable
at the pleasure of the Partner executing it.
(c) Each meeting of Partners shall be conducted
by the General Partner or by such other Person that the General
Partner may designate.
(d) Subject to the provisions of this Section
8.06, the General Partner, in its sole and absolute discretion,
shall establish all other provisions relating to meetings of
Partners, including notice of the time, place or purpose of any
meeting at which any matter is to be voted on by any Partners,
waiver of any such notice, action by consent without a meeting,
the establishment of a record date, quorum requirements, voting
in person or by proxy or any other matter with respect to the
exercise of any such right to vote; provided, however, that
unless the General Partner has established a lower percentage, a
16<PAGE>
majority of the Partners entitled to vote thereat shall
constitute a quorum at all meetings of the Partners.
Section 8.07. Net Worth of General Partner.By
execution of this Agreement, the General Partner represents and
covenants that (a) as of the date hereof and at all times during
the existence of the Partnership it will maintain a fair market
value net worth (determined in accordance with generally accepted
accounting principles) of at least ten percent (10%) of the total
contributions to the Partnership less any redemptions, throughout
the life of the Partnership, in accordance with Rev. Proc. 89-12,
1989-1 C.B. 798, or such other amount as may be required from
time to time pursuant to any amendment, modification or successor
to Rev. Proc. 89-12 (such net worth being computed excluding any
interest in, or receivable due from, the Partnership and
including any income tax liabilities that would become due by the
General Partner upon disposition by the General Partner of all
assets included in determining such net worth), and (b) it will
not make any voluntary dispositions of assets which would reduce
the net worth below the amount described in (a).
Section 8.08. Restrictions on General Partner. So
long as any series of Subordinated Debentures are held by the
Partnership, the General Partner shall not (i) direct the time,
method and place of conducting any proceeding for any remedy
available to the Trustee, or executing any trust or power
conferred on the Trustee with respect to such series, (ii) waive
any past default which is waivable under the Indenture, (iii)
exercise any right to rescind or annul a declaration that the
principal of all of a series of Subordinated Debentures shall be
due and payable or (iv) consent to any amendment, modification or
termination of the Indenture, where such consent shall be
required, without, in each case, obtaining the prior approval of
the holders of not less than 66 2/3% of the aggregate stated
liquidation preference of all series of Preferred Partner
Interests affected thereby, acting as a single class; provided,
however, that where a consent under the Indenture would require
the consent of each holder affected thereby, no such consent
shall be given by the General Partner without the prior consent
of each holder of all series of Preferred Partner Interests
affected thereby. The General Partner shall not revoke any
action previously authorized or approved by a vote of any series
of Preferred Partner Interests. The General Partner shall notify
all holders of such Preferred Partner Interests of any notice of
default received from the Trustee with respect to such series of
Subordinated Debentures. In addition, the General Partner will
not permit or cause the Partnership to file a voluntary petition
in bankruptcy without the approval of the holders of not less
than 66 2/3% of the aggregate stated liquidation preference of
the outstanding Preferred Partner Interests.
17<PAGE>
ARTICLE IX - Liability and Indemnification
Section 9.01. Partnership Expenses and Liabilities.
(a) Except as provided in the Delaware Act, the
General Partner shall have the liabilities of a partner in a
partnership without limited partners to Persons other than the
Partnership and the other Partners. Except as provided in the
Delaware Act or this Agreement, the General Partner shall have
the liabilities of a partner in a partnership without limited
partners to the Partnership and to the other Partners.
(b) Except as otherwise expressly required by
law, a Limited Partner, in its capacity as such, shall have no
liability in excess of (i) the amount of its capital
contributions to the Partnership, (ii) its share of any assets
and undistributed profits of the Partnership, and (iii) the
amount of any distributions wrongfully distributed to it.
Section 9.02. No Liability. Except as otherwise
expressly provided by the Delaware Act or in Section 9.01(a), no
Covered Person shall be liable to the Partnership or to any other
Partner for any act or omission performed or omitted pursuant to
the authority granted to it hereunder or by law, or from a loss
resulting from any mistake or error in judgment on its part or
from the negligence, dishonesty, fraud or bad faith of any
employee, independent contractor, broker or other agent of the
Partnership, provided that such act or omission, such mistake or
error in judgment or the selection of such employee, independent
contractor, broker or other agent, as the case may be, did not
result from the willful misconduct, gross negligence or fraud of
such Covered Person. Any Covered Person shall be fully protected
in relying in good faith upon the records of the Partnership and
upon such information, opinions, reports or statements presented
to the Partnership by any Person as to matters the Covered Person
reasonably believes are within such other Person's professional
or expert competence and who has been selected with reasonable
care by or on behalf of the Partnership, including information,
opinions, reports or statements as to the value and amount of the
assets, liabilities, profits, losses, or any other facts
pertinent to the existence and amount of assets from which
distributions to Partners might properly be paid.
Section 9.03. Indemnification. To the fullest extent
permitted by applicable law, except as set forth in Section
8.03(c), an Indemnified Person shall be entitled to
indemnification from the Partnership for any loss, damage or
claim incurred by such Indemnified Person by reason of any act or
omission performed or omitted by such Indemnified Person in good
faith on behalf of the Partnership and in a manner reasonably
believed to be within the scope of authority conferred on such
Indemnified Person by this Agreement, except that no Indemnified
Person shall be entitled to be indemnified in respect of any
loss, damage or claim incurred by such Indemnified Person by
reason of willful misconduct, gross negligence or fraud with
18<PAGE>
respect to such acts or omissions; provided, however, that any
indemnity under this Section 9.03 shall be provided out of and to
the extent of Partnership assets only, and except as otherwise
expressly provided in Section 9.01(a) or by the Delaware Act, no
Covered Person shall have any personal liability on account
thereof. To the fullest extent permitted by applicable law,
expenses (including legal fees) incurred by an Indemnified Person
in defending any claim, demand, action, suit or proceeding shall,
from time to time, be advanced by the Partnership prior to the
final disposition of such claim, demand, action, suit or
proceeding upon receipt by the Partnership of an undertaking by
or on behalf of the Indemnified Person to repay such amount if it
shall be determined that the Indemnified Person is not entitled
to be indemnified as authorized in this Section 9.03.
ARTICLE X - Withdrawal; Transfer Restrictions
Section 10.01. Transfer by General Partner; Admission
of Substituted General Partner. The General Partner may not
Transfer its Interest (in whole or in part) to any Person without
the consent of all other Partners, provided that the General
Partner may, without the consent of any Partner, Transfer its
Interest to JCP&L or any direct or indirect wholly owned
subsidiary of JCP&L. Notwithstanding anything else herein, the
General Partner may merge with or into another Person, may permit
another Person to merge with or into the General Partner and may
Transfer all or substantially all of its assets to another Person
if the General Partner is the survivor of such merger or the
Person into which the General Partner is merged or to which the
General Partner's assets are transferred is a Person organized
under the laws of the United States or any state thereof or the
District of Columbia. The General Partner shall have the right
to admit the assignee or transferee of its Interest which is
permitted hereunder as a substituted or additional general
partner of the Partnership, with or without the consent of the
Limited Partners. Any such assignee or transferee of all or a
part of the Interest of a General Partner shall be deemed
admitted to the Partnership as a general partner of the
Partnership immediately prior to the effective date of such
Transfer, and such additional or successor general partner of the
Partnership is hereby authorized and shall continue the business
of the Partnership without dissolution.
Section 10.02. Withdrawal of Limited Partners. A
Preferred Partner may not withdraw from the Partnership prior to
the dissolution and winding up of the Partnership except upon the
assignment of its Preferred Partner Interests (including any
redemption, repurchase, exchange or other acquisition by the
Partnership), as the case may be, in accordance with the
provisions of this Agreement. Any Person who has been assigned
one or more Interests shall provide the Partnership with a
completed Form W-8 or such other documents or information as are
requested by the Partnership for tax reporting purposes. A
withdrawing Preferred Partner shall not be entitled to receive
19<PAGE>
any distribution and shall not otherwise be entitled to receive
the fair value of its Preferred Partner Interest except as
otherwise expressly provided in this Agreement.
Section 10.03. Withdrawal of Class A Limited Partner.
Upon the admission of at least one Preferred Partner as a Limited
Partner of the Partnership, the Class A Limited Partner shall be
deemed to have withdrawn from the Partnership as a Limited
Partner of the Partnership, and upon such withdrawal, the Class A
Limited Partner shall have its capital contribution returned to
it without any interest or deduction and shall have no further
interest in the Partnership.
ARTICLE XI - Dissolution of the Partnership
Section 11.01. No Dissolution. The Partnership shall
not be dissolved by the admission of additional or successor
Partners in accordance with the terms of this Agreement. The
death, withdrawal, incompetency, bankruptcy, dissolution or other
cessation to exist as a legal entity of a Limited Partner, or the
occurrence of any other event that terminates the Interest of a
Limited Partner in the Partnership, shall not in and of itself
cause the Partnership to be dissolved and its affairs wound up.
To the fullest extent permitted by applicable law, upon the
occurrence of any such event, the General Partner may, without
any further act, vote or approval of any Partner, subject to the
terms of this Agreement, admit any Person to the Partnership as
an additional or substitute Limited Partner, which admission
shall be effective as of the date of the occurrence of such
event, and the business of the Partnership shall be continued
without dissolution.
Section 11.02. Events Causing Dissolution. The
Partnership shall be dissolved and its affairs shall be wound up
upon the occurrence of any of the following events:
(a) The expiration of the term of the
Partnership, as provided in Section 2.04 hereof;
(b) The withdrawal, removal or bankruptcy of the
General Partner or Transfer (other than a grant of a security
interest) by the General Partner of its entire Interest in the
Partnership when the assignee is not admitted to the Partnership
as an additional or successor General Partner in accordance with
Section 10.01 hereof, or the occurrence of any other event that
results in the General Partner ceasing to be a general partner of
the Partnership under the Delaware Act, provided, the Partnership
shall not be dissolved and required to be wound up in connection
with any of the events specified in this clause (b) if (i) at the
time of the occurrence of such event there is at least one
remaining general partner of the Partnership who is hereby
authorized to, and agrees to, and does carry on the business of
the Partnership, or (ii) within ninety days after the occurrence
of such event, a majority in Interest of the remaining Partners
20<PAGE>
(or such greater percentage in Interest as is required by the
Delaware Act) agree in writing to continue the business of the
Partnership and to the appointment, effective as of the date of
such event, if required, of one or more additional general
partners of the Partnership;
(c) The entry of a decree of judicial dissolution
under the Delaware Act;
(d) The bankruptcy, liquidation, dissolution or
winding up of JCP&L;
(e) the written consent of the General Partner
and all of the Preferred Partners; or
(f) in the sole and absolute discretion of the
General Partner upon the happening of a Special Event.
Section 11.03. Notice of Dissolution. Upon the
dissolution of the Partnership, the General Partner shall
promptly notify the Partners of such dissolution.
ARTICLE XII - Liquidation of Partner Interests
Section 12.01. Liquidation. Upon dissolution of the
Partnership, the General Partner, or, in the event that the
dissolution is caused by an event described in Section 11.02(b)
and there is no other General Partner, a Person or Persons who
may be approved by Preferred Partners holding not less than a
majority in liquidation preference of the Preferred Partners
Interests, as liquidating trustee (the "Liquidating Trustee"),
shall immediately commence to wind up the Partnership's affairs;
provided, however, that a reasonable time shall be allowed for
the orderly liquidation of the assets of the Partnership and the
satisfaction of liabilities to creditors so as to enable the
Partners to minimize the normal losses attendant upon a
liquidation. The Preferred Partners shall continue to share
profits and losses during liquidation in the same proportions, as
specified in Articles V and VI hereof, as before liquidation.
The proceeds of liquidation shall be distributed, as realized, in
the following order and priority:
(a) to creditors of the Partnership, including
Preferred Partners who are creditors, to the extent otherwise
permitted by law, in satisfaction of the liabilities of the
Partnership (whether by payment or the making of reasonable
provision for payment thereof), other than liabilities for which
reasonable provision for payment has been made and liabilities
for distributions to Partners;
(b) to the holders of Preferred Partner Interests
of each series then outstanding in accordance with the terms of
the Action or Actions for such Series; and
21<PAGE>
(c) to all Partners in accordance with their
respective positive Capital Account balances, after giving effect
to all contributions, distributions and allocations for all
periods.
Section 12.02. Termination. The Partnership shall
terminate when all of the assets of the Partnership have been
distributed in the manner provided for in this Article XII, and
the Certificate of Limited Partnership shall have been cancelled
in the manner required by the Delaware Act.
Section 12.03. Duty of Care. The General Partner or
the Liquidating Trustee, as the case may be, shall not be liable
to the Partnership or any Partner for any loss attributable to
any act or omission of the General Partner or the Liquidating
Trustee, as the case may be, taken in good faith in connection
with the liquidation of the Partnership and distribution of its
assets in belief that such course of conduct was in the best
interest of the Partnership. The General Partner or the
Liquidating Trustee, as the case may be, may consult with counsel
and accountants with respect to liquidating the Partnership and
distributing its assets and shall be justified in acting or
omitting to act in accordance with the written opinion of such
counsel or accountants, provided they shall have been selected
with reasonable care.
Section 12.04. No Liability for Return of Capital.
The General Partner and its respective officers, directors,
members, shareholders, employees, representatives, agents,
partners and Affiliates shall not be personally liable for the
return of the capital contributions of any Partner to the
Partnership. No Partner shall be obligated to restore to the
Partnership any amount with respect to a negative Capital
Account.
ARTICLE XIII - Preferred Partner Interests
Section 13.01. Preferred Partner Interests.
(a) The aggregate number of Preferred Partner
Interests which the Partnership shall have authority to issue is
unlimited. Each series of Preferred Partner Interests shall rank
equally and all Preferred Partner Interests shall rank senior to
all other Interests in respect of the right to receive
distributions and the right to receive payments out of the assets
of the Partnership upon voluntary or involuntary dissolution and
winding up of the Partnership. The issuance of any Interests
ranking senior to the Preferred Partner Interest shall be deemed
to materially adversely affect the rights of the Preferred
Partner Interests under this Agreement.
(b) The General Partner on behalf of the Partnership
is authorized to issue Preferred Partner Interests, in one or
more series, having such designations, rights, privileges,
22<PAGE>
restrictions and other terms and provisions, whether in regard to
distributions, return of capital or otherwise, as may from time
to time be established in a written action or actions (each, an
"Action") of the General Partner providing for the issue of such
series. In connection with the foregoing, the General Partner is
expressly authorized, prior to issuance, to set forth in an
Action or Actions providing for the issue of such series, the
following:
(i) The distinctive designation of such series
which shall distinguish it from other series;
(ii) The number of Preferred Partner Interests
included in such series, which number may be increased or
decreased from time to time unless otherwise provided by
the General Partner in creating the series;
(iii) The distribution rate (or method of
determining such rate) for Preferred Partner Interests of
such series and the first date upon which such distribution
shall be payable;
(iv) The amount or amounts which shall be paid
out of the assets of the Partnership to the holders of such
series of Preferred Partner Interests upon voluntary or
involuntary dissolution and winding up of the Partnership;
(v) The price or prices at which, the period or
periods within which and the terms and conditions upon
which the Preferred Partner Interests of such series may be
redeemed or purchased, in whole or in part, at the option
of the Partnership;
(vi) The obligation of the Partnership to
purchase or redeem Preferred Partner Interests of such
series pursuant to a sinking fund or otherwise and the
price or prices at which, the period or periods within
which and the terms and conditions upon which the Preferred
Partner Interests of such series shall be redeemed, in
whole or in part, pursuant to such obligation;
(vii) The period or periods within which and the
terms and conditions, if any, including the price or prices
or the rate or rates of conversion or exchange and the
terms and conditions of any adjustments thereof, upon which
the Preferred Partner Interests of such series shall be
convertible or exchangeable at the option of the Preferred
Partner, or the Partnership, into any other Interests or
securities or other property or cash or into any other
series of Preferred Partner Interests;
(viii) The voting rights, if any, of the
Preferred Partner Interests of such series in addition to
those required by law and set forth in this Agreement, and
any requirement for the approval by the Preferred Partner
23<PAGE>
Interests, or of the Preferred Partner Interests of one or
more series, or of both, as a condition to specified
Actions or amendments to this Agreement;
(ix) The additional amounts, if any, which the
Partnership will pay as a distribution as necessary in
order that the net amounts received by the Preferred
Partners who hold such series of Preferred Partner
Interests after withholding or deduction on account of
certain taxes, duties, assessments or governmental charges
will equal the amount which would have been receivable in
respect of such Preferred Partner Interests in the absence
of such withholding or deduction ("Additional Amounts");
and
(x) Any other relative rights, powers,
preferences or limitations of the Preferred Partner
Interests of the series not inconsistent with this
Agreement or with applicable law.
In connection with the foregoing and without limiting
the generality thereof, the General Partner is hereby expressly
authorized, without the vote or approval of any other Partner, to
take any Action to create under the provisions of this Agreement
a series of Preferred Partner Interests that was not previously
outstanding. Without the vote or approval of any other Partner,
the General Partner may execute, swear to, acknowledge, deliver,
file and record whatever documents may be required in connection
with the issue from time to time of Preferred Partner Interests
in one or more series as shall be necessary, convenient or
desirable to reflect the issue of such series. The General
Partner shall do all things it deems to be appropriate or
necessary to comply with the Delaware Act and is authorized and
directed to do all things it deems to be necessary or permissible
in connection with any future issuance, including compliance with
any statute, rule, regulation or guideline of any Federal, state
or other governmental agency or any securities exchange.
Any Action or Actions taken by the General Partner
pursuant to the provisions of this paragraph (b) shall be deemed
an amendment and supplement to and part of this Agreement.
(c) Except as otherwise provided in this Agreement or
in any Action in respect of any series of the Preferred Partner
Interests and as otherwise required by law, all rights to the
management and control of the Partnership shall be vested
exclusively in the General Partner.
(d) No holder of Interests shall be entitled as a
matter of right to subscribe for or purchase, or have any
preemptive right with respect to, any part of any new or
additional issue of Interests of any class or series whatsoever,
or of securities convertible into any Interests of any class or
series whatsoever, whether now or hereafter authorized and
whether issued for cash or other consideration or by way of
24<PAGE>
distribution. Any Person acquiring Preferred Partner Interests
shall be admitted to the Partnership as a Preferred Partner upon
compliance with Section 2.06.
13.02. Terms of Preferred Partner Interests.
Notwithstanding anything else in any Action to the contrary, all
Preferred Partner Interests of the Partnership shall have the
following voting rights, preferences, participating, optional and
other special rights and the qualifications, limitations or
restrictions of, and other matters relating to, the Preferred
Partner Interests as set forth below in this Section 13.02.
(a) Distributions.
(i) The Preferred Partners shall be entitled to
receive, when, as and if declared by the General
Partner out of funds held by the Partnership to
the extent that the Partnership has cash on hand
sufficient to permit such payments and funds
legally available therefor, cumulative cash
distributions at a rate per annum established by
the General Partner, calculated on the basis of a
360-day year consisting of twelve (12) months of
thirty (30) days each, and for any period shorter
than a full monthly distribution period,
distributions will be computed on the basis of the
actual number of days elapsed in such period, and
payable in United States dollars monthly in
arrears on the last day of each calendar month of
each year. In the event that any date on which
distributions are payable on the Preferred Partner
Interests is not a Business Day, then payment of
the distribution payable on such date will be made
on the next succeeding day which is a Business Day
(and without any interest or other payment in
respect of any such delay) except that, if such
Business Day is in the next succeeding calendar
year, such payment shall be made on the
immediately preceding Business Day, in each case
with the same force and effect as if made on such
date. Such distributions will accrue and be
cumulative from the original date of issue whether
or not they have been declared and whether or not
there are profits, surplus or other funds of the
Partnership legally available for the payment of
distributions, or whether they are deferred.
(ii) If distributions have not been paid in full
on any series of Preferred Partner Interests, the
Partnership may not:
(A) pay or declare and set aside for payment, any
distributions on any other series of Preferred
Partner Interests unless the amount of any
distributions paid or declared on any Preferred
25<PAGE>
Partner Interests is paid or declared on all
Preferred Partner Interests then outstanding on a
pro rata basis, on the date such distributions are
paid or declared, so that
(1) (x) the aggregate amount of
distributions paid or declared on such series
of Preferred Partner Interests bears to (y)
the aggregate amount of distributions paid or
declared on all such Preferred Partner
Interests outstanding the same ratio as
(2) (x) the aggregate of all accumulated
arrears of unpaid distributions in respect of
such series of Preferred Partner Interests
bears to (y) the aggregate of all accumulated
arrears of unpaid distributions in respect of
all such Preferred Partner Interests
outstanding;
(B) pay or declare any distribution on any
general partner Interest; or
(C) redeem, purchase or otherwise acquire any
Preferred Partner Interests or any general partner
Interests;
until, in each case, such time as all accumulated and unpaid
distributions on all series of Preferred Partner Interests shall
have been paid in full for all distribution periods terminating
on or prior to, in the case of clauses (A) and (B), such payment
and, in the case of clause (C), the date of such redemption,
purchase or acquisition.
(b) Notice of Redemption.
(i) The Partnership may not redeem any
outstanding Preferred Partner Interests unless all
accumulated and unpaid distributions have been
paid on all Preferred Partner Interests for all
monthly distribution periods terminating on or
prior to the date of redemption.
(ii) Notice of any redemption (a "Notice of
Redemption") of a series of Preferred Partner
Interests will be given by the Partnership by mail
to each record holder of such series of Preferred
Partner Interests to be redeemed not fewer than
thirty (30) nor more than ninety (90) days prior
to the date fixed for redemption thereof. For
purposes of the calculation of the date of
redemption and the dates on which notices are
given pursuant to this paragraph (b)(ii), a Notice
of Redemption shall be deemed to be given on the
day such notice is first mailed by first-class
26<PAGE>
mail, postage prepaid, or on the date it was
delivered in person, receipt acknowledged to the
record holders of such series of Preferred Partner
Interests. Each Notice of Redemption shall be
addressed to the record holders of such series of
Preferred Partner Interests at the address
appearing in the books and records of the
Partnership. No defect in the Notice of
Redemption or in the mailing thereof or
publication of its contents shall affect the
validity of the redemption proceedings.
(iii) If the Partnership gives a Notice of
Redemption in respect of a series of Preferred
Partner Interests, then, by 12:00 noon, New York
time, on the redemption date, the Partnership will
irrevocably deposit with The Depository Trust
Company or its successor securities depository
funds sufficient to pay the applicable Redemption
Price and will give The Depository Trust Company
or its successor securities depository irrevocable
instructions and authority to pay the Redemption
Price to the holders of the Preferred Partner
Interests. If Notice of Redemption shall have
been given and funds deposited as required, then
on the date of such deposit, all rights of the
Preferred Partner Interest Owners and the holders
of such series of Preferred Partner Interests so
called for redemption will cease, except the right
to receive the Redemption Price, but without
interest. In the event that any date fixed for
redemption of such series of Preferred Partner
Interests is not a Business Day, then payment of
the Redemption Price payable on such date will be
made on the next succeeding day which is a
Business Day (and without any interest or other
payment in respect of any such delay), except
that, if such Business Day falls in the next
succeeding calendar year, such payment will be
made on the immediately preceding Business Day.
In the event that payment of the Redemption Price
in respect of a series of Preferred Partner
Interests is not made either by the Partnership or
by JCP&L pursuant to the Guarantee pertaining to
the series of Preferred Partner Interests,
distributions on such series of Preferred Partner
Interests will continue to accrue at the then
applicable rate, from the original redemption date
to the date of payment, in which case the actual
payment date will be considered the date fixed for
redemption for purposes of calculating the
Redemption Price.
(iv) In the event that less than all the
outstanding series of Preferred Partner Interests
27<PAGE>
are to be redeemed, the series of Preferred
Partner Interests to be redeemed, will be selected
according to a determination by The Depository
Trust Company or its successor securities
depository. In the case of a partial redemption
resulting from a requirement that the Partnership
pay Additional Amounts or withhold or deduct
certain amounts, the Partnership will (A) cause
the global certificates representing all of such
series of Preferred Partner Interests to be
withdrawn from The Depository Trust Company or its
successor securities depository, (B) issue
certificates in definitive form representing such
series of Preferred Partner Interests, and (C)
redeem the series of Preferred Partner Interests
subject to such requirement to withhold or deduct
Additional Amounts. Subject to applicable law,
JCP&L or its subsidiaries may at any time and from
time to time purchase outstanding Preferred
Partner Interests by tender, in the open market or
by private agreement. If a partial redemption or
a purchase of outstanding Preferred Partner
Interests by tender, in the open market or by
private agreement would result in a delisting of a
series of Preferred Partner Interests from any
national securities exchange on which the series
of Preferred Partner Interests are then listed,
the Partnership may then only redeem or purchase
the series of Preferred Partner Interests in
whole.
(c) Liquidation Distribution. If, upon any
liquidation, the Liquidation Distribution on a series of
Preferred Partner Interests can be paid only in part because the
Partnership has insufficient assets available to pay in full the
aggregate liquidation distributions on all Preferred Partner
Interests then outstanding, then the amounts payable directly by
the Partnership on the such series of Preferred Partner Interests
and on all other Preferred Partner Interests then outstanding
shall be paid on a pro rata basis, so that
(i) (A) the aggregate amount paid in respect of
the Liquidation Distribution bears to (B) the
aggregate amount paid as liquidation distributions
on all other Preferred Partnership Interests then
outstanding the same ratio as
(ii) (A) the aggregate Liquidation Distribution
bears to (B) the aggregate maximum liquidation
distributions on all other Preferred Partner
Interests then outstanding.
(d) Voting Rights. If (i) the Partnership fails to
pay distributions in full on a series of Preferred Partner
Interests for eighteen (18) consecutive monthly distribution
28<PAGE>
periods; (ii) an event of default as defined in the Indenture
occurs and is continuing; or (iii) JCP&L is in default on any of
its payment or other obligations under the Guarantee, then the
holders of such series of Preferred Partner Interests, together
with the holders of all other series of Preferred Partner
Interests acting as a single class, will be entitled, by a vote
of the majority of the aggregate stated liquidation preference of
outstanding Preferred Partner Interests, to appoint and authorize
a special representative of the Partnership and the Preferred
Partners (the "Special Representative") to enforce the
Partnership's rights under the Indenture, including, after
failure to pay interest for sixty (60) consecutive monthly
interest periods, the payment of interest on the Subordinated
Debentures, and to enforce the obligations of JCP&L under the
Guarantee.
In furtherance of the foregoing, and without limiting
the powers of any Special Representative so appointed and for the
avoidance of any doubt concerning the powers of the Special
Representative, any Special Representative, in its own name and
as Special Representative of the Partnership and the Preferred
Partners, may institute any proceedings, including, without
limitation, any suit in equity, an action at law or other
judicial or administrative proceeding, to enforce the
Partnership's or the Preferred Partners' rights directly against
JCP&L (including, without limitation, the Partnership's rights
under the Indenture or as a holder or beneficial owner of the
Subordinated Debentures), or any other obligor in connection with
such obligations on behalf of the Partnership or the Preferred
Partners, and may prosecute such proceeding to final judgment or
decree, including any appeals thereof, and enforce the same
against JCP&L or any other obligor in connection with such
obligations and collect, out of the property, wherever situated,
of JCP&L or any such other obligor upon such obligations, the
monies adjudged or decreed to be payable in the manner provided
by law. The Special Representative shall not be admitted as a
partner in the Partnership or otherwise be deemed to be a partner
in the Partnership and shall have no liability for the debts,
obligations or liabilities of the Partnership.
For purposes of determining whether the
Partnership has failed to pay distributions in full for eighteen
(18) consecutive monthly distribution periods, distributions
shall be deemed to remain in arrears, notwithstanding any
payments in respect thereof, until full cumulative distributions
have been or contemporaneously are declared and paid with respect
to all monthly distribution periods terminating on or prior to
the date of payment of such full cumulative distributions.
Subject to requirements of applicable law, not later than thirty
(30) days after such right to appoint a Special Representative
arises, the General Partner will convene a general meeting for
the above purpose. If the General Partner fails to convene such
meeting within such 30-day period, the Preferred Partners who
hold 10% of the aggregate stated liquidation preference of such
outstanding series of Preferred Partner Interests will be
29<PAGE>
entitled to convene such meeting. The provisions of this
Agreement relating to the convening and conduct of meetings of
Partners will apply with respect to any such meeting. Any
Special Representative so appointed shall cease to act in such
capacity immediately if the Partnership (or JCP&L pursuant to the
Guarantee) shall have paid in full all accumulated and unpaid
distributions on the Preferred Partner Interests or such default
or breach by JCP&L, as the case may be, shall have been cured.
Notwithstanding the appointment of any such Special
Representative, JCP&L shall retain all rights under the
Indenture, including the right to extend the interest payment
period on the Subordinated Debentures as provided in the
Indenture.
If any proposed amendment of this Agreement
provides for, or the General Partner otherwise proposes to effect
any action which would materially adversely affect the powers,
preferences or special rights of such series of Preferred Partner
Interests, then holders of the outstanding series of Preferred
Partner Interests will be entitled to vote on such amendment or
action of the General Partner (but not on any other amendment or
action) and, in the case of an amendment or action which would
equally materially adversely affect the powers, preferences or
special rights of any other series of outstanding Preferred
Partner Interests, all holders of all such series of Preferred
Partner Interests, will be entitled to vote together as a class
on such amendment or action of the General Partner (but not on
any other amendment or action), and such amendment or action
shall not be effective except with the approval of Preferred
Partners holding not less than 66 2/3% of the aggregate stated
liquidation preference of such outstanding series of Preferred
Partner Interests. Except as otherwise provided under Section
11.02 or the Delaware Act, the Partnership will be dissolved and
wound up only with the consent of the holders of all Preferred
Partner Interests outstanding.
The powers, preferences or special rights of a series
of Preferred Partner Interests will be deemed not to be adversely
affected by the creation or issue of, and no vote will be
required for the creation or issue of, any further series of
Preferred Partner Interests or any general partner interests.
Any required approval of a series of Preferred Partner
Interests may be given at a separate meeting of such holders
convened for such purpose, at a meeting of the holders of all
series of Preferred Partner Interests or pursuant to written
consent. The Partnership will cause a notice of any meeting at
which holders of a series of Preferred Partner Interests are
entitled to vote, or of any matter upon which action by written
consent of such holders is to be taken, to be mailed to each
holder of Preferred Partner Interests. Each such notice will
include a statement setting forth (i) the date of such meeting or
the date by which such action is to be taken, (ii) a description
of any matter to be voted on at such meeting or upon which
30<PAGE>
written consent is sought, and (iii) instructions for the
delivery of proxies or consents.
No vote or consent of the holders of a series of
Preferred Partner Interests will be required for the Partnership
to redeem and cancel such Series of Preferred Partner Interests
in accordance with this Agreement and the related Action.
Notwithstanding that holders of a series of Preferred
Partner Interests are entitled to vote or consent under any of
the circumstances described above, any Preferred Partner
Interests that are owned by JCP&L or any Person owned more than
50% by JCP&L, either directly or indirectly, shall not be
entitled to vote or consent and shall, for the purposes of such
vote or consent, be treated as if they were not outstanding.
(e) Mergers. The Partnership shall not consolidate,
amalgamate, merge with or into, or be replaced by, or convey,
transfer or lease its properties and assets substantially as an
entirety to any corporation or other entity, except with the
prior approval of the Preferred Partners holding not less than
66 2/3% of the aggregate stated liquidation preference of such
outstanding Preferred Partner Interests or as described below.
The General Partner may without the consent of the holders of any
series of Preferred Partner Interests, cause the Partnership to
consolidate, amalgamate, merge with or into, or be replaced by,
or convey, transfer or lease its properties and assets
substantially as an entirety to, a corporation, a limited
liability company, limited partnership or a trust or other entity
organized as such under the laws of the United States or any
state thereof or the District of Columbia provided that (i) such
successor entity either (A) expressly assumes all of the terms
and provisions of the Preferred Partner Interests by which the
Partnership is bound and the other obligations of the Partnership
or (B) substitutes for the Preferred Partner Interests other
securities having substantially the same terms as the Preferred
Partner Interests (the "Successor Securities") so long as the
Successor Securities rank, with regards to participation in the
profits or assets of the successor entity, at least as high as
the Preferred Partner Interests rank, with regard to
participation in the profits or assets of the Partnership,
(ii) JCP&L confirms its obligations under the Guarantee with
regard to the Preferred Partner Interests or Successor
Securities, if any are issued, (iii) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does
not cause any series of Preferred Partner Interests or Successor
Securities to be delisted by any national securities exchange or
other organization on which those Preferred Partner Interests or
Successor Securities are then listed, (iv) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or
lease does not cause the Preferred Partner Interests to be
downgraded by any nationally recognized statistical rating
organization, as that term is defined by the Commission for
purposes of Rule 436(g)(2) under the Securities Act, (v) such
merger, consolidation, amalgamation, replacement, conveyance,
31<PAGE>
transfer or lease does not adversely affect the powers,
preferences and special rights of holders of Preferred Partner
Interests or Successor Securities in any material respect, (vi)
such successor entity has a purpose substantially identical to
that of the Partnership and (vii) prior to such merger,
consolidation, amalgamation, replacement, conveyance, transfer or
lease JCP&L has received an opinion of counsel (which may be
regular counsel to the Partnership or an Affiliate, but not an
employee thereof) experienced in such matters to the effect that
(A) holders of outstanding Preferred Partner Interests or
Successor Securities will not recognize any gain or loss for
Federal income tax proposes as a result of the merger,
consolidation, amalgamation, replacement, conveyance, transfer or
lease, (B) such successor entity will be treated as a partnership
for Federal income tax purposes, (C) following such merger,
consolidation, amalgamation, replacement, conveyance, transfer or
lease, JCP&L and such successor entity will be in compliance with
the 1940 Act without registering thereunder as an "investment
company," and (D) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease will not adversely
affect the limited liability of holders of Preferred Partner
Interests or Successor Securities.
ARTICLE XIV - Transfers
Section 14.01. Transfers of Preferred Partner
Interests. Preferred Partner Interests may be freely transferred
by a Preferred Partner. No Interest shall be transferred, in
whole or in part, except in accordance with the terms and
conditions set forth in this Agreement. Any transfer or
purported transfer of any Interest not made in accordance with
this Agreement shall be null and void.
Section 14.02. Transfer of Certificates. The General
Partner shall provide for the registration of Certificates. Upon
surrender for registration of transfer of any Certificate, the
General Partner shall cause one or more new Certificates to be
issued in the name of the designated transferee or transferees.
Every Certificate surrendered for registration of transfer shall
be accompanied by a written instrument of transfer and agreement
to be bound by the provisions of this Agreement in form
satisfactory to the General Partner duly executed by the
Preferred Partner or his attorney duly authorized in writing.
Each Certificate surrendered for registration of transfer shall
be cancelled by the General Partner. A transferee of a
Certificate shall provide the Partnership with a completed Form
W-8 or such other documents or information as are requested by
the Partnership for tax reporting purposes and thereafter shall
be admitted to the Partnership as a Preferred Partner and shall
be entitled to the rights and subject to the obligations of a
Preferred Partner hereunder upon the receipt by such transferee
of a Certificate. The transferor of a Certificate shall cease to
be a limited partner of the Partnership at the time that the
32<PAGE>
transferee of the Certificate is admitted to the Partnership as a
Preferred Partner in accordance with this Section 14.02.
Section 14.03. Persons Deemed Preferred Partners. The
Partnership may treat the Person in whose name any Certificate
shall be registered on the books and records of the Partnership
as the Preferred Partner and the sole holder of such Certificate
for purposes of receiving distributions and for all other
purposes whatsoever and, accordingly, shall not be bound to
recognize any equitable or other claims to or interest in such
Certificate on the part of any other Person, whether or not the
Partnership shall have actual or other notice thereof.
Section 14.04. Book Entry Interests. The
Certificates, on original issuance, will be issued in the form of
a typewritten Certificate or Certificates representing the Book
Entry Interests, to be delivered to The Depository Trust Company,
the initial Clearing Agency, by, or on behalf of, the
Partnership. Such Certificates shall initially be registered on
the books and records of the Partnership in the name of Cede &
Co., the nominee of the initial Clearing Agency, and no Preferred
Partner Interest Owner will receive a definitive Certificate
representing such Preferred Partner Interest Owner's interests in
such Certificate, except as provided in Section 14.06. Unless
and until definitive, fully registered Certificates (the
"Definitive Certificates") have been issued to the Preferred
Partner Interest Owners pursuant to Section 14.06:
(a) The provisions of this Section shall be in
full force and effect;
(b) The Partnership and the General Partner shall
be entitled to deal with the Clearing Agency for all purposes of
this Agreement (including the payment of distributions on the
Certificates and receiving approvals, votes or consents
hereunder) as the Preferred Partner and the sole holder of the
Certificates and shall have no obligations to the Preferred
Partner Interest Owners;
(c) The rights of the Preferred Partner Interest
Owners shall be exercised only through the Clearing Agency and
shall be limited to those established by law and agreements
between such Preferred Partner Interest Owners and the Clearing
Agency and/or the Clearing Agency Participants. Unless or until
the Definitive Certificates are issued pursuant to Section 14.06,
the initial Clearing Agency will make book entry transfers among
the Clearing Agency Participants and receive and transmit
payments of distributions on the Certificates to such Clearing
Agency Participants;
(d) To the extent that the provisions of this
Section conflict with any other provisions of this Agreement, the
provisions of this Section shall control; and
33<PAGE>
(e) Whenever this Agreement requires or permits
actions to be taken based upon approvals, votes or consents of a
percentage of the Preferred Partners, the Clearing Agency shall
be deemed to represent such percentage only to the extent that it
has received instructions to such effect from the Preferred
Partner Interest Owners and/or Clearing Agency Participants
owning or representing, respectively, such required percentage of
the beneficial interests in the Certificates and has delivered
such instructions to the General Partner.
Section 14.05. Notices to Clearing Agency. Whenever a
notice or other communication to the Preferred Partners is
required under this Agreement, unless and until Definitive
Certificates shall have been issued pursuant to Section 14.06,
the General Partner shall give all such notices and
communications specified herein to be given to the Preferred
Partners to the Clearing Agency, and shall have no obligations to
the Preferred Partner Interest Owners.
Section 14.06. Definitive Certificates. If (a) the
Clearing Agency elects to discontinue its services as securities
depository and gives reasonable notice to the Partnership, or
(b) the Partnership elects to terminate the book entry system
through the Clearing Agency, then the Definitive Certificates
shall be prepared by the Partnership. Upon surrender of the
typewritten Certificate or Certificates representing the Book
Entry Interests by the Clearing Agency, accompanied by
registration instructions, the General Partner shall cause the
Definitive Certificates to be delivered to the holders of
Preferred Partner Interests in accordance with the instructions
of the Clearing Agency. The General Partner shall not be liable
for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such
instructions. Any Person receiving a Definitive Certificate in
accordance with this Article XIV shall be admitted to the
Partnership as a Preferred Partner upon receipt of such
Definitive Certificate. The Clearing Agency or the nominee of
the Clearing Agency, as the case may be, shall cease to be a
Limited Partner of the Partnership under this Section 14.06 at
the time that at least one additional Person is admitted to the
Partnership as a Preferred Partner in accordance with this
Section 14.06. The Definitive Certificates shall be printed,
lithographed or engraved or may be produced in any other manner
as is reasonably acceptable to the General Partner, as evidenced
by its execution thereof.
Additionally, in the event that the Partnership
exercises its option to redeem only a portion of the Preferred
Partner Interests because it is or would be required to withhold
or deduct Additional Amounts in regard to such Preferred Partner
Interests to be redeemed, the Partnership may cause the global
Certificate representing all of the Preferred Partner Interests
to be withdrawn from the Clearing Agency and issue Definitive
Certificates representing the remaining Preferred Partner
Interests. Thereafter, the Preferred Partner Interests subject
34<PAGE>
to such requirement to withhold or deduct Additional Amounts will
be redeemed.
35<PAGE>
ARTICLE XV - General
Section 15.01. Power of Attorney. (a) The Class A
Limited Partner and each Preferred Partner constitutes and
appoints the General Partner and the Liquidating Trustee as its
true and lawful representative and attorney-in-fact, in its name,
place and stead, to make, execute, sign, acknowledge and deliver
or file (i) all instruments, documents and certificates which may
from time to time be required by any law to effectuate, implement
and continue the valid and subsisting existence of the
Partnership, (ii) all instruments, documents and certificates
that may be required to effectuate the dissolution and
termination of the Partnership in accordance with the provisions
hereof and Delaware law, (iii) all other amendments of this
Agreement or the Certificate of Limited Partnership and other
filings contemplated by this Agreement including, without
limitation, amendments reflecting the withdrawal of the General
Partner, or the return, in whole or in part, of the contribution
of any Partner, or the addition, substitution or increased
contribution of any Partner, or any action of the Partners duly
taken pursuant to this Agreement whether or not such Partner
voted in favor of or otherwise approved such action, and (iv) any
other instrument, certificate or document required from time to
time to admit a Partner, to effect its substitution as a Partner,
to effect the substitution of the Partner's assignee as a Partner
or to reflect any action of the Partners provided for in this
Agreement.
(b) The powers of attorney granted herein (i)
shall be deemed to be coupled with an interest, shall be
irrevocable and shall survive the death, insanity, incompetency
or incapacity (or, in the case of a Partner that is a
corporation, association, partnership, limited liability company
or trust, shall survive the merger, dissolution or other
termination of existence) of the Partner and (ii) shall survive
the assignment by the Partner of the whole or any portion of his
Interest, except that where the assignee of the whole or any
portion thereof has furnished a power of attorney, this power of
attorney shall survive such assignment for the sole purpose of
enabling the General Partner and the Liquidating Trustee to
execute, acknowledge and file any instrument necessary to effect
any permitted substitution of the assignee for the assignor as a
Partner and shall thereafter terminate. In the event that the
appointment conferred in this Section 15.01 would not constitute
a legal and valid appointment by any Partner under the laws of
the jurisdiction in which such Partner is incorporated,
established or resident, upon the request of the General Partner
or the Liquidating Trustee, such Partner shall deliver to the
General Partner or the Liquidating Trustee a properly
authenticated and duly executed document constituting a legal and
valid power of attorney under the laws of the appropriate
jurisdiction covering the matters set forth in this Section
15.01.
36<PAGE>
(c) The General Partner may require a power of
attorney to be executed by a transferee of a Partner as a
condition of its admission as a substitute Partner.
Section 15.02. Waiver of Partition. Each Partner
hereby irrevocably waives any and all rights that it may have to
maintain an action for partition of any of the Partnership's
property or assets.
Section 15.03. Notices. Any notice permitted or
required to be given hereunder shall be in writing and shall be
deemed given (i) on the day the notice is first mailed to a
Partner by first class mail, postage prepaid, or (ii) on the date
it was delivered in person to a Partner, receipt acknowledged, at
its address appearing on the books and records of the
Partnership. Another address may be designated by a Partner by
such Partner giving notice of its new address as provided in this
Section 15.03.
Section 15.04. Entire Agreement. This Agreement,
including the exhibits annexed hereto and incorporated by
reference herein, contains the entire agreement of the parties
hereto and supersedes all prior agreements and understandings,
oral or otherwise, among the parties hereto with respect to the
matters contained herein.
Section 15.05. Waivers. Except as otherwise expressly
provided herein, no purported waiver by any party of any breach
by another party of any of his obligations, agreements or
covenants hereunder, or any part thereof, shall be effective
unless made in a writing executed by the party or parties sought
to be bound thereby, and no failure to pursue or elect any remedy
with respect to any default under or breach of any provision of
this Agreement, or any part hereof, shall be deemed to be a
waiver of any other subsequent similar or different default or
breach, or any election of remedies available in connection
therewith, nor shall the acceptance or receipt by any party of
any money or other consideration due him under this Agreement,
with or without knowledge of any breach hereunder, constitute a
waiver of any provision of this Agreement with respect to such or
any other breach.
Section 15.06. Headings. The section headings herein
contained have been inserted only as a matter of convenience of
reference and in no way define, limit or describe the scope or
intent of any provisions of this Agreement nor in any way affect
any such provisions.
Section 15.07. Separability. Each provision of this
Agreement shall be considered to be separable, and if, for any
reason, any such provision or provisions, or any part thereof, is
determined to be invalid and contrary to any existing or future
applicable law, such invalidity shall not impair the operation
of, or affect, those portions of this Agreement which are valid,
and this Agreement shall be construed and enforced in all
37<PAGE>
respects as if such invalid or unenforceable provision or
provisions had been omitted.
Section 15.08. Contract Construction. Whenever the
content of this Agreement permits, the masculine gender shall
include the feminine and neuter genders, and reference to
singular or plural shall be interchangeable with the other.
References in this Agreement to particular sections of the Code
or to provisions of the Delaware Act shall be deemed to refer to
such sections or provisions as they may be amended after the date
of this Agreement.
Section 15.09. Counterparts. This Agreement may be
executed in one or more counterparts and each of such
counterparts for all purposes shall be deemed to be an original,
but all of such counterparts, when taken together, shall
constitute but one and the same instrument, binding upon all
parties hereto, notwithstanding that all of such parties may not
have executed the same counterpart.
Section 15.10. Benefit. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns, but shall not be deemed
for the benefit of creditors or any other Persons, nor shall it
be deemed to permit any assignment by a Partner of any of its
rights or obligations hereunder except as expressly provided
herein.
Section 15.11. Further Actions. Each of the Partners
hereby agrees that it shall hereafter execute and deliver such
further instruments and do such further acts and things as may be
required or useful to carry out the intent and purposes of this
Agreement and as are not inconsistent with the terms hereof.
Section 15.12. Governing Law. This Agreement shall be
governed by and construed in accordance with the substantive laws
of the State of Delaware, without regard to conflicts of laws.
Section 15.13. Amendments. Except as otherwise
expressly provided herein or as otherwise required by law, this
Agreement may only be amended by a written instrument executed by
the General Partner provided, however, that any amendment which
would adversely affect the powers, preferences or special rights
of any series of Preferred Partner Interests may be effected only
as permitted by the terms of such series of Preferred Partner
Interests.
38<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first above written.
GENERAL PARTNER:
JCP&L PREFERRED CAPITAL, INC.
By:______________________________
Name:
Title:
CLASS A LIMITED PARTNER
______________________________
Terrance G. Howson
39<PAGE>
Exhibit A
Certificate Evidencing Preferred Partner Interests
of
JCP&L Capital, L.P.
___% Cumulative Monthly Income Preferred Partner
Interests, Series __ (liquidation preference
$25 per Preferred Partner Interest)
JCP&L Capital, L.P., a Delaware limited partnership
(the "Partnership"), hereby certifies that Cede & Co. (the
"Holder") is the registered owner of ____________ (_______) fully
paid Preferred Partner Interests of the Partnership designated
the ___% Cumulative Monthly Income Preferred Partner Interests,
Series __ (liquidation preference $25 per Preferred Partner
Interest) (the "Series __ Preferred Partner Interests")
representing preferred limited partner interests in the
Partnership transferable on the books and records of the
Partnership, in person or by a duly authorized attorney, upon
surrender of this Certificate duly endorsed and in proper form
for transfer. The powers, preferences and special rights and
limitations of the Series __ Preferred Partner Interests are set
forth in, and this Certificate and the Series __ Preferred
Partner Interests represented hereby are issued and shall in all
respects be subject to the terms and provisions of, the Amended
and Restated Limited Partnership Agreement dated as of
___________, 1995 of the Partnership as the same may, from time
to time, be amended (the "Partnership Agreement") authorizing the
issuance of the Series __ Preferred Partner Interests and
1<PAGE>
determining, along with any Actions of the General Partner of the
Partnership as authorized under the Partnership Agreement, the
preferred, deferred and other special rights and restrictions,
regarding distributions, voting, redemption and otherwise and
other matters relating to the Series __ Preferred Partner
Interests. The Partnership will furnish a copy of the
Partnership Agreement to the Holder without charge upon written
request to the Partnership at its principal place of business or
registered office. Capitalized terms used herein but not defined
shall have the meaning given them in the Partnership Agreement.
The Holder is entitled to the benefits of the Payment and
Guarantee Agreement of Jersey Central Power & Light Company,
dated as of _____________, 1995 relating to the Preferred Partner
Interests (the "Guarantee") and of the Indenture between Jersey
Central Power & Light Company and United States Trust Company of
New York, dated as of ________, 1995 (the "Indenture"), under and
pursuant to which the related series of Subordinated Debentures
are issued and outstanding, in either case to the extent provided
therein. The Holder is further entitled to enforce such rights
of the Partnership under the Indenture to the extent provided
therein and in the Partnership Agreement. The Partnership will
furnish a copy of the Guarantee and Indenture to the Holder
without charge upon written request to the Partnership at its
principal place of business or registered office.
The Holder, by accepting this Certificate, is deemed to
have (i) agreed that the Subordinated Debentures issued pursuant
to the Indenture are subordinate and junior in right of payment
to all Senior Indebtedness of Jersey Central Power & Light
2<PAGE>
Company as and to the extent provided in the Indenture and (ii)
agreed that the Guarantee is subordinate and junior in right of
payment to all Senior Indebtedness of Jersey Central Power &
Light Company. Upon receipt of this Certificate, the Holder is
admitted to the Partnership as a Preferred Partner, is bound by
the Partnership Agreement and is entitled to the benefits
thereunder.
IN WITNESS WHEREOF, the Partnership has executed this
Certificate this ____ day of _____________, 1995.
JCP&L CAPITAL, L.P.
By: JCP&L Preferred Capital,
Inc., its General Partner
By: ______________________________
Name:
Title:
3<PAGE>
Exhibit A-6
Action by the General Partner of JCP&L Capital, L.P.
Creating the ___% Cumulative Monthly Income
Preferred Partner Interests, Series A
Pursuant to Section 13.01 of the Amended and Restated
Limited Partnership Agreement of JCP&L Capital, L.P. dated as of
_______, 1995 (as amended from time to time, the "Partnership
Agreement"), JCP&L Preferred Capital, Inc., as general partner
(the "General Partner") of JCP&L Capital, L.P. (the
"Partnership"), desiring to state the designations, distribution
rights, redemption rights, preferences, privileges, limitations
and other rights of a new series of Preferred Partner Interests,
hereby authorizes and establishes such new series of Preferred
Partner Interests according to the following terms and conditions
(each capitalized term used but not defined herein shall have the
meaning set forth in the Partnership Agreement):
(a) Designation. _________________________________
(_________) interests with an aggregate liquidation preference of
$___________ of the Preferred Partner Interests of the
Partnership, liquidation preference $25 per Preferred Partner
Interest, are hereby designated as "___% Cumulative Monthly
Income Preferred Partner Interests, Series A" (hereinafter the
"Series A Preferred Partner Interests.")
(b) Distributions.
(i) The Preferred Partners who hold the Series A
Preferred Partner Interests shall be entitled to
receive, when, as and if declared by the General
Partner to the extent that the Partnership has
cash on hand sufficient to permit such payments
and funds legally available therefor, cumulative
cash distributions at a rate per annum of ___% of
the stated liquidation preference of $25 per
Series A Preferred Partner Interest per annum,
commencing _______, 1995. Distributions on the
Series A Preferred Partner Interests which accrue
from the date of original issue to _______, 1995
shall be payable on _______, 1995.
(ii) Distributions on the Series A Preferred
Partner Interests must be declared by the General
Partner in any calendar year or portion thereof to
the extent that the General Partner reasonably
anticipates that at the time of payment the
Partnership will have, and must be paid by the
Partnership to the extent that at the time of
proposed payment it has, cash on hand sufficient
to permit such payments and funds legally
available therefor. Distributions on the Series A
Preferred Partner Interests will be deferred if<PAGE>
and for so long as JCP&L defers payments to the
Partnership on the Debentures (as defined below).
Accrued and unpaid distributions on the Series A
Preferred Partner Interests will accrue additional
distributions ("Additional Distributions") in
respect thereof, to the extent permitted by law,
at the distribution rate per annum applicable to
Series A Preferred Partner Interests. Such
additional distributions shall be payable at the
time the related deferred distribution is paid,
but in any event by the end of such deferral
period. Distributions declared on the Series A
Preferred Partner Interests will be payable to the
Series A Preferred Partners as they appear on the
books and records of the Partnership on the
relevant record dates, which will be one Business
Day prior to the relevant payment dates, provided
that if the Series A Preferred Partner Interests
are not in book-entry-only form, the record dates
will be the fifteenth day of each month.
(c) Redemption.
(i) The Series A Preferred Partner Interests are
redeemable, at the option of the Partnership in
whole or in part from time to time, on or after
______, [1999], at the Redemption Price (as
defined below).
(ii) Upon payment when due or redemption at any
time of the ___% Deferrable Interest Subordinated
Debentures, Series A due ______, 204[3] (the
"Debentures") issued by JCP&L pursuant to an
Indenture dated as of ______, 1995 between JCP&L
and United States Trust Company of New York, as
Trustee (the "Indenture"), which Debentures were
purchased by the Partnership from JCP&L with the
proceeds from the issuance and sale of the Series
A Preferred Partner Interests and the related
capital contribution of the General Partner, the
proceeds from such payment or redemption of the
Debentures shall be applied to redeem the Series A
Preferred Partner Interests at the redemption
price of $25 per Preferred Partner Interest plus
accumulated and unpaid distributions (whether or
not declared) to the date fixed for redemption,
together with any accrued additional distributions
thereon (the "Redemption Price").
(iii) If at any time after the issuance of the
Series A Preferred Partner Interests, the
Partnership is or would be required to pay
Additional Amounts (as defined below) or JCP&L is
or would be required to withhold or deduct certain
amounts pursuant to paragraph (e) hereof, then,
2<PAGE>
the Partnership may, at its option, redeem the
Series A Preferred Partner Interests in whole or,
if such requirement relates only to certain of the
Series A Preferred Partner Interests, the Series A
Preferred Partner Interests subject to such
requirement, in each case at the Redemption Price.
(iv) If an Investment Company Act Event shall
occur and be continuing, the Partnership shall
elect to either: (1) redeem the Series A
Preferred Partner Interests in whole but not in
part at the Redemption Price within ninety (90)
days following the occurrence of such Investment
Company Act Event, provided that, if at the time
there is available to the General Partner the
opportunity to eliminate, within such ninety (90)
day period, the Investment Company Act Event by
taking some ministerial action, such as filing a
form or making an election, or pursuing some other
similar reasonable measure which would not involve
unreasonable cost or expense, which has no adverse
effect on the Partnership or JCP&L, the General
Partner will pursue such measure in lieu of
redemption; or (2) dissolve the Partnership and,
after satisfaction of liabilities to creditors,
cause Debentures (and any rights to interest on
such Debentures) with an aggregate principal
amount equal to the aggregate stated liquidation
preference of the outstanding Series A Preferred
Partner Interests to be distributed to the holders
of the Series A Preferred Partner Interests in
liquidation of such holders' Interests in the
Partnership, within ninety (90) days following the
occurrence of such Investment Company Act Event,
provided, however, that the Partnership shall have
received an opinion of counsel (which may be
regular tax counsel to JCP&L or an Affiliate but
not an employee thereof) to the effect that the
holders of the Series A Preferred Partner
Interests will not recognize any gain or loss for
federal income tax purposes as a result of such
dissolution and distribution.
(v) If a Tax Event shall occur and be continuing,
the Partnership may elect to: (1) redeem the
Series A Preferred Partner Interests in whole (but
not in part) at the Redemption Price within ninety
(90) days following the occurrence of such Tax
Event, provided that, if at the time there is
available to the General Partner the opportunity
to eliminate, within such ninety (90) day period,
the Tax Event by taking some ministerial action,
such as filing a form or making an election, or
pursuing some other similar reasonable measure
which would not involve unreasonable cost or
3<PAGE>
expense, which has no adverse effect on the
Partnership or JCP&L, the General Partner will
pursue such measure in lieu of redemption; (2)
dissolve the Partnership and, after satisfactions
of liabilities to creditors, cause Debentures (and
any rights to interest on such Debentures) with an
aggregate principal amount equal to the aggregate
stated liquidation preference of the outstanding
Series A Preferred Partner Interests to be
distributed to the holders of the Series A
Preferred Partner Interests in liquidation of such
holders' Interests in the Partnership, within
ninety (90) days following the occurrence of such
Tax Event, provided, however, that the Partnership
shall have received an opinion of counsel (which
may be regular tax counsel to JCP&L or an
Affiliate but not an employee thereof) to the
effect that the holders of the Series A Preferred
Partner Interests will not recognize any gain or
loss for federal income tax purposes as a result
of such dissolution and distribution; or (3) have
the Series A Preferred Partner Interests remain
outstanding.
(d) Liquidation Distribution. In the event of any
voluntary or involuntary dissolution and winding up of the
Partnership (other than pursuant to paragraphs (c)(iv) or (c)(v)
hereof), holders of the Series A Preferred Partner Interests at
the time outstanding will be entitled to receive out of the
assets of the Partnership available for distribution to holders
of Preferred Partner Interests, after satisfaction of liabilities
to creditors as required by the Delaware Act, before any
distribution of assets is made to holders of the general partner
interests, but together with holders of every other series of
Preferred Partner Interests outstanding, an amount equal to, in
the case of holders of Series A Preferred Partner Interests, the
aggregate of the stated liquidation preference of $25 per Series
A Preferred Partner Interest plus accumulated and unpaid
distributions (whether or not declared) to the date of payment,
together with any additional distributions accrued thereon and
any accrued and unpaid Additional Amounts (the "Liquidation
Distribution").
(e) Additional Amounts. All payments in respect of
the Series A Preferred Partner Interests by the Partnership will
be made without withholding or deduction for or on account of any
present or future taxes, duties, assessments or governmental
charges of whatever nature imposed or levied upon or as a result
of such payment by or on behalf of the United States, any state
thereof or any other jurisdiction through which or from which
such payment is made, or any authority therein or thereof having
power to tax, unless the withholding or deduction of such taxes,
duties, assessments or governmental charges is required by law.
In the event that any such withholding or deduction is required
as a consequence of (i) the Debentures not being treated as
4<PAGE>
indebtedness for United States federal income tax purposes or
(ii) the Partnership not being treated as a partnership for
United States federal income tax purposes, the Partnership will
pay as a distribution such additional amounts as may be necessary
in order that the net amounts received by the holders of the
Series A Preferred Partner Interests after such withholding or
deduction will equal the amounts which would have been receivable
in respect of such Preferred Partner Interests in the absence of
such withholding or deduction ("Additional Amounts"), except that
no such Additional Amounts will be payable to a holder of Series
A Preferred Partner Interests (or a third party on such holder's
behalf) with respect to Series A Preferred Partner Interests if:
(i) such holder is liable for such taxes, duties,
assessments or governmental charges in respect of
such Series A Preferred Partner Interests by
reason of such holder's having a connection with
the United States, any state thereof or any other
jurisdiction through which or from which such
payment is made, or in which such holder resides,
conducts business or has other contacts, other
than being a holder of Series A Preferred Partner
Interests, or
(ii) the Partnership has notified such holder of
the obligation to withhold or deduct taxes and
requested but not received from such holder a
declaration of non-residence, a valid taxpayer
identification number or other claim for
exemption, and such withholding or deduction would
not have been required had such declaration,
taxpayer identification number of claim been
received.
(f) Subordination. The holders of Series A Preferred
Partner Interests are deemed, by acceptance of such Interests, to
have (i) agreed that the Debentures issued pursuant to the
Indenture are subordinate and junior in right of payment to all
Senior Indebtedness as and to the extent provided in the
Indenture and (ii) agreed that the Guarantee relating to the
Series A Preferred Partner Interests is subordinate and junior in
right of payment to all Senior Indebtedness of JCP&L.
(g) The holders of the Series A Preferred Partner
Interests shall have no voting rights except as provided in the
Partnership Agreement or as required under the Delaware Act.
5<PAGE>
IN WITNESS WHEREOF, the General Partner has executed
this Action as of _______, 1995.
JCP&L PREFERRED CAPITAL, INC.
By:
Name:
Title:
6<PAGE>
Exhibit A-8
JERSEY CENTRAL POWER & LIGHT COMPANY
AND
UNITED STATES TRUST COMPANY OF NEW YORK,
As Trustee
INDENTURE
Dated as of _____________ 1, 1995
Providing for the Issuance of Subordinated
Debentures in Series and for the
__% Deferrable Interest Subordinated Debentures,
Series A, due 2044<PAGE>
INDENTURE BETWEEN JERSEY CENTRAL POWER & LIGHT COMPANY
AND UNITED STATES TRUST COMPANY OF NEW YORK
DATED AS OF ________________, 1995
TABLE OF CONTENTS
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01 Definitions. . . . . . . . . . . . . . . . . 1
SECTION 1.02 Other Definitions. . . . . . . . . . . . . . 6
SECTION 1.03 Incorporation by Reference of Trust Indenture
Act. . . . . . . . . . . . . . . . . . . . . . 7
SECTION 1.04 Rules of Construction. . . . . . . . . . . . . 7
SECTION 1.05 Acts of Holders. . . . . . . . . . . . . . . . 8
ARTICLE 2
THE SECURITIES; THE SERIES A SECURITIES
SECTION 2.01 Issue of Securities Generally. . . . . . . . . 9
SECTION 2.02 Form of the Series A Securities; Denominations;
Global Security. . . . . . . . . . . . . . . 10
SECTION 2.03 Execution and Authentication. . . . . . . . 11
SECTION 2.04 Registrar and Paying Agent. . . . . . . . . 12
SECTION 2.05 Paying Agent to Hold Money in Trust. . . . . 13
SECTION 2.06 Securityholder Lists. . . . . . . . . . . . 13
SECTION 2.07 Transfer and Exchange. . . . . . . . . . . . 13
SECTION 2.08 Replacement Securities. . . . . . . . . . . 14
SECTION 2.09 Outstanding Securities; Determinations of Holders'
Action. . . . . . . . . . . . . . . . . . . 15
SECTION 2.10 Temporary Securities. . . . . . . . . . . . 16
SECTION 2.11 Cancellation. . . . . . . . . . . . . . . . 17
SECTION 2.12 CUSIP Numbers. . . . . . . . . . . . . . . . 17
SECTION 2.13 Defaulted Interest. . . . . . . . . . . . . 17
-ii-
2<PAGE>
ARTICLE 3
REDEMPTION
SECTION 3.01 Right to Redeem; Notice to Trustee. . . . . 18
SECTION 3.02 Selection of Securities to be Redeemed. . . 18
SECTION 3.03 Notice of Redemption. . . . . . . . . . . . 19
SECTION 3.04 Effect of Notice of Redemption. . . . . . . 20
SECTION 3.05 Deposit of Redemption Price. . . . . . . . . 20
SECTION 3.06 Securities Redeemed in Part. . . . . . . . . 20
ARTICLE 4
COVENANTS
SECTION 4.01 Payment of the Securities. . . . . . . . . . 20
SECTION 4.02 Prohibition Against Dividends, etc. During an
Event of Default. . . . . . . . . . . . . . 23
SECTION 4.03 SEC Reports. . . . . . . . . . . . . . . . . 23
SECTION 4.04 Compliance Certificates. . . . . . . . . . . 23
SECTION 4.05 Further Instruments and Acts. . . . . . . . 24
SECTION 4.06 Investment Company Act. . . . . . . . . . . 24
SECTION 4.07 Payments for Consents. . . . . . . . . . . . 24
ARTICLE 5
SUCCESSOR CORPORATION
SECTION 5.01 When the Company May Merge, Etc. . . . . . . 24
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01 Events of Default. . . . . . . . . . . . . . 25
SECTION 6.02 Acceleration. . . . . . . . . . . . . . . . 27
SECTION 6.03 Other Remedies. . . . . . . . . . . . . . . 27
SECTION 6.04 Waiver of Past Defaults. . . . . . . . . . . 28
SECTION 6.05 Control by Majority. . . . . . . . . . . . . 28
-iii-
3<PAGE>
SECTION 6.06 Limitation on Suits. . . . . . . . . . . . . 28
SECTION 6.07 Rights of Holders to Receive Payment. . . . 29
SECTION 6.08 Collection Suit by the Trustee. . . . . . . 29
SECTION 6.09 The Trustee May File Proofs of Claim. . . . 29
SECTION 6.10 Priorities. . . . . . . . . . . . . . . . . 30
SECTION 6.11 Undertaking for Costs. . . . . . . . . . . . 30
SECTION 6.12 Waiver of Stay, Extension or
Usury Laws. . . . . . . . . . . . . . . 31
ARTICLE 7
THE TRUSTEE
SECTION 7.01 Duties of the Trustee. . . . . . . . . . . . 31
SECTION 7.02 Rights of the Trustee. . . . . . . . . . . . 32
SECTION 7.03 Individual Rights of the Trustee. . . . . . 33
SECTION 7.04 The Trustee's Disclaimer. . . . . . . . . . 34
SECTION 7.05 Notice of Defaults. . . . . . . . . . . . . 34
SECTION 7.06 Reports by Trustee to Holders. . . . . . . . 34
SECTION 7.07 Compensation and Indemnity. . . . . . . . . 34
SECTION 7.08 Replacement of Trustee. . . . . . . . . . . 35
SECTION 7.09 Successor Trustee by Merger. . . . . . . . . 36
SECTION 7.10 Eligibility; Disqualification. . . . . . . . 36
SECTION 7.11 Preferential Collection of Claims Against the
Company. . . . . . . . . . . . . . . . . . . 37
ARTICLE 8
SATISFACTION AND DISCHARGE OF INDENTURE;
DEFEASANCE OF CERTAIN OBLIGATIONS; UNCLAIMED MONEYS
SECTION 8.01 Satisfaction and Discharge of Indenture. . . 37
SECTION 8.02 Application by Trustee of Funds Deposited for
Payment of Securities. . . . . . . . . . . . 38
-iv-
4<PAGE>
SECTION 8.03 Repayment of Moneys Held by Paying Agent. . 38
SECTION 8.04 Return of Moneys Held by the Trustee and Paying
Agent Unclaimed for Three Years. . . . . . . 38
ARTICLE 9
AMENDMENTS
SECTION 9.01 Without Consent of Holders. . . . . . . . . 39
SECTION 9.02 With Consent of Holders. . . . . . . . . . . 39
SECTION 9.03 Compliance with Trust Indenture Act. . . . . 40
SECTION 9.04 Revocation and Effect Of Consents, Waivers and
Actions. . . . . . . . . . . . . . . . . . . 41
SECTION 9.05 Notation on or Exchange of Securities. . . . 41
SECTION 9.06 Trustee to Sign Supplemental Indentures. . . 41
SECTION 9.07 Effect of Supplemental Indentures. . . . . . 42
ARTICLE 10
SUBORDINATION
SECTION 10.01 Securities Subordinated to Senior Indebtedness. 42
SECTION 10.02 Priority and Payment of Proceeds in Certain
Events; Remedies Standstill. . . . . . . . . 42
SECTION 10.03 Payments which May Be Made Prior to Notice. 44
SECTION 10.04 Rights of Holders of Senior Indebtedness Not to Be
Impaired. . . . . . . . . . . . . . . . . . 44
SECTION 10.05 Trustee May Take Action to Effectuate
Subordination. . . . . . . . . . . . . . . . 44
SECTION 10.06 Subrogation. . . . . . . . . . . . . . . . . 45
SECTION 10.07 Obligations of Company Unconditional;
Reinstatement. . . . . . . . . . . . . . . . 45
SECTION 10.08 Trustee Entitled to Assume Payments Not Prohibited
in Absence of Notice. . . . . . . . . . . . 46
SECTION 10.09 Right of Trustee to Hold Senior Indebtedness. 47
-v-
5<PAGE>
ARTICLE 11
MISCELLANEOUS
SECTION 11.01 Trust Indenture Act Controls . . . . . . . . 47
SECTION 11.02 Notices. . . . . . . . . . . . . . . . . . . 47
SECTION 11.03 Communication by Holders with Other Holders. 48
SECTION 11.04 Certificate and Opinion as to Conditions
Precedent. . . . . . . . . . . . . . . . . . 48
SECTION 11.05 Statements Required in Certificate or Opinion. 48
SECTION 11.06 Severability Clause. . . . . . . . . . . . . 49
SECTION 11.07 Rules by Trustee, Paying Agent and Registrar. 49
SECTION 11.08 Legal Holidays. . . . . . . . . . . . . . . 49
SECTION 11.09 Governing Law. . . . . . . . . . . . . . . . 50
SECTION 11.10 No Recourse Against Others. . . . . . . . . 50
SECTION 11.11 Successors. . . . . . . . . . . . . . . . . 50
SECTION 11.12 Multiple Original Copies of this Indenture. 50
SECTION 11.13 No Adverse Interpretation of Other Agreements. 50
SECTION 11.14 Table of Contents; Headings, Etc. . . . . . 50
SECTION 11.15 Benefits of the Indenture. . . . . . . . . . 51
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . 51
[FORM OF FACE OF THE SECURITY] . . . . . . . . . . . . . . 52
[FORM OF REVERSE SIDE OF SECURITY] . . . . . . . . . . . . 54
1. Payment of Interest and Additional Interest . . . . . 54
2. Deferral of Interest . . . . . . . . . . . . . . . . . 54
3. Method of Payment . . . . . . . . . . . . . . . . . . 54
4. Paying Agent and Registrar . . . . . . . . . . . . . . 55
5. Indenture . . . . . . . . . . . . . . . . . . . . . . 55
6. Redemption . . . . . . . . . . . . . . . . . . . . . . 55
7. Notice of Redemption . . . . . . . . . . . . . . . . . 55
8. Subordination . . . . . . . . . . . . . . . . . . . . 56
9. Denominations; Transfer; Exchange . . . . . . . . . . 56
10. Persons Deemed Owners . . . . . . . . . . . . . . . . 56
11. Amendment; Waiver . . . . . . . . . . . . . . . . . . 56
12. Defaults and Remedies . . . . . . . . . . . . . . . . 57
-vi-
6<PAGE>
13. Trustee Dealings with the Company . . . . . . . . . . 57
14. No Recourse Against Others . . . . . . . . . . . . . . 57
15. Abbreviations . . . . . . . . . . . . . . . . . . . . 58
16. Unclaimed Money . . . . . . . . . . . . . . . . . . . 58
17. Discharge Prior to Maturity . . . . . . . . . . . . . 58
18. Successor . . . . . . . . . . . . . . . . . . . . . . 58
19. Governing Law . . . . . . . . . . . . . . . . . . . . 58
ASSIGNMENT FORM . . . . . . . . . . . . . . . . . . . . . . 59
-vii-
7<PAGE>
INDENTURE, dated as of ___________ 1, 1995, by and between
Jersey Central Power & Light Company, a New Jersey corporation
(the "Company"), and United States Trust Company of New York, as
trustee (the "Trustee").
Whereas, the Company desires to borrow money from time to
time and to issue securities from time to time, in one or more
series, including securities to be issued from time to time to
one or more of its Subsidiaries, as in this Indenture provided;
and
Whereas, the Company has authorized the issuance of the
initial series of securities to be known as the __% Deferrable
Interest Subordinated Debentures, Series A, due 2044 (the "Series
A Securities"), and to provide therefor, the Company has duly
authorized the execution and delivery of this Indenture, and all
things necessary to make the Series A Securities when duly issued
and executed by the Company and authenticated and delivered
hereunder, the valid obligations of the Company, and to make this
Indenture a valid and binding agreement of the Company, in
accordance with its terms, have been done;
Now, therefore, each party, intending to be legally bound
hereby, agrees as follows for the equal and ratable benefit of
the Holders of the Series A Securities:
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01 Definitions.
"Affiliate" of any specified Person means any other Person,
directly or indirectly, controlling or controlled by or under
direct or indirect common control with such specified Person.
When used with respect to any Person, "control" means the power
to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities,
by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Board of Directors" means the Board of Directors of the
Company or any committee thereof duly authorized to act on behalf
of such Board, and any resolution of the Board of Directors means
any resolution of the Board of Directors or any committee thereof
duly authorized to act on behalf of such Board.
1<PAGE>
"Business Day" means any day other than a day on which
banking institutions in The City of New York are authorized or
required by law to close.
"Capital Lease Obligations" of a Person means any obligation
which is required to be classified and accounted for as a capital
lease on the face of a balance sheet of such Person prepared in
accordance with GAAP.
"Capital Stock" means any and all shares, interests, rights
to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) corporate
stock, including any Preferred Stock.
"Company" means Jersey Central Power & Light Company until a
Successor replaces it pursuant to Article 5 of this Indenture
and, thereafter, shall mean the Successor.
"Default" means any event which is, or after notice or
passage of time, or both, would be, an Event of Default.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial
Accounting Standards Board.
"Guarantee" means the Payment and Guarantee Agreement, or
other guaranty, if any, of the Company of the payment of periodic
cash distributions, and payments on liquidation or redemption,
with respect to the Preferred Securities of any series.
"Indenture" means this indenture, as amended or supplemented
from time to time in accordance with the terms hereof, including
the provisions of the TIA that are deemed to be a part hereof.
"Interest Payment Date" means the interest payment date
specified in the Securities.
"Issue Date" means the date on which the Securities are
originally issued.
2<PAGE>
"JCP&L Capital" means JCP&L Capital, L. P., a Delaware
limited partnership, all of the Voting Interests of which are
indirectly owned by the Company through a Wholly Owned
Subsidiary.
"Officer" means, with respect to any corporation, the
Chairman of the Board, the Chief Executive Officer, the
President, any Vice President, the Treasurer or any Assistant
Treasurer or the Secretary or any Assistant Secretary of such
corporation.
"Officer's Certificate" means a written certificate
containing the applicable information specified in Sections 11.04
and 11.05 hereof, signed in the name of the Company by any one of
its Officers, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion containing the
applicable information specified in Sections 11.04 and 11.05
hereof, by legal counsel who is reasonably acceptable to the
Trustee.
"Person" means any individual, corporation, partnership,
limited liability company, joint venture, association,
joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any
other entity.
"Preferred Securities" means the securities representing
limited partner interests of JCP&L Capital of any series with a
preference in respect of cash distributions and amounts payable
on liquidation over the Voting Interests indirectly owned by the
Company.
"Preferred Stock" means any class of Capital Stock of an
issuer that is preferred as to dividends or rights in liquidation
as compared with any other class of Capital Stock of the same
issuer.
"Record Date" with respect to any security means the date
set to determine the holders of any security entitled to
participate in any distribution, dividend, interest or other
payment or to vote, consent, make a request or exercise any other
right associated with such security.
"Redemption Date" or "redemption date" means the date
specified for the redemption of Securities in accordance with the
terms of the Securities and Article 3 of this Indenture.
3<PAGE>
"Redemption Price" or "redemption price", with respect to
any Security to be redeemed, means the price at which it is to be
redeemed pursuant to this Indenture and the Securities.
"Regular Record Date", with respect to an interest payment
on the Securities, means the date set forth on the face of the
Securities for the determination of Holders entitled to receive
payment of interest on the next succeeding interest payment date.
"SEC" or "Commission" means the Securities and Exchange
Commission.
"Securities" means any of the securities of any series
issued, authenticated and delivered under this Indenture.
"Series A Preferred Securities" means the securities
representing limited partner interests of JCP&L Capital, with a
preference in respect of cash distributions and amounts payable
on liquidation over the Voting Interests indirectly owned by the
Company, the proceeds of the sale of which are used by JCP&L
Capital to purchase Series A Securities.
"Series A Securities" means any of the Company's __%
Deferrable Interest Subordinated Debentures, Series A, due 2044,
issued under this Indenture.
"Securities Act" means the Securities Act of 1933, as
amended.
"Securityholder" or "Holder" means a Person in whose name a
Security is registered on the Registrar's books.
"Senior Indebtedness" means, without duplication, (i) the
principal of and premium (if any) in respect of (A) indebtedness
of the Company for money borrowed and (B) indebtedness evidenced
by securities, debentures, bonds or other similar instruments
(including purchase money obligations) for payment of which the
Company is responsible or liable; (ii) all Capital Lease
Obligations of the Company; (iii) all obligations of the Company
issued or assumed as the deferred purchase price of property, all
conditional sale obligations of the Company and all obligations
of the Company under any title retention agreement (but excluding
trade accounts payable arising in the ordinary course of
business); (iv) all obligations of the Company for the
reimbursement of any obligor on any letter of credit, banker's
acceptance, security purchase facility or similar credit
4<PAGE>
transaction (other than obligations with respect to letters of
credit securing obligations (other than obligations described in
(i) through (iii) above) entered into in the ordinary course of
business of the Company to the extent such letters of credit are
not drawn upon or, if and to the extent drawn upon, such drawing
is reimbursed no later than the third Business Day following
receipt by the Company of a demand for reimbursement following
payment on the letter of credit); (v) all obligations of the type
referred to in clauses (i) through (iv) of other Persons for the
payment of which the Company is responsible or liable as obligor,
guarantor or otherwise; and (vi) all obligations of the type
referred to in clauses (i) through (v) of other Persons secured
by any lien on any property or asset of the Company (whether or
not such obligation is assumed by the Company), the amount of
such obligation being deemed to be the lesser of the value of
such property or assets or the amount of the obligation so
secured; provided, however, that Senior Indebtedness does not
include endorsements of negotiable instruments for collection in
the ordinary course of business. Notwithstanding anything to the
contrary in the foregoing, Senior Indebtedness shall not include
any indebtedness that is by its terms subordinated to or pari
passu with the Securities or any indebtedness between or among
the Company and any Affiliates.
"Stated Maturity" means, with respect to any security, the
date specified in such security as the fixed date on which the
principal of such security is due and payable, including pursuant
to any mandatory prepayment provision.
"Subsidiary" means any corporation, association,
partnership, limited liability company or other business entity
of which more than 50% of the total voting power of all the
Voting Stock or Voting Interests is at the time owned or
controlled, directly or indirectly, by (i) the Company, (ii) the
Company and one or more Subsidiaries, or (iii) one or more
Subsidiaries.
"TIA" means the Trust Indenture Act of 1939, as amended and
as in effect on the date of this Indenture; provided, however,
that if the TIA is amended after such date, TIA means, to the
extent required by any such amendment, the TIA as so amended.
"Trust Officer" means the Chairman of the Board of
Directors, the President, or any other officer or assistant
officer of the Trustee assigned by the Trustee to administer its
corporate trust matters.
"Trustee" means the party named as the "Trustee" in the
first paragraph of this Indenture until a successor replaces it
5<PAGE>
pursuant to the applicable provisions of this Indenture and,
thereafter, shall mean such successor.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such
obligations) of the United States of America (including any
agency or instrumentality thereof) for the payment of which the
full faith and credit of the United States of America is pledged
and which are not callable at the issuer's option and repurchase
obligations with respect to any of the foregoing entered into
with any depository institution or trust company incorporated
under the laws of the United States of America or any state
thereof and subject to the supervision and examination by federal
and/or state banking authorities if such repurchase obligation is
by its terms to be performed by the repurchaser within 30 days of
the repurchase agreement.
"Voting Interests" means interests (including partnership
interests) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or a
trustee of an entity or to direct the management of the affairs
of such entity.
"Voting Stock" means, with respect to a corporation, all
classes of Capital Stock then outstanding of such corporation
normally entitled to vote in elections of directors.
"Wholly Owned Subsidiary" means a Subsidiary all the Voting
Stock or Voting Interests of which (other than directors'
qualifying shares) are owned by the Company or another Wholly
Owned Subsidiary.
SECTION 1.02 Other Definitions.
TERM DEFINED IN SECTION
"Act" . . . . . . . . . . . . . . . . . . 1.05
"Additional Interest. . . . . . . . . . . 4.01
"Bankruptcy Law" . . . . . . . . . . . . 6.01
"Control" . . . . . . . . . . . . . . . . 1.01
"Custodian" . . . . . . . . . . . . . . . 6.01
"Event of Default". . . . . . . . . . . . 6.01
"Extension Period". . . . . . . . . . . . 4.01
"Legal Holiday" . . . . . . . . . . . . . 11.08
"Notice of Default" . . . . . . . . . . . 6.01
"Paying Agent" . . . . . . . . . . . . . 2.04
"Register" . . . . . . . . . . . . . . . 2.04
"Registrar" . . . . . . . . . . . . . . . 2.04
"Successor" . . . . . . . . . . . . . . . 5.01
6<PAGE>
SECTION 1.03 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA,
such provision is incorporated by reference in and made a part of
this Indenture. The following TIA terms used in this Indenture
have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Holder or
Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" on the indenture securities means the Company and
any other obligor on the Securities.
All other TIA terms used in this Indenture that are defined
by the TIA, defined by TIA reference to another statute or
defined by SEC rule have the meanings assigned to them by such
definitions.
SECTION 1.04 Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
7<PAGE>
(4) "including" means including, without limitation;
(5) words in the singular include the plural, and words in
the plural include the singular;
(6) "herein," "hereof" and other words of similar import
refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision; and
(7) whenever the masculine gender is used herein, it shall
be deemed to include the female gender and the neuter,
as well.
SECTION 1.05. Acts of Holders.
(1) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be
given or taken by Holders may be embodied in and evidenced by one
or more instruments of substantially similar tenor signed by such
Holders in person or by an agent duly appointed in writing; and,
except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are
delivered to the Trustee and, where it is hereby expressly
required, to the Company. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of Holders signing such
instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Indenture and conclusive in
favor of the Trustee and the Company, if made in the manner
provided in this Section.
(2) The fact and date of the execution by any Person of any
such instrument or writing may be proved in any manner which the
Trustee deems sufficient.
(3) The ownership of Securities shall be proved by the
Register.
(4) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Security shall
bind every future Holder of the same Security and the holder of
every Security issued upon the registration of transfer thereof
or in exchange therefor or in lieu thereof in respect of anything
done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such
action is made upon such Security.
8<PAGE>
(5) If the Company solicits from the Holders any request,
demand, authorization, direction, notice, consent, waiver or
other Act, the Company may, at its option, by or pursuant to a
resolution of its Board of Directors, fix in advance a record
date for the determination of Holders entitled to give such
request, demand, authorization, direction, notice, consent,
waiver or other Act, but the Company shall have no obligation to
do so. If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other Act
may be given before or after such record date, but only the
Holders of record at the close of business on such record date
shall be deemed to be Holders for the purposes of determining
whether Holders of the requisite proportion of outstanding
Securities have authorized or agreed or consented to such
request, demand, authorization, direction, notice, consent,
waiver or other Act, and for that purpose the outstanding
Securities shall be computed as of such record date.
ARTICLE 2
THE SECURITIES; THE SERIES A SECURITIES
SECTION 2.01 Issue of Securities Generally.
The Securities may be issued in one or more series as from
time to time shall be authorized by the Board of Directors.
The Securities of each series and the Trustee's Certificate
of Authentication shall be substantially in the forms to be
attached
as exhibits to this Indenture or supplemental indenture providing
for their issuance, but in the case of Securities other than
Series A Securities, with such inclusions, omissions and
variations as are authorized or permitted by this Indenture. The
Securities may have such letters, numbers or other marks of
identification or designation and such legends or endorsements
printed, lithographed or engraved thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of
this Indenture, or as may be required to comply with any law or
with any rule or regulation made pursuant thereto or with any
rule or regulation of any securities exchange on which the
Securities may be listed, or to conform to usage. Each Security
shall be dated the date of its authentication.
The several series of Securities may differ from the Series
A Securities, and as and between series, in respect of any or all
of the following matters:
(a) designation;
(b) date or dates of maturity, which may be serial;
9<PAGE>
(c) rate (or method of determining the rate) of
interest or Additional Interest;
(d) interest payment dates and the frequency of
interest payments;
(e) provisions, if any, authorizing the Company to
extend the interest payment dates;
(f) authorized denominations;
(g) the place or places for the payment of principal
and for the payment of interest;
(h) limitation, if any, upon the aggregate principal
amount of Securities of the series which may be issued;
(i) provisions, if any, with regard to any obligation
of the Company to permit the exchange of the Securities of
such series into stock or other securities of the Company or
of any other corporations or entities;
(j) provisions, if any, reserving to the Company the
right to redeem all or any part of the Securities of such
series before maturity at such time or times, upon such
notice and at such redemption price or prices (together with
accrued interest to the date of redemption) as may be
specified in the respective forms of Securities;
(k) provisions, if any, for any sinking or analogous
fund with respect to the Securities of such series; and
(l) any other provisions expressing or referring to
the terms and conditions upon which the Securities of such
series are to be issued under this Indenture which are not
in conflict with the provisions of this Indenture;
in each case as determined and specified by the Board of
Directors. The Trustee shall not authenticate and deliver
Securities of any series (other than the Series A Securities)
upon initial issue unless the terms and conditions of such series
shall have been set forth in a supplemental indenture entered
into between the Company and the Trustee as provided in Section
9.01 hereof.
SECTION 2.02 Form of the Series A Securities; Denominations;
Global Security.
The Series A Securities and the Trustee's Certificate of
Authentication shall be substantially in the form of Exhibit A
attached hereto. The terms and provisions contained in the Series
A Securities, a form of which is annexed hereto as Exhibit A,
10<PAGE>
shall constitute, and are hereby expressly made, a part of this
Indenture. The Company and the Trustee, by their execution and
delivery of this Indenture, expressly agree to such terms and
provisions and to be bound thereby.
The Trustee shall authenticate and make available for
delivery Series A Securities for original issue in the aggregate
principal amount of $___________ for issuance to JCP&L Capital in
consideration of a cash payment equal to the principal amount
thereof, upon a resolution of the Board of Directors and a
written order of the Company signed by two Officers of the
Company, but without any further action by the Company. Such
order shall specify the date on which the original issue of the
Series A Securities is to be authenticated and delivered. The
aggregate principal amount of Series A Securities outstanding at
any time may not exceed $___________, except as provided in
Section 2.08 hereof.
The Series A Securities shall be issuable only in registered
form without coupons and only in denominations of $25.00 and any
integral multiple thereof.
Initially, the Series A Securities shall be issued as a
temporary certificate in global form, that is, as one Security
for the total principal amount of the Series A Securities to be
outstanding, registered in the name of JCP&L Capital. If and
when the Series A Securities are registered in the name of a
custodian, the custodian shall be responsible for maintaining
records of the names and addresses of, and the principal amounts
owned by, the beneficial owners of its global Security. After
initial issuance, the Series A Securities may be transferred or
exchanged in accordance with Section 2.07 hereof.
SECTION 2.03 Execution and Authentication.
The Securities shall be executed on behalf of the Company by
its Chief Executive Officer, its President or one of its Vice
Presidents, under its corporate seal imprinted or reproduced
thereon attested by its Secretary or one of its Assistant
Secretaries. The signature of any such Officer on the Securities
may be manual or facsimile.
Securities bearing the manual or facsimile signatures of
individuals who were at any time the proper Officers of the
Company shall bind the Company, notwithstanding that such
individuals or any of them have ceased to hold such offices prior
to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
11<PAGE>
No Security shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there
appears on such Security a Certificate of Authentication duly
executed by the Trustee by manual signature of an authorized
officer, and such certificate upon any Security shall be
conclusive evidence, and the only evidence, that such Security
has been duly authenticated and made available for delivery
hereunder.
The Trustee shall act as the initial authenticating agent.
Thereafter, the Trustee, with the concurrence of the Company, may
appoint an authenticating agent. An authenticating agent may
authenticate Securities whenever the Trustee may do so. Each
reference in this Indenture to authentication by the Trustee
includes authentication by such agent. An authenticating agent
has the same rights as a Paying Agent to deal with the Company or
an Affiliate of the Company.
SECTION 2.04 Registrar and Paying Agent.
The Company shall maintain or cause to be maintained, within
the State of New York, an office or agency where the Securities
may be presented for registration of transfer or for exchange
("Registrar"), an office or agency where Securities may be
presented or surrendered for redemption or payment ("Paying
Agent"), and an office or agency where notices and demands to or
upon the Company in respect of the Securities and this Indenture
may be served. The Registrar shall keep a register (the
"Register") of the Securities and of their transfer and exchange.
The Register shall be open to inspection by the Company and the
Trustee at all reasonable times. The Company may have one or
more co-Registrars and one or more additional Paying Agents. The
terms Paying Agent and Registrar include any additional paying
agent and co-Registrar. The corporate trust office of the
Trustee at 114 West 47th Street, New York, New York, 10036,
Attention: Corporate Trust Department, Department B, shall
initially be the location for the Registrar, Paying Agent and
agent for service of notice or demands on the Company.
The Company shall enter into an appropriate agency agreement
with any Registrar, Paying Agent or co-Registrar (if not the
Trustee or the Company). The agreement shall implement the
provisions of this Indenture that relate to such agent. The
Company shall give prompt written notice to the Trustee of any
change of location of such office or agency. If at any time the
Company shall fail to maintain or cause to be maintained any such
required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices
and demands may be made or served at the address of the Trustee
set forth in Section 11.02 hereof. The Company shall notify the
Trustee of the name and address of any such agent. If the Company
fails to maintain a Registrar, Paying Agent or agent for service
of notices or demands, the Trustee shall act as such and shall be
12<PAGE>
entitled to appropriate compensation therefor pursuant to Section
7.07 hereof. The Company or any Affiliate of the Company may act
as Paying Agent, Registrar or co-Registrar or agent for service
of notices and demands.
The Company may also from time to time designate one or more
other offices or agencies where the Securities may be presented
or surrendered for any or all such purposes and may from time to
time rescind such designations. The Company will give prompt
written notice to the Trustee of any such designation or
rescission and of any change in location of any such other office
or agency.
SECTION 2.05 Paying Agent to Hold Money in Trust.
Except as otherwise provided herein, prior to each due date
of the principal and interest on any Security, the Company shall
deposit with the Paying Agent a sum of money sufficient to pay
such principal and interest so becoming due. The Company shall
require each Paying Agent (other than the Trustee or the Company)
to agree in writing that such Paying Agent shall hold in trust
for the benefit of Securityholders or the Trustee all money held
by the Paying Agent for the payment of principal and interest on
the Securities and shall notify the Trustee of any default by the
Company in making any such payment. At any time during the
continuance of any such default, the Paying Agent shall, upon the
request of the Trustee, forthwith pay to the Trustee all money so
held in trust and account for any money disbursed by it. The
Company at any time may require a Paying Agent to pay all money
held by it to the Trustee and to account for any money disbursed
by it. Upon doing so, the Paying Agent shall have no further
liability for the money so paid over to the Trustee. If the
Company, a Subsidiary or an Affiliate of either of them acts as
Paying Agent, it shall segregate the money held by it as Paying
Agent and hold it as a separate trust fund.
SECTION 2.06 Securityholder Lists.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of
the names and addresses of Securityholders. If the Trustee is not
the Registrar, the Company shall cause to be furnished to the
Trustee on or before the Record Date for each interest payment
date and at such other times as the Trustee may request in
writing, within five Business Days of such request, a list, in
such form as the Trustee may reasonably require, of the names and
addresses of Securityholders.
SECTION 2.07 Transfer and Exchange.
13<PAGE>
When Securities of any series are presented to the Registrar
or a co-Registrar with a request to register the transfer or to
exchange them for an equal principal amount of Securities of the
same series of other authorized denominations, the Registrar
shall register the transfer or make the exchange as requested if
its requirements for such transactions are met. To permit
registrations of transfer and exchanges of Securities of any
series, the Company shall execute and the Trustee shall
authenticate Securities of the same series, all at the
Registrar's request.
Every Security presented or surrendered for registration of
transfer or for exchange shall (if so required by the Company or
the Trustee) be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Company and
the Trustee duly executed by the Holder or his attorney duly
authorized in writing.
The Company shall not charge a service charge for any
registration of transfer or exchange, but the Company may require
payment of a sum sufficient to pay all taxes, assessments or
other governmental charges that may be imposed in connection with
the transfer or exchange of the Securities from the
Securityholder requesting such transfer or exchange (other than
any exchange of a temporary Security for a definitive Security
not involving any change in ownership).
The Company shall not be required to make, and the Registrar
need not register, transfers or exchanges of (a) any Security for
a period beginning at the opening of business five days before
the mailing of a notice of redemption of Securities and ending at
the close of business on the day of such mailing or (b) any
Security selected, called or being called for redemption, except,
in the case of any Security to be redeemed in part, the portion
thereof not to be redeemed.
SECTION 2.08 Replacement Securities.
If (a) any mutilated Security is surrendered to the Company
or the Trustee, or (b) the Company and the Trustee receive
evidence to their satisfaction of the destruction, loss or theft
of any Security, and there is delivered to the Company and the
Trustee such security or indemnity as may be required by them to
save each of them harmless, then, in the absence of notice to the
Company or the Trustee that such Security has been acquired by a
bona fide purchaser, the Company shall execute in exchange for
any such mutilated Security of any series or in lieu of any such
destroyed, lost or stolen Security of any series, a new Security
of the same series and of like tenor and principal amount,
bearing a number not contemporaneously outstanding, and the
14<PAGE>
Trustee shall authenticate and make such new Security available
for delivery.
In case any such mutilated, destroyed, lost or stolen
Security has become or is about to become due and payable, or is
about to be redeemed by the Company pursuant to Article 3 hereof,
the Company in its discretion may, instead of issuing a new
Security, pay or purchase such Security, as the case may be.
Upon the issuance of any new Securities under this Section
2.08, the Company may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in
relation thereto and any other expenses (including the fees and
expenses of the Trustee) in connection therewith.
Every new Security issued pursuant to this Section 2.08 in
lieu of any mutilated, destroyed, lost or stolen Security shall
constitute an original additional contractual obligation of the
Company whether or not the mutilated, destroyed, lost or stolen
Security shall be at any time enforceable by anyone, and shall be
entitled to all benefits of this Indenture equally and ratably
with any and all other Securities duly issued hereunder.
The provisions of this Section 2.08 are exclusive and shall
preclude (to the extent lawful) all other rights and remedies
with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Securities.
SECTION 2.09 Outstanding Securities; Determinations of Holders'
Action.
Securities outstanding at any time are all the Securities
authenticated by the Trustee except for those canceled by it,
those delivered to it for cancellation, those mutilated,
destroyed, lost or stolen Securities referred to in Section 2.08
hereof, those redeemed by the Company pursuant to Article 3
hereof, and those described in this Section 2.09 as not
outstanding. A Security does not cease to be outstanding because
the Company or a Subsidiary or Affiliate thereof holds the
Security; provided, however, that in determining whether the
Holders of the requisite principal amount of Securities have
given or concurred in any request, demand, authorization,
direction, notice, consent or waiver hereunder, Securities owned
by the Company or any Affiliate or Subsidiary of the Company
(other than JCP&L Capital, so long as any of its Preferred
Securities are outstanding) shall be disregarded and deemed not
to be outstanding; provided, further, that if the Trustee is
making such determination, it shall disregard only such
Securities as it knows to be owned by the Company or any
Affiliate or Subsidiary thereof. Securities owned by JCP&L
15<PAGE>
Capital shall be deemed to be outstanding, so long as any of its
Preferred Securities are outstanding.
Subject to the foregoing, only Securities outstanding at the
time of such determination shall be considered in any such
determination (including determinations pursuant to Articles 3, 6
and 9).
If a Security is replaced pursuant to Section 2.08, it
ceases to be outstanding unless the Trustee receives proof
satisfactory to it that the replaced Security is held by a bona
fide purchaser.
If the Paying Agent (other than the Company) holds, in
accordance with this Indenture, whenever payment of principal on
the Securities is due, whether at Stated Maturity, upon
acceleration or on a Redemption Date, money sufficient to pay the
Securities payable on that date, then immediately on the date of
Stated Maturity, upon acceleration or on such Redemption Date, as
the case may be, such Securities shall cease to be outstanding,
and interest, if any, on such Securities shall cease to accrue.
SECTION 2.10 Temporary Securities.
Until definitive Securities are ready for delivery, the
Company may execute temporary Securities, and upon the Company's
written request, signed by two Officers of the Company, the
Trustee shall authenticate and make such temporary Securities
available for delivery. Temporary Securities shall be printed,
lithographed, typewritten, mimeographed or otherwise produced, in
any authorized denomination, substantially of the tenor of the
definitive Securities of the same series in lieu of which they
are issued and with such appropriate insertions, omissions,
substitutions and other variations as the Officers of the Company
executing such Securities may determine, as conclusively
evidenced by their execution of such Securities.
If temporary Securities of any series are issued (except for
the global form of certificate issued initially as described in
Section 2.02 hereof), the Company shall cause definitive
Securities of the same series to be prepared without unreasonable
delay. After the preparation of definitive Securities, the
temporary Securities of the same series shall be exchangeable for
such definitive Securities upon surrender of such temporary
Securities at the office or agency of the Company designated for
such purpose pursuant to Section 2.04 hereof, without charge to
the Holder. Upon surrender for cancellation of any one or more
temporary Securities of any series, the Company shall execute a
like principal amount of definitive Securities of the same series
of authorized denominations, and the Trustee, upon written
16<PAGE>
request of the Company signed by two Officers of the Company,
shall authenticate and make such Securities available for
delivery in exchange therefor. Until so exchanged, the temporary
Securities shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities.
SECTION 2.11 Cancellation.
All Securities surrendered for payment, redemption by the
Company pursuant to Article 3 hereof or registration of transfer
or exchange shall, if surrendered to any Person other than the
Trustee, be delivered to the Trustee and shall be promptly
canceled by the Trustee. The Company may at any time deliver to
the Trustee for cancellation any Securities previously
authenticated and made available for delivery hereunder which the
Company may have acquired in any manner whatsoever, and all
Securities so delivered shall be promptly canceled by the
Trustee. The Company may not reissue, or issue new Securities to
replace, Securities it has paid or delivered to the Trustee for
cancellation. No Securities shall be authenticated in lieu of or
in exchange for any Securities canceled as provided in this
Section 2.11, except as expressly permitted by this Indenture.
All canceled Securities held by the Trustee shall be destroyed by
the Trustee, and the Trustee shall deliver a certificate of
destruction to the Company.
SECTION 2.12 CUSIP Numbers.
The Company, in issuing the Securities of any series, may
use "CUSIP" numbers applicable to such series (if then generally
in use), and the Trustee shall use CUSIP numbers in notices of
redemption or exchange as a convenience to Holders; provided that
any such notice shall state that no representation is made as to
the correctness of such numbers either as printed on the
Securities or as contained in any notice of redemption or
exchange and that reliance may be placed only on the other
identification numbers printed on the Securities and any
redemption shall not be affected by any defect in or omission of
such numbers.
SECTION 2.13 Defaulted Interest.
If the Company defaults in a payment of interest on the
Securities on the interest payment date, it shall pay the
defaulted interest, plus (to the extent lawful) any interest
payable on the defaulted interest, to the Persons who are Holders
on a subsequent special record date, and such special record
date, as used in this Section 2.13 with respect to the payment of
any defaulted interest, shall mean the 15th day next preceding
the date fixed by the Company for the payment of defaulted
interest, whether or not such day is a Business Day. At least 15
days before the subsequent special record date, the Company shall
17<PAGE>
mail to each Holder and to the Trustee a notice that states the
subsequent special record date, the payment date and the amount
of defaulted interest to be paid.
ARTICLE 3
REDEMPTION
SECTION 3.01 Right to Redeem; Notice to Trustee.
(a) The Company, at its option, may redeem the Securities
pursuant to paragraph 6 of the Securities. The Company may not
redeem (or otherwise purchase) less than all of the Securities of
any series if as a result of such partial redemption (or
purchase) such series of the Securities would be delisted from
any national securities exchange on which they are then listed,
and in such case if the Company elects to redeem (or otherwise
purchase) any of the Securities of such series, it shall redeem
(or otherwise purchase) all of them. If paragraph 6 of the
Securities authorizes the Company to redeem Securities based on
an obligation to pay Additional Interest, the Company may not
redeem such Securities based solely upon such obligation, unless
it receives an Opinion of Counsel that more than an insubstantial
risk exists that JCP&L Capital would have to pay certain
penalties, interest or tax if it fails to withhold or deduct
certain amounts from the distributions to the holders of the
series of Preferred Securities, the proceeds of the sale of which
were used by JCP&L Capital to purchase the Securities proposed to
be redeemed by the Company, or that the Company would be
obligated to pay certain penalties, interest or tax if it fails
to withhold or deduct certain amounts in connection with payments
with respect to such Securities. In no event shall the Company
redeem such Securities based on an obligation to pay Additional
Interest if the amount of the Additional Interest is de minimus.
If as a result of the redemption by JCP&L Capital of any series
of Preferred Securities, such series would be delisted from any
national securities exchange on which such series is then listed,
the Company shall also redeem all of the Securities that were
purchased by JCP&L Capital with the proceeds from the sale of
such series of Preferred Securities.
(b) If the Company elects to redeem Securities pursuant to
paragraph 6 of the Securities, it shall notify the Trustee in
writing of the Redemption Date, the aggregate principal amount of
Securities to be redeemed and the Redemption Price. The Company
shall give such notice to the Trustee at least 45 days before the
Redemption Date (unless a shorter notice shall be satisfactory to
the Trustee).
18<PAGE>
SECTION 3.02 Selection of Securities to be Redeemed.
If less than all the outstanding Securities of any series
are to be redeemed at any time, the Trustee shall select the
Securities of such series to be redeemed in compliance with the
requirements of the principal national securities exchange, if
any, on which the Securities are listed, or if the Securities are
not listed on a national securities exchange, on a pro rata
basis, by lot or, any other method the Trustee considers fair and
appropriate. If all of the Securities of the series to be
partially redeemed are held in global form by the Depository
Trust Company or any successor securities depository, as
custodian, it shall select the Securities by lot. The Trustee
shall make the selection at least 30 days, but not more than 90
days, before the Redemption Date from outstanding Securities not
previously called for redemption. Securities and portions of them
the Trustee selects shall be in authorized denominations only.
Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for
redemption. The Trustee shall notify the Company promptly of the
Securities or portions of Securities to be redeemed.
SECTION 3.03 Notice of Redemption.
At least 30 days but not more than 90 days before a
Redemption Date, the Company shall mail or cause to be mailed a
notice of redemption by first-class mail, postage prepaid, to
each Holder of Securities to be redeemed at the Holder's last
address, as it appears on the Register. A copy of such notice
shall be mailed to the Trustee when the notice is mailed to
Holders of Securities. At the Company's written request, the
Trustee shall give the notice of redemption in the Company's name
and at its expense.
The notice shall identify the Securities (by series and by
certificate number) to be redeemed, the provision of the
Securities or this Indenture pursuant to which the Securities
called for redemption are being redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) the CUSIP number (subject to Section 2.12 hereof);
(4) the name and address of the Paying Agent;
(5) that Securities called for redemption must be
surrendered to the Paying Agent to collect the Redemption Price;
(6) if fewer than all the outstanding Securities of any
series are to be redeemed, the identification and principal
19<PAGE>
amounts of the particular Securities to be redeemed and that, on
and after the Redemption Date, upon surrender of such Securities,
a new Security or Securities of the same series in principal
amount equal to the unredeemed portion thereof will be issued;
and
(7) that, unless the Company defaults in making such
redemption payment, interest will cease to accrue on Securities
called for redemption on and after the Redemption Date.
SECTION 3.04 Effect of Notice of Redemption.
After notice of redemption is given, all Securities called
for redemption become due and payable on the Redemption Date and
at the Redemption Price. Upon the later of the Redemption Date
and the date such Securities are surrendered to the Trustee or
the Paying Agent, such Securities shall be paid at the Redemption
Price, plus accrued and unpaid interest and Additional Interest
thereon, if any, and accrued interest thereon, to the Redemption
Date.
SECTION 3.05 Deposit of Redemption Price.
On or prior to a Redemption Date, the Company shall
irrevocably deposit with the Trustee or the Paying Agent (or if
the Company or an Affiliate is the Paying Agent, the Company
shall segregate and hold in trust or cause such Affiliate to
segregate and hold in trust) money sufficient to pay the
Redemption Price of, and accrued and unpaid interest, including
Additional Interest, if any, and accrued interest thereon, on all
Securities to be redeemed on that date. After the Redemption
Date, interest ceases to accrue on the Securities to be redeemed
with respect to which the Company has deposited sufficient money
to pay the Redemption Price and accrued interest whether or not
such Securities are surrendered for payment. Subject to
applicable law, the Trustee or the Paying Agent shall return to
the Company three years after the Redemption Date any money
deposited with it and not applied for redemption.
SECTION 3.06 Securities Redeemed in Part.
Upon surrender of a Security of any series that is redeemed
in part, the Trustee shall authenticate for the Holder a new
Security of the same series equal in principal amount to the
unredeemed portion of such Security.
20<PAGE>
ARTICLE 4
COVENANTS
SECTION 4.01 Payment of the Securities.
(a) The Company shall pay the principal of and interest
(including interest accruing on or after the filing of a petition
in bankruptcy or reorganization relating to the Company, whether
or not a claim for post-filing interest is allowed in such
proceeding) on the Securities on the dates and in the manner
provided in the Securities or pursuant to this Indenture. An
installment of principal or interest shall be considered paid on
the applicable date due if on such date the Trustee or the Paying
Agent holds, in accordance with this Indenture, money sufficient
to pay all of such installment then due. The Company shall pay
interest on overdue principal and interest on overdue
installments of interest (including interest accruing during an
Extension Period (as hereinafter defined) and/or on or after the
filing of a petition in bankruptcy or reorganization relating to
the Company, whether or not a claim for post-filing interest is
allowed in such proceeding), to the extent lawful, at the rate
per annum borne by the Securities in default, which interest on
overdue interest shall accrue from the date such amounts became
overdue, or from such other date as may be specified in the
Securities.
(b) Notwithstanding paragraph (a) of this Section 4.01 or
any other provision herein to the contrary, if before an event
occurs which, under the terms of the Series A Preferred
Securities, results in a distribution of Series A Securities to
the holders of the Series A Preferred Securities in liquidation
of their interests in JCP&L Capital, the Company makes a payment
under the Guarantee, the Company shall receive a credit for any
payment it makes (i) in lieu of a periodic distribution to the
holders of the Series A Preferred Securities pursuant to the
Guarantee, and the Company shall have no obligation to pay
interest on the Series A Securities in the amount of such payment
and (ii) in lieu of a liquidation or redemption distribution to
the holders of the Series A Preferred Securities pursuant to the
Guarantee, and the Company shall have no obligation to pay the
principal of the Series A Securities in the amount of such
payment. The Company shall notify the Trustee and the Holders of
any credit to which it is entitled hereunder.
(c) Notwithstanding paragraph (a) of this Section 4.01 or
any other provision herein to the contrary, the Company shall
have the right in its sole and absolute discretion at any time
and from time to time while the Series A Securities are
outstanding, so long as an Event of Default under Section 6.01(a)
hereof has not occurred and is not continuing, to extend the
interest payment period for up to 60 consecutive months, but not
beyond the Stated Maturity of such Securities, provided that at
the end of each such period (referred to herein as an "Extension
Period") the Company shall pay all interest then accrued and
unpaid (together with interest thereon at the rate specified in
21<PAGE>
the title of the Series A Securities to the extent permitted by
applicable law); and provided that, during any such Extension
Period, neither the Company nor any Subsidiary, (i) shall declare
or pay any dividend on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its Capital Stock
(other than dividends paid to the Company by a Wholly Owned
Subsidiary), or (ii) pay any interest on any Securities of any
other series then outstanding. Prior to the termination of an
Extension Period, the Company may shorten or may further extend
the interest payment period, provided that such Extension Period
together with all such further extensions may not exceed 60
consecutive months. If JCP&L Capital is the sole holder of the
Securities, the Company shall give JCP&L Capital notice of its
selection of such extended interest payment period one Business
Day prior to the earlier of (i) the date any distributions on
Preferred Securities are payable or (ii) the date JCP&L Capital
is required to give notice to any national securities exchange on
which the Preferred Securities are listed or other applicable
self-regulatory organization or to the holders of the Preferred
Securities of the record date or the date such distribution is
payable, but in any event not less than one Business Day prior to
such record date. The Company shall cause JCP&L Capital to give
notice of the Company's selection of such extended interest
payment period to the holders of the Preferred Securities. If
JCP&L Capital shall not be the sole holder of the Securities, the
Company will give the holders of the Securities notice of its
selection of such extended interest payment period ten Business
Days prior to the earlier of (i) the Interest Payment Date or
(ii) the date the Company is required to give notice of the
record or payment date of such related interest payment to any
national securities exchange on which the Securities are then
listed or other applicable self-regulatory organization or to
holders of the Securities, but in any event not less than two
Business Days prior to such record date. The Company shall give
or cause the Trustee to give such notice of the Company's
selection of such extended interest payment period to the
Holders.
(d) If and when JCP&L Capital is required to pay, (i) as an
additional distribution with respect to the Series A Preferred
Securities, an amount equal to any federal, state or other taxes,
duties, assessments or governmental charges of whatever nature,
that have been withheld or deducted from the distributions to the
holders of the Series A Preferred Securities, or (ii) any other
federal, state or local taxes, duties, assessments or
governmental charges of whatever nature, the Company shall pay
additional interest ("Additional Interest") on the Series A
Securities in an amount equal to such additional distribution and
such other taxes, duties, assessments and charges. The Company
shall furnish the Trustee with an Officer's Certificate or other
written notice reporting the events described in this subsection
and their consequences.
22<PAGE>
(e) If and when JCP&L Capital redeems the Series A
Preferred Securities in accordance with their terms, the Series A
Securities shall become due and payable in a principal amount
equal to the aggregate stated liquidation preference of such
Series A Preferred Securities, together with all accrued and
unpaid interest, including Additional Interest, if any, and
accrued interest thereon to the date of payment. The Company
shall furnish the Trustee with an Officer's Certificate or other
written notice reporting the events described in this subsection
and their consequences.
SECTION 4.02 Prohibition Against Dividends, etc. During an
Event of Default.
Neither the Company nor any Subsidiary shall declare or pay
any dividend on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its Capital Stock,
other than dividends paid to the Company by a Wholly Owned
Subsidiary, if at such time (a) there shall have occurred any
event that, with the giving of notice or the lapse of time or
both, would constitute an Event of Default under Section 6.01
hereof, or (b) any Preferred Securities are at the time
outstanding and the Company is in default under the Guarantee.
SECTION 4.03 SEC Reports.
The Company shall file with the Trustee, within 15 days
after it files them with the SEC, copies of its annual report and
of the information, documents and other reports (or copies of
such portions of any of the foregoing as the SEC may by rules and
regulations prescribe) which the Company is required to file with
the SEC pursuant to Sections 13 or 15(d) of the Exchange Act. If
the Company is not subject to the reporting requirements of
Sections 13 or 15(d) of the Exchange Act, the Company shall file
with the Trustee and the SEC, in accordance with the rules and
regulations prescribed by the SEC, such of the supplementary and
periodic information, documents and reports which may be required
pursuant to Section 13 of the Exchange Act, in respect of a
security listed and registered on a national securities exchange
as may be prescribed in such rules and regulations. The Company
shall also comply with the provisions of Section 314(a) of the
TIA.
SECTION 4.04 Compliance Certificates.
(a) The Company shall deliver to the Trustee within 90
days after the end of each of the Company's fiscal years an
Officer's Certificate, stating whether or not the signer knows of
any Default or Event of Default. Such certificate shall contain a
certification from the principal executive officer, principal
23<PAGE>
financial officer or principal accounting officer of the Company
as to his or her knowledge of the Company's compliance with all
conditions and covenants under this Indenture. For purposes of
this Section 4.04(a), such compliance shall be determined without
regard to any period of grace or requirement of notice provided
under this Indenture. If such Officer does know of such a Default
or Event of Default, the certificate shall describe any such
Default or Event of Default, and its status. Such Officer's
Certificate need not comply with Section 11.04 hereof.
(b) The Company shall, so long as any of the Securities
are outstanding, deliver to the Trustee, as promptly as
practicable after any Officer becomes aware of any continuing
Default or Event of Default, an Officer's Certificate specifying
such Default, Event of Default or other default and what action
the Company is taking or proposes to take with respect thereto.
(c) The Company shall deliver to the Trustee any
information reasonably requested by the Trustee in connection
with the compliance by the Trustee or the Company with the TIA.
SECTION 4.05 Further Instruments and Acts.
Upon request of the Trustee, the Company shall execute and
deliver such further instruments and do such further acts as may
be reasonably necessary or proper to carry out more effectively
the purposes of this Indenture.
SECTION 4.06 Investment Company Act.
The Company shall not become an investment company subject
to registration under the Investment Company Act of 1940, as
amended.
SECTION 4.07 Payments for Consents.
Neither the Company nor any Subsidiary shall, directly or
indirectly, pay or cause to be paid any consideration, whether by
way of interest, fee or otherwise, to any Holder of any
Securities for or as an inducement to any consent, waiver or
amendment of any of the terms or provisions of this Indenture or
the Securities unless such consideration is offered to be paid or
agreed to be paid to all Holders of the Securities who so
consent, waive or agree to amend in the time frame set forth in
the documents soliciting such consent, waiver or agreement.
24<PAGE>
ARTICLE 5
SUCCESSOR CORPORATION
SECTION 5.01 When the Company May Merge, Etc.
The Company may not consolidate with or merge with or into,
or sell, convey, transfer or lease all or substantially all of
its assets (either in one transaction or a series of
transactions) to, any Person unless:
(1) the Person formed by or surviving such consolidation
or merger or to which such sale, conveyance, transfer or lease
shall have been made (the "Successor") if other than the Company,
is organized and existing under the laws of the United States of
America or any State thereof or the District of Columbia, and the
Successor (a) shall expressly assume by a supplemental indenture,
executed and delivered to the Trustee, in form satisfactory to
the Trustee, all the obligations of the Company under the
Securities and the Indenture, and (b) if any Preferred Securities
are then outstanding, the Successor shall expressly assume the
Company's obligations under the Guarantee, and shall become or
acquire the general partner of JCP&L Capital; and
(2) the Company delivers to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, sale, conveyance, transfer or lease and
such supplemental indenture comply with this Indenture.
The Successor will be the successor to the Company, and will
be substituted for, and may exercise every right and power and
become the obligor on the Securities with the same effect as if
the Successor had been named as, the Company herein. The
predecessor shall be released from the obligations of the Company
set forth in this Indenture and in the Securities.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01 Events of Default.
An "Event of Default" occurs if one of the following shall
have occurred and be continuing:
(1) The Company defaults in the payment, when due and
payable, of (a) interest on any Security or Additional Interest,
if any, and the default continues for a period of 15 days, or (b)
the principal of any Security when the same becomes due and
payable at maturity, upon acceleration, on any Redemption Date,
or otherwise; provided that the failure of the Company to pay
interest or Additional Interest on any series of Securities
during an Extension Period applicable to the Securities of such
series shall not constitute a default hereunder;
25<PAGE>
(2) The Company defaults in the performance of, fails to
comply with, any of its other covenants or agreements in the
Securities or this Indenture and such failure continues for 30
days after receipt by the Company of a "Notice of Default";
(3) The Company, pursuant to or within the meaning of any
Bankruptcy Law:
(a) commences a voluntary case or proceeding;
(b) consents to the entry of an order for relief
against it in an involuntary case or proceeding;
(c) consents to the appointment of a Custodian of it
or for all or substantially all of its property,
and such Custodian is not discharged within 90
days;
(d) makes a general assignment for the benefit of its
creditors; or
(e) admits in writing its inability to pay its debts
generally as they become due; or
(4) A court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(a) is for relief against the Company in an
involuntary case or proceeding;
(b) appoints a Custodian of the Company or for all or
substantially all of its properties; or
(c) orders the liquidation of the Company;
and in each case the order or decree remains unstayed and in
effect for 90 days.
The foregoing will constitute Events of Default whatever the
reason for any such Event of Default and whether it is voluntary
or involuntary or is effected by operation of law or pursuant to
any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body.
The term "Bankruptcy Law" means Title 11, United States
Code, or any similar Federal or state law for the relief of
debtors. "Custodian" means any receiver, trustee, assignee,
liquidator, sequestrator, custodian or similar official under any
Bankruptcy Law.
26<PAGE>
A Default under clause (2) above is not an Event of Default
until the Trustee notifies the Company, or the Holders of at
least a majority in aggregate principal amount of the Securities
at the time outstanding notify the Company and the Trustee, of
the Default and the Company does not cure such Default within the
time specified in clause (2) above after receipt of such notice.
Any such notice must specify the Default, demand that it be
remedied and state that such notice is a "Notice of Default."
SECTION 6.02 Acceleration.
If any Event of Default other than an Event of Default under
clauses (3) or (4) of Section 6.01 hereof occurs and is
continuing, the Trustee may, by notice to the Company, or the
Holders of at least a majority in aggregate principal amount of
the Securities at the time outstanding may, by notice to the
Company and the Trustee (each, an "Acceleration Notice"), and the
Trustee shall, upon the request of such Holders, declare the
principal of and accrued and unpaid interest, including
Additional Interest, if any, and accrued interest thereon, on all
of the Securities to be due and payable. Upon such a
declaration, such principal and interest shall be due and payable
immediately.
The Company shall deliver to the Trustee, as promptly as
practicable after it obtains knowledge thereof, written notice in
the form of an Officer's Certificate of any event which with the
giving of notice and the lapse of time would become an Event of
Default under clause (2) of Section 6.01 hereof, its status and
what action the Company is taking or proposes to take with
respect thereto.
If an Event of Default specified in clauses (3) or (4) of
Section 6.01 hereof occurs, the principal of and interest,
including Additional Interest, if any, on all the Securities
shall ipso facto become and be immediately due and payable
without any declaration or other act on the part of the Trustee
or any Securityholders.
The Holders of a majority in aggregate principal amount of
the Securities at the time outstanding, by notice to the Trustee,
may rescind an acceleration and its consequences if the
rescission would not conflict with any judgment or decree and if
all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely
because of acceleration. No such rescission shall affect any
subsequent Default or impair any right consequent thereto.
27<PAGE>
SECTION 6.03 Other Remedies.
If an Event of Default occurs and is continuing, the Trustee
may, in its own name or as trustee of an express trust,
institute, pursue and prosecute any proceeding, including,
without limitation, any action at law or suit in equity or other
judicial or administrative proceeding to collect the payment of
principal of or interest on the Securities, or to enforce the
performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of the
Securities in the proceeding. A delay or omission by the Trustee
or any Securityholder in exercising any right or remedy accruing
upon an Event of Default shall not impair the right or remedy or
constitute a waiver of, or acquiescence in, the Event of Default.
No remedy is exclusive of any other remedy. All available
remedies are cumulative.
SECTION 6.04 Waiver of Past Defaults.
Subject to Section 6.07 hereof, the Holders of a majority in
aggregate principal amount of the Securities of any series at the
time outstanding, by notice to the Trustee (and without notice to
any other Securityholder), may waive an existing Default or Event
of Default affecting the Securities of such series and its
consequences. When a Default is waived, it is deemed cured and
shall cease to exist, but no such waiver shall extend to any
subsequent or other Default or impair any consequent right.
SECTION 6.05 Control by Majority.
The Holders of a majority in aggregate principal amount of
the Securities at the time outstanding may direct the time,
method and place of conducting any proceeding for any remedy
available to the Trustee or of exercising any trust or power
conferred on the Trustee. However, the Trustee may refuse to
follow any direction that conflicts with law or this Indenture or
that the Trustee determines in good faith is unduly prejudicial
to the rights of other Securityholders or would involve the
Trustee in personal liability. The Trustee may take any other
action deemed proper by the Trustee which is not inconsistent
with such direction.
SECTION 6.06 Limitation on Suits.
Except as provided in Section 6.07 hereof, a Securityholder
may not pursue any remedy with respect to this Indenture or the
Securities unless:
(1) the Holder gives to the Trustee written notice stating
that an Event of Default is continuing;
28<PAGE>
(2) the Holders of at least a majority in aggregate
principal amount of the Securities at the time outstanding make a
written request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee reasonable
security and indemnity against any loss, liability or expense
satisfactory to the Trustee;
(4) the Trustee does not comply with the request within 60
days after receipt of the notice, the request and the offer of
security and indemnity; and
(5) the Holders of a majority in aggregate principal
amount of the Securities at the time outstanding do not give the
Trustee a direction inconsistent with the request during such 60
days.
A Securityholder may not use this Indenture to prejudice the
rights of any other Securityholder or to obtain a preference or
priority over any other Securityholder.
SECTION 6.07 Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the
right of any Holder to receive payment of the principal amount of
or interest on the Securities held by such Holder, on or after
the respective due dates expressed in the Securities (in the case
of interest, as the same may be extended pursuant to the
provisions of this Indenture and the Securities) or any
Redemption Date, or to bring suit for the enforcement of any such
payment on or after such respective dates shall not be impaired
or affected adversely without the consent of each such Holder.
SECTION 6.08 Collection Suit by the Trustee.
If an Event of Default described in Section 6.01(1) hereof
occurs and is continuing, the Trustee may recover judgment in its
own name and as trustee of an express trust against the Company
or any obligor on the Securities for the whole amount owing with
respect to the Securities and the amounts provided for in Section
7.07 hereof.
SECTION 6.09 The Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment,
composition or other judicial proceeding relating to the Company
29<PAGE>
or its properties or assets, the Trustee shall be entitled and
empowered, by intervention in such proceeding or otherwise:
(1) to file and prove a claim for the whole amount of the
principal amount and interest on the Securities and to file such
other papers or documents as may be necessary or advisable in
order to have the claims of the Trustee (including any claim for
the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel) and of the Holders
allowed in such judicial proceeding; and
(2) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the
same; and any Custodian in any such judicial proceeding is hereby
authorized by each Holder to make such payments to the Trustee
and, in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay the Trustee any
amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel, and any other amounts due the Trustee under Section 7.07
hereof.
Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf
of any Holder any plan of reorganization, arrangement, adjustment
or composition affecting the Securities or the rights of any
Holder thereof, or to authorize the Trustee to vote in respect of
the claim of any Holder in any such proceeding.
SECTION 6.10 Priorities.
If the Trustee collects any money pursuant to this Article
6, it shall pay out the money in the following order:
FIRST: to the Trustee for amounts due under Section 7.07
hereof;
SECOND: to Securityholders for amounts due and unpaid on
the Securities for the principal amount,
Redemption Price or interest, if any, as the case
may be, ratably, without preference or priority of
any kind, according to such amounts due and
payable on the Securities; and
THIRD: the balance, if any, to the Company.
The Trustee may fix a record date and payment date for any
payment to Securityholders pursuant to this Section 6.10.
30<PAGE>
SECTION 6.11 Undertaking for Costs.
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action
taken or omitted by it as Trustee, a court in its discretion may
require the filing by any party litigant (other than the Trustee)
in the suit of an undertaking to pay the costs of the suit, and
the court in its discretion may assess reasonable costs,
including reasonable attorneys' fees and expenses, against any
party litigant in the suit, having due regard to the merits and
good faith of the claims or defenses made by the party litigant.
This Section 6.11 does not apply to a suit by the Trustee, a suit
by a Holder pursuant to Section 6.07 hereof or a suit by Holders
of more than 10% in aggregate principal amount of the Securities
at the time outstanding.
SECTION 6.12 Waiver of Stay, Extension or Usury Laws.
The Company covenants (to the extent that it may lawfully do
so) that it will not at any time insist upon, or plead or in any
manner whatsoever claim or take the benefit or advantage of, any
stay or extension law or any usury or other law wherever enacted,
now or at any time hereafter in force, that would prohibit or
forgive the Company from paying all or any portion of the
principal or interest on the Securities as contemplated herein or
affect the covenants or the performance by the Company of its
obligations under this Indenture; and the Company (to the extent
that it may lawfully do so) hereby expressly waives all benefit
or advantage of any such law, and covenants that it will not
hinder, delay or impede the execution of any power herein granted
to the Trustee, but will suffer and permit the execution of every
such power as though no such law had been enacted.
ARTICLE 7
THE TRUSTEE
SECTION 7.01 Duties of the Trustee.
(1) If an Event of Default has occurred and is continuing,
the Trustee shall exercise the rights and powers vested in it by
this Indenture and use the same degree of care and skill in its
exercise as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.
(2) Except during the continuance of an Event of Default,
(a) the Trustee need perform only those duties that are
specifically set forth in this Indenture and no others; and (b)
in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates
or opinions furnished to the Trustee and conforming to the
requirements of this Indenture. However, in the case of any
certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee
31<PAGE>
shall examine the certificates and opinions to determine whether
or not they conform to the requirements of this Indenture.
(3) No provision in this Indenture shall relieve the
Trustee from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct, except
that:
(a) this paragraph (3) does not limit the effect of
paragraphs (1) and (2) of this Section 7.01;
(b) the Trustee shall not be liable for any error of
judgment made in good faith by a Trust Officer
unless it is proved that the Trustee was negligent
in ascertaining the pertinent facts;
(c) the Trustee shall not be liable with respect to
any action it takes or omits to take in good faith
in accordance with a direction received by it
pursuant to Section 6.05 hereof; and
(d) the Trustee may refuse to perform any duty or
exercise any right or power or extend or risk its
own funds or otherwise incur any financial
liability unless it receives security and
indemnity reasonably satisfactory to it against
any loss, liability or expense.
(4) Every provision of this Indenture that in any way
relates to the Trustee is subject to paragraphs (1), (2), (3) and
(5) of this Section 7.01 and to Section 7.02.
(5) Money held by the Trustee in trust hereunder need not
be segregated from other funds except to the extent required by
law. The Trustee shall not be liable for interest on any money
held by it hereunder.
SECTION 7.02 Rights of the Trustee.
Except as otherwise provided in Section 7.01 hereof:
(1) the Trustee may rely on any document believed by it to
be genuine and to have been signed or presented by the proper
person. The Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture or other paper or
document, but the Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it
may see fit, and, if the Trustee determines to make such further
inquiry or investigation, it shall be entitled to examine the
32<PAGE>
books, records and premises of the Company, personally or by
agent or attorney;
(2) whenever the Trustee is requested by the Company to act
or refrain from acting hereunder, the Trustee may require an
Officer's Certificate directing it to act or refrain from so
acting, and, if appropriate, an Opinion of Counsel. The Trustee
shall not be liable for any action it takes or omits to take in
the absence of bad faith in reliance on such Officer's
Certificate and Opinion of Counsel;
(3) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any action
hereunder, the Trustee (unless other evidence be herein
specifically prescribed) may in the absence of bad faith on its
part, rely upon an Officer's Certificate;
(4) the Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent
appointed with due care;
(5) the Trustee shall not be liable for any action it takes
or omits to take in good faith which it reasonably believes to be
authorized or within its rights or powers;
(6) the Trustee may consult with counsel of its selection
and the advice of such counsel or any Opinion of Counsel shall be
full and complete authorization and protection in respect of any
action taken, suffered or omitted by it hereunder in good faith
and in reliance thereon; and
(7) the Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Indenture at the
request or direction of any of the Holders pursuant to this
Indenture, unless such Holders shall have offered to the Trustee
reasonable security and indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with such
request or direction.
SECTION 7.03 Individual Rights of the Trustee.
The Trustee in its individual or any other capacity may
become the owner or pledgee of Securities and may otherwise deal
with the Company or its Affiliates with the same rights it would
have if it were not the Trustee. Any Paying Agent, Registrar or
co-Registrar may do the same with like rights. However, the
Trustee must comply with Sections 7.10 and 7.11 hereof.
33<PAGE>
SECTION 7.04 The Trustee's Disclaimer.
The Trustee makes no representation as to the validity or
adequacy of this Indenture or the Securities, it shall not be
accountable for the Company's use of the proceeds from the
Securities, and it shall not be responsible for any statement in
this Indenture or the Securities or any report or certificate
issued by the Company hereunder (other than the Trustee's
Certificate of Authentication), or the determination as to which
beneficial owners are entitled to receive any notices hereunder.
SECTION 7.05 Notice of Defaults.
If a Default occurs and is continuing and if it is known to
the Trustee, the Trustee shall mail to each Securityholder, as
their names and addresses appear on the Security Register, notice
of the Default within 90 days after it becomes known to the
Trustee unless such Default shall have been cured or waived.
Except in the case of a Default described in Section 6.01(1)
hereof, the Trustee may withhold such notice if and so long as a
committee of Trust Officers in good faith determines that the
withholding of such notice is in the interests of
Securityholders. The second sentence of this Section 7.05 shall
be in lieu of the proviso to TIA Section 315(b). Said proviso is
hereby expressly excluded from this Indenture, as permitted by
the TIA.
SECTION 7.06 Reports by Trustee to Holders.
Within 60 days after each May 31 beginning with the May 31
next following the date of this Indenture, the Trustee shall mail
to each Securityholder a brief report dated as of such May 31 in
accordance with and to the extent required under TIA Section 313.
A copy of each report at the time of its mailing to
Securityholders shall be filed with the Company, the SEC and each
securities exchange on which the Securities are listed. The
Company agrees to promptly notify the Trustee whenever the
Securities become listed on any securities exchange and of any
delisting thereof.
SECTION 7.07 Compensation and Indemnity.
The Company agrees:
(1) to pay to the Trustee from time to time such
compensation as shall be agreed in writing between the Company
and the Trustee for all services rendered by it hereunder (which
34<PAGE>
compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust);
(2) to reimburse the Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made
by the Trustee in accordance with any provision of this Indenture
(including the reasonable compensation and the expenses and
advances of its agents and counsel), including all reasonable
expenses and advances incurred or made by the Trustee in
connection with any membership on any creditors' committee,
except any such expense or advance as may be attributable to its
negligence or bad faith; and
(3) to indemnify the Trustee, its officers, directors and
shareholders, for, and to hold it harmless against, any and all
loss, liability or expense, incurred without negligence or bad
faith on its part, arising out of or in connection with the
acceptance or administration of this trust, including the costs
and expenses of defending itself against any claim or liability
in connection with the exercise or performance of any of its
powers or duties hereunder.
The Trustee shall have a claim and lien prior to the
Securities as to all property and funds held by it hereunder for
any amount owing it or any predecessor Trustee pursuant to this
Section 7.07, except with respect to funds held in trust for the
payment of principal of or interest on particular Securities.
The Company's payment obligations pursuant to this Section
7.07 are not subject to Article 10 of this Indenture and shall
survive the discharge of this Indenture. When the Trustee renders
services or incurs expenses after the occurrence of a Default
specified in Section 6.01 hereof, the compensation for services
and expenses are intended to constitute expenses of
administration under any Bankruptcy Law.
SECTION 7.08 Replacement of Trustee.
The Trustee may resign by so notifying the Company in
writing at least 30 days prior to the date of the proposed
resignation; provided, however, no such resignation shall be
effective until a successor Trustee has accepted its appointment
pursuant to this Section 7.08. The Holders of a majority in
aggregate principal amount of the Securities at the time
outstanding may remove the Trustee by so notifying the Trustee in
writing and may appoint a successor Trustee, which shall be
subject to the consent of the Company unless an Event of Default
has occurred and is continuing. The Trustee shall resign if:
35<PAGE>
(1) the Trustee fails to comply with Section 7.10 hereof;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or public officer takes charge of the
Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall promptly
appoint a successor Trustee. A successor Trustee shall deliver a
written acceptance of its appointment to the retiring Trustee and
to the Company. Thereupon the resignation or removal of the
retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. The successor Trustee shall mail a
notice of its succession to Securityholders. Subject to payment
of all amounts owing to the Trustee under Section 7.07 hereof and
subject further to its lien under Section 7.07, the retiring
Trustee shall promptly transfer all property held by it as
Trustee to the successor Trustee. If a successor Trustee does
not take office within 30 days after the retiring Trustee resigns
or is removed, the retiring Trustee, the Company or the Holders
of a majority in aggregate principal amount of the Securities at
the time outstanding may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10 hereof, any
Securityholder may petition any court of competent jurisdiction
for its removal and the appointment of a successor Trustee.
SECTION 7.09 Successor Trustee by Merger.
If the Trustee consolidates with, merges or converts into,
or transfers all or substantially all its corporate trust
business or assets (including this Trusteeship) to, another
corporation, the resulting, surviving or transferee corporation
without any further act shall, with the concurrence of the
Company, be the successor Trustee.
SECTION 7.10 Eligibility; Disqualification.
The Trustee shall at all times satisfy the requirements of
TIA Sections 310(a)(1) and 310(a)(2). The Trustee shall have a
combined capital and surplus of at least $50,000,000 as set forth
in its most recent published annual report of condition. The
Trustee shall comply with TIA Section 310(b). In determining
whether the Trustee has conflicting interests as defined in TIA
36<PAGE>
Section 310(b)(1), the provisions contained in the proviso to TIA
Section 310(b)(1) shall be deemed incorporated herein.
SECTION 7.11 Preferential Collection of Claims Against the
Company.
If and when the Trustee shall be or become a creditor of the
Company, the Trustee shall be subject to the provisions of the
TIA regarding the collection of claims against the Company.
ARTICLE 8
SATISFACTION AND DISCHARGE OF INDENTURE;
DEFEASANCE OF CERTAIN OBLIGATIONS; UNCLAIMED MONEYS
SECTION 8.01 Satisfaction and Discharge of Indenture.
The Company shall be deemed to have paid and discharged the
entire indebtedness on all Securities outstanding upon the
deposit referred to in subparagraph (A) below, and the provisions
of this Indenture with respect to the Securities shall no longer
be in effect (except as to (1) the rights of registration of
transfer, substitution and exchange of Securities, (2) the
replacement of apparently mutilated, defaced, destroyed, lost or
stolen Securities, (3) the rights of Holders to receive payments
of principal thereof and interest thereon, (4) the rights of the
Holders as beneficiaries hereof with respect to the property so
deposited with the Trustee payable to all or any of them, (5) the
obligation of the Company to maintain an office or agency for
payments on and registration of transfer of the Securities, and
(6) the rights, obligations and immunities of the Trustee
hereunder) and the Trustee shall, at the request and expense of
the Company, execute proper instruments acknowledging the same,
if:
(A) the Company has irrevocably deposited or caused to be
irrevocably deposited with the Trustee as trust funds in
trust, specifically pledged as security for, and dedicated
solely to, the benefit of the Holders (i) cash in an amount,
or (ii) U.S. Government Obligations, maturing as to
principal and interest at such times and in such amounts as
will ensure the availability of cash, or (iii) a combination
thereof, sufficient to pay the principal of, and interest
on, all Securities then outstanding, whether at the Stated
Maturity, upon acceleration or upon the redemption of the
Securities;
(B) no Default or Event of Default with respect to the
Securities has occurred and is continuing on the date of
such deposit or occurs as a result of such deposit;
(C) the Company has delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all
37<PAGE>
conditions precedent relating to the defeasance contemplated
by this provision have been complied with; and
(D) if the deposit includes U. S. Government Obligations,
the Company has delivered to the Trustee (i) either a
private Internal Revenue Service ruling or an Opinion of
Counsel to the effect that the Holders will not recognize
income, gain or loss for federal income tax purposes as a
result of such deposit, defeasance and discharge and will be
subject to federal income tax on the same amount and in the
manner and at the same times as would have been the case if
such deposit, defeasance and discharge had not occurred, and
(ii) an Opinion of Counsel to the effect that (A) the
deposit shall not result in the Company, the Trustee or the
trust being deemed to be an "investment company" under the
Investment Company Act of 1940, as amended, and (B) such
deposit creates a valid trust in which the Holders of the
Securities have the sole beneficial ownership interest or
that the Holders of the Securities have a nonavoidable first
priority security interest in such trust. Notwithstanding
the foregoing, the Company's obligations to pay principal of
and interest, including Additional Interest, if any, on the
Securities shall continue until the Internal Revenue Service
ruling or Opinion of Counsel referred to in clause (i) above
is provided with regard to and without reliance upon such
obligations continuing to be obligations of the Company.
SECTION 8.02 Application by Trustee of Funds Deposited for
Payment of Securities.
Subject to Section 8.04 and Article 10 of this Indenture,
all moneys deposited with the Trustee pursuant to Section 8.01
hereof shall be held in trust and applied by it to the payment,
either directly or through any Paying Agent (including the
Company acting as its own Paying Agent), to the Holders of the
particular Securities for the payment or redemption of which such
moneys have been deposited with the Trustee, of all sums due and
to become due thereon for principal and interest; but such money
need not be segregated from other funds except to the extent
required by law.
SECTION 8.03 Repayment of Moneys Held by Paying Agent.
In connection with the satisfaction and discharge of this
Indenture, all moneys then held by any Paying Agent under this
Indenture shall, upon demand of the Company, be repaid to it or
paid to the Trustee, and thereupon such Paying Agent shall be
released from all further liability with respect to such moneys.
38<PAGE>
SECTION 8.04 Return of Moneys Held by the Trustee and Paying
Agent Unclaimed for Three Years
Any moneys deposited with or paid to the Trustee or any
Paying Agent for the payment of the principal or interest on any
Security and not applied but remaining unclaimed for three years
after the date when such principal or interest shall have become
due and payable shall, upon the written request of the Company
and unless otherwise required by mandatory provisions of
applicable escheat or abandoned or unclaimed property laws, be
repaid to the Company by the Trustee or such Paying Agent, and
the Holder of such Security shall, unless otherwise required by
mandatory provisions of applicable escheat or abandoned or
unclaimed property laws, thereafter look only to the Company for
any payment which such Holder may be entitled to collect, and all
liability of the Trustee or any Paying Agent with respect to such
moneys shall thereupon cease.
ARTICLE 9
AMENDMENTS
SECTION 9.01 Without Consent of Holders.
From time to time, when authorized by a resolution of the
Board of Directors, the Company and the Trustee, without notice
to or the consent of the Holders of the Securities issued
hereunder, may amend or supplement this Indenture or the
Securities:
(1) to cure any ambiguity, defect or inconsistency;
(2) to comply with Article 5 hereof;
(3) to provide for uncertificated Securities in addition to
or in place of certificated Securities;
(4) to make any other change that does not adversely affect
the rights of any Securityholder;
(5) to comply with any requirement of the SEC in connection
with the qualification of this Indenture under the TIA; or
(6) to set forth the terms and conditions, which shall not
be inconsistent with this Indenture, of the series of Securities
(other than the Series A Securities) that are to be issued
hereunder and the form of Securities of such series.
39<PAGE>
SECTION 9.02 With Consent of Holders.
With the written consent of the Holders of at least a
majority in aggregate principal amount of any series of
Securities at the time outstanding, who are affected by any
amendment or waiver, the Company and the Trustee may amend this
Indenture or the Securities or may waive future compliance by the
Company with any provisions of this Indenture or the Securities
of such series. However, without the consent of each
Securityholder affected, such an amendment or waiver may not:
(1) reduce the principal amount of the Securities, or
reduce the principal amount of the Securities the Holders of
which must consent to an amendment of this Indenture or a waiver;
(2) change the Stated Maturity of the principal of, or the
interest or rate of interest on the Securities, change adversely
to the Holders the redemption provisions of Article 3 hereof or
in the Securities, or impair the right to institute suit for the
enforcement of any such payment or make any Security payable in
money or securities other than that stated in the Security;
(3) make any change in Article 10 hereof that adversely
affects the rights of the Holders of the Securities or any change
to any other section hereof that adversely affects their rights
under Article 10 hereof;
(4) waive a Default in the payment of the principal of, or
interest on, any Security; or
(5) change Section 6.07 hereof.
It shall not be necessary for the consent of the Holders
under this Section 9.02 to approve the particular form of any
proposed amendment, but it shall be sufficient if such consent
approves the substance thereof.
If certain Holders agree to defer or waive certain
obligations of the Company hereunder with respect to Securities
held by them, such deferral or waiver shall not affect the rights
of any other Holder to receive the payment or performance
required hereunder in a timely manner, unless such deferral or
waiver complies with the requirements of this Section 9.02.
After an amendment or waiver under this Section 9.02 becomes
effective, the Company shall mail to each Holder affected by such
amendment or waiver a notice briefly describing the amendment or
waiver. Any failure of the Company to mail such notices, or any
defect therein, shall not, however, in any way impair or affect
the validity of such amendment or waiver.
40
<PAGE>
SECTION 9.03 Compliance with Trust Indenture Act.
Every supplemental indenture executed pursuant to this
Article 9 shall comply with the TIA.
SECTION 9.04 Revocation and Effect Of Consents, Waivers and
Actions.
Until an amendment, waiver or other action by Holders
becomes effective, a consent to it or any other action by a
Holder of a Security hereunder is a continuing consent by the
Holder and every subsequent Holder of that Security or portion of
the Security that evidences the same obligation as the consenting
Holder's Security, even if notation of the consent, waiver or
action is not made on the Security. However, any such Holder or
subsequent Holder may revoke the consent, waiver or action as to
such Holder's Security or portion of the Security if the Trustee
receives the notice of revocation before the consent of the
requisite aggregate principal amount of the Securities at the
time outstanding has been obtained and not revoked. After an
amendment, waiver or action becomes effective, it shall bind
every Securityholder, except as provided in Section 9.02 hereof.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders entitled to
consent to any amendment or waiver. If a record date is fixed,
then, notwithstanding the first two sentences of the immediately
preceding paragraph, those Persons who were Holders at such
record date or their duly designated proxies, and only those
Persons, shall be entitled to consent to such amendment,
supplement or waiver or to revoke any consent previously given,
whether or not such Persons continue to be Holders after such
record date.
SECTION 9.05 Notation on or Exchange of Securities.
Securities authenticated and made available for delivery
after the execution of any supplemental indenture pursuant to
this Article 9 may, and shall, if required by the Trustee, bear a
notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall
so determine, new Securities of any series so modified as to
conform, in the opinion of the Trustee and the Board of
Directors, to any such supplemental indenture may be prepared and
executed by the Company and authenticated and made available for
delivery by the Trustee in exchange for outstanding Securities of
the same series.
SECTION 9.06 Trustee to Sign Supplemental Indentures.
The Trustee shall sign any supplemental indenture authorized
pursuant to this Article 9 if the supplemental indenture does not
adversely affect the rights, duties, liabilities or immunities of
41<PAGE>
the Trustee. If it does, the Trustee may, but need not, sign it.
In signing such amendment the Trustee shall be entitled to
receive, and shall be fully protected in relying upon, an
Officer's Certificate and Opinion of Counsel stating that such
supplemental indenture is authorized or permitted by this
Indenture.
SECTION 9.07 Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this
Article 9, this Indenture shall be modified in accordance
therewith, and such supplemental indenture shall form a part of
this Indenture for all purposes and every Holder of Securities
theretofore or thereafter authenticated and made available for
delivery hereunder shall be bound thereby.
ARTICLE 10
SUBORDINATION
SECTION 10.01 Securities Subordinated to Senior Indebtedness.
Notwithstanding the provisions of Section 6.01 hereof or any
other provision herein or in the Securities, the Company and the
Trustee and each Holder by his acceptance thereof (a) covenant
and agree that all payments by the Company of the principal of
and interest (which term for purposes of this Article 10 shall
include Additional Interest, if any, and any additional accrued
interest) on the Securities shall be subordinated in accordance
with the provisions of this Article 10 to the prior payment in
full, in cash or cash equivalents, of all amounts payable on
Senior Indebtedness, and (b) acknowledge that holders of Senior
Indebtedness are or shall be relying on this Article 10.
SECTION 10.02 Priority and Payment of Proceeds in Certain
Events; Remedies Standstill.
(a) Upon any payment or distribution of assets or
securities of the Company, as the case may be, of any kind or
character, whether in cash, property or securities, upon any
dissolution or winding up or total or partial liquidation or
reorganization of the Company, whether voluntary or involuntary,
or in bankruptcy, insolvency, receivership or other proceedings,
all amounts payable on Senior Indebtedness (including any
interest accruing on such Senior Indebtedness subsequent to the
commencement of a bankruptcy, insolvency or similar proceeding)
shall first be paid in full in cash, or payment provided for in
cash or cash equivalents, before the Holders or the Trustee on
behalf of the Holders shall be entitled to receive from the
Company any payment of principal of or interest on or any other
amounts in respect of the Securities or distribution of any
assets or securities. Before any payment may be made by the
42<PAGE>
Company of the principal of or interest on the Securities upon
any such dissolution or winding up or liquidation or
reorganization, any payment or distribution of assets or
securities of the Company of any kind or character, whether in
cash, property or securities, to which the Holders or the Trustee
on their behalf would be entitled, except for the provisions of
this Article 10, shall be made by the Company or by any receiver,
trustee in bankruptcy, liquidating trustee, agent or other Person
making such payment or distribution first to the holders of all
Senior Indebtedness or their representatives to the extent
necessary to pay all Senior Indebtedness in full after giving
effect to any concurrent payment or distribution to the holders
of Senior Indebtedness.
(b) No direct or indirect payment by or on behalf of the
Company of principal of or interest on the Securities whether
pursuant to the terms of the Securities or upon acceleration or
otherwise shall be made if, at the time of such payment, there
exists any default in the payment of all or any portion of any
Senior Indebtedness, or any other default affecting Senior
Indebtedness permitting its acceleration, as the result of which
the maturity of Senior Indebtedness has been accelerated, and the
Trustee has received written notice from any trustee,
representative or agent for the holders of the Senior
Indebtedness or the holders of at least a majority in principal
amount of the Senior Indebtedness at the time outstanding of such
default and acceleration, and such default shall not have been
cured or waived by or on behalf of the holders of such Senior
Indebtedness.
(c) If, notwithstanding the foregoing provision
prohibiting such payment or distribution, the Trustee or any
Holder shall have received any payment on account of the
principal of or interest on the Securities (other than as
permitted by subsections (a) and (b) of this Section 10.02) when
such payment is prohibited by this Section 10.02 and before all
amounts payable on Senior Indebtedness are paid in full in cash
or cash equivalents, then and in such event (subject to the
provisions of Section 10.08 hereof) such payment or distribution
shall be received and held in trust for the holders of Senior
Indebtedness and shall be paid over or delivered first to the
representatives of the holders of the Senior Indebtedness
remaining unpaid to the extent necessary to pay such Senior
Indebtedness in full in cash or cash equivalents.
Upon any payment or distribution of assets or securities
referred to in this Article 10, the Trustee and the Holders shall
be entitled to rely upon any order or decree of a court of
competent jurisdiction in which such dissolution, winding up,
liquidation or reorganization proceedings are pending, and upon a
certificate of the receiver, trustee in bankruptcy, liquidating
trustee, agent or other Person making any such payment or
distribution, delivered to the Trustee for the purpose of
43<PAGE>
ascertaining the Persons entitled to participate in such
distribution, the holders of Senior Indebtedness and other
indebtedness of the Company, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and
all other facts pertinent thereto or to this Article 10.
SECTION 10.03 Payments which May Be Made Prior to Notice.
Nothing in this Article 10 or elsewhere in this Indenture
shall prevent (i) the Company, except under the conditions
described in Section 10.02 hereof, from making payments of
principal of and interest on the Securities or from depositing
with the Trustee any monies for such payments, or (ii) the
application by the Trustee of any monies deposited with it for
the purpose of making such payments of principal of and interest
on the Securities, to the Holders entitled thereto, unless at
least one day prior to the date when such payment would otherwise
(except for the prohibitions contained in Section 10.02 hereof)
become due and payable, the Trustee shall have received the
written notice provided for in Section 10.02(b) hereof.
SECTION 10.04 Rights of Holders of Senior Indebtedness Not to Be
Impaired.
No right of any present or future holder of any Senior
Indebtedness to enforce subordination as herein provided shall at
any time or in any way be prejudiced or impaired by any good
faith act or omission to act by any such holder, or by any
noncompliance by the Company with the terms and provisions and
covenants herein regardless of any knowledge thereof any such
holder may have or otherwise be charged with.
The provisions of this Article 10 are intended to be for the
benefit of, and shall be enforceable directly by, the holders of
Senior Indebtedness.
Notwithstanding anything to the contrary in this Article 10,
to the extent the Holders or the Trustee have paid over or
delivered to any holder of Senior Indebtedness any payment or
distribution received on account of the principal of, or interest
on, the Securities to which any other holder of Senior
Indebtedness shall be entitled to share in accordance with
Section 10.02 hereof, no holder of Senior Indebtedness shall have
a claim or right against the Holders or the Trustee with respect
to any such payment or distribution or as a result of the failure
to make payments or distributions to such other holder of Senior
Indebtedness.
44<PAGE>
SECTION 10.05 Trustee May Take Action to Effectuate
Subordination.
Each Holder by his acceptance of the Securities authorizes
and directs the Trustee on his behalf to take such action as may
be necessary or appropriate to effectuate, as between the holders
of Senior Indebtedness and the Holders, the subordination and the
subrogation as provided in this Article 10 and appoints the
Trustee his attorney-in-fact for any and all such purposes.
SECTION 10.06 Subrogation.
Upon the payment in full, in cash or cash equivalents, of
all Senior Indebtedness, the Holders shall be subrogated to the
rights of the holders of such Senior Indebtedness to receive
payments or distributions of assets of the Company made on such
Senior Indebtedness until the Securities shall be paid in full;
and for the purposes of such subrogation, no payments or
distributions to holders of such Senior Indebtedness of any cash,
property or securities to which Holders of the Securities would
be entitled, except for this Article 10, and no payment pursuant
to this Article 10 to holders of such Senior Indebtedness by the
Holders of the Securities, shall, as between the Company, its
creditors other than holders of such Senior Indebtedness and the
Holders of the Securities, be deemed to be a payment by the
Company to or on account of such Senior Indebtedness, it being
understood that the provisions of this Article 10 are solely for
the purpose of defining the relative rights of the holders of
such Senior Indebtedness, on the one hand, and the Holders of the
Securities, on the other hand.
If any payment or distribution to which the Holders of the
Securities would otherwise have been entitled but for the
provisions of this Article 10 shall have been applied, pursuant
to this Article 10, to the payment of all Senior Indebtedness,
then and in such case, the Holders of the Securities shall be
entitled to receive from the holders of such Senior Indebtedness
at the time outstanding any payments or distributions received by
such holders of Senior Indebtedness in excess of the amount
sufficient to pay, in cash or cash equivalents, all such Senior
Indebtedness in full.
SECTION 10.07 Obligations of Company Unconditional;
Reinstatement.
Nothing in this Article 10, or elsewhere in this Indenture
or in any Security, is intended to or shall impair, as between
the Company and the Holders of the Securities, the obligations of
the Company, which are absolute and unconditional, to pay to the
Holders the principal of, and interest on, the Securities as and
when the same shall become due and payable in accordance with
their terms, or is intended to or shall affect the relative
45<PAGE>
rights of the Holders of the Securities and creditors of the
Company other than the holders of the Senior Indebtedness, nor
shall anything herein or therein prevent the Trustee or any
Holder from exercising all remedies otherwise permitted by
applicable law upon Default under this Indenture, subject to the
rights, if any, under this Article 10 of the holders of such
Senior Indebtedness in respect of cash, property or securities of
the Company received upon the exercise of any such remedy.
The failure to make a scheduled payment of principal of, or
interest on, the Securities by reason of Section 10.02 hereof
shall not be construed as preventing the occurrence of an Event
of Default under Section 6.01 hereof; provided, however, that if
(i) the conditions preventing the making of such payment no
longer exist, and (ii) the Holders of the Securities are made
whole with respect to such omitted payments, the Event of Default
relating thereto (including any failure to pay any accelerated
amounts) shall be automatically waived, and the provisions of the
Indenture shall be reinstated as if no such Event of Default had
occurred.
SECTION 10.08 Trustee Entitled to Assume Payments Not Prohibited
in Absence of Notice.
The Trustee or Paying Agent shall not be charged with the
knowledge of the existence of any facts which would prohibit the
making of any payment to or by the Trustee or Paying Agent,
unless and until the Trustee or Paying Agent shall have received
written notice thereof from the Company or one or more holders of
Senior Indebtedness or from any trustee or agent therefor or
unless the Trustee or Paying Agent otherwise had actual knowledge
thereof; and, prior to the receipt of any such written notice or
actual knowledge, the Trustee or Paying Agent may conclusively
assume that no such facts exist.
Unless at least one day prior to the date when by the terms
of this Indenture any monies are to be deposited by the Company
with the Trustee or any Paying Agent for any purpose (including,
without limitation, the payment of the principal of or the
interest on any Security), the Trustee or Paying Agent shall,
except where no notice is necessary or where notice is deemed
given in Sections 10.02 and 10.03 hereof, have received with
respect to such monies the notice provided for in the preceding
sentence, the Trustee or Paying Agent shall have full power and
authority to receive and apply such monies to the purpose for
which they were received. Neither of them shall be affected by
any notice to the contrary, which may be received by either on or
after such date. The foregoing shall not apply to the Paying
Agent if the Company is acting as Paying Agent. Nothing in this
Section 10.08 shall limit the right of the holders of Senior
Indebtedness to recover payments as contemplated by Section 10.02
hereof. The Trustee or Paying Agent shall be entitled to rely on
46<PAGE>
the delivery to it of a written notice by a Person representing
himself or itself to be a holder of such Senior Indebtedness (or
a trustee on behalf of, or other representative of, such holder)
to establish that such notice has been given by a holder of such
Senior Indebtedness or a trustee or representative on behalf of
any such holder. The Trustee shall not be deemed to have any
fiduciary duty to the holders of Senior Indebtedness.
SECTION 10.09 Right of Trustee to Hold Senior Indebtedness.
The Trustee and any Paying Agent shall be entitled to all of
the rights set forth in this Article 10 in respect of any Senior
Indebtedness at any time held by them to the same extent as any
other holder of such Senior Indebtedness, and nothing in this
Indenture shall be construed to deprive the Trustee or any Paying
Agent of any of its rights as such holder.
ARTICLE 11
MISCELLANEOUS
SECTION 11.01 Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or
conflicts with the duties imposed by operation of subsection (c)
of Section 318 of the TIA, the imposed duties shall control. The
provisions of Sections 310 to 317, inclusive, of the TIA that
impose duties on any Person (including provisions automatically
deemed included in an indenture unless the indenture provides
that such provisions are excluded) are a part of and govern this
Indenture, except as, and to the extent, they are expressly
excluded from this Indenture, as permitted by the TIA.
SECTION 11.02 Notices.
Any notice or communication shall be in writing and
delivered in person or mailed by first-class mail, postage
prepaid, addressed as follows:
if to the Company:
Jersey Central Power & Light Company
300 Madison Avenue
Morristown, New Jersey 07962-1911
Attention: Secretary
Facsimile No.: (___) ________
if to the Trustee:
United States Trust Company of New York
47<PAGE>
114 West 47th Street
New York, New York 10036
Attn: Corporate Trust Department,
Department B
The Company or the Trustee, by giving notice to the other,
may designate additional or different addresses for subsequent
notices of communications. Upon request from the holder, if any,
of Senior Indebtedness, the Company shall notify such holder of
any such additional or different addresses of which the Company
receives notice from the Trustee.
Any notice or communication given to a Securityholder shall
be mailed to the Securityholder at the Securityholder's address
as it appears on the Register of the Registrar and shall be
sufficiently given if mailed within the time prescribed.
Failure to mail a notice or communication to a
Securityholder or any defect in it shall not affect its
sufficiency with respect to other Securityholders. If a notice or
communication is mailed in the manner provided above, it is duly
given, whether or not received by the addressee.
If the Company mails a notice or communication to the
Securityholders, it shall mail a copy to the Trustee and each
Registrar, Paying Agent or co-Registrar.
SECTION 11.03 Communication by Holders with Other Holders.
Securityholders may communicate, pursuant to TIA Section
312(b), with other Securityholders with respect to their rights
under this Indenture or the Securities. The Company, the Trustee,
the Registrar, the Paying Agent and anyone else shall have the
protection of TIA Section 312(c).
SECTION 11.04 Certificate and Opinion as to Conditions
Precedent.
Upon any request or application by the Company to the
Trustee to take any action under this Indenture, the Company
shall furnish to the Trustee:
(1) an Officer's Certificate (complying with Section 11.05
hereof) stating that, in the opinion of such Officer, all
conditions precedent to the taking of such action have been
complied with; and
(2) if appropriate, an Opinion of Counsel (complying with
Section 11.05 hereof) stating that, in the opinion of such
48<PAGE>
counsel, all such conditions precedent to the taking of such
action have been complied with.
SECTION 11.05 Statements Required in Certificate or Opinion.
Each Officer's Certificate and Opinion of Counsel with
respect to compliance with a covenant or condition provided for
in this Indenture shall include:
(1) a statement that each individual making such Officer's
Certificate or Opinion of Counsel has read such covenant or
condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or
opinions contained in such Officer's Certificate or Opinion of
Counsel are based;
(3) a statement that, in the opinion of each such
individual, he or she has made such examination or investigation
as is necessary to enable him or her to express an informed
opinion as to whether or not such covenant or condition has been
complied with; and
(4) a statement that, in the opinion of such individual,
such covenant or condition has been complied with; provided,
however, that with respect to matters of fact not involving any
legal conclusion, an Opinion of Counsel may rely on an Officer's
Certificate or certificates of public officials.
SECTION 11.06 Severability Clause.
If any provision in this Indenture or in the Securities
shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby.
SECTION 11.07 Rules by Trustee, Paying Agent and Registrar.
The Trustee may make reasonable rules for action by or a
meeting of Securityholders. The Registrar and Paying Agent may
make reasonable rules for their functions.
SECTION 11.08 Legal Holidays.
A "Legal Holiday" is any day other than a Business Day. If
any specified date (including a date for giving notice) is a
49<PAGE>
Legal Holiday, the action to be taken on such date shall be taken
on the next succeeding day that is not a Legal Holiday, and if
such action is a payment in respect of the Securities, no
principal or interest installment shall accrue for the
intervening period; except that if any payment is due on a Legal
Holiday and the next succeeding day that is not a Legal Holiday
is in the next succeeding calendar year, such payment shall be
made on the Business Day immediately preceding such Legal
Holiday.
SECTION 11.09 Governing Law.
This Indenture and the Securities shall be governed by and
construed in accordance with the laws of the State of New York,
as applied to contracts made and performed within the State of
New York, without regard to its principles of conflicts of laws.
SECTION 11.10 No Recourse Against Others.
No director, officer, employee or stockholder, as such, of
the Company shall have any liability for any obligations of the
Company under the Securities or this Indenture or for any claim
based on, in respect of or by reason of such obligations or their
creation. By accepting a Security, each Securityholder shall
waive and release all such liability. The waiver and release
shall be part of the consideration for the issue of the
Securities.
SECTION 11.11 Successors.
All agreements of the Company in this Indenture and the
Securities shall bind its successors and assigns. All agreements
of the Trustee in this Indenture shall bind its successors and
assigns.
SECTION 11.12 Multiple Original Copies of this Indenture.
The parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together
represent the same agreement. Any signed copy shall be sufficient
proof of this Indenture.
SECTION 11.13 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another
indenture, loan or debt agreement of the Company or any
Subsidiary. Any such indenture, loan or debt agreement may not be
used to interpret this Indenture.
50<PAGE>
SECTION 11.14 Table of Contents; Headings, Etc.
The Table of Contents, Cross-Reference Table, and headings
of the Articles and Sections of this Indenture have been inserted
for convenience of reference only, are not to be considered a
part hereof, and shall in no way modify or restrict any of the
terms or provisions hereof.
SECTION 11.15 Benefits of the Indenture.
Nothing in this Indenture or in the Securities, express or
implied, shall give to any person, other than the parties hereto
and their successors hereunder and the Holders, any benefit or
any legal or equitable right, remedy or claim under this
Indenture, except as expressly provided in Article 10 hereof.
SIGNATURES
IN WITNESS WHEREOF, the undersigned, being duly authorized,
have executed this Indenture on behalf of the respective parties
hereto as of the date first above written.
JERSEY CENTRAL POWER & COMPANY
By:
Name:
Title:
UNITED STATES TRUST COMPANY OF NEW YORK
as Trustee
By:
Name:
Title:
51<PAGE>
[FORM OF FACE OF THE SECURITY]
__% Deferrable Interest Subordinated Debentures, Series A,
due 2044
No. __________________
$___________
Jersey Central Power & Light Company, a New Jersey corporation
(the "Company", which term includes any successor corporation
under the Indenture hereinafter referred to), promises to pay to
_______________ or registered assigns, the principal amount of
_____________________________ Dollars on _______________, 2044.
Interest Payment Dates: the last day of each month
commencing on ____________, 1995, except as provided in the
Indenture.
Regular Record Dates: the 15th day of each month (or if all
the Securities are held in book-entry-only form, the Business
Day) immediately preceding the applicable Interest Payment Date.
This Security shall not be valid until an authorized officer
of the Trustee manually signs the Trustee's Certificate of
Authentication below.
Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof which shall for all
purposes have the same effect as if set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Security to
be signed manually or by facsimile by its duly authorized
officers and a facsimile of its corporate seal to be affixed
hereto or imprinted hereon.
Jersey Central Power & Light Company
By:________________________________
Name:______________________________
Title:_____________________________
By:________________________________
Name:______________________________
Title:_____________________________
Dated: _____________________
52
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred
to in the within-mentioned Indenture.
UNITED STATES TRUST COMPANY OF NEW YORK
By: __________________________
Authorized Signatory
53
<PAGE>
[FORM OF REVERSE SIDE OF SECURITY]
__ % Deferrable Interest Subordinated Debentures, Series A,
due 2044
1. Payment of Interest and Additional Interest
Jersey Central Power & Light Company, a New Jersey
corporation (the "Company"), promises to pay interest on the
principal amount of this Security (the "Series A Securities") at
the rate per annum shown in its title above. Interest will be
payable monthly on each Interest Payment Date, commencing
_________, 1995. Interest on this Security will accrue for each
day that elapses from the most recent date to which interest has
been paid, or if no interest has been paid, from the date of its
authentication, to the next Interest Payment Date; provided that,
if there is no existing Event of Default in the payment of
interest and if this Security is authenticated between a record
date referred to on the face hereof and the next succeeding
Interest Payment Date, interest shall accrue from such next
succeeding Interest Payment Date. Interest will be computed on
the basis of a 360-day year of twelve 30-day months. Under
certain circumstances, the Company may be required to pay
Additional Interest.
The Company shall pay interest on overdue principal and
interest on overdue installments of interest, to the extent
lawful, at the rate per annum borne by this Security.
2. Deferral of Interest
The Company may at any time and from time to time, if it is
not in default in the payment of interest on the Series A
Securities, extend the interest payment period on the Series A
Securities for up to 60 consecutive months, but not later than
______________, 2044. At the end of such period the Company
will pay all interest then accrued and unpaid (including interest
on such interest if legally permitted), provided that during such
interest extension period, which the Company may shorten at its
option, neither the Company nor any Subsidiary will declare or
pay any dividend on or purchase, redeem or acquire or make a
liquidation payment on its Capital Stock.
3. Method of Payment
The Company will pay interest on the Series A
Securities (except defaulted interest) to the persons who are
registered Holders at the close of business on the 15th day of
the month (or if all the Series A Securities are held in book-
entry-only form, on the Business Day) immediately preceding the
Interest Payment Date even if the Series A Security is thereafter
canceled on registration of transfer or registration of exchange.
Holders must surrender Securities to a Paying Agent to collect
principal payments. The Company will pay principal and interest
in money of the United States that at the time of payment is
54
<PAGE>
legal tender for payment of public and private debts. However,
the Company may pay principal and interest by its check payable
in such money. It may mail an interest payment to a
Securityholder's registered address.
4. Paying Agent and Registrar
Initially, the Trustee will act as Paying Agent and
Registrar. The Company may appoint and change any Paying Agent or
Registrar without notice, other than notice to the Trustee. The
Company or an Affiliate of the Company may act as Paying Agent,
Registrar or co-Registrar.
5. Indenture
The Company issued the Series A Securities under an
Indenture, dated as of __________, 1995 (the "Indenture"),
between the Company and the Trustee. The Indenture also provides
for the issuance by the Company from time to time of additional
Securities of different series and with different terms and
conditions but subject, nevertheless, to the Indenture. The
terms of the Series A Securities include those stated herein and
in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939, as amended (the
"TIA"). Capitalized terms used herein and not defined herein
have the meanings ascribed thereto in the Indenture. The Series
A Securities are subject to all such terms, and Securityholders
are referred to the Indenture and the TIA for a statement of
those terms.
The Series A Securities are general unsecured obligations of
the Company limited to $_______________ aggregate principal
amount.
6. Redemption
At the option of the Company, the Series A Securities are
redeemable at any time the Company is required to pay Additional
Interest on the Series A Securities as described in the
Indenture, and from and after __________, 1999, as a whole, or
from time to time in part. The amount to be paid on redemption
(the "Redemption Price") shall be equal to 100% of the principal
amount thereof plus accrued and unpaid interest, and Additional
Interest, if any, and accrued interest thereon, to the Redemption
Date. The Company must notify the Trustee of its election to
redeem the Series A Securities at least 45 days before the
Redemption Date.
Under certain circumstances described in the Indenture, the
Company may be required to redeem the Series A Securities.
55
<PAGE>
7. Notice of Redemption
Notice of redemption will be mailed at least 30 days but not
more than 90 days before the Redemption Date to each Holder of
Series A Securities to be redeemed at the Holder's registered
address. Interest on the Securities to be redeemed by the
Company will cease to accrue after the Redemption Date. Series A
Securities in denominations larger than $25.00 of principal
amount may be redeemed in part but only in integral multiples of
$25.00 of principal amount.
8. Subordination
The Securities are subordinated to Senior Indebtedness (as
that term - essentially, debt for borrowed money - is defined in
the Indenture). To the extent provided in the Indenture, Senior
Indebtedness must be paid before the Securities may be paid. The
Company agrees, and each Securityholder by accepting a Security
agrees, to such subordination and authorizes the Trustee to give
it effect.
9. Denominations; Transfer; Exchange
The Series A Securities are in registered form, without
coupons, in denominations of $25.00 of principal amount and
integral multiples of $25.00. A Holder may transfer or exchange
Series A Securities in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay any
taxes and fees required by law or permitted by the Indenture. The
Registrar need not transfer or exchange any Securities for a
period of five days before notice of redemption is given or any
Securities that are selected for redemption (except, in the case
of a Security to be redeemed in part, the portion of the Security
not to be redeemed).
10. Persons Deemed Owners
The registered Holder of this Security may be treated as the
owner of this Security for all purposes.
11. Amendment; Waiver
Subject to certain exceptions in the Indenture which require
the consent of every Holder, (i) the Indenture or the Series A
Securities may be amended with the written consent of the Holders
of a majority in aggregate principal amount of the Series A
Securities at the time outstanding, and (ii) certain defaults or
noncompliance with certain provisions may be waived with the
written consent of the Holders of a majority in aggregate
principal amount of the Series A Securities at the time
outstanding. Subject to certain exceptions in the Indenture,
without the consent of any Securityholder, the Company and the
Trustee may amend the Indenture or the Securities to cure any
ambiguity, defect or inconsistency, to bind a successor to the
obligations of the Indenture, to provide for uncertificated
Securities in addition to certificated Securities, to comply with
56
<PAGE>
any requirements of the Securities and Exchange Commission in
connection with the qualification of the Indenture under the TIA,
to make any change that does not adversely affect the rights of
any Securityholder or to provide for the issuance of any other
series of Securities. Amendments bind all Holders and subsequent
Holders.
12. Defaults and Remedies
Under the Indenture, Events of Default include (i) default
in payment of the principal amount, or interest, in respect of
the Securities when the same becomes due and payable subject, in
the case of interest, to the grace period and any extension
period provided for in the Indenture; (ii) failure by the Company
to comply with its other covenants in the Indenture or the
Securities, subject to notice and lapse of time; and (iii)
certain events of bankruptcy or insolvency of the Company. If an
Event of Default occurs and is continuing, the Trustee, or the
Holders of at least a majority in aggregate principal amount of
the Securities at the time outstanding, may declare all the
Securities to be due and payable immediately. Certain events of
bankruptcy or insolvency are Events of Default which will result
in the Securities becoming due and payable immediately upon the
occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may
refuse to enforce the Indenture or the Securities unless it
receives reasonable indemnity and security. Subject to certain
limitations, Holders of a majority in aggregate principal amount
of the Securities at the time outstanding may direct the Trustee
in its exercise of any trust or power. The Trustee may withhold
from Securityholders notice of any continuing Default (except a
Default in paying principal and/or interest) if it determines
that withholding notice is in their interests.
13. Trustee Dealings with the Company
Subject to certain limitations imposed by the TIA, the
Trustee, in its individual or any other capacity, may become the
owner or pledgee of Securities and may otherwise deal with and
collect obligations owed to it by the Company or its Affiliates
and may otherwise deal with the Company or its Affiliates with
the same rights it would have if it were not Trustee.
14. No Recourse Against Others
A director, officer, employee or stockholder, as such, of
the Company shall not have any liability for any obligations of
the Company under the Securities or the Indenture or for any
claim based on, in respect of or by reason of such obligations or
their creation. By accepting a Security, each Securityholder
waives and releases all such liability. The waiver and release
are part of the consideration for the issue of the Securities.
57
<PAGE>
15. Abbreviations
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (tenants in
common), TEN ENT (tenants by the entireties), JT TEN (joint
tenants with right of survivorship and not as tenants in common),
CUST (custodian), and U/G/M/A (Uniform Gift to Minors Act).
16. Unclaimed Money
If money for the payment of principal or interest remains
unclaimed for three years, the Trustee or Paying Agent will pay
the money back to the Company at its request. After that,
Holders entitled to such money must look to the Company for
payment.
17. Discharge Prior to Maturity
If the Company deposits with the Trustee or Paying Agent
money or U.S. Government Obligations sufficient to pay the
principal of and interest on the Securities to maturity, the
Company will be discharged from the Indenture under certain
conditions and except for certain provisions thereof.
18. Successor
When a successor Person to the Company assumes all the
obligations of its predecessor under the Securities and the
Indenture in accordance with the Indenture, such predecessor
shall be released from those obligations.
19. Governing Law
THE INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF
NEW YORK, WITHOUT REGARD TO ITS PRINCIPLES OF CONFLICTS OF LAWS.
58
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below: (I) or (we)
assign and transfer this Security to:
_________________________________________________________________
(Insert assignee's social security or tax I.D. number)
_________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint ______________________________ agent to
transfer this Security on the books of the Company. The agent
may substitute another to act for him.
Dated: ________________ Signature: ________________________
(Sign exactly as your name appears
on the other side of this Security)
Signature Guaranty: ________________________
(New York commercial bank or trust company or member
of an accepted medallion guaranty)
59
<PAGE>
Exhibit A-10
DEMAND PROMISSORY NOTE
$_______________ _________, 1995
For value received, JERSEY CENTRAL POWER & LIGHT COMPANY, a
New Jersey corporation ("JCP&L"), hereby promises to pay to the
order of JCP&L PREFERRED CAPITAL, INC., a Delaware corporation
("Capital"), ON DEMAND, at the office of Capital located at
Mellon Bank Center, Tenth and Market Streets, Wilmington,
Delaware 19801, or at such other place as Capital may specify
from time to time, in lawful money of the United States of
America, the principal sum of $_____________, or such lesser
unpaid principal amount as shall be outstanding hereunder,
together with interest from the date hereof on the unpaid
principal balance of this Note calculated at a rate equal to the
Citibank, N.A. base rate as in effect from time to time, such
interest to be compounded semi-annually on _________ and ________
of each year while this Note is outstanding.
The amount of any payment made by JCP&L hereunder shall be
recorded by Capital on the schedule attached hereto and the
resulting unpaid principal balance set forth in such schedule
shall be presumptive evidence of the principal balance owing and
unpaid on this Note.
Presentment for payment, demand, notice of dishonor,
protest, notice of protest, and all other demands and notices in
connection with the delivery, performance and enforcement of this
Note are hereby waived.
This Note shall be governed by and construed and interpreted
in accordance with the substantive laws of the State of New
Jersey without giving effect to conflict of law principles.
This Note may be amended only by an instrument in writing
executed by JCP&L and Capital.
JERSEY CENTRAL POWER & LIGHT COMPANY
By:
Title: <PAGE>
Exhibit B-1
PAYMENT AND GUARANTEE AGREEMENT
THIS PAYMENT AND GUARANTEE AGREEMENT ("Guarantee
Agreement"), dated as of ________, 1995, is executed and
delivered by Jersey Central Power & Light Company, a New Jersey
corporation (the "Guarantor"), for the benefit of the Holders (as
defined below) from time to time of the Preferred Securities (as
defined below) of JCP&L Capital, L.P., a Delaware limited
partnership (the "Issuer").
WHEREAS, the Issuer is issuing on the date hereof
$________________ aggregate stated liquidation preference of
preferred limited partner interests of a series designated the
____% Cumulative Monthly Income Preferred Securities, Series A
(the "Preferred Securities"), and the Guarantor desires to enter
into this Guarantee Agreement for the benefit of the Holders, as
provided herein;
WHEREAS, the Issuer will use (i) the proceeds from the
issuance and sale of the Preferred Securities to the Holders and
(ii) the capital contributions relating to the issuance of the
Issuer's general partner interests (the "Common Securities") to
JCP&L Preferred Capital, Inc., a Delaware corporation and a
wholly-owned subsidiary of the Guarantor (the "General Partner"),
to purchase Subordinated Debentures (as defined below) issued by
the Guarantor under the Indenture (as defined below); and
WHEREAS, the Guarantor desires irrevocably and
unconditionally to agree to the extent set forth herein to pay to
the Holders the Guarantee Payments (as defined below) and to make
certain other payments on the terms and conditions set forth
herein.
NOW, THEREFORE, in consideration of the premises and other
consideration, receipt of which is hereby acknowledged, the
Guarantor, intending to be legally bound hereby, agrees as
follows:
ARTICLE I
As used in this Guarantee Agreement, the terms set forth
below shall, unless the context otherwise requires, have the
following meanings. Capitalized terms used but not otherwise
defined herein shall have the meanings assigned to such terms in
the Issuer's Amended and Restated Limited Partnership Agreement
dated as of _______, 1995 (the "Limited Partnership Agreement").
"Guarantee Payments" shall mean the following payments,
without duplication, to the extent not paid by the Issuer: (i)
any accumulated and unpaid monthly distributions on the Preferred
Securities (except for monthly distributions which are not paid
during an Extension Period (as defined in the Indenture)) to the
extent that the Issuer has sufficient cash on hand to permit such
payments and funds legally available therefor, (ii) the<PAGE>
Redemption Price (as defined below) payable with respect to any
Preferred Securities called for redemption by the Issuer to the
extent that the Issuer has sufficient cash on hand to permit such
payments and funds legally available therefor, (iii) upon a
liquidation of the Issuer other than in connection with a
distribution of Subordinated Debentures (a "Distribution Event")
following a dissolution of the Issuer resulting from a Special
Event (as defined in the Limited Partnership Agreement), the
lesser of (a) the Liquidation Distribution (as defined below) and
(b) the amount of assets of the Issuer available for distribution
to Holders in liquidation of the Issuer, and (iv) any Additional
Amounts (as defined in the Limited Partnership Agreement) payable
by the Issuer in respect of the Preferred Securities.
"Holder" shall mean any holder from time to time of any
Preferred Securities of the Issuer; provided, however, that in
determining whether the Holders of the requisite percentage of
Preferred Securities have given any request, notice, consent or
waiver hereunder, "Holder" shall not include the Guarantor or any
entity owned more than 50% by the Guarantor, either directly or
indirectly.
"Indenture" shall mean the Indenture dated as of __________,
1995 between the Guarantor and United States Trust Company of New
York, as Trustee.
"Liquidation Distribution" shall mean the aggregate of the
stated liquidation preference of $25 per Preferred Security and
all accumulated and unpaid distributions to the date of payment,
together with any additional distributions accrued thereon.
"Redemption Price" shall mean the aggregate of $25 per
Preferred Security, plus accumulated and unpaid distributions to
the date fixed for redemption, together with any Additional
Distributions (as defined in the Limited Partnership Agreement)
accrued thereon.
"Subordinated Debentures" shall mean the Guarantor's ___%
Deferrable Interest Subordinated Debentures, Series A, due
_______, 204[3], issued under and pursuant to the Indenture.
ARTICLE II
SECTION 2.01. (a) The Guarantor hereby irrevocably and
unconditionally agrees to pay in full to the Holders the
Guarantee Payments, as and when due (except to the extent paid by
the Issuer), to the fullest extent permitted by law, regardless
of any defense, right of set-off or counterclaim which the
Guarantor or the Issuer may have or assert. The Guarantor's
obligation to make a Guarantee Payment may be satisfied by direct
payment by the Guarantor to the Holders or by payment of such
amounts by the Issuer to the Holders. Notwithstanding anything
to the contrary herein, the Guarantor retains all of its rights
under Section 4.01(c) of the Indenture to extend the interest
payment period thereunder and the Guarantor shall not be
2<PAGE>
obligated hereunder to pay during an Extension Period (as defined
in the Indenture) any monthly distributions on the Preferred
Securities which are not paid by the Issuer during such Extension
Period.
(b) All Guarantee Payments shall be made without
withholding or deduction for or on account of any present or
future taxes, duties, assessments or governmental charges of
whatever nature imposed or levied upon or as a result of such
payment by or on behalf of the United States, any state thereof
or any other jurisdiction through which or from which such
payment is made, or any authority therein or thereof having power
to tax, unless the withholding or deduction of such taxes,
duties, assessments or governmental charges is required by law.
In the event that any such withholding or deduction is required
as a consequence of (i) the Subordinated Debentures not being
treated as indebtedness for United States federal income tax
purposes or (ii) Penelec Capital not being treated as a
partnership for United States federal income tax purposes, the
Guarantor shall pay such additional amounts ("Additional
Amounts") as may be necessary in order that the net amounts
received by the Holders after such withholding or deduction will
equal the amount which would have been receivable in respect of
the Preferred Securities in the absence of such withholding or
deduction, except that no such additional amounts will be payable
to any Holder (or a third party on such Holder's behalf):
i) if such Holder is liable for such taxes,
duties, assessments or governmental charges in respect
of the Preferred Securities by reason of such Holder's
having a connection with the United States, any state
thereof or any other jurisdiction through which or from
which such payment is made, or in which such Holder
resides, conducts business or has other contacts, other
than being a Holder, or
ii) if the Issuer or the Guarantor has notified
such Holder of the obligation to withhold or deduct
taxes and requested but not received from such Holder a
declaration of non-residence, a valid taxpayer
identification number or other claim for exemption, and
such withholding or deduction would not have been
required had such declaration, taxpayer identification
number or claim been received.
SECTION 2.02. The Guarantor hereby waives notice of
acceptance of this Guarantee Agreement and of any liability to
which it applies or may apply, presentment, demand for payment,
protest, notice of nonpayment, notice of dishonor, notice of
redemption and all other notices and demands.
SECTION 2.03. Except as otherwise set forth herein, the
obligations, covenants, agreements and duties of the Guarantor
under this Guarantee Agreement shall to the fullest extent
3<PAGE>
permitted by law in no way be affected or impaired by reason of
the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or
otherwise, of the performance or observance by the
Issuer of any express or implied agreement, covenant,
term or condition relating to the Preferred Securities
to be performed or observed by the Issuer;
(b) the extension of time for the payment by the
Issuer of all or any portion of the monthly
distributions, Redemption Price, Liquidation
Distribution or any other sums payable under the terms
of the Preferred Securities or the extension of time
for the performance of any other obligation under,
arising out of, or in connection with, the Preferred
Securities;
(c) any failure, omission, delay or lack of
diligence on the part of the Holders to enforce, assert
or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the
Preferred Securities, or any action on the part of the
Issuer granting indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation,
dissolution, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors,
reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings
affecting, the Issuer or any of the assets of the
Issuer;
(e) any invalidity of, or defect or deficiency
in, any of the Preferred Securities; or
(f) the settlement or compromise of any
obligation guaranteed hereby or hereby incurred.
The Holders shall have no obligation to give notice to, or obtain
consent of, the Guarantor with respect to the occurrence of any
of the foregoing.
SECTION 2.04. This is a guarantee of payment and not of
collection. A Holder may enforce this Guarantee Agreement
directly against the Guarantor, and the Guarantor will waive any
right or remedy to require that any action be brought against the
Issuer or any other person or entity before proceeding against
the Guarantor. Subject to Section 2.05, all waivers hereunder
shall be without prejudice to the Holders' right at the Holders'
option to proceed against the Issuer, whether by separate action
or by joinder. The Guarantor agrees that this Guarantee
Agreement shall not be discharged except by payment of the
Guarantee Payments in full (to the extent not paid by the Issuer)
4<PAGE>
and by complete performance of all obligations of the Guarantor
contained in this Guarantee Agreement.
SECTION 2.05. The Guarantor will be subrogated to all
rights of the Holders against the Issuer in respect of any
amounts paid to the Holders by the Guarantor under this Guarantee
Agreement and shall have the right to waive payment by the Issuer
of any amount of distributions in respect of which payment has
been made to the Holders by the Guarantor pursuant to Section
2.01; provided, however, that the Guarantor shall not (except to
the extent required by mandatory provisions of law) exercise any
rights which it may acquire by way of subrogation or any
indemnity, reimbursement or other agreement, in all cases as a
result of a payment under this Guarantee Agreement, if, at the
time of any such payment, any amounts remain due and unpaid under
this Guarantee Agreement. If any amount shall be paid to the
Guarantor in violation of the preceding sentence, the Guarantor
agrees to pay over such amount to the Holders.
SECTION 2.06. The Guarantor acknowledges that its
obligations hereunder are independent of the obligations of the
Issuer with respect to the Preferred Securities and that the
Guarantor shall be liable as principal and sole debtor hereunder
to make Guarantee Payments pursuant to the terms of this
Guarantee Agreement notwithstanding the occurrence of any event
referred to in subsections (a) through (f), inclusive, of Section
2.03 hereof.
SECTION 2.07. The Guarantor expressly acknowledges that (i)
this Guarantee Agreement will be deposited with the General
Partner to be held for the benefit of the Holders; (ii) in the
event of the appointment of a Special Representative pursuant to
the Limited Partnership Agreement, the Special Representative may
enforce this Guarantee Agreement on behalf of the Holders and
take possession of this Guarantee Agreement for such purpose;
(iii) if no Special Representative has been appointed, the
General Partner has the right to enforce this Guarantee Agreement
on behalf of the Holders: (iv) the Holders of not less than a
majority in aggregate stated liquidation preference of the
Preferred Securities have the right to direct the time, method
and place of conducting any proceeding for any remedy available
in respect of this Guarantee Agreement, including the giving of
directions to the General Partner or the Special Representative,
as the case may be; and (v) if the General Partner or Special
Representative fails to enforce this Guarantee Agreement as above
provided, any Holder may institute a legal proceeding directly
against the Guarantor to enforce its rights under this Guarantee
Agreement, without first instituting a legal proceeding against
the Issuer or any other person or entity.
Any such Special Representative may enforce the
Issuer's rights against the Guarantor under the Indenture,
including, after failure to pay interest for 60 consecutive
monthly interest periods, the payment of interest on the
Subordinated Debentures, enforce the obligations of the Guarantor
5<PAGE>
under this Guarantee Agreement and enforce the Guarantor's
obligations under the Indenture and the Subordinated Debentures
directly against the Guarantor; the Guarantor, upon request of a
Special Representative, agrees to execute and deliver such
documents as may be necessary, appropriate or convenient for such
Special Representative with respect to such enforcement.
ARTICLE III
SECTION 3.01. So long as any Preferred Securities remain
outstanding, neither the Guarantor nor any majority-owned
subsidiary of the Guarantor shall declare or pay any dividend on,
or redeem, purchase, acquire or make a liquidation payment with
respect to, any of its preferred or common stock (other than
dividends to the Guarantor by a wholly-owned subsidiary of the
Guarantor) (i) during an Extension Period (as defined in the
Indenture) or (ii) if at such time the Guarantor shall be in
default with respect to its payment or other obligations
hereunder or there shall have occurred any event that, with the
giving of notice or the lapse of time or both, would constitute
an Event of Default under the Indenture. The Guarantor shall
take all actions necessary to ensure the compliance of its
subsidiaries with this Section 3.01.
SECTION 3.02. The Guarantor covenants, so long as any
Preferred Securities remain outstanding: (i) to maintain direct
or indirect 100% ownership of the Common Securities; (ii) to
cause at least 3% of the total value of the Issuer and at least
3% of all interests in the capital, income, gain, loss, deduction
and credit of the Issuer to be represented by Common Securities;
(iii) not to cause the Issuer to be voluntarily dissolved, wound-
up or terminated, except upon the entry of a decree of judicial
dissolution or in connection with a Distribution Event or certain
mergers, consolidations or other transactions permitted by the
Limited Partnership Agreement; (iv) except as otherwise provided
in the Limited Partnership Agreement, to cause the General
Partner to remain the general partner of the Issuer and timely
perform all of its duties as general partner of the Issuer
(including the duty to pay distributions on the Preferred
Securities out of cash on hand and funds legally available
therefor) in all material respects, provided that any permitted
successor of the Guarantor under the Indenture may directly or
indirectly succeed to the duties as general partner of the
Issuer; and (v) to use its reasonable efforts to cause the Issuer
to remain a limited partnership and otherwise continue to be
treated as a partnership for United States federal income tax
purposes.
SECTION 3.03. This Guarantee Agreement will constitute an
unsecured obligation of the Guarantor and will rank (i)
subordinate and junior in right of payment to all present and
future Senior Indebtedness (as defined in the Indenture) of the
Guarantor, and (ii) senior in right of payment to the Guarantor's
preferred and common stock.
6<PAGE>
ARTICLE IV
This Guarantee Agreement shall terminate and be of no
further force and effect upon full payment of the Redemption
Price of all Preferred Securities or upon full payment of the
amounts payable to the Holders upon liquidation of the Issuer or
upon consummation of a Distribution Event; provided, however,
that this Guarantee Agreement shall continue to be effective or
shall be reinstated, as the case may be, if at any time any
Holder of Preferred Securities must restore payments of any sums
paid under the Preferred Securities or under this Guarantee
Agreement for any reason whatsoever.
ARTICLE V
SECTION 5.01. All guarantees and agreements contained in
this Guarantee Agreement shall bind the successors, assigns,
receivers, trustees and representatives of the Guarantor and
shall inure to the benefit of the Holders. The Guarantor may not
assign its obligations hereunder without the prior approval of
the Holders of not less than 66 2/3% of the aggregate stated
liquidation preference of all Preferred Securities then
outstanding; provided that nothing herein shall preclude any
transaction involving the Guarantor pursuant to Section 5.01 of
the Indenture. No such permitted transaction shall be deemed an
assignment of the Guarantor's obligations hereunder for purposes
hereof.
SECTION 5.02. This Guarantee Agreement may only be amended
by a written instrument executed by the Guarantor; provided that,
so long as any of the Preferred Securities remain outstanding,
any such amendment that materially adversely affects the holders
of Preferred Securities, any termination of this Guarantee
Agreement and any waiver of compliance with any covenant
hereunder shall be effected only with the prior approval of the
Holders of not less than 66 2/3% of the aggregate stated
liquidation preference of all Preferred Securities then
outstanding.
SECTION 5.03. All notices, requests or other communications
required or permitted to be given hereunder to the Guarantor
shall be deemed given if in writing and delivered personally or
by recognized overnight courier or express mail service or by
facsimile transmission (confirmed in writing) or by registered or
certified mail (return receipt requested), addressed to the
Guarantor at the following address (or at such other address as
shall be specified by notice to the Holders):
Jersey Central Power & Light Company
c/o GPU Service Corporation
100 Interpace Parkway
Parsippany, NJ 07054
Facsimile No.: (201) 263-6397
Attention: Treasurer
7
<PAGE>
All notices, requests or other communications required or
permitted to be given hereunder to the Holders shall be deemed
given if in writing and delivered by the Guarantor in the same
manner as notices sent by the Issuer to the Holders.
SECTION 5.04. This Guarantee Agreement is solely for the
benefit of the Holders and is not separately transferable from
the Preferred Securities.
8<PAGE>
SECTION 5.05. THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE SUBSTANTIVE
LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO CONFLICT
OF LAW PRINCIPLES.
THIS GUARANTEE AGREEMENT is executed as of the day and year
first above written.
JERSEY CENTRAL POWER & LIGHT COMPANY
By _________________________________
Name:
Title:
9<PAGE>
Exhibit D-1
STATE OF NEW JERSEY
BOARD OF PUBLIC UTILITIES
PETITION
N.J.A.C. 14:1-5.9
DOCKET NO. EF94100475
IN THE MATTER OF THE PETITION OF
JERSEY CENTRAL POWER & LIGHT
COMPANY FOR AUTHORITY TO: (i)
Issue up to $125,000,000 Aggregate
Principal Amount of Subordinated
Debentures in one or more series
and to Make, Execute and Deliver an
Original Indenture and one or more
Supplemental Indentures in
connection therewith; (ii) Make,
Execute and Deliver one or more
Guarantees with respect to the
issuance and sale of not more than
$125,000,000 aggregate stated
liquidation value of monthly income
preferred securities; and (iii)
Make, Execute and Deliver to a
wholly-owned subsidiary a Demand
Promissory Note in an aggregate
principal amount of not more than
$13,000,000.
TO THE HONORABLE BOARD OF PUBLIC UTILITIES:
Jersey Central Power & Light Company (the "Company" or
the "Petitioner"), respectfully states:
1. The Company is a corporation of the State of New
Jersey, engaged in the business of generating, transmitting,
distributing and selling electric energy for public use in all or
parts of thirteen counties in such state, and is a public utility
as defined by N.J.S. 48:2-13. It files this petition pursuant to
N.J.S. 48:3-9 and N.J.A.C. 14:1-5.9.
10<PAGE>
2. Pursuant to N.J.A.C. 14:1-4.5, the Company
designates as the person to be notified in connection herewith
the following:
Wendy S. Greengrove
Attorney for Petitioner
300 Madison Avenue
Morristown, New Jersey 07962-1911
3. Information concerning each class and issue of the
Company's capital stock will be set forth in Exhibit "D" to be
submitted.
4. The preferences, voting powers, restrictions and
qualifications of the various series of the Company's Cumulative
Preferred Stock, 4% Series A, 7.88% Series E, 8.48% Series I,
8.65% Series J and 7.52% Series K are briefly stated in the
Company's Petitions to your Honorable Board in Docket Nos. 7269,
721-32, 778-872, EF88121337 and EF91121811JA, respectively.
5. A listing of the principal amounts of the Company's
long-term indebtedness will be set forth in Exhibit "D" to be
submitted.
6. The Company's first mortgage bonds, including first
mortgage bonds designated secured medium-term notes, have been
issued under and secured by the Company's Indenture dated as of
March 1, 1946 ("Original Bond Indenture") between the Company and
IBJ Schroder Bank & Trust Company, Successor Trustee, as
supplemented by fifty supplemental indentures, referred to in the
Company's Petition in Docket No. 704-175, and in Orders of Your
Honorable Board in Docket Nos. 709-521, 7012-685, 719-618,
726-528, 737-593, 7310-787, 749-659, 751-26A, 754-490, 752-121,
7512-1301, 764-504, 773-222, 7712-1155A, 7811-1584, 793-295,
2<PAGE>
795-508, 799-471, EF8505515, EF8605480, EF88121337, EF90111334J,
EF90111334B, EF91121811JA and EF92121082J (herein called "Bond
Supplemental Indentures"). The making of the Original Bond
Indenture and the Bond Supplemental Indentures and the issuance
of the Bonds were respectively authorized by your Honorable Board
by Orders in such proceedings.
7. At September 30, 1994, the Company had $99,100,000
short-term debt outstanding.
8. By Order of your Honorable Board dated March 31,
1993, in Docket No. EF92121082J, the Company was granted
authority from time to time through June 30, 1995 without further
order of the Board to, among other things, (i) issue and sell up
to $700,000,000 aggregate principal amount of additional first
mortgage bonds, (ii) issue and sell up to $700,000,000 aggregate
principal amount of secured medium-term notes as first mortgage
bonds and (iii) issue and sell additional shares of cumulative
preferred stock in one or more series having an aggregate stated
value of up to $100,000,000, provided, however, that the
aggregate principal amount of all securities to be issued and
sold would not exceed $700,000,000. Pursuant to said Order and
as previously reported to your Honorable Board, the Company has
issued and sold the following securities: (i) $150,000,000
aggregate principal amount of First Mortgage Bonds, 6 3/8% Series
due 2003; (ii) $125,000,000 aggregate principal amount of First
Mortgage Bonds, 7 1/2% Series due 2023; and (iii) $150,000,000
aggregate principal amount of First Mortgage Bonds, 6 3/4% Series
due 2025. At the date hereof, $275,000,000 aggregate principal
amount of securities remains unissued and unsold pursuant to said
3<PAGE>
Order. Approval of this Petition and the sale of the Securities
and Subordinated Debentures (as described and defined below) are
expected to defer beyond June 30, 1995 the Company's need to
issue the remaining $275,000,000 of authorized securities.
Nevertheless, in order to maintain debt and equity issuance
flexibility, the Company desires to retain the authorization to
issue the remaining $275,000,000 of securities and expects to
request, in a subsequent filing, approval from your Honorable
Board (and the Securities and Exchange Commission) to extend
beyond June 30, 1995 the date by which such securities may be
sold.
9. (a) As part of its ongoing financing program, the
Company now proposes to form a limited partnership under the
Delaware Revised Uniform Limited Partnership Act ("JCP&L
Capital"), which would issue, from time to time in one or more
series through December 31, 1996, preferred limited partner
interests, in the form of monthly income preferred securities
(the "Securities"), having an aggregate stated liquidation value
not to exceed $125,000,000. The sole purpose of JCP&L Capital
will be to issue and sell the Securities to investors and to use
the net proceeds of the sale, together with the proceeds of the
sale to Investment Sub (as defined below) of its general partner
interests, to purchase the Company's Subordinated Debentures.
JCP&L Capital's general partner interests will not be
transferrable, its business and affairs will be managed and
controlled directly by its general partner and its general
partner will be responsible for all liabilities and obligations
of JCP&L Capital.
4<PAGE>
(b) The Company also proposes to form a special
purpose wholly-owned Delaware corporate subsidiary, JCP&L
Preferred Capital, Inc. ("Investment Sub"), to serve as the sole
general partner of JCP&L Capital. The Company will acquire all
of the common stock of Investment Sub for a nominal consideration
and will capitalize Investment Sub with (i) a capital
contribution in the amount of approximately 3% of the total
capitalization of JCP&L Capital, or up to $4 million, and (ii) a
demand promissory note in the principal amount of approximately
10% of the total capitalization of JCP&L Capital, or up to $13
million, such note to accrue interest, compounded semi-annually,
at a rate equal to the Citibank, N.A. base rate as in effect from
time to time.
(c) Investment Sub will acquire all of the
general partner interests of JCP&L Capital for up to $4 million,
representing up to a 3% interest in JCP&L Capital (the "Equity
Contribution"). JCP&L Capital will apply the proceeds from the
sale of the Securities, together with the Equity Contribution, to
purchase the Company's deferrable interest subordinated
debentures (the "Subordinated Debentures").
(d) The Company will also guarantee on a limited
basis to the extent set forth in payment and guarantee agreements
to be executed and delivered by the Company in connection with
each series of Securities (the "Guarantees"), (i) payment of
distributions on the Securities to the extent JCP&L Capital has
sufficient cash on hand to permit such payments and funds legally
available therefor, (ii) payments to the Securities holders of
amounts due upon redemption of the Securities to the extent JCP&L
5<PAGE>
Capital has sufficient cash on hand to permit such payments and
funds legally available therefor, (iii) upon a liquidation of
JCP&L Capital (other than in connection with a distribution of
Subordinated Debentures as described in Paragraph 10 below),
payment of the lesser of (x) the liquidation preference of the
Securities or (y) the amount of assets available for distribution
to the Securities holders in liquidation, and (iv) certain
additional amounts that may be payable in respect of the
Securities. The Company will also covenant in the Guarantees to
cause Investment Sub to timely perform all of its duties as
general partner of JCP&L Capital, including the general partner's
duty to pay all of the costs and expenses of JCP&L Capital.
10. Each Subordinated Debenture will be issued under
an Indenture to be entered into with United States Trust Company
of New York, as Trustee, and will have an initial term of up to
50 years. Prior to maturity, the Company will pay only interest
on the Subordinated Debentures at a rate equal to the
distribution rate on the related series of Securities. Such
interest payments will constitute JCP&L Capital's only income and
will be used by it to pay monthly distributions on the Securities
and distributions on the general partner interests of JCP&L
Capital held by Investment Sub. Distributions on the Securities
will be made monthly, will be cumulative and must be made to the
extent that JCP&L Capital has legally available funds and cash
sufficient for such purposes. However, the Company will have the
right to defer payment of interest on the Subordinated Debentures
for up to five years, in which event JCP&L Capital may similarly
defer payment of distributions on the Securities; provided,
6<PAGE>
however, that if distributions on the Securities are not paid for
eighteen consecutive months, then the Securities holders will
have the right to appoint a special representative to enforce
JCP&L Capital's rights under the Subordinated Debentures and the
Securities holders' rights under the Guarantees. The Company and
JCP&L Capital may be required to pay interest on any deferred
interest or distributions, to the extent permitted by applicable
law. The interest rates, payment dates, redemption and other
similar provisions of each series of Subordinated Debentures will
be identical to the distribution rates, payment dates, redemption
and other similar provisions of the related series of
Securities.
11. Each Subordinated Debenture and related Guarantee
will be subordinate to all other existing and future indebtedness
of the Company for borrowed money and will have no cross-default
provisions with respect to other indebtedness of the Company -
i.e., a default under any other outstanding indebtedness of the
Company will not result in a default under the Subordinated
Debentures or the Guarantees. However, the Company may not
declare or pay dividends on, or redeem, its outstanding
Cumulative Preferred Stock or Common Stock unless all payments
then due (whether or not previously deferred) under the
Subordinated Debentures and the Guarantees have been made.
12. The Securities may be redeemable at the option of
JCP&L Capital at a price equal to their stated value plus any
accrued and unpaid distributions, (i) at any time after five
years from their date of issuance, or (ii) in the event that (v)
JCP&L Capital is required by applicable tax laws to withhold or
7<PAGE>
deduct certain amounts in connection with distributions or other
payments, or (w) JCP&L Capital is subject to federal income tax
with respect to interest received on the Subordinated Debentures
or is otherwise not treated as a partnership for federal income
tax purposes, or (x) it is determined that the interest payments
by the Company on the Subordinated Debentures are not deductible
for federal income tax purposes, or (y) JCP&L Capital is subject
to more than a de minimis amount of other taxes, duties or other
governmental charges, or (z) JCP&L Capital becomes subject to
regulation as an "investment company" under the Investment
Company Act of 1940, as amended. Upon occurrence of any of the
events set forth in clause (ii) above, JCP&L Capital may also
have the right to dissolve and distribute the Subordinated
Debentures to the Securities holders in liquidation of their
interests in JCP&L Capital.
In the event that JCP&L Capital is required by
applicable tax laws to withhold or deduct certain amounts in
connection with distributions or other payments, JCP&L Capital
may also have the obligation, if the Securities are not redeemed
or Subordinated Debentures are not distributed to the holders
thereof as aforesaid, to "gross up" such payments so that the
Securities holders will receive the same payment after such
withholding or deduction as they would have received if no such
withholding or deduction were required. In such latter event,
the Company's obligations under the Subordinated Debentures and
the Guarantees would also cover any such "gross up" obligations.
13. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of JCP&L Capital, the
8<PAGE>
holders of the Securities will be entitled to receive, out of the
assets of JCP&L Capital available for distribution to its
partners, before any distribution of assets to the general
partner of JCP&L Capital, an amount equal to the stated
liquidation preference of the Securities plus any accrued and
unpaid distributions.
14. The Company believes that the proposed financing
through the sale of the Securities will provide substantial
benefits over issuing traditional perpetual preferred stock.
While the Company expects that the Securities will carry a
slightly higher dividend rate than a perpetual preferred stock
issue, the expected tax deductibility of interest payments on the
Subordinated Debentures, on a comparative basis, will afford the
Company an increased cash flow and a positive impact on net
income in the period prior to the Company's next rate case, and
may contribute to lower customer rates thereafter. The Company
understands that the financial markets will view the financing
the Company obtains through the Securities program as having
essentially the same equity characteristics as would be the case
if the Company were to issue traditional perpetual preferred
stock. The Company also understands that the rating agencies
will view the financing the Company obtains through the
Securities program as having equity characteristics somewhere
between sinking fund preferred stock and traditional perpetual
preferred stock. Based on an assumed dividend rate of
approximately 9.125% for a perpetual preferred stock issue and an
assumed distribution rate between 9.375% and 9.50% resulting in
an after-tax rate of between 6.09% and 6.175% (assuming a 35%
9<PAGE>
federal tax rate) for the Securities, the Company believes that
it could achieve an average annual after-tax savings of
approximately $3.7 million, and a net present value after-tax
savings over an assumed 49 year life of a $125,000,000 Securities
issue of approximately $40.5 million. The Securities will be
included in the capitalization section of the Company's
consolidated balance sheet. The Subordinated Debentures, so long
as they remain inter-company obligations, will not appear on the
Company's consolidated balance sheet.
JCP&L Capital intends to enter into an appropriate
underwriting, purchase, selling or distribution agency agreement
with respect to the issuance and sale of Securities and desires
to maintain the flexibility to sell the Securities in one or more
public sales through a negotiated underwriting, with the amounts
of the offering, the annual distribution rate per Security, and
the related terms of the Subordinated Debentures, to be
determined at the time of sale of each series of Securities.
A number of factors have contributed to the
decision to pursue these transactions on a negotiated basis.
First, since this is a relatively new form of security, the
number of underwriters with significant experience as lead
managers in structuring and distributing securities of this type
is limited. Consequently, unlike the more typical financing, a
lead manager must be selected for this offering based on
experience, market knowledge, and particular familiarity with
these unique transactions. Second, distribution of securities of
this type is significantly affected by the ability to develop an
extensive selling group and market the securities over an
10<PAGE>
extended period of time to a diverse investor base. This
extended marketing approach, which is not possible in a
competitive bidding, allows the lead manager to reallocate shares
based on demand and ultimately achieve a more attractive pricing
for the issuer.
Moreover, the Securities are a relatively new type
of financial instrument, they are quite complex and there is as
yet no "standard" package of rights, terms and conditions
attributable thereto which are universally accepted by the
investment community. Thus, unlike the situation with perpetual
preferred stock or first mortgage bonds, these transactions are
generally structured in coordination with a lead underwriter to
conform to the terms of comparable securities customarily
marketed by such investment banking firm. Moreover, because of
the complexity of the Securities, a significant investment of
time would be required for potential bidders to review the
relevant documentation and understand the nature and terms of the
Securities. As a consequence, the normal bidding process may not
work efficiently since firms will be asked to bid on securities
with which they may not be fully familiar or comfortable. When
combined with the competitive bidding process' elimination of the
extended marketing time required for these securities, as
described above, the result is likely to be reduced participation
in the bidding process or more expensive bids than would be
obtained through negotiations. In any event, the fee structure
will be determined in accordance with the standard fees for $25
par value perpetual preferred stock, which, like common equity,
is primarily distributed through a retail broker network which
11<PAGE>
demands higher commissions. All transactions involving such
securities to date have had a 3.15% gross spread on retail
distribution.
The aggregate stated value of the Securities to be
sold by JCP&L Capital will depend on market acceptance, but will
not exceed $125,000,000.
15. The issuance of Subordinated Debentures by the
Company will be subject to the restriction in Article VI,
paragraph Eighth (B) of the Company's Restated Certificate of
Incorporation which limits, without the consent of the holders of
a majority of the Company's outstanding Cumulative Preferred
Stock, the amount of unsecured indebtedness which the Company may
have outstanding at any one time to 20% of the aggregate of the
total outstanding principal amount of all bonds and other
securities representing secured indebtedness issued or assumed by
the Company, plus its capital stock, premiums thereon, and
surplus as stated on its books of account.
16. The Company expects to apply the net proceeds, of
the sale of Subordinated Debentures to JCP&L Capital, to the
repayment of outstanding short-term debt, for construction
purposes, and for other general corporate purposes, including the
redemption of outstanding senior securities pursuant to the
optional redemption provisions thereof. The Company represents
that it will not so redeem such outstanding securities unless the
estimated present value savings derived from the difference
between interest or dividend payments on a new issue of
comparable securities and those securities refunded is on an
after-tax basis greater than the estimated present value of all
12<PAGE>
redemption, tendering and issuing costs, assuming an appropriate
discount rate. Such discount rate will be based on meeting the
Company's long-term capital structure goals, with appropriate
adjustments for income taxes.
17. The Company will file an annual statement setting
forth the terms and conditions of all the Securities and the
corresponding Subordinated Debentures and Guarantees issued
during that year, together with a calculation of the cumulative
stated value of the Securities and principal amount of
Subordinated Debentures so issued.
18. Pursuant to N.J.S. 48:3-9, the Company applies to
your Honorable Board for authority for the following:
(a) Without further order of the Board, to issue,
in one or more series through December 31, 1996, Subordinated
Debentures in an aggregate principal amount not to exceed
$125,000,000 and, in connection therewith, to make, execute and
deliver to United States Trust Company of New York, as Trustee,
an Indenture ("Original Debenture Indenture") providing for the
issuance of such Subordinated Debentures in series and one or
more Supplemental Indentures thereto (each, a "Supplement") for
the purpose, among other things, of describing the terms of the
Subordinated Debentures. A copy of the proposed Original
Debenture Indenture and each Supplement will be filed with your
Honorable Board;
(b) Without further Order of the Board, to make,
execute and deliver one or more Guarantees with respect to the
issuance and sale by JCP&L Capital of not more than $125,000,000
aggregate stated liquidation value of Securities; and
13<PAGE>
(c) Without further Order of the Board, to make,
execute and deliver to Investment Sub a demand promissory note in
an aggregate principal amount of not more than $13,000,000.
19. No franchise or right is proposed to be
capitalized directly or indirectly as a result of or in
connection with the proposed transaction.
20. The Board of Directors of the Company has
authorized the transactions described in and the filing of the
within petition. A certified copy of the resolutions of the
Board of Directors is attached hereto and made part hereof
(Exhibit "A").
21. The only regulatory body, in addition to your
Honorable Board, having jurisdiction over the proposed
transactions for which your Board's approval is sought is the
Securities and Exchange Commission. Although the Company has
qualified to do business in the Commonwealth of Pennsylvania, it
has consistently been the position of the Pennsylvania Public
Utility Commission that, under the conditions applicable to the
issuance and sale by the Company of securities heretofore issued,
the provisions of the Pennsylvania Public Utility Code relating
to the issuance of securities by public utilities are not
applicable.
22. The Company hereby respectfully requests that
the Board expedite its consideration and approval of the within
Petition so that it may be able to take advantage of favorable
market conditions.
23. Attached hereto and made part hereof are the
following exhibits:
14<PAGE>
Exhibit "A" - Certified Resolutions of the Board of Directors
authorizing the transactions described in and the
filing of the within petition (To Be Submitted).
Exhibit "B" - Statement of Cash Flows for the twelve months
ended September 30, 1994 (To Be Submitted). The
Statement of Cash Flows for the year 1993 is
incorporated by reference (pages 120 and 121) to
the Company's filing of its annual report for the
year 1993 to the Board of Public Utilities.
Exhibit "C" - Statements of Sources of Construction Funds as at
December 31, 1993 and September 30, 1994 (To Be
Submitted).
Exhibit "D" - Balance Sheets and Statements of Long-Term Debt
and Capital Stock as at September 30, 1994, both
before and after giving effect to the proposed
transactions, together with pro forma journal
entries (To Be Submitted). The Balance Sheet as
at December 31, 1993 is incorporated by reference
(pages 110 through 113) to the Company's filing of
its annual report for the year 1993 to the Board
of Public Utilities.
Exhibit "E" - Statements of Utility Plant by Accounts as at
December 31, 1993 and September 30, 1994, together
with Additions and Retirements during the period
(To Be Submitted).
Exhibit "F" - Statements of Income and Retained Earnings for the
twelve months ended September 30, 1994, both
before and after giving effect to the proposed
transactions, together with explanations of pro
forma adjustments (To Be Submitted). The
Statements of Income and Retained Earnings for the
year 1993 are incorporated by reference (pages 114
through 119) to the Company's filing of its annual
report for the year 1993 to the Board of Public
Utilities.
Exhibit "G" - Statement of Securities Outstanding at December
31, 1993 and Statement of Interest and Dividends
Paid or Declared for the year ended December 31,
1993 and the respective rates thereof.
Exhibit "H" - General description and an estimate of costs of
construction, completion, extension, or
improvement projects for the year 1994, in
addition to the forecast for the year 1995.
Exhibit "I" - Copy of Form of Subordinated Debenture Indenture
(To be Submitted).
15<PAGE>
Exhibit "J" - Copy of Form of Subordinated Debenture (to be
included in Exhibit "I")
Exhibit "K" - Copy of Form of Underwriting Agreement or Purchase
Agreement (To be Submitted).
Exhibit "L" - Copy of Form of Demand Promissory Note (To be
Submitted).
Exhibit "M" - Copy of Form of Jersey Central Power & Light
Company Guarantee (To be Submitted).
Exhibit "N" - Copy of Application on Form U-1 filed with the
Securities and Exchange Commission on behalf of
Jersey Central Power & Light Company (To be
Submitted).
WHEREFORE, the Company respectfully requests your
Honorable Board to authorize it, in accordance with the terms
hereinabove set forth, and in conjunction with the establishing
of JCP&L Capital, a limited partnership, and JCP&L Preferred
Capital, Inc., from time to time through December 31, 1996:
1. without further order of the Board, to issue, in one
or more series, Subordinated Debentures in an
aggregate principal amount not to exceed
$125,000,000, and, in connection therewith, to make,
execute and deliver to United States Trust Company of
New York, as Trustee, an Indenture and one or more
Supplemental Indentures thereto, substantially in the
forms to be filed with your Honorable Board;
2. without further order of the Board, to make, execute
and deliver one or more Guarantees with respect to
the issuance and sale by JCP&L Capital of not more
than $125,000,000 aggregate stated liquidation value
of Securities; and
3. without further order of this Board, to make, execute
and deliver to Investment Sub a demand promissory
note in an aggregate principal amount of not more
than $13,000,000.
The Company further requests that an expedited procedure
be used in the disposition of this petition, including issuance
of an appropriate order without hearing.
Respectfully submitted,
JERSEY CENTRAL POWER & LIGHT COMPANY
Wendy S. Greengrove
Attorney for Petitioner
300 Madison Avenue
Morristown, New Jersey 07962-1911
Date: October 20, 1994
16
<PAGE>
STATE OF NEW JERSEY )
ss.
COUNTY OF MORRIS )
P. H. PREIS, of full age, being duly sworn according to
law, upon his oath deposes and says:
1. I am Vice President and Comptroller of Jersey Central
Power & Light Company, the petitioner named in the foregoing
petition.
2. I have read the foregoing petition and the exhibits
thereto and, to the best of my knowledge and belief, the same are
true and properly set forth the accounting matters related
thereto.
3. It is the intention of the petitioner in good faith to
use the proceeds of the securities proposed to be issued for the
purpose set forth in the petition and particularly in paragraph
number 16 hereof.
P. H. Preis
Sworn to and subscribed
before me this 20th day
of October, 1994.
17
<PAGE>
EXHIBITS INTENTIONALLY EXCLUDED
18
<PAGE>
Exhibit D-2
STATE OF NEW JERSEY
BOARD OF PUBLIC UTILITIES
NEWARK, WEDNESDAY,
NEW JERSEY FEBRUARY 8, 1995
BOARD MEETING
ITEM 3A - ELECTRIC
3A Docket No. EF 94100475 - Order Authorizing
the Issuance of Subordinated Debentures, the
Execution of an Original Indenture, and
Supplemental Indentures, the Execution of One
or More Guarantees and the Execution of a
Demand Promissory Note - In the Matter of the
Petition of Jersey Central Power & Light
Company for Authority to (i) Issue Up to
$125,000,000 Aggregate Principal Amount of
Subordinated Debentures in One or More Series
and to Make, Execute and Deliver an Original
Indenture and One or More Supplemental
Indentures in Connection Therewith; (ii)
Make, Execute and Deliver One or More
Guarantees with Respect to the Issuance and
Sale of not More than $125,000,000 Aggregate
Stated Liquidation Value of Monthly Income
Preferred Securities; and (iii) Make, Execute
and Deliver to a wholly Owned Subsidiary a
Demand Promissory Note in an Aggregate
Principal Amount of note More than
$13,000,000.
BEFORE: PRESIDENT HERBERT H. TATE, JR.
COMMISSIONER EDMOND H. SALMON
COMMISSIONER CARMEN J. ARMENTI
J. H. BUEHRER & ASSOCIATES
17 Academy Street - Suite 201
Newark, New Jersey 07102
FAX: 201/643-3241
J. H. BUEHRER & ASSOCIATES (201) 623-1974<PAGE>
2
PRESIDENT TATE: Item 3A.
DR. GRYGIEL: Commissioners, this is a
request by Jersey Central Power & Light
Company for authorization to Issue $125
million of Monthly Income Preferred
Securities, the purpose of which is to repay
outstanding short-term debt.
If you recall in November of 1994,
Public Service Electric & Gas sought a
similar approval of an identical security and
the Board by a two to one vote approved the
transaction.
Since that time, the Staff has monitored
in cooperation with the Petitioner
developments in the MIPS market and from
November until very recently last week, there
still were no transactions involving MIPS
that were sold on a competitive basis. We
believe in the arguments that we put forward
in our memo with regard to a lower cost of
capital using the MIPS and the benefits to
the Company's equity capitalization as a
result of the sale that the potential
J. H. BUEHRER & ASSOCIATES 623-1974<PAGE>
3
benefits of the transaction continued to be
present for Jersey Central as they were for
Public Service Electric & Gas and we would
recommend that the Board authorize Jersey
Central to sell on a negotiated basis $125
million of MIPS.
PRESIDENT TATE: Any comments?
COMMISSIONER ARMENTI: Mr. President,
Commissioner Salmon, Doctor, my position on
these issuances is well documented I think
going way back. Let me refer you to the
November 4th PSE&G issuance. I believe that
was Docket No. EF93080335, and let me just
say from the outset I have no difficulty with
the procedure or the investment firms, but I
do have a problem not going out for
competitive bids.
You indicated in your memo that 80
percent of these transactions were completed
by Goldman Sachs because of their complicity
and structuring. It seemed to me, am I to
assume that there is 20 percent of investment
firms who also restructure these type of
deals?
J. H. BUEHRER & ASSOCIATES 623-1974<PAGE>
4
DR. GRYGIEL: No, there is 20 percent of
the total transactions in MIPS are handled by
other investment banking firms. The set is
around three to five firms that are active in
that market, but basically Goldman Sachs and
Merrill Lynch are probably the two most
dominant players in that market.
As we noted before, Commissioner, when
these MIPS are sold and they are sold
basically to a retail market, that is to
small individual investors, that the
syndicates that is necessary to sell these on
an economic basis are rather large. It could
be as many as -- the last time, I think we
had 12 investment banking firms in the main
marketing group.
So, it's not as if Goldman Sachs or
whoever the company ultimately chooses gains
all of the benefits from the sale of the
securities, they are divvied up among those
who participate in the ultimate syndicate
which could be as wide as I said of 11 major
firms as well as subsidiary firms in the
State of New Jersey and other places.
J. H. BUEHRER & ASSOCIATES 623-1974<PAGE>
5
COMMISSIONER ARMENTI: My concern is
that why can't the other three or four firms
who participate in this type of activity not
been asked to submit bids on a competitive
basis?
DR. GRYGIEL: I think there is two
points to make: one is that neither in the
non-utility sector or in the utility sector
has there been such a transaction which to me
is fairly compelling evidence that if there
were benefits to be gained from doing it on a
competitive basis, by now someone would have
taken the leap and done it.
Secondly, in terms of the underwriting
risk involved on the bid and given that it is
a retail market, it is not unusual for retail
transactions to be negotiated to avoid the
potential of having to keep on your shelves
unsold securities.
COMMISSIONER ARMENTI: As I recall, the
commission in the November 4th PSE&G
transaction amounted to approximately $6
million.
J. H. BUEHRER & ASSOCIATES 623-1974<PAGE>
6
DR. GRYGIEL: I think as a rough number
that's right. Remember as we explained
later, the $6 million was the aggregate which
was then --
COMMISSIONER ARMENTI: Divvied up.
DR. GRYGIEL: Yes, divvied up among 12
or 13 of -- I keep increasing the numbers, I
started with 11 -- among a large number of as
many as 10 other underwriting firms. So
again that is not available for the sole
disposition of the lead underwriter.
COMMISSIONER ARMENTI: And I understand
that this transaction could amount to
approximately $2.5 to $4 million in
commissions.
DR. GRYGIEL: In rough numbers, yes.
COMMISSIONER ARMENTI: If the other
underwriters participate in this structuring
of this type of a deal, why can't those other
investment houses participate in the bidding
process?
DR. GRYGIEL: Well, just a slight turn
of a phrase, the other firms participate in
J. H. BUEHRER & ASSOCIATES 623-1974<PAGE>
7
the distribution of the shares, namely the
selling of the shares. There is three or
four firms who have specialized in the
structuring of the transactions. The actual
sale is open to anyone who wants to
participate in the underwriting syndicate.
It's not an unusual phenomenon to have
specialization in certain kinds of
transactions that tend to prevail over some
period of time.
COMMISSIONER ARMENTI: Doesn't though,
as a rule -- I mean, investment house firms
employees move from one investment house to
another. If they accumulate a certain
expertise at, say, Goldman & Sachs and I
don't mean to point them out necessarily, but
they were mentioned here.
DR. GRYGIEL: Sure.
COMMISSIONER ARMENTI: And they move
over to Kidder Peabody, wouldn't they be able
to structure a deal? Wouldn't they have the
expertise because they moved from one house
to another house?
J. H. BUEHRER & ASSOCIATES 623-1974<PAGE>
8
DR. GRYGIEL: Again, just a slight
point, moving from Goldman to Kidder would
not at this time particularly be advantageous
since Kidder is not a player in this market.
The notion of the expertise is yes partially
embedded in specific individuals, but it is
also embedded in underwriter's counsel, which
is there irrespective of who is chosen and it
is embedded in the structure of each of the
firms that have undertaken the investment in
knowledge to be able to do these transactions
on an efficient basis.
COMMISSIONER ARMENTI: It is the utility
who contacts the firm, is that correct?
DR. GRYGIEL: Well, it's one knocking on
one door and one knocking on the other door.
Given the current markets, I would assume
that the underwriting firms are making --
those who have the ability and the confidence
of the market to do these transactions are
knocking on doors saying we can do it, give
us an opportunity to do it.
J. H. BUEHRER & ASSOCIATES 623-1974<PAGE>
9
COMMISSIONER ARMENTI: How does the
utility determine, in this case JCP&L,
whether there are any other investment houses
who would be willing to participate?
DR. GRYGIEL: All of the MIPS
transactions, whether they are utility or
non-utility are recorded and reviewed by the
SEC. Those transactions and the details of
those transactions in terms of commissions
and underwriting fees are all public
information.
In addition, the individual companies
who issue the MIPS are periodically called to
ask how that transaction went, were they
satisfied with the distribution, was it done
on a timely basis? So, there are ways for
Jersey Central in this case to assure itself
that (a) it is getting an appropriate rate
and (b) it is getting an appropriate
distribution for what it wants to achieve in
terms of retail holding of these particular
securities.
J. H. BUEHRER & ASSOCIATES 623-1974<PAGE>
10
COMMISSIONER ARMENTI: I just failed to
understand why they just don't test the
market on behalf of the ratepayers.
DR. GRYGIEL: Well, I don't disagree.
That is a thought that I take to bed
sometimes also, like why can't I get up in
the morning and look at the paper and there's
a competitive deal and I can cut it out, run
down here and say, we've got our first of
these now. But, it just hasn't happened.
I think one part of it is that the
benefits from the MIPS transactions in terms
of the tax deductibility of interest produces
a very low effective rate and the companies
are in a sense anxious to get these
securities on their books so that they
benefits to the ratepayers ultimately of the
lower rate will be sufficient to meet the
concerns that you have in terms of the
absolute lowest rate.
Would the rate be any lower under a
competitive scenario? I think we have had a
J. H. BUEHRER & ASSOCIATES 623-1974<PAGE>
11
lot of these discussions and the
professional, academic literature does not
produce a conclusive answer. There are
circumstances in which competitive bids will
produce a lower rate and circumstances in
which negotiated will produce a lower bid.
COMMISSIONER ARMENTI: Mr. President,
Commissioner Salmon, I have great respect as
always for Dr. Grygiel's expertise, except
when he says he goes to bed with a MIP.
(Laughter.)
I have to wonder about his judgment.
PRESIDENT TATE: I think you made your
point.
COMMISSIONER ARMENTI: I still feel if
we are going to divert from what all of us
have indicated our policy is, that is go to
competitive bid most times and other
utilities are going to exercise this type of
procedure, maybe we should have some
guidelines or rules as to how we are going to
handle this in the future.
J. H. BUEHRER & ASSOCIATES 623-1974<PAGE>
12
I still maintain that the ratepayers'
best interests are served by competitive
bidding and I just can't support this.
PRESIDENT TATE: All right. Any other
comment?
COMMISSIONER SALMON: I would just like
to make this comment for the record, Mr.
President, that I believe that after reading
the documentation that there are certain
transactions where there would be a benefit
by a negotiated effort as compared where most
of the time you may do a competitive type
bid.
I am confident after reading the
materials and the recommendations of the
Economist to vote in support of his
recommendation for this transaction.
PRESIDENT TATE: The comments of Dr.
Grygiel are noted and well taken about what
the current competitive market is for the
issuance of this type of security and, again,
the comments of Commissioner Armenti in his
statement are also well taken by this Board.
J. H. BUEHRER & ASSOCIATES 623-1974<PAGE>
13
COMMISSIONER SALMON: I'm going to make
a motion that we accept the recommendation of
our Chief Economist in the issuance of this
Petition.
PRESIDENT TATE: And I will second that.
THE SECRETARY: Commissioner Salmon?
COMMISSIONER SALMON: Yes.
THE SECRETARY: Commissioner Armenti?
COMMISSIONER ARMENTI: No.
THE SECRETARY: President Tate.
PRESIDENT TATE: Yes.
DR. GRYGIEL: Commissioner, before I go
to Item 3B, we would note that we do and we
will continue to monitor all MIPS
transactions and pursue as we had between the
last transaction and this one any development
which would indicate that someone has
successfully done one of these on a
competitive basis.
But, I would point out that the Board
has really crafted out a small subset of
transactions that it allows to go on a
J. H. BUEHRER & ASSOCIATES 623-1974<PAGE>
14
negotiated basis. The preponderance of
transactions are done within guidelines of
competitive bids.
PRESIDENT TATE: Thank you, Dr. Grygiel.
J. H. BUEHRER & ASSOCIATES 623-1974<PAGE>
Exhibit F-1
(LETTERHEAD OF BERLACK, ISRAELS & LIBERMAN)
February 22, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Jersey Central Power & Light Company -
Application on Form U-1
SEC File No. 70-8495
Gentlemen:
We have examined the Application on Form U-1, dated
October 20, 1994, under the Public Utility Holding Company Act of
1935 (the "Act"), filed by Jersey Central Power & Light Company
("JCP&L") with the Securities and Exchange Commission and
docketed in SEC File No. 70-8495, as amended by Amendment No. 1
thereto, dated this date, of which this opinion is to be a part.
(The Application, as thus to be amended, is hereinafter referred
to as the "Application".)
The Application contemplates, among other things, the
organization by JCP&L of a special purpose Delaware corporate
subsidiary (JCP&L Preferred Capital, Inc.) to become the sole
general partner of a newly formed Delaware limited partnership,
JCP&L Capital, L.P. ("JCP&L Capital"), the issuance and sale by
JCP&L Capital of up to 5,000,000 preferred securities,
representing preferred limited partner interests (the "Preferred
Securities"), the proceeds of which, together with the capital
contribution of the general partner, will be used to purchase
subordinated debentures issued by JCP&L (the "Subordinated
Debentures"). JCP&L will guarantee (the "Guarantee") the payment
by JCP&L Capital of distributions on the Preferred Securities and
of amounts due upon liquidation of JCP&L Capital or redemption of
the Preferred Securities, all to the extent set forth in the
Guarantee. The Preferred Securities are to be issued by JCP&L
Capital pursuant to an Amended and Restated Limited Partnership
Agreement and one or more Actions thereunder (collectively, the
"Limited Partnership Agreement") and the Subordinated Debentures
are to be issued by JCP&L pursuant to an indenture between JCP&L<PAGE>
Securities and Exchange Commission
February 22, 1995
Page 2
and United States Trust Company of New York, as Trustee (the
"Indenture").
For many years, we have participated in various
proceedings related to the issuance and sale of securities by
JCP&L, its parent, General Public Utilities Corporation, and its
affiliates, Metropolitan Edison Company and Pennsylvania Electric
Company, and we are familiar with the terms of the outstanding
securities of the corporations comprising the General Public
Utilities holding company system.
We have examined copies, signed, certified or otherwise
proven to our satisfaction, of the Restated Certificate of
Incorporation and By-Laws of JCP&L, and of the forms of Limited
Partnership Agreement and Indenture. We have also examined the
Petition filed by JCP&L with the New Jersey Board of Public
Utilities ("NJBPU") and the relevant portion of the transcript
from the February 8, 1995 Agenda Meeting of the NJBPU, at which
the Petition was approved. We have also examined such other
instruments, agreements and documents and made such further
investigation as we have deemed necessary as a basis for this
opinion.
With respect to all matters of New Jersey law, we have
relied upon the opinion of Richard S. Cohen, Esq., and with
respect to all matters of Delaware law, we have relied upon the
opinion of Richards, Layton & Finger, which are being filed as
Exhibits F-2 and F-3, respectively, to the Application.
Based upon the foregoing, and assuming that the
transactions therein proposed are carried out in accordance with
the Application, we are of the opinion that when (i) the
Commission shall have entered an order forthwith granting the
Application, (ii) all necessary corporate and partnership action
required on the part of JCP&L, JCP&L Preferred Capital, Inc. and
JCP&L Capital shall have been duly taken, (iii) all action under
state "Blue Sky" laws to permit the consummation of the proposed
transactions shall have been completed, and (iv) the certificates
representing the Preferred Securities and Subordinated Debentures
are, upon issuance thereof, duly signed, countersigned and
authenticated, as may be necessary, and assuming that the
Preferred Securities and Subordinated Debentures are issued and
sold under circumstances which are permitted under Section 12(f)
of the Act and Rule 70 of the General Rules and Regulations under
the Act,<PAGE>
Securities and Exchange Commission
February 22, 1995
Page 3
(a) all State laws applicable to the proposed
transactions will have been complied with;
(b) JCP&L Capital, the proposed issuer of the
Preferred Securities, has been duly formed and is
validly existing in good standing as a limited
partnership;
(c) JCP&L, the proposed issuer of the
Subordinated Debentures and the Guarantee, is validly
organized and duly existing;
(d) upon payment of the purchase price therefor
by the purchasers thereof, the Preferred Securities
will be validly issued, fully paid and non-assessable
limited partner interests, and the holders thereof will
be entitled to the rights and privileges appertaining
thereto set forth in the Limited Partnership Agreement;
(e) upon payment of the purchase price therefor
by the purchasers thereof, the Subordinated Debentures
will be the valid and binding obligations of JCP&L in
accordance with their terms, and the Guarantee will be
the valid and binding obligation of JCP&L in accordance
with its terms subject, in each case, to applicable
bankruptcy, insolvency, reorganization, moratorium and
other laws affecting creditors rights generally
(including, without limitation, the Atomic Energy Act
and applicable regulations of the Nuclear Regulatory
Commission thereunder) and general equitable
principles; and
(f) the consummation of the proposed transactions
will not violate the legal rights of the holders of any
securities issued by JCP&L or any "associate company"
thereof, as defined in the Act.
We hereby consent to the filing of this opinion as an
exhibit to the Application and in any proceedings before the
Commission that may be held in connection therewith.
Very truly yours,
BERLACK, ISRAELS & LIBERMAN<PAGE>
Exhibit F-2
(Letterhead of R.S. Cohen)
February 22, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
RE: Jersey Central Power & Light Company -
Application on Form U-1
SEC File No. 70-8495
Gentlemen:
I have examined the Application on Form U-1, dated
October 20, 1994, under the Public Utility Holding Company Act of
1935 (the "Act"), filed by Jersey Central Power & Light Company
("JCP&L") with the Securities and Exchange Commission and
docketed in SEC File No. 70-8495, as amended by Amendment No. 1
thereto dated this date, of which this opinion is to be a part.
(The Application, as thus to be amended, is hereinafter referred
to as the "Application".)
The Application contemplates, among other things, the
organization by JCP&L of a special purpose Delaware corporate
subsidiary (JCP&L Preferred Capital, Inc.) to become the sole
general partner of a newly formed Delaware limited partnership,
JCP&L Capital, L.P. ("JCP&L Capital"), the issuance and sale by
JCP&L Capital of up to 5,000,000 preferred securities,
representing preferred limited partner interests (the "Preferred
Securities"), the proceeds of which, together with the capital
contribution of the general partner, will be used to purchase
subordinated debentures issued by JCP&L (the "Subordinated
Debentures"). JCP&L will guarantee (the "Guarantee") the payment
by JCP&L Capital of distributions on the Preferred Securities and
of amounts due upon liquidation of JCP&L Capital or redemption of
the Preferred Securities, all to the extent set forth in the
Guarantee. The Preferred Securities are to be issued by JCP&L
Capital pursuant to an Amended and Restated Limited Partnership
Agreement and one or more Actions thereunder (collectively, the
"Limited Partnership Agreement") and the Subordinated Debentures
are to be issued by JCP&L pursuant to an indenture between JCP&L
and United States Trust Company of New York, as Trustee (the
"Indenture").<PAGE>
I am Corporate Counsel of JCP&L and for many years, I
have participated in various proceedings related to the issuance
and sale of securities by JCP&L, and am familiar with the terms
of the outstanding securities of JCP&L.
I have examined copies, signed, certified or otherwise
proven to my satisfaction, of the Restated Certificate of
Incorporation and By-Laws of JCP&L, each as amended to date, and
of the forms of Limited Partnership Agreement and Indenture. I
have also examined the Petition filed by JCP&L with the New
Jersey Board of Public Utilities ("NJBPU") and the relevant
portion of the transcript from the February 8, 1995 Agenda
Meeting of the NJBPU, at which the Petition was approved. I have
also examined such other instruments, agreements and documents
and made such further investigation as I have deemed necessary as
a basis for this opinion.
Based upon the foregoing, and assuming that the
transactions therein proposed are carried out in accordance with
the Application, I am of the opinion, insofar as matters governed
by the laws of the State of New Jersey are concerned, that when
(i) the Commission shall have entered an order forthwith granting
the Application, (ii) all necessary corporate and partnership
action required on the part of JCP&L, JCP&L Preferred Capital,
Inc. and JCP&L Capital shall have been duly taken, (iii) all
action under state "Blue Sky" laws to permit the consummation of
the proposed transactions shall have been completed, and (iv) the
certificates representing the Preferred Securities and
Subordinated Debentures are, upon issuance thereof, duly signed,
countersigned and authenticated, as may be necessary, and
assuming that the Preferred Securities and Subordinated
Debentures are issued and sold under circumstances which are
permitted under Section 12(f) of the Act and Rule 70 of the
General Rules and Regulations under the Act,
(a) all laws of the State of New Jersey
applicable to the proposed transactions will have been
complied with;
(b) JCP&L, the proposed issuer of the
Subordinated Debentures and the Guarantee, is validly
organized and duly existing;
(c) upon payment of the purchase price therefor
by the purchasers thereof, the Subordinated Debentures
will be the valid and binding obligations of JCP&L in
accordance with their terms, and the Guarantee will be
the valid and binding obligation of JCP&L in accordance
with its terms subject, in each case, to applicable
bankruptcy, insolvency, reorganization, moratorium and
other laws affecting creditors rights generally
(including, without limitation, the Atomic Energy Act
and applicable regulations of the Nuclear Regulatory
Commission thereunder) and general equitable
principles; and
2<PAGE>
(d) the consummation of the proposed transactions
will not violate the legal rights of the holders of any
securities issued by JCP&L.
I hereby consent to the filing of this opinion as an
exhibit to the Application and in any proceedings before the
Commission that may be held in connection therewith.
Very truly yours,
Richard S. Cohen
3<PAGE>
(LETTERHEAD OF RICHARDS, LAYTON & FINGER)
Exhibit F-3
February 22, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Jersey Central Power & Light Company
Application on Form U-1
SEC File No. 70-8495
Ladies and Gentlemen:
We have acted as special Delaware counsel for JCP&L
Capital, L.P., a Delaware limited partnership (the
"Partnership"), in connection with the matters set forth herein.
At the Partnership's request, this opinion is being furnished to
you. Initially capitalized terms used herein and not otherwise
defined are used as defined in the LP Agreement (as defined
below).
The Application (as defined below) contemplates, among
other things, (i) the organization by Jersey Central Power &
Light Company, a New Jersey corporation ("Jersey Central Power &
Light Company"), of JCP&L Preferred Capital, Inc., a Delaware
corporation (the "General Partner"), to become the sole general
partner of the Partnership, and (ii) the issuance and sale by the
Partnership of up to 5,000,000 Preferred Partner Interests. The
issuance and sale by the Partnership of the Preferred Partner
Interests pursuant to the LP Agreement are hereinafter referred
to as the "Transaction."
For purposes of giving the opinions hereinafter set
forth, our examination of documents has been limited to the
examination of originals or copies of the following:
(a) The Certificate of Limited Partnership of the
Partnership, dated as of February 21, 1995 (the "Partnership
Certificate"), as filed in the office of the Secretary of State
of the State of Delaware (the "Secretary of State") on February
21, 1995;
(b) The Limited Partnership Agreement of the
Partnership, dated as of February 21, 1995;<PAGE>
Securities and Exchange Commission
February 22, 1995
Page 2
(c) The Application on Form U-1, dated October 20,
1994 (the "Original Application"), under the Public Utility
Holding Company Act of 1935, filed by Jersey Central Power &
Light Company with the Securities and Exchange Commission and
docketed in SEC File No. 70-8495, as amended by Amendment No. 1
to the Original Application, dated February 22, 1995 ("Amendment
No. 1") (the Original Application as amended by Amendment No. 1
is referred to as the "Application");
(d) A form of Amended and Restated Limited Partnership
Agreement of the Partnership, filed as an exhibit to the
Application (the "Agreement");
(e) A form of Action of the General Partner relating
to the Preferred Partner Interests (the "Action");
(f) The Certificate of Incorporation of the General
Partner, dated February 21, 1995 (the "Certificate of
Incorporation"), as filed in the office of the Secretary of State
on February 21, 1995;
(g) The By-Laws of the General Partner (the "By-
Laws");
(h) A certificate of an officer of the General
Partner;
(i) A Certificate of Good Standing for the
Partnership, dated February 22, 1995, obtained from the Secretary
of State; and
(j) A Certificate of Good Standing for the General
Partner, dated February 22, 1995, obtained from the Secretary of
State.
The Agreement as amended and supplemented by the Action
is referred to as the "LP Agreement."
For purposes of this opinion, we have not reviewed any
documents other than the documents listed in paragraphs (a)
through (j) above. In particular, we have not reviewed any
document (other than the documents listed in paragraphs (a)
through (j) above) that is referred to in or incorporated by
reference into the LP Agreement or the Application. We have
assumed that there exists no provision in any document that we
have not reviewed that is inconsistent with the opinions stated
herein. We have conducted no independent factual investigation
of our own but rather have relied solely upon the foregoing
documents, the statements and information set forth therein and
the additional matters recited or assumed herein, all of which we<PAGE>
Securities and Exchange Commission
February 22, 1995
Page 3
have assumed to be true, complete and accurate in all material
respects.
With respect to all documents examined by us, we have
assumed (i) the authenticity of all documents submitted to us as
authentic originals, (ii) the conformity with the originals of
all documents submitted to us as copies or forms, and (iii) the
genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that
the LP Agreement constitutes the entire agreement among the
parties thereto with respect to the subject matter thereof,
including with respect to the admission of partners to, and the
creation, operation and termination of, the Partnership, and that
the LP Agreement and the Partnership Certificate are in full
force and effect and have not been amended, (ii) that the Board
of Directors of the General Partner has duly adopted resolutions
(collectively, the "Resolutions") authorizing the General
Partner's execution and delivery of, and the performance of its
obligations under, the LP Agreement, (iii) that the Certificate
of Incorporation and the By-Laws are in full force and effect and
have not been amended, (iv) except to the extent provided in
paragraph 2 below, the due organization or due formation, as the
case may be, and valid existence in good standing of each party
to the documents examined by us under the laws of the
jurisdiction governing its organization or formation, (v) the
legal capacity of natural persons who are parties to the
documents examined by us, (vi) except to the extent set forth in
the last sentence of paragraph 3 below, that each of the parties
to the documents examined by us has the power and authority to
execute and deliver, and to perform its obligations under, such
documents, (vii) the due authorization, execution and delivery by
all parties thereto of all documents examined by us, including
the LP Agreement, (viii) the receipt by each Person to be
admitted to the Partnership as a limited partner of the
Partnership in connection with its purchase of Preferred Partner
Interests (each, a "Preferred Partner" and collectively, the
"Preferred Partners") of a Certificate and the payment for the
Preferred Partner Interests acquired by it, in accordance with
the LP Agreement, (ix) that the books and records of the
Partnership set forth all information required by the LP
Agreement and the Delaware Revised Uniform Limited Partnership
Act (6 Del. C. Section 17-101, et seq.), including all
information with respect to all Persons to be admitted as
Partners and their contributions to the Partnership, (x) that the
Preferred Partner Interests are issued and sold to the Preferred
Partners in accordance with the LP Agreement, (xi) that the
Preferred Partners, as limited partners of the Partnership, take
no action other than actions required or permitted by the LP
Agreement and exercise no rights or powers other than rights and
powers the exercise of which are required or permitted by the LP
Agreement, and (xii) that neither the Partnership, the General<PAGE>
Securities and Exchange Commission
February 22, 1995
Page 4
Partner nor Jersey Central Power & Light Company derives income
from or connected with sources within the State of Delaware or
has any assets, activities (other than the Partnership's and the
General Partner's maintenance of a registered office and
registered agent in the State of Delaware and the Partnership's
and the General Partner's filing of documents with the Secretary
of State) or employees in the State of Delaware. We have not
participated in the preparation of the Application and assume no
responsibility for
its contents.
This opinion is limited to the laws of the State of
Delaware (excluding the securities laws of the State of
Delaware), and we have not considered and express no opinion on
the laws of any other jurisdiction, including federal laws and
rules and regulations relating thereto. Our opinions are
rendered only with respect to Delaware laws and rules,
regulations and orders thereunder which are currently in effect.
Based upon the foregoing, and upon our examination of
such questions of law and statutes of the State of Delaware as we
have considered necessary or appropriate, and subject to the
assumptions, qualifications, limitations and exceptions set forth
herein, we are of the opinion that:
1. The Transaction does not violate applicable
Delaware law.
2. The Partnership has been duly formed and is
validly existing in good standing as a limited partnership under
the laws of the State of Delaware.
3. Upon issuance and payment as contemplated by the
LP Agreement, the Preferred Partner Interests will be validly
issued and, subject to the qualifications set forth herein, will
be fully paid and nonassessable limited partner interests in the
Partnership, as to which the Preferred Partners, as limited
partners of the Partnership, will have no liability in excess of
their obligations to make payments provided for in the LP
Agreement and their share of the Partnership's assets and
undistributed profits (subject to the obligation of a Preferred
Partner to repay any funds wrongfully distributed to it). Each
Preferred Partner will be entitled to the rights and privileges
of a Preferred Partner that are set forth in the LP Agreement.
The General Partner has the requisite corporate power and
authority under the General Corporation Law of the State of
Delaware (8 Del. C. Section 101, et seq.), the Certificate of
Incorporation, the By-Laws and the Resolutions to execute and
deliver, and to perform its obligations under, the LP Agreement.<PAGE>
Securities and Exchange Commission
February 22, 1995
Page 5
4. The consummation of the Transaction will not
violate the legal rights of Jersey Central Power & Light Company,
in its capacity as the sole stockholder of the General Partner,
the General Partner, in its capacity as a general partner of the
Partnership, or the Preferred Partners, in their capacity as
limited partners of the Partnership.
In rendering the opinions expressed herein, we express
no opinion regarding applicable law relating to fiduciary duties.
The opinion expressed in the second sentence of
paragraph 3 above is subject to (i) bankruptcy, insolvency,
moratorium, receivership, reorganization, liquidation, fraudulent
conveyance and other similar laws relating to or affecting the
rights and remedies of creditors generally, and (ii) principles
of equity (regardless of whether considered and applied in a
proceeding in equity or at law).
We consent to the filing of this opinion with the
Securities and Exchange Commission as an exhibit to the
Application. We also consent to Berlack, Israels & Liberman's
and Richard S. Cohen, Esquire's relying as to matters of Delaware
law upon this opinion in connection with opinions to be rendered
by them to you in connection with the Application. Except as
stated above, without our prior written consent, this opinion may
not be furnished or quoted to, or relied upon by, any other
person or entity for any purpose.
Very truly yours,
RICHARDS, LAYTON & FINGER<PAGE>
