Amendment No. 3 to
SEC File No. 70-8403
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM U-1
APPLICATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 ("Act")
PENNSYLVANIA ELECTRIC COMPANY ("Penelec")
1001 Broad Street
Johnstown, Pennsylvania 15907
(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)
Don W. Myers, 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
William C. Matthews, Esq., Robert C. Gerlach, Esq.
Secretary Ballard Spahr Andrews &
Pennsylvania Electric Company Ingersoll
1001 Broad Street 1735 Market Street
Johnstown, Pennsylvania 15907 Philadelphia, Pennsylvania 19103
(Names and addresses of agents for service)
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Penelec hereby amends its Application on Form U-1, as
heretofore amended, docketed in SEC File No. 70-8403, as follows:
1. By amending Items 1, 2 and 3 thereof to read in their
entirety as follows:
ITEM 1. DESCRIPTION OF PROPOSED TRANSACTIONS.
A. Penelec proposes to organize a special purpose
subsidiary ("Penelec Capital") as a limited partnership under the
Delaware Revised Uniform Limited Partnership Act. Penelec also
intends to organize a second special purpose wholly-owned
subsidiary under the Delaware General Corporation Law
("Investment Sub") for the sole purpose of acting as the general
partner of Penelec Capital. Penelec would acquire all of the
common stock of Investment Sub for a nominal consideration and
would capitalize Investment Sub with a demand promissory note in
the principal amount of approximately 10% of the total
capitalization of Penelec Capital, or up to $13 million. Penelec
Capital will then issue and sell from time to time in one or more
series through June 30, 1996 up to $125 million aggregate stated
value of preferred limited partnership interests, in the form of
Monthly Income Preferred Securities, $25 per security stated
value ("MIPS").
B. Penelec or Investment Sub will acquire all of the
general partnership interests of Penelec Capital. Investment Sub
would acquire up to a 3% general partnership interest in Penelec
Capital for up to $4 million. The total equity contribution by
Penelec and/or Investment Sub to Penelec Capital will not exceed
$35 million (the aggregate of such investment being herein
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referred to as the "Equity Contribution"). Penelec Capital will
apply the proceeds from the sale of the MIPS, together with the
Equity Contribution, to purchase Penelec's subordinated
debentures (individually, a "Subordinated Debenture" and
collectively, the "Subordinated Debentures"). In addition,
Penelec may acquire a separate class of limited partnership
interest in Penelec Capital for a nominal consideration to ensure
that Penelec Capital will at all times have a limited partner as
required by the Delaware Revised Uniform Limited Partnership Act.
C. Penelec will also unconditionally guarantee
(individually, a "Guaranty" and collectively, the "Guaranties")
(i) payment of distributions on the MIPS, if and to the extent
Penelec Capital has declared distributions out of funds legally
available therefor, (ii) payments to the MIPS holders of amounts
due upon liquidation of Penelec Capital or redemption of the
MIPS, and (iii) certain additional amounts that may be payable in
respect of the MIPS.
D. Each Subordinated Debenture will have an initial
term of up to 50 years. Prior to maturity, Penelec will pay only
interest on the Subordinated Debentures at a rate equal to the
distribution rate on the related series of MIPS. Such interest
payments will constitute Penelec Capital's only income and will
be used by it to pay monthly distributions on the MIPS and
distributions on the general partnership interests of Penelec
Capital. Distributions on the MIPS will be made monthly, will be
cumulative and must be made to the extent that Penelec Capital
has legally available funds and cash sufficient for such
purposes. However, Penelec will have the right to defer payment
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of interest on the Subordinated Debentures for up to five years,
provided that if distributions on the MIPS are not paid for
eighteen consecutive months, then the MIPS holders will have the
right to appoint a special representative to enforce Penelec
Capital's rights under the Subordinated Debentures and the
Guaranties. Penelec Capital will have the parallel right to
defer distributions on the related series of MIPS for up to five
years. Penelec and Penelec Capital, as the case may be, may be
required to pay interest on any deferred interest or
distributions, to the extent permitted by applicable law. The
distribution rates, payment dates, redemption and other similar
provisions of each MIPS series will be identical to the interest
rates, payment dates, redemption and other provisions of the
Subordinated Debenture issued by Penelec with respect thereto.
E. Each Subordinated Debenture and related Guaranty
will be subordinate to all other existing and future indebtedness
for borrowed money of Penelec and will have no cross-default
provisions with respect to other Penelec indebtedness -- i.e., a
default under any other outstanding Penelec indebtedness will not
result in a default under the Subordinated Debenture or the
Guaranty. However, Penelec may not declare and pay dividends on
its outstanding Cumulative Preferred Stock or Common Stock unless
all payments then due (whether or not previously deferred) under
the Subordinated Debentures and the Guaranties have been made.
F. It is expected that Penelec's interest payments on
the Subordinated Debentures will be deductible for income tax
purposes and that Penelec Capital will be treated as a
partnership for federal income tax purposes. Consequently, MIPS
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holders and Penelec (and Investment Sub) will be deemed to have
received partnership distributions in respect of their
distributions from Penelec Capital and will not be entitled to
any "dividend received deduction" under the Internal Revenue
Code.
The MIPS may be redeemable at the option of Penelec
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) Penelec
Capital is required by applicable tax laws to withhold or deduct
certain amounts in connection with distributions or other
payments, or (w) Penelec 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 Penelec on the Subordinated Debentures are not deductible for
federal income tax purposes, or (y) Penelec Capital is subject to
more than a de minimis amount of other taxes, duties or other
governmental charges, or (z) Penelec Capital becomes subject to
regulation as an "investment company" under the Investment
Company Act of 1940. Upon occurrence of any of the events set
forth in clause (ii) of the immediately preceding sentence,
Penelec Capital may also have the right to dissolve and
distribute the Subordinated Debentures to the MIPS holders in
liquidation of their interests in Penelec Capital.
In the event that Penelec Capital is required by
applicable tax laws to withhold or deduct certain amounts in
connection with distributions or other payments, Penelec Capital
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may also have the obligation, if the MIPS are not redeemed or
Subordinated Debentures are not distributed to the holders
thereof as aforesaid, to "gross up" such payments so that the
MIPS 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, Penelec's
obligations under the Subordinated Debentures and the Guaranties
would also cover any such "gross up" obligations.
G. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of Penelec Capital, the
holders of the MIPS will be entitled to receive, out of the
assets of Penelec Capital available for distribution to its
partners, before any distribution of assets to the general
partner of Penelec Capital, an amount equal to the stated value
of the MIPS plus any accrued and unpaid distributions.
H. The constituent instruments of Penelec Capital,
including its Limited Partnership Agreement, will provide, among
other things, that Penelec Capital's activities will be limited
to the issuance and sale of MIPS from time to time and the
application of (i) the proceeds thereof, and (ii) the Equity
Contribution to the purchase of Subordinated Debentures.
Accordingly, it is not proposed that Penelec Capital's
constituent instruments include any interest or distribution
coverage or capitalization ratio restrictions on its ability to
issue and sell MIPS as each such issuance will be supported by a
Subordinated Debenture and a Guaranty, and such restrictions
would therefore not be relevant or necessary for Penelec Capital
to maintain an appropriate capital structure. Moreover, the
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issuance of Subordinated Debentures by Penelec will be subject to
the restriction in Article 6th, Section 8(D) of Penelec's
Restated Articles of Incorporation which limits, without the
consent of the holders of a majority of Penelec's outstanding
Cumulative Preferred Stock, the amount of unsecured indebtedness
which Penelec 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 Penelec plus Penelec's capital stock, premiums
thereon, and surplus of Penelec as stated on its books of
account.
Penelec Capital's constituent instruments will further
state that its general partnership interests are not
transferrable, that its business and affairs will be managed and
controlled directly by Penelec or by Investment Sub, and that
Penelec or Investment Sub, as the case may be, will be
responsible for all liabilities and obligations of Penelec
Capital.
I. Penelec believes that the proposed MIPS program
will provide substantial benefits over traditional perpetual
preferred stock issuances by Penelec. While Penelec expects that
the MIPS will carry a somewhat higher "dividend" rate than a
perpetual preferred issue, the expected tax deductibility of
interest payments on the Subordinated Debentures will afford
Penelec with increased cash flow and net income, and then
ultimately lower customer rates. At the same time, Penelec
understands that the financial markets will view the financing
Penelec obtains through the MIPS program as having essentially
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the same equity characteristics as would be the case if Penelec
were to issue traditional perpetual preferred stock. Penelec
also understands that the rating agencies will view the financing
Penelec obtains through the MIPS program as having equity
characteristics somewhere between sinking fund preferred stock
and traditional perpetual preferred stock. Indeed, based on an
assumed dividend rate of about 8 3/8% for a Penelec perpetual
preferred issue and an assumed 8 7/8% distribution rate for the
MIPS, Penelec believes that, over the 49 year life of a $125
million MIPS issue, it could achieve approximately $49 million of
savings, on a net present value basis. The MIPS will be carried
in the capitalization section of Penelec's consolidated balance
sheet. The Subordinated Debentures, so long as they remain
inter-company obligations, will not appear on Penelec's
consolidated balance sheet.
J. Rule 54 under the Act provides, among other
things, that in determining whether to approve transactions by a
subsidiary of a registered holding company, other than with
respect to exempt wholesale generators ("EWG") or foreign utility
companies ("FUCO"), the Commission shall not consider the effect
of the capitalization or earnings of any subsidiary which is an
EWG or a FUCO upon the registered holding company system if Rules
53(a), (b) and (c) under the Act are satisfied. As demonstrated
below, each of the conditions set forth in Rules 53(a)(1) through
(a)(4) have been met, and none of the conditions described in
Rules 53(b)(1) through (b)(3) exist.
1. The GPU System's average consolidated retained
earnings as reported for its four most recent quarterly periods
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on GPU's Annual Report on Form 10-K for the year ended December
31, 1993 and Quarterly Reports on Form 10-Q for the quarters
ended March 31, June 30 and September 30, 1993 as filed under the
Securities Exchange Act of 1934 was approximately $1.81 billion.
At the date of the original filing of this Application, GPU had
invested, directly or indirectly, an aggregate of $11.4 million
in a foreign EWG (see HCAR No. 35-25987). Accordingly, GPU's
investment in EWGs and FUCOs equals approximately .6% of such
average consolidated retained earnings.
2. GPU maintains books and records to identify
investments in, and earnings from, any EWG or FUCO in which it
directly or indirectly holds an interest. GPU, through its
wholly-owned subsidiary Energy Initiatives, Inc. ("EI"), owns
less than 50% of the voting securities issued by the partnership
by which it holds its interest in such foreign EWG (the
"Partnership"). Accordingly, GPU through EI will proceed in good
faith, to the extent reasonable under the circumstances, to
cause:
(a) the Partnership to maintain books and
records in accordance with United States generally accepted
accounting principles ("GAAP");
(b) the financial statements of the
Partnership to be prepared according to GAAP; and
(c) access by the Commission to such books
and records and financial statements (or copies thereof) in
English as the Commission may request and, in any event,
will provide the Commission on request copies of such
materials as are made available to GPU and EI.
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If and to the extent that the Partnership books,
records or financial statements are not maintained in accordance
with GAAP, GPU and EI will, upon request of the Commission,
describe and quantify each material variation therefrom as and to
the extent required by subparagraphs (2)(iii)(A) and (2)(iii)(B)
of Rule 53.
3. None of the GPU System's domestic public
utility subsidiary employees are, at the date hereof, rendering
any services, directly or indirectly, to any EWG or FUCO in which
GPU directly or indirectly holds an interest.
4. Copies of this Application are being provided
to the Pennsylvania Public Utility Commission ("PaPUC"), the only
federal, state or local regulatory agency having jurisdiction
over the retail rates of Penelec. In addition, GPU will submit
to the PaPUC copies of any Rule 24 certificates required
hereunder, as well as a copy of Item 9 of GPU's Form U5S and
Exhibits H and I of Item 10 thereof (commencing with the Form U5S
to be filed for 1994, the year in which EI acquired its interest
in the Partnership).
5. None of the provisions of paragraph (b) of
Rule 53 render paragraph (a) of that Rule unavailable for the
proposed transactions.
(a) Neither GPU nor any subsidiary of GPU is
the subject of any pending bankruptcy or similar proceeding.
(b) GPU's average consolidated retained
earnings for the four most recent quarterly periods
(approximately $1.81 billion) represented an increase of
approximately $100 million in the average consolidated
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retained earnings for the previous four quarterly periods
(approximately $1.71 billion).
(c) GPU incurred no losses from direct or
indirect investments in EWGs and FUCOs in 1993.
K. Penelec expects to apply the net proceeds of the
sale to Penelec Capital of Subordinated Debentures 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. Penelec 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
redemption, tendering and issuing costs, assuming an appropriate
discount rate. Such discount rate will be based on meeting
Penelec's long-term capital structure goals, with appropriate
adjustments for income taxes. Penelec will not use any of the
net proceeds of the sale of Subordinated Debentures to acquire,
either directly or indirectly, any interest in any EWG or FUCO.
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 10,000
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New York Stock Exchange listing fee 15,000
Legal fees:
Berlack, Israels & Liberman 85,000
Ballard Spahr Andrews & Ingersoll 85,000
Carter, Ledyard & Milburn 55,000
Richards, Layton & Finger, P.A. 25,000
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 21,771
Total $440,000
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ITEM 3. APPLICABLE STATUTORY PROVISIONS.
A. The acquisition by Penelec of partnership
interests of Penelec Capital and shares of the capital stock of
Investment Sub, the acquisition by Investment Sub of a demand
promissory note of Penelec and partnership interests of Penelec
Capital and the acquisition by Penelec Capital of the
Subordinated Debentures and the Guaranties are subject to
Sections 9(a), 10 and 12(b) of the Act and Rule 45 thereunder.
B. The issuance and sale of the MIPS by Penelec
Capital, and the contingent distribution of Subordinated
Debentures to the MIPS holders, are subject to Sections 6(a) and
7 of the Act and Rule 54 thereunder.
C. Penelec believes that the issuance of its
Subordinated Debentures and its Guaranties to Penelec Capital
will be exempt from the declaration requirements of the Act by
virtue of Rule 45(b)(1) thereunder.
2. By deleting Exhibits A-1, A-2, A-3, A-4, B-1 and
B-2 from Item 6(a) thereof.
3. By redesignating and filing the following exhibits
in Item 6(a) thereof:
(a) Exhibits:
A-1 - Certificate of Incorporation of Penelec
Preferred Capital, Inc. (Investment Sub)
- Incorporated by reference to Exhibit
3-C, Registration Statement on Form S-
3, Registration Nos. 33-53677 and 33-
53677-01.
A-2 - By-Laws of Penelec Preferred Capital,
Inc. (Investment Sub).
A-3 - Certificate of Limited Partnership of
Penelec Capital - Incorporated by
reference to Exhibit 3-E, Registration
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Statement on Form S-3, Registration Nos.
33-53677 and 33-53677-01.
A-4 - Form of Limited Partnership Agreement of
Penelec Capital - Incorporated by
reference to Exhibit 3-F, Registration
Statement on Form S-3, Registration Nos.
33-53677 and 33-53677-01.
A-5 - Form of Amended and Restated Limited
Partnership Agreement of Penelec Capital
- Incorporated by reference to Exhibit
3-G, Registration Statement on Form S-
3, Registration Nos. 33-53677 and 33-
53677-01.
A-6 - Form of Action Creating Series A
Preferred Securities - Incorporated by
reference to Exhibit 3-H, Registration
Statement on Form S-3, Registration Nos.
33-53677 and 33-53677-01.
A-7 - Form of Preferred Security 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.
B-1 - Form of Payment and Guarantee Agreement
- Incorporated by reference to Exhibit
4-D, Registration Statement on Form S-
3, Registration Nos. 33-53677 and 33-
53677-01.
B-2 - Form of Underwriting Agreement - to be
filed by amendment.
C - Registration Statement on Form S-3 under
the Securities Act of 1933 relating to
the various securities which are the
subject hereof and all amendments and
exhibits thereto - Incorporated by
reference to Registration Statement on
Form S-3, Registration Nos. 33-53677 and
33-53677-01.
D-1 - Copy of Securities Certificate and
application filed by Penelec with the
PaPUC.
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D-2 - Copy of PaPUC Opinion and Order
registering Penelec's Securities
Certificate and approving issuance of
Certificate of Public Convenience.
F-1 - Opinion of Berlack, Israels & Liberman.
F-2 - Opinion of Ballard Spahr Andrews &
Ingersoll.
F-3 - Opinion of Richards, Layton & Finger,
P.A.
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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.
PENNSYLVANIA ELECTRIC COMPANY
By: ______________________________
Don W. Myers, Vice President and
Treasurer
Date: June 2, 1994
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EXHIBITS TO BE FILED BY EDGAR
Exhibits:
A-2 - By-Laws of Penelec Preferred Capital,
Inc. (Investment Sub).
A-8 - Form of Subordinated Debenture
Indenture.
D-1 - Copy of Securities Certificate and
application filed by Penelec with the
PaPUC.
D-2 - Copy of PaPUC Opinion and Order
registering Penelec's Securities
Certificate and approving issuance of
Certificate of Public Convenience.
F-1 - Opinion of Berlack, Israels & Liberman.
F-2 - Opinion of Ballard Spahr Andrews &
Ingersoll.
F-3 - Opinion of Richards, Layton & Finger,
P.A.
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Exhibit A-2
_________________________________________________________________
_________________________________________________________________
________________________
PENELEC PREFERRED CAPITAL, INC.
By-Laws
(May 9, 1994)
________________________
_________________________________________________________________
_________________________________________________________________
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BY-LAWS
Offices
1. The principal office of PENELEC PREFERRED CAPITAL,
INC. (the "Corporation") shall be in Mellon Bank Center, Tenth
and Market Streets, 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
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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
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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.
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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 fifteen 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 fifty
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
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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
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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
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presence of a quorum at a meeting of the Board of Directors or of
a committee which authorizes the contract or transaction.
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
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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 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
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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
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.
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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
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.
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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
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
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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.
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
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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
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
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(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.
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
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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.
(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
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Executive Committee of which notice is required to be given by
law or by the By-Laws.
(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,
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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.
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.
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(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
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
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by the Corporation, similar to that which may be required to be
given by the Treasurer.
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.
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(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
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
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which shall be paid by the Corporation, similar to that which may
be required to be given by the Comptroller.
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.
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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.
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
22
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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
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
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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
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
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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.
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
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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.
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
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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
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.
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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
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. 1. 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.
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2. 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
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, litho-
graphed 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, deben-
tures, notes or other instruments may nevertheless be adopted by
the Corporation and be issued and delivered as though the person
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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.
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
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<PAGE>
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
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
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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.
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
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<PAGE>
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.
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<PAGE>
Exhibit A-8
Draft of 6/1/94
PENNSYLVANIA ELECTRIC COMPANY
AND
UNITED STATES TRUST COMPANY OF NEW YORK
As Trustee
INDENTURE
Dated as of , 1994
Providing for the Issuance of Subordinated
Debentures in Series and for the
___% Subordinated Debentures, Series A, due 2043
<PAGE>
INDENTURE, dated as of __________________, by and between
Pennsylvania Electric Company, a Pennsylvania 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 Series A
Securities (as hereinafter defined), 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 Company's __% Subordinated Debentures due 2043
(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.
"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
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<PAGE>
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 Pennsylvania Electric 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.
"Penelec Capital" means Penelec 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.
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<PAGE>
"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 Penelec 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.
"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 Penelec 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 Penelec
Capital to purchase Series A Securities.
4
<PAGE>
"Series A Securities" means any of the Company's __%
Subordinated Debentures due 2043, 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
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.
5
<PAGE>
"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, any 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
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.
6
<PAGE>
"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
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.
7
<PAGE>
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;
(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
8
<PAGE>
Company in reliance thereon, whether or not notation of such
action is made upon such Security.
(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.
9
<PAGE>
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;
(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
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<PAGE>
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,
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 Penelec
Capital in consideration of a cash payment equal to the principal
amount thereof, upon a Board of Directors resolution 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.
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<PAGE>
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 a custodian or its nominee
for the initial Holder. 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.
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.
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<PAGE>
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 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
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
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<PAGE>
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.
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.
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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
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
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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 Penelec Capital) 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 Penelec
Capital shall be deemed to be 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
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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
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
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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
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, unless such obligation
to pay is de minimus, the Company may not redeem any Securities
of any series based solely upon the requirement that it is
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obligated to pay Additional Interest on such Series, pursuant to
Section 4.01(d) hereof, unless it receives an Opinion of Counsel
that more than an insubstantial risk exists that Penelec 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 Penelec 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, unless
such obligation to pay is de minimus; provided, however, the
Company shall redeem all of the Securities of such series, if as
a result of the redemption by Penelec Capital of such series of
Preferred Securities, such series of Preferred Securities would
be delisted from any national securities exchange on which such
series is then listed.
(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).
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
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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
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.
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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.
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
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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 Penelec 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 the Series A 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 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 Penelec Capital is the
sole holder of the Securities, the Company shall give Penelec
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 Penelec 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
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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 Penelec Capital to give notice of the Company's selection
of such extended interest payment period to the holders of the
Preferred Securities. If Penelec Capital shall not be the sole
holder of the Subordinated Debentures, 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 Penelec 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.
(e) If and when Penelec 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
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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
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.
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(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.
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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.
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 Penelec 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.
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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 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;
(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;
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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.
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 on all
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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.
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
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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;
(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
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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
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.
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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.
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
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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
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.
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(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
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
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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.
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.
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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
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
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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.
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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:
(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.
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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
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
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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
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 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.
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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.
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
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(other than the Series A Securities) that are to be issued
hereunder and the form of Securities of such series.
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
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defect therein, shall not, however, in any way impair or affect
the validity of such amendment or waiver.
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.
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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
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
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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
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
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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
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
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to make payments or distributions to such other holder of Senior
Indebtedness.
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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
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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
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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:
Pennsylvania Electric Company
1001 Broad Street
Johnstown, Pennsylvania 15907
Attention: Secretary
Facsimile No.: (814) 533-8541
if to the Trustee:
United States Trust Company of New York
114 West 47th Street
New York, New York 10036
Attn: Corporate Trust Department,
Department B
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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
counsel, all such conditions precedent to the taking of such
action have been complied with.
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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
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
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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.
SECTION 11.14 Table of Contents; Headings, Etc.
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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.
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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, [(a)] except as expressly provided in Article 10
hereof[, and (b) except that so long as any of the Preferred
Securities is then outstanding, the duly authorized
representative of the holders of the Preferred Securities may
enforce any of the Company's obligations, and may exercise any of
the remedies of the Holders, under this Indenture or the
Securities against the Company].
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.
PENNSYLVANIA ELECTRIC COMPANY
By: __________________________
Name: ________________________
Title: _______________________
UNITED STATES TRUST COMPANY OF NEW YORK
as Trustee
By: __________________________
Name: ________________________
Title: ________________________
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[FORM OF FACE OF THE SECURITY]
__% Subordinated Debentures, Series A, due 2043
No. __________________ $___________
Pennsylvania Electric Company, a Pennsylvania 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 ___________________,
2043.
Interest Payment Dates: the last day of each month
commencing on ______________ , 19__, 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.
PENNSYLVANIA ELECTRIC COMPANY
By: ___________________________
Name: _________________________
Title: ________________________
Dated: _____________________
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: __________________________
Name
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______________________________
Authorized Signatory
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[FORM OF REVERSE SIDE OF SECURITY]
__% Subordinated Debentures, Series A, due 2043
1. Payment of Interest and Additional Interest
Pennsylvania Electric Company, a Pennsylvania 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 _________. 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
_____________, 2043. 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
legal tender for payment of public and private debts. However,
the Company may pay principal and interest by its check payable
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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 _____________, 1994 (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 (the "Redemption Price") 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.
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
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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
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
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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.
61
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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.
62
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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)
63
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Exhibit D-1
PENNSYLVANIA
PUBLIC UTILITY COMMISSION
IN THE MATTER OF THE APPLICATION: A-110400F0026
Application of Pennsylvania Electric Company for approval of
the acquisition of more than 5% of the voting stock of a special
purpose subsidiary.
The Pennsylvania Public Utility Commission hereby
certifies that after an investigation and/or hearing, it has, by
its report and order made and entered, found and determined that
the granting of the application is necessary or proper for the
service, accomodation, convenience and safety of the public and
evidencing hereby issues to the applicant this CERTIFICATE OF
PUBLIC CONVENIENCE evidencing the Commission's approval
In Witness Whereof, The PENNSYLVANIA PUBLIC UTILITY
COMMISSION has caused these presents to be signed and sealed, and
duly attested by its Secretary at its office in the city of
Harrisburg this 4th day of May 1994.
[SEAL] John G. Alford
Secretary
<PAGE>
Exhibit D-2
PENNSYLVANIA
PUBLIC UTILITY COMMISSION
Harrisburg, PA 17105-3265
Public Meeting held May 4, 1994
Commissioners Present:
David W. Rolke, Chairman
Joseph Rhodes, Jr., Vice-Chairman
John M. Quain
Lisa Crutchfield
John Hanger
Securities Certificate of Pennsylvania Electric S-940427
Company for the issuance of up to $160 million
principal amount of subordinated indebtedness and
guaranty in support of a subsidiary's issuance
of monthly income preferred shares.
Application of Pennsylvania Electric Company A-110400F0026
for approval of the acquisition of more than
5% of the voting stock of a special purpose
subsidiary.
OPINION AND ORDER
BY THE COMMISSION:
On April 7, 1994, Pennsylvania Electric Company
(Penelec) filed for registration pursuant to Chapter 19 of the
Pennsylvania Public Utility Code, 66 Pa. C.S. Sub-Section 1901,
et seq., a securities certificate for the issuance of up to $160
million principal amount of subordinated indebtedness and
guaranty in support of a subsidiary's issuance of monthly income
preferred shares (MIPS). Penelec's proposed issuance of MIPS
will increase the preferred stock in the capital structure while
retaining the tax deduction associated with the payment of
interest on debt.
1
<PAGE>
On April 11, 1994, Penelec filed for registration
pursuant to Chapter 11 of the Pennsylvania Public Utility Code,
66 Pa. C.S. Sub-Section 1101, et seq., a related application for
approval of the acquisition of more than five percent of the
voting capital stock of a newly created special purpose
subsidiary, Penelec Capital. It was not necessary to establish a
protest period or publish notice of this acquisition.
Penelec is proposing to create Penelec Capital by
contributing up to $35 million in cash as common equity. Penelec
Capital will be organized as a Delaware limited liability company
(LLC) or as a limited partnership. If Penelec Capital is
organized as a LLC, Penelec may organize a second special purpose
wholly-owned subsidiary (Investment Sub) for the sole purpose of
acquiring and holding a second class of Penelec Capital common
interest so as to comply with Delaware regulatory requirements.
If Penelec Capital is organized as a limited partnership,
Investment Sub may serve as general partner of Penelec Capital.
In either case, Penelec will acquire all of the common interests
of Penelec Capital or, alternatively, all of the capital stock of
Investment Sub and a portion of common interests in Penelec
Capital. The purpose of Penelec Capital will be to sell MIPS to
investors and to lend the proceeds from the sale to Penelec.
Penelec Capital will issue in one or more series through
June 30, 1996 up to $125 million of MIPS to investors and will
lend to Penelec up to $160 million (the proceeds from the sale of
2
<PAGE>
MIPS plus the equity investment). The loan will be evidenced by
an unsecured promissory note or notes (Notes) or by subordinated
debentures (Debentures) and will be subordinate to all other
existing and future indebtedness of Penelec. In addition,
Penelec will unconditionally guarantee certain payments to the
holders of the MIPS to the extent not paid by Penelec Capital.
Each issuance of MIPS will be redeemable at the maturity or
redemption of the corresponding Note or Debenture. The maturity
of the Notes or Debentures will be thirty years with an option to
extend the loan for an additional twenty years; or, in the
alternative, a simple maturity of up to 50 years. The monthly
interest payments on the Notes and Debentures will be at least
equal to the declared dividend or distribution payments on the
MIPS. If dividends or distributions on the MIPS are not paid for
eighteen consecutive months and Penelec is not obligated to make
payments under the Guarantees, the holders of the MIPS may
appoint a Trustee.
Prepayment provisions for the Notes or the Debentures will
be identical to the redemption provisions of the MIPS. The MIPS
will be redeemable at the option of Penelec Capital at any time
after five years from their date of issuance, or may be redeemed
if the advantages for income tax deductibility disappear. If the
interest payments made by Penelec are no longer tax deductible,
Penelec may: dissolve Penelec Capital and exchange the MIPS for
the junior subordinated debt, or distribute the Debentures to the
3
<PAGE>
holders of the MIPS; redeem the MIPS and dissolve Penelec
Capital; or leave the MIPS outstanding.
The proceeds will be used by Penelec to repay outstanding
short-term bank loans or other unsecured indebtedness; to fund
construction expenditures; and for other corporate purposes. The
proceeds may also be used for the redemption of outstanding first
mortgage bonds and preferred stock.
After examination of the instant securities certificate, we
have concluded that the proposed issuance by Penelec appears to
be necessary or proper for the present and probable future
capital needs of the utility, and that the securities certificate
should be registered. We have also reviewed the instant
application and have determined that the proposed acquisition
appears necessary or proper for the service, accommodation,
convenience and safety of the public and that the application
should be approved; THEREFORE,
IT IS ORDERED:
1. That the securities certificate filed by Pennsylvania
Electric Company for the issuance of up to $160 million principal
amount of subordinated indebtedness and guaranty in support of a
subsidiary's issuance of monthly income preferred shares is
hereby registered.
2. That the application of Pennsylvania Electric Company
for approval of the acquisition of more than five percent of the
voting capital stock of a special purpose subsidiary is hereby
4
<PAGE>
approved, and that a Certificate of Public Convenience evidencing
such approval be issued.
3. That Pennsylvania Electric Company file within sixty
days after completion of the proposed issuance described in
Ordering Paragraph No. 1, above, a statement setting forth the
terms and conditions of the issuance.
BY THE COMMISSION,
John G. Alford
Secretary
(SEAL)
ORDER ADOPTED: May 4, 1994
ORDER ENTERED: May 4, 1994
5
<PAGE>
Exhibit F-1
June 2, 1994
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Pennsylvania Electric Company -
Application on Form U-1
SEC File No. 70-8403
Gentlemen:
We have examined the Application on Form U-1, dated
March 30, 1994, under the Public Utility Holding Company Act of
1935 (the "Act"), filed by Pennsylvania Electric Company
("Penelec") with the Securities and Exchange Commission and
docketed in SEC File No. 70-8403, as amended by Amendment No. 1
thereto, dated April 12, 1994, Amendment No. 2 thereto, dated May
6, 1994, and Amendment No. 3 thereto, dated this date, of which
this opinion is to be a part. (The Application, as so amended
and as thus to be amended, is hereinafter referred to as the
"Application".)
The Application contemplates, among other things, the
organization by Penelec of a special purpose Delaware corporate
subsidiary (Penelec Preferred Capital, Inc.) to become the sole
general partner of a newly formed Delaware limited partnership,
Penelec Capital, L.P. ("Penelec Capital"), the issuance and sale
by Penelec 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 Penelec (the "Subordinated
Debentures"). Penelec will guarantee (the "Guarantee") the
payment by Penelec Capital of distributions on the Preferred
Securities and of amounts due upon liquidation of Penelec Capital
or redemption of the Preferred Securities, all to the extent set
forth in the Guarantee. The Preferred Securities are to be
issued by Penelec 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 Penelec pursuant to
an indenture between Penelec 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
Met-Ed, its parent, General Public Utilities Corporation, and its
affiliates, Jersey Central Power & Light Company and Metropolitan
Edison Company, and we are familiar with the terms of the
outstanding securities of the corporations comprising the General
Public Utilities holding company system.
<PAGE>
Securities and Exchange Commission
June 2, 1994
Page 2
We have examined copies, signed, certified or otherwise
proven to our satisfaction, of the Restated Articles of
Incorporation and By-Laws of Penelec, and of the forms of Limited
Partnership Agreement and Indenture. We have also examined the
securities certificate and application filed by Penelec with the
Pennsylvania Public Utility Commission ("PaPUC") and the Order
and Opinion of the PaPUC, dated May 4, 1994, registering the
securities certificate and approving the issuance of a
Certificate of Public Convenience, as well as said Certificate of
Public Convenience. 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 Pennsylvania law, we
have relied upon the opinion of Ballard Spahr Andrews &
Ingersoll, and with respect to all matters of Delaware law, we
have relied upon the opinion of Richards, Layton & Finger, P.A.,
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 Penelec Preferred Capital, Inc. and
Penelec 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 State laws applicable to the proposed
transactions will have been complied with;
(b) Penelec Capital, the proposed issuer of the
Preferred Securities, has been duly formed and is
validly existing in good standing as a limited
partnership;
(c) Penelec, the proposed issuer of the
Subordinated Debentures and the Guarantee, is validly
organized and duly existing;
<PAGE>
Securities and Exchange Commission
June 2, 1994
Page 3
(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 Penelec in
accordance with their terms, and the Guarantee will be
the valid and binding obligation of Penelec 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 Penelec 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>
(LETTERHEAD OF BALLARD SPAHR ANDREWS & INGERSOLL)
Exhibit F-2
June 2, 1994
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Pennsylvania Electric Company -
Application of Form U-1
SEC File No. 70-8403
Ladies and Gentlemen:
We have examined the Application on Form U-1, dated
March 30, 1994, under the Public Utility Holding Company Act of
1935 (the "Act"), filed by Pennsylvania Electric Company
("Penelec") with the Securities and Exchange Commission (the
"Commission") and docketed in SEC File No. 70-8403, as amended by
Amendment No. 1 thereto, dated April 12, 1994, Amendment No. 2
thereto, dated May 6, 1994, and Amendment No. 3 thereto, dated
this date, of which this opinion is to be a part. (The
Application, as so amended and as thus to be amended, is
hereinafter referred to as the "Application").
The Application contemplates, among other things, the
organization by Penelec of a special purpose Delaware corporate
subsidiary ("Penelec Preferred Capital, Inc.") to become the sole
general partner of a newly formed Delaware limited partnership,
Penelec Capital, L.P. ("Penelec Capital"), the issuance and sale
by Penelec 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 Penelec (the "Subordinated
Debentures"). Penelec will guarantee (the "Guarantee") the
payment by Penelec Capital of distributions on the Preferred
Securities and of amounts due upon liquidation of Penelec Capital
or redemption of the Preferred Securities, all to the extent set
forth in the Guarantee. The Preferred Securities are to be
issued by Penelec 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 Penelec pursuant to
an indenture between Penelec and United States Trust Company of
New York, as Trustee (the "Indenture").
We have been counsel to Penelec for many years, and
have participated in various proceedings related to the issuance
and sale of securities by Penelec and its parent, General Public
Utilities Corporation, and we are familiar with the terms of
their outstanding securities.
<PAGE>
Securities and Exchange Commission
June 2, 1994
Page 2
We have examined copies, signed, certified or otherwise
proven to our satisfaction, of the Restated Articles of
Incorporation and By-Laws of Penelec and the forms of Limited
Partnership Agreement and Indenture. We have also examined the
securities certificate and application filed by Penelec with the
Pennsylvania Public Utility Commission ("PaPUC") and the Order
and Opinion of the PaPUC, dated May 4, 1994, registering the
securities certificate and approving the issuance of a
Certificate of Public Convenience, as well as said Certificate of
Public Convenience. 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.
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 insofar as the laws
of the Commonwealth of Pennsylvania are concerned, when (i) the
Commission shall have entered an order forthwith granting the
Application and (ii) all necessary corporate and partnership
action required on the part of Penelec, Penelec Preferred
Capital, Inc. and Penelec Capital shall have been duly take,
(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 Pennsylvania laws applicable to the
proposed transactions will have been complied with;
(b) Penelec, 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 Penelec in
accordance with their terms, and the Guarantee will be
the valid and binding obligation of Penelec in
accordance with its terms subject, in each case, to
applicable bankruptcy, insolvency, reorganization,
moratorium and other laws affecting creditors rights
generally (including, without limitations, the Atomic
Energy Act and applicable regulations of the Nuclear
Regulatory Commission thereunder) and general equitable
principles; and
<PAGE>
Securities and Exchange Commission
June 2, 1994
Page 3
(d) the consummation of the proposed transactions
will not violate the legal rights of the holders of any
securities issued by Penelec or Ninevah Water Company.
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. In
addition, we hereby consent to the reliance by Berlack, Israels &
Liberman on this opinion as to all matters of Pennsylvania law in
rendering their opinion to you which will also be an exhibit to
the Application.
Very truly yours,
BALLARD SPAHR ANDREWS
& INGERSOLL
<PAGE>
(LETTERHEAD OF RICHARDS, LAYTON & FINGER)
Exhibit F-3
June 2, 1994
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Pennsylvania Electric Company -
Application of Form U-1
SEC File No. 70-8403
Ladies and Gentlemen:
We have acted as special Delaware counsel for Penelec
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 Pennsylvania Electric
Company, a Pennsylvania corporation ("Pennsylvania Electric
Company"), of Penelec 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 May 10, 1994 (the "Partnership
Certificate"), as filed in the office of the Secretary of State
of the State of Delaware (the "Secretary of State") on May 10,
1994;
(b) The Limited Partnership Agreement of the
Partnership, dated as of May 10, 1994;
<PAGE>
<PAGE>
Securities and Exchange Commission
June 2, 1994
Page 2
(c) The Application on Form U-1, dated March 30, 1994
(the "Original Application"), under the Public Utility Holding
Company Act of 1935, filed by Pennsylvania Electric Company with
the Securities and Exchange Commission and docketed in SEC File
No. 70-8403, as amended by Amendment No. 1 to the Original
Application, dated April 12, 1994 ("Amendment No. 1"), Amendment
No. 2 to the Original Application, dated May 6, 1994 ("Amendment
No. 2"), and Amendment No. 3 to the Original Application, dated
on or about June 2, 1994 ("Amendment No. 3") (the Original
Application as amended by Amendment No. 1, Amendment No. 2 and
Amendment No. 3 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 May 6, 1994 (the "Certificate of Incorporation"),
as filed in the office of the Secretary of State on May 9, 1994;
(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 June 2, 1994, obtained from the Secretary of
State; and
(j) A Certificate of Good Standing for the General
Partner, dated June 2, 1994, 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
<PAGE>
the additional matters recited or assumed herein, all of which we
have assumed to be true, complete and accurate in all material
respects.
<PAGE>
Securities and Exchange Commission
June 2, 1994
Page 3
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 Preferred Partner 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 Partner nor Pennsylvania Electric
Company derive income from or connected with sources within the
State of Delaware or have 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.
<PAGE>
Securities and Exchange Commission
June 2, 1994
Page 4
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.
4. The consummation of the Transaction will not
violate the legal rights of Pennsylvania Electric 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.
<PAGE>
Securities and Exchange Commission
June 2, 1994
Page 5
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 Ballard Spahr Andrews & Ingersoll'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>
