SEC FILE NO. 70-8403
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
CERTIFICATE PURSUANT TO
RULE 24
OF PARTIAL COMPLETION OF TRANSACTIONS
PENNSYLVANIA ELECTRIC COMPANY
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________________________________x
:
In the Matter of :
: Certificate
Pennsylvania Electric Company : Pursuant to
: Rule 24 of
File No. 70-8403 : Partial
: Completion of
(Public Utility Holding : Transactions
Company Act of 1935) :
:
________________________________________x
To the Members of the Securities and Exchange Commission:
The undersigned, Pennsylvania Electric Company
("Penelec"), hereby certifies pursuant to Rule 24 of the General
Rules and Regulations under the Public Utility Holding Company
Act of 1935 (the "Act") that a portion of the transactions
proposed in the Application, as amended and as post-effectively
amended, filed in SEC File No. 70-8403 have been carried out in
accordance with the terms and conditions of, and for the purposes
requested in, said Application and pursuant to the Commission's
Order, dated June 24, 1994 (HCAR No. 26071), and Supplemental
Order, dated June 27, 1994 (HCAR No. 26073), with respect
thereto:
1. On June 27, 1994 Penelec and Penelec Capital, L.P.
("Penelec Capital"), a Delaware limited partnership of which
Penelec Preferred Capital, Inc. (the "General Partner"), a wholly
owned subsidiary of Penelec, serves as sole general partner,
entered into an Underwriting Agreement with Goldman, Sachs & Co.,
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Dean Witter Reynolds Inc., A.G. Edwards & Sons, Inc., Kidder,
Peabody & Co. Incorporated, Morgan Stanley & Co. Incorporated and
Prudential Securities Incorporated, as representatives of the
several underwriters listed in Schedule I thereto (the
"Underwriters"), providing for the issuance and sale by Penelec
Capital of 4,200,000 8 3/4% Monthly Income Preferred Securities,
Series A ("Series A Preferred Securities"), to the Underwriters.
The Agreement provided that the Underwriters would pay Penelec
Capital $25 per Series A Preferred Security and that Penelec
would pay the Underwriters commissions of $0.7875 per Series A
Preferred Security, which represents 3.15% of the purchase price
per Series A Preferred Security, except that such commissions
would be $0.50 per Series A Preferred Security sold to certain
institutions.
2. On July 5, 1994, Penelec Capital issued and sold
to the Underwriters an aggregate of 4,200,000 Series A Preferred
Securities for a total purchase price of $105,000,000, and
Penelec paid to the Underwriters aggregate commissions of
$3,273,000. In addition, on July 5, 1994, Penelec Capital used
such $105,000,000, together with the $3,247,425 capital
contribution from the General Partner, to purchase from Penelec
$108,247,425 aggregate principal amount of Penelec's 8 3/4%
Deferrable Interest Subordinated Debentures, Series A, due
July 5, 2043, which were issued under and pursuant to the
Indenture dated as of July 1, 1994 between Penelec and United
States Trust Company of New York, as Trustee. Also on July 5,
1994, Penelec issued its $10,824,743 demand promissory note to
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the General Partner and its Payment and Guarantee Agreement to
Penelec Capital.
3. Pursuant to the Commission's Order, dated June 24,
1994, an additional 800,000 Monthly Income Preferred Securities
may be sold by Penelec Capital from time to time through June 30,
1996.
4. The following exhibits in Item 6 are filed
herewith:
A-5(a) - Amended and Restated Limited
Partnership Agreement of Penelec
Capital, dated June 27, 1994.
A-6(a) - Action Creating Series A Preferred
Securities, dated June 27, 1994.
A-7(a) - Preferred Security Certificate,
dated July 5, 1994, representing
4,200,000 Series A Preferred
Securities.
A-8(a) - Indenture, dated as of July 1,
1994, between Penelec and United
States Trust Company of New York,
as Trustee.
A-9(a) - 8 3/4% Deferrable Interest
Subordinated Debenture, Series A,
due 2043.
B-1(a) - Payment and Guarantee Agreement of
Penelec, dated as of July 5, 1994.
B-2(a) - Underwriting Agreement.
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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: July 14, 1994
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EXHIBITS TO BE FILED BY EDGAR
Exhibits:
A-5(a) - Amended and Restated Limited
Partnership Agreement of Penelec
Capital, dated June 27, 1994.
A-6(a) - Action Creating Series A Preferred
Securities, dated June 27, 1994.
A-7(a) - Preferred Security Certificate,
dated July 5, 1994, representing
4,200,000 Series A Preferred
Securities.
A-8(a) - Indenture, dated as of July 1,
1994, between Penelec and United
States Trust Company of New York,
as Trustee.
A-9(a) - 8 3/4% Deferrable Interest
Subordinated Debenture, Series A,
due 2043.
B-1(a) - Payment and Guarantee Agreement of
Penelec, dated as of July 5, 1994.
B-2(a) - Underwriting Agreement.
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Exhibit A-5(a)
AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
OF PENELEC CAPITAL, L.P.
This AMENDED AND RESTATED LIMITED PARTNERSHIP
AGREEMENT, dated as of June 27, 1994, of Penelec Capital, L.P., a
Delaware limited partnership (the "Partnership") is made by and
among Penelec Preferred Capital, Inc. as General Partner, Don W.
Myers, as Class A Limited Partner and the Persons (as defined
below) who become limited partners of the Partnership in
accordance with the provisions hereof.
WHEREAS, Penelec Preferred Capital, Inc. and Don W.
Myers have heretofore formed a limited partnership pursuant to
the Delaware Act (as defined below), by filing a Certificate of
Limited Partnership (as defined below) with the Secretary of
State of the State of Delaware on May 10, 1994, and entering into
a Limited Partnership Agreement of the Partnership dated as of
May 10, 1994 (the "Limited Partnership Agreement"); and
WHEREAS, the parties hereto desire to continue the
Partnership as a limited partnership under the Delaware Act and
to amend and restate the original Limited Partnership Agreement
in its entirety.
NOW, THEREFORE, the parties hereto, intending to be
legally bound hereby, agree to amend and restate the Limited
Partnership Agreement in its entirety as follows:
ARTICLE I - Definitions
For purposes of this Agreement, each of the following
terms shall have the meaning set forth below (such meaning to be
equally applicable to both singular and plural forms of the terms
so defined).
"Action" shall have the meaning set forth in Section
13.01.(b).
"Additional Amounts" shall have the meaning set forth
in Section 13.01(b)(ix).
"Affiliate" shall mean, with respect to the Person to
which it refers, a Person that directly or indirectly through one
or more intermediaries, controls or is controlled by, or is under
common control with, such subject Person.
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"Agreement" shall mean this Amended and Restated
Limited Partnership Agreement, as amended, modified, supplemented
or restated from time to time, including, without limitation, by
any Action establishing a series of Preferred Partner Interests.
"Book Entry Interests" shall mean a beneficial interest
in the Certificates, ownership and transfers of which shall be
made through book entries by a Clearing Agency as described in
Section 14.04.
"Business Day" shall mean any day other than a day on
which banking institutions in The City of New York are authorized
or required by law to close.
"Capital Account" shall have the meaning set forth in
Section 4.01. For purposes of determining the Capital Accounts
as set forth in Article IV, partnership items shall be computed
in the same manner as the Partnership computes its income for
Federal income tax purposes, rather than generally accepted
accounting principles, except that (1) a distribution in kind of
Partnership property shall be treated as a taxable disposition of
such property for its fair market value (taking into account
Section 7701(g) of the Code) on the date of distribution, and (2)
adjustments shall be made in accordance with Treasury Regulation
Section 1.704-1(b)(2)(iv), which adjustments shall include any
income which is exempt from United States Federal income tax, all
Partnership losses and all expenses properly chargeable to the
Partnership, whether deductible or non-deductible and whether
described in Section 705(a)(2)(B) of the Code, treated as so
described pursuant to Treasury Regulation Section
1.704-1(b)(2)(iv)(i), or otherwise.
"Certificate" shall mean a certificate substantially in
the form attached hereto as Exhibit A, evidencing a Preferred
Partner Interest.
"Certificate of Limited Partnership" shall mean the
Certificate of Limited Partnership of the Partnership and any and
all amendments thereto and restatements thereof filed with the
Secretary of State of the State of Delaware.
"Class A Limited Partner" shall mean Don Myers in his
capacity as a limited partner of the Partnership.
"Clearing Agency" shall mean an organization registered
as a "Clearing Agency" pursuant to Section 17A of the Exchange
Act.
"Clearing Agency Participant" shall mean a broker
dealer, bank, other financial institution or other Person for
whom from time to time a Clearing Agency effects book entry
transfers and pledges of securities deposited with the Clearing
Agency.
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"Code" shall mean the United States Internal Revenue
Code of 1986 and (unless the context requires otherwise) the
rules and regulations promulgated thereunder, as amended from
time to time.
"Commission" shall mean the Securities and Exchange
Commission.
"Covered Person" shall mean any Partner, any Affiliate
of a Partner or any officers, directors, shareholders, partners,
members, employees, representatives or agents of a Partner or
their respective Affiliates, or any employee or agent of the
Partnership or its Affiliates.
"Definitive Certificate" shall have the meaning set
forth in Section 14.04.
"Delaware Act" shall mean the Delaware Revised Uniform
Limited Partnership Act, 6 Del. C. Section 17-101, et seq., as
amended from time to time or any successor statute thereto.
"Economic Risk of Loss" shall mean the "economic risk
of loss" that any Partner is treated as bearing under Treasury
Regulation Section 1.752-2 with respect to any Partnership
liability.
"Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
"Fiscal Year" shall have the meaning set forth in
Section 7.01.
"General Partner" shall mean Penelec Preferred, in its
capacity as general partner of the Partnership, together with any
successor thereto that becomes a general partner of the
Partnership pursuant to the terms of this Agreement.
"Guarantee" shall mean the Payment and Guarantee
Agreement to be dated as of July 5, 1994 of Penelec, as amended
or supplemented from time to time, and any additional Payment and
Guarantee Agreements entered into by Penelec for the benefit of
the Preferred Partners.
"Indenture" shall mean the Indenture to be dated as of
July 1, 1994, as amended or supplemented from time to time,
between Penelec and United States Trust Company of New York as
Trustee and any additional Indentures entered into by Penelec
pursuant to which Subordinated Debentures of Penelec are to be
issued.
"Indemnified Person" shall mean the General Partner,
any Affiliate of the General Partner or any officers, directors,
shareholders, partners, members, employees, representatives or
agents of the General Partner, or any employee or agent of the
Partnership or its Affiliates.
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"Interest" shall mean the entire partnership interest
of a Partner in the Partnership at any particular time, including
the right of such Partner to any and all benefits to which a
Partner may be entitled as provided in this Agreement, together
with the obligations of such Partner to comply with all of the
terms and provisions of this Agreement.
"Investment Company Act Event" shall mean the
occurrence of a change in law or regulation or a change in an
official interpretation of law or regulation by any legislative
body, court, governmental agency or regulatory authority (a
"Change in 40 Act Law") to the effect that the Partnership is or
will be considered an "investment company" required to be
registered under the 1940 Act, which Change in 40 Act Law becomes
effective on or after the date of issuance of any series of
Preferred Partner Interests; provided that no Investment Company
Act Event shall be deemed to have occurred if the Partnership
shall have received an opinion of counsel (which may be regular
counsel to Penelec or an Affiliate, but not an employee thereof),
to the effect that Penelec and/or the Partnership have taken
reasonable measures, in their discretion, to avoid such Change in
40 Act Law so that in the opinion of such counsel,
notwithstanding such Change in 40 Act Law, the Partnership is not
required to be registered as an "investment company" within the
meaning of the 1940 Act.
"Limited Partners" shall mean the Class A Limited
Partner, if any, and the Preferred Partners.
"Liquidating Distributions" shall mean distributions of
Partnership property made upon a liquidation and dissolution of
the Partnership as provided in Article XII.
"Liquidation Distribution" shall mean the liquidation
preference of each series of Preferred Partner Interests as set
forth in the Action for such series.
"Liquidating Trustee" shall have the meaning set forth
in Section 12.01.
"1940 Act" shall mean the Investment Company Act of
1940, as amended.
"Partners" shall mean the General Partner and the
Limited Partners.
"Partnership" shall mean Penelec Capital, L.P., a
limited partnership formed under the laws of the State of
Delaware.
"Penelec" shall mean Pennsylvania Electric Company and
its successors.
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"Penelec Preferred" shall mean Penelec Preferred
Capital, Inc. and its successors.
"Person" shall mean any individual, general
partnership, limited partnership, corporation, limited liability
company, joint venture, trust, business trust, cooperative or
association and the heirs, executors, administrators, legal
representatives, successors and assigns of such Person where the
context so admits.
"Preferred Partner" shall mean a limited partner of the
Partnership who holds one or more Preferred Partner Interests.
"Preferred Partner Interest Owner" shall mean, with
respect to a Book Entry Interest, a Person who is the beneficial
owner of such Book Entry Interest, as reflected on the books of
the Clearing Agency, or on the books of a Person maintaining an
account with such Clearing Agency (directly as a Clearing Agency
Participant or as an indirect participant, in each case in
accordance with the rules of such Clearing Agency).
"Preferred Partner Interests" shall mean the Interests
described in Article XIII.
"Purchase Price" shall mean the amount paid for each
Preferred Partner Interest.
"Securities Act" shall mean the Securities Act of 1933,
as amended.
"Special Event" shall mean a Tax Event or an Investment
Company Act Event.
"Special Representative" shall have the meaning set
forth in Section 13.02(d).
"Subordinated Debentures" shall mean the Deferrable
Interest Subordinated Debentures of Penelec issued under the
Indenture.
"Tax Event" shall mean that the Partnership shall have
obtained an opinion of counsel (which may be regular tax counsel
to Penelec or an Affiliate, but not an employee thereof) to the
effect that, as a result of any amendment to, or change
(including any announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein affecting
taxation, or as a result of any official administrative
pronouncement or judicial decision interpreting or applying any
applicable laws or regulations, which amendment or change is
effective, or which pronouncement or decision has been issued or
rendered, on or after the date of issuance of any series of
Preferred Partner Interests, there is more than an insubstantial
risk that (i) the Partnership will be subject to Federal income
tax with respect to interest received on the related Subordinated
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Debentures or the Partnership will otherwise not be taxed as a
partnership or (ii) interest payable by Penelec to the
Partnership on the related Subordinated Debentures will not be
deductible for Federal income tax purposes, or (iii) the
Partnership is subject to more than a de minimus amount of other
taxes, duties or other governmental charges.
"Tax Matters Partner" shall have the meaning set forth
in Section 7.05.
"Transfer" shall mean any transfer, sale, assignment,
gift, pledge, hypothecation or other disposition or encumbrance
of an interest in the Partnership.
"Treasury Regulations" shall mean the final and
temporary income tax regulations, as well as the procedural and
administrative regulations, promulgated by the United States
Department of the Treasury under the Code, as amended from time
to time.
"Trustee" shall mean United States Trust Company of New
York or any other trustee under the Indenture.
"Underwriting Agreement" shall mean the Underwriting
Agreement entered into on June 27, 1994 among the Partnership,
Penelec and the underwriters named therein with regard to the
sale of Preferred Partner Interests and related securities, and
any additional Underwriting Agreements entered into by the
Partnership and Penelec with regard to the sale of additional
Preferred Partner Interests and related securities.
ARTICLE II - Continuation; Name; Purposes; Term; Definitions
Section 2.01. Formation. The parties hereto hereby
join together to continue the heretofore formed limited
partnership which shall exist under and be governed by the
Delaware Act. The Partnership shall make any and all filings or
disclosures required under the laws of Delaware or otherwise with
respect to its continuation as a limited partnership, its use of
a fictitious name or otherwise as may be required. The
Partnership shall be a limited partnership among the Partners
solely for the purposes specified in Section 2.03 hereof, and
this Agreement shall not be deemed to create a partnership among
the Partners with respect to any activities whatsoever other than
the activities within the business purposes of the Partnership as
specified in Section 2.03. No Partner shall have any power to
bind any other Partner with respect to any matter except as
specifically provided in this Agreement. No Partner shall be
responsible or liable for any indebtedness or obligation of any
other Partner incurred either before or after the execution of
this Agreement. The assets of the Partnership shall be owned by
the Partnership as an entity, and no Partner individually shall
own any direct interest in the assets of the Partnership.
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Section 2.02. Name and Place of Business. The name of
the Partnership is "Penelec Capital, L.P." The Partnership may
operate under the name of "Penelec Capital" and such name shall
be used for no purposes other than those set forth herein. The
principal place of business of the Partnership shall be Mellon
Bank Center, Tenth and Market Streets, Wilmington, Delaware, or
at such other place as may be selected by the General Partner in
its sole and absolute discretion.
Section 2.03. Purposes. The sole purposes of the
Partnership are to issue and sell Interests in the Partnership,
including, without limitation, Preferred Partner Interests, and
to use the proceeds of all sales of Interests in the Partnership
to purchase Subordinated Debentures issued by Penelec pursuant to
the Indenture and to effect other similar arrangements permitted
by this Agreement, and to engage in any and all activities
necessary, convenient, advisable or incidental thereto. The
Partnership shall not incur debt for borrowed money.
Section 2.04. Term. The Partnership was formed on
May 10, 1994 and shall continue without dissolution through
June 30, 2060, unless sooner dissolved as provided in Article XI
hereof.
Section 2.05. Qualification in Other Jurisdictions.
The General Partner shall cause the Partnership to be qualified
or registered under assumed or fictitious name statutes or
similar laws in any jurisdiction in which the Partnership
transacts business. The General Partner shall execute, deliver
and file any certificates (and any amendments and/or restatements
thereof) necessary for the Partnership to qualify to do business
in a jurisdiction in which the Partnership may wish to conduct
business.
Section 2.06. Admission of Preferred Partners.
Without execution of this Agreement, upon receipt by a Person of
a Certificate and payment for the Preferred Partner Interest
being acquired by such Person, which shall be deemed to
constitute a request by such Person that the books and records of
the Partnership reflect its admission as a Preferred Partner,
such Person shall be admitted to the Partnership as a Preferred
Partner and shall become bound by this Agreement.
Section 2.07. Records. The name and mailing address
of each Partner and the amount contributed to the capital of the
Partnership shall be listed on the books and records of the
Partnership. The Partnership shall keep such other records as
are required by Section 17-305 of the Delaware Act. The General
Partner shall update the books and records from time to time as
necessary to accurately reflect the information therein.
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ARTICLE III - Capital Contributions
Section 3.01. Capital Contributions. As of the date
of this Agreement, the General Partner has contributed the amount
of $99 to the capital of the Partnership and shall make any
further contributions required to satisfy its obligations under
Section 3.04. Each Preferred Partner, or its predecessor in
interest, will contribute to the capital of the Partnership the
amount of the Purchase Price for the Preferred Partner Interests
held by it.
Section 3.02. Additional Capital Contributions. No
Partner shall be required to make any additional contributions or
advances to the Partnership except as provided in Section 3.04.
or by law.
Section 3.03. No Interest or Withdrawals. No interest
shall accrue on any capital contribution made by a Partner, and
no Partner shall have the right to withdraw or to be repaid any
portions of its capital contributions so made, except as
specifically provided in this Agreement.
Section 3.04. Minimum Capital Contribution of General
Partner. Whenever any Limited Partner makes a capital
contribution, the General Partner shall immediately make a
capital contribution sufficient to cause the aggregate capital
contribution of the General Partner to equal 3% of the aggregate
capital contributed by all Partners at such time. Any such
additional contributions shall constitute additional capital
contributions made by the General Partner.
Section 3.05. Partnership Interests. Unless otherwise
provided herein, the percentage interests of the Partners shall
be determined in proportion to the capital contributions of the
Partners.
Section 3.06. Interests. Each Preferred Partner's
respective Preferred Partner Interests shall be set forth on the
books and records of the Partnership. Each Partner hereby agrees
that its Interests shall for all purposes be personal property.
No Partner has an interest in specific Partnership property. The
Partnership shall not issue any additional interest in the
Partnership after the date hereof other than General Partner
Interests or Preferred Partner Interests.
ARTICLE IV - Capital Accounts
Section 4.01. Capital Accounts. There shall be
established on the books of the Partnership a capital account
("Capital Account") for each Partner that shall consist of the
initial capital contribution to the Partnership made by such
Partner (or such Partner's predecessor in interest), increased
by: (a) any additional capital contributions made by such
Partner, (b) the agreed value of any property subsequently
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contributed to the capital of the Partnership by such Partner;
and (c) items of income and gain allocated to any Partner (or
predecessor thereof). A Partner's Capital Account shall be
decreased by: (a) items of loss and deduction allocated to any
Partner (or predecessor thereof); and (b) any distributions made
to such Partner. In addition to and notwithstanding the
foregoing, Capital Accounts shall be otherwise adjusted in
accordance with the tax accounting principles set forth in
Treasury Regulation Section 1.704-1(b)(2)(iv).
Section 4.02. Compliance With Treasury Regulations.
The foregoing provisions and the other provisions of this
Agreement relating to the maintenance of Capital Accounts are
intended to comply with Section 704(b) of the Code and Treasury
Regulation Section 1.704-1(b) and shall be interpreted and
applied in a manner consistent with such regulations. In the
event that the General Partner shall determine that it is prudent
to modify the manner in which the Capital Accounts, or any debits
or credits thereto, are determined in order to comply with such
regulations, the General Partner may make such modification.
ARTICLE V - Allocations
Section 5.01. Profits and Losses. Each fiscal period,
items of income, gain, loss, deduction or credit of the
Partnership shall be allocated (i) first, items of income of the
Partnership to the Preferred Partners, pro rata in proportion to
the number of Preferred Partner Interests held by each Preferred
Partner and at the distribution rate specified in the Action for
each series of Preferred Partner Interests, in an amount equal to
the excess of (a) the distributions accrued on such Preferred
Partner Interests (other than Additional Amounts) since their
date of issuance through and including the close of the current
fiscal period (whether or not paid) over (b) the items of income
of the Partnership allocated to the Preferred Partners pursuant
to this Section 5.01(i) in all prior fiscal periods; (ii) second,
items of income of the Partnership to each Preferred Partner to
whom Additional Amounts were paid during a fiscal period, in an
amount equal to such Additional Amounts; and (iii) thereafter,
all remaining items of income, gain, loss, deduction or credit to
the General Partner; provided however, that the percentage of
items of income, gain, loss, deduction or credit of the
Partnership allocated to the General Partner for any fiscal
period shall at least equal three percent.
Section 5.02. Allocation Rules. For purposes of
determining the profits, losses or any other items allocable to
any period, profits, losses and any such other items shall be
determined on a daily, monthly or other basis, as determined by
the General Partner in its sole and absolute discretion using any
method that is permissible under Section 706 of the Code and the
Treasury Regulations thereunder. The Partners are aware of the
income tax consequences of the allocations made by this Article V
and hereby agree to be bound by the provisions of this Article V
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in reporting their shares of Partnership income and loss for
income tax purposes.
Section 5.03. Adjustments to Reflect Changes in
Interests. Notwithstanding the foregoing, with respect to any
Fiscal Year during which any Partner's percentage interest in the
Partnership changes, whether by reason of the admission of a
Partner, the withdrawal of a Partner, a non-pro rata contribution
of capital to the Partnership or any other event described in
Section 706(d)(1) of the Code and the Treasury Regulations issued
thereunder, allocations of the items of income, gain, loss,
deduction or credit of the Partnership shall be adjusted
appropriately to take into account the varying interests of the
Partners during such Fiscal Year. The General Partner shall
consult with the Partnership's accountants and other advisors and
shall select the method of making such adjustments, which method
shall be used consistently thereafter.
Section 5.04. Tax Allocations. For purposes of
Article V and Federal, state and local income tax purposes,
Partnership income, gain, loss, deduction or credit (or any item
thereof) for each Fiscal Year shall be determined in accordance
with Federal tax accounting principles rather than generally
accepted accounting principles and shall be allocated to and
among the Partners in order to reflect the allocations made
pursuant to the provisions of this Article V for such Fiscal Year
(other than allocations of items which are not deductible or are
excluded from taxable income), taking into account any variation
between the adjusted tax basis and book value of Partnership
property in accordance with the principles of Section 704(c) of
the Code.
Section 5.05. Qualified Income Offset. Notwithstanding
any other provision hereof, if any Partner unexpectedly receives
an adjustment, allocation or distribution described in Treasury
Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5), and (6) which
creates or increases a deficit in the Capital Account of such
Partner (and, for this purpose, the existence of a deficit shall
be determined by reducing the Partner's Capital Account by the
items described in Treasury Regulation Section
1.704-1(b)(2)(ii)(d)(4), (5), and (6)), the next available gross
income of the Partnership shall be allocated to the Partners
having such deficit balances, in proportion to the deficit
balances, until such deficit balances are eliminated as quickly
as possible. The provisions of this Section 5.05 are intended to
constitute a "qualified income offset" within the meaning of
Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted and implemented as therein provided.
ARTICLE VI - Distributions
Section 6.01. Distributions. Preferred Partners shall
receive periodic distributions, if any, in accordance with the
applicable terms of the Preferred Partner Interests, as and when
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declared by the General Partner. Subject to the rights of the
holders of the Preferred Partner Interests, the General Partner
shall receive such distributions, if any, as may be declared from
time to time by the General Partner.
Section 6.02. Certain Distributions Prohibited.
Notwithstanding anything in this Agreement to the contrary, all
Partnership distributions shall be subject to the following
limitations:
(a) No distribution shall be made to any Partner if,
and to the extent that, such distribution would not be permitted
under Section 17-607 of the Delaware Act or other applicable law.
(b) No distribution shall be made to any Partner to
the extent that such distribution, if made, would create or
increase a deficit balance in the Capital Account of such
Partner.
(c) Other than Liquidating Distributions, no
distribution of Partnership property shall be made in kind.
Notwithstanding anything in the Delaware Act or this Agreement to
the contrary, in the event of a Liquidating Distribution, a
Partner may be compelled in accordance with Section 12.01 to
accept a distribution of Subordinated Debentures, cash or of any
other asset in kind from the Partnership even if the percentage
of the asset distributed to it exceeds a percentage of that asset
which is equal to the percentage in which such Partner shares in
distributions from the Partnership.
ARTICLE VII - Accounting Matters; Banking
Section 7.01. Fiscal Year. The fiscal year ("Fiscal
Year") of the Partnership shall be the calendar year, or such
other year as is required by the Code.
Section 7.02. Certain Accounting Matters. (a) At all
times during the existence of the Partnership, the General
Partner shall keep, or cause to be kept, full books of account,
records and supporting documents, which shall reflect in
reasonable detail, each transaction of the Partnership. The
books of account shall be maintained on the accrual method of
accounting, in accordance with generally accepted accounting
principles, consistently applied. The Partnership shall use the
accrual method of accounting for United States Federal income tax
purposes. The books of account and the records of the
Partnership shall be examined by and reported upon as of the end
of each Fiscal Year by a firm of independent certified public
accountants selected by the General Partner.
(b) The General Partner shall cause to be prepared and
delivered to each of the Partners, within 90 days after the end
of each Fiscal Year of the Partnership, annual financial
statements of the Partnership, including a balance sheet of the
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Partnership as of the end of such Fiscal Year and the related
statements of income or loss and a statement indicating such
Partner's share of each item of Partnership income, gain, loss,
deduction or credit for such Fiscal Year for income tax purposes.
(c) Notwithstanding anything in this Agreement to the
contrary, the General Partner may, to the maximum extent
permitted by applicable law, keep confidential from the Partners
for such period of time as the General Partner deems reasonable
any information which the General Partner reasonably believes to
be in the nature of trade secrets or other information the
disclosure of which the General Partner in good faith believes is
not in the best interest of the Partnership or could damage the
Partnership or its business or which the Partnership is required
by law or by an agreement with a third party to keep
confidential.
(d) The General Partner may make, or revoke, in its
sole and absolute discretion, any elections for the Partnership
that are permitted under tax or other applicable laws, including
elections under Section 704(c) of the Code, provided that the
General Partner shall not make any elections pursuant to Section
754 of the Code.
Section 7.03. Banking. The Partnership shall maintain
one or more bank accounts in the name and for the sole benefit of
the Partnership. The signatories for such accounts shall be
designated by the General Partner. Reserve cash, cash held
pending the expenditure of funds for the business of the
Partnership or cash held pending a distribution to one or more of
the Partners may be invested in any manner at the sole and
absolute discretion of the General Partner.
Section 7.04. Right to Rely on Authority of General
Partner. No Person that is not a Partner, in dealing with the
General Partner, shall be required to determine such General
Partner's authority to make any commitment or engage in any
undertaking on behalf of the Partnership, or to determine any
fact or circumstance bearing upon the existence of the authority
of the General Partner.
Section 7.05. Tax Matters Partner. The "tax matters
partner," as defined in Section 6231 of the Code, of the
Partnership shall be the General Partner (the "Tax Matters
Partner"). The Tax Matters Partner shall receive no compensation
from the Partnership for its services in that capacity. The Tax
Matters Partner is authorized to employ such accountants,
attorneys and agents as it, in its sole and absolute discretion,
deems necessary or appropriate. Any Person who serves as Tax
Matters Partner shall not be liable to the Partnership or to any
Partner for any action it takes or fails to take as Tax Matters
Partner with respect to any administrative or judicial proceeding
involving "partnership items" (as defined in Section 6231 of the
Code) of the Partnership.
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ARTICLE VIII - Management
Section 8.01. Management. (a) The General Partner
shall have full and exclusive authority with respect to all
matters concerning the conduct of the business and affairs of the
Partnership, including (without limitation) the power, without
the consent of the Limited Partners, to make all decisions it
deems necessary, advisable, convenient or appropriate to
accomplish the purposes of the Partnership. The acts of the
General Partner acting alone shall serve to bind the Partnership
and shall constitute the acts of the Partners.
(b) The Limited Partners, in their capacity as such,
shall not take part in the management, operation or control of
the business of the Partnership or transact any business in the
name of the Partnership. In addition, the Limited Partners, in
their capacity as such, shall not be agents of the Partnership
and shall not have the power to sign or bind the Partnership to
any agreement or document. The Limited Partners shall have the
right to vote only with respect to those matters specifically
provided for in this Agreement. Notwithstanding anything herein
to the contrary, the Preferred Partners may exercise all rights
provided to them, if any, under the Indenture and the Guarantee.
(c) The General Partner is authorized and directed to
use its best efforts to conduct the affairs of, and to operate,
the Partnership in such a way that the Partnership would not be
deemed to be an "investment company" required to be registered
under the 1940 Act or taxed as a corporation for Federal income
tax purposes and so that the Subordinated Debentures will be
treated as indebtedness of Penelec for Federal income tax
purposes. In this connection, the General Partner is authorized
to take any action not inconsistent with applicable law, the
Certificate of Limited Partnership or this Agreement that does
not materially adversely affect the interests of holders of
Preferred Partner Interests that the General Partner determines
in its sole and absolute discretion to be necessary, advisable or
desirable for such purposes.
Section 8.02. Fiduciary Duty. (a) To the extent that,
at law or in equity, an Indemnified Person has duties (including
fiduciary duties) and liabilities relating thereto to the
Partnership or to any other Covered Person, an Indemnified Person
acting under this Agreement shall not be liable to the
Partnership or to any other Covered Person for its good faith
reliance on the provisions of this Agreement or the advice of
counsel selected by the Indemnified Person in good faith. The
provisions of this Agreement, to the extent that they restrict
the duties and liabilities of an Indemnified Person otherwise
existing at law or in equity, are agreed by the parties hereto to
replace such other duties and liabilities of such Indemnified
Person.
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(b) Unless otherwise expressly provided herein,
(i) whenever a conflict of interest exists or arises between
Covered Persons, or (ii) whenever this Agreement or any other
agreement contemplated herein or therein provides that an
Indemnified Person shall act in a manner that is, or provides
terms that are, fair and reasonable to the Partnership or any
Partner, the Indemnified Person shall resolve such conflict of
interest, taking such action or providing such terms, considering
in each case the relative interest of each party (including its
own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such
interests, any customary or accepted industry practices, the
advice of counsel selected by the Indemnified Person in good
faith, and any applicable generally accepted accounting practices
or principles. In the absence of bad faith by the Indemnified
Person, the resolution, action or term so made, taken or provided
by the Indemnified Person shall not constitute a breach of this
Agreement or any other agreement contemplated herein or of any
duty or obligation of the Indemnified Person at law or in equity
or otherwise.
(c) Whenever in this Agreement an Indemnified Person
is permitted or required to make a decision (i) in its
"discretion" or under a grant of similar authority or latitude,
the Indemnified Person shall be entitled to consider only such
interests and factors as it desires, including its own interests,
and shall have no duty or obligation to give any consideration to
any interest of or factors affecting the Partnership or any other
Person, or (ii) in its "good faith" or under another express
standard, the Indemnified Person shall act under such express
standard and shall not be subject to any other or different
standard imposed by this Agreement or other applicable law.
Section 8.03. Specific Obligations of the General
Partner. The General Partner hereby undertakes:
(a) to devote to the affairs of the Partnership so
much of its time as shall be necessary to carry on properly the
Partnership's business and its responsibilities hereunder;
(b) to cause the Partnership to do or refrain from
doing such acts as shall be required by Delaware law in order to
preserve the valid existence of the Partnership as a Delaware
limited partnership and to preserve the limited liability of the
Limited Partners; and,
(c) the General Partner shall pay directly all, and
the Partnership shall not be obligated to pay, directly or
indirectly, any, of the costs and expenses of the Partnership
(including, without limitation, costs and expenses relating to
the organization of, and offering of Preferred Partner Interests
in, the Partnership and costs and expenses relating to the
operation of the Partnership, including without limitation, costs
and expenses of accountants, attorneys, statistical or
bookkeeping services and computing or accounting equipment,
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paying agent(s), registrar(s), transfer agent(s), duplicating,
travel and telephone and costs and expenses incurred in
connection with the acquisition, financing, and disposition of
Partnership assets).
Section 8.04. Powers of the General Partner. The
General Partner shall have the right, power and authority, in the
management of the business and affairs of the Partnership, to do
or cause to be done any and all acts deemed by the General
Partner to be necessary or appropriate to effectuate the
business, purposes and objectives of the Partnership. Without
limiting the generality of the foregoing, the General Partner
shall have the power and authority without any further act,
approval or vote of any Partner to:
(a) issue Interests, including Preferred Partner
Interests, and classes and series thereof, in accordance with
this Agreement;
(b) act as, or appoint another Person to act as,
registrar and transfer agent for the Preferred Partner Interests;
(c) establish a record date with respect to all
actions to be taken hereunder that require a record date to be
established, including with respect to allocations, distributions
and voting rights and declare distributions and make all other
required payments on General Partner, Class A Limited Partner and
Preferred Partner Interests as the Partnership's paying agent;
(d) enter into and perform one or more
Underwriting Agreements and use the proceeds from the issuance of
the Interests to purchase the Subordinated Debentures, in each
case on behalf of the Partnership;
(e) bring and defend on behalf of the Partnership
actions and proceedings at law or in equity before any court or
governmental, administrative or other regulatory agency, body or
commission or otherwise;
(f) employ or otherwise engage employees and
agents (who may be designated as officers with titles) and
managers, contractors, advisors and consultants and pay
reasonable compensation for such services;
(g) redeem each series of Preferred Partner
Interests (which shall constitute a return of capital and not a
distribution of income) in accordance with its terms and/or to
the extent that the related series of Subordinated Debentures is
redeemed or reaches maturity; and,
(h) execute all documents or instruments, perform
all duties and powers and do all things for and on behalf of the
Partnership in all matters necessary, convenient, advisable or
incidental to the foregoing.
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The expression of any power or authority of the General
Partner in this Agreement shall not in any way limit or exclude
any other power or authority which is not specifically or
expressly set forth in, or precluded by, this Agreement.
Section 8.05. Independent Affairs. Any Partner or
Affiliate thereof may engage in or possess an interest in any
other business venture of whatever nature and description,
independently or with others, wherever located and whether or not
comparable to or in competition with the Partnership or the
General Partner, or any Affiliate thereof, and neither the
Partnership nor any of the Partners shall, by virtue of this
Agreement, have any rights with respect to, or interests in, such
independent ventures or the income, profits or losses derived
therefrom. No Partner or Affiliate thereof shall be obligated to
present any particular investment opportunity to the Partnership
even if such opportunity is of a character that, if presented to
the Partnership, could be taken by the Partnership, and any
Partner or Affiliate thereof shall have the right to take for its
own account (individually or as a partner or fiduciary) or to
recommend to others any such particular investment opportunity.
Section 8.06. Meetings of the Partners. Meetings of
the Partners of any class or series or of all classes or series
of the Partnership's Interests may be called at any time by the
Partners holding 10% in liquidation preference of such class or
series of Interests, or of all classes or series of Interests, as
the case may be, or as provided in any Action establishing a
series of Preferred Partner Interests. Except to the extent
otherwise provided in any such Action, the following provisions
shall apply to meetings of Partners.
(a) Notice of any meeting shall be given to all
Partners not less than ten (10) business days nor more than sixty
(60) days prior to the date of such meeting. Partners may vote
in person or by proxy at such meeting. Whenever a vote, consent
or approval of Partners is permitted or required under this
Agreement, such vote, consent or approval may be given at a
meeting of Partners or by written consent.
(b) Each Partner may authorize any Person to act
for it by proxy on all matters in which a Partner is entitled to
participate, including waiving notice of any meeting, or voting
or participating at a meeting. Every proxy must be signed by the
Partner or its attorney-in-fact. No proxy shall be valid after
the expiration of eleven (11) months from the date thereof unless
otherwise provided in the proxy. Every proxy shall be revocable
at the pleasure of the Partner executing it.
(c) Each meeting of Partners shall be conducted
by the General Partner or by such other Person that the General
Partner may designate.
(d) Subject to the provisions of this Section
8.06, the General Partner, in its sole and absolute discretion,
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shall establish all other provisions relating to meetings of
Partners, including notice of the time, place or purpose of any
meeting at which any matter is to be voted on by any Partners,
waiver of any such notice, action by consent without a meeting,
the establishment of a record date, quorum requirements, voting
in person or by proxy or any other matter with respect to the
exercise of any such right to vote; provided, however, that
unless the General Partner has established a lower percentage, a
majority of the Partners entitled to vote thereat shall
constitute a quorum at all meetings of the Partners.
Section 8.07. Net Worth of General Partner. B y
execution of this Agreement, the General Partner represents and
covenants that (a) as of the date hereof and at all times during
the existence of the Partnership it will maintain a fair market
value net worth (determined in accordance with generally accepted
accounting principles) of at least ten percent (10%) of the total
contributions to the Partnership less any redemptions, throughout
the life of the Partnership, in accordance with Rev. Proc. 89-12,
1989-1 C.B. 798, or such other amount as may be required from
time to time pursuant to any amendment, modification or successor
to Rev. Proc. 89-12 (such net worth being computed excluding any
interest in, or receivable due from, the Partnership and
including any income tax liabilities that would become due by the
General Partner upon disposition by the General Partner of all
assets included in determining such net worth), and (b) it will
not make any voluntary dispositions of assets which would reduce
the net worth below the amount described in (a).
Section 8.08. Restrictions on General Partner. So
long as any series of Subordinated Debentures are held by the
Partnership, the General Partner shall not (i) direct the time,
method and place of conducting any proceeding for any remedy
available to the Trustee, or executing any trust or power
conferred on the Trustee with respect to such series, (ii) waive
any past default which is waivable under the Indenture, (iii)
exercise any right to rescind or annul a declaration that the
principal of all of a series of Subordinated Debentures shall be
due and payable or (iv) consent to any amendment, modification or
termination of the Indenture, where such consent shall be
required, without, in each case, obtaining the prior approval of
the holders of not less than 66 2/3% of the aggregate stated
liquidation preference of all series of Preferred Partner
Interests affected thereby, acting as a single class; provided,
however, that where a consent under the Indenture would require
the consent of each holder affected thereby, no such consent
shall be given by the General Partner without the prior consent
of each holder of all series of Preferred Partner Interests
affected thereby. The General Partner shall not revoke any
action previously authorized or approved by a vote of any series
of Preferred Partner Interests. The General Partner shall notify
all holders of such Preferred Partner Interests of any notice of
default received from the Trustee with respect to such series of
Subordinated Debentures. In addition, the General Partner will
not permit or cause the Partnership to file a voluntary petition
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in bankruptcy without the approval of the holders of not less
than 66 2/3% of the aggregate stated liquidation preference of
the outstanding Preferred Partner Interests.
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ARTICLE IX - Liability and Indemnification
Section 9.01. Partnership Expenses and Liabilities.
(a) Except as provided in the Delaware Act, the
General Partner shall have the liabilities of a partner in a
partnership without limited partners to Persons other than the
Partnership and the other Partners. Except as provided in the
Delaware Act or this Agreement, the General Partner shall have
the liabilities of a partner in a partnership without limited
partners to the Partnership and to the other Partners.
(b) Except as otherwise expressly required by
law, a Limited Partner, in its capacity as such, shall have no
liability in excess of (i) the amount of its capital
contributions to the Partnership, (ii) its share of any assets
and undistributed profits of the Partnership, and (iii) the
amount of any distributions wrongfully distributed to it.
Section 9.02. No Liability. Except as otherwise
expressly provided by the Delaware Act or in Section 9.01(a), no
Covered Person shall be liable to the Partnership or to any other
Partner for any act or omission performed or omitted pursuant to
the authority granted to it hereunder or by law, or from a loss
resulting from any mistake or error in judgment on its part or
from the negligence, dishonesty, fraud or bad faith of any
employee, independent contractor, broker or other agent of the
Partnership, provided that such act or omission, such mistake or
error in judgment or the selection of such employee, independent
contractor, broker or other agent, as the case may be, did not
result from the willful misconduct, gross negligence or fraud of
such Covered Person. Any Covered Person shall be fully protected
in relying in good faith upon the records of the Partnership and
upon such information, opinions, reports or statements presented
to the Partnership by any Person as to matters the Covered Person
reasonably believes are within such other Person's professional
or expert competence and who has been selected with reasonable
care by or on behalf of the Partnership, including information,
opinions, reports or statements as to the value and amount of the
assets, liabilities, profits, losses, or any other facts
pertinent to the existence and amount of assets from which
distributions to Partners might properly be paid.
Section 9.03. Indemnification. To the fullest extent
permitted by applicable law, except as set forth in Section
8.03(c), an Indemnified Person shall be entitled to
indemnification from the Partnership for any loss, damage or
claim incurred by such Indemnified Person by reason of any act or
omission performed or omitted by such Indemnified Person in good
faith on behalf of the Partnership and in a manner reasonably
believed to be within the scope of authority conferred on such
Indemnified Person by this Agreement, except that no Indemnified
Person shall be entitled to be indemnified in respect of any
loss, damage or claim incurred by such Indemnified Person by
reason of willful misconduct, gross negligence or fraud with
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respect to such acts or omissions; provided, however, that any
indemnity under this Section 9.03 shall be provided out of and to
the extent of Partnership assets only, and except as otherwise
expressly provided in Section 9.01(a) or by the Delaware Act, no
Covered Person shall have any personal liability on account
thereof. To the fullest extent permitted by applicable law,
expenses (including legal fees) incurred by an Indemnified Person
in defending any claim, demand, action, suit or proceeding shall,
from time to time, be advanced by the Partnership prior to the
final disposition of such claim, demand, action, suit or
proceeding upon receipt by the Partnership of an undertaking by
or on behalf of the Indemnified Person to repay such amount if it
shall be determined that the Indemnified Person is not entitled
to be indemnified as authorized in this Section 9.03.
ARTICLE X - Withdrawal; Transfer Restrictions
Section 10.01. Transfer by General Partner; Admission
of Substituted General Partner. The General Partner may not
Transfer its Interest (in whole or in part) to any Person without
the consent of all other Partners, provided that the General
Partner may, without the consent of any Partner, Transfer its
Interest to Penelec or any direct or indirect wholly owned
subsidiary of Penelec. Notwithstanding anything else herein, the
General Partner may merge with or into another Person, may permit
another Person to merge with or into the General Partner and may
Transfer all or substantially all of its assets to another Person
if the General Partner is the survivor of such merger or the
Person into which the General Partner is merged or to which the
General Partner's assets are transferred is a Person organized
under the laws of the United States or any state thereof or the
District of Columbia. The General Partner shall have the right
to admit the assignee or transferee of its Interest which is
permitted hereunder as a substituted or additional general
partner of the Partnership, with or without the consent of the
Limited Partners. Any such assignee or transferee of all or a
part of the Interest of a General Partner shall be deemed
admitted to the Partnership as a general partner of the
Partnership immediately prior to the effective date of such
Transfer, and such additional or successor general partner of the
Partnership is hereby authorized and shall continue the business
of the Partnership without dissolution.
Section 10.02. Withdrawal of Limited Partners. A
Preferred Partner may not withdraw from the Partnership prior to
the dissolution and winding up of the Partnership except upon the
assignment of its Preferred Partner Interests (including any
redemption, repurchase, exchange or other acquisition by the
Partnership), as the case may be, in accordance with the
provisions of this Agreement. Any Person who has been assigned
one or more Interests shall provide the Partnership with a
completed Form W-8 or such other documents or information as are
requested by the Partnership for tax reporting purposes. A
withdrawing Preferred Partner shall not be entitled to receive
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any distribution and shall not otherwise be entitled to receive
the fair value of its Preferred Partner Interest except as
otherwise expressly provided in this Agreement.
Section 10.03. Withdrawal of Class A Limited Partner.
Upon the admission of at least one Preferred Partner as a Limited
Partner of the Partnership, the Class A Limited Partner shall be
deemed to have withdrawn from the Partnership as a Limited
Partner of the Partnership, and upon such withdrawal, the Class A
Limited Partner shall have its capital contribution returned to
it without any interest or deduction and shall have no further
interest in the Partnership.
ARTICLE XI - Dissolution of the Partnership
Section 11.01. No Dissolution. The Partnership shall
not be dissolved by the admission of additional or successor
Partners in accordance with the terms of this Agreement. The
death, withdrawal, incompetency, bankruptcy, dissolution or other
cessation to exist as a legal entity of a Limited Partner, or the
occurrence of any other event that terminates the Interest of a
Limited Partner in the Partnership, shall not in and of itself
cause the Partnership to be dissolved and its affairs wound up.
To the fullest extent permitted by applicable law, upon the
occurrence of any such event, the General Partner may, without
any further act, vote or approval of any Partner, subject to the
terms of this Agreement, admit any Person to the Partnership as
an additional or substitute Limited Partner, which admission
shall be effective as of the date of the occurrence of such
event, and the business of the Partnership shall be continued
without dissolution.
Section 11.02. Events Causing Dissolution. The
Partnership shall be dissolved and its affairs shall be wound up
upon the occurrence of any of the following events:
(a) The expiration of the term of the
Partnership, as provided in Section 2.04 hereof;
(b) The withdrawal, removal or bankruptcy of the
General Partner or Transfer (other than a grant of a security
interest) by the General Partner of its entire Interest in the
Partnership when the assignee is not admitted to the Partnership
as an additional or successor General Partner in accordance with
Section 10.01 hereof, or the occurrence of any other event that
results in the General Partner ceasing to be a general partner of
the Partnership under the Delaware Act, provided, the Partnership
shall not be dissolved and required to be wound up in connection
with any of the events specified in this clause (b) if (i) at the
time of the occurrence of such event there is at least one
remaining general partner of the Partnership who is hereby
authorized to, and agrees to, and does carry on the business of
the Partnership, or (ii) within ninety days after the occurrence
of such event, a majority in Interest of the remaining Partners
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(or such greater percentage in Interest as is required by the
Delaware Act) agree in writing to continue the business of the
Partnership and to the appointment, effective as of the date of
such event, if required, of one or more additional general
partners of the Partnership;
(c) The entry of a decree of judicial dissolution
under the Delaware Act;
(d) The bankruptcy, liquidation, dissolution or
winding up of Penelec;
(e) the written consent of the General Partner
and all of the Preferred Partners; or
(f) in the sole and absolute discretion of the
General Partner upon the happening of a Special Event.
Section 11.03. Notice of Dissolution. Upon the
dissolution of the Partnership, the General Partner shall
promptly notify the Partners of such dissolution.
ARTICLE XII - Liquidation of Partner Interests
Section 12.01. Liquidation. Upon dissolution of the
Partnership, the General Partner, or, in the event that the
dissolution is caused by an event described in Section 11.02(b)
and there is no other General Partner, a Person or Persons who
may be approved by Preferred Partners holding not less than a
majority in liquidation preference of the Preferred Partners
Interests, as liquidating trustee (the "Liquidating Trustee"),
shall immediately commence to wind up the Partnership's affairs;
provided, however, that a reasonable time shall be allowed for
the orderly liquidation of the assets of the Partnership and the
satisfaction of liabilities to creditors so as to enable the
Partners to minimize the normal losses attendant upon a
liquidation. The Preferred Partners shall continue to share
profits and losses during liquidation in the same proportions, as
specified in Articles V and VI hereof, as before liquidation.
The proceeds of liquidation shall be distributed, as realized, in
the following order and priority:
(a) to creditors of the Partnership, including
Preferred Partners who are creditors, to the extent otherwise
permitted by law, in satisfaction of the liabilities of the
Partnership (whether by payment or the making of reasonable
provision for payment thereof), other than liabilities for which
reasonable provision for payment has been made and liabilities
for distributions to Partners;
(b) to the holders of Preferred Partner Interests
of each series then outstanding in accordance with the terms of
the Action or Actions for such Series; and
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(c) to all Partners in accordance with their
respective positive Capital Account balances, after giving effect
to all contributions, distributions and allocations for all
periods.
Section 12.02. Termination. The Partnership shall
terminate when all of the assets of the Partnership have been
distributed in the manner provided for in this Article XII, and
the Certificate of Limited Partnership shall have been cancelled
in the manner required by the Delaware Act.
Section 12.03. Duty of Care. The General Partner or
the Liquidating Trustee, as the case may be, shall not be liable
to the Partnership or any Partner for any loss attributable to
any act or omission of the General Partner or the Liquidating
Trustee, as the case may be, taken in good faith in connection
with the liquidation of the Partnership and distribution of its
assets in belief that such course of conduct was in the best
interest of the Partnership. The General Partner or the
Liquidating Trustee, as the case may be, may consult with counsel
and accountants with respect to liquidating the Partnership and
distributing its assets and shall be justified in acting or
omitting to act in accordance with the written opinion of such
counsel or accountants, provided they shall have been selected
with reasonable care.
Section 12.04. No Liability for Return of Capital.
The General Partner and its respective officers, directors,
members, shareholders, employees, representatives, agents,
partners and Affiliates shall not be personally liable for the
return of the capital contributions of any Partner to the
Partnership. No Partner shall be obligated to restore to the
Partnership any amount with respect to a negative Capital
Account.
ARTICLE XIII - Preferred Partner Interests
Section 13.01. Preferred Partner Interests.
(a) The aggregate number of Preferred Partner
Interests which the Partnership shall have authority to issue is
unlimited. Each series of Preferred Partner Interests shall rank
equally and all Preferred Partner Interests shall rank senior to
all other Interests in respect of the right to receive
distributions and the right to receive payments out of the assets
of the Partnership upon voluntary or involuntary dissolution and
winding up of the Partnership. The issuance of any Interests
ranking senior to the Preferred Partner Interest shall be deemed
to materially adversely affect the rights of the Preferred
Partner Interests under this Agreement.
(b) The General Partner on behalf of the Partnership
is authorized to issue Preferred Partner Interests, in one or
more series, having such designations, rights, privileges,
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restrictions and other terms and provisions, whether in regard to
distributions, return of capital or otherwise, as may from time
to time be established in a written action or actions (each, an
"Action") of the General Partner providing for the issue of such
series. In connection with the foregoing, the General Partner is
expressly authorized, prior to issuance, to set forth in an
Action or Actions providing for the issue of such series, the
following:
(i) The distinctive designation of such series
which shall distinguish it from other series;
(ii) The number of Preferred Partner Interests
included in such series, which number may be increased or
decreased from time to time unless otherwise provided by the
General Partner in creating the series;
(iii) The distribution rate (or method of
determining such rate) for Preferred Partner Interests of
such series and the first date upon which such distribution
shall be payable;
(iv) The amount or amounts which shall be paid
out of the assets of the Partnership to the holders of such
series of Preferred Partner Interests upon voluntary or
involuntary dissolution and winding up of the Partnership;
(v) The price or prices at which, the period or
periods within which and the terms and conditions upon which
the Preferred Partner Interests of such series may be
redeemed or purchased, in whole or in part, at the option of
the Partnership;
(vi) The obligation of the Partnership to
purchase or redeem Preferred Partner Interests of such
series pursuant to a sinking fund or otherwise and the price
or prices at which, the period or periods within which and
the terms and conditions upon which the Preferred Partner
Interests of such series shall be redeemed, in whole or in
part, pursuant to such obligation;
(vii) The period or periods within which and the
terms and conditions, if any, including the price or prices
or the rate or rates of conversion or exchange and the terms
and conditions of any adjustments thereof, upon which the
Preferred Partner Interests of such series shall be
convertible or exchangeable at the option of the Preferred
Partner, or the Partnership, into any other Interests or
securities or other property or cash or into any other
series of Preferred Partner Interests;
(viii) The voting rights, if any, of the
Preferred Partner Interests of such series in addition to
those required by law and set forth in this Agreement, and
any requirement for the approval by the Preferred Partner
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Interests, or of the Preferred Partner Interests of one or
more series, or of both, as a condition to specified Actions
or amendments to this Agreement;
(ix) The additional amounts, if any, which the
Partnership will pay as a distribution as necessary in order
that the net amounts received by the Preferred Partners who
hold such series of Preferred Partner Interests after
withholding or deduction on account of certain taxes,
duties, assessments or governmental charges will equal the
amount which would have been receivable in respect of such
Preferred Partner Interests in the absence of such
withholding or deduction ("Additional Amounts"); and
(x) Any other relative rights, powers,
preferences or limitations of the Preferred Partner
Interests of the series not inconsistent with this Agreement
or with applicable law.
In connection with the foregoing and without limiting
the generality thereof, the General Partner is hereby expressly
authorized, without the vote or approval of any other Partner, to
take any Action to create under the provisions of this Agreement
a series of Preferred Partner Interests that was not previously
outstanding. Without the vote or approval of any other Partner,
the General Partner may execute, swear to, acknowledge, deliver,
file and record whatever documents may be required in connection
with the issue from time to time of Preferred Partner Interests
in one or more series as shall be necessary, convenient or
desirable to reflect the issue of such series. The General
Partner shall do all things it deems to be appropriate or
necessary to comply with the Delaware Act and is authorized and
directed to do all things it deems to be necessary or permissible
in connection with any future issuance, including compliance with
any statute, rule, regulation or guideline of any Federal, state
or other governmental agency or any securities exchange.
Any Action or Actions taken by the General Partner
pursuant to the provisions of this paragraph (b) shall be deemed
an amendment and supplement to and part of this Agreement.
(c) Except as otherwise provided in this Agreement or
in any Action in respect of any series of the Preferred Partner
Interests and as otherwise required by law, all rights to the
management and control of the Partnership shall be vested
exclusively in the General Partner.
(d) No holder of Interests shall be entitled as a
matter of right to subscribe for or purchase, or have any
preemptive right with respect to, any part of any new or
additional issue of Interests of any class or series whatsoever,
or of securities convertible into any Interests of any class or
series whatsoever, whether now or hereafter authorized and
whether issued for cash or other consideration or by way of
distribution. Any Person acquiring Preferred Partner Interests
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shall be admitted to the Partnership as a Preferred Partner upon
compliance with Section 2.06.
13.02. Terms of Preferred Partner Interests.
Notwithstanding anything else in any Action to the contrary, all
Preferred Partner Interests of the Partnership shall have the
following voting rights, preferences, participating, optional and
other special rights and the qualifications, limitations or
restrictions of, and other matters relating to, the Preferred
Partner Interests as set forth below in this Section 13.02.
(a) Distributions.
(i) The Preferred Partners shall be entitled to
receive, when, as and if declared by the General
Partner out of funds held by the Partnership to
the extent that the Partnership has cash on hand
sufficient to permit such payments and funds
legally available therefor, cumulative cash
distributions at a rate per annum established by
the General Partner, calculated on the basis of a
360-day year consisting of twelve (12) months of
thirty (30) days each, and for any period shorter
than a full monthly distribution period,
distributions will be computed on the basis of the
actual number of days elapsed in such period, and
payable in United States dollars monthly in
arrears on the last day of each calendar month of
each year. In the event that any date on which
distributions are payable on the Preferred Partner
Interests is not a Business Day, then payment of
the distribution payable on such date will be made
on the next succeeding day which is a Business Day
(and without any interest or other payment in
respect of any such delay) except that, if such
Business Day is in the next succeeding calendar
year, such payment shall be made on the
immediately preceding Business Day, in each case
with the same force and effect as if made on such
date. Such distributions will accrue and be
cumulative from the original date of issue whether
or not they have been declared and whether or not
there are profits, surplus or other funds of the
Partnership legally available for the payment of
distributions, or whether they are deferred.
(ii) If distributions have not been paid in full
on any series of Preferred Partner Interests, the
Partnership may not:
(A) pay or declare and set aside for payment, any
distributions on any other series of Preferred
Partner Interests unless the amount of any
distributions paid or declared on any Preferred
Partner Interests is paid or declared on all
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Preferred Partner Interests then outstanding on a
pro rata basis, on the date such distributions are
paid or declared, so that
(1) (x) the aggregate amount of
distributions paid or declared on such series
of Preferred Partner Interests bears to (y)
the aggregate amount of distributions paid or
declared on all such Preferred Partner
Interests outstanding the same ratio as
(2) (x) the aggregate of all accumulated
arrears of unpaid distributions in respect of
such series of Preferred Partner Interests
bears to (y) the aggregate of all accumulated
arrears of unpaid distributions in respect of
all such Preferred Partner Interests
outstanding;
(B) pay or declare any distribution on any
general partner Interest; or
(C) redeem, purchase or otherwise acquire any
Preferred Partner Interests or any general partner
Interests;
until, in each case, such time as all accumulated and unpaid
distributions on all series of Preferred Partner Interests shall
have been paid in full for all distribution periods terminating
on or prior to, in the case of clauses (A) and (B), such payment
and, in the case of clause (C), the date of such redemption,
purchase or acquisition.
(b) Notice of Redemption.
(i) The Partnership may not redeem any
outstanding Preferred Partner Interests unless all
accumulated and unpaid distributions have been
paid on all Preferred Partner Interests for all
monthly distribution periods terminating on or
prior to the date of redemption.
(ii) Notice of any redemption (a "Notice of
Redemption") of a series of Preferred Partner
Interests will be given by the Partnership by mail
to each record holder of such series of Preferred
Partner Interests to be redeemed not fewer than
thirty (30) nor more than ninety (90) days prior
to the date fixed for redemption thereof. For
purposes of the calculation of the date of
redemption and the dates on which notices are
given pursuant to this paragraph (b)(ii), a Notice
of Redemption shall be deemed to be given on the
day such notice is first mailed by first-class
mail, postage prepaid, or on the date it was
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delivered in person, receipt acknowledged to the
record holders of such series of Preferred Partner
Interests. Each Notice of Redemption shall be
addressed to the record holders of such series of
Preferred Partner Interests at the address
appearing in the books and records of the
Partnership. No defect in the Notice of
Redemption or in the mailing thereof or
publication of its contents shall affect the
validity of the redemption proceedings.
(iii) If the Partnership gives a Notice of
Redemption in respect of a series of Preferred
Partner Interests, then, by 12:00 noon, New York
time, on the redemption date, the Partnership will
irrevocably deposit with The Depository Trust
Company or its successor securities depository
funds sufficient to pay the applicable Redemption
Price and will give The Depository Trust Company
or its successor securities depository irrevocable
instructions and authority to pay the Redemption
Price to the holders of the Preferred Partner
Interests. If Notice of Redemption shall have
been given and funds deposited as required, then
on the date of such deposit, all rights of the
Preferred Partner Interest Owners and the holders
of such series of Preferred Partner Interests so
called for redemption will cease, except the right
to receive the Redemption Price, but without
interest. In the event that any date fixed for
redemption of such series of Preferred Partner
Interests is not a Business Day, then payment of
the Redemption Price payable on such date will be
made on the next succeeding day which is a
Business Day (and without any interest or other
payment in respect of any such delay), except
that, if such Business Day falls in the next
succeeding calendar year, such payment will be
made on the immediately preceding Business Day.
In the event that payment of the Redemption Price
in respect of a series of Preferred Partner
Interests is not made either by the Partnership or
by Penelec pursuant to the Guarantee pertaining to
the series of Preferred Partner Interests,
distributions on such series of Preferred Partner
Interests will continue to accrue at the then
applicable rate, from the original redemption date
to the date of payment, in which case the actual
payment date will be considered the date fixed for
redemption for purposes of calculating the
Redemption Price.
(iv) In the event that less than all the
outstanding series of Preferred Partner Interests
are to be redeemed, the series of Preferred
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Partner Interests to be redeemed, will be selected
according to a determination by The Depository
Trust Company or its successor securities
depository. In the case of a partial redemption
resulting from a requirement that the Partnership
pay Additional Amounts or withhold or deduct
certain amounts, the Partnership will (A) cause
the global certificates representing all of such
series of Preferred Partner Interests to be
withdrawn from The Depository Trust Company or its
successor securities depository, (B) issue
certificates in definitive form representing such
series of Preferred Partner Interests, and (C)
redeem the series of Preferred Partner Interests
subject to such requirement to withhold or deduct
Additional Amounts. Subject to applicable law,
Penelec or its subsidiaries may at any time and
from time to time purchase outstanding Preferred
Partner Interests by tender, in the open market or
by private agreement. If a partial redemption or
a purchase of outstanding Preferred Partner
Interests by tender, in the open market or by
private agreement would result in a delisting of a
series of Preferred Partner Interests from any
national securities exchange on which the series
of Preferred Partner Interests are then listed,
the Partnership may then only redeem or purchase
the series of Preferred Partner Interests in
whole.
(c) Liquidation Distribution. If, upon any
liquidation, the Liquidation Distribution on a series of
Preferred Partner Interests can be paid only in part because the
Partnership has insufficient assets available to pay in full the
aggregate liquidation distributions on all Preferred Partner
Interests then outstanding, then the amounts payable directly by
the Partnership on the such series of Preferred Partner Interests
and on all other Preferred Partner Interests then outstanding
shall be paid on a pro rata basis, so that
(i) (A) the aggregate amount paid in respect of
the Liquidation Distribution bears to (B) the
aggregate amount paid as liquidation distributions
on all other Preferred Partnership Interests then
outstanding the same ratio as
(ii) (A) the aggregate Liquidation Distribution
bears to (B) the aggregate maximum liquidation
distributions on all other Preferred Partner
Interests then outstanding.
(d) Voting Rights. If (i) the Partnership fails to
pay distributions in full on a series of Preferred Partner
Interests for eighteen (18) consecutive monthly distribution
periods; (ii) an event of default as defined in the Indenture
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occurs and is continuing; or (iii) Penelec is in default on any
of its payment or other obligations under the Guarantee, then the
holders of such series of Preferred Partner Interests, together
with the holders of all other series of Preferred Partner
Interests acting as a single class, will be entitled, by a vote
of the majority of the aggregate stated liquidation preference of
outstanding Preferred Partner Interests, to appoint and authorize
a special representative of the Partnership and the Preferred
Partners (the "Special Representative") to enforce the
Partnership's rights under the Indenture, including, after
failure to pay interest for sixty (60) consecutive monthly
interest periods, the payment of interest on the Subordinated
Debentures, and to enforce the obligations of Penelec under the
Guarantee.
In furtherance of the foregoing, and without limiting
the powers of any Special Representative so appointed and for the
avoidance of any doubt concerning the powers of the Special
Representative, any Special Representative, in its own name and
as Special Representative of the Partnership and the Preferred
Partners, may institute any proceedings, including, without
limitation, any suit in equity, an action at law or other
judicial or administrative proceeding, to enforce the
Partnership's or the Preferred Partners' rights directly against
Penelec (including, without limitation, the Partnership's rights
under the Indenture or as a holder or beneficial owner of the
Subordinated Debentures), or any other obligor in connection with
such obligations on behalf of the Partnership or the Preferred
Partners, and may prosecute such proceeding to final judgment or
decree, including any appeals thereof, and enforce the same
against Penelec or any other obligor in connection with such
obligations and collect, out of the property, wherever situated,
of Penelec or any such other obligor upon such obligations, the
monies adjudged or decreed to be payable in the manner provided
by law. The Special Representative shall not be admitted as a
partner in the Partnership or otherwise be deemed to be a partner
in the Partnership and shall have no liability for the debts,
obligations or liabilities of the Partnership.
For purposes of determining whether the
Partnership has failed to pay distributions in full for eighteen
(18) consecutive monthly distribution periods, distributions
shall be deemed to remain in arrears, notwithstanding any
payments in respect thereof, until full cumulative distributions
have been or contemporaneously are declared and paid with respect
to all monthly distribution periods terminating on or prior to
the date of payment of such full cumulative distributions.
Subject to requirements of applicable law, not later than thirty
(30) days after such right to appoint a Special Representative
arises, the General Partner will convene a general meeting for
the above purpose. If the General Partner fails to convene such
meeting within such 30-day period, the Preferred Partners who
hold 10% of the aggregate stated liquidation preference of such
outstanding series of Preferred Partner Interests will be
entitled to convene such meeting. The provisions of this
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Agreement relating to the convening and conduct of meetings of
Partners will apply with respect to any such meeting. Any
Special Representative so appointed shall cease to act in such
capacity immediately if the Partnership (or Penelec pursuant to
the Guarantee) shall have paid in full all accumulated and unpaid
distributions on the Preferred Partner Interests or such default
or breach by Penelec, as the case may be, shall have been cured.
Notwithstanding the appointment of any such Special
Representative, Penelec shall retain all rights under the
Indenture, including the right to extend the interest payment
period on the Subordinated Debentures as provided in the
Indenture.
If any proposed amendment of this Agreement
provides for, or the General Partner otherwise proposes to effect
any action which would materially adversely affect the powers,
preferences or special rights of such series of Preferred Partner
Interests, then holders of the outstanding series of Preferred
Partner Interests will be entitled to vote on such amendment or
action of the General Partner (but not on any other amendment or
action) and, in the case of an amendment or action which would
equally materially adversely affect the powers, preferences or
special rights of any other series of outstanding Preferred
Partner Interests, all holders of all such series of Preferred
Partner Interests, will be entitled to vote together as a class
on such amendment or action of the General Partner (but not on
any other amendment or action), and such amendment or action
shall not be effective except with the approval of Preferred
Partners holding not less than 66 2/3% of the aggregate stated
liquidation preference of such outstanding series of Preferred
Partner Interests. Except as otherwise provided under Section
11.02 or the Delaware Act, the Partnership will be dissolved and
wound up only with the consent of the holders of all Preferred
Partner Interests outstanding.
The powers, preferences or special rights of a series
of Preferred Partner Interests will be deemed not to be adversely
affected by the creation or issue of, and no vote will be
required for the creation or issue of, any further series of
Preferred Partner Interests or any general partner interests.
Any required approval of a series of Preferred Partner
Interests may be given at a separate meeting of such holders
convened for such purpose, at a meeting of the holders of all
series of Preferred Partner Interests or pursuant to written
consent. The Partnership will cause a notice of any meeting at
which holders of a series of Preferred Partner Interests are
entitled to vote, or of any matter upon which action by written
consent of such holders is to be taken, to be mailed to each
holder of Preferred Partner Interests. Each such notice will
include a statement setting forth (i) the date of such meeting or
the date by which such action is to be taken, (ii) a description
of any matter to be voted on at such meeting or upon which
written consent is sought, and (iii) instructions for the
delivery of proxies or consents.
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No vote or consent of the holders of a series of
Preferred Partner Interests will be required for the Partnership
to redeem and cancel such Series of Preferred Partner Interests
in accordance with this Agreement and the related Action.
Notwithstanding that holders of a series of Preferred
Partner Interests are entitled to vote or consent under any of
the circumstances described above, any Preferred Partner
Interests that are owned by Penelec or any Person owned more than
50% by Penelec, either directly or indirectly, shall not be
entitled to vote or consent and shall, for the purposes of such
vote or consent, be treated as if they were not outstanding.
(e) Mergers. The Partnership shall not consolidate,
amalgamate, merge with or into, or be replaced by, or convey,
transfer or lease its properties and assets substantially as an
entirety to any corporation or other entity, except with the
prior approval of the Preferred Partners holding not less than
66 2/3% of the aggregate stated liquidation preference of such
outstanding Preferred Partner Interests or as described below.
The General Partner may without the consent of the holders of any
series of Preferred Partner Interests, cause the Partnership to
consolidate, amalgamate, merge with or into, or be replaced by,
or convey, transfer or lease its properties and assets
substantially as an entirety to, a corporation, a limited
liability company, limited partnership or a trust or other entity
organized as such under the laws of the United States or any
state thereof or the District of Columbia provided that (i) such
successor entity either (A) expressly assumes all of the terms
and provisions of the Preferred Partner Interests by which the
Partnership is bound and the other obligations of the Partnership
or (B) substitutes for the Preferred Partner Interests other
securities having substantially the same terms as the Preferred
Partner Interests (the "Successor Securities") so long as the
Successor Securities rank, with regards to participation in the
profits or assets of the successor entity, at least as high as
the Preferred Partner Interests rank, with regard to
participation in the profits or assets of the Partnership,
(ii) Penelec confirms its obligations under the Guarantee with
regard to the Preferred Partner Interests or Successor
Securities, if any are issued, (iii) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does
not cause any series of Preferred Partner Interests or Successor
Securities to be delisted by any national securities exchange or
other organization on which those Preferred Partner Interests or
Successor Securities are then listed, (iv) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or
lease does not cause the Preferred Partner Interests to be
downgraded by any nationally recognized statistical rating
organization, as that term is defined by the Commission for
purposes of Rule 436(g)(2) under the Securities Act, (v) such
merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease does not adversely affect the powers,
preferences and special rights of holders of Preferred Partner
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Interests or Successor Securities in any material respect, (vi)
such successor entity has a purpose substantially identical to
that of the Partnership and (vii) prior to such merger,
consolidation, amalgamation, replacement, conveyance, transfer or
lease Penelec has received an opinion of counsel (which may be
regular counsel to the Partnership or an Affiliate, but not an
employee thereof) experienced in such matters to the effect that
(A) holders of outstanding Preferred Partner Interests or
Successor Securities will not recognize any gain or loss for
Federal income tax proposes as a result of the merger,
consolidation, amalgamation, replacement, conveyance, transfer or
lease, (B) such successor entity will be treated as a partnership
for Federal income tax purposes, (C) following such merger,
consolidation, amalgamation, replacement, conveyance, transfer or
lease, Penelec and such successor entity will be in compliance
with the 1940 Act without registering thereunder as an
"investment company," and (D) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease will not
adversely affect the limited liability of holders of Preferred
Partner Interests or Successor Securities.
ARTICLE XIV - Transfers
Section 14.01. Transfers of Preferred Partner
Interests. Preferred Partner Interests may be freely transferred
by a Preferred Partner. No Interest shall be transferred, in
whole or in part, except in accordance with the terms and
conditions set forth in this Agreement. Any transfer or
purported transfer of any Interest not made in accordance with
this Agreement shall be null and void.
Section 14.02. Transfer of Certificates. The General
Partner shall provide for the registration of Certificates. Upon
surrender for registration of transfer of any Certificate, the
General Partner shall cause one or more new Certificates to be
issued in the name of the designated transferee or transferees.
Every Certificate surrendered for registration of transfer shall
be accompanied by a written instrument of transfer and agreement
to be bound by the provisions of this Agreement in form
satisfactory to the General Partner duly executed by the
Preferred Partner or his attorney duly authorized in writing.
Each Certificate surrendered for registration of transfer shall
be cancelled by the General Partner. A transferee of a
Certificate shall provide the Partnership with a completed Form
W-8 or such other documents or information as are requested by
the Partnership for tax reporting purposes and thereafter shall
be admitted to the Partnership as a Preferred Partner and shall
be entitled to the rights and subject to the obligations of a
Preferred Partner hereunder upon the receipt by such transferee
of a Certificate. The transferor of a Certificate shall cease to
be a limited partner of the Partnership at the time that the
transferee of the Certificate is admitted to the Partnership as a
Preferred Partner in accordance with this Section 14.02.
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Section 14.03. Persons Deemed Preferred Partners. The
Partnership may treat the Person in whose name any Certificate
shall be registered on the books and records of the Partnership
as the Preferred Partner and the sole holder of such Certificate
for purposes of receiving distributions and for all other
purposes whatsoever and, accordingly, shall not be bound to
recognize any equitable or other claims to or interest in such
Certificate on the part of any other Person, whether or not the
Partnership shall have actual or other notice thereof.
Section 14.04. Book Entry Interests. The
Certificates, on original issuance, will be issued in the form of
a typewritten Certificate or Certificates representing the Book
Entry Interests, to be delivered to The Depository Trust Company,
the initial Clearing Agency, by, or on behalf of, the
Partnership. Such Certificates shall initially be registered on
the books and records of the Partnership in the name of Cede &
Co., the nominee of the initial Clearing Agency, and no Preferred
Partner Interest Owner will receive a definitive Certificate
representing such Preferred Partner Interest Owner's interests in
such Certificate, except as provided in Section 14.06. Unless
and until definitive, fully registered Certificates (the
"Definitive Certificates") have been issued to the Preferred
Partner Interest Owners pursuant to Section 14.06:
(a) The provisions of this Section shall be in
full force and effect;
(b) The Partnership and the General Partner shall
be entitled to deal with the Clearing Agency for all purposes of
this Agreement (including the payment of distributions on the
Certificates and receiving approvals, votes or consents
hereunder) as the Preferred Partner and the sole holder of the
Certificates and shall have no obligations to the Preferred
Partner Interest Owners;
(c) The rights of the Preferred Partner Interest
Owners shall be exercised only through the Clearing Agency and
shall be limited to those established by law and agreements
between such Preferred Partner Interest Owners and the Clearing
Agency and/or the Clearing Agency Participants. Unless or until
the Definitive Certificates are issued pursuant to Section 14.06,
the initial Clearing Agency will make book entry transfers among
the Clearing Agency Participants and receive and transmit
payments of distributions on the Certificates to such Clearing
Agency Participants;
(d) To the extent that the provisions of this
Section conflict with any other provisions of this Agreement, the
provisions of this Section shall control; and
(e) Whenever this Agreement requires or permits
actions to be taken based upon approvals, votes or consents of a
percentage of the Preferred Partners, the Clearing Agency shall
be deemed to represent such percentage only to the extent that it
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has received instructions to such effect from the Preferred
Partner Interest Owners and/or Clearing Agency Participants
owning or representing, respectively, such required percentage of
the beneficial interests in the Certificates and has delivered
such instructions to the General Partner.
Section 14.05. Notices to Clearing Agency. Whenever a
notice or other communication to the Preferred Partners is
required under this Agreement, unless and until Definitive
Certificates shall have been issued pursuant to Section 14.06,
the General Partner shall give all such notices and
communications specified herein to be given to the Preferred
Partners to the Clearing Agency, and shall have no obligations to
the Preferred Partner Interest Owners.
Section 14.06. Definitive Certificates. If (a) the
Clearing Agency elects to discontinue its services as securities
depository and gives reasonable notice to the Partnership, or
(b) the Partnership elects to terminate the book entry system
through the Clearing Agency, then the Definitive Certificates
shall be prepared by the Partnership. Upon surrender of the
typewritten Certificate or Certificates representing the Book
Entry Interests by the Clearing Agency, accompanied by
registration instructions, the General Partner shall cause the
Definitive Certificates to be delivered to the holders of
Preferred Partner Interests in accordance with the instructions
of the Clearing Agency. The General Partner shall not be liable
for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such
instructions. Any Person receiving a Definitive Certificate in
accordance with this Article XIV shall be admitted to the
Partnership as a Preferred Partner upon receipt of such
Definitive Certificate. The Clearing Agency or the nominee of
the Clearing Agency, as the case may be, shall cease to be a
Limited Partner of the Partnership under this Section 14.06 at
the time that at least one additional Person is admitted to the
Partnership as a Preferred Partner in accordance with this
Section 14.06. The Definitive Certificates shall be printed,
lithographed or engraved or may be produced in any other manner
as is reasonably acceptable to the General Partner, as evidenced
by its execution thereof.
Additionally, in the event that the Partnership
exercises its option to redeem only a portion of the Preferred
Partner Interests because it is or would be required to withhold
or deduct Additional Amounts in regard to such Preferred Partner
Interests to be redeemed, the Partnership may cause the global
Certificate representing all of the Preferred Partner Interests
to be withdrawn from the Clearing Agency and issue Definitive
Certificates representing the remaining Preferred Partner
Interests. Thereafter, the Preferred Partner Interests subject
to such requirement to withhold or deduct Additional Amounts will
be redeemed.
ARTICLE XV - General
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Section 15.01. Power of Attorney. (a) The Class A
Limited Partner and each Preferred Partner constitutes and
appoints the General Partner and the Liquidating Trustee as its
true and lawful representative and attorney-in-fact, in its name,
place and stead, to make, execute, sign, acknowledge and deliver
or file (i) all instruments, documents and certificates which may
from time to time be required by any law to effectuate, implement
and continue the valid and subsisting existence of the
Partnership, (ii) all instruments, documents and certificates
that may be required to effectuate the dissolution and
termination of the Partnership in accordance with the provisions
hereof and Delaware law, (iii) all other amendments of this
Agreement or the Certificate of Limited Partnership and other
filings contemplated by this Agreement including, without
limitation, amendments reflecting the withdrawal of the General
Partner, or the return, in whole or in part, of the contribution
of any Partner, or the addition, substitution or increased
contribution of any Partner, or any action of the Partners duly
taken pursuant to this Agreement whether or not such Partner
voted in favor of or otherwise approved such action, and (iv) any
other instrument, certificate or document required from time to
time to admit a Partner, to effect its substitution as a Partner,
to effect the substitution of the Partner's assignee as a Partner
or to reflect any action of the Partners provided for in this
Agreement.
(b) The powers of attorney granted herein (i)
shall be deemed to be coupled with an interest, shall be
irrevocable and shall survive the death, insanity, incompetency
or incapacity (or, in the case of a Partner that is a
corporation, association, partnership, limited liability company
or trust, shall survive the merger, dissolution or other
termination of existence) of the Partner and (ii) shall survive
the assignment by the Partner of the whole or any portion of his
Interest, except that where the assignee of the whole or any
portion thereof has furnished a power of attorney, this power of
attorney shall survive such assignment for the sole purpose of
enabling the General Partner and the Liquidating Trustee to
execute, acknowledge and file any instrument necessary to effect
any permitted substitution of the assignee for the assignor as a
Partner and shall thereafter terminate. In the event that the
appointment conferred in this Section 15.01 would not constitute
a legal and valid appointment by any Partner under the laws of
the jurisdiction in which such Partner is incorporated,
established or resident, upon the request of the General Partner
or the Liquidating Trustee, such Partner shall deliver to the
General Partner or the Liquidating Trustee a properly
authenticated and duly executed document constituting a legal and
valid power of attorney under the laws of the appropriate
jurisdiction covering the matters set forth in this Section
15.01.
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(c) The General Partner may require a power of
attorney to be executed by a transferee of a Partner as a
condition of its admission as a substitute Partner.
Section 15.02. Waiver of Partition. Each Partner
hereby irrevocably waives any and all rights that it may have to
maintain an action for partition of any of the Partnership's
property or assets.
Section 15.03. Notices. Any notice permitted or
required to be given hereunder shall be in writing and shall be
deemed given (i) on the day the notice is first mailed to a
Partner by first class mail, postage prepaid, or (ii) on the date
it was delivered in person to a Partner, receipt acknowledged, at
its address appearing on the books and records of the
Partnership. Another address may be designated by a Partner by
such Partner giving notice of its new address as provided in this
Section 15.03.
Section 15.04. Entire Agreement. This Agreement,
including the exhibits annexed hereto and incorporated by
reference herein, contains the entire agreement of the parties
hereto and supersedes all prior agreements and understandings,
oral or otherwise, among the parties hereto with respect to the
matters contained herein.
Section 15.05. Waivers. Except as otherwise expressly
provided herein, no purported waiver by any party of any breach
by another party of any of his obligations, agreements or
covenants hereunder, or any part thereof, shall be effective
unless made in a writing executed by the party or parties sought
to be bound thereby, and no failure to pursue or elect any remedy
with respect to any default under or breach of any provision of
this Agreement, or any part hereof, shall be deemed to be a
waiver of any other subsequent similar or different default or
breach, or any election of remedies available in connection
therewith, nor shall the acceptance or receipt by any party of
any money or other consideration due him under this Agreement,
with or without knowledge of any breach hereunder, constitute a
waiver of any provision of this Agreement with respect to such or
any other breach.
Section 15.06. Headings. The section headings herein
contained have been inserted only as a matter of convenience of
reference and in no way define, limit or describe the scope or
intent of any provisions of this Agreement nor in any way affect
any such provisions.
Section 15.07. Separability. Each provision of this
Agreement shall be considered to be separable, and if, for any
reason, any such provision or provisions, or any part thereof, is
determined to be invalid and contrary to any existing or future
applicable law, such invalidity shall not impair the operation
of, or affect, those portions of this Agreement which are valid,
and this Agreement shall be construed and enforced in all
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respects as if such invalid or unenforceable provision or
provisions had been omitted.
Section 15.08. Contract Construction. Whenever the
content of this Agreement permits, the masculine gender shall
include the feminine and neuter genders, and reference to
singular or plural shall be interchangeable with the other.
References in this Agreement to particular sections of the Code
or to provisions of the Delaware Act shall be deemed to refer to
such sections or provisions as they may be amended after the date
of this Agreement.
Section 15.09. Counterparts. This Agreement may be
executed in one or more counterparts and each of such
counterparts for all purposes shall be deemed to be an original,
but all of such counterparts, when taken together, shall
constitute but one and the same instrument, binding upon all
parties hereto, notwithstanding that all of such parties may not
have executed the same counterpart.
Section 15.10. Benefit. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns, but shall not be deemed
for the benefit of creditors or any other Persons, nor shall it
be deemed to permit any assignment by a Partner of any of its
rights or obligations hereunder except as expressly provided
herein.
Section 15.11. Further Actions. Each of the Partners
hereby agrees that it shall hereafter execute and deliver such
further instruments and do such further acts and things as may be
required or useful to carry out the intent and purposes of this
Agreement and as are not inconsistent with the terms hereof.
Section 15.12. Governing Law. This Agreement shall be
governed by and construed in accordance with the substantive laws
of the State of Delaware, without regard to conflicts of laws.
Section 15.13. Amendments. Except as otherwise
expressly provided herein or as otherwise required by law, this
Agreement may only be amended by a written instrument executed by
the General Partner provided, however, that any amendment which
would adversely affect the powers, preferences or special rights
of any series of Preferred Partner Interests may be effected only
as permitted by the terms of such series of Preferred Partner
Interests.
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IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first above written.
GENERAL PARTNER:
PENELEC PREFERRED CAPITAL, INC.
By: /s/Don W. Myers
Name: Don W. Myers
Title: Vice President and Treasurer
CLASS A LIMITED PARTNER
/s/Don W. Myers
Don W. Myers
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Exhibit A
Certificate Evidencing Preferred Partner Interests
of
Penelec Capital, L.P.
___% Cumulative Monthly Income Preferred Partner
Interests, Series __ (liquidation preference
$25 per Preferred Partner Interest)
Penelec Capital, L.P., a Delaware limited partnership (the
"Partnership"), hereby certifies that Cede & Co. (the "Holder") is the
registered owner of ____________ (_______) fully paid Preferred
Partner Interests of the Partnership designated the ___% Cumulative
Monthly Income Preferred Partner Interests, Series __ (liquidation
preference $25 per Preferred Partner Interest) (the "Series __
Preferred Partner Interests") representing preferred limited partner
interests in the Partnership transferable on the books and records of
the Partnership, in person or by a duly authorized attorney, upon
surrender of this Certificate duly endorsed and in proper form for
transfer. The powers, preferences and special rights and limitations
of the Series __ Preferred Partner Interests are set forth in, and
this Certificate and the Series __ Preferred Partner Interests
represented hereby are issued and shall in all respects be subject to
the terms and provisions of, the Amended and Restated Limited
Partnership Agreement dated as of ___________, 1994 of the Partnership
as the same may, from time to time, be amended (the "Partnership
Agreement") authorizing the issuance of the Series __ Preferred
Partner Interests and determining, along with any Actions of the
General Partner of the Partnership as authorized under the Partnership
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Agreement, the preferred, deferred and other special rights and
restrictions, regarding distributions, voting, redemption and
otherwise and other matters relating to the Series __ Preferred
Partner Interests. The Partnership will furnish a copy of the
Partnership Agreement to the Holder without charge upon written
request to the Partnership at its principal place of business or
registered office. Capitalized terms used herein but not defined
shall have the meaning given them in the Partnership Agreement. The
Holder is entitled to the benefits of the Payment and Guarantee
Agreement of Pennsylvania Electric Company, dated as of _____________,
1994 relating to the Preferred Partner Interests (the "Guarantee") and
of the Indenture between Pennsylvania Electric Company and United
States Trust Company of New York, dated as of ________, 1994 (the
"Indenture"), under and pursuant to which the related series of
Subordinated Debentures are issued and outstanding, in either case to
the extent provided therein. The Holder is further entitled to
enforce such rights of the Partnership under the Indenture to the
extent provided therein and in the Partnership Agreement. The
Partnership will furnish a copy of the Guarantee and Indenture to the
Holder without charge upon written request to the Partnership at its
principal place of business or registered office.
The Holder, by accepting this Certificate, is deemed to have
(i) agreed that the Subordinated Debentures issued pursuant to the
Indenture are subordinate and junior in right of payment to all Senior
Indebtedness of Pennsylvania Electric Company as and to the extent
provided in the Indenture and (ii) agreed that the Guarantee is
subordinate and junior in right of payment to all Senior Indebtedness
of Pennsylvania Electric Company. Upon receipt of this Certificate,
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the Holder is admitted to the Partnership as a Preferred Partner, is
bound by the Partnership Agreement and is entitled to the benefits
thereunder.
IN WITNESS WHEREOF, the Partnership has executed this
Certificate this ____ day of _____________, 1994.
PENELEC CAPITAL, L.P.
By: Penelec Preferred Capital,
Inc., its General Partner
By: ______________________________
Name:
Title:
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Exhibit A-6(a)
Action by the General Partner of Penelec Capital, L.P.
Creating the 8 3/4% Cumulative Monthly Income
Preferred Partner Interests, Series A
Pursuant to Section 13.01 of the Amended and Restated
Limited Partnership Agreement of Penelec Capital, L.P. dated as
of June 27, 1994 (as amended from time to time, the "Partnership
Agreement"), Penelec Preferred Capital, Inc., as general partner
(the "General Partner") of Penelec Capital, L.P. (the
"Partnership"), desiring to state the designations, distribution
rights, redemption rights, preferences, privileges, limitations
and other rights of a new series of Preferred Partner Interests,
hereby authorizes and establishes such new series of Preferred
Partner Interests according to the following terms and conditions
(each capitalized term used but not defined herein shall have the
meaning set forth in the Partnership Agreement):
(a) Designation. Four Million Two Hundred Thousand
(4,200,000) interests with an aggregate liquidation preference of
$105,000,000 of the Preferred Partner Interests of the
Partnership, liquidation preference $25 per Preferred Partner
Interest, are hereby designated as "8 3/4% Cumulative Monthly
Income Preferred Partner Interests, Series A" (hereinafter the
"Series A Preferred Partner Interests.")
(b) Distributions.
(i) The Preferred Partners who hold the Series A
Preferred Partner Interests shall be entitled to
receive, when, as and if declared by the General
Partner to the extent that the Partnership has
cash on hand sufficient to permit such payments
and funds legally available therefor, cumulative
cash distributions at a rate per annum of 8 3/4%
of the stated liquidation preference of $25 per
Series A Preferred Partner Interest per annum,
commencing July 31, 1994. Distributions on the
Series A Preferred Partner Interests which accrue
from the date of original issue to July 31, 1994
shall be payable on July 31, 1994.
(ii) Distributions on the Series A Preferred
Partner Interests must be declared by the General
Partner in any calendar year or portion thereof to
the extent that the General Partner reasonably
anticipates that at the time of payment the
Partnership will have, and must be paid by the
Partnership to the extent that at the time of
proposed payment it has, cash on hand sufficient
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to permit such payments and funds legally
available therefor. Distributions on the Series A
Preferred Partner Interests will be deferred if
and for so long as Penelec defers payments to the
Partnership on the Debentures (as defined below).
Accrued and unpaid distributions on the Series A
Preferred Partner Interests will accrue additional
distributions ("Additional Distributions") in
respect thereof, to the extent permitted by law,
at the distribution rate per annum applicable to
Series A Preferred Partner Interests. Such
additional distributions shall be payable at the
time the related deferred distribution is paid,
but in any event by the end of such deferral
period. Distributions declared on the Series A
Preferred Partner Interests will be payable to the
Series A Preferred Partners as they appear on the
books and records of the Partnership on the
relevant record dates, which will be one Business
Day prior to the relevant payment dates, provided
that if the Series A Preferred Partner Interests
are not in book-entry-only form, the record dates
will be the fifteenth day of each month.
(c) Redemption.
(i) The Series A Preferred Partner Interests are
redeemable, at the option of the Partnership in
whole or in part from time to time, on or after
July 5, 1999, at the Redemption Price (as defined
below).
(ii) Upon payment when due or redemption at any
time of the 8 3/4% Deferrable Interest
Subordinated Debentures, Series A due July 5, 2043
(the "Debentures") issued by Penelec pursuant to
an Indenture dated as of July 1, 1994 between
Penelec and United States Trust Company of New
York, as Trustee (the "Indenture"), which
Debentures were purchased by the Partnership from
Penelec with the proceeds from the issuance and
sale of the Series A Preferred Partner Interests
and the related capital contribution of the
General Partner, the proceeds from such payment or
redemption of the Debentures shall be applied to
redeem the Series A Preferred Partner Interests at
the redemption price of $25 per Preferred Partner
Interest plus accumulated and unpaid distributions
(whether or not declared) to the date fixed for
redemption, together with any accrued additional
distributions thereon (the "Redemption Price").
(iii) If at any time after the issuance of the
Series A Preferred Partner Interests, the
Partnership is or would be required to pay
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<PAGE>
Additional Amounts (as defined below) or Penelec
is or would be required to withhold or deduct
certain amounts pursuant to paragraph (e) hereof,
then, the Partnership may, at its option, redeem
the Series A Preferred Partner Interests in whole
or, if such requirement relates only to certain of
the Series A Preferred Partner Interests, the
Series A Preferred Partner Interests subject to
such requirement, in each case at the Redemption
Price.
(iv) If an Investment Company Act Event shall
occur and be continuing, the Partnership shall
elect to either: (1) redeem the Series A
Preferred Partner Interests in whole but not in
part at the Redemption Price within ninety (90)
days following the occurrence of such Investment
Company Act Event, provided that, if at the time
there is available to the General Partner the
opportunity to eliminate, within such ninety (90)
day period, the Investment Company Act Event by
taking some ministerial action, such as filing a
form or making an election, or pursuing some other
similar reasonable measure which would not involve
unreasonable cost or expense, which has no adverse
effect on the Partnership or Penelec, the General
Partner will pursue such measure in lieu of
redemption; or (2) dissolve the Partnership and,
after satisfaction of liabilities to creditors,
cause Debentures (and any rights to interest on
such Debentures) with an aggregate principal
amount equal to the aggregate stated liquidation
preference of the outstanding Series A Preferred
Partner Interests to be distributed to the holders
of the Series A Preferred Partner Interests in
liquidation of such holders' Interests in the
Partnership, within ninety (90) days following the
occurrence of such Investment Company Act Event,
provided, however, that the Partnership shall have
received an opinion of counsel (which may be
regular tax counsel to Penelec or an Affiliate but
not an employee thereof) to the effect that the
holders of the Series A Preferred Partner
Interests will not recognize any gain or loss for
federal income tax purposes as a result of such
dissolution and distribution.
(v) If a Tax Event shall occur and be continuing,
the Partnership may elect to: (1) redeem the
Series A Preferred Partner Interests in whole (but
not in part) at the Redemption Price within ninety
(90) days following the occurrence of such Tax
Event, provided that, if at the time there is
available to the General Partner the opportunity
to eliminate, within such ninety (90) day period,
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<PAGE>
the Tax Event by taking some ministerial action,
such as filing a form or making an election, or
pursuing some other similar reasonable measure
which would not involve unreasonable cost or
expense, which has no adverse effect on the
Partnership or Penelec, the General Partner will
pursue such measure in lieu of redemption; (2)
dissolve the Partnership and, after satisfactions
of liabilities to creditors, cause Debentures (and
any rights to interest on such Debentures) with an
aggregate principal amount equal to the aggregate
stated liquidation preference of the outstanding
Series A Preferred Partner Interests to be
distributed to the holders of the Series A
Preferred Partner Interests in liquidation of such
holders' Interests in the Partnership, within
ninety (90) days following the occurrence of such
Tax Event, provided, however, that the Partnership
shall have received an opinion of counsel (which
may be regular tax counsel to Penelec or an
Affiliate but not an employee thereof) to the
effect that the holders of the Series A Preferred
Partner Interests will not recognize any gain or
loss for federal income tax purposes as a result
of such dissolution and distribution; or (3) have
the Series A Preferred Partner Interests remain
outstanding.
(d) Liquidation Distribution. In the event of any
voluntary or involuntary dissolution and winding up of the
Partnership (other than pursuant to paragraphs (c)(iv) or (c)(v)
hereof), holders of the Series A Preferred Partner Interests at
the time outstanding will be entitled to receive out of the
assets of the Partnership available for distribution to holders
of Preferred Partner Interests, after satisfaction of liabilities
to creditors as required by the Delaware Act, before any
distribution of assets is made to holders of the general partner
interests, but together with holders of every other series of
Preferred Partner Interests outstanding, an amount equal to, in
the case of holders of Series A Preferred Partner Interests, the
aggregate of the stated liquidation preference of $25 per Series
A Preferred Partner Interest plus accumulated and unpaid
distributions (whether or not declared) to the date of payment,
together with any additional distributions accrued thereon and
any accrued and unpaid Additional Amounts (the "Liquidation
Distribution").
(e) Additional Amounts. All payments in respect of
the Series A Preferred Partner Interests by the Partnership will
be made without withholding or deduction for or on account of any
present or future taxes, duties, assessments or governmental
charges of whatever nature imposed or levied upon or as a result
of such payment by or on behalf of the United States, any state
thereof or any other jurisdiction through which or from which
such payment is made, or any authority therein or thereof having
4
<PAGE>
power to tax, unless the withholding or deduction of such taxes,
duties, assessments or governmental charges is required by law.
In the event that any such withholding or deduction is required
as a consequence of (i) the Debentures not being treated as
indebtedness for United States federal income tax purposes or
(ii) the Partnership not being treated as a partnership for
United States federal income tax purposes, the Partnership will
pay as a distribution such additional amounts as may be necessary
in order that the net amounts received by the holders of the
Series A Preferred Partner Interests after such withholding or
deduction will equal the amounts which would have been receivable
in respect of such Preferred Partner Interests in the absence of
such withholding or deduction ("Additional Amounts"), except that
no such Additional Amounts will be payable to a holder of Series
A Preferred Partner Interests (or a third party on such holder's
behalf) with respect to Series A Preferred Partner Interests if:
(i) such holder is liable for such taxes, duties,
assessments or governmental charges in respect of
such Series A Preferred Partner Interests by
reason of such holder's having a connection with
the United States, any state thereof or any other
jurisdiction through which or from which such
payment is made, or in which such holder resides,
conducts business or has other contacts, other
than being a holder of Series A Preferred Partner
Interests, or
(ii) the Partnership has notified such holder of
the obligation to withhold or deduct taxes and
requested but not received from such holder a
declaration of non-residence, a valid taxpayer
identification number or other claim for
exemption, and such withholding or deduction would
not have been required had such declaration,
taxpayer identification number of claim been
received.
(f) Subordination. The holders of Series A Preferred
Partner Interests are deemed, by acceptance of such Interests, to
have (i) agreed that the Debentures issued pursuant to the
Indenture are subordinate and junior in right of payment to all
Senior Indebtedness as and to the extent provided in the
Indenture and (ii) agreed that the Guarantee relating to the
Series A Preferred Partner Interests is subordinate and junior in
right of payment to all Senior Indebtedness of Penelec.
(g) The holders of the Series A Preferred Partner
Interests shall have no voting rights except as provided in the
Partnership Agreement or as required under the Delaware Act.
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<PAGE>
IN WITNESS WHEREOF, the General Partner has executed
this Action as of June 27, 1994.
PENELEC PREFERRED CAPITAL, INC.
By: /s/Don W. Myers
Name: Don W. Myers
Title: Vice President and Treasurer
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<PAGE>
Exhibit A-7(a)
CUSIP NO. 706870201 No. P - 1
Certificate Evidencing Preferred Partner Interests
of
Penelec Capital, L.P.
8 3/4% Cumulative Monthly Income Preferred Partner
Interests, Series A (liquidation preference
$25 per Preferred Partner Interest)
Penelec Capital, L.P., a Delaware limited partnership
(the "Partnership"), hereby certifies that Cede & Co. (the
"Holder") is the registered owner of FOUR MILLION TWO HUNDRED
THOUSAND (4,200,000) fully paid Preferred Partner Interests of
the Partnership designated the 8 3/4% Cumulative Monthly Income
Preferred Partner Interests, Series A (liquidation preference
$25 per Preferred Partner Interest) (the "Series A Preferred
Partner Interests") representing preferred limited partner
interests in the Partnership transferable on the books and
records of the Partnership, in person or by a duly authorized
attorney, upon surrender of this Certificate duly endorsed and in
proper form for transfer. The powers, preferences and special
rights and limitations of the Series A Preferred Partner
Interests are set forth in, and this Certificate and the Series A
Preferred Partner Interests represented hereby are issued and
shall in all respects be subject to the terms and provisions of,
the Amended and Restated Limited Partnership Agreement dated as
of June 27, 1994 of the Partnership as the same may, from time to
time, be amended (the "Partnership Agreement") authorizing the
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<PAGE>
issuance of the Series A Preferred Partner Interests and
determining, along with any Actions of the General Partner of the
Partnership as authorized under the Partnership Agreement, the
preferred, deferred and other special rights and restrictions,
regarding distributions, voting, redemption and otherwise and
other matters relating to the Series A Preferred Partner
Interests. The Partnership will furnish a copy of the
Partnership Agreement to the Holder without charge upon written
request to the Partnership at its principal place of business or
registered office. Capitalized terms used herein but not defined
shall have the meaning given them in the Partnership Agreement.
The Holder is entitled to the benefits of the Payment and
Guarantee Agreement of Pennsylvania Electric Company, dated as of
July 5, 1994 relating to the Preferred Partner Interests (the
"Guarantee") and of the Indenture between Pennsylvania Electric
Company and United States Trust Company of New York, dated as of
July 1, 1994 (the "Indenture"), under and pursuant to which the
related series of Subordinated Debentures are issued and
outstanding, in either case to the extent provided therein. The
Holder is further entitled to enforce such rights of the
Partnership under the Indenture to the extent provided therein
and in the Partnership Agreement. The Partnership will furnish a
copy of the Guarantee and Indenture to the Holder without charge
upon written request to the Partnership at its principal place of
business or registered office.
The Holder, by accepting this Certificate, is deemed to
have (i) agreed that the Subordinated Debentures issued pursuant
to the Indenture are subordinate and junior in right of payment
2
<PAGE>
to all Senior Indebtedness of Pennsylvania Electric Company as
and to the extent provided in the Indenture and (ii) agreed that
the Guarantee is subordinate and junior in right of payment to
all Senior Indebtedness of Pennsylvania Electric Company. Upon
receipt of this Certificate, the Holder is admitted to the
Partnership as a Preferred Partner, is bound by the Partnership
Agreement and is entitled to the benefits thereunder.
IN WITNESS WHEREOF, the Partnership has executed this
Certificate this 5th day of July, 1994.
PENELEC CAPITAL, L.P.
By: Penelec Preferred Capital,
Inc., its General Partner
By: /s/Don W. Myers
Name: Don W. Myers
Title: Vice President and Treasurer
Countersigned:
MELLON BANK, N.A.
(Pittsburgh, PA)
Transfer Agent
By: /s/Jack A. Livingston
Authorized Signature
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Exhibit A-8(a)
PENNSYLVANIA ELECTRIC COMPANY
AND
UNITED STATES TRUST COMPANY OF NEW YORK,
As Trustee
INDENTURE
Dated as of July 1, 1994
Providing for the Issuance of Subordinated
Debentures in Series and for the
8 3/4% Deferrable Interest Subordinated Debentures, Series A,
due 2043
<PAGE>
INDENTURE, dated as of July 1, 1994, 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 8 3/4% Deferrable
Interest Subordinated Debentures, Series A, due 2043 (the "Series
A Securities"), and to provide therefor, the Company has duly
authorized the execution and delivery of this Indenture, and all
things necessary to make the Series A Securities when duly issued
and executed by the Company and authenticated and delivered
hereunder, the valid obligations of the Company, and to make this
Indenture a valid and binding agreement of the Company, in
accordance with its terms, have been done;
Now, therefore, each party, intending to be legally bound
hereby, agrees as follows for the equal and ratable benefit of
the Holders of the Series A Securities:
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01 Definitions.
"Affiliate" of any specified Person means any other Person,
directly or indirectly, controlling or controlled by or under
direct or indirect common control with such specified Person.
When used with respect to any Person, "control" means the power
to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities,
by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Board of Directors" means the Board of Directors of the
Company or any committee thereof duly authorized to act on behalf
of such Board, and any resolution of the Board of Directors means
any resolution of the Board of Directors or any committee thereof
duly authorized to act on behalf of such Board.
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"Business Day" means any day other than a day on which
banking institutions in The City of New York are authorized or
required by law to close.
"Capital Lease Obligations" of a Person means any obligation
which is required to be classified and accounted for as a capital
lease on the face of a balance sheet of such Person prepared in
accordance with GAAP.
"Capital Stock" means any and all shares, interests, rights
to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) corporate
stock, including any Preferred Stock.
"Company" means 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.
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"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.
"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.
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"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.
"Series A Securities" means any of the Company's 8 3/4%
Deferrable Interest Subordinated Debentures, Series A, 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
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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.
"Subsidiary" means any corporation, association,
partnership, limited liability company or other business entity
of which more than 50% of the total voting power of all the
Voting Stock or Voting Interests is at the time owned or
controlled, directly or indirectly, by (i) the Company, (ii) the
Company and one or more Subsidiaries, or (iii) one or more
Subsidiaries.
"TIA" means the Trust Indenture Act of 1939, as amended and
as in effect on the date of this Indenture; provided, however,
that if the TIA is amended after such date, TIA means, to the
extent required by any such amendment, the TIA as so amended.
"Trust Officer" means the Chairman of the Board of
Directors, the President, or any other officer or assistant
officer of the Trustee assigned by the Trustee to administer its
corporate trust matters.
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"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.
"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
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"Successor" . . . . . . . . . . . . . . . 5.01
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SECTION 1.03 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA,
such provision is incorporated by reference in and made a part of
this Indenture. The following TIA terms used in this Indenture
have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Holder or
Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" on the indenture securities means the Company and
any other obligor on the Securities.
All other TIA terms used in this Indenture that are defined
by the TIA, defined by TIA reference to another statute or
defined by SEC rule have the meanings assigned to them by such
definitions.
SECTION 1.04 Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including, without limitation;
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(5) words in the singular include the plural, and words in
the plural include the singular;
(6) "herein," "hereof" and other words of similar import
refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision; and
(7) whenever the masculine gender is used herein, it shall
be deemed to include the female gender and the neuter,
as well.
SECTION 1.05. Acts of Holders.
(1) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be
given or taken by Holders may be embodied in and evidenced by one
or more instruments of substantially similar tenor signed by such
Holders in person or by an agent duly appointed in writing; and,
except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are
delivered to the Trustee and, where it is hereby expressly
required, to the Company. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of Holders signing such
instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Indenture and conclusive in
favor of the Trustee and the Company, if made in the manner
provided in this Section.
(2) The fact and date of the execution by any Person of any
such instrument or writing may be proved in any manner which the
Trustee deems sufficient.
(3) The ownership of Securities shall be proved by the
Register.
(4) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Security shall
bind every future Holder of the same Security and the holder of
every Security issued upon the registration of transfer thereof
or in exchange therefor or in lieu thereof in respect of anything
done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such
action is made upon such Security.
(5) If the Company solicits from the Holders any request,
demand, authorization, direction, notice, consent, waiver or
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other Act, the Company may, at its option, by or pursuant to a
resolution of its Board of Directors, fix in advance a record
date for the determination of Holders entitled to give such
request, demand, authorization, direction, notice, consent,
waiver or other Act, but the Company shall have no obligation to
do so. If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other Act
may be given before or after such record date, but only the
Holders of record at the close of business on such record date
shall be deemed to be Holders for the purposes of determining
whether Holders of the requisite proportion of outstanding
Securities have authorized or agreed or consented to such
request, demand, authorization, direction, notice, consent,
waiver or other Act, and for that purpose the outstanding
Securities shall be computed as of such record date.
ARTICLE 2
THE SECURITIES; THE SERIES A SECURITIES
SECTION 2.01 Issue of Securities Generally.
The Securities may be issued in one or more series as from
time to time shall be authorized by the Board of Directors.
The Securities of each series and the Trustee's Certificate
of Authentication shall be substantially in the forms to be
attached
as exhibits to this Indenture or supplemental indenture providing
for their issuance, but in the case of Securities other than
Series A Securities, with such inclusions, omissions and
variations as are authorized or permitted by this Indenture. The
Securities may have such letters, numbers or other marks of
identification or designation and such legends or endorsements
printed, lithographed or engraved thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of
this Indenture, or as may be required to comply with any law or
with any rule or regulation made pursuant thereto or with any
rule or regulation of any securities exchange on which the
Securities may be listed, or to conform to usage. Each Security
shall be dated the date of its authentication.
The several series of Securities may differ from the Series
A Securities, and as and between series, in respect of any or all
of the following matters:
(a) designation;
(b) date or dates of maturity, which may be serial;
(c) rate (or method of determining the rate) of
interest or Additional Interest;
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(d) interest payment dates and the frequency of
interest payments;
(e) provisions, if any, authorizing the Company to
extend the interest payment dates;
(f) authorized denominations;
(g) the place or places for the payment of principal
and for the payment of interest;
(h) limitation, if any, upon the aggregate principal
amount of Securities of the series which may be issued;
(i) provisions, if any, with regard to any obligation
of the Company to permit the exchange of the Securities of
such series into stock or other securities of the Company or
of any other corporations or entities;
(j) provisions, if any, reserving to the Company the
right to redeem all or any part of the Securities of such
series before maturity at such time or times, upon such
notice and at such redemption price or prices (together with
accrued interest to the date of redemption) as may be
specified in the respective forms of Securities;
(k) provisions, if any, for any sinking or analogous
fund with respect to the Securities of such series; and
(l) any other provisions expressing or referring to
the terms and conditions upon which the Securities of such
series are to be issued under this Indenture which are not
in conflict with the provisions of this Indenture;
in each case as determined and specified by the Board of
Directors. The Trustee shall not authenticate and deliver
Securities of any series (other than the Series A Securities)
upon initial issue unless the terms and conditions of such series
shall have been set forth in a supplemental indenture entered
into between the Company and the Trustee as provided in Section
9.01 hereof.
SECTION 2.02 Form of the Series A Securities; Denominations;
Global Security.
The Series A Securities and the Trustee's Certificate of
Authentication shall be substantially in the form of Exhibit A
attached hereto. The terms and provisions contained in the Series
A Securities, a form of which is annexed hereto as Exhibit A,
shall constitute, and are hereby expressly made, a part of this
Indenture. The Company and the Trustee, by their execution and
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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 $108,247,425 for issuance to Penelec Capital
in consideration of a cash payment equal to the principal amount
thereof, upon a resolution of the Board of Directors and a
written order of the Company signed by two Officers of the
Company, but without any further action by the Company. Such
order shall specify the date on which the original issue of the
Series A Securities is to be authenticated and delivered. The
aggregate principal amount of Series A Securities outstanding at
any time may not exceed $108,247,425, except as provided in
Section 2.08 hereof.
The Series A Securities shall be issuable only in registered
form without coupons and only in denominations of $25.00 and any
integral multiple thereof.
Initially, the Series A Securities shall be issued as a
temporary certificate in global form, that is, as one Security
for the total principal amount of the Series A Securities to be
outstanding, registered in the name of Penelec Capital. If and
when the Series A Securities are registered in the name of a
custodian, the custodian shall be responsible for maintaining
records of the names and addresses of, and the principal amounts
owned by, the beneficial owners of its global Security. After
initial issuance, the Series A Securities may be transferred or
exchanged in accordance with Section 2.07 hereof.
SECTION 2.03 Execution and Authentication.
The Securities shall be executed on behalf of the Company by
its Chief Executive Officer, its President or one of its Vice
Presidents, under its corporate seal imprinted or reproduced
thereon attested by its Secretary or one of its Assistant
Secretaries. The signature of any such Officer on the Securities
may be manual or facsimile.
Securities bearing the manual or facsimile signatures of
individuals who were at any time the proper Officers of the
Company shall bind the Company, notwithstanding that such
individuals or any of them have ceased to hold such offices prior
to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
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
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executed by the Trustee by manual signature of an authorized
officer, and such certificate upon any Security shall be
conclusive evidence, and the only evidence, that such Security
has been duly authenticated and made available for delivery
hereunder.
The Trustee shall act as the initial authenticating agent.
Thereafter, the Trustee, with the concurrence of the Company, may
appoint an authenticating agent. An authenticating agent may
authenticate Securities whenever the Trustee may do so. Each
reference in this Indenture to authentication by the Trustee
includes authentication by such agent. An authenticating agent
has the same rights as a Paying Agent to deal with the Company or
an Affiliate of the Company.
SECTION 2.04 Registrar and Paying Agent.
The Company shall maintain or cause to be maintained, within
the State of New York, an office or agency where the Securities
may be presented for registration of transfer or for exchange
("Registrar"), an office or agency where Securities may be
presented or surrendered for redemption or payment ("Paying
Agent"), and an office or agency where notices and demands to or
upon the Company in respect of the Securities and this Indenture
may be served. The Registrar shall keep a register (the
"Register") of the Securities and of their transfer and exchange.
The Register shall be open to inspection by the Company and the
Trustee at all reasonable times. The Company may have one or
more co-Registrars and one or more additional Paying Agents. The
terms Paying Agent and Registrar include any additional paying
agent and co-Registrar. The corporate trust office of the
Trustee at 114 West 47th Street, New York, New York, 10036,
Attention: Corporate Trust Department, Department B, shall
initially be the location for the Registrar, Paying Agent and
agent for service of notice or demands on the Company.
The Company shall enter into an appropriate agency agreement
with any Registrar, Paying Agent or co-Registrar (if not the
Trustee or the Company). The agreement shall implement the
provisions of this Indenture that relate to such agent. The
Company shall give prompt written notice to the Trustee of any
change of location of such office or agency. If at any time the
Company shall fail to maintain or cause to be maintained any such
required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices
and demands may be made or served at the address of the Trustee
set forth in Section 11.02 hereof. The Company shall notify the
Trustee of the name and address of any such agent. If the Company
fails to maintain a Registrar, Paying Agent or agent for service
of notices or demands, the Trustee shall act as such and shall be
entitled to appropriate compensation therefor pursuant to Section
7.07 hereof. The Company or any Affiliate of the Company may act
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as Paying Agent, Registrar or co-Registrar or agent for service
of notices and demands.
The Company may also from time to time designate one or more
other offices or agencies where the Securities may be presented
or surrendered for any or all such purposes and may from time to
time rescind such designations. The Company will give prompt
written notice to the Trustee of any such designation or
rescission and of any change in location of any such other office
or agency.
SECTION 2.05 Paying Agent to Hold Money in Trust.
Except as otherwise provided herein, prior to each due date
of the principal and interest on any Security, the Company shall
deposit with the Paying Agent a sum of money sufficient to pay
such principal and interest so becoming due. The Company shall
require each Paying Agent (other than the Trustee or the Company)
to agree in writing that such Paying Agent shall hold in trust
for the benefit of Securityholders or the Trustee all money held
by the Paying Agent for the payment of principal and interest on
the Securities and shall notify the Trustee of any default by the
Company in making any such payment. At any time during the
continuance of any such default, the Paying Agent shall, upon the
request of the Trustee, forthwith pay to the Trustee all money so
held in trust and account for any money disbursed by it. The
Company at any time may require a Paying Agent to pay all money
held by it to the Trustee and to account for any money disbursed
by it. Upon doing so, the Paying Agent shall have no further
liability for the money so paid over to the Trustee. If the
Company, a Subsidiary or an Affiliate of either of them acts as
Paying Agent, it shall segregate the money held by it as Paying
Agent and hold it as a separate trust fund.
SECTION 2.06 Securityholder Lists.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of
the names and addresses of Securityholders. If the Trustee is not
the Registrar, the Company shall cause to be furnished to the
Trustee on or before the Record Date for each interest payment
date and at such other times as the Trustee may request in
writing, within five Business Days of such request, a list, in
such form as the Trustee may reasonably require, of the names and
addresses of Securityholders.
SECTION 2.07 Transfer and Exchange.
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
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same series of other authorized denominations, the Registrar
shall register the transfer or make the exchange as requested if
its requirements for such transactions are met. To permit
registrations of transfer and exchanges of Securities of any
series, the Company shall execute and the Trustee shall
authenticate Securities of the same series, all at the
Registrar's request.
Every Security presented or surrendered for registration of
transfer or for exchange shall (if so required by the Company or
the Trustee) be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Company and
the Trustee duly executed by the Holder or his attorney duly
authorized in writing.
The Company shall not charge a service charge for any
registration of transfer or exchange, but the Company may require
payment of a sum sufficient to pay all taxes, assessments or
other governmental charges that may be imposed in connection with
the transfer or exchange of the Securities from the
Securityholder requesting such transfer or exchange (other than
any exchange of a temporary Security for a definitive Security
not involving any change in ownership).
The Company shall not be required to make, and the Registrar
need not register, transfers or exchanges of (a) any Security for
a period beginning at the opening of business five days before
the mailing of a notice of redemption of Securities and ending at
the close of business on the day of such mailing or (b) any
Security selected, called or being called for redemption, except,
in the case of any Security to be redeemed in part, the portion
thereof not to be redeemed.
SECTION 2.08 Replacement Securities.
If (a) any mutilated Security is surrendered to the Company
or the Trustee, or (b) the Company and the Trustee receive
evidence to their satisfaction of the destruction, loss or theft
of any Security, and there is delivered to the Company and the
Trustee such security or indemnity as may be required by them to
save each of them harmless, then, in the absence of notice to the
Company or the Trustee that such Security has been acquired by a
bona fide purchaser, the Company shall execute in exchange for
any such mutilated Security of any series or in lieu of any such
destroyed, lost or stolen Security of any series, a new Security
of the same series and of like tenor and principal amount,
bearing a number not contemporaneously outstanding, and the
Trustee shall authenticate and make such new Security available
for delivery.
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In case any such mutilated, destroyed, lost or stolen
Security has become or is about to become due and payable, or is
about to be redeemed by the Company pursuant to Article 3 hereof,
the Company in its discretion may, instead of issuing a new
Security, pay or purchase such Security, as the case may be.
Upon the issuance of any new Securities under this Section
2.08, the Company may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in
relation thereto and any other expenses (including the fees and
expenses of the Trustee) in connection therewith.
Every new Security issued pursuant to this Section 2.08 in
lieu of any mutilated, destroyed, lost or stolen Security shall
constitute an original additional contractual obligation of the
Company whether or not the mutilated, destroyed, lost or stolen
Security shall be at any time enforceable by anyone, and shall be
entitled to all benefits of this Indenture equally and ratably
with any and all other Securities duly issued hereunder.
The provisions of this Section 2.08 are exclusive and shall
preclude (to the extent lawful) all other rights and remedies
with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Securities.
SECTION 2.09 Outstanding Securities; Determinations of Holders'
Action.
Securities outstanding at any time are all the Securities
authenticated by the Trustee except for those canceled by it,
those delivered to it for cancellation, those mutilated,
destroyed, lost or stolen Securities referred to in Section 2.08
hereof, those redeemed by the Company pursuant to Article 3
hereof, and those described in this Section 2.09 as not
outstanding. A Security does not cease to be outstanding because
the Company or a Subsidiary or Affiliate thereof holds the
Security; provided, however, that in determining whether the
Holders of the requisite principal amount of Securities have
given or concurred in any request, demand, authorization,
direction, notice, consent or waiver hereunder, Securities owned
by the Company or any Affiliate or Subsidiary of the Company
(other than Penelec Capital, so long as any of its Preferred
Securities are outstanding) shall be disregarded and deemed not
to be outstanding; provided, further, that if the Trustee is
making such determination, it shall disregard only such
Securities as it knows to be owned by the Company or any
Affiliate or Subsidiary thereof. Securities owned by Penelec
Capital shall be deemed to be outstanding, so long as any of its
Preferred Securities are outstanding.
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Subject to the foregoing, only Securities outstanding at the
time of such determination shall be considered in any such
determination (including determinations pursuant to Articles 3, 6
and 9).
If a Security is replaced pursuant to Section 2.08, it
ceases to be outstanding unless the Trustee receives proof
satisfactory to it that the replaced Security is held by a bona
fide purchaser.
If the Paying Agent (other than the Company) holds, in
accordance with this Indenture, whenever payment of principal on
the Securities is due, whether at Stated Maturity, upon
acceleration or on a Redemption Date, money sufficient to pay the
Securities payable on that date, then immediately on the date of
Stated Maturity, upon acceleration or on such Redemption Date, as
the case may be, such Securities shall cease to be outstanding,
and interest, if any, on such Securities shall cease to accrue.
SECTION 2.10 Temporary Securities.
Until definitive Securities are ready for delivery, the
Company may execute temporary Securities, and upon the Company's
written request, signed by two Officers of the Company, the
Trustee shall authenticate and make such temporary Securities
available for delivery. Temporary Securities shall be printed,
lithographed, typewritten, mimeographed or otherwise produced, in
any authorized denomination, substantially of the tenor of the
definitive Securities of the same series in lieu of which they
are issued and with such appropriate insertions, omissions,
substitutions and other variations as the Officers of the Company
executing such Securities may determine, as conclusively
evidenced by their execution of such Securities.
If temporary Securities of any series are issued (except for
the global form of certificate issued initially as described in
Section 2.02 hereof), the Company shall cause definitive
Securities of the same series to be prepared without unreasonable
delay. After the preparation of definitive Securities, the
temporary Securities of the same series shall be exchangeable for
such definitive Securities upon surrender of such temporary
Securities at the office or agency of the Company designated for
such purpose pursuant to Section 2.04 hereof, without charge to
the Holder. Upon surrender for cancellation of any one or more
temporary Securities of any series, the Company shall execute a
like principal amount of definitive Securities of the same series
of authorized denominations, and the Trustee, upon written
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
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Securities shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities.
SECTION 2.11 Cancellation.
All Securities surrendered for payment, redemption by the
Company pursuant to Article 3 hereof or registration of transfer
or exchange shall, if surrendered to any Person other than the
Trustee, be delivered to the Trustee and shall be promptly
canceled by the Trustee. The Company may at any time deliver to
the Trustee for cancellation any Securities previously
authenticated and made available for delivery hereunder which the
Company may have acquired in any manner whatsoever, and all
Securities so delivered shall be promptly canceled by the
Trustee. The Company may not reissue, or issue new Securities to
replace, Securities it has paid or delivered to the Trustee for
cancellation. No Securities shall be authenticated in lieu of or
in exchange for any Securities canceled as provided in this
Section 2.11, except as expressly permitted by this Indenture.
All canceled Securities held by the Trustee shall be destroyed by
the Trustee, and the Trustee shall deliver a certificate of
destruction to the Company.
SECTION 2.12 CUSIP Numbers.
The Company, in issuing the Securities of any series, may
use "CUSIP" numbers applicable to such series (if then generally
in use), and the Trustee shall use CUSIP numbers in notices of
redemption or exchange as a convenience to Holders; provided that
any such notice shall state that no representation is made as to
the correctness of such numbers either as printed on the
Securities or as contained in any notice of redemption or
exchange and that reliance may be placed only on the other
identification numbers printed on the Securities and any
redemption shall not be affected by any defect in or omission of
such numbers.
SECTION 2.13 Defaulted Interest.
If the Company defaults in a payment of interest on the
Securities on the interest payment date, it shall pay the
defaulted interest, plus (to the extent lawful) any interest
payable on the defaulted interest, to the Persons who are Holders
on a subsequent special record date, and such special record
date, as used in this Section 2.13 with respect to the payment of
any defaulted interest, shall mean the 15th day next preceding
the date fixed by the Company for the payment of defaulted
interest, whether or not such day is a Business Day. At least 15
days before the subsequent special record date, the Company shall
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.
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ARTICLE 3
REDEMPTION
SECTION 3.01 Right to Redeem; Notice to Trustee.
(a) The Company, at its option, may redeem the Securities
pursuant to paragraph 6 of the Securities. The Company may not
redeem (or otherwise purchase) less than all of the Securities of
any series if as a result of such partial redemption (or
purchase) such series of the Securities would be delisted from
any national securities exchange on which they are then listed,
and in such case if the Company elects to redeem (or otherwise
purchase) any of the Securities of such series, it shall redeem
(or otherwise purchase) all of them. If paragraph 6 of the
Securities authorizes the Company to redeem Securities based on
an obligation to pay Additional Interest, the Company may not
redeem such Securities based solely upon such obligation, unless
it receives an Opinion of Counsel that more than an insubstantial
risk exists that 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. In no event shall the Company
redeem such Securities based on an obligation to pay Additional
Interest if the amount of the Additional Interest is de minimus.
If as a result of the redemption by Penelec Capital of any series
of Preferred Securities, such series would be delisted from any
national securities exchange on which such series is then listed,
the Company shall also redeem all of the Securities that were
purchased by Penelec Capital with the proceeds from the sale of
such series of Preferred Securities.
(b) If the Company elects to redeem Securities pursuant to
paragraph 6 of the Securities, it shall notify the Trustee in
writing of the Redemption Date, the aggregate principal amount of
Securities to be redeemed and the Redemption Price. The Company
shall give such notice to the Trustee at least 45 days before the
Redemption Date (unless a shorter notice shall be satisfactory to
the Trustee).
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
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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.
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SECTION 3.03 Notice of Redemption.
At least 30 days but not more than 90 days before a
Redemption Date, the Company shall mail or cause to be mailed a
notice of redemption by first-class mail, postage prepaid, to
each Holder of Securities to be redeemed at the Holder's last
address, as it appears on the Register. A copy of such notice
shall be mailed to the Trustee when the notice is mailed to
Holders of Securities. At the Company's written request, the
Trustee shall give the notice of redemption in the Company's name
and at its expense.
The notice shall identify the Securities (by series and by
certificate number) to be redeemed, the provision of the
Securities or this Indenture pursuant to which the Securities
called for redemption are being redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) the CUSIP number (subject to Section 2.12 hereof);
(4) the name and address of the Paying Agent;
(5) that Securities called for redemption must be
surrendered to the Paying Agent to collect the Redemption Price;
(6) if fewer than all the outstanding Securities of any
series are to be redeemed, the identification and principal
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
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thereon, if any, and accrued interest thereon, to the Redemption
Date.
SECTION 3.05 Deposit of Redemption Price.
On or prior to a Redemption Date, the Company shall
irrevocably deposit with the Trustee or the Paying Agent (or if
the Company or an Affiliate is the Paying Agent, the Company
shall segregate and hold in trust or cause such Affiliate to
segregate and hold in trust) money sufficient to pay the
Redemption Price of, and accrued and unpaid interest, including
Additional Interest, if any, and accrued interest thereon, on all
Securities to be redeemed on that date. After the Redemption
Date, interest ceases to accrue on the Securities to be redeemed
with respect to which the Company has deposited sufficient money
to pay the Redemption Price and accrued interest whether or not
such Securities are surrendered for payment. Subject to
applicable law, the Trustee or the Paying Agent shall return to
the Company three years after the Redemption Date any money
deposited with it and not applied for redemption.
SECTION 3.06 Securities Redeemed in Part.
Upon surrender of a Security of any series that is redeemed
in part, the Trustee shall authenticate for the Holder a new
Security of the same series equal in principal amount to the
unredeemed portion of such Security.
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
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allowed in such proceeding), to the extent lawful, at the rate
per annum borne by the Securities in default, which interest on
overdue interest shall accrue from the date such amounts became
overdue, or from such other date as may be specified in the
Securities.
(b) Notwithstanding paragraph (a) of this Section 4.01 or
any other provision herein to the contrary, if before an event
occurs which, under the terms of the Series A Preferred
Securities, results in a distribution of Series A Securities to
the holders of the Series A Preferred Securities in liquidation
of their interests in 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 such Securities, provided that at
the end of each such period (referred to herein as an "Extension
Period") the Company shall pay all interest then accrued and
unpaid (together with interest thereon at the rate specified in
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
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self-regulatory organization or to the holders of the Preferred
Securities of the record date or the date such distribution is
payable, but in any event not less than one Business Day prior to
such record date. The Company shall cause 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 Securities,
the Company will give the holders of the Securities notice of its
selection of such extended interest payment period ten Business
Days prior to the earlier of (i) the Interest Payment Date or
(ii) the date the Company is required to give notice of the
record or payment date of such related interest payment to any
national securities exchange on which the Securities are then
listed or other applicable self-regulatory organization or to
holders of the Securities, but in any event not less than two
Business Days prior to such record date. The Company shall give
or cause the Trustee to give such notice of the Company's
selection of such extended interest payment period to the
Holders.
(d) If and when 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.
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Neither the Company nor any Subsidiary shall declare or pay
any dividend on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its Capital Stock,
other than dividends paid to the Company by a Wholly Owned
Subsidiary, if at such time (a) there shall have occurred any
event that, with the giving of notice or the lapse of time or
both, would constitute an Event of Default under Section 6.01
hereof, or (b) any Preferred Securities are at the time
outstanding and the Company is in default under the Guarantee.
SECTION 4.03 SEC Reports.
The Company shall file with the Trustee, within 15 days
after it files them with the SEC, copies of its annual report and
of the information, documents and other reports (or copies of
such portions of any of the foregoing as the SEC may by rules and
regulations prescribe) which the Company is required to file with
the SEC pursuant to Sections 13 or 15(d) of the Exchange Act. If
the Company is not subject to the reporting requirements of
Sections 13 or 15(d) of the Exchange Act, the Company shall file
with the Trustee and the SEC, in accordance with the rules and
regulations prescribed by the SEC, such of the supplementary and
periodic information, documents and reports which may be required
pursuant to Section 13 of the Exchange Act, in respect of a
security listed and registered on a national securities exchange
as may be prescribed in such rules and regulations. The Company
shall also comply with the provisions of Section 314(a) of the
TIA.
SECTION 4.04 Compliance Certificates.
(a) The Company shall deliver to the Trustee within 90
days after the end of each of the Company's fiscal years an
Officer's Certificate, stating whether or not the signer knows of
any Default or Event of Default. Such certificate shall contain a
certification from the principal executive officer, principal
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
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such Default, Event of Default or other default and what action
the Company is taking or proposes to take with respect thereto.
(c) The Company shall deliver to the Trustee any
information reasonably requested by the Trustee in connection
with the compliance by the Trustee or the Company with the TIA.
SECTION 4.05 Further Instruments and Acts.
Upon request of the Trustee, the Company shall execute and
deliver such further instruments and do such further acts as may
be reasonably necessary or proper to carry out more effectively
the purposes of this Indenture.
SECTION 4.06 Investment Company Act.
The Company shall not become an investment company subject
to registration under the Investment Company Act of 1940, as
amended.
SECTION 4.07 Payments for Consents.
Neither the Company nor any Subsidiary shall, directly or
indirectly, pay or cause to be paid any consideration, whether by
way of interest, fee or otherwise, to any Holder of any
Securities for or as an inducement to any consent, waiver or
amendment of any of the terms or provisions of this Indenture or
the Securities unless such consideration is offered to be paid or
agreed to be paid to all Holders of the Securities who so
consent, waive or agree to amend in the time frame set forth in
the documents soliciting such consent, waiver or agreement.
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,
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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.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01 Events of Default.
An "Event of Default" occurs if one of the following shall
have occurred and be continuing:
(1) The Company defaults in the payment, when due and
payable, of (a) interest on any Security or Additional Interest,
if any, and the default continues for a period of 15 days, or (b)
the principal of any Security when the same becomes due and
payable at maturity, upon acceleration, on any Redemption Date,
or otherwise; provided that the failure of the Company to pay
interest or Additional Interest on any series of Securities
during an Extension Period applicable to the Securities of such
series shall not constitute a default hereunder;
(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;
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(b) consents to the entry of an order for relief
against it in an involuntary case or proceeding;
(c) consents to the appointment of a Custodian of it
or for all or substantially all of its property,
and such Custodian is not discharged within 90
days;
(d) makes a general assignment for the benefit of its
creditors; or
(e) admits in writing its inability to pay its debts
generally as they become due; or
(4) A court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(a) is for relief against the Company in an
involuntary case or proceeding;
(b) appoints a Custodian of the Company or for all or
substantially all of its properties; or
(c) orders the liquidation of the Company;
and in each case the order or decree remains unstayed and in
effect for 90 days.
The foregoing will constitute Events of Default whatever the
reason for any such Event of Default and whether it is voluntary
or involuntary or is effected by operation of law or pursuant to
any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body.
The term "Bankruptcy Law" means Title 11, United States
Code, or any similar Federal or state law for the relief of
debtors. "Custodian" means any receiver, trustee, assignee,
liquidator, sequestrator, custodian or similar official under any
Bankruptcy Law.
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."
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SECTION 6.02 Acceleration.
If any Event of Default other than an Event of Default under
clauses (3) or (4) of Section 6.01 hereof occurs and is
continuing, the Trustee may, by notice to the Company, or the
Holders of at least a majority in aggregate principal amount of
the Securities at the time outstanding may, by notice to the
Company and the Trustee (each, an "Acceleration Notice"), and the
Trustee shall, upon the request of such Holders, declare the
principal of and accrued and unpaid interest, including
Additional Interest, if any, and accrued interest thereon, on all
of the Securities to be due and payable. Upon such a
declaration, such principal and interest shall be due and payable
immediately.
The Company shall deliver to the Trustee, as promptly as
practicable after it obtains knowledge thereof, written notice in
the form of an Officer's Certificate of any event which with the
giving of notice and the lapse of time would become an Event of
Default under clause (2) of Section 6.01 hereof, its status and
what action the Company is taking or proposes to take with
respect thereto.
If an Event of Default specified in clauses (3) or (4) of
Section 6.01 hereof occurs, the principal of and interest,
including Additional Interest, if any, on all the Securities
shall ipso facto become and be immediately due and payable
without any declaration or other act on the part of the Trustee
or any Securityholders.
The Holders of a majority in aggregate principal amount of
the Securities at the time outstanding, by notice to the Trustee,
may rescind an acceleration and its consequences if the
rescission would not conflict with any judgment or decree and if
all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely
because of acceleration. No such rescission shall affect any
subsequent Default or impair any right consequent thereto.
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.
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The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of the
Securities in the proceeding. A delay or omission by the Trustee
or any Securityholder in exercising any right or remedy accruing
upon an Event of Default shall not impair the right or remedy or
constitute a waiver of, or acquiescence in, the Event of Default.
No remedy is exclusive of any other remedy. All available
remedies are cumulative.
SECTION 6.04 Waiver of Past Defaults.
Subject to Section 6.07 hereof, the Holders of a majority in
aggregate principal amount of the Securities of any series at the
time outstanding, by notice to the Trustee (and without notice to
any other Securityholder), may waive an existing Default or Event
of Default affecting the Securities of such series and its
consequences. When a Default is waived, it is deemed cured and
shall cease to exist, but no such waiver shall extend to any
subsequent or other Default or impair any consequent right.
SECTION 6.05 Control by Majority.
The Holders of a majority in aggregate principal amount of
the Securities at the time outstanding may direct the time,
method and place of conducting any proceeding for any remedy
available to the Trustee or of exercising any trust or power
conferred on the Trustee. However, the Trustee may refuse to
follow any direction that conflicts with law or this Indenture or
that the Trustee determines in good faith is unduly prejudicial
to the rights of other Securityholders or would involve the
Trustee in personal liability. The Trustee may take any other
action deemed proper by the Trustee which is not inconsistent
with such direction.
SECTION 6.06 Limitation on Suits.
Except as provided in Section 6.07 hereof, a Securityholder
may not pursue any remedy with respect to this Indenture or the
Securities unless:
(1) the Holder gives to the Trustee written notice stating
that an Event of Default is continuing;
(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;
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(3) such Holder or Holders offer to the Trustee reasonable
security and indemnity against any loss, liability or expense
satisfactory to the Trustee;
(4) the Trustee does not comply with the request within 60
days after receipt of the notice, the request and the offer of
security and indemnity; and
(5) the Holders of a majority in aggregate principal
amount of the Securities at the time outstanding do not give the
Trustee a direction inconsistent with the request during such 60
days.
A Securityholder may not use this Indenture to prejudice the
rights of any other Securityholder or to obtain a preference or
priority over any other Securityholder.
SECTION 6.07 Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the
right of any Holder to receive payment of the principal amount of
or interest on the Securities held by such Holder, on or after
the respective due dates expressed in the Securities (in the case
of interest, as the same may be extended pursuant to the
provisions of this Indenture and the Securities) or any
Redemption Date, or to bring suit for the enforcement of any such
payment on or after such respective dates shall not be impaired
or affected adversely without the consent of each such Holder.
SECTION 6.08 Collection Suit by the Trustee.
If an Event of Default described in Section 6.01(1) hereof
occurs and is continuing, the Trustee may recover judgment in its
own name and as trustee of an express trust against the Company
or any obligor on the Securities for the whole amount owing with
respect to the Securities and the amounts provided for in Section
7.07 hereof.
SECTION 6.09 The Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment,
composition or other judicial proceeding relating to the Company
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
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other papers or documents as may be necessary or advisable in
order to have the claims of the Trustee (including any claim for
the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel) and of the Holders
allowed in such judicial proceeding; and
(2) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the
same; and any Custodian in any such judicial proceeding is hereby
authorized by each Holder to make such payments to the Trustee
and, in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay the Trustee any
amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel, and any other amounts due the Trustee under Section 7.07
hereof.
Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf
of any Holder any plan of reorganization, arrangement, adjustment
or composition affecting the Securities or the rights of any
Holder thereof, or to authorize the Trustee to vote in respect of
the claim of any Holder in any such proceeding.
SECTION 6.10 Priorities.
If the Trustee collects any money pursuant to this Article
6, it shall pay out the money in the following order:
FIRST: to the Trustee for amounts due under Section 7.07
hereof;
SECOND: to Securityholders for amounts due and unpaid on
the Securities for the principal amount,
Redemption Price or interest, if any, as the case
may be, ratably, without preference or priority of
any kind, according to such amounts due and
payable on the Securities; and
THIRD: the balance, if any, to the Company.
The Trustee may fix a record date and payment date for any
payment to Securityholders pursuant to this Section 6.10.
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
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the court in its discretion may assess reasonable costs,
including reasonable attorneys' fees and expenses, against any
party litigant in the suit, having due regard to the merits and
good faith of the claims or defenses made by the party litigant.
This Section 6.11 does not apply to a suit by the Trustee, a suit
by a Holder pursuant to Section 6.07 hereof or a suit by Holders
of more than 10% in aggregate principal amount of the Securities
at the time outstanding.
SECTION 6.12 Waiver of Stay, Extension or Usury Laws.
The Company covenants (to the extent that it may lawfully do
so) that it will not at any time insist upon, or plead or in any
manner whatsoever claim or take the benefit or advantage of, any
stay or extension law or any usury or other law wherever enacted,
now or at any time hereafter in force, that would prohibit or
forgive the Company from paying all or any portion of the
principal or interest on the Securities as contemplated herein or
affect the covenants or the performance by the Company of its
obligations under this Indenture; and the Company (to the extent
that it may lawfully do so) hereby expressly waives all benefit
or advantage of any such law, and covenants that it will not
hinder, delay or impede the execution of any power herein granted
to the Trustee, but will suffer and permit the execution of every
such power as though no such law had been enacted.
ARTICLE 7
THE TRUSTEE
SECTION 7.01 Duties of the Trustee.
(1) If an Event of Default has occurred and is continuing,
the Trustee shall exercise the rights and powers vested in it by
this Indenture and use the same degree of care and skill in its
exercise as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.
(2) Except during the continuance of an Event of Default,
(a) the Trustee need perform only those duties that are
specifically set forth in this Indenture and no others; and (b)
in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates
or opinions furnished to the Trustee and conforming to the
requirements of this Indenture. However, in the case of any
certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee
shall examine the certificates and opinions to determine whether
or not they conform to the requirements of this Indenture.
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(3) No provision in this Indenture shall relieve the
Trustee from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct, except
that:
(a) this paragraph (3) does not limit the effect of
paragraphs (1) and (2) of this Section 7.01;
(b) the Trustee shall not be liable for any error of
judgment made in good faith by a Trust Officer
unless it is proved that the Trustee was negligent
in ascertaining the pertinent facts;
(c) the Trustee shall not be liable with respect to
any action it takes or omits to take in good faith
in accordance with a direction received by it
pursuant to Section 6.05 hereof; and
(d) the Trustee may refuse to perform any duty or
exercise any right or power or extend or risk its
own funds or otherwise incur any financial
liability unless it receives security and
indemnity reasonably satisfactory to it against
any loss, liability or expense.
(4) Every provision of this Indenture that in any way
relates to the Trustee is subject to paragraphs (1), (2), (3) and
(5) of this Section 7.01 and to Section 7.02.
(5) Money held by the Trustee in trust hereunder need not
be segregated from other funds except to the extent required by
law. The Trustee shall not be liable for interest on any money
held by it hereunder.
SECTION 7.02 Rights of the Trustee.
Except as otherwise provided in Section 7.01 hereof:
(1) the Trustee may rely on any document believed by it to
be genuine and to have been signed or presented by the proper
person. The Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture or other paper or
document, but the Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it
may see fit, and, if the Trustee determines to make such further
inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by
agent or attorney;
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(2) whenever the Trustee is requested by the Company to act
or refrain from acting hereunder, the Trustee may require an
Officer's Certificate directing it to act or refrain from so
acting, and, if appropriate, an Opinion of Counsel. The Trustee
shall not be liable for any action it takes or omits to take in
the absence of bad faith in reliance on such Officer's
Certificate and Opinion of Counsel;
(3) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any action
hereunder, the Trustee (unless other evidence be herein
specifically prescribed) may in the absence of bad faith on its
part, rely upon an Officer's Certificate;
(4) the Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent
appointed with due care;
(5) the Trustee shall not be liable for any action it takes
or omits to take in good faith which it reasonably believes to be
authorized or within its rights or powers;
(6) the Trustee may consult with counsel of its selection
and the advice of such counsel or any Opinion of Counsel shall be
full and complete authorization and protection in respect of any
action taken, suffered or omitted by it hereunder in good faith
and in reliance thereon; and
(7) the Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Indenture at the
request or direction of any of the Holders pursuant to this
Indenture, unless such Holders shall have offered to the Trustee
reasonable security and indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with such
request or direction.
SECTION 7.03 Individual Rights of the Trustee.
The Trustee in its individual or any other capacity may
become the owner or pledgee of Securities and may otherwise deal
with the Company or its Affiliates with the same rights it would
have if it were not the Trustee. Any Paying Agent, Registrar or
co-Registrar may do the same with like rights. However, the
Trustee must comply with Sections 7.10 and 7.11 hereof.
SECTION 7.04 The Trustee's Disclaimer.
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The Trustee makes no representation as to the validity or
adequacy of this Indenture or the Securities, it shall not be
accountable for the Company's use of the proceeds from the
Securities, and it shall not be responsible for any statement in
this Indenture or the Securities or any report or certificate
issued by the Company hereunder (other than the Trustee's
Certificate of Authentication), or the determination as to which
beneficial owners are entitled to receive any notices hereunder.
SECTION 7.05 Notice of Defaults.
If a Default occurs and is continuing and if it is known to
the Trustee, the Trustee shall mail to each Securityholder, as
their names and addresses appear on the Security Register, notice
of the Default within 90 days after it becomes known to the
Trustee unless such Default shall have been cured or waived.
Except in the case of a Default described in Section 6.01(1)
hereof, the Trustee may withhold such notice if and so long as a
committee of Trust Officers in good faith determines that the
withholding of such notice is in the interests of
Securityholders. The second sentence of this Section 7.05 shall
be in lieu of the proviso to TIA Section 315(b). Said proviso is
hereby expressly excluded from this Indenture, as permitted by
the TIA.
SECTION 7.06 Reports by Trustee to Holders.
Within 60 days after each May 31 beginning with the May 31
next following the date of this Indenture, the Trustee shall mail
to each Securityholder a brief report dated as of such May 31 in
accordance with and to the extent required under TIA Section 313.
A copy of each report at the time of its mailing to
Securityholders shall be filed with the Company, the SEC and each
securities exchange on which the Securities are listed. The
Company agrees to promptly notify the Trustee whenever the
Securities become listed on any securities exchange and of any
delisting thereof.
SECTION 7.07 Compensation and Indemnity.
The Company agrees:
(1) to pay to the Trustee from time to time such
compensation as shall be agreed in writing between the Company
and the Trustee for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust);
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(2) to reimburse the Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made
by the Trustee in accordance with any provision of this Indenture
(including the reasonable compensation and the expenses and
advances of its agents and counsel), including all reasonable
expenses and advances incurred or made by the Trustee in
connection with any membership on any creditors' committee,
except any such expense or advance as may be attributable to its
negligence or bad faith; and
(3) to indemnify the Trustee, its officers, directors and
shareholders, for, and to hold it harmless against, any and all
loss, liability or expense, incurred without negligence or bad
faith on its part, arising out of or in connection with the
acceptance or administration of this trust, including the costs
and expenses of defending itself against any claim or liability
in connection with the exercise or performance of any of its
powers or duties hereunder.
The Trustee shall have a claim and lien prior to the
Securities as to all property and funds held by it hereunder for
any amount owing it or any predecessor Trustee pursuant to this
Section 7.07, except with respect to funds held in trust for the
payment of principal of or interest on particular Securities.
The Company's payment obligations pursuant to this Section
7.07 are not subject to Article 10 of this Indenture and shall
survive the discharge of this Indenture. When the Trustee renders
services or incurs expenses after the occurrence of a Default
specified in Section 6.01 hereof, the compensation for services
and expenses are intended to constitute expenses of
administration under any Bankruptcy Law.
SECTION 7.08 Replacement of Trustee.
The Trustee may resign by so notifying the Company in
writing at least 30 days prior to the date of the proposed
resignation; provided, however, no such resignation shall be
effective until a successor Trustee has accepted its appointment
pursuant to this Section 7.08. The Holders of a majority in
aggregate principal amount of the Securities at the time
outstanding may remove the Trustee by so notifying the Trustee in
writing and may appoint a successor Trustee, which shall be
subject to the consent of the Company unless an Event of Default
has occurred and is continuing. The Trustee shall resign if:
(1) the Trustee fails to comply with Section 7.10 hereof;
(2) the Trustee is adjudged bankrupt or insolvent;
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(3) a receiver or public officer takes charge of the
Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall promptly
appoint a successor Trustee. A successor Trustee shall deliver a
written acceptance of its appointment to the retiring Trustee and
to the Company. Thereupon the resignation or removal of the
retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. The successor Trustee shall mail a
notice of its succession to Securityholders. Subject to payment
of all amounts owing to the Trustee under Section 7.07 hereof and
subject further to its lien under Section 7.07, the retiring
Trustee shall promptly transfer all property held by it as
Trustee to the successor Trustee. If a successor Trustee does
not take office within 30 days after the retiring Trustee resigns
or is removed, the retiring Trustee, the Company or the Holders
of a majority in aggregate principal amount of the Securities at
the time outstanding may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10 hereof, any
Securityholder may petition any court of competent jurisdiction
for its removal and the appointment of a successor Trustee.
SECTION 7.09 Successor Trustee by Merger.
If the Trustee consolidates with, merges or converts into,
or transfers all or substantially all its corporate trust
business or assets (including this Trusteeship) to, another
corporation, the resulting, surviving or transferee corporation
without any further act shall, with the concurrence of the
Company, be the successor Trustee.
SECTION 7.10 Eligibility; Disqualification.
The Trustee shall at all times satisfy the requirements of
TIA Sections 310(a)(1) and 310(a)(2). The Trustee shall have a
combined capital and surplus of at least $50,000,000 as set forth
in its most recent published annual report of condition. The
Trustee shall comply with TIA Section 310(b). In determining
whether the Trustee has conflicting interests as defined in TIA
Section 310(b)(1), the provisions contained in the proviso to TIA
Section 310(b)(1) shall be deemed incorporated herein.
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SECTION 7.11 Preferential Collection of Claims Against the
Company.
If and when the Trustee shall be or become a creditor of the
Company, the Trustee shall be subject to the provisions of the
TIA regarding the collection of claims against the Company.
ARTICLE 8
SATISFACTION AND DISCHARGE OF INDENTURE;
DEFEASANCE OF CERTAIN OBLIGATIONS; UNCLAIMED MONEYS
SECTION 8.01 Satisfaction and Discharge of Indenture.
The Company shall be deemed to have paid and discharged the
entire indebtedness on all Securities outstanding upon the
deposit referred to in subparagraph (A) below, and the provisions
of this Indenture with respect to the Securities shall no longer
be in effect (except as to (1) the rights of registration of
transfer, substitution and exchange of Securities, (2) the
replacement of apparently mutilated, defaced, destroyed, lost or
stolen Securities, (3) the rights of Holders to receive payments
of principal thereof and interest thereon, (4) the rights of the
Holders as beneficiaries hereof with respect to the property so
deposited with the Trustee payable to all or any of them, (5) the
obligation of the Company to maintain an office or agency for
payments on and registration of transfer of the Securities, and
(6) the rights, obligations and immunities of the Trustee
hereunder) and the Trustee shall, at the request and expense of
the Company, execute proper instruments acknowledging the same,
if:
(A) the Company has irrevocably deposited or caused to be
irrevocably deposited with the Trustee as trust funds in
trust, specifically pledged as security for, and dedicated
solely to, the benefit of the Holders (i) cash in an amount,
or (ii) U.S. Government Obligations, maturing as to
principal and interest at such times and in such amounts as
will ensure the availability of cash, or (iii) a combination
thereof, sufficient to pay the principal of, and interest
on, all Securities then outstanding, whether at the Stated
Maturity, upon acceleration or upon the redemption of the
Securities;
(B) no Default or Event of Default with respect to the
Securities has occurred and is continuing on the date of
such deposit or occurs as a result of such deposit;
(C) the Company has delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all
conditions precedent relating to the defeasance contemplated
by this provision have been complied with; and
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(D) If the deposit includes U. S. Government Obligations,
the Company has delivered to the Trustee (i) either a
private Internal Revenue Service ruling or an Opinion of
Counsel to the effect that the Holders will not recognize
income, gain or loss for federal income tax purposes as a
result of such deposit, defeasance and discharge and will be
subject to federal income tax on the same amount and in the
manner and at the same times as would have been the case if
such deposit, defeasance and discharge had not occurred, and
(ii) an Opinion of Counsel to the effect that (A) the
deposit shall not result in the Company, the Trustee or the
trust being deemed to be an "investment company" under the
Investment Company Act of 1940, as amended, and (B) such
deposit creates a valid trust in which the Holders of the
Securities have the sole beneficial ownership interest or
that the Holders of the Securities have a nonavoidable first
priority security interest in such trust. Notwithstanding
the foregoing, the Company's obligations to pay principal of
and interest, including Additional Interest, if any, on the
Securities shall continue until the Internal Revenue Service
ruling or Opinion of Counsel referred to in clause (i) above
is provided with regard to and without reliance upon such
obligations continuing to be obligations of the Company.
SECTION 8.02 Application by Trustee of Funds Deposited for
Payment of Securities.
Subject to Section 8.04 and Article 10 of this Indenture,
all moneys deposited with the Trustee pursuant to Section 8.01
hereof shall be held in trust and applied by it to the payment,
either directly or through any Paying Agent (including the
Company acting as its own Paying Agent), to the Holders of the
particular Securities for the payment or redemption of which such
moneys have been deposited with the Trustee, of all sums due and
to become due thereon for principal and interest; but such money
need not be segregated from other funds except to the extent
required by law.
SECTION 8.03 Repayment of Moneys Held by Paying Agent.
In connection with the satisfaction and discharge of this
Indenture, all moneys then held by any Paying Agent under this
Indenture shall, upon demand of the Company, be repaid to it or
paid to the Trustee, and thereupon such Paying Agent shall be
released from all further liability with respect to such moneys.
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
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after the date when such principal or interest shall have become
due and payable shall, upon the written request of the Company
and unless otherwise required by mandatory provisions of
applicable escheat or abandoned or unclaimed property laws, be
repaid to the Company by the Trustee or such Paying Agent, and
the Holder of such Security shall, unless otherwise required by
mandatory provisions of applicable escheat or abandoned or
unclaimed property laws, thereafter look only to the Company for
any payment which such Holder may be entitled to collect, and all
liability of the Trustee or any Paying Agent with respect to such
moneys shall thereupon cease.
ARTICLE 9
AMENDMENTS
SECTION 9.01 Without Consent of Holders.
From time to time, when authorized by a resolution of the
Board of Directors, the Company and the Trustee, without notice
to or the consent of the Holders of the Securities issued
hereunder, may amend or supplement this Indenture or the
Securities:
(1) to cure any ambiguity, defect or inconsistency;
(2) to comply with Article 5 hereof;
(3) to provide for uncertificated Securities in addition to
or in place of certificated Securities;
(4) to make any other change that does not adversely affect
the rights of any Securityholder;
(5) to comply with any requirement of the SEC in connection
with the qualification of this Indenture under the TIA; or
(6) to set forth the terms and conditions, which shall not
be inconsistent with this Indenture, of the series of Securities
(other than the Series A Securities) that are to be issued
hereunder and the form of Securities of such series.
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
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amendment or waiver, the Company and the Trustee may amend this
Indenture or the Securities or may waive future compliance by the
Company with any provisions of this Indenture or the Securities
of such series. However, without the consent of each
Securityholder affected, such an amendment or waiver may not:
(1) reduce the principal amount of the Securities, or
reduce the principal amount of the Securities the Holders of
which must consent to an amendment of this Indenture or a waiver;
(2) change the Stated Maturity of the principal of, or the
interest or rate of interest on the Securities, change adversely
to the Holders the redemption provisions of Article 3 hereof or
in the Securities, or impair the right to institute suit for the
enforcement of any such payment or make any Security payable in
money or securities other than that stated in the Security;
(3) make any change in Article 10 hereof that adversely
affects the rights of the Holders of the Securities or any change
to any other section hereof that adversely affects their rights
under Article 10 hereof;
(4) waive a Default in the payment of the principal of, or
interest on, any Security; or
(5) change Section 6.07 hereof.
It shall not be necessary for the consent of the Holders
under this Section 9.02 to approve the particular form of any
proposed amendment, but it shall be sufficient if such consent
approves the substance thereof.
If certain Holders agree to defer or waive certain
obligations of the Company hereunder with respect to Securities
held by them, such deferral or waiver shall not affect the rights
of any other Holder to receive the payment or performance
required hereunder in a timely manner, unless such deferral or
waiver complies with the requirements of this Section 9.02.
After an amendment or waiver under this Section 9.02 becomes
effective, the Company shall mail to each Holder affected by such
amendment or waiver a notice briefly describing the amendment or
waiver. Any failure of the Company to mail such notices, or any
defect therein, shall not, however, in any way impair or affect
the validity of such amendment or waiver.
SECTION 9.03 Compliance with Trust Indenture Act.
Every supplemental indenture executed pursuant to this
Article 9 shall comply with the TIA.
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SECTION 9.04 Revocation and Effect Of Consents, Waivers and
Actions.
Until an amendment, waiver or other action by Holders
becomes effective, a consent to it or any other action by a
Holder of a Security hereunder is a continuing consent by the
Holder and every subsequent Holder of that Security or portion of
the Security that evidences the same obligation as the consenting
Holder's Security, even if notation of the consent, waiver or
action is not made on the Security. However, any such Holder or
subsequent Holder may revoke the consent, waiver or action as to
such Holder's Security or portion of the Security if the Trustee
receives the notice of revocation before the consent of the
requisite aggregate principal amount of the Securities at the
time outstanding has been obtained and not revoked. After an
amendment, waiver or action becomes effective, it shall bind
every Securityholder, except as provided in Section 9.02 hereof.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders entitled to
consent to any amendment or waiver. If a record date is fixed,
then, notwithstanding the first two sentences of the immediately
preceding paragraph, those Persons who were Holders at such
record date or their duly designated proxies, and only those
Persons, shall be entitled to consent to such amendment,
supplement or waiver or to revoke any consent previously given,
whether or not such Persons continue to be Holders after such
record date.
SECTION 9.05 Notation on or Exchange of Securities.
Securities authenticated and made available for delivery
after the execution of any supplemental indenture pursuant to
this Article 9 may, and shall, if required by the Trustee, bear a
notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall
so determine, new Securities of any series so modified as to
conform, in the opinion of the Trustee and the Board of
Directors, to any such supplemental indenture may be prepared and
executed by the Company and authenticated and made available for
delivery by the Trustee in exchange for outstanding Securities of
the same series.
SECTION 9.06 Trustee to Sign Supplemental Indentures.
The Trustee shall sign any supplemental indenture authorized
pursuant to this Article 9 if the supplemental indenture does not
adversely affect the rights, duties, liabilities or immunities of
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
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Officer's Certificate and Opinion of Counsel stating that such
supplemental indenture is authorized or permitted by this
Indenture.
SECTION 9.07 Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this
Article 9, this Indenture shall be modified in accordance
therewith, and such supplemental indenture shall form a part of
this Indenture for all purposes and every Holder of Securities
theretofore or thereafter authenticated and made available for
delivery hereunder shall be bound thereby.
ARTICLE 10
SUBORDINATION
SECTION 10.01 Securities Subordinated to Senior Indebtedness.
Notwithstanding the provisions of Section 6.01 hereof or any
other provision herein or in the Securities, the Company and the
Trustee and each Holder by his acceptance thereof (a) covenant
and agree that all payments by the Company of the principal of
and interest (which term for purposes of this Article 10 shall
include Additional Interest, if any, and any additional accrued
interest) on the Securities shall be subordinated in accordance
with the provisions of this Article 10 to the prior payment in
full, in cash or cash equivalents, of all amounts payable on
Senior Indebtedness, and (b) acknowledge that holders of Senior
Indebtedness are or shall be relying on this Article 10.
SECTION 10.02 Priority and Payment of Proceeds in Certain
Events; Remedies Standstill.
(a) Upon any payment or distribution of assets or
securities of the Company, as the case may be, of any kind or
character, whether in cash, property or securities, upon any
dissolution or winding up or total or partial liquidation or
reorganization of the Company, whether voluntary or involuntary,
or in bankruptcy, insolvency, receivership or other proceedings,
all amounts payable on Senior Indebtedness (including any
interest accruing on such Senior Indebtedness subsequent to the
commencement of a bankruptcy, insolvency or similar proceeding)
shall first be paid in full in cash, or payment provided for in
cash or cash equivalents, before the Holders or the Trustee on
behalf of the Holders shall be entitled to receive from the
Company any payment of principal of or interest on or any other
amounts in respect of the Securities or distribution of any
assets or securities. Before any payment may be made by the
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
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securities of the Company of any kind or character, whether in
cash, property or securities, to which the Holders or the Trustee
on their behalf would be entitled, except for the provisions of
this Article 10, shall be made by the Company or by any receiver,
trustee in bankruptcy, liquidating trustee, agent or other Person
making such payment or distribution first to the holders of all
Senior Indebtedness or their representatives to the extent
necessary to pay all Senior Indebtedness in full after giving
effect to any concurrent payment or distribution to the holders
of Senior Indebtedness.
(b) No direct or indirect payment by or on behalf of the
Company of principal of or interest on the Securities whether
pursuant to the terms of the Securities or upon acceleration or
otherwise shall be made if, at the time of such payment, there
exists any default in the payment of all or any portion of any
Senior Indebtedness, or any other default affecting Senior
Indebtedness permitting its acceleration, as the result of which
the maturity of Senior Indebtedness has been accelerated, and the
Trustee has received written notice from any trustee,
representative or agent for the holders of the Senior
Indebtedness or the holders of at least a majority in principal
amount of the Senior Indebtedness at the time outstanding of such
default and acceleration, and such default shall not have been
cured or waived by or on behalf of the holders of such Senior
Indebtedness.
(c) If, notwithstanding the foregoing provision
prohibiting such payment or distribution, the Trustee or any
Holder shall have received any payment on account of the
principal of or interest on the Securities (other than as
permitted by subsections (a) and (b) of this Section 10.02) when
such payment is prohibited by this Section 10.02 and before all
amounts payable on Senior Indebtedness are paid in full in cash
or cash equivalents, then and in such event (subject to the
provisions of Section 10.08 hereof) such payment or distribution
shall be received and held in trust for the holders of Senior
Indebtedness and shall be paid over or delivered first to the
representatives of the holders of the Senior Indebtedness
remaining unpaid to the extent necessary to pay such Senior
Indebtedness in full in cash or cash equivalents.
Upon any payment or distribution of assets or securities
referred to in this Article 10, the Trustee and the Holders shall
be entitled to rely upon any order or decree of a court of
competent jurisdiction in which such dissolution, winding up,
liquidation or reorganization proceedings are pending, and upon a
certificate of the receiver, trustee in bankruptcy, liquidating
trustee, agent or other Person making any such payment or
distribution, delivered to the Trustee for the purpose of
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
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thereon, the amount or amounts paid or distributed thereon and
all other facts pertinent thereto or to this Article 10.
SECTION 10.03 Payments which May Be Made Prior to Notice.
Nothing in this Article 10 or elsewhere in this Indenture
shall prevent (i) the Company, except under the conditions
described in Section 10.02 hereof, from making payments of
principal of and interest on the Securities or from depositing
with the Trustee any monies for such payments, or (ii) the
application by the Trustee of any monies deposited with it for
the purpose of making such payments of principal of and interest
on the Securities, to the Holders entitled thereto, unless at
least one day prior to the date when such payment would otherwise
(except for the prohibitions contained in Section 10.02 hereof)
become due and payable, the Trustee shall have received the
written notice provided for in Section 10.02(b) hereof.
SECTION 10.04 Rights of Holders of Senior Indebtedness Not to Be
Impaired.
No right of any present or future holder of any Senior
Indebtedness to enforce subordination as herein provided shall at
any time or in any way be prejudiced or impaired by any good
faith act or omission to act by any such holder, or by any
noncompliance by the Company with the terms and provisions and
covenants herein regardless of any knowledge thereof any such
holder may have or otherwise be charged with.
The provisions of this Article 10 are intended to be for the
benefit of, and shall be enforceable directly by, the holders of
Senior Indebtedness.
Notwithstanding anything to the contrary in this Article 10,
to the extent the Holders or the Trustee have paid over or
delivered to any holder of Senior Indebtedness any payment or
distribution received on account of the principal of, or interest
on, the Securities to which any other holder of Senior
Indebtedness shall be entitled to share in accordance with
Section 10.02 hereof, no holder of Senior Indebtedness shall have
a claim or right against the Holders or the Trustee with respect
to any such payment or distribution or as a result of the failure
to make payments or distributions to such other holder of Senior
Indebtedness.
SECTION 10.05 Trustee May Take Action to Effectuate
Subordination.
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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
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
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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
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)
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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,
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Department B
The Company or the Trustee, by giving notice to the other,
may designate additional or different addresses for subsequent
notices of communications. Upon request from the holder, if any,
of Senior Indebtedness, the Company shall notify such holder of
any such additional or different addresses of which the Company
receives notice from the Trustee.
Any notice or communication given to a Securityholder shall
be mailed to the Securityholder at the Securityholder's address
as it appears on the Register of the Registrar and shall be
sufficiently given if mailed within the time prescribed.
Failure to mail a notice or communication to a
Securityholder or any defect in it shall not affect its
sufficiency with respect to other Securityholders. If a notice or
communication is mailed in the manner provided above, it is duly
given, whether or not received by the addressee.
If the Company mails a notice or communication to the
Securityholders, it shall mail a copy to the Trustee and each
Registrar, Paying Agent or co-Registrar.
SECTION 11.03 Communication by Holders with Other Holders.
Securityholders may communicate, pursuant to TIA Section
312(b), with other Securityholders with respect to their rights
under this Indenture or the Securities. The Company, the Trustee,
the Registrar, the Paying Agent and anyone else shall have the
protection of TIA Section 312(c).
SECTION 11.04 Certificate and Opinion as to Conditions
Precedent.
Upon any request or application by the Company to the
Trustee to take any action under this Indenture, the Company
shall furnish to the Trustee:
(1) an Officer's Certificate (complying with Section 11.05
hereof) stating that, in the opinion of such Officer, all
conditions precedent to the taking of such action have been
complied with; and
(2) if appropriate, an Opinion of Counsel (complying with
Section 11.05 hereof) stating that, in the opinion of such
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
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<PAGE>
principal or interest installment shall accrue for the
intervening period; except that if any payment is due on a Legal
Holiday and the next succeeding day that is not a Legal Holiday
is in the next succeeding calendar year, such payment shall be
made on the Business Day immediately preceding such Legal
Holiday.
SECTION 11.09 Governing Law.
This Indenture and the Securities shall be governed by and
construed in accordance with the laws of the State of New York,
as applied to contracts made and performed within the State of
New York, without regard to its principles of conflicts of laws.
SECTION 11.10 No Recourse Against Others.
No director, officer, employee or stockholder, as such, of
the Company shall have any liability for any obligations of the
Company under the Securities or this Indenture or for any claim
based on, in respect of or by reason of such obligations or their
creation. By accepting a Security, each Securityholder shall
waive and release all such liability. The waiver and release
shall be part of the consideration for the issue of the
Securities.
SECTION 11.11 Successors.
All agreements of the Company in this Indenture and the
Securities shall bind its successors and assigns. All agreements
of the Trustee in this Indenture shall bind its successors and
assigns.
SECTION 11.12 Multiple Original Copies of this Indenture.
The parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together
represent the same agreement. Any signed copy shall be sufficient
proof of this Indenture.
SECTION 11.13 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another
indenture, loan or debt agreement of the Company or any
Subsidiary. Any such indenture, loan or debt agreement may not be
used to interpret this Indenture.
SECTION 11.14 Table of Contents; Headings, Etc.
52
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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.
SECTION 11.15 Benefits of the Indenture.
Nothing in this Indenture or in the Securities, express or
implied, shall give to any person, other than the parties hereto
and their successors hereunder and the Holders, any benefit or
any legal or equitable right, remedy or claim under this
Indenture, except as expressly provided in Article 10 hereof.
SIGNATURES
IN WITNESS WHEREOF, the undersigned, being duly authorized,
have executed this Indenture on behalf of the respective parties
hereto as of the date first above written.
PENNSYLVANIA ELECTRIC COMPANY
By: s/Don W. Myers
Name: Don W. Myers
Title: Vice President
UNITED STATES TRUST COMPANY OF NEW YORK
as Trustee
By: s/Louis P. Young
Name: Louis P. Young
Title: Vice President
53
<PAGE>
[FORM OF FACE OF THE SECURITY]
PENNSYLVANIA ELECTRIC COMPANY
8 3/4% Deferrable Interest 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 July 5, 2043.
Interest Payment Dates: the last day of each month
commencing on July 31, 1994, 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:
________________________
By:
__________________________
Name:
_________________________
54
<PAGE>
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: __________________________
Authorized Signatory
55
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[FORM OF REVERSE SIDE OF SECURITY]
8 3/4% Deferrable Interest 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 July 31, 1994.
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
July 5, 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,
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<PAGE>
the Company may pay principal and interest by its check payable
in such money. It may mail an interest payment to a
Securityholder's registered address.
4. Paying Agent and Registrar
Initially, the Trustee will act as Paying Agent and
Registrar. The Company may appoint and change any Paying Agent or
Registrar without notice, other than notice to the Trustee. The
Company or an Affiliate of the Company may act as Paying Agent,
Registrar or co-Registrar.
5. Indenture
The Company issued the Series A Securities under an
Indenture, dated as of July 1, 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 $108,247,425 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 July 5, 1999, as a whole, or from
time to time in part. The amount to be paid on redemption (the
"Redemption Price") shall be equal to 100% of the principal
amount thereof plus accrued and unpaid interest, and Additional
Interest, if any, and accrued interest thereon, to the Redemption
Date. The Company must notify the Trustee of its election to
redeem the Series A Securities at least 45 days before the
Redemption Date.
Under certain circumstances described in the Indenture, the
Company may be required to redeem the Series A Securities.
7. Notice of Redemption
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<PAGE>
Notice of redemption will be mailed at least 30 days but not
more than 90 days before the Redemption Date to each Holder of
Series A Securities to be redeemed at the Holder's registered
address. Interest on the Securities to be redeemed by the
Company will cease to accrue after the Redemption Date. Series A
Securities in denominations larger than $25.00 of principal
amount may be redeemed in part but only in integral multiples of
$25.00 of principal amount.
8. Subordination
The Securities are subordinated to Senior Indebtedness (as
that term - essentially, debt for borrowed money - is defined in
the Indenture). To the extent provided in the Indenture, Senior
Indebtedness must be paid before the Securities may be paid. The
Company agrees, and each Securityholder by accepting a Security
agrees, to such subordination and authorizes the Trustee to give
it effect.
9. Denominations; Transfer; Exchange
The Series A Securities are in registered form, without
coupons, in denominations of $25.00 of principal amount and
integral multiples of $25.00. A Holder may transfer or exchange
Series A Securities in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay any
taxes and fees required by law or permitted by the Indenture. The
Registrar need not transfer or exchange any Securities for a
period of five days before notice of redemption is given or any
Securities that are selected for redemption (except, in the case
of a Security to be redeemed in part, the portion of the Security
not to be redeemed).
10. Persons Deemed Owners
The registered Holder of this Security may be treated as the
owner of this Security for all purposes.
11. Amendment; Waiver
Subject to certain exceptions in the Indenture which require
the consent of every Holder, (i) the Indenture or the Series A
Securities may be amended with the written consent of the Holders
of a majority in aggregate principal amount of the Series A
Securities at the time outstanding, and (ii) certain defaults or
noncompliance with certain provisions may be waived with the
written consent of the Holders of a majority in aggregate
principal amount of the Series A Securities at the time
outstanding. Subject to certain exceptions in the Indenture,
without the consent of any Securityholder, the Company and the
Trustee may amend the Indenture or the Securities to cure any
ambiguity, defect or inconsistency, to bind a successor to the
obligations of the Indenture, to provide for uncertificated
Securities in addition to certificated Securities, to comply with
58
<PAGE>
any requirements of the Securities and Exchange Commission in
connection with the qualification of the Indenture under the TIA,
to make any change that does not adversely affect the rights of
any Securityholder or to provide for the issuance of any other
series of Securities. Amendments bind all Holders and subsequent
Holders.
12. Defaults and Remedies
Under the Indenture, Events of Default include (i) default
in payment of the principal amount, or interest, in respect of
the Securities when the same becomes due and payable subject, in
the case of interest, to the grace period and any extension
period provided for in the Indenture; (ii) failure by the Company
to comply with its other covenants in the Indenture or the
Securities, subject to notice and lapse of time; and (iii)
certain events of bankruptcy or insolvency of the Company. If an
Event of Default occurs and is continuing, the Trustee, or the
Holders of at least a majority in aggregate principal amount of
the Securities at the time outstanding, may declare all the
Securities to be due and payable immediately. Certain events of
bankruptcy or insolvency are Events of Default which will result
in the Securities becoming due and payable immediately upon the
occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may
refuse to enforce the Indenture or the Securities unless it
receives reasonable indemnity and security. Subject to certain
limitations, Holders of a majority in aggregate principal amount
of the Securities at the time outstanding may direct the Trustee
in its exercise of any trust or power. The Trustee may withhold
from Securityholders notice of any continuing Default (except a
Default in paying principal and/or interest) if it determines
that withholding notice is in their interests.
13. Trustee Dealings with the Company
Subject to certain limitations imposed by the TIA, the
Trustee, in its individual or any other capacity, may become the
owner or pledgee of Securities and may otherwise deal with and
collect obligations owed to it by the Company or its Affiliates
and may otherwise deal with the Company or its Affiliates with
the same rights it would have if it were not Trustee.
14. No Recourse Against Others
A director, officer, employee or stockholder, as such, of
the Company shall not have any liability for any obligations of
the Company under the Securities or the Indenture or for any
claim based on, in respect of or by reason of such obligations or
their creation. By accepting a Security, each Securityholder
waives and releases all such liability. The waiver and release
are part of the consideration for the issue of the Securities.
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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.
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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)
61
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INDENTURE BETWEEN PENNSYLVANIA ELECTRIC COMPANY
AND UNITED STATES TRUST COMPANY OF NEW YORK
DATED AS OF JULY 1, 1994
TABLE OF CONTENTS
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01 Definitions. . . . . . . . . . . . . . . 1
SECTION 1.02 Other Definitions. . . . . . . . . . . . 6
SECTION 1.03 Incorporation by Reference of Trust
Indenture Act. . . . . . . . . . . . . . 7
SECTION 1.04 Rules of Construction. . . . . . . . . . 7
SECTION 1.05 Acts of Holders. . . . . . . . . . . . . 8
ARTICLE 2
THE SECURITIES; THE SERIES A SECURITIES
SECTION 2.01 Issue of Securities Generally. . . . . . 9
SECTION 2.02 Form of the Series A Securities;
Denominations; Global Security. . . . . 10
SECTION 2.03 Execution and Authentication. . . . . . 11
SECTION 2.04 Registrar and Paying Agent. . . . . . 12
SECTION 2.05 Paying Agent to Hold Money in Trust. . 13
SECTION 2.06 Securityholder Lists. . . . . . . . . . 13
SECTION 2.07 Transfer and Exchange. . . . . . . . . 13
SECTION 2.08 Replacement Securities. . . . . . . . . 14
SECTION 2.09 Outstanding Securities; Determinations
of Holders' Action. . . . . . . . . . . 15
SECTION 2.10 Temporary Securities. . . . . . . . . . 16
SECTION 2.11 Cancellation. . . . . . . . . . . . . . 16
SECTION 2.12 CUSIP Numbers. . . . . . . . . . . . . 17
SECTION 2.13 Defaulted Interest. . . . . . . . . . . 17
ii
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ARTICLE 3
REDEMPTION
SECTION 3.01 Right to Redeem; Notice to Trustee. . . 17
SECTION 3.02 Selection of Securities to be Redeemed. 18
SECTION 3.03 Notice of Redemption. . . . . . . . . . 19
SECTION 3.04 Effect of Notice of Redemption. . . . . 19
SECTION 3.05 Deposit of Redemption Price. . . . . . 20
SECTION 3.06 Securities Redeemed in Part. . . . . . 20
ARTICLE 4
COVENANTS
SECTION 4.01 Payment of the Securities. . . . . . . 20
SECTION 4.02 Prohibition Against Dividends, etc.
During an Event of Default. . . . . . . 23
SECTION 4.03 SEC Reports. . . . . . . . . . . . . . 23
SECTION 4.04 Compliance Certificates. . . . . . . . 23
SECTION 4.05 Further Instruments and Acts. . . . . . 24
SECTION 4.06 Investment Company Act. . . . . . . . . 24
SECTION 4.07 Payments for Consents. . . . . . . . . 24
ARTICLE 5
SUCCESSOR CORPORATION
SECTION 5.01 When the Company May Merge, Etc. . . . 24
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01 Events of Default. . . . . . . . . . . 25
SECTION 6.02 Acceleration. . . . . . . . . . . . . . 27
SECTION 6.03 Other Remedies. . . . . . . . . . . . . 27
SECTION 6.04 Waiver of Past Defaults. . . . . . . . 28
SECTION 6.05 Control by Majority. . . . . . . . . . 28
SECTION 6.06 Limitation on Suits. . . . . . . . . . 28
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SECTION 6.07 Rights of Holders to Receive Payment. . 29
SECTION 6.08 Collection Suit by the Trustee. . . . . 29
SECTION 6.09 The Trustee May File Proofs of Claim. . 29
SECTION 6.10 Priorities. . . . . . . . . . . . . . . 30
SECTION 6.11 Undertaking for Costs. . . . . . . . . 30
SECTION 6.12 Waiver of Stay, Extension or
Usury Laws. . . . . . . . . . . . . . . 31
ARTICLE 7
THE TRUSTEE
SECTION 7.01 Duties of the Trustee. . . . . . . . . 31
SECTION 7.02 Rights of the Trustee. . . . . . . . . 32
SECTION 7.03 Individual Rights of the Trustee. . . . 33
SECTION 7.04 The Trustee's Disclaimer. . . . . . . . 34
SECTION 7.05 Notice of Defaults. . . . . . . . . . . 34
SECTION 7.06 Reports by Trustee to Holders. . . . . 34
SECTION 7.07 Compensation and Indemnity. . . . . . . 34
SECTION 7.08 Replacement of Trustee. . . . . . . . . 35
SECTION 7.09 Successor Trustee by Merger. . . . . . 36
SECTION 7.10 Eligibility; Disqualification. . . . . 36
SECTION 7.11 Preferential Collection of Claims
Against the Company. . . . . . . . . . 37
ARTICLE 8
SATISFACTION AND DISCHARGE OF INDENTURE;
DEFEASANCE OF CERTAIN OBLIGATIONS; UNCLAIMED MONEYS
SECTION 8.01 Satisfaction and Discharge of
Indenture. . . . . . . . . . . . . . . 37
SECTION 8.02 Application by Trustee of Funds
Deposited for Payment of Securities. . 38
SECTION 8.03 Repayment of Moneys Held by Paying
Agent. . . . . . . . . . . . . . . . . 38
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SECTION 8.04 Return of Moneys Held by the Trustee and
Paying Agent Unclaimed for Three Years. 38
ARTICLE 9
AMENDMENTS
SECTION 9.01 Without Consent of Holders. . . . . . . 39
SECTION 9.02 With Consent of Holders. . . . . . . . 39
SECTION 9.03 Compliance with Trust Indenture Act. . 40
SECTION 9.04 Revocation and Effect Of Consents,
Waivers and Actions. . . . . . . . . . 41
SECTION 9.05 Notation on or Exchange of Securities. 41
SECTION 9.06 Trustee to Sign Supplemental
Indentures. . . . . . . . . . . . . . . 41
SECTION 9.07 Effect of Supplemental Indentures. . . 42
ARTICLE 10
SUBORDINATION
SECTION 10.01 Securities Subordinated to Senior
Indebtedness. . . . . . . . . . . . . . 42
SECTION 10.02 Priority and Payment of Proceeds in
Certain Events; Remedies Standstill. . 42
SECTION 10.03 Payments which May Be Made Prior to
Notice. . . . . . . . . . . . . . . . . 44
SECTION 10.04 Rights of Holders of Senior Indebtedness
Not to Be Impaired. . . . . . . . . . . 44
SECTION 10.05 Trustee May Take Action to Effectuate
Subordination. . . . . . . . . . . . . 44
SECTION 10.06 Subrogation. . . . . . . . . . . . . . 45
SECTION 10.07 Obligations of Company Unconditional;
Reinstatement. . . . . . . . . . . . . 45
SECTION 10.08 Trustee Entitled to Assume Payments Not
Prohibited in Absence of Notice. . . . 46
SECTION 10.09 Right of Trustee to Hold Senior
Indebtedness. . . . . . . . . . . . . . 47
ARTICLE 11
v
<PAGE>
MISCELLANEOUS
SECTION 11.01 Trust Indenture Act Controls . . . . . 47
SECTION 11.02 Notices. . . . . . . . . . . . . . . . 47
SECTION 11.03 Communication by Holders with Other
Holders. . . . . . . . . . . . . . . . 48
SECTION 11.04 Certificate and Opinion as to Conditions
Precedent. . . . . . . . . . . . . . . 48
SECTION 11.05 Statements Required in Certificate or
Opinion. . . . . . . . . . . . . . . . 48
SECTION 11.06 Severability Clause. . . . . . . . . . 49
SECTION 11.07 Rules by Trustee, Paying Agent and
Registrar. . . . . . . . . . . . . . . 49
SECTION 11.08 Legal Holidays. . . . . . . . . . . . . 49
SECTION 11.09 Governing Law. . . . . . . . . . . . . 50
SECTION 11.10 No Recourse Against Others. . . . . . . 50
SECTION 11.11 Successors. . . . . . . . . . . . . . . 50
SECTION 11.12 Multiple Original Copies of this
Indenture. . . . . . . . . . . . . . . 50
SECTION 11.13 No Adverse Interpretation of Other
Agreements. . . . . . . . . . . . . . . 50
SECTION 11.14 Table of Contents; Headings, Etc. . . . 50
SECTION 11.15 Benefits of the Indenture. . . . . . . 51
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . 51
[FORM OF FACE OF THE SECURITY] . . . . . . . . . . . . . . 52
[FORM OF REVERSE SIDE OF SECURITY] . . . . . . . . . . . . 53
1. Payment of Interest and Additional Interest . . . 53
2. Deferral of Interest . . . . . . . . . . . . . . 53
3. Method of Payment . . . . . . . . . . . . . . . . 53
4. Paying Agent and Registrar . . . . . . . . . . . 54
5. Indenture . . . . . . . . . . . . . . . . . . . . 54
6. Redemption . . . . . . . . . . . . . . . . . . . 54
7. Notice of Redemption . . . . . . . . . . . . . . 54
8. Subordination . . . . . . . . . . . . . . . . . . 55
9. Denominations; Transfer; Exchange . . . . . . . . 55
10. Persons Deemed Owners . . . . . . . . . . . . . . 55
vi
<PAGE>
11. Amendment; Waiver . . . . . . . . . . . . . . . . 55
12. Defaults and Remedies . . . . . . . . . . . . . . 56
13. Trustee Dealings with the Company . . . . . . . . 56
14. No Recourse Against Others . . . . . . . . . . . 56
15. Abbreviations . . . . . . . . . . . . . . . . . . 57
16. Unclaimed Money . . . . . . . . . . . . . . . . . 57
17. Discharge Prior to Maturity . . . . . . . . . . . 57
18. Successor . . . . . . . . . . . . . . . . . . . . 57
19. Governing Law . . . . . . . . . . . . . . . . . . 57
ASSIGNMENT FORM . . . . . . . . . . . . . . . . . . . . . . 58
vii
<PAGE>
Exhibit A-9(a)
[TEMPORARY CERTIFICATE]
PENNSYLVANIA ELECTRIC COMPANY
8 3/4% Deferrable Interest Subordinated Debentures, Series A,
due 2043
No. 1 $108,247,425.00
Pennsylvania Electric Company, a Pennsylvania corporation (the
"Company", which term includes any successor corporation under
the Indenture hereinafter referred to), promises to pay to
Penelec Capital, L. P. or registered assigns, the principal
amount of One Hundred Eight Million Two Hundred Forty-Seven
Thousand Four Hundred Twenty-Five and 00/100 Dollars on July 5,
2043.
Interest Payment Dates: the last day of each month
commencing on July 31, 1994, 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: s/Don W. Myers
Name: Don W. Myers
Title: Vice President
By: s/M.A. Nalewako
Name: M. A. Nalewako
<PAGE>
Title: Assistant Secretary
Dated: July 5, 1994
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred
to in the within-mentioned Indenture.
UNITED STATES TRUST COMPANY OF NEW YORK
By: s/Louis P. Young
Louis P. Young, Vice President,
Authorized Signatory
<PAGE>
PENNSYLVANIA ELECTRIC COMPANY
8 3/4% Deferrable Interest 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 July 31, 1994.
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
July 5, 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
<PAGE>
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 July 1, 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 $108,247,425 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 July 5, 1999, as a whole, or from
time to time in part. The amount to be paid on redemption (the
"Redemption Price") shall be equal to 100% of the principal
amount thereof plus accrued and unpaid interest, and Additional
Interest, if any, and accrued interest thereon, to the Redemption
Date. The Company must notify the Trustee of its election to
redeem the Series A Securities at least 45 days before the
Redemption Date.
Under certain circumstances described in the Indenture, the
Company may be required to redeem the Series A Securities.
7. Notice of Redemption
Notice of redemption will be mailed at least 30 days but not
more than 90 days before the Redemption Date to each Holder of
Series A Securities to be redeemed at the Holder's registered
address. Interest on the Securities to be redeemed by the
<PAGE>
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
any Securityholder or to provide for the issuance of any other
series of Securities. Amendments bind all Holders and subsequent
Holders.
<PAGE>
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.
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).
<PAGE>
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.
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below: (I) or (we)
assign and transfer this Security to:
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
_________________________________
(Insert assignee's social security or tax I.D. number)
_________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint ______________________________ agent to
transfer this Security on the books of the Company. The agent
may substitute another to act for him.
Dated: _____________ Signature: _______________________
(Sign exactly as your name appears
on the other side of this Security)
Signature Guaranty: ________________________
(New York commercial bank or trust company or member
of an accepted medallion guaranty)
<PAGE>
Exhibit B-1(a)
PAYMENT AND GUARANTEE AGREEMENT
THIS PAYMENT AND GUARANTEE AGREEMENT ("Guarantee
Agreement"), dated as of July 5, 1994, is executed and delivered
by Pennsylvania Electric Company, a Pennsylvania corporation (the
"Guarantor"), for the benefit of the Holders (as defined below)
from time to time of the Preferred Securities (as defined below)
of Penelec Capital, L.P., a Delaware limited partnership (the
"Issuer").
WHEREAS, the Issuer is issuing on the date hereof
$105,000,000 aggregate stated liquidation preference of preferred
limited partner interests of a series designated the 8 3/4%
Cumulative Monthly Income Preferred Securities, Series A (the
"Preferred Securities"), and the Guarantor desires to enter into
this Guarantee Agreement for the benefit of the Holders, as
provided herein;
WHEREAS, the Issuer will use (i) the proceeds from the
issuance and sale of the Preferred Securities to the Holders and
(ii) the capital contributions relating to the issuance of the
Issuer's general partner interests (the "Common Securities") to
Penelec Preferred Capital, Inc., a Delaware corporation and a
wholly-owned subsidiary of the Guarantor (the "General Partner"),
to purchase Subordinated Debentures (as defined below) issued by
the Guarantor under the Indenture (as defined below); and
WHEREAS, the Guarantor desires irrevocably and
unconditionally to agree to the extent set forth herein to pay to
the Holders the Guarantee Payments (as defined below) and to make
certain other payments on the terms and conditions set forth
herein.
NOW, THEREFORE, in consideration of the premises and other
consideration, receipt of which is hereby acknowledged, the
Guarantor, intending to be legally bound hereby, agrees as
follows:
ARTICLE I
As used in this Guarantee Agreement, the terms set forth
below shall, unless the context otherwise requires, have the
following meanings. Capitalized terms used but not otherwise
defined herein shall have the meanings assigned to such terms in
the Issuer's Amended and Restated Limited Partnership Agreement
dated as of June 27, 1994 (the "Limited Partnership Agreement").
"Guarantee Payments" shall mean the following payments,
without duplication, to the extent not paid by the Issuer: (i)
any accumulated and unpaid monthly distributions on the Preferred
Securities (except for monthly distributions which are not paid
during an Extension Period (as defined in the Indenture)) to the
extent that the Issuer has sufficient cash on hand to permit such
1
<PAGE>
payments and funds legally available therefor, (ii) the
Redemption Price (as defined below) payable with respect to any
Preferred Securities called for redemption by the Issuer to the
extent that the Issuer has sufficient cash on hand to permit such
payments and funds legally available therefor, (iii) upon a
liquidation of the Issuer other than in connection with a
distribution of Subordinated Debentures (a "Distribution Event")
following a dissolution of the Issuer resulting from a Special
Event (as defined in the Limited Partnership Agreement), the
lesser of (a) the Liquidation Distribution (as defined below) and
(b) the amount of assets of the Issuer available for distribution
to Holders in liquidation of the Issuer, and (iv) any Additional
Amounts (as defined in the Limited Partnership Agreement) payable
by the Issuer in respect of the Preferred Securities.
"Holder" shall mean any holder from time to time of any
Preferred Securities of the Issuer; provided, however, that in
determining whether the Holders of the requisite percentage of
Preferred Securities have given any request, notice, consent or
waiver hereunder, "Holder" shall not include the Guarantor or any
entity owned more than 50% by the Guarantor, either directly or
indirectly.
"Indenture" shall mean the Indenture dated as of July 1,
1994 between the Guarantor and United States Trust Company of New
York, as Trustee.
"Liquidation Distribution" shall mean the aggregate of the
stated liquidation preference of $25 per Preferred Security and
all accumulated and unpaid distributions to the date of payment,
together with any additional distributions accrued thereon.
"Redemption Price" shall mean the aggregate of $25 per
Preferred Security, plus accumulated and unpaid distributions to
the date fixed for redemption, together with any Additional
Distributions (as defined in the Limited Partnership Agreement)
accrued thereon.
"Subordinated Debentures" shall mean the Guarantor's 8 3/4%
Deferrable Interest Subordinated Debentures, Series A, due July
5, 2043, issued under and pursuant to the Indenture.
ARTICLE II
SECTION 2.01. (a) The Guarantor hereby irrevocably and
unconditionally agrees to pay in full to the Holders the
Guarantee Payments, as and when due (except to the extent paid by
the Issuer), to the fullest extent permitted by law, regardless
of any defense, right of set-off or counterclaim which the
Guarantor or the Issuer may have or assert. The Guarantor's
obligation to make a Guarantee Payment may be satisfied by direct
payment by the Guarantor to the Holders or by payment of such
amounts by the Issuer to the Holders. Notwithstanding anything
to the contrary herein, the Guarantor retains all of its rights
under Section 4.01(c) of the Indenture to extend the interest
2
<PAGE>
payment period thereunder and the Guarantor shall not be
obligated hereunder to pay during an Extension Period (as defined
in the Indenture) any monthly distributions on the Preferred
Securities which are not paid by the Issuer during such Extension
Period.
(b) All Guarantee Payments shall be made without
withholding or deduction for or on account of any present or
future taxes, duties, assessments or governmental charges of
whatever nature imposed or levied upon or as a result of such
payment by or on behalf of the United States, any state thereof
or any other jurisdiction through which or from which such
payment is made, or any authority therein or thereof having power
to tax, unless the withholding or deduction of such taxes,
duties, assessments or governmental charges is required by law.
In the event that any such withholding or deduction is required
as a consequence of (i) the Subordinated Debentures not being
treated as indebtedness for United States federal income tax
purposes or (ii) Penelec Capital not being treated as a
partnership for United States federal income tax purposes, the
Guarantor shall pay such additional amounts ("Additional
Amounts") as may be necessary in order that the net amounts
received by the Holders after such withholding or deduction will
equal the amount which would have been receivable in respect of
the Preferred Securities in the absence of such withholding or
deduction, except that no such additional amounts will be payable
to any Holder (or a third party on such Holder's behalf):
i) if such Holder is liable for such taxes,
duties, assessments or governmental charges in respect
of the Preferred Securities by reason of such Holder's
having a connection with the United States, any state
thereof or any other jurisdiction through which or from
which such payment is made, or in which such Holder
resides, conducts business or has other contacts, other
than being a Holder, or
ii) if the Issuer or the Guarantor has notified
such Holder of the obligation to withhold or deduct
taxes and requested but not received from such Holder a
declaration of non-residence, a valid taxpayer
identification number or other claim for exemption, and
such withholding or deduction would not have been
required had such declaration, taxpayer identification
number or claim been received.
SECTION 2.02. The Guarantor hereby waives notice of
acceptance of this Guarantee Agreement and of any liability to
which it applies or may apply, presentment, demand for payment,
protest, notice of nonpayment, notice of dishonor, notice of
redemption and all other notices and demands.
SECTION 2.03. Except as otherwise set forth herein, the
obligations, covenants, agreements and duties of the Guarantor
under this Guarantee Agreement shall to the fullest extent
3
<PAGE>
permitted by law in no way be affected or impaired by reason of
the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or
otherwise, of the performance or observance by the
Issuer of any express or implied agreement, covenant,
term or condition relating to the Preferred Securities
to be performed or observed by the Issuer;
(b) the extension of time for the payment by the
Issuer of all or any portion of the monthly
distributions, Redemption Price, Liquidation
Distribution or any other sums payable under the terms
of the Preferred Securities or the extension of time
for the performance of any other obligation under,
arising out of, or in connection with, the Preferred
Securities;
(c) any failure, omission, delay or lack of
diligence on the part of the Holders to enforce, assert
or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the
Preferred Securities, or any action on the part of the
Issuer granting indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation,
dissolution, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors,
reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings
affecting, the Issuer or any of the assets of the
Issuer;
(e) any invalidity of, or defect or deficiency
in, any of the Preferred Securities; or
(f) the settlement or compromise of any
obligation guaranteed hereby or hereby incurred.
The Holders shall have no obligation to give notice to, or obtain
consent of, the Guarantor with respect to the occurrence of any
of the foregoing.
SECTION 2.04. This is a guarantee of payment and not of
collection. A Holder may enforce this Guarantee Agreement
directly against the Guarantor, and the Guarantor will waive any
right or remedy to require that any action be brought against the
Issuer or any other person or entity before proceeding against
the Guarantor. Subject to Section 2.05, all waivers hereunder
shall be without prejudice to the Holders' right at the Holders'
option to proceed against the Issuer, whether by separate action
or by joinder. The Guarantor agrees that this Guarantee
Agreement shall not be discharged except by payment of the
Guarantee Payments in full (to the extent not paid by the Issuer)
4
<PAGE>
and by complete performance of all obligations of the Guarantor
contained in this Guarantee Agreement.
SECTION 2.05. The Guarantor will be subrogated to all
rights of the Holders against the Issuer in respect of any
amounts paid to the Holders by the Guarantor under this Guarantee
Agreement and shall have the right to waive payment by the Issuer
of any amount of distributions in respect of which payment has
been made to the Holders by the Guarantor pursuant to Section
2.01; provided, however, that the Guarantor shall not (except to
the extent required by mandatory provisions of law) exercise any
rights which it may acquire by way of subrogation or any
indemnity, reimbursement or other agreement, in all cases as a
result of a payment under this Guarantee Agreement, if, at the
time of any such payment, any amounts remain due and unpaid under
this Guarantee Agreement. If any amount shall be paid to the
Guarantor in violation of the preceding sentence, the Guarantor
agrees to pay over such amount to the Holders.
SECTION 2.06. The Guarantor acknowledges that its
obligations hereunder are independent of the obligations of the
Issuer with respect to the Preferred Securities and that the
Guarantor shall be liable as principal and sole debtor hereunder
to make Guarantee Payments pursuant to the terms of this
Guarantee Agreement notwithstanding the occurrence of any event
referred to in subsections (a) through (f), inclusive, of Section
2.03 hereof.
SECTION 2.07. The Guarantor expressly acknowledges that (i)
this Guarantee Agreement will be deposited with the General
Partner to be held for the benefit of the Holders; (ii) in the
event of the appointment of a Special Representative pursuant to
the Limited Partnership Agreement, the Special Representative may
enforce this Guarantee Agreement on behalf of the Holders and
take possession of this Guarantee Agreement for such purpose;
(iii) if no Special Representative has been appointed, the
General Partner has the right to enforce this Guarantee Agreement
on behalf of the Holders: (iv) the Holders of not less than a
majority in aggregate stated liquidation preference of the
Preferred Securities have the right to direct the time, method
and place of conducting any proceeding for any remedy available
in respect of this Guarantee Agreement, including the giving of
directions to the General Partner or the Special Representative,
as the case may be; and (v) if the General Partner or Special
Representative fails to enforce this Guarantee Agreement as above
provided, any Holder may institute a legal proceeding directly
against the Guarantor to enforce its rights under this Guarantee
Agreement, without first instituting a legal proceeding against
the Issuer or any other person or entity.
Any such Special Representative may enforce the
Issuer's rights against the Guarantor under the Indenture,
including, after failure to pay interest for 60 consecutive
monthly interest periods, the payment of interest on the
Subordinated Debentures, enforce the obligations of the Guarantor
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under this Guarantee Agreement and enforce the Guarantor's
obligations under the Indenture and the Subordinated Debentures
directly against the Guarantor; the Guarantor, upon request of a
Special Representative, agrees to execute and deliver such
documents as may be necessary, appropriate or convenient for such
Special Representative with respect to such enforcement.
ARTICLE III
SECTION 3.01. So long as any Preferred Securities remain
outstanding, neither the Guarantor nor any majority-owned
subsidiary of the Guarantor shall declare or pay any dividend on,
or redeem, purchase, acquire or make a liquidation payment with
respect to, any of its preferred or common stock (other than
dividends to the Guarantor by a wholly-owned subsidiary of the
Guarantor) (i) during an Extension Period (as defined in the
Indenture) or (ii) if at such time the Guarantor shall be in
default with respect to its payment or other obligations
hereunder or there shall have occurred any event that, with the
giving of notice or the lapse of time or both, would constitute
an Event of Default under the Indenture. The Guarantor shall
take all actions necessary to ensure the compliance of its
subsidiaries with this Section 3.01.
SECTION 3.02. The Guarantor covenants, so long as any
Preferred Securities remain outstanding: (i) to maintain direct
or indirect 100% ownership of the Common Securities; (ii) to
cause at least 3% of the total value of the Issuer and at least
3% of all interests in the capital, income, gain, loss, deduction
and credit of the Issuer to be represented by Common Securities;
(iii) not to cause the Issuer to be voluntarily dissolved, wound-
up or terminated, except upon the entry of a decree of judicial
dissolution or in connection with a Distribution Event or certain
mergers, consolidations or other transactions permitted by the
Limited Partnership Agreement; (iv) except as otherwise provided
in the Limited Partnership Agreement, to cause the General
Partner to remain the general partner of the Issuer and timely
perform all of its duties as general partner of the Issuer
(including the duty to pay distributions on the Preferred
Securities out of cash on hand and funds legally available
therefor) in all material respects, provided that any permitted
successor of the Guarantor under the Indenture may directly or
indirectly succeed to the duties as general partner of the
Issuer; and (v) to use its reasonable efforts to cause the Issuer
to remain a limited partnership and otherwise continue to be
treated as a partnership for United States federal income tax
purposes.
SECTION 3.03. This Guarantee Agreement will constitute an
unsecured obligation of the Guarantor and will rank (i)
subordinate and junior in right of payment to all present and
future Senior Indebtedness (as defined in the Indenture) of the
Guarantor, and (ii) senior in right of payment to the Guarantor's
preferred and common stock.
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ARTICLE IV
This Guarantee Agreement shall terminate and be of no
further force and effect upon full payment of the Redemption
Price of all Preferred Securities or upon full payment of the
amounts payable to the Holders upon liquidation of the Issuer or
upon consummation of a Distribution Event; provided, however,
that this Guarantee Agreement shall continue to be effective or
shall be reinstated, as the case may be, if at any time any
Holder of Preferred Securities must restore payments of any sums
paid under the Preferred Securities or under this Guarantee
Agreement for any reason whatsoever.
ARTICLE V
SECTION 5.01. All guarantees and agreements contained in
this Guarantee Agreement shall bind the successors, assigns,
receivers, trustees and representatives of the Guarantor and
shall inure to the benefit of the Holders. The Guarantor may not
assign its obligations hereunder without the prior approval of
the Holders of not less than 66-2/3% of the aggregate stated
liquidation preference of all Preferred Securities then
outstanding; provided that nothing herein shall preclude any
transaction involving the Guarantor pursuant to Section 5.01 of
the Indenture. No such permitted transaction shall be deemed an
assignment of the Guarantor's obligations hereunder for purposes
hereof.
SECTION 5.02. This Guarantee Agreement may only be amended
by a written instrument executed by the Guarantor; provided that,
so long as any of the Preferred Securities remain outstanding,
any such amendment that materially adversely affects the holders
of Preferred Securities, any termination of this Guarantee
Agreement and any waiver of compliance with any covenant
hereunder shall be effected only with the prior approval of the
Holders of not less than 66-2/3% of the aggregate stated
liquidation preference of all Preferred Securities then
outstanding.
SECTION 5.03. All notices, requests or other communications
required or permitted to be given hereunder to the Guarantor
shall be deemed given if in writing and delivered personally or
by recognized overnight courier or express mail service or by
facsimile transmission (confirmed in writing) or by registered or
certified mail (return receipt requested), addressed to the
Guarantor at the following address (or at such other address as
shall be specified by notice to the Holders):
Pennsylvania Electric Company
c/o GPU Service Corporation
100 Interpace Parkway
Parsippany, NJ 07054
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Facsimile No.: (201) 263-6397
Attention: Treasurer
All notices, requests or other communications required or
permitted to be given hereunder to the Holders shall be deemed
given if in writing and delivered by the Guarantor in the same
manner as notices sent by the Issuer to the Holders.
SECTION 5.04. This Guarantee Agreement is solely for the
benefit of the Holders and is not separately transferable from
the Preferred Securities.
SECTION 5.05. THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE SUBSTANTIVE
LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO CONFLICT
OF LAW PRINCIPLES.
THIS GUARANTEE AGREEMENT is executed as of the day and year
first above written.
PENNSYLVANIA ELECTRIC COMPANY
By /s/ Don W. Myers
Name: Don W. Myers
Title: Vice President and
Treasurer
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Exhibit B-2(a)
Penelec CAPITAL, L.P.
8 3/4% Cumulative Monthly Income
Preferred Securities, Series A
(liquidation preference $25 per Preferred Security)
guaranteed on a limited basis
by Pennsylvania Electric Company
Underwriting Agreement
June 27, 1994
Goldman, Sachs & Co.,
Dean Witter Reynolds Inc.
A.G. Edwards & Sons, Inc.
Kidder, Peabody & Co. Incorporated
Morgan Stanley & Co. Incorporated
PaineWebber Incorporated
Prudential Securities Incorporated
As representatives of the several Underwriters
named in Schedule I hereto,
c/o Goldman, Sachs & Co.,
85 Broad Street,
New York, New York 10004.
Dear Sirs:
Penelec Capital, L.P. ("Penelec Capital"), a limited
partnership formed under the laws of the State of Delaware, and
Pennsylvania Electric Company, a Pennsylvania corporation, as
guarantor (the "Guarantor"), propose, subject to the terms and
conditions stated herein, that Penelec Capital issue and sell to
the Underwriters named in Schedule I hereto (the "Underwriters")
an aggregate of 4,200,000 preferred partner interests of Penelec
Capital of a series designated the 8 3/4% Cumulative Monthly
Income Preferred Securities, Series A (liquidation preference $25
per Preferred Security) (the "Preferred Securities"), guaranteed
by the Guarantor as to the payment of distributions, to the
extent Penelec Capital has sufficient cash on hand to permit such
payments and funds legally available therefor, and as to payments
on liquidation or redemption described in any Final Supplemented
Prospectus (as defined in Section 1(a) hereof) (the "Limited
Guarantee").
1.Each of Penelec Capital and the Guarantor jointly and
severally represents and warrants to, and agrees with, each of
the Underwriters that:
(a) A registration statement on Form S-3 in respect of,
among other things, the Preferred Securities, the Limited
Guarantee and the 8 3/4% Deferrable Interest Subordinated
Debentures due 2043 of the Guarantor (the "8 3/4% Subordinated
Debentures", and collectively with the Preferred Securities and
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the Limited Guarantee, the "Securities") (File Nos. 33-53677 and
33-53677-01), has been filed by Penelec Capital and the Guarantor
with the Securities and Exchange Commission (the "Commission");
such registration statement and any post-effective amendment
thereto, each in the form heretofore delivered to you, and,
excluding exhibits thereto but including all documents
incorporated by reference in the prospectus contained therein, to
you for each of the other Underwriters, have been declared
effective by the Commission in such form; as of the date of this
Agreement, no other document with respect to such registration
statement or document incorporated by reference therein has
heretofore been filed with the Commission; and no stop order
suspending the effectiveness of such registration statement has
been issued and no proceeding for that purpose has been initiated
or threatened by the Commission (any preliminary prospectus
included in such registration statement or filed with the
Commission pursuant to Rule 424(a) of the rules and regulations
of the Commission under the Securities Act of 1933, as amended
(the "Act"), is hereinafter called a "Preliminary Prospectus" or
a "Preliminary Supplemented Prospectus," as the case may be; the
various parts of such registration statement, including all
exhibits thereto and the documents incorporated by reference in
the prospectus contained in the registration statement at the
time such part of the registration statement became effective but
excluding Form T-1, each as amended at the time such part of the
registration statement became effective, are hereinafter
collectively called the "Registration Statement"; the prospectus
relating to the Securities, in the form in which it was included
in the Registration Statement at the time it became effective, is
hereinafter called the "Prospectus"; any reference herein to any
Preliminary Prospectus or the Prospectus shall be deemed to refer
to and include the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 under the Act, as of the date of
such Preliminary Prospectus or Prospectus, as the case may be;
any reference to any amendment or supplement to any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and
include any documents filed after the date of such Preliminary
Prospectus or Prospectus, as the case may be, under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and incorporated by reference in such Preliminary Prospectus or
Prospectus, as the case may be; any reference to any amendment to
the Registration Statement shall be deemed to refer to and
include any annual report of the Guarantor filed pursuant to
Section 13(a) or 15(d) of the Exchange Act after the effective
date of the Registration Statement that is incorporated by
reference in the Registration Statement; and the Prospectus as
amended or supplemented in final form in relation to the
Securities in the form in which it is filed with the Commission
pursuant to Rule 424(b) under the Act in accordance with Section
5(a) hereof, including any documents incorporated by reference
therein as of the date of such filing, being hereinafter called
the "Final Supplemented Prospectus");
(b) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission, and
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each Preliminary Prospectus, at the time of filing thereof,
conformed in all material respects to the requirements of the
Act, the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"), and the rules and regulations of the Commission
thereunder, and did not contain an untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading;
provided, however, that this representation and warranty shall
not apply to any statements or omissions made in reliance upon
and in conformity with information furnished in writing to
Penelec Capital or the Guarantor by an Underwriter through you
expressly for use therein;
(c) The documents incorporated by reference in the
Prospectus, when they were filed with the Commission, conformed
in all material respects to the requirements of the Exchange Act
and the rules and regulations of the Commission thereunder; and
any further documents so filed and incorporated by reference in
the Prospectus or any further amendment or supplement thereto,
when such documents are filed with the Commission, will conform
in all material respects to the requirements of the Exchange Act
and the rules and regulations of the Commission thereunder and
will not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of
circumstances under which they were made, not misleading;
provided, however, that this representation and warranty shall
not apply to any statements or omissions made in reliance upon
and in conformity with information furnished in writing to
Penelec Capital or the Guarantor by an Underwriter through you
expressly for use in the Preliminary Supplemented Prospectus or
the Final Supplemented Prospectus;
(d) The Registration Statement conforms, and the Prospectus
and any further amendments or supplements to the Registration
Statement or the Prospectus will conform, in all material
respects to the requirements of the Act, the Trust Indenture Act
and the rules and regulations of the Commission thereunder and do
not and will not, as of the applicable effective date as to the
Registration Statement and any amendment thereto and as of the
applicable filing date as to the Prospectus and any amendment or
supplement thereto, contain an untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in
reliance upon and in conformity with information furnished in
writing to Penelec Capital or the Guarantor by an Underwriter
through you expressly for use therein, or to any statements in or
omissions from the Form T-1 of the Trustee (as defined below),
but nothing contained herein is intended as a waiver of
compliance with the Act or the Exchange Act regulations or any
rule or regulation of the Commission thereunder;
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(e) Penelec Capital has no subsidiaries. Since the
respective dates as of which information is given in the
Registration Statement and the Prospectus, there has not been any
change in the capital stock or material change in the long-term
debt of the Guarantor (including all of its subsidiaries taken as
a whole) (except for such preferred stock and long-term debt
acquired for sinking fund purposes or redeemed pursuant to
sinking fund or optional redemption provisions or changes in
obligations under capital leases incurred in the ordinary course
of the Guarantor's business or for any increase in common stock
as a result of capital contributions or any decrease in capital
stock as a result of the declaration by the Guarantor of either
regular quarterly dividends on the Guarantor's preferred stock or
dividends on its common stock) or in the capital accounts or
long-term debt of Penelec Capital, or any material adverse change
in or affecting (i) the condition (financial or otherwise),
stockholder's equity, business affairs, operating properties,
business prospects or results of operations of the Guarantor and
its subsidiaries taken as a whole or (ii) the condition
(financial or otherwise), capital accounts, business affairs,
operating properties, business prospects or results of operations
of Penelec Capital, in any such case otherwise than as set forth
or contemplated in the Final Supplemented Prospectus;
(f) Penelec Capital has been duly formed and is validly
existing in good standing as a limited partnership under the laws
of the State of Delaware, with power and authority to own its
properties and conduct its business as described in the Final
Supplemented Prospectus, and is duly qualified as a foreign
limited partnership for the transaction of business and is in
good standing under the laws of each other jurisdiction in which
it owns or leases properties, or conducts any business, so as to
require such qualification, or is subject to no material
liability or disability by reason of the failure to be so
qualified in any such jurisdiction; Penelec Preferred Capital,
Inc., a Delaware corporation, is the sole general partner (the
"General Partner") of Penelec Capital; the General Partner is a
wholly owned subsidiary of the Guarantor; and the General Partner
has been duly incorporated and is validly existing in good
standing as a corporation under the laws of the State of
Delaware, with corporate power and authority to own its
properties and conduct its business as described in the Final
Supplemented Prospectus;
(g) The Guarantor is duly incorporated and is validly
existing in good standing as a corporation under the laws of its
jurisdiction of incorporation, with corporate power and authority
to own its properties and conduct its business as described in
the Final Supplemented Prospectus and is duly qualified as a
foreign corporation for the transaction of business and is in
good standing under the laws of each other jurisdiction in which
it owns or leases properties or conducts any business so as to
require such qualification, or is subject to no material
liability or disability by reason of the failure to be so
qualified in any such jurisdiction;
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(h) The Guarantor has an authorized capitalization as set
forth in the Final Supplemented Prospectus; and all of the
issued limited partner interests of Penelec Capital have been
duly and validly authorized and issued, are fully paid and non-
assessable and conform to the descriptions thereof contained in
the Final Supplemented Prospectus;
(i) The Preferred Securities have been duly and validly
authorized by Penelec Capital, and, when issued and delivered
against payment therefor at the Time of Delivery (as defined
herein) will be duly and validly issued and fully paid and non-
assessable and will conform to the descriptions thereof contained
in the Final Supplemented Prospectus;
(j) The indenture (the "Indenture") to be dated as of July 1,
1994 between the Guarantor and United States Trust Company as
trustee (the "Trustee") and the 8 3/4% Subordinated Debentures to
be issued thereunder, have been duly authorized; the Indenture,
which is substantially in the form filed as an exhibit to the
Registration Statement, has been duly qualified under the Trust
Indenture Act, and, at the Time of Delivery, will have been duly
executed and delivered and will constitute, and the 8 3/4%
Subordinated Debentures, when duly executed and authenticated in
accordance with the Indenture and issued and delivered under the
circumstances provided in the Final Supplemented Prospectus, will
constitute, valid and legally binding obligations of the
Guarantor enforceable in accordance with their terms, subject to
bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles; and
the Indenture conforms and the 8 3/4% Subordinated Debentures
when duly executed, authenticated, issued and delivered, will
conform to the descriptions thereof in the Final Supplemented
Prospectus;
(k) The Amended and Restated Limited Partnership Agreement,
dated as of June 27, 1994 (the "Limited Partnership Agreement"),
has been duly authorized by the General Partner and constitutes a
valid and legally binding obligation of the General Partner, in
its capacity as general partner of Penelec Capital, enforceable
in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium and other laws
of general applicability relating to or affecting creditors'
rights and to general equity principles;
(l) The Limited Guarantee has been duly authorized and when
executed and delivered by the Guarantor will constitute a valid
and legally binding obligation of the Guarantor, enforceable in
accordance with its terms, subject to bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium and other laws
of general applicability relating to or affecting creditors'
rights and to general equity principles; and the Limited
Guarantee will conform to the description thereof in the Final
Supplemented Prospectus;
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(m) All of the issued general and limited partner interests
of Penelec Capital (other than the Preferred Securities) are
owned indirectly by the Guarantor and the Class A Limited Partner
(as defined in the Limited Partnership Agreement), respectively,
and have been duly and validly authorized and validly issued,
free and clear of all liens, encumbrances, equities or claims;
and Penelec Capital is not a party to or otherwise bound by any
agreement other than those described in the Final Supplemented
Prospectus;
(n) The issue and sale of the Preferred Securities by Penelec
Capital, the compliance by Penelec Capital with all of the
provisions of this Agreement, and the consummation of the
transactions herein contemplated have been duly authorized by all
necessary action of Penelec Capital and will not conflict with or
result in a breach or violation of any of the terms or provisions
of, or constitute a default under, any indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument to
which Penelec Capital is a party or by which Penelec Capital is
bound or to which any of the property or assets of Penelec
Capital is subject, nor will such action result in any violation
of the provisions of the Certificate of Limited Partnership of
Penelec Capital or the Limited Partnership Agreement or any
statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over Penelec
Capital or any of its properties; and no consent, approval,
authorization, order, registration or qualification of or with
any such court or governmental agency or body is required for the
issue and sale of the Preferred Securities or the consummation by
Penelec Capital of the transactions contemplated by this
Agreement, except such as have been obtained regarding the
registration under the Act of the Securities, the qualification
of the Indenture under the Trust Indenture Act, the approval of
the Commission under the Public Utility Holding Company Act of
1935, as amended (the "1935 Act") and the approvals of the
Pennsylvania Public Utility Commission (the "PaPUC"), and such
consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or Blue
Sky laws in connection with the purchase of the Preferred
Securities and distribution of the Securities by the Underwriters
and the filing of Certificates Pursuant to Rule 24 under the 1935
Act;
(o) The issue and sale of the Preferred Securities by Penelec
Capital, the compliance by Penelec Capital and the Guarantor with
all of the provisions of this Agreement, the execution, delivery
and performance by the Guarantor of the Limited Guarantee, the
execution, delivery and performance by the Guarantor of the
Indenture and the issuance and delivery by the Guarantor of the 8
3/4% Subordinated Debentures thereunder and the consummation of
the transactions herein and therein contemplated have been duly
authorized by all necessary action of the Guarantor, will not
conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any
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indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Guarantor is a party or by
which the Guarantor is bound or to which any of the property or
assets of the Guarantor is subject except for such conflicts,
breaches or violations which, individually or in the aggregate,
would not have a material adverse effect on the condition
(financial or otherwise), stockholder's equity, business affairs,
operating properties, business prospects or results of operations
of the Guarantor (including all of its subsidiaries taken as a
whole), nor will such action result in any violation of the
provisions of the Restated Articles of Incorporation or By-laws
of the Guarantor or any statute or any order, rule or regulation
of any court or governmental agency or body having jurisdiction
over the Guarantor or any of its subsidiaries or any of their
properties; and no consent, approval, authorization, order,
registration or qualification of or with any such court or
governmental agency or body is required for the issuance of the
Limited Guarantee, the issuance of 8 3/4% Subordinated
Debentures, or the consummation by the Guarantor of the
transactions contemplated by this Agreement, except such as have
been obtained regarding the registration under the Act of the
Securities, the qualification of the Indenture under the Trust
Indenture Act and the approval of the Commission under the 1935
Act and the approvals of the PaPUC and such consents, approvals,
authorizations, registrations or qualifications as may be
required under state securities or Blue Sky laws in connection
with the purchase of the Preferred Securities and distribution of
the Securities by the Underwriters and the filing of Certificates
Pursuant to Rule 24 under the 1935 Act;
(p) Neither Penelec Capital nor the Guarantor is in violation
of its charter, or, in the case of Penelec Capital, its
Certificate of Limited Partnership or the Limited Partnership
Agreement, or in default in the performance or observance of any
material obligation, agreement, covenant or condition contained
in any material contract, indenture, mortgage, loan agreement,
note, lease, or other instrument to which it or any of them is a
party or by which it or any of them or their properties may be
bound;
(q) Other than as set forth in the Final Supplemented
Prospectus, there are no legal or governmental proceedings
pending to which Penelec Capital or the Guarantor is a party or
of which any property of Penelec Capital or the Guarantor is the
subject which, if determined adversely to Penelec Capital or the
Guarantor, would individually or in the aggregate have a material
adverse effect on (i) the consolidated financial position,
stockholder's equity or results of operations of the Guarantor
(including all of its subsidiaries taken as a whole) or (ii) the
financial position, capital accounts or results of operations of
Penelec Capital; and, to the best of Penelec Capital's and the
Guarantor's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others;
(r) Neither Penelec Capital nor the Guarantor is and, after
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giving effect to the offering and sale of the Securities, will be
an investment company, unit investment trust or face-amount
certificate company that is or is required to be registered under
the Investment Company Act of 1940, as amended (the "Investment
Company Act"); and neither Penelec Capital nor the Guarantor is
directly or indirectly controlled by or acting on behalf of any
person that is such a company or trust;
(s) Neither Penelec Capital nor the Guarantor nor their
affiliates does business with the government of Cuba or with any
person located in Cuba within the meaning of Section 517.075 of
Florida Statutes (chapter 92-198, Laws of Florida); and
(t) Coopers & Lybrand, who have certified certain financial
statements of the Guarantor and its subsidiaries, are independent
public accountants as required by the Act and the rules and
regulations of the Commission thereunder.
2. Subject to the terms and conditions herein set forth,
Penelec Capital agrees to issue and sell to each of the
Underwriters, and each of the Underwriters agrees, severally and
not jointly, to purchase from Penelec Capital, at a purchase
price per Preferred Security of $25, the number of Preferred
Securities set forth opposite the name of such Underwriter in
Schedule I hereto. The Guarantor agrees to issue the Limited
Guarantee and 8 3/4% Subordinated Debentures concurrently with
the issue and sale of the Preferred Securities as contemplated
herein.
The Guarantor hereby guarantees the timely performance by
Penelec Capital of its obligations under this Section 2, Section
6 and Section 11. As compensation to the Underwriters for their
commitments hereunder, and in view of the fact that the proceeds
of the sale of the Preferred Securities will be used to purchase
8 3/4% Subordinated Debentures of the Guarantor, the Guarantor
hereby agrees to pay at the Time of Delivery (as defined in
Section 4 hereof) to Goldman, Sachs & Co., for the accounts of
the several Underwriters, an amount equal to $.7875 per Preferred
Security for the Preferred Securities to be delivered by Penelec
Capital hereunder at the Time of Delivery, except that such
amount will be $.50 per Preferred Security with respect to those
Preferred Securities sold to certain institutions.
3. Upon the authorization by you of the release of the
Preferred Securities, the several Underwriters propose to offer
the Preferred Securities for sale upon the terms and conditions
set forth in the Final Supplemented Prospectus.
4. The Preferred Securities to be purchased by each
Underwriter hereunder will be represented by a global certificate
in book-entry form which will be deposited by or on behalf of
Penelec Capital with The Depository Trust Company ("DTC") or its
designated custodian and registered in the name of Cede & Co., as
nominee for DTC. Penelec Capital will deliver the Preferred
Securities to Goldman, Sachs & Co., for the account of each
Underwriter, against payment by or on behalf of such Underwriter
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of the purchase price therefor by certified or official bank
check or checks, payable to the order of Penelec Capital in New
York Clearing House (next day) funds, by causing DTC to credit
the Preferred Securities to the account of Goldman, Sachs & Co.
at DTC. Penelec Capital will cause the certificate representing
the Preferred Securities to be made available to Goldman, Sachs &
Co. for checking at least twenty-four hours prior to the Time of
Delivery at the office of DTC or its designated custodian (the
"Designated Office"). The time, date and location of such
delivery and payment shall be 9:30 a.m., New York City time, on
July 5, 1994 or such other time and date as Goldman, Sachs & Co.
and Penelec Capital may agree upon in writing at the offices of
Berlack, Israels & Liberman, 120 West 45th Street, New York, New
York 10036. Such time and date are herein called the "Time of
Delivery".
At the Time of Delivery, the Guarantor will pay, or cause to
be paid, the commission payable at the Time of Delivery to the
Underwriters under Section 2 hereof by certified or official bank
check or checks, payable to the order of Goldman, Sachs & Co. in
New York Clearing House funds.
5. Each of Penelec Capital and the Guarantor jointly and
severally agrees with each of the Underwriters:
(a) To prepare the Final Supplemented Prospectus in a form
approved by you and to file such Final Supplemented Prospectus
pursuant to Rule 424(b) under the Act not later than the
Commission's close of business on the second business day
following the execution and delivery of this Agreement, or, if
applicable, such earlier time as may be required by Rule 424(b)
under the Act; to make no further amendment or any supplement to
the Registration Statement or Final Supplemented Prospectus prior
to the Time of Delivery which shall be reasonably disapproved by
you promptly after reasonable notice thereof; to advise you,
promptly after it receives notice thereof, of the time when any
amendment to the Registration Statement has been filed or becomes
effective or any supplement to the Prospectus or any amended
Prospectus has been filed and to furnish you with copies thereof;
in the case of the Guarantor, to file promptly all reports and
any definitive proxy or information statements required to be
filed with the Commission pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act and for so long as the delivery of a
prospectus is required in connection with the offering or sale of
the Securities, and during such same period to advise you,
promptly after it receives notice thereof, of the time when any
amendment to the Registration Statement has been filed or becomes
effective or any supplement to the Prospectus or any amendment to
the Prospectus has been filed with the Commission, of the
issuance by the Commission of any stop order or of any order
preventing or suspending the use of any prospectus relating to
the Securities, of the suspension of the qualification of the
Securities for offering or sale in any jurisdiction, of the
initiation or threatening of any proceeding for any such purpose,
or of any request by the Commission for the amending or
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supplementing of the Registration Statement or Prospectus or for
additional information; and, in the event of the issuance of any
stop order or of any order preventing or suspending the use of
any prospectus relating to the Securities or suspending any such
qualification, to use promptly its best efforts to obtain its
withdrawal;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Securities for offering and
sale under the securities laws of such jurisdictions as you may
request and to comply with such laws so as to permit the
continuance of sales and dealings therein in such jurisdictions
for as long as may be necessary to complete the distribution of
the Securities, provided that in connection therewith neither
Penelec Capital nor the Guarantor shall be required to qualify as
a foreign corporation or to file a general consent to service of
process in any jurisdiction;
(c) To furnish the Underwriters with copies of the Final
Supplemented Prospectus in such quantities as you may from time
to time reasonably request, and, if the delivery of a prospectus
is required at any time prior to the expiration of nine months
after the time of issue of the Prospectus in connection with the
offering or sale of the Securities and if at such time any event
shall have occurred as a result of which the Prospectus as then
amended or supplemented would include an untrue statement of a
material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made when such Prospectus is
delivered, not misleading, or, if for any other reason it shall
be necessary during such period to amend or supplement the
Prospectus or to file under the Exchange Act any document
incorporated by reference in the Prospectus in order to comply
with the Act or the Exchange Act, to notify you and upon your
request to file such document and to prepare and furnish without
charge to each Underwriter and to any dealer in securities as
many copies as you may from time to time reasonably request of an
amended Prospectus or a supplement to the Prospectus which will
correct such statement or omission or effect such compliance, and
in case any Underwriter is required to deliver a prospectus in
connection with sales of any of the Securities at any time nine
months or more after the time of issue of the Prospectus, upon
your request but at the expense of such Underwriter, to prepare
and deliver to such Underwriter as many copies as you may request
of an amended or supplemented Prospectus complying with Section
10(a)(3) of the Act;
(d) In the case of the Guarantor, to make generally available
to its security holders as soon as practicable, but in any event
not later than eighteen months after the effective date of the
Registration Statement (as defined in Rule 158(c) under the Act),
an earning statement of the Guarantor and its subsidiaries (which
need not be audited) complying with Section 11(a) of the Act and
the rules and regulations thereunder (including Rule 158);
10
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(e) During the period beginning from the date hereof and
continuing to and including the earlier of (i) the date, after
the Time of Delivery, on which the distribution of the Securities
ceases, as determined by Goldman, Sachs & Co., or (ii) the date
which is 90 days after the Time of Delivery, not to offer, sell,
contract to sell or otherwise dispose of any Preferred
Securities, any limited partner interests of Penelec Capital, or
any preferred stock or any other securities of Penelec Capital or
the Guarantor which are substantially similar to the Preferred
Securities or the Limited Guarantee, or any securities
convertible into or exchangeable for Preferred Securities,
limited partner interests, preferred stock or such substantially
similar securities of either Penelec Capital or the Guarantor
without your prior written consent;
(f) To the extent necessary to comply with New York Stock
Exchange rules and regulations or the rules and regulations of
any other exchange on which the Preferred Securities are listed,
to furnish to the holders of the Preferred Securities as soon as
practicable after the end of each fiscal year an annual report
(including a balance sheet and statements of income, capital
stock and cash flows of the Guarantor and its consolidated
subsidiaries certified by independent public accountants) and, as
soon as practicable after the end of each of the first three
quarters of each fiscal year (beginning with the fiscal quarter
ending after the effective date of the Registration Statement),
consolidated summary financial information of the Guarantor and
its subsidiaries for such quarter in reasonable detail;
(g) During a period of three years from the effective date of
the Registration Statement, to furnish to you copies of all
reports or other communications (financial or other) furnished to
the holders of the Preferred Securities generally, and deliver to
you (i) as soon as they are available, copies of any reports and
financial statements furnished to or filed with the Commission or
any national securities exchange on which any class of securities
of Penelec Capital or Guarantor is listed; and (ii) such
additional information concerning the business and financial
condition of the Guarantor as you may from time to time
reasonably request (such financial statements to be on a
consolidated basis to the extent the accounts of the Guarantor
and its subsidiaries are consolidated in reports furnished to the
holders of the Preferred Securities generally or to the
Commission);
(h) To use its best efforts to list, subject to notice of
issuance, the Preferred Securities on the New York Stock
Exchange; and
(i) To use its best efforts to list the 8 3/4% Subordinated
Debentures, upon issuance to the holders of the Preferred
Securities, on the same exchange on which the Preferred
Securities are then listed.
6. Penelec Capital and the Guarantor jointly and severally
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covenant and agree with the several Underwriters that Penelec
Capital and the Guarantor will pay or cause to be paid the
following: (i) the fees, disbursements and expenses of Penelec
Capital's and the Guarantor's counsel and accountants in
connection with the registration of the Securities under the Act
and all other expenses in connection with the preparation,
printing and filing of the Registration Statement, any
Preliminary Prospectus, the Prospectus, the Preliminary
Supplemented Prospectus, the Final Supplemented Prospectus and
any amendments and supplements thereto and the mailing and
delivering of copies thereof to the Underwriters and dealers;
(ii) the cost of printing or producing any Agreement among
Underwriters, this Agreement, the Blue Sky Memorandum and any
other documents in connection with the offering, purchase, sale
and delivery of the Securities; (iii) all expenses in connection
with the qualification of the Securities for offering and sale
under state securities laws as provided in Section 5(b) hereof,
including the fees and disbursements of counsel for the
Underwriters not to exceed $15,000 incurred in connection with
such qualification and in connection with the Blue Sky survey;
(iv) any fees charged by securities rating services for rating
the Securities; (v) any filing fees incident to securing any
required review by the National Association of Securities
Dealers, Inc. of the terms of the sale of the Securities (vi) the
cost of preparing certificates for the Preferred Securities;
(vii) the cost and charges of any transfer agent or registrar;
(viii) the cost of qualifying the Securities with The Depository
Trust Company; (ix) the fees and expenses of any Trustee and any
agent of any Trustee and the fees or disbursements of counsel for
any Trustee in connection with the Indenture and the 8 3/4%
Subordinated Debentures; and (x) all other costs and expenses
incident to the performance of its obligations hereunder which
are not otherwise specifically provided for in this Section. It
is understood, however, that, except as provided in this Section,
Section 8 and Section 11 hereof, the Underwriters will pay all of
their own costs and expenses, including the fees of their
counsel, stock transfer taxes on resale of any of the Preferred
Securities by them, and any advertising expenses connected with
any offers they may make.
7. The obligations of the Underwriters hereunder shall be
subject, in their discretion, to the condition that all
representations and warranties and other statements of Penelec
Capital and the Guarantor herein are, at and as of the Time of
Delivery, true and correct, the condition that Penelec Capital
and the Guarantor shall have performed all of its obligations
hereunder theretofore to be performed, and the following
additional conditions:
(a) The Final Supplemented Prospectus shall have been
electronically filed with the Commission pursuant to Rule
424(b) within the applicable time period prescribed for such
filing by the rules and regulations under the Act and in
accordance with Section 5(a) hereof; no stop order suspending
the effectiveness of the Registration Statement or any part
12
<PAGE>
thereof shall have been issued and no proceeding for that
purpose shall have been initiated or threatened by the
Commission; and all requests for additional information on the
part of the Commission shall have been complied with to your
reasonable satisfaction;
(b) Reid & Priest, counsel for the Underwriters, shall have
furnished to you such opinion or opinions, dated the Time of
Delivery, with respect to: the incorporation of the Guarantor
and the formation of Penelec Capital; insofar as the Federal
laws of the United States and the laws of the State of New
York are concerned, the validity of the 8 3/4% Subordinated
Debentures and the Limited Guarantee; this Agreement; the
Preferred Securities; the Indenture; the Registration
Statement; the Final Supplemented Prospectus; and other
related matters as you may reasonably request, and such
counsel shall have received such papers and information as
they may reasonably request to enable them to pass upon such
matters; provided, that in rendering such opinion, Reid &
Priest may rely upon the opinion of Ballard Spahr Andrews &
Ingersoll delivered pursuant to subsection (c) hereof as to
all matters of Pennsylvania law and upon the opinion of
Richards, Layton & Finger delivered pursuant to subsection (e)
hereof as to matters of Delaware law relating to Penelec
Capital, the Preferred Securities and the Limited Partnership
Agreement.
(c) Berlack, Israels & Liberman and Ballard Spahr Andrews &
Ingersoll, counsel for Penelec Capital and the Guarantor,
shall have furnished to you their written opinions, dated the
Time of Delivery, in form and substance satisfactory to you,
to the effect that:
(i) Penelec Capital has been duly formed and is validly
existing as a limited partnership in good standing under the
Delaware Revised Uniform Limited Partnership Act ("DRULPA"),
with, under the Limited Partnership Agreement and DRULPA,
partnership power and authority to own its properties and
conduct its business as described in the Final Supplemented
Prospectus, and is duly qualified as a foreign limited
partnership for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it
owns or leases properties, or conducts any business, so as to
require such qualification, or is subject to no material
liability or disability by reason of the failure to be so
qualified in any such jurisdiction;
(ii) The Guarantor is duly incorporated and is validly
existing as a corporation in good standing under the laws of
its jurisdiction of incorporation, with corporate power and
authority to own its properties and conduct its business as
described in the Final Supplemented Prospectus, and is duly
qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties or conducts
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<PAGE>
any business so as to require such qualification, or is
subject to no material liability or disability by reason of
the failure to be so qualified in any such jurisdiction;
(iii) The Guarantor has the authorized capital stock as
set forth in the Final Supplemented Prospectus; and all of the
issued general partner interests of Penelec Capital have been
duly and validly authorized and validly issued and are owned
by the General Partner, free of all liens, encumbrances,
equities or claims;
(iv) The Preferred Securities have been duly and validly
authorized and are validly issued and, subject to the
qualifications set forth in Section 7(e)(iv) hereof, are fully
paid and nonassessable limited partner interests in Penelec
Capital;
(v) The Indenture and the 8 3/4% Subordinated Debentures
to be issued thereunder, have been duly authorized; the
Indenture has been duly qualified under the Trust Indenture
Act, and has been duly executed and delivered and constitutes,
and the 8 3/4% Subordinated Debentures, when duly executed and
authenticated in accordance with the Indenture and issued and
delivered under the circumstances provided in the Final
Supplemented Prospectus, will constitute, valid and legally
binding obligations of the Guarantor enforceable in accordance
with their terms, subject to bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium and other
laws of general applicability relating to or affecting
creditors' rights and to general equity principles; and the
Indenture conforms and the 8 3/4% Subordinated Debentures,
when duly executed, authenticated, issued and delivered, will
conform to the descriptions thereof in the Final Supplemented
Prospectus;
(vi) The Limited Partnership Agreement has been duly
authorized by the General Partner and constitutes a valid and
legally binding obligation of the General Partner, in its
capacity as general partner of Penelec Capital, enforceable in
accordance with its terms, subject to bankruptcy, insolvency,
moratorium, fraudulent conveyance, reorganization and other
laws of general applicability relating to or affecting
creditors' rights and to general equity principles;
(vii) The Limited Guarantee has been duly authorized,
executed and delivered by the Guarantor and constitutes a
valid and legally binding obligation of the Guarantor,
enforceable in accordance with its terms, subject to
bankruptcy, insolvency, moratorium, fraudulent conveyance,
reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general
equity principles; and the Limited Guarantee conforms to the
description thereof in the Final Supplemented Prospectus;
(viii) The issue and sale of the Preferred Securities by
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<PAGE>
Penelec Capital, the compliance by Penelec Capital with the
provisions of this Agreement, and the consummation of the
transactions herein and therein contemplated have been duly
authorized by all necessary action of Penelec Capital and will
not conflict with or result in a breach or violation of any of
the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which Penelec Capital is a party or
by which Penelec Capital is bound or to which any of the
property or assets of Penelec Capital is subject, nor will
such action result in any violation of the provisions of the
Certificate of Limited Partnership of Penelec Capital or
Limited Partnership Agreement of Penelec Capital or any
statute or any order, of which such counsel is aware, rule or
regulation of any court or governmental agency or body having
jurisdiction over Penelec Capital or any of its properties;
(ix) The issue and sale of the Preferred Securities by
Penelec Capital, the compliance by Penelec Capital and the
Guarantor with the provisions of this Agreement, the
execution, delivery and performance by the Guarantor of the
Limited Guarantee, the execution, delivery and performance by
the Guarantor of the Indenture and the issuance and delivery
by the Guarantor of the 8 3/4% Subordinated Debentures
thereunder and the consummation of the transactions herein and
therein contemplated have been duly authorized by all
necessary action of the Guarantor and will not conflict with
or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Guarantor is a party or by which the
Guarantor is bound or to which any of the property or assets
of the Guarantor is subject of which such counsel is aware
except for such conflicts, breaches or violations which,
individually or in the aggregate, would not have a material
adverse effect on the condition (financial or otherwise),
stockholder's equity, business affairs, operating properties,
business prospects or results of operations of the Guarantor
(including all of its subsidiaries taken as a whole), nor will
such action result in any violation of the provisions of the
Restated Articles of Incorporation or By-laws of the Guarantor
or any statute or any order, of which such counsel is aware,
or any rule or regulation of any court or governmental agency
or body having jurisdiction over the Guarantor or any of its
subsidiaries or any of their properties;
(x) No consent, approval, authorization or order of, or
filing with, any court or governmental agency or body is
required for the consummation of the transactions contemplated
by this Agreement in connection with the issuance and delivery
of the Securities or the consummation by Penelec Capital and
the Guarantor of the transactions contemplated herein except
such as have been made or obtained under the Act, the 1935
Act, the PaPUC, and the Trust Indenture Act, and such as may
be required under state securities laws in connection with the
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<PAGE>
purchase of the Preferred Securities by the Underwriters and
the distribution of the Securities by the Underwriters and the
filing of Certificates Pursuant to Rule 24 under the 1935 Act;
(xi) This Agreement has been duly authorized, executed
and delivered by each of Penelec Capital and the Guarantor;
(xii) The statements made in the Prospectus under the
caption "Description of Preferred Securities", insofar as they
purport to constitute summaries of the terms of the Preferred
Securities are accurate and fair summaries;
(xiii) The documents incorporated by reference in the Final
Supplemented Prospectus or any amendment or supplement thereto
(other than the financial statements and related schedules
therein and other financial or statistical data included or
incorporated by reference therein, as to which such counsel
need express no opinion), when they became effective or were
filed with the Commission, as the case may be, complied as to
form in all material respects with the requirements of the
Exchange Act and the rules and regulations of the Commission
thereunder;
(xiv) The Registration Statement and the Prospectus and
any further amendments and supplements thereto made by Penelec
Capital prior to the Time of Delivery (other than the
financial statements and related schedules therein and other
financial or statistical data included or incorporated by
reference therein, as to which such counsel need express no
opinion) comply as to form in all material respects with the
requirements of the Act, the Trust Indenture Act and the rules
and regulations thereunder; and they do not know of any
amendment to the Registration Statement required to be filed
or of any contracts or other documents of a character required
to be filed as an exhibit to the Registration Statement or
required to be incorporated by reference into the Prospectus
or required to be described in the Registration Statement or
the Prospectus which are not filed or incorporated by
reference or described as required;
(xv) Neither Penelec Capital nor the Guarantor is and, after
giving effect to the offering and sale of the Preferred
Securities, will be an investment company, unit investment
trust or face-amount certificate company that is or is
required to be registered under the Investment Company Act;
and neither Penelec Capital nor the Guarantor is directly or
indirectly controlled by or acting on behalf of any person
that is such a company or trust;
In addition, each such counsel shall state that to the best of
such counsel's knowledge and other than as set forth in the
Final Supplemented Prospectus, there are no legal or
governmental proceedings pending to which Penelec Capital or
the Guarantor is a party or of which any property of Penelec
Capital or the Guarantor is the subject which, if determined
16
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adversely to Penelec Capital or the Guarantor, would
individually or in the aggregate have a material adverse
effect on (i) the consolidated financial position,
stockholder's equity or results of operations of the Guarantor
and the Guarantor's subsidiaries taken as a whole or (ii) the
financial position, capital accounts or results of operations
of Penelec Capital; and, to the best of such counsel's
knowledge, no such proceedings are overtly threatened or
contemplated by governmental authorities or overtly threatened
by others;
In addition, each such counsel shall state that although they
do not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the
Registration Statement or the Prospectus, except for those
covered by their opinion in subsection (xii) of this section
7(c), they have no reason to believe that, as of its effective
date, the Registration Statement or any further amendment
thereto made by Penelec Capital or the Guarantor prior to the
Time of Delivery (other than the financial statements and
related schedules and other financial or statistical data
included or incorporated by reference therein, as to which
such counsel need express no opinion) contained an untrue
statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading or that, as of its date, the
Prospectus or any further amendment or supplement thereto made
by Penelec Capital or the Guarantor prior to the Time of
Delivery (other than the financial statements and related
schedules and other financial or statistical data included or
incorporated by reference therein, as to which such counsel
need express no opinion) contained an untrue statement of a
material fact or omitted to state a material fact necessary to
make the statements therein, in light of the circumstances in
which they were made, not misleading or that, as of the Time
of Delivery, the Prospectus or any further amendment or
supplement thereto made by Penelec Capital or the Guarantor
prior to the Time of Delivery (other than the financial
statements and related schedules and other financial or
statistical data included or incorporated by reference
therein, as to which such counsel need express no opinion)
contains an untrue statement of a material fact or omits to
state a material fact necessary to make the statements
therein, in light of the circumstances in which they were
made, not misleading;
In rendering their opinions, (A) Berlack, Israels & Liberman
may rely upon the opinion of Ballard Spahr Andrews & Ingersoll
as to all matters involving laws of the Commonwealth of
Pennsylvania, and (B) such counsel may rely, as to matters of
Delaware Law relating to Penelec Capital, the Preferred
Securities and the Limited Partnership Agreement, upon the
opinion of Richards, Layton & Finger, delivered pursuant to
subsection (e) hereof;
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(d) Carter, Ledyard & Milburn, special tax counsel for
Penelec Capital and the Guarantor, shall have furnished to you
their written opinion, dated the Time of Delivery, in form and
substance satisfactory to you, to the effect that such counsel
confirms its opinion as set forth under "United States
Taxation" in the Final Supplemented Prospectus;
(e) Richards, Layton & Finger, special Delaware counsel for
Penelec Capital and the Guarantor, shall have furnished to you
their written opinion, dated the Time of Delivery, in form and
substance satisfactory to you, to the effect that:
(i) Penelec Capital has been duly formed and is validly
existing in good standing as a limited partnership under
DRULPA;
(ii) Under the Limited Partnership Agreement and DRULPA,
Penelec Capital has all necessary partnership power and
authority to own its properties and conduct its business,
all as described in the Final Supplemented Prospectus;
(iii) The general partner and limited partner interests in
Penelec Capital issued to the General Partner and the Class
A Limited Partner have been duly and validly authorized and
are validly issued;
(iv) The Preferred Securities issued to the limited
partners of Penelec Capital, who hold the Preferred
Securities (the "Preferred Security Holders") have been duly
and validly authorized and are validly issued and, subject
to the qualifications set forth herein, are fully paid and
nonassessable limited partner interests in Penelec Capital,
as to which, assuming that the Preferred Security Holders,
as limited partners of Penelec Capital, do not participate
in the control of the business of Penelec Capital, the
Preferred Security Holders, as limited partners of Penelec
Capital, will have no liability in excess of their
obligations to make payments provided for in the Limited
Partnership Agreement and their share of Penelec Capital's
assets and undistributed profits (subject to the obligation
of a Preferred Security Holder to repay any funds wrongfully
distributed to it);
(v) There are no provisions in the Limited Partnership
Agreement the inclusion of which, subject to the terms and
conditions therein, or, assuming that the Preferred Security
Holders, as limited partners of Penelec Capital, take no
action other than actions permitted by the Limited
Partnership Agreement, the exercise of which, in accordance
with the terms and conditions therein, would cause the
Preferred Security Holders, as limited partners of Penelec
Capital, to be deemed to be participating in the control of
the business of Penelec Capital;
(vi) The Limited Partnership Agreement constitutes a
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legal, valid and binding agreement of the General Partner,
and is enforceable against the General Partner, in its
capacity as general partner of Penelec Capital, in
accordance with its terms subject to bankruptcy, insolvency,
moratorium, fraudulent conveyance, receivership,
reorganization, liquidation and other similar laws relating
to or affecting the rights and remedies of creditors
generally and to principles of equity (regardless of whether
considered and applied in a proceeding in equity or at law);
(vii) Under the Limited Partnership Agreement and DRULPA,
Penelec Capital has all necessary partnership power and
authority to execute and deliver, and to perform its
obligations under, this Agreement;
(viii) Under the Limited Partnership Agreement and DRULPA,
the execution and delivery by Penelec Capital of this
Agreement, and the performance by Penelec Capital of its
obligations hereunder, have been duly authorized by all
necessary partnership action on the part of Penelec Capital;
(ix) The issuance and sale by Penelec Capital of the
Preferred Securities pursuant to this Agreement and the
execution, delivery and performance by Penelec Capital of
this Agreement will not violate (i) any Delaware statute,
rule or regulation, or (ii) the Certificate of Limited
Partnership of Penelec Capital or the Limited Partnership
Agreement;
(x) No consent, approval, authorization, order,
registration or qualification of or with any Delaware court
or Delaware governmental agency or body is required solely
as a result of the issuance and sale by Penelec Capital of
the Preferred Securities pursuant to this Agreement, the
execution, delivery and performance by Penelec Capital of
this Agreement or the consummation of the transactions
contemplated in this Agreement; and
(xi) Such counsel has reviewed the statements in the
Final Supplemented Prospectus under the caption "Penelec
Capital" and, insofar as it contains statements of Delaware
law, such statements are fairly presented.
(xii) Assuming that Penelec Capital is treated as a
partnership for Federal income tax purposes, and assuming
that Penelec Capital derives no income from or connected
with sources within the State of Delaware and has no assets,
activities (other than the maintenance of a registered
office and registered agent in the State of Delaware and the
filing of documents with the Delaware Secretary of State) or
employees in the State of Delaware, the Preferred Security
Holders (other than those Preferred Security Holders who
reside or are domiciled in the State of Delaware), will have
no liability for Delaware income taxes solely as a result of
their participation in Penelec Capital, and Penelec Capital
19
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will not be liable for any Delaware income tax.
(f) On the date of this Agreement and at the Time of
Delivery, Coopers & Lybrand shall have furnished to you a letter,
dated the date of delivery thereof, in form and substance
satisfactory to you, to the effect set forth in Annex I hereto;
(g) Since the respective dates as of which information is
given in the Prospectus there shall not have been any change in
the capital stock or material change in the long-term debt of the
Guarantor (including all of its subsidiaries taken as a whole)
(except for such preferred stock and long-term debt acquired for
sinking fund purposes or redeemed pursuant to sinking fund or
optional redemption provisions or changes in obligations under
capital leases incurred in the ordinary course of the Guarantor's
business or for any increase in common stock as a result of
capital contributions or any decrease in capital stock as a
result of the declaration by the Guarantor either of regular
quarterly dividends on the Guarantor's preferred stock or
dividends on its common stock) or in the capital accounts or
long-term debt of Penelec Capital, or any change in or affecting
(x) the condition (financial or otherwise), stockholder's equity,
business affairs, operating properties, business prospects or
results of operations of the Guarantor and its subsidiaries taken
as a whole or (y) the condition (financial or otherwise), capital
accounts, business affairs, operating properties, business
prospects or results of operations of Penelec Capital, in any
such case otherwise than as set forth or contemplated in the
Final Supplemented Prospectus, the effect of which is in your
judgment so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering of the Securities
or the delivery of the Preferred Securities on the terms and in
the manner contemplated in the Final Supplemented Prospectus;
(h) On or after the date hereof (i) no downgrading shall
have occurred in the rating accorded the Guarantor's debt
securities or preferred stock or Penelec Capital's Preferred
Securities by any "nationally recognized statistical rating
organization", as that term is defined by the Commission for
purposes of Rule 436(g)(2) under the Act and (ii) no such
organization shall have publicly announced that it has under
surveillance or review, with possible negative implications, its
rating of any of the Guarantor's debt securities or preferred
stock or Penelec Capital's Preferred Securities;
(i) On or after the date hereof there shall not have
occurred any of the following: (i) a suspension or material
limitation in trading in securities generally on the New York
Stock Exchange; (ii) a suspension or material limitation in
trading in Penelec Capital's Preferred Securities on the New York
Stock Exchange or the Guarantor's preferred stock on the
Philadelphia Stock Exchange; (iii) a general moratorium on
commercial banking activities in New York declared by either
Federal or New York State authorities; or (iv) the outbreak or
escalation of hostilities involving the United States or the
20
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declaration by the United States, of a national emergency or war
if the effect of any such event specified in this Clause (iv) in
your judgment makes it impracticable or inadvisable to proceed
with the public offering of the Securities or the delivery of the
Preferred Securities on the terms and in the manner contemplated
in the Final Supplemented Prospectus;
(j) Provided the listing requirement concerning the minimum
number of Preferred Security Holders shall have been satisfied,
the Preferred Securities shall have been duly listed, subject to
notice of issuance, on the New York Stock Exchange;
(k) Penelec Capital and the Guarantor shall have furnished
or caused to be furnished to you at the Time of Delivery, a
certificate or certificates of the General Partner and a
certificate or certificates of officers of the Guarantor,
respectively, satisfactory to you as to the accuracy of the
representations and warranties of Penelec Capital and the
Guarantor herein at and as of such Time of Delivery, as to the
performance by each of Penelec Capital and the Guarantor of all
of their obligations hereunder to be performed at or prior to
such Time of Delivery, as to the matters set forth in subsections
(a) and (g) of this Section and as to such other matters as you
may reasonably request; and
(l) A Special Event (as defined in the Final Supplemented
Prospectus) shall not have occurred and be continuing; provided
that it shall also be a condition of the obligations of Penelec
Capital and the Guarantor hereunder, to issue and sell the
Preferred Securities, that a Special Event shall not have
occurred and be continuing.
8. (a) Penelec Capital and the Guarantor will jointly and
severally indemnify and hold harmless each Underwriter against
any losses, claims, damages or liabilities, joint or several, to
which such Underwriter may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration
Statement, the Prospectus, the Preliminary Supplemented
Prospectus, the Final Supplemented Prospectus or any other
prospectus relating to the Securities, or any amendment or
supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Underwriter for
any legal or other expenses reasonably incurred by such
Underwriter in connection with investigating or defending any
such action or claim as such expenses are incurred; provided,
however, that neither Penelec Capital nor the Guarantor shall be
liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged
omission made in any Preliminary Prospectus, the Registration
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Statement, the Prospectus, the Preliminary Supplemented
Prospectus, the Final Supplemented Prospectus or any other
prospectus relating to the Securities, or any such amendment or
supplement in reliance upon and in conformity with written
information furnished to Penelec Capital or the Guarantor by any
Underwriter through you expressly for use therein; and provided,
further that neither Penelec Capital nor the Guarantor shall be
liable to any Underwriter under this subsection (a) with respect
to any Preliminary Prospectus or Preliminary Supplemented
Prospectus to the extent that any such loss, claim, damage or
liability of such Underwriter results from the fact that such
Underwriter sold the Securities to a person as to whom it shall
be established that there was not sent or given, at or prior to
the written confirmation of such sale, a copy of the Final
Supplemented Prospectus (excluding documents incorporated by
reference) or of the Final Supplemented Prospectus as then
amended or supplemented (excluding documents incorporated by
reference) in any case where such delivery is required by the Act
if Penelec Capital or the Guarantor has previously furnished
copies thereof in sufficient quantity to such Underwriter and the
loss, claim, damage or liability of such Underwriter results from
an untrue statement or omission of a material fact contained in
the Preliminary Prospectus or Preliminary Supplemented Prospectus
and corrected in the Final Supplemented Prospectus (excluding
documents incorporated by reference) or in the Prospectus as then
amended or supplemented (excluding documents incorporated by
reference).
(b) Each Underwriter will indemnify and hold harmless
Penelec Capital and the Guarantor against any losses, claims,
damages or liabilities to which Penelec Capital or the Guarantor
may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement, the
Prospectus, the Preliminary Supplemented Prospectus, the Final
Supplemented Prospectus or any other prospectus relating to the
Securities, or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged
omission was made in any Preliminary Prospectus, the Registration
Statement, the Prospectus, the Preliminary Supplemented
Prospectus, the Final Supplemented Prospectus or any other
prospectus relating to the Securities, or any such amendment or
supplement in reliance upon and in conformity with written
information furnished to Penelec Capital or the Guarantor by such
Underwriter through you expressly for use therein; and will
reimburse Penelec Capital and the Guarantor for any legal or
other expenses reasonably incurred by Penelec Capital or the
Guarantor in connection with investigating or defending any such
action or claim as such expenses are incurred.
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(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any
action, such indemnified party shall, if a claim in respect
thereof is to be made against the indemnifying party under such
subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which
it may have to any indemnified party otherwise than under such
subsection. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of
the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall
wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party; provided, however, that
if the defendants in any such action include both the indemnified
party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be legal defenses
available to it and/or other indemnified parties which are
different from or additional to those available to the
indemnifying party, the indemnified party or parties shall have
the right to select separate counsel to assert such legal
defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties. Upon
receipt of notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party
under such subsection for any legal expenses of other counsel or
any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof unless
(i) the indemnified party shall have employed separate counsel in
connection with the assertion of legal defenses in accordance
with the proviso to the next preceding sentence (it being
understood, however, that the indemnifying party shall not be
liable for the expenses of more than one separate counsel (plus
any local counsel retained in the indemnified party's reasonable
judgment), approved by you in the case of paragraph (a) of this
Section 8 representing the indemnified parties under such
paragraph (a) who are parties to such action), (ii) the
indemnifying party shall not have employed counsel reasonably
satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of
commencement of the action or (iii) the indemnifying party has
authorized the employment of counsel for the indemnified party at
the expense of the indemnifying party; and except that, if clause
(i) or (iii) is applicable, such liability shall be only in
respect of the counsel referred to in such clause (i) or (iii).
(d) If the indemnification provided for in this Section 8
is held unavailable, in whole or on part, to hold harmless an
indemnified party under subsection (a) or (b) above in respect of
any losses, claims, damages or liabilities (or actions in respect
thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified
23
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party as a result of such losses, claims, damages or liabilities
(or actions in respect thereof) in such proportion as is
appropriate to reflect the relative benefits received by Penelec
Capital and the Guarantor on the one hand and the Underwriters on
the other from the offering of the Securities. If, however, the
allocation provided by the immediately preceding sentence is not
permitted by applicable law or if the indemnified party failed to
give the notice required under subsection (c) above, then each
indemnifying party shall contribute to such amount paid or
payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also
the relative fault of Penelec Capital and the Guarantor on the
one hand and the Underwriters on the other in connection with the
statements or omissions which resulted in such losses, claims,
damages or liabilities (or actions in respect thereof), as well
as any other relevant equitable considerations. The relative
benefits received by Penelec Capital and the Guarantor on the one
hand and the Underwriters on the other shall be deemed to be in
the same proportion as the total net proceeds from the offering
(before deducting expenses) received by Penelec Capital bear to
the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover
page of the Final Supplemented Prospectus. The relative fault
shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information supplied by Penelec Capital and the Guarantor on the
one hand or the Underwriters on the other and the parties'
relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. Penelec
Capital, the Guarantor and the Underwriters agree that it would
not be just and equitable if contributions pursuant to this
subsection (d) were determined by pro rata allocation (even if
the Underwriters were treated as one entity for such purpose) or
by any other method of allocation which does not take account of
the equitable considerations referred to above in this subsection
(d). The amount paid or payable by an indemnified party as a
result of the losses, claims, damages or liabilities (or actions
in respect thereof) referred to above in this subsection (d)
shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with
investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (d), no
Underwriter shall be required to contribute any amount in excess
of the amount by which the total price at which the Preferred
Securities underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which
such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Underwriters' obligations
in this subsection (d) to contribute are several in proportion to
their respective underwriting obligations and not joint.
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(e) The obligations of Penelec Capital and the Guarantor
under this Section 8 shall be in addition to any liability which
Penelec Capital and the Guarantor may otherwise have and shall
extend, upon the same terms and conditions, to each person, if
any, who controls any Underwriter within the meaning of the Act;
and the obligations of the Underwriters under this Section 8
shall be in addition to any liability which the respective
Underwriters may otherwise have and shall extend, upon the same
terms and conditions, to each officer and director of Penelec
Capital and the Guarantor and to each person, if any, who
controls Penelec Capital and the Guarantor within the meaning of
the Act.
9. (a) If any Underwriter shall default in its obligation
to purchase the Preferred Securities which it has agreed to
purchase hereunder, you may in your discretion arrange for you or
another party or other parties to purchase such Preferred
Securities on the terms contained herein. If within thirty-six
hours after such default by any Underwriter you do not arrange
for the purchase of such Preferred Securities, then Penelec
Capital and the Guarantor shall be entitled to a further period
of thirty-six hours within which to procure another party or
other parties satisfactory to you to purchase such Preferred
Securities on such terms. In the event that, within the
respective prescribed periods, you notify Penelec Capital and the
Guarantor that you have so arranged for the purchase of such
Preferred Securities, or Penelec Capital or the Guarantor
notifies you that it has so arranged for the purchase of such
Preferred Securities, you or Penelec Capital and the Guarantor
shall have the right to postpone the Time of Delivery for a
period of not more than seven days, in order to effect whatever
changes may thereby be made necessary in the Registration
Statement or the Final Supplemented Prospectus, or in any other
documents or arrangements, and Penelec Capital and the Guarantor
agree to file promptly any amendments or supplements to the
Registration Statement or the Prospectus which in your opinion
may thereby be made necessary. The term "Underwriter" as used in
this Agreement shall include any person substituted under this
Section with like effect as if such person had originally been a
party to this Agreement with respect to such Preferred
Securities.
(b) If, after giving effect to any arrangements for the
purchase of the Preferred Securities of a defaulting Underwriter
or Underwriters by you and Penelec Capital and the Guarantor as
provided in subsection (a) above, the aggregate number of such
Preferred Securities which remains unpurchased does not exceed
one-eleventh of the aggregate number of all the Preferred
Securities, then Penelec Capital and the Guarantor shall have the
right to require each non-defaulting Underwriter to purchase the
number of Preferred Securities which such Underwriter agreed to
purchase hereunder and, in addition, to require each
non-defaulting Underwriter to purchase its pro rata share (based
on the number of Preferred Securities which such Underwriter
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agreed to purchase hereunder) of the Preferred Securities of such
defaulting Underwriter or Underwriters for which such
arrangements have not been made; but nothing herein shall relieve
a defaulting Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the
purchase of the Preferred Securities of a defaulting Underwriter
or Underwriters by you and Penelec Capital and the Guarantor as
provided in subsection (a) above, the aggregate number of such
Preferred Securities which remains unpurchased exceeds
one-eleventh of the aggregate number of all the Preferred
Securities, or if Penelec Capital and the Guarantor shall not
exercise the right described in subsection (b) above to require
non-defaulting Underwriters to purchase Preferred Securities of a
defaulting Underwriter or Underwriters, then this Agreement shall
thereupon terminate, without liability on the part of any non-
defaulting Underwriter, Penelec Capital or the Guarantor except
for the expenses to be borne by Penelec Capital, the Guarantor
and the Underwriters as provided in Section 6 hereof and the
indemnity and contribution agreements in Section 8 hereof; but
nothing herein shall relieve a defaulting Underwriter from
liability for its default.
10. The respective indemnities, agreements,
representations, warranties and other statements of Penelec
Capital, the Guarantor and the several Underwriters, as set forth
in this Agreement or made by or on behalf of them, respectively,
pursuant to this Agreement, shall remain in full force and
effect, regardless of any investigation (or any statement as to
the results thereof) made by or on behalf of any Underwriter or
any controlling person of any Underwriter, or Penelec Capital,
the Guarantor, or any officer or director or controlling person
of Penelec Capital or the Guarantor, and shall survive delivery
of and payment for the Preferred Securities.
11. If this Agreement shall be terminated pursuant to
Section 9 hereof, Penelec Capital and the Guarantor shall not
then be under any liability to any Underwriter except as provided
in Section 6 and Section 8 hereof; but, if for any other reason
(including the issuance of any stop order suspending the
effectiveness of the Registration Statement under the Act or
proceedings therefor initiated or threatened by the Commission,
or, if for any reason there shall not be in full force and effect
appropriate orders of the Commission under the 1935 Act and of
the PaPUC authorizing the issuance and sale of the Securities and
to the extent necessary the other transactions contemplated
hereby), Preferred Securities are not delivered by or on behalf
of Penelec Capital (or the related Limited Guarantee and 8 3/4%
Subordinated Debentures issuable by the Guarantor are not
concurrently issued by the Guarantor) as provided herein, Penelec
Capital and the Guarantor will reimburse the Underwriters through
you for all out-of-pocket expenses approved in writing by you,
including fees and disbursements of counsel, reasonably incurred
by the Underwriters in making preparations for the purchase, sale
and delivery of the Preferred Securities (or the Limited
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Guarantee and 8 3/4% Subordinated Debentures not so issued), but
Penelec Capital and the Guarantor shall then be under no further
liability to any Underwriter except as provided in Section 6 and
Section 8 hereof.
12. In all dealings hereunder, you shall act on behalf of
each of the Underwriters, and the parties hereto shall be
entitled to act and rely upon any statement, request, notice or
agreement on behalf of any Underwriter made or given by you
jointly or by Goldman, Sachs & Co. on behalf of you as the
representatives.
All statements, requests, notices and agreements hereunder
shall be in writing, and if to the Underwriters shall be
delivered or sent by mail, telex or facsimile transmission to you
as the representatives in care of Goldman, Sachs & Co., at 85
Broad Street, New York, N.Y. 10004, Attention: Registration
Department; and if to Penelec Capital or the Guarantor shall be
delivered or sent by mail to the address of the Guarantor set
forth in the Registration Statement, Attention: Treasurer;
provided, however, that any notice to an Underwriter pursuant to
Section 8(c) hereof shall be delivered or sent by mail, telex or
facsimile transmission to such Underwriter at its address set
forth in its Underwriters' Questionnaire, or telex constituting
such Questionnaire, which address will be supplied to Penelec
Capital or the Guarantor by you upon request. Any such
statements, requests, notices or agreements shall take effect
upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely
to the benefit of, the Underwriters, Penelec Capital, the
Guarantor and, to the extent provided in Sections 8 and 10
hereof, the officers and directors of the Guarantor and each
person who controls Penelec Capital and the Guarantor or any
Underwriter, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall
acquire or have any right under or by virtue of this Agreement.
No purchaser of any of the Preferred Securities from any
Underwriter shall be deemed a successor or assign by reason
merely of such purchase.
14. Time shall be of the essence of this Agreement. As
used herein, the term "business day" shall mean any day when the
Commission's office in Washington, D.C. is open for business.
15. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
16. This Agreement may be executed by any one or more of
the parties hereto in any number of counterparts, each of which
shall be deemed to be an original, but all such counterparts
shall together constitute one and the same instrument.
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If the foregoing is in accordance with your understanding,
please sign and return to us twelve (12) counterparts hereof, and
upon the acceptance hereof by you, on behalf of each of the
Underwriters, this letter and such acceptance hereof shall
constitute a binding agreement between each of the Underwriters,
on one hand, and Penelec Capital and the Guarantor, on the other
hand. It is understood that your acceptance of this letter on
behalf of each of the Underwriters is pursuant to the authority
set forth in a form of Agreement among Underwriters, the form of
which shall be submitted to Penelec Capital and the Guarantor for
examination upon request, but without warranty on your part as to
the authority of the signers thereof.
Very truly yours,
PENELEC CAPITAL, L. P.
By: Penelec Preferred Capital, Inc.
its General Partner
By: /s/ Don W. Myers
Name: Don W. Myers
Title: Vice President and
Treasurer
PENNSYLVANIA ELECTRIC COMPANY
By: /s/ Don W. Myers
Name: Don W. Myers
Title: Vice President and
Treasurer
Accepted as of the date hereof:
Goldman, Sachs & Co.
Dean Witter Reynolds Inc.
A.G. Edwards & Sons, Inc.
Kidder, Peabody & Co. Incorporated
Morgan Stanley & Co. Incorporated
PaineWebber Incorporated
Prudential Securities Incorporated
Acting on its own behalf and
as Representative of the
Several Underwriters referred
to in the foregoing Agreement
By: /s/ Goldman, Sachs & Co.
(Goldman, Sachs & Co.)
28
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SCHEDULE I
Underwriter Total Number of
Preferred Securities
to be Purchased
GOLDMAN, SACHS & CO. 490,300
DEAN WITTER REYNOLDS INC. 490,000
A.G. EDWARDS & SONS, INC. 490,000
KIDDER, PEABODY & CO. INCORPORATED 490,000
MORGAN STANLEY & CO. INCORPORATED 490,000
PRUDENTIAL SECURITIES INCORPORATED 490,000
BEAR, STEARNS & CO. INC. 68,100
ALEX. BROWN & SONS INCORPORATED 68,100
CS FIRST BOSTON CORPORATION 68,100
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION 68,100
OPPENHEIMER & CO., INC. 68,100
PAINEWEBBER INCORPORATED 68,100
SALOMON BROTHERS INC 68,100
ADVEST, INC. 27,000
ARTHURS, LESTRANGE & COMPANY, INCORPORATED 27,000
J.C. BRADFORD & CO. 27,000
COMMERZBANK CAPITAL MARKETS CORPORATION 27,000
COWEN & COMPANY 27,000
CREDIT LYONNAIS SECURITIES (USA) INC. 27,000
DAIN BOSWORTH INCORPORATED 27,000
DAVENPORT & CO. OF VIRGINIA, INC. 27,000
DOFT & CO., INC. 27,000
FAHNESTOCK & CO. INC. 27,000
GRUNTAL & CO., INCORPORATED 27,000
J.J.B. HILLIARD, W.L. LYONS, INC. 27,000
INTERSTATE/JOHNSON LANE CORPORATION 27,000
JANNEY MONTGOMERY SCOTT INC. 27,000
LEGG MASON WOOD WALKER, INCORPORATED 27,000
MCDONALD & COMPANY SECURITIES, INC. 27,000
MORGAN KEEGAN & COMPANY, INC. 27,000
PARKER/HUNTER INCORPORATED 27,000
PENNSYLVANIA MERCHANT GROUP LTD 27,000
PIPER JAFFRAY INC. 27,000
PRYOR, MCCLENDON, COUNTS & CO., INC. 27,000
RAUSCHER PIERCE REFSNES, INC. 27,000
RAYMOND JAMES & ASSOCIATES, INC. 27,000
THE ROBINSON-HUMPHREY COMPANY, INC. 27,000
RODMAN & RENSHAW, INC. 27,000
STIFEL, NICOLAUS & COMPANY, INCORPORATED 27,000
STURDIVANT & CO., INC. 27,000
TUCKER ANTHONY INCORPORATED 27,000
WHEAT, FIRST SECURITIES, INC. 27,000
TOTAL 4,200,000
29
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ANNEX 1
[FORM OF LETTER OF ACCOUNTANTS]
Pursuant to Section 7(f) of the Underwriting Agreement, the
accountants shall furnish letters to the Underwriters to the
effect that:
(1) They are independent certified public accountants with
respect to the Guarantor and its subsidiaries within the meaning
of the Act and the applicable published rules and regulations
thereunder;
(2) In their opinion, the financial statements and any
supplementary financial information and schedules (and, if
applicable, prospective financial statements and/or pro forma
financial information) audited by them and included or
incorporated by reference in the Prospectus or the Registration
Statement comply as to form in all material respects with the
applicable accounting requirements of the Act and the related
published rules and regulations thereunder;
(3) On the basis of procedures referred to in such letter,
including a reading of the minutes and the latest available
interim financial statements of the Guarantor and inquiries of
officials of the Guarantor responsible for financial and
accounting matters, nothing caused them to believe that:
(A) Any material modifications should be made to the
unaudited financial statements, if any, included or
incorporated by reference in the Prospectus, for them to be
in conformity with generally accepted accounting principles;
(B) the unaudited financial statements, if any, included
or incorporated by reference in the Prospectus do not comply
as to form in all material respects with the applicable
accounting requirements of the Act or the Exchange Act and
the published rules and regulations of the Commission
thereunder;
(C) the unaudited pro forma condensed consolidated
financial statements, if any, included or incorporated by
reference in the Prospectus do not comply as to form in all
material respects with the applicable accounting
requirements of the Act or the Exchange Act and the
published rules and regulations of the Commission thereunder
or the pro forma adjustments have not been properly applied
to the historical amounts in the compilation of those
statements;
(D) at the date of the latest available internal balance
sheet of the Guarantor and at a subsequent specified date
not more than five days prior to the date of such letter,
there was any change in the common stock, preferred stock
without mandatory redemption, preferred stock with mandatory
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redemption or long-term debt (other than from currency
fluctuations and normal repurchases of long-term debt and
preferred stock for sinking fund purposes and scheduled
repayments or changes in obligations under capital leases
incurred in the ordinary course of the Guarantor's business)
of the Guarantor and its subsidiaries consolidated or any
decrease in its common stockholder's equity (excluding any
decrease as a result of the declaration by the Guarantor of
regular quarterly dividends on its preferred stock and
dividends on its common stock) as compared with amounts
shown in the latest balance sheet included or incorporated
by reference in the Prospectus, except in all cases for
changes, increases or decreases that the Prospectus
discloses have occurred or may occur or as may be set forth
in such letter; or
(4) In addition to their audit referred to in their reports
included or incorporated by reference in the Registration
Statement and Prospectus and the procedures referred to in (3)
above, they have carried out certain other specified procedures,
not constituting an audit, with respect to certain specified
dollar amounts, percentages and other financial information (in
each case to the extent that such dollar amounts, percentages and
other financial information are derived, directly or by analysis
or computation, from the general accounting records of the
Guarantor and its subsidiaries) that are included or incorporated
by reference in the Prospectus and appear in the Prospectus or
incorporated documents and have found such dollar amounts,
percentages and financial information to be in agreement with the
general accounting records of the Guarantor and its subsidiaries.
For purposes of this letter, all references in this Annex I
to the Prospectus shall be deemed to the Final Supplemented
Prospectus in the form in which it is proposed to be filed but
otherwise as defined in the Underwriting Agreement (including all
documents incorporated by reference therein) as of the date of
the letter delivered on the date of the Underwriting Agreement
and to the Final Supplemented Prospectus as defined in the
Underwriting Agreement (including all documents incorporated by
reference therein), or, if the Prospectus has at such time been
further amended or supplemented, to the Prospectus as so further
amended or supplemented, as of the date of the letter delivered
at the Time of Delivery.
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