As filed with the Securities and Exchange Commission on August, 26
1998
Registration Nos. 333-
333-
333-
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
--------------------
PENNSYLVANIA ELECTRIC COMPANY
(Exact name of registrant as specified
in its charter)
PENNSYLVANIA
(State or other jurisdiction of incorporation or organization)
25-0718085
(I.R.S. Employer Identification No.)
2800 Pottsville Pike
Reading, Pennsylvania 19605
(610) 929-3601
PENELEC CAPITAL II, L.P.
(Exact name of registrant as specified
in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
Applied for
(I.R.S. Employer Identification No.)
c/o GPU Service, Inc.
310 Madison Avenue
Morristown, New Jersey 07962
(973) 455-8200
PENELEC CAPITAL TRUST
(Exact name of registrant as specified
in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
Applied for
(I.R.S. Employer Identification No.)
The Bank of New York (Delaware)
White Clay Center, Route 273
Newark, Delaware 19711
(302) 451-2500
(Addresses, including zip codes, and telephone numbers, including area
codes, of registrants' principal executive offices)
TERRANCE G. HOWSON
Vice President and Treasurer
GPU Service, Inc.
310 Madison Avenue
Morristown, New Jersey 07962
(973) 455-8200
(Name, address, including zip code, and telephone number, including
area code, of agent for service for each registrant)
--------------------
Please send copies of all communications to:
DOUGLAS E. DAVIDSON, ESQ. ROBERT C. GERLACH, ESQ.
Berlack, Israels & Liberman LLP Ballard Spahr Andrews & Ingersoll, LLP
120 West 45th Street 1735 Market Street
New York, New York 10036 Philadelphia, Pennsylvania 19103
(212) 704-0100 (215) 665-8500
SCOTT L. GUIBORD, ESQ. JOHN T. HOOD, ESQ.
Secretary Thelen Reid & Priest LLP
Pennsylvania Electric Company 40 West 57th Street
2800 Pottsville Pike New York, New York 10019
Reading, Pennsylvania 19605 (212) 603-2000
(610) 929-3601
<PAGE>
Approximate date of commencement of proposed sale to the public: At such
time or times after the effective date of this Registration Statement as the
registrants shall determine based on market conditions and other factors.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box./ /
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering./ /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering./ /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box./ /
--------------------
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Amount To Maximum Maximum Amount Of
Be Offering Aggregate Registration
Title of Each Class Registered Price Per Offering Fee
of Securities To Be (1) Unit Price (1)
Registered (1)(2)(3)(4) (1)(2)(3)(4)
-----------------------------------------------------------------------------
Senior Notes of
Pennsylvania
Electric Company...
-----------------------------------------------------------------------------
Trust Securities of
Penelec Capital
Trust .............
-----------------------------------------------------------------------------
Preferred Securities
of Penelec Capital
II, L.P............
-----------------------------------------------------------------------------
Pennsylvania
Electric Company
Guarantee with
respect to Penelec
Capital II, L.P.
-----------------------------------------------------------------------------
Subordinated
Debentures of
Pennsylvania
Electric Company...
-----------------------------------------------------------------------------
Total............. $725,000,000 100% $725,000,000 $213,875
-----------------------------------------------------------------------------
(1)Such indeterminate number of Trust Securities of Penelec Capital Trust (the
"Trust"), such indeterminate number of Preferred Securities of Penelec
Capital II, L.P. ("Penelec Capital") and such indeterminate principal amount
of Senior Notes, Guarantee and Subordinated Debentures of Pennsylvania
Electric Company as may be from time to time issued at indeterminate prices.
Subordinated Debentures of the Pennsylvania Electric Company may be issued
and sold to Penelec Capital, in which event such Subordinated Debentures may
later be distributed to the holders of the Preferred Securities and the Trust
Securities upon a dissolution of Penelec Capital and the Trust and the
distribution of the assets thereof. No separate consideration will be
received for the Preferred Securities, the Subordinated Debentures or the
Guarantee.
(2)Estimated solely for purposes of calculating the registration fee pursuant to
Rule 457. The aggregate initial public offering price of the Trust Securities
of the Trust, Preferred Securities of Penelec Capital, and Subordinated
Debentures of Pennsylvania Electric Company offered hereby will not exceed
$125,000,000 and the aggregate initial public offering price of all the
securities registered hereby will not exceed $725,000,000.
(3)Exclusive of accrued interest and accumulated distributions, if any.
(4)Includes the rights of holders of Preferred Securities under the Guarantee
and back-up undertakings, consisting of obligations by Pennsylvania Electric
Company as set forth in the Trust Agreement of the Trust, the Subordinated
Debenture Indenture and Supplemental Indentures thereto, in each case as
further described in the Registration Statement. No separate consideration
will be received for the Guarantee or any back-up
undertakings.
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SECTION 8(a), MAY DETERMINE.
- -------------------------------------------------------------------------------
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of any offer to buy nor shall there be any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
<PAGE>
SUBJECT TO COMPLETION, DATED AUGUST __, 1998
PROSPECTUS $725,000,000
PENNSYLVANIA ELECTRIC COMPANY
SENIOR NOTES
--------------------
PENELEC CAPITAL TRUST
TRUST SECURITIES
each representing a Cumulative Preferred Security of Penelec Capital II, L.P.
fully and unconditionally guaranteed to the extent Penelec Capital II, L.P.
has funds,
as set forth herein, by
PENNSYLVANIA ELECTRIC COMPANY
-------------------
Pennsylvania Electric Company, a Pennsylvania corporation (the "Company"),
may offer, from time to time in one or more series, up to $725,000,000 aggregate
principal amount of Senior Notes (the "Senior Notes") secured by its Senior Note
Mortgage Bonds (as defined herein) until the Release Date (as defined herein),
and in amounts, at prices and on terms to be determined at or prior to the time
or times of sale. Until the Release Date, the Senior Notes will be secured by
Senior Note Mortgage Bonds issued and delivered by the Company to the Senior
Note Trustee (as defined herein). See "Description of Senior Notes - Security;
Release Date". On the Release Date, the Senior Notes will cease to be secured,
will become unsecured general obligations of the Company and will rank on a
parity with other unsecured and unsubordinated indebtedness of the Company
(unless otherwise secured under the limited circumstances described under the
caption "Description of Senior Notes - Certain Covenants of the Company
Limitations on Liens").
Penelec Capital Trust (the "Trust"), a statutory business trust created
under the laws of the State of Delaware, may offer up to $125,000,000 aggregate
liquidation value of preferred beneficial interests, in the form of Trust
Securities (the "Trust Securities"), in amounts, at prices and on terms to be
determined at or prior to the time of sale. Each Trust Security represents a
cumulative preferred limited partner interest (the "Preferred Securities") of
Penelec Capital II, L.P., a limited partnership formed under the laws of the
State of Delaware ("Penelec Capital"), which will be a special purpose indirect
subsidiary of the Company.
The Trust will use the proceeds from the sale of its Trust Securities to
purchase Preferred Securities from Penelec Capital, which will be the sole
assets of the Trust. Penelec Capital will lend
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<PAGE>
the proceeds from the sale of its Preferred Securities, plus the capital
contribution made by Penelec Preferred Capital II, Inc., a Delaware special
purpose corporation and the sole general partner of Penelec Capital (the
"General Partner"), to the Company, which loan will be evidenced by Subordinated
Debentures (the "Subordinated Debentures") issued by the Company. The Company's
Subordinated Debentures may be issued to Penelec Capital in exchange for Penelec
Capital's payment to the Company of an amount representing the proceeds from the
sale of the Preferred Securities to the Trust and the capital contributions of
the General Partner. Subordinated Debentures purchased by Penelec Capital may
subsequently be distributed pro rata to the holders of the Preferred Securities
and the Trust Securities in connection with the dissolution of Penelec Capital
and the Trust.
The Company will also unconditionally guarantee the payment by Penelec
Capital of (i) any accumulated and unpaid distributions on the Preferred
Securities to the extent Penelec Capital has funds on hand legally available
therefor, (ii) the applicable redemption price payable with respect to any
Preferred Securities called for redemption by Penelec Capital to the extent
Penelec Capital has funds on hand legally available therefor, and (iii) upon the
liquidation of Penelec Capital (other than in connection with a Distribution
Event (as defined herein)), the lesser of (a) the portion of the partnership
liquidation distribution applicable to the Preferred Securities and (b) the
amount of assets of Penelec Capital legally available for distribution to
holders of Preferred Securities in liquidation of Penelec Capital (the
"Guarantee").
The Trust Securities will be subject to mandatory redemption upon any
redemption of the of Preferred Securities, which will be subject to mandatory
redemption upon the maturity or prior redemption of the of Subordinated
Debentures, but will not be subject to any mandatory sinking fund. Preferred
Securities may also be subject to optional redemption upon the occurrence of
certain special events at the Special Event Redemption Price (as defined in
"Description of the Preferred Securities - Special Event Redemptions or
Distributions"). See "Description of the Preferred Securities - Mandatory
Redemption" and "--Special Event Redemptions or Distributions" and "Description
of the Subordinated Debentures and the Debenture Indenture."
The Senior Notes, Trust Securities, Preferred Securities, together with
the related Guarantee, and Subordinated Debentures are collectively referred to
as the "Offered Securities". The aggregate principal amount and liquidation
value of all Offered Securities to be
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<PAGE>
offered hereunder will not exceed $725,000,000. Risk Factors regarding the
Offered Securities will be set forth in the Prospectus Supplement or
Supplements.
Certain specific terms of the Offered Securities in respect of which this
Prospectus is being delivered will be set forth in an accompanying Prospectus
Supplement or Supplements, together with the terms of the particular Offered
Securities, the initial price thereof and the net proceeds from the sale
thereof. The Prospectus Supplement will set forth, with regard to the particular
Offered Securities, without limitation and where applicable, the following: (i)
in the case of the Senior Notes, the designation, aggregate principal amount,
maturity date or dates, interest rate or rates (or method of calculation
thereof) and times of payment of interest, the terms of any redemption, exchange
or sinking fund provisions, the purchase price and any other specific terms of
the offering, (ii) in the case of the Trust Securities, the specific title,
aggregate liquidation value, number of securities, purchase price, any listing
on a securities exchange, distribution rate (or method of calculation thereof)
on the related Preferred Securities, dates on which distributions shall be
payable and dates from which distributions shall accumulate on the related
Preferred Securities, any voting rights, any redemption, exchange or sinking
fund provisions, any other rights, preferences, privileges, limitations or
restrictions relating to the Trust Securities and the terms upon which the
proceeds of the Trust Securities shall be used to purchase a specific series of
Preferred Securities of Penelec Capital.
The Offered Securities may be sold to or through underwriters, through
dealers or agents, directly to purchasers or through a combination of such
methods. See "Plan of Distribution". The names of any underwriters, dealers or
agents involved in the sale of the Offered Securities in respect of which this
Prospectus is being delivered and any applicable fee, commission or discount
arrangements with them, will be set forth in the related Prospectus Supplement.
See "Plan of Distribution" for possible indemnification and contribution
arrangements for dealers, underwriters and agents.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
--------------------
The date of this Prospectus is , 1998.
3
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "SEC") and the New York Stock Exchange. Such reports and other
information can be inspected and copied at the public reference facilities
maintained by the SEC at Room 1024, Judiciary Plaza, 450 Fifth Street, NW,
Washington, D.C., and at the following regional offices of the SEC: New York
Regional Office, 13th Floor, Seven World Trade Center, New York, New York and
Chicago Regional Office, 14th Floor, 500 West Madison Street, Chicago, Illinois.
Copies of such materials can also be obtained at prescribed rates from the
Public Reference Section of the SEC at its principal office at Judiciary Plaza,
450 Fifth Street, NW, Washington, D.C. 20549. Such material is also available
from the SEC's Web site at "http//www.sec.gov". Certain of the Company's
securities are listed on the New York Stock Exchange and such reports and other
information can also be inspected and copied at the office of such exchange on
the 7th Floor, 20 Broad Street, New York, New York.
This Prospectus constitutes a part of a Registration Statement on Form S-3
(together with all amendments and exhibits thereto, the "Registration
Statement") filed by the Company, Penelec Capital and the Trust with the SEC
under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the Offered Securities. This Prospectus does not contain all of the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the SEC. Reference is
made to the Registration Statement and to the exhibits relating thereto for
further information with respect to the Company, Penelec Capital, the Trust and
the Offered Securities. Any statements contained herein concerning the
provisions of any document filed as an exhibit to the Registration Statement or
otherwise filed with the SEC or incorporated by reference herein are not
necessarily complete, and in each instance reference is made to the copy of such
document so filed for a more complete description of the matter involved. Each
such statement is qualified in its entirety by such reference.
No separate financial statements of the Trust or Penelec Capital have been
included or incorporated by reference herein. The Company does not consider that
such financial statements would be material to holders of the Trust Securities
because (i) the Trust and Penelec Capital are special purpose entities, have no
independent operations and exist for the sole purpose of issuing the securities
described herein and (ii) the Company's obligations described herein and in any
accompanying Prospectus Supplement under the Guarantee, the Subordinated
Debentures purchased by Penelec Capital and the related
Debenture Indenture (as defined herein), and the General Partner's obligations
under the Amended and Restated Trust Agreement of the Trust and the Amended and
Restated Limited Partnership Agreement of Penelec Capital, taken together,
constitute a full and unconditional guarantee of payments due on the Preferred
Securities which are represented by the Trust Securities. See "Description of
the Trust Securities," "Description of the Preferred Securities" and
"Description of the Subordinated Debentures and Debenture Indenture" and
"Description of the Guarantee".
4
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates herein by reference the following
documents which have been filed by the Company with the SEC pursuant to the
Exchange Act:
1. The Company's Annual Report on Form 10-K for the year ended December
31, 1997.
2. The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31 and June 30, 1998.
3. The Company's Current Reports on Form 8-K, dated May 22, May 27,
June 5,
July 17, July 21, and August 3, 1998.
All documents subsequently filed by the Company with the SEC pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination
of the offering made hereby shall be deemed to be incorporated herein by
reference and to be a part hereof from the respective dates of filing thereof.
The documents incorporated or deemed to be incorporated herein by reference are
sometimes hereinafter called the "Incorporated Documents". Any statement
contained herein or in an Incorporated Document shall be deemed to be modified
or superseded for all purposes to the extent that a statement contained herein
or in any Prospectus Supplement or in any subsequently filed Incorporated
Document modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus or any Prospectus Supplement.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon written or oral the request of any such person, a
copy of any or all of the Incorporated Documents, excluding the exhibits thereto
unless such exhibits are specifically incorporated by reference into such
documents. Requests for such documents should be directed to Pennsylvania
Electric Company, 2800 Pottsville Pike, Reading, Pennsylvania 19605, attention:
Secretary. The Company telephone number is (610) 929-3601.
In addition to the historical information contained or incorporated by
reference herein, this Prospectus contains or incorporates by reference a number
of "forward-looking statements" within the meaning of the Exchange Act. Such
statements address future events and conditions concerning capital expenditures,
resolution and impact of litigation, regulatory matters, liquidity and capital
resources and accounting matters. Actual results in each case could differ
materially from those projected in such statements due to a variety of factors
including, without limitation, restructuring of the utility industry; future
economic conditions; earnings retention and dividend payout policies;
developments in the legislative, regulatory and competitive environments in
which the Company operates; and other circumstances that could affect
anticipated revenues and costs, such as compliance with laws and regulations.
These and other factors are discussed in the Company's filings with the SEC.
5
<PAGE>
PENNSYLVANIA ELECTRIC COMPANY
Pennsylvania Electric Company (the "Company"), a public utility furnishing
electric service within the Commonwealth of Pennsylvania and a small portion of
New York State, is a subsidiary of GPU, Inc. ("GPU"), a holding company
registered under the Public Utility Holding Company Act of 1935. The Company
provides electric service within a territory located in western, northern and
south central Pennsylvania having a population of about 1,500,000. The Company,
as lessee of the property of The Waverly Electric Light and Power Company, a
subsidiary, also serves a population of about 13,700 in Waverly, New York. The
Company's principal executive offices are located at 2800 Pottsville Pike,
Reading, Pennsylvania 19605, and its telephone number is (610) 929-3601.
For the year 1997, residential sales accounted for about 35% of the
Company's operating revenues from customers and 28% of kilowatt-hour sales to
customers; commercial sales accounted for about 33% of the Company's operating
revenues from customers and 30% of kilowatt-hour sales to customers; industrial
sales accounted for about 28% of the Company's operating revenues from customers
and 36% of kilowatt-hour sales to customers; and sale to rural electric
cooperatives, municipalities (primarily for street and highway lighting) and
others accounted for about 4% of the Company's operating revenues from customers
and 6% of kilowatt-hour sales to customers. The revenues derived from the 25
largest customers in the aggregate accounted for approximately 13% of operating
revenues from customers for the year 1997. The Company also makes interchange
and spot market sales of electricity to other utilities.
The electric generating and transmission facilities of the Company and its
affiliates, Metropolitan Edison Company and Jersey Central Power & Light Company
(collectively doing business as "GPU Energy"), are physically interconnected and
are operated as a single integrated and coordinated system. The transmission
facilities of the integrated system are physically interconnected with
neighboring nonaffiliated utilities in Pennsylvania, New Jersey, Maryland, New
York and Ohio. The Company is a member of the Pennsylvania-New Jersey-Maryland
Interconnection ("PJM") and the Mid-Atlantic Council, an organization providing
coordinated review of the planning by utilities in the PJM area. The
interconnection facilities are used for substantial capacity and energy
interchange and purchased power transactions as well as emergency assistance.
PENELEC CAPITAL TRUST
Penelec Capital Trust (the "Trust") is a statutory business trust created
in August 1998 under the laws of the State of Delaware. The Trust exists for the
sole purpose of issuing the Trust Securities representing the Preferred
Securities to be held by the Trust and performing functions directly related
thereto. The Trust cannot issue any other securities. The Preferred Securities
will be the only assets of the Trust and the only revenues of the Trust will be
distributions it receives on the Preferred Securities. All expenses and
liabilities of the Trust will be paid by the General Partner. The Trust's
mailing address is The Bank of New York (Delaware), White Clay Center, Route
273, Newark, Delaware 19711 and its telephone number is (302) 451-2500.
6
<PAGE>
PENELEC CAPITAL II, L.P.
Penelec Capital II, L.P. ("Penelec Capital") is a limited partnership
formed in August 1998 under the laws of the State of Delaware. All of its
general partner interests are owned by Penelec Preferred Capital II, Inc., which
will be a wholly owned subsidiary of the Company, as the general partner (the
"General Partner"). As a limited partnership, all of the business and affairs of
Penelec Capital are managed by the General Partner. Penelec Capital was created
solely for the purpose of issuing the Preferred Securities and lending the
proceeds thereof to the Company. Such loans are evidenced by the Subordinated
Debentures issued by the Company in series under the Debenture Indenture (as
hereinafter defined). The Subordinated Debentures will be the only assets of
Penelec Capital and the only revenues of Penelec Capital will be interest its
receives on the Subordinated Debentures. The General Partner pays all of Penelec
Capital's operating expenses and has general liability for all of Penelec
Capital's obligations. Penelec Capital's mailing address is c/o GPU Service,
Inc. 310 Madison Avenue, Morristown, New Jersey 07962 and its telephone number
is (973) 455-8200.
FINANCING PROGRAM
Depending upon market conditions, during the next two years the Company
and/or the Trust, as the case may be, expect to offer pursuant to one or more
separate offerings, up to $725,000,000 aggregate principal amount and
liquidation value of Offered Securities, including up to $125,000,000
liquidation value of Trust Securities. The net proceeds from the sale of the
Trust Securities will be used to purchase Preferred Securities from Penelec
Capital. Penelec Capital will, in turn, lend the proceeds from the sale of its
Preferred Securities to the Company, which loan will be evidenced by the
Company's Subordinated Debentures. The Company also expects to have short-term
borrowings outstanding from time to time during such period.
USE OF PROCEEDS
Unless otherwise indicated in the accompanying Prospectus Supplement, the
Company intends to use the net proceeds from the sale of the Offered Securities
offered hereby (i) to redeem other outstanding securities of the Company,
including first mortgage bonds, preferred stock and preferred securities, (ii)
to repay outstanding short-term bank loans or other unsecured indebtedness,
(iii) for construction purposes and (iv) for other corporate purposes, including
to reimburse the Company's treasury for funds previously expended therefrom for
the above purposes. The Trust will use the proceeds from the sale of its Trust
Securities to purchase the Preferred Securities. Penelec Capital will use the
proceeds from the sale of the Preferred Securities to purchase the Subordinated
Debentures. Any specific allocation of the proceeds to a particular purpose that
has been made at the date of any Prospectus Supplement will be described
therein.
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<PAGE>
COMPANY COVERAGE RATIOS
The Company's Ratio of Earnings to Fixed Charges for each of the periods
indicated was as follows:
Years ended December 31, Twelve Months
------------------------ ended
1993 1994 1995 1996 1997 June 30, 1998
---- ---- ---- ---- ---- -------------
4.09 1.69 3.51 2.64 3.35 2.95
The Ratio of Earnings to Fixed Charges represents, on a pre-tax basis, the
number of times earnings cover fixed charges. Earnings consist of net income to
which has been added fixed charges and taxes based on income of the Company.
Fixed charges consist of interest on funded indebtedness, other interest
(including distributions on Company Obligated Manditorily Redeemable Preferred
Securities), amortization of net gain on reacquired debt and net discount on
debt and interest portion of all rentals charged to income.
The Company's Ratio of Earnings to Combined Fixed Charges and Preferred
Stock Dividends for each of the periods indicated was as follows:
Years ended December 31, Twelve Months
------------------------ ended
1993 1994 1995 1996 1997 June 30, 1998
---- ---- ---- ---- ---- -------------
3.52 1.59 3.39 2.55 3.29 2.90
The Ratio of Earnings to Combined Fixed Charges and Preferred Stock
Dividends represents, on a pre-tax basis, the number of times earnings cover
fixed charges and preferred stock dividends. Earnings consist of net income to
which has been added fixed charges and taxes based on income of the Company.
Combined fixed charges and preferred stock dividends consist of interest on
funded indebtedness, other interest (including distribution on company Obligated
Manditorily Redeemable Preferred Securities), amortization of net gain on
reacquired debt and net discount on debt, preferred stock dividends (increased
to reflect the pre-tax earnings required to cover such dividend requirements)
and the interest portion of all rentals charged to income.
ACCOUNTING TREATMENT
The financial statements of Penelec Capital will be consolidated with the
Company's financial statements, with the Preferred Securities shown on the
Company's consolidated financial statements as "Company Obligated Mandatorily
Redeemable Preferred Securities of a partnership". The Company's financial
statements will include a footnote that discloses, among other things, that the
sole asset of Penelec Capital consists of the Subordinated Debentures and will
specify the principal amount, interest rate and maturity date of each series of
Subordinated Debentures.
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<PAGE>
DESCRIPTION OF SENIOR NOTES
The following is a summary of certain terms and provisions of the Senior
Notes and the Senior Note Indenture (as defined below). Reference is made to the
Senior Note Indenture which is an exhibit to the Registration Statement of which
this Prospectus forms a part.
General
The Senior Notes may be issued from time to time in one or more series in
amounts and on terms to be determined at or prior to the time or times of sale,
under the Senior Note Indenture, as it may be amended or supplemented (the
"Senior Note Indenture") between the Company and United States Trust Company of
New York (the "Senior Note Trustee").
Until the Release Date (as defined below), all of the Senior Notes
outstanding under the Senior Note Indenture will be secured by one or more
series of the Company's Senior Note Mortgage Bonds (as defined below) issued and
delivered by the Company to the Senior Note Trustee. See "-- Security; Release
Date". On the Release Date, the Senior Notes will cease to be secured by the
Senior Note Mortgage Bonds, will become unsecured general obligations of the
Company and will rank on a parity with other unsecured and unsubordinated
indebtedness of the Company. The Senior Note Indenture provides that prior to
the Release Date, the principal amount of the Senior Notes that may be issued
and outstanding cannot exceed the principal amount of the Senior Note Mortgage
Bonds then held by the Senior Note Trustee. See "Description of Senior Note
Mortgage Bonds".
There is no requirement under the Senior Note Indenture that future issues
of debt securities of the Company be issued exclusively under the Senior Note
Indenture; accordingly, the Company will be free to employ other indentures or
documentation, containing provisions different from those included in the Senior
Note Indenture or applicable to one or more issues of Senior Notes, in
connection with future issues of other debt securities. There is no limitation
on the amount of Senior Notes that may be issued under the Senior Note
Indenture. Notwithstanding the foregoing, the Senior Note Indenture contains
certain restrictive covenants, including a restriction that the Company may not
issue, assume, guarantee or permit to exist, so long as any Senior Notes are
outstanding and after the Release Date, any debt that ranks senior to the Senior
Notes, subject to certain exceptions. In addition, the Senior Note Indenture
also provides that so long as any Senior Notes are outstanding, certain
sale/leaseback arrangements are restricted.
There is no provision in the Senior Note Indenture or the Senior Notes
that requires the Company to redeem, or permit the holders to cause a redemption
of, the Senior Notes or that
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<PAGE>
otherwise protects the holders in the event that the Company incurs substantial
additional indebtedness, whether or not in connection with a change in control
of the Company.
Reference is made to the Prospectus Supplement for a description of the
following terms of the series of Senior Notes in respect of which this
Prospectus is being delivered: (i) the title of such Senior Notes; (ii) the
aggregate principal amount of such Senior Notes; (iii) the price (expressed as a
percentage of principal amount) at which such Senior Notes will be issued; (iv)
the date or dates on which the principal of such Senior Notes is payable; (v)
the rate or rates at which such Senior Notes will bear interest, the date or
dates from which such interest will accrue, the dates on which such interest
will be payable ("Interest Payment Dates"), and the regular record dates for the
interest payable on such Interest Payment Dates; (vi) the option, if any, of the
Company to redeem such Senior Notes and the period or periods within which, or
the date or dates on which, the prices at which and the terms and conditions
upon which, such Senior Notes may be redeemed, in whole or in part, upon the
exercise of such option; (vii) the obligation, if any, of the Company to redeem
or purchase such Senior Notes at the option of the registered holder or pursuant
to any sinking fund or analogous provisions and the period or periods within
which, or the date or dates on which, the price or prices at which and the terms
and conditions upon which, such Senior Notes will be redeemed or purchased, in
whole or in part, pursuant to such obligation; (viii) the denominations in which
such Senior Notes will be issuable, if other than $1,000 and integral multiples
thereof; (ix) whether such Senior Notes are to be issued in whole or in part in
book-entry form and represented by one or more global Senior Notes and, if so,
the identity of the depository for such global Senior Notes and the specific
terms of the depository arrangements therefor; and (x) any other terms of such
Senior Notes, including with respect to any series, if applicable.
Redemption Provisions
Any terms for the optional or mandatory redemption of the Senior Notes
will be set forth in the Prospectus Supplement or Supplements. Except as shall
otherwise be provided in the applicable Prospectus Supplement or Supplements,
the Senior Notes will be redeemable only upon notice by mail not less than 30
nor more than 60 days prior to the date fixed for redemption, and, if less than
all the Senior Notes of a series, or any tranche thereof, are to be redeemed,
the particular Senior Notes to be redeemed will be selected by the Senior Note
Trustee in such a manner as it shall deem appropriate and fair.
Any notice of redemption at the option of the Company may state that such
redemption will be conditional upon receipt by the Senior Note Trustee, on or
prior to the date fixed for such
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redemption, of money sufficient to pay the principal of and premium, if any, and
interest on such Senior Notes and that if such money has not been so received,
such notice will be of no force and effect and the Company will not be required
to redeem such Senior Notes.
Security; Release Date
Until the Release Date, the Senior Notes will be secured by one or more
series of the Company's first mortgage bonds ("Senior Note Mortgage Bonds')
issued and delivered by the Company to the Senior Note Trustee (see "Description
of Senior Note Mortgage Bonds"). Upon the issuance of a series of Senior Notes
prior to the Release Date, the Company will simultaneously issue and deliver to
the Senior Note Trustee, as security for all the Senior Notes being issued, a
series of Senior Note Mortgage Bonds that will have the same stated maturity
date and corresponding redemption provisions, and will be in the same aggregate
principal amount and have the same interest rate as the corresponding series of
Senior Notes being issued. Any payment by the Company to the Senior Note Trustee
of principal of, premium, if any, and interest on, a series of Senior Note
Mortgage Bonds will be applied by the Senior Note Trustee to satisfy the
Company's obligations with respect to principal of, premium, if any, and
interest on, the corresponding series of Senior Notes.
The Release Date will be the earlier of (i) the date that all First
Mortgage Bonds (as defined herein) other than the Senior Note Mortgage Bonds,
have been retired (at, before or after the maturity thereof) through payment,
redemption, purchase or otherwise and (ii) the date upon which the Senior Note
Trustee holds Senior Note Mortgage Bonds constituting not less than 80% in
aggregate principal amount of all outstanding First Mortgage Bonds. On the
Release Date, the Senior Note Trustee will deliver to the Company for
cancellation all Senior Note Mortgage Bonds and, not later than 30 days
thereafter, will provide notice to all holders of the Senior Notes of the
occurrence of the Release Date. As a result, on the Release Date, the Senior
Note Mortgage Bonds shall cease to secure the Senior Notes and the Senior Notes
will become unsecured and unsubordinated general obligations of the Company.
Each series of Senior Note Mortgage Bonds will be a series of First
Mortgage Bonds of the Company. See "Description of Senior Note Mortgage Bonds
Kind and Priority of Lien". Upon the payment or cancellation of any outstanding
Senior Notes, the Senior Note Trustee shall surrender to the Company for
cancellation an equal principal amount of the related series of Senior Note
Mortgage Bonds. The Company shall not permit, at any time prior to the Release
Date, the aggregate principal amount of Senior Note Mortgage Bonds held by the
Senior Note Trustee to be less than the aggregate principal amount of the Senior
Notes
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outstanding. The Senior Note Indenture includes a restriction that the Company
may not issue, guarantee or permit to exist, so long as any of the Senior Notes
are outstanding and after the Release Date, any debt that ranks senior to the
Senior Notes, subject to certain exceptions. After the issuance of the first
series of the Senior Notes, no additional First Mortgage Bonds will be issued
under the Mortgage (as defined herein) other than as collateral security for the
Senior Notes.
Events of Default
The following constitute events of default under the Senior Note
Indenture: (a) default in the payment of principal of and premium, if any, on
any Senior Note when due and payable; (b) default in the payment of interest on
any Senior Note when due which continues for 60 days; (c) default in the
performance or breach of any other covenant or agreement of the Company in the
Senior Notes or in the Senior Note Indenture and the continuation thereof for 90
days after written notice thereof to the Company by the Senior Note Trustee or
the holders of at least 33% in aggregate principal amount of the outstanding
Senior Notes; (d) prior to the Release Date, the occurrence of a completed
default (as defined herein) under the Mortgage; provided, however, that the
waiver or cure of such default and the recission and annulment of the
consequences thereof under the Mortgage shall constitute a waiver of the
corresponding event of default under the Senior Note Indenture and a recission
and annulment of the consequences thereof under the Senior Note Indenture; and
(e) certain events of bankruptcy, insolvency, reorganization, assignment or
receivership of the Company.
If an event of default occurs and is continuing, either the Senior Note
Trustee or the holders of a majority in aggregate principal amount of the
outstanding Senior Notes may declare the principal amount of all of the Senior
Notes to be due and payable immediately. Upon such acceleration of the Senior
Notes, the Senior Note Mortgage Bonds shall be immediately redeemable upon
demand of the Senior Note Trustee (and surrender thereof to the Mortgage
Trustee, as defined herein) at a redemption price of 100% of the principal
amount thereof, together with interest to the redemption date. See "Description
of Senior Note Mortgage Bonds - Redemption Provisions of Senior Note Mortgage
Bonds". At any time after an acceleration of the Senior Notes has been obtained
(and provided the acceleration of all Senior Note Mortgage Bonds has not
occurred), if the Company pays or deposits with the Senior Note Trustee a sum
sufficient to pay all matured installments of interest and the principal and any
premium which has become due on the Senior Notes otherwise than by acceleration
and all defaults shall have been cured or waived, then such payment or deposit
will cause an automatic rescission and annulment of the acceleration of the
Senior Notes.
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The Senior Note Indenture provides that the Senior Note Trustee generally
will be under no obligation to exercise any of its rights or powers under the
Senior Note Indenture at the request or direction of any of the holders of the
Senior Notes unless such holders have offered to the Senior Note Trustee
reasonable security or indemnity. Subject to such provisions for indemnity and
certain other limitations contained in the Senior Note Indenture, the holders of
a majority in aggregate principal amount of the outstanding Senior Notes
generally will have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Senior Note Trustee, or of
exercising any trust or power conferred on the Senior Note Trustee. The holders
of a majority in aggregate principal amount of the outstanding Senior Notes
generally will have the right to waive any past default or event of default
(other than a payment default) on behalf of all holders of the Senior Notes. The
Senior Note Indenture provides that no holder of the Senior Notes may institute
any action against the Company under the Senior Note Indenture unless such
holder previously shall have given to the Senior Note Trustee written notice of
an event of default and continuance thereof and unless the holders of not less
than a majority in aggregate principal amount of the Senior Notes then
outstanding affected by such event of default shall have requested the Senior
Note Trustee to institute such action and shall have offered the Senior Note
Trustee reasonable indemnity, and the Senior Note Trustee shall not have
instituted such action within 60 days of such request. Furthermore, no holder of
the Senior Notes will be entitled to institute any such action if and to the
extent that such action would disturb or prejudice the rights of other holders
of the Senior Notes. Notwithstanding that the right of a holder of the Senior
Notes to institute a proceeding with respect to the Senior Note Indenture is
subject to certain conditions precedent, each holder of a Senior Note has the
right, which is absolute and unconditional, to receive payment of the principal
of, and premium, if any, and interest on such Senior Note when due and to
institute suit for the enforcement of any such payment, and such rights may not
be impaired without the consent of such holders of Senior Notes. The Senior Note
Indenture provides that the Senior Note Trustee, within 90 days after the
occurrence of a default with respect to the Senior Notes, is required to give
holders of the Senior Notes notice of any default known to the Senior Note
Trustee, unless cured or waived, but, except in the case of default in the
payment of principal of, or premium, if any, or interest on, any Senior Notes,
the Senior Note Trustee may withhold such notice if it determines in good faith
that it is in the interest of such holders to do so. The Company is required to
deliver to the Senior Note Trustee each year an officer's certificate as to
whether or not the Company is in compliance with the conditions and covenants
under the Senior Note Indenture.
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Modification with Approval
Modification and amendment of the Senior Note Indenture may be effected by
the Company and the Senior Note Trustee with the consent of the holders of a
majority in aggregate principal amount of the outstanding Senior Notes affected
thereby, provided that no such modification or amendment may, without the
consent of the holder of each outstanding Senior Note affected thereby, (a)
change the maturity date of any Senior Note; (b) reduce the rate (or change the
method of calculation thereof) or extend the time of payment of interest on any
Senior Note; (c) reduce the principal amount of, or premium payable on, any
Senior Note; (d) change the coin or currency of any payment of principal of, or
premium, if any, or interest on, any Senior Note; (e) change the date on which
any Senior Note may be redeemed or repaid at the option of the holder thereof or
adversely affect the rights of a holder to institute suit for the enforcement of
any payment on or with respect to any Senior Note; (f) impair the interest of
the Senior Note Trustee in the Senior Note Mortgage Bonds held by it or, prior
to the Release Date, reduce the principal amount of any series of Senior Note
Mortgage Bonds securing the Senior Notes to an amount less than the principal
amount of the related series of Senior Notes or alter the payment provisions of
such Senior Note Mortgage Bonds in a manner adverse to the holders of the Senior
Notes; or (g) modify the foregoing requirements or reduce the percentage of
outstanding Senior Notes necessary to modify or amend the Senior Note Indenture
or to waive any past default to less than a majority.
Modification without Approval
Modification and amendment of the Senior Note Indenture may be effected by
the Company and the Senior Note Trustee without the consent of the holders (a)
to add to the covenants of the Company for the benefit of the holders or to
surrender a right conferred on the Company in the Senior Note Indenture; (b) to
add further security for the Senior Notes; (c) to supply omissions, cure
ambiguities or correct defects, which actions, in each case, are not prejudicial
to the interest of the holders in any material respect; or (d) to make any other
change that is not prejudicial to the holders of the Senior Notes in any
material respect.
A supplemental indenture which changes or eliminates any covenants or
other provision of the Senior Note Indenture (or any supplemental indenture)
which has expressly been included solely for the benefit of one or more series
of the Senior Notes, or which modifies the rights of the holders of the Senior
Notes of such series with respect to such covenant or provision, will be deemed
not to affect the rights under the Senior Note Indenture of the holders of the
Senior Notes of any other series.
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Defeasance and Discharge
The Senior Note Indenture provides that the Company will be discharged
from any and all obligations in respect to the Senior Notes and the Senior Note
Indenture (except for certain obligations such as obligations to register the
transfer or exchange of the Senior Notes, replace stolen, lost or mutilated
Senior Notes and maintain paying agencies) if, among other things, the Company
irrevocably deposits with the Senior Note Trustee, in trust for the benefit of
the holders of Senior Notes, money or certain United States government
obligations, or any combination thereof, which will provide money in an amount
sufficient, without reinvestment, to make all payments of principal of, premium,
if any, and interest on, the Senior Notes on the dates such payments are due in
accordance with the terms of the Senior Note Indenture and the Senior Notes;
provided that unless all of the Senior Notes mature within 90 days of such
deposit by redemption or otherwise, the Company shall also have delivered to the
Senior Note Trustee an opinion of counsel to the effect that the holders of the
Senior Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such defeasance or discharge of the Senior Note
Indenture. Thereafter, the holders of the Senior Notes may look only to such
deposit for payment of the principal of, and interest and any premium on, the
Senior Notes.
Consolidation, Merger and Sale or Disposition of Assets
The Company may not consolidate with or merge into any other corporation
or sell or otherwise dispose of its properties as or substantially as an
entirety unless (i) the successor or transferee corporation shall be a
corporation organized and existing under the laws of the United States or any
state thereof or the District of Columbia, (ii) the successor or transferee
corporation assumes by supplemental indenture the due and punctual payment of
the principal of and premium, if any, and interest on all the Senior Notes and
the performance of every covenant of the Senior Note Indenture to be performed
or observed by the Company; and (iii) if prior to the Release Date, the
successor or transferee corporation assumes the Company's obligations under the
Mortgage with respect to the Senior Note Mortgage Bonds. Upon any such
consolidation, merger, sale, transfer or other disposition of the properties of
the Company substantially as an entirety, the successor corporation formed by
such consolidation or into which the Company is merged or to which such transfer
is made shall succeed to, and be substituted for, and may exercise every right
and power of, the Company under the Senior Note Indenture with the same effect
as if such successor corporation had been named as the Company therein, and the
Company will be released from all obligations under the Senior Note Indenture.
For purposes of the Senior Note Indenture, the conveyance or other transfer by
the Company of (a) all or any portion of its facilities for the generation of
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electric energy or (b) all of its facilities for the transmission of electric
energy, in each case considered alone or in any combination with properties
described in the other clause, shall in no event be deemed to constitute a
conveyance or other transfer of all the properties of the Company, as or
substantially as an entirety.
Certain Covenants of the Company
Limitation on Liens
The Senior Note Indenture provides that, so long as any such Senior Notes
are outstanding, the Company may not issue, assume, guarantee or permit to exist
after the Release Date any Debt (as defined below) that is secured by any
mortgage, security interest, pledge or lien ("Lien") of or upon any Operating
Property of the Company (as defined below), whether owned at the date of the
Senior Note Indenture or thereafter acquired, without in any such case
effectively securing the Senior Notes (together with, if the Company shall so
determine, any other indebtedness of the Company ranking equally with the Senior
Notes) equally and ratably with such Debt (but only so long as such Debt is so
secured).
The foregoing restriction will not apply to: (1) Liens on any Operating
Property existing at the time of its acquisition (which Liens may also extend to
subsequent repairs, alterations and improvements to such Operating Property);
(2) Liens on Operating Property of a corporation existing at the time such
corporation is merged into or consolidated with, or such corporation disposes of
its properties (or those of a division) as or substantially as an entirety to,
the Company; (3) Liens on Operating Property to secure the costs of acquisition,
construction, development or substantial repair, alteration or improvement of
property or to secure indebtedness incurred to provide funds for any such
purpose or for reimbursement of funds previously expended for any such purpose,
provided such Liens are created or assumed contemporaneously with, or within 18
months after, such acquisition or the completion of substantial repair or
alteration, construction, development or substantial improvement; (4) Liens in
favor of any state or any department, agency or instrumentality or political
subdivision of any state, or for the benefit of holders of securities issued by
any such entity (or providers of credit enhancement with respect to such
securities), to secure any Debt (including, without limitation, obligations of
the Company with respect to industrial development, pollution control or similar
revenue bonds) incurred for the purpose of financing all or any part of the
purchase price or the cost of substantially repairing or altering, constructing,
developing or substantially improving Operating Property of the Company; (5)
Liens under the Mortgage, except as provided in the Senior Note Indenture; (6)
liens to compensate
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the Senior Note Trustee as provided in the Senior Note Indenture; (7) any
extension, renewal or replacement (or successive extensions, renewals or
replacements), in whole or in part, of any Lien referred to in clauses (1)
through (7), provided, however, that the principal amount of Debt secured
thereby and not otherwise authorized by said clauses (1) to (7), inclusive,
shall not exceed the principal amount of Debt, plus any premium or fee payable
in connection with any such extension, renewal or replacement, so secured at the
time of such extension, renewal or replacement. However, the foregoing
restriction will not apply to the issuance, assumption or guarantee by the
Company of Debt secured by a Lien which would otherwise be subject to the
foregoing restriction up to an aggregate amount which, together with all other
secured Debt of the Company (not including secured Debt permitted under any of
the foregoing exceptions) and the Value (as defined below) of Sale and
Lease-Back Transactions (as defined below) existing at such time (other than
Sale and Lease-Back Transactions the proceeds of which have been applied to the
retirement of certain indebtedness, Sale and Lease-Back Transactions in which
the property involved would have been permitted to be subjected to a Lien under
any of the foregoing exceptions in clauses (1) to (6) and Sale and Lease-Back
Transactions that are permitted by the first sentence of "Limitations on Sale
and Lease-Back Transactions" below), does not exceed the greater of 15% of
Tangible Assets or 15% of Capitalization (as such terms are defined below).
Limitation on Sale and Lease-Back Transactions
The Senior Note Indenture provides that so long as any Senior Notes are
outstanding, the Company may not enter into or permit to exist after the Release
Date any Sale and Lease-Back Transaction with respect to any Operating Property
(except for transactions involving leases for a term, including renewals, of not
more than 48 months), if the purchasers' commitment is obtained more than 18
months after the later of the completion of the acquisition, construction or
development of such Operating Property or the placing in operation of such
Operating Property or of such Operating Property as constructed or developed or
substantially repaired, altered or improved. This restriction will not apply if
(a) the Company would be entitled pursuant to any of the provisions described in
clauses (1) to (5) of the first sentence of the second paragraph under
"Limitation on Liens" above to issue, assume, guarantee or permit to exist Debt
secured by a Lien on such Operating Property without equally and ratably
securing the Senior Notes, (b) after giving effect to such Sale and Lease-Back
Transaction, the Company could incur pursuant to the provisions described in the
second sentence of the second paragraph under "Limitation on Liens", at least
$1.00 of additional Debt secured by Liens (other than Liens permitted by clause
(a)), or (c) the Company applies within 180 days an amount equal to, in the case
of a sale or transfer for cash, the net proceeds (not exceeding the net book
value), and, otherwise,
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an amount equal to the fair value (as determined by its Board of Directors) of
the Operating Property so leased, to the retirement of Senior Notes or other
Debt of the Company ranking equally with the Senior Notes, subject to reduction
for Senior Notes and such Debt retired during such 180-day period otherwise than
pursuant to mandatory sinking fund or prepayment provisions and payments at
stated maturity.
Certain Definitions
"Capitalization" means the total of all the following items appearing on,
or included in, the consolidated balance sheet of the Company: (i) liabilities
for indebtedness maturing more than 12 months from the date of determination;
and (ii) common stock, preferred stock, Hybrid Preferred Securities (as defined
in the Senior Note Indenture), premium on capital stock, capital surplus,
capital in excess of par value and retained earnings (however the foregoing may
be designated), less, to the extent not otherwise deducted, the cost of shares
of capital stock reacquired by the Company.
"Debt" means any outstanding debt for money borrowed evidenced by notes,
debentures, bonds or other securities, or guarantees of any thereof.
"Operating Property" means (i) any interest in real property owned by the
Company and (ii) any asset owned by the Company that is depreciable in
accordance with generally accepted accounting principles ("GAAP") excluding, in
either case, any interest of the Company as lessee under any lease (except for a
lease that results from a Sale and Lease-Back Transaction) which has been or
would be capitalized on the books of the lessee in accordance with GAAP.
"Sale and Lease-Back Transaction" means any arrangement with any person
providing for the leasing to the Company of any Operating Property (except for
leases for a term, including any renewals thereof, of not more than 48 months),
which Operating Property has been or is to be sold or transferred by the Company
to such person; provided, however, Sale and Lease-Back Transaction does not
include any arrangement first entered into prior to the date of the Senior Note
Indenture.
"Tangible Assets" means the amount shown as total assets on the
consolidated balance sheet of the Company, less the following: (i) intangible
assets including, but without limitation, such items as goodwill, trademarks,
trade names, patents, and unamortized debt discount and expense, and (ii)
appropriate adjustments, if any, on account of minority interests. Tangible
Assets shall be determined in accordance with GAAP and practices applicable to
the type of business in which the Company is engaged and that are approved by
the independent
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accountants that are regularly retained by the Company, and may be determined as
of a date not more than 60 days prior to the happening of the event for which
such determination is being made.
"Value" means, with respect to a Sale and Lease-Back Transaction, as of
any particular time, the amount equal to the greater of (i) the net proceeds to
the Company from the sale or transfer of the property leased pursuant to such
Sale and Lease-Back Transaction, or (ii) the net book value of such property, as
determined by the Company in accordance with GAAP, in either case multiplied by
a fraction, the numerator of which shall be equal to the number of full years of
the term of the lease that is part of such Sale and Lease-Back Transaction
remaining at the time of determination and the denominator of which shall be
equal to the number of full years of such term, without regard, in any case, to
any renewal or extension options contained in such lease.
Voting of Senior Note Mortgage Bonds Held by Senior Note Trustee
The Senior Note Trustee, as the holder of Senior Note Mortgage Bonds, will
attend any meeting of bondholders under the Mortgage, or, at its option, will
deliver its proxy in connection therewith relating to matters with respect to
which it is entitled to vote or consent.
The Senior Note Trustee shall vote all Senior Note Mortgage Bonds then
held by it or consent with respect thereto, proportionately with the vote or
consent of the holders of all other First Mortgage Bonds outstanding under the
Mortgage, the holders of which are eligible to vote or consent; provided,
however, that the Senior Note Trustee shall not so vote in favor of, or so
consent to, any amendment or modification of the Mortgage which, if it were an
amendment or modification of the Senior Note Indenture, would require the
consent of the holders of Senior Notes as described under "- Modification",
without the prior consent of holders of Senior Notes which would be required for
such an amendment or modification of the Senior Note Indenture.
Resignation or Removal of Senior Note Trustee
The Senior Note Trustee may resign at any time upon written notice to the
Company specifying the day upon which the resignation is to take effect and such
resignation will take effect immediately upon the later of the appointment of a
successor Senior Note Trustee and such specified day.
The Senior Note Trustee may be removed at any time by an instrument or
concurrent instruments in writing filed with the Senior Note Trustee and signed
by the holders, or their
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attorneys-in-fact, of at least a majority in aggregate principal amount of the
then outstanding Senior Notes. In addition, so long as no event of default under
the Senior Note Indenture or event which, with the giving of notice or lapse of
time or both, would become an event of default has occurred and is continuing,
the Company may remove the Senior Note Trustee upon written notice to the holder
of each Senior Note outstanding and the Senior Note Trustee, and appointment of
a successor Senior Note Trustee.
Concerning the Senior Note Trustee
The United States Trust Company of New York is the Senior Note Trustee
under the Senior Note Indenture, the Mortgage Trustee under the Mortgage and, as
described in "Description of the Subordinated Debentures and the Debenture
Indenture", the Debenture Trustee under the Debenture Indenture. The Senior Note
Indenture provides that the Company's obligations to compensate the Senior Note
Trustee and reimburse the Senior Note Trustee for expenses, disbursements and
advances will constitute indebtedness which will be secured by a lien generally
prior to that of the Senior Notes upon all property and funds held or collected
by the Senior Note Trustee as such.
Governing Law
The Senior Note Indenture and each Senior Note will be governed by New
York law.
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DESCRIPTION OF SENIOR NOTE MORTGAGE BONDS
General
The Senior Note Mortgage Bonds are first mortgage bonds ("First Mortgage
Bonds") to be issued under and secured by the Company's Mortgage and Deed of
Trust dated as of January 1, 1942 between the Company and United States Trust
Company of New York, as successor trustee (the "Mortgage Trustee"), as
heretofore amended and supplemented, and to be further amended and supplemented
by one or more Supplemental Indentures with respect to the Senior Note Mortgage
Bonds (collectively, the "Mortgage"). The statements herein concerning the First
Mortgage Bonds and the Mortgage are summaries and do not purport to be complete.
They may make use of defined terms and are subject to, and qualified in their
entirety by, all of the provisions of the Mortgage, which is incorporated herein
by reference.
The Senior Note Mortgage Bonds will be issued as security for the
Company's obligations under the Senior Note Indenture and will be immediately
delivered to and registered in the name of the Senior Note Trustee. The Senior
Note Indenture provides that the Senior Note Trustee shall not transfer any
Senior Note Mortgage Bonds except to a successor trustee, to the Company (as
provided in the Senior Note Indenture) or in compliance with a court order in
connection with a bankruptcy or reorganization proceeding of the Company. The
Senior Note Trustee shall generally vote the Senior Note Mortgage Bonds
proportionately with what it believes to be the vote of the holders of all other
First Mortgage Bonds then outstanding, as described under "Description of Senior
Notes - Voting of Senior Note Mortgage Bonds Held by Senior Note Trustee".
The Senior Note Mortgage Bonds will correspond to the corresponding series
of Senior Notes in respect of principal amount, interest rate, maturity date and
redemption provisions. Upon payment of the principal or premium, if any, or
interest on the Senior Notes, Senior Note Mortgage Bonds of the corresponding
series in a principal amount equal to the principal amount of such Senior Notes
will, to the extent of such payment of principal, premium or interest, be deemed
fully paid and the obligation of the Company to make such payment shall be
discharged.
Redemption Provisions of Senior Note Mortgage Bonds
The Senior Note Mortgage Bonds will be redeemed on the respective dates
and in the respective principal amounts which correspond to the redemption dates
for and the principal amounts to be redeemed of the corresponding series of
Senior Notes. The Senior Note Mortgage Bonds are not redeemable by operation of
the improvement fund or the maintenance provisions of the Mortgage, or with the
proceeds of released property.
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In the event of an event of default under the Senior Note Indenture and
acceleration of the Senior Notes, the Senior Note Mortgage Bonds will be
immediately redeemable in whole, upon demand of the Senior Note Trustee, at a
redemption price of 100% of the principal amount thereof, together with accrued
interest to the redemption date. See "Description of Senior Notes Events of
Default".
Kind and Priority of Lien
The Senior Note Mortgage Bonds will rank equally as to security with all
First Mortgage Bonds outstanding under the Mortgage, which is a direct first
lien on substantially all of the Company's property and franchises (except cash,
securities, judgments, contracts, accounts and chooses in action not
specifically subjected to its lien, certain personal property, including
merchandise, materials or supplies held or acquired for sale or consumption,
automobiles and trucks), and subject only to (1) the Mortgage Trustee's prior
lien for its compensation and reimbursement and (2) excepted encumbrances
specified in the Mortgage. The Mortgage contains provisions for subjecting to
its lien, subject to existing liens, property and franchises (except such as are
excluded as above-mentioned from the lien of the Mortgage) which may be
hereafter acquired by the Company, and contains certain restrictions upon the
acquisition of property with respect to which certain prior lien bonds are
outstanding. No prior lien bonds are presently outstanding.
Release and Substitution of Property
The Company, without notice to or action by the Mortgage Trustee, may,
with limitation, change or substitute contracts, leases and rights-of-way,
surrender or assent to the modification of any right, license, franchise or
permit, or dispose of property of a limited nature; and may obtain a release of
certain mortgaged property from the lien of the Mortgage upon depositing not
less than the fair value thereof or, in certain cases, the consideration
received therefor, with the Mortgage Trustee or a prior lien holder. Such
deposited cash may (1) be withdrawn against an equal amount of bondable value of
property additions, or equal principal amounts of refundable prior lien bonds
and First Mortgage Bonds previously issued and theretofore or then retired; or
(2) be used for the purchase, payment or redemption of First Mortgage Bonds. If
any such deposited cash is not so withdrawn, used or applied within three years
after deposit with the Mortgage Trustee, it shall be used or applied by the
Mortgage Trustee to purchase, pay at maturity or redeem First Mortgage Bonds.
Dividend Restrictions
The Mortgage restricts cash dividends payable by the Company on its common
stock to the amount of the Company's accumulated earned surplus less
$10,084,106. The amount available for the declaration and payment of dividends
on the Company's common stock pursuant to this restriction will be contained in
a Prospectus Supplement.
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Issuance of Additional First Mortgage Bonds
So long as the Company is not in default in the performance of any
covenant to be performed by it under the Mortgage and obtains all requisite
authority of governmental bodies, it may issue additional First Mortgage Bonds
to the extent of (1) 60% of bondable value of property additions; (2) the
principal amount of refundable prior lien bonds deposited, retired or to be
retired; (3) the principal amount of First Mortgage Bonds then or theretofore
retired; and (4) the amount of cash deposited with the Mortgage Trustee against
the issuance of First Mortgage Bonds. First Mortgage Bonds may be issued
pursuant to (1) and (4), and in certain cases pursuant to (2) and (3), above,
only if net earnings (calculated before income taxes but after deduction of an
amount equal to the greater of the actual book provision for depreciation or the
"minimum provision for depreciation") shall be at least two times the annual
interest requirements on First Mortgage Bonds and prior lien bonds to be
outstanding. Cash deposited against the issuance of First Mortgage Bonds may be
withdrawn by the Company in an amount equal to the principal amount of First
Mortgage Bonds which it would otherwise be entitled to have authenticated and
delivered; and such cash may be applied to the purchase, payment at maturity or
redemption of First Mortgage Bonds.
The principal amount of additional First Mortgage Bonds issuable pursuant
to these provisions will be contained in a Prospectus Supplement.
Improvement Fund
The Company is required to deposit with the Mortgage Trustee by April 30
of each year cash equal to 1% of the aggregate principal amount of First
Mortgage Bonds issued prior to January 1 of such year (certain First Mortgage
Bonds excepted) less (1) 60% of the amount of bondable value of property
additions and/or (2) the principal amount of refundable prior lien bonds and
First Mortgage Bonds previously issued and theretofore or then retired, which
the Company then elects to take as a credit. Cash so deposited may be (a)
withdrawn within three years upon the same basis as such a credit may be taken,
or (b) used by the Mortgage Trustee for the purchase, payment at maturity or
redemption of First Mortgage Bonds. The Company has heretofore utilized bondable
value of property additions to satisfy this requirement and expects to continue
to do so in the future.
Maintenance Fund
The Company is required to make expenditures for property additions and/or
to deposit with the Mortgage Trustee, cash (less, at the option of the Company,
credit for refundable prior lien bonds and First Mortgage Bonds theretofore or
then retired) in amounts equal to the minimum provision for depreciation,
computed
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cumulatively at the end of each year. Cash so deposited with the Mortgage
Trustee may, during the next succeeding three years, be withdrawn by the Company
to the extent that the amount theretofore expended for property additions, as
aforesaid, exceeds the minimum provision for depreciation. The Company has, in
the past, made sufficient expenditures for property additions to meet its
obligations with respect to the minimum provision for depreciation, and no
deposits with the Mortgage Trustee have been required in this connection. The
Company expects that this pattern will continue in the future.
So long as any of the First Mortgage Bonds shall be outstanding, the term
"minimum provision for depreciation" with reference to any period after 1948
means an amount equal to the greater of (1) 15% of gross operating revenues
during such period from the operation of bondable property after deducting the
aggregate cost of electric energy purchased for resale during such period in
connection with the operation of such property, less an amount equal to charges
for current repairs and maintenance of such property, or (2) an amount computed
at the rate of 2.4% per annum of the depreciable utility property of the Company
as of January 1 of each year or portion thereof embraced within such period.
Modification of Mortgage
With the consent of the holders of not less than 75% in principal amount
of the First Mortgage Bonds affected, the Company and the Mortgage Trustee are
empowered to change the Mortgage in any way except (a) to reduce the amount or
extend the due dates of the principal of or interest on the First Mortgage
Bonds, or (b) to reduce the percentage of bondholders required to effect changes
in the Mortgage.
Defaults and Notice Thereof
Events of default ("completed defaults") include default in the payment of
principal and premium, if any, of any of the First Mortgage Bonds or any prior
lien bonds; default, for 60 days, in payment of interest on any of the First
Mortgage Bonds or beyond the period of grace on any prior lien bonds; default,
for 60 days after notice, in the performance of any covenant in the Mortgage;
and bankruptcy, insolvency or reorganization (under certain circumstances) of
the Company. The Mortgage Trustee may withhold notice to bondholders of default
(except default in payment of principal, premium, interest or sinking and
improvement fund installments) if its responsible officers think it is in the
interest of the bondholders to do so.
A majority in aggregate principal amount of the First Mortgage Bonds is
necessary to require the Mortgage Trustee to take action to enforce the lien of
the Mortgage. The Mortgage Trustee may require reasonable indemnification before
being required to enforce the lien of the Mortgage. Holders of not less than 25%
in aggregate
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principal amount of outstanding First Mortgage Bonds or the Mortgage Trustee may
declare the principal and interest of all outstanding First Mortgage Bonds due
upon the occurrence of a completed default, but the holders of a majority in
principal amount of the outstanding First Mortgage Bonds may, under certain
circumstances, including the curing of such default, annul any such declaration.
No holder shall have the right to institute action, unless holders of 25% in
aggregate principal amount of First Mortgage Bonds shall have made written
request to the Mortgage Trustee to institute such action.
Concerning the Mortgage Trustee
The Mortgage Trustee, United States Trust Company of New York, is
permitted to engage in other transactions with the Company, except that if the
Mortgage Trustee acquires any conflicting interest, as defined, it must
eliminate it or resign and is required in certain cases to share with the
bondholders the benefits of payments received within four months prior to
default. United States Trust Company of New York is also the Senior Note Trustee
under the Senior Note Indenture and the Debenture Trustee under the Debenture
Indenture and a depository of the Company and certain of the Company's
affiliates and has in the past made, and may in the future make, loans to the
Company and certain of the Company's affiliates.
Satisfaction and Discharge of Mortgage
Upon the Company's making due provision for the payment of all of the
First Mortgage Bonds and paying all other sums due under the Mortgage, the
Mortgage shall cease to be of further effect and may be satisfied and discharged
of record. Holders of First Mortgage Bonds may wish to consult with their own
tax advisers regarding possible tax effects in the event of a defeasance of the
Mortgage.
Evidence as to Compliance with Mortgage Provisions
While the Mortgage does not require that evidence be furnished at stated
intervals to the Mortgage Trustee as to the absence of a default or as to
compliance with each of the terms of the Mortgage, the Company furnishes the
Mortgage Trustee annually with a compliance certificate required by the Trust
Indenture Act of 1939, as amended. The Mortgage does require that the Company
furnish a certificate to the Mortgage Trustee that the Company is not in default
under the Mortgage only in connection with certain applications under the
Mortgage made to the Mortgage Trustee, such as for the authentication of
additional First Mortgage Bonds, certain withdrawals of cash and certain
releases of property. In addition, the improvement fund, maintenance fund and
recording provisions of the Mortgage require that the Company furnish an annual
filing to the Mortgage Trustee that the Company is in compliance with these
provisions. The Mortgage also requires that each certificate or opinion
furnished under the Mortgage contain a statement as to compliance with the
condition or covenant of the Mortgage to which the certificate or opinion
relates.
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DESCRIPTION OF THE TRUST SECURITIES
The following is a summary of certain terms and provisions of the Trust
Securities and the Amended and Restated Trust Agreement of the Trust (the "Trust
Agreement"). Reference is made to the Trust Agreement, which is an exhibit to
the Registration Statement of which this Prospectus forms a part.
General
The Trust Securities may be issued in amounts, at prices and on terms to
be determined at or prior to the time of sale. Reference is made to the
Prospectus Supplement relating the Trust Securities for specific terms,
including (i) the distinctive designation of such Trust Securities; (ii) the
number of Trust Securities issued; (iii) the annual distribution rate or rates
(or method of calculation thereof) for the Preferred Securities, which are
represented by the Trust Securities and the date or dates upon which such
distributions shall be payable; (iv) the date or dates (or method of determining
the date or dates) from which distributions on the Preferred Securities, which
are represented by the Trust Securities, shall be cumulative; (v) the obligation
or option, if any, of the Trust to purchase or redeem Trust Securities and the
price or prices at which, the period or periods within which, and the terms and
conditions upon which, the Preferred Securities, which are represented by the
Trust Securities shall be purchased or redeemed, in whole or in part, pursuant
to such obligation or option; (vi) the terms and conditions, if any, upon which
the Subordinated Debentures may be distributed to holders of Trust Securities
("Distribution Event"); (vii) if applicable, any securities exchange upon which
the Trust Securities shall be listed; (viii) whether the Trust Securities are to
be issued in whole or in part in book-entry form and represented by one or more
global certificates, and if so, the identity of the depository for such global
certificates and the specific terms of the depository arrangements therefor; and
(ix) any other relevant rights, preferences, privileges, limitations or
restrictions of Trust Securities, including any rights to defer distributions on
the Trust Securities, not inconsistent with the Trust Agreement or with
applicable law.
The Trust Securities will be issued by the Trust pursuant to the Trust
Agreement. Each Trust Security will represent a Preferred Security of Penelec
Capital. The Preferred Securities will be guaranteed by the Company to the
extent set forth below under "Description of the Guarantee". The Guarantee of
the Company, when taken together with the Company's obligations under the
Subordinated Debentures and the Debenture Indenture, and the General Partner's
obligations under the Trust Agreement and the Partnership Agreement (as defined
below"), including obligations to pay costs, expenses, debts and liabilities of
the Trust and Penelec Capital (other than with respect to the Trust Securities),
would provide a full and unconditional guarantee of amounts due on the Preferred
Securities, which are represented by Trust Securities.
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The Trust is a statutory business trust created under the Delaware
Business Trust Act. A trustee of the Trust will hold the Preferred Securities
deposited in the Trust for the benefit of the holders of the Trust Securities.
The Trust Agreement provides that, to the fullest extent permitted by law,
without the need for any other action of any person, including any trustee of
the Trust and any other holder of Trust Securities, each holder of Trust
Securities shall be entitled to enforce in the name of the Trust the Trust's
rights under the Preferred Securities represented by the Trust Securities held
by such holder.
It is anticipated that the assets of the Trust available for distribution
to the holders of the Trust Securities will be limited to payments from Penelec
Capital under the Preferred Securities, the source of which payments by Penelec
Capital will be limited to payments from the Company on the Subordinated
Debentures. See "Description of the Subordinated Debentures and the Debenture
Indenture". If the Company fails to make a payment on the Subordinated
Debentures or if Penelec Capital fails to make a distribution on the Preferred
Securities, the Trust will not have sufficient funds to make related payments on
the Trust Securities.
Certain United States federal income tax considerations applicable to any
offering of Trust Securities will be described in the Prospectus Supplement
relating thereto.
Distributions
Each Trust Security will represent a Preferred Security of Penelec Capital
issued to and held by the Trust, and distributions on the Trust Securities will
be made concurrently with distributions on the Preferred Securities.
Distributions on the Preferred Securities will be cumulative and will accumulate
from the date and at the annual rate or rates described in the Prospectus
Supplement.
Redemption of Trust Securities
The Trust Securities will be subject to mandatory redemption upon
redemption of the Preferred Securities at the redemption price set forth in the
Prospectus Supplement.
Payments on Liquidation of Penelec Capital
Upon receipt by the Trust of any distribution, in cash or in kind, from
Penelec Capital upon liquidation of Penelec Capital (or payment by the Company
under the Guarantee in respect thereof), after satisfaction of creditors of the
Trust as required by applicable law, a trustee of the Trust shall distribute to
the holders of the Trust Securities such distributions, in cash or in kind, in
proportion to the respective number of Preferred Securities represented by such
Trust Securities.
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Withdrawal of Preferred Securities
Any beneficial owner of Trust Securities may withdraw all, but not less
than all, of the Preferred Securities represented by such Trust Securities by
providing a written notice and agreement to be bound by the terms of the
Partnership Agreement to a trustee of the Trust, with evidence of beneficial
ownership in form satisfactory to such trustee. The Preferred Securities will
only be issued in certificated form.
Any holder of Preferred Securities may redeposit withdrawn Preferred
Securities by delivery to a trustee of the Trust of a certificate or
certificates for the Preferred Securities to be deposited, properly endorsed or
accompanied, if required by such trustee, by a properly executed instrument of
transfer or endorsement in form satisfactory to such trustee and in compliance
with the terms of the Partnership Agreement, together with all such
certifications as may be required by such trustee in its sole discretion and in
accordance with the provisions of the Trust Agreement.
Voting Rights
If the holders of the Preferred Securities, acting as a single class, are
entitled to appoint and authorize a Special Representative (as defined below)
pursuant to the Partnership Agreement, a trustee of the Trust shall notify the
holders of the Trust Securities of such right, request direction of each holder
of a Trust Security as to the appointment of a Special Representative and vote
the Preferred Securities represented by such Trust Security in accordance with
such direction.
Upon receipt of notice of any meeting at which the holders of the
Preferred Securities are entitled to vote, a trustee of the Trust shall, as soon
as practicable thereafter, mail to the holders of the Trust Securities a notice,
which shall be provided by the General Partner and which shall contain (i) such
information as is contained in such notice of meeting, (ii) a statement that the
holders of Trust Securities at the close of business on a specified record date
will be entitled, subject to any applicable provision of law, to instruct such
trustee as to the exercise of the voting rights pertaining to the amount of
Preferred Securities represented by their respective Trust Securities, and (iii)
a brief statement as to the manner in which such instructions may be given. Upon
the written request of a holder of a Trust Security, such trustee shall vote or
cause to be voted the number of Preferred Securities represented by such Trust
Securities in accordance with the instructions set forth in such request.
Expenses of the Trust
All charges or expenses of the Trust, including the charges and expenses
of the trustees of the Trust, will be paid by the General Partner.
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DESCRIPTION OF THE PREFERRED SECURITIES
The following is a summary of certain terms and provisions of the
Preferred Securities represented by the Trust Securities. Reference is made to
the Amended and Restated Limited Partnership Agreement of Penelec Capital (the
"Partnership Agreement"), which is an exhibit to the Registration Statement of
which this Prospectus forms a part.
General
The Preferred Securities will be issued from time to time in one or more
series and shall have the terms described in the Prospectus Supplement.
Reference is made to the Prospectus Supplement relating to any series of
Preferred Securities of Penelec Capital for specific terms, including (i) the
distinctive designation of such Preferred Securities; (ii) the number of
Preferred Securities issued; (iii) the annual distribution rate or rates (or
method of determining such rate or rates) for Preferred Securities and the date
or dates upon which such distributions shall be payable; (iv) the date or dates
(or method of determining the date or dates) from which distributions on
Preferred Securities shall be cumulative; (v) the obligation or option, if any,
of Penelec Capital to purchase or redeem Preferred Securities and the price or
prices at which, the period or periods within which, and the terms and
conditions upon which, Preferred Securities shall be purchased or redeemed, in
whole or in part, pursuant to such obligation or option; (vi) the terms and
conditions, if any, upon which the Subordinated Debentures may be distributed to
holders of Preferred Securities; and (vii) any other relevant rights,
preferences, privileges, limitations or restrictions of Preferred Securities,
including any rights to defer distributions on the Preferred Securities, not
inconsistent with the Partnership Agreement or with applicable law.
The Preferred Securities will be guaranteed by the Company to the extent
set forth below under "Description of the Guarantee". The Guarantee of the
Company, when taken together with the Company's obligations under the
Subordinated Debentures and the Debenture Indenture and the General Partner's
obligations under the Partnership Agreement, would provide a full and
unconditional guarantee of amounts due on Preferred Securities issued by Penelec
Capital.
All of the general partner interests of Penelec Capital are owned by the
General Partner, which is a wholly owned subsidiary of the Company. The
Preferred Securities represent preferred limited partner interests of Penelec
Capital. All of the Preferred Securities issued by Penelec Capital will be of
equal rank in participation in the profits and assets and income of Penelec
Capital. The Partnership Agreement authorizes the General Partner to establish
series of Preferred Securities having such designations, rights, privileges,
restrictions and other terms
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and provisions as the General Partner may determine. Distributions on all series
of Preferred Securities must be paid in full before the General Partner may
participate in the profits or assets of Penelec Capital.
Certain United States federal income tax considerations applicable to any
offering of Preferred Securities will be described in the Prospectus Supplement
relating thereto.
Distributions
The General Partner may make distributions on the general partner
interests of Penelec Capital only after payment in full of all distributions
accumulated on all outstanding Preferred Securities of Penelec Capital.
Distributions on the Preferred Securities must be paid by Penelec Capital
to the extent that Penelec Capital has funds on hand legally available therefor.
The funds available for distribution by Penelec Capital will be limited to
payments received by Penelec Capital in respect of the Subordinated Debentures.
See "Description of the Subordinated Debentures and the Debenture Indenture".
Mandatory Redemption
A series of Preferred Securities will be subject to mandatory redemption
upon the repayment at maturity or prior redemption of the corresponding series
of the Subordinated Debentures.
Liquidation Distribution
In the event of any voluntary or involuntary dissolution or winding up of
Penelec Capital, the holders of Preferred Securities will be entitled to receive
out of the assets of Penelec Capital, after satisfaction of liabilities to
creditors and before any distribution of assets is made to the General Partner,
the lesser of (i) the sum of their stated liquidation preference and all
accumulated and unpaid distributions to the date of payment of the Preferred
Securities, and (ii) the amount of assets of Penelec Capital legally available
for distribution to the holders of Preferred Securities. All assets of Penelec
Capital remaining after payment of the liquidation distribution to the holders
of Preferred Securities will be distributed to the General Partner.
Voting Rights
Except as provided in a Prospectus Supplement and as otherwise required by
law and the Partnership Agreement, the holders of the Preferred Securities have
no voting rights.
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If (i) Penelec Capital fails to pay distributions in full on a series of
Preferred Securities for a period as set forth in the Prospectus Supplement,
(ii) an Event of Default (as defined in the Debenture Indenture) occurs and is
continuing, or (iii) the Company is in default on any of its payment obligations
under the related Guarantee, then the holders of the Preferred Securities,
acting as a single class, will be entitled by a vote of the majority of the
aggregate stated liquidation preference of the outstanding Preferred Securities
to appoint a special representative (the "Special Representative") to enforce
Penelec Capital's rights against the Company under the Subordinated Debentures
and the Debenture Indenture and the obligations undertaken by the Company under
the Guarantee issued in conjunction with the issuance of such Preferred
Securities. The Special Representative shall not be admitted as a partner of
Penelec Capital or otherwise be deemed a partner of Penelec Capital and shall
have no liability for the debts, obligations or liabilities of Penelec Capital.
If any proposed amendment to the Partnership Agreement provides for, or
the General Partner otherwise proposes to effect, any action which would
materially adversely affect the powers, preferences or special rights attached
to any series of Preferred Securities, whether by way of amendment to the
Partnership Agreement or otherwise, then the holders of such series of Preferred
Securities will be entitled to vote on such amendment or action of the General
Partner.
So long as any series of Subordinated Debentures are held by Penelec
Capital, the General Partner may not, except as directed to do so by the Special
Representative, (i) direct the time, method and place of conducting any
proceeding for any remedy available to the holder of the Subordinated Debentures
or the Trustee under the Debenture Indenture (the "Debenture Trustee"), or
executing any trust or power conferred on the Debenture Trustee, (ii) waive any
past default which is available under the Debenture Indenture, (iii) exercise
any right to rescind or annul a declaration that the principal of all the
Subordinated Debentures shall be due and payable or (iv) consent to any
amendment, modification or termination of the Debenture Indenture, where such
consent shall be required, without, in each case, obtaining the prior approval
of the holders of not less than a majority of the aggregate stated liquidation
preference of all series of Preferred Securities affected thereby. The General
Partner shall not revoke any action previously authorized or approved by a vote
of any series of Preferred Securities. The General Partner shall notify all
holders of the Preferred Securities of any notice of default received from the
Debenture Trustee with respect to any series of Subordinated Debentures.
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DESCRIPTION OF THE GUARANTEE
The following is a summary of certain provisions of the Guarantee which
will be executed and delivered by the Company concurrently with the issuance of
each series of the Preferred Securities. Reference is made to the Guarantee,
which is filed as an exhibit to the Registration Statement of which this
Prospectus forms a part.
General
Under the Guarantee, the Company will agree to pay (i) any accumulated and
unpaid distributions on the Preferred Securities to the extent that Penelec
Capital has funds on hand legally available therefor, (ii) the applicable
redemption price payable with respect to any Preferred Securities called for
redemption by Penelec Capital to the extent that Penelec Capital has funds on
hand legally available therefor, and (iii) upon a liquidation of Penelec
Capital, other than in connection with a Distribution Event, the lesser of (a)
the portion of the partnership liquidation distribution applicable to the
Preferred Securities and (b) the amount of assets of Penelec Capital legally
available for distribution to holders of Preferred Securities in liquidation of
Penelec Capital (collectively, the "Guarantee Payments"). The Company will agree
to pay the Guarantee Payments, as and when due (except to the extent paid by
Penelec Capital), to the fullest extent permitted by law, regardless of any
defense, right of setoff or counterclaim which the Company may have or assert
against Penelec Capital, the General Partner, the Trust or a trustee of the
Trust. The Company's obligation to make a Guarantee Payment may be satisfied by
direct payment of the required amounts by the Company to the holders of
Preferred Securities or by causing Penelec Capital to pay such amounts to such
holders.
Status of the Guarantee
The Guarantee will constitute an unsecured obligation of the Company and
will rank subordinate and junior in right of payment to all general liabilities
of the Company, except trade accounts payable arising in the ordinary course of
business.
The Guarantee will constitute a guarantee of payment and not of
collection. The Guarantee will be held by the General Partner for the benefit of
the holders of the Preferred Securities. In the event of the appointment of a
Special Representative, the Special Representative may enforce the Guarantee. If
no Special Representative has been appointed to enforce the Guarantee, the
General Partner will have the right to enforce the Guarantee on behalf of the
holders of the Preferred Securities. The holders of Trust Securities, together
with the holders of the Preferred Securities other than the Trust, representing
not less than 10% in aggregate stated liquidation preference of the Preferred
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Securities, will have the right to direct the time, method and place of
conducting any proceeding to enforce any remedy available in respect of the
Guarantee, including the giving of directions to the General Partner or the
Special Representative, as the case may be. If the General Partner or the
Special Representative fails to enforce the Guarantee as above provided, any
holder of Trust Securities representing Preferred Securities, and any holder of
Preferred Securities other than the Trust, may institute a legal proceeding
directly against the Company to enforce the Company's obligations under the
Guarantee without first instituting a legal proceeding against Penelec Capital
or any other person or entity. The Guarantee will not be discharged except by
payment of the Guarantee Payments in full to the extent not paid by Penelec
Capital and by complete performance of all obligations of the Company contained
in the Guarantee.
Relationship Among Guarantee, Subordinated Debentures and Preferred
Securities
In addition to the obligations of the Company under the Guarantee, the
Debenture Indenture provides that the Company shall cause the General Partner to
remain the general partner of Penelec Capital and timely perform all its duties
as such (including the duty to pay distributions on the Preferred Securities),
which include, among other things, the General Partner's duties under the
Partnership Agreement to directly pay all costs and expenses of Penelec Capital
(for the purpose of insuring that payment of principal and interest by the
Company on the Subordinated Debentures will be sufficient to allow payment in
full to the holders of the Preferred Securities). While the assets of the
General Partner will not be available for making distributions on the Preferred
Securities, they will be available for payment of the expenses of Penelec
Capital. Accordingly, the Guarantee and the Debenture Indenture, together with
the related covenants contained in the Partnership Agreement and the Company's
obligations under the Subordinated Debentures, provide for the Company's full
and unconditional guarantee of the Preferred Securities as set forth above.
Certain Covenants of the Company
Under the Guarantee, the Company will covenant that, so long as any
Preferred Securities remain outstanding, neither the Company nor any majority
owned subsidiary of the Company 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 by a wholly owned subsidiary) if at such
time the Company shall be in default with respect to its payment obligations
under the Guarantee 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 Debenture Indenture.
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Amendments
Except with respect to any changes which do not materially adversely
affect the rights of holders of Preferred Securities (in which case no vote will
be required), the Guarantee may be amended only with the prior approval of the
holders of Trust Securities, together with the holders of Preferred Securities
other than the Trust, representing not less than a majority of the aggregate
stated liquidation preference of the outstanding Preferred Securities.
Merger of the Company
So long as the Preferred Securities remain outstanding, the Company will
maintain its corporate existence; provided that the Company may consolidate with
or merge with or into any other person or sell, convey, transfer or lease all or
substantially all its assets (either in one transaction or a series of
transactions) to any person if the successor person shall be organized and
existing under the laws of the United States or any state thereof or the
District of Columbia and shall expressly assume the obligations of the Company
under the Guarantee.
Termination of the Guarantee
The Guarantee will terminate and be of no further force and effect upon
full payment of the applicable redemption price of all Preferred Securities or
upon full payment of the amounts payable with respect to the Preferred
Securities upon liquidation of Penelec Capital or upon the occurrence of a
Distribution Event. The Guarantee will continue to be effective or will 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 the Guarantee.
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DESCRIPTION OF THE SUBORDINATED DEBENTURES
AND THE DEBENTURE INDENTURE
The following is a summary of certain terms and provisions of the
Subordinated Debentures and the Debenture Indenture. Reference is made to the
Debenture Indenture, which is filed as an exhibit to the Registration Statement
of which this Prospectus forms a part.
General
The Subordinated Debentures will be unsecured, subordinated obligations of
the Company issued under the Debenture Indenture (the "Debenture Indenture").
The Subordinated Debentures will be in a principal amount equal to the aggregate
stated liquidation preference of the corresponding series of Preferred
Securities plus the General Partner's capital contribution in Penelec Capital,
will bear interest at a rate equal to the distribution rate on the Preferred
Securities payable on the distribution dates for the Preferred Securities, will
have maturity and redemption provisions corresponding to the redemption
provisions of the Preferred Securities and will be subject to mandatory
redemption upon the dissolution and liquidation of Penelec Capital other than in
connection with a Distribution Event.
The Company will deliver the Subordinated Debentures to the General
Partner to be held on behalf of the holders of the Preferred Securities. The
Subordinated Debentures will be delivered by the Company to evidence the loan by
Penelec Capital to the Company of an amount equal to the proceeds received from
the sale of the Preferred Securities, plus the General Partner's concurrent
capital contribution in Penelec Capital.
Redemption
The Subordinated Debentures will be subject to mandatory redemption upon
the liquidation and dissolution of Penelec Capital other than in connection with
a Distribution Event or upon redemption of the Preferred Securities and as
described in the Prospectus Supplement.
If the Company gives a notice of redemption in respect of Subordinated
Debentures, then, except as set forth below, on or prior to the redemption date,
the Company shall deposit with the paying agent funds sufficient to pay the
applicable redemption price and will give irrevocable instructions and authority
to pay the applicable redemption price. If notice of redemption shall have been
given, if required, and the funds so deposited, then the Subordinated Debentures
called for redemption shall become due and payable on the redemption date and
upon the redemption date, interest will cease to accrue on the Subordinated
Debentures called for redemption and such Subordinated Debentures will no longer
be deemed to be outstanding.
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Any notice of redemption at the option of the Company may state that such
redemption will be conditional upon receipt by the Debenture Trustee, on or
prior to the date fixed for such redemption, of money sufficient to pay the
applicable redemption price on such Subordinated Debentures and, that if such
money has not been so received, such notice will be of no force and effect and
the Company will not be required to redeem such Subordinated Debentures.
Additional Interest
If at any time Penelec Capital would be required to pay any taxes, duties,
assessments or governmental charges of whatever nature (other than withholding
taxes) imposed by the United States, or any other taxing authority, then, in any
such case, the Company also will pay as additional interest such amounts as
shall be required so that the net amounts received and retained by Penelec
Capital after paying any such taxes, duties, assessments or governmental charges
will not be less than the amounts Penelec Capital would have received had no
such taxes, duties or governmental charges been imposed.
Subordination
The Debenture Indenture provides that all payments by the Company in
respect of the Subordinated Debentures shall be subordinated to the prior
payment in full of all amounts payable on Senior Indebtedness. The term "Senior
Indebtedness" means (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 obligation, for payment of which the Company is responsible or liable;
(ii) all capital lease obligations of the Company; (iii) all obligations of the
Company issued or assumed as the deferred purchase price of property, all
conditional sale obligations of the Company and all obligations of the Company
under any title retention agreement (but excluding trade accounts payable
arising in the ordinary course of business); (iv) certain 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; (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),
except for any such indebtedness that is by its terms subordinated to or pari
passu with the Subordinated Debentures.
Upon any payment or distribution of assets or securities of the Company,
upon any dissolution or winding up or total or partial liquidation or
reorganization of the Company, whether
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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 before
Penelec Capital (as holder of the Subordinated Debentures), the Debenture
Trustee on behalf of such holder or any Special Representative appointed by the
holders of the Preferred Securities shall be entitled to receive from the
Company any payment of principal of or interest on or any other amounts in
respect of the Subordinated Debentures or distribution of any assets or
securities.
No direct or indirect payment by or on behalf of the Company of principal
of or interest on the Subordinated Debentures, whether pursuant to the terms of
the Subordinated Debentures or upon acceleration or otherwise, shall be made if,
at the time of such payment, there exists (i) a default in the payment of all or
any portion of any Senior Indebtedness or (ii) any other default pursuant to
which the maturity of Senior Indebtedness has been accelerated and, in either
case, requisite notice has been received by the Debenture Trustee and such
default shall not have been cured or waived by or on behalf of the holders of
such Senior Indebtedness.
If the Debenture Trustee, Penelec Capital (as holder of the Subordinated
Debentures) or any Special Representative appointed by the holders of the
Preferred Securities, shall have received any payment on account of the
principal of or interest on the Subordinated Debentures when such payment is
prohibited and before all amounts payable on, under or in connection with Senior
Indebtedness are paid in full, then such payment shall be received and held in
trust for the holders of Senior Indebtedness and shall be paid over or delivered
first to the holders of the Senior Indebtedness remaining unpaid to the extent
necessary to pay such Senior Indebtedness in full.
Nothing in the Debenture Indenture shall limit the right of the Debenture
Trustee, Penelec Capital (as holder of the Subordinated Debentures) or the
Special Representative to take any action to accelerate the maturity of the
Subordinated Debentures or to pursue any rights or remedies against the Company;
provided that all Senior Indebtedness shall be paid before Penelec Capital (as
holder of the Subordinated Debentures) is entitled to receive any payment from
the Company of principal of or interest on the Subordinated Debentures.
Upon the payment in full of all Senior Indebtedness, Penelec Capital (as
holder of the Subordinated Debentures) (and any Special Representative appointed
by the holders of the Preferred Securities) 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 Subordinated
Debentures shall be paid in full.
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The Indenture does not limit the aggregate amount of Senior Indebtedness
which the Company may issue.
Certain Covenants of the Company
The Company will covenant that it and any majority owned subsidiary will
not 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 to the Company by a wholly-owned subsidiary of the Company) (i) during
an Extension Period (as defined in the accompanying Prospectus Supplement or
Supplements), (ii) if 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 Debenture Indenture or (iii) if the Company shall be in default with
respect to its payment obligations under any Guarantee. The Company will also
covenant (i) to maintain direct or indirect 100% ownership of the General
Partner and will cause the General Partner to maintain 100% ownership of the
general partner interests of Penelec Capital, (ii) to cause the General Partner
to at all times maintain "fair market net worth " of at least 10% of the total
capital contributions (less redemptions) to Penelec Capital and to maintain
General Partner interests representing 3% of all interests in the capital,
income, gain, loss, deduction and credit of Penelec Capital, (iii) to cause the
General Partner to timely perform all of its duties as general partner of
Penelec Capital (including the duty to pay distributions on the Preferred
Securities), and (iv) to use its reasonable efforts to cause Penelec Capital to
remain a limited partnership and otherwise continue to be treated as a
partnership for federal income tax purposes.
Penelec Capital may not waive compliance or waive any default in
compliance by the Company with any covenant or other term in the Debenture
Indenture without the approval of the Special Representative or without the
direction of the holders of a majority of the aggregate stated liquidation
preference of the Preferred Securities.
Modification of the Debenture Indenture without Approval
The Debenture Indenture contains provisions permitting the Company and the
Debenture Trustee, without the consent of the Special Representative or Penelec
Capital (as holder of the Subordinated Debentures), to modify the Debenture
Indenture or any supplemental indenture: (i) to cure any ambiguity, defect or
inconsistency; (ii) to comply with the provisions of the Debenture Indenture
regarding a successor to the Company; (iii) to provide for uncertificated
Subordinated Debentures in addition to or in place of certificated Subordinated
Debentures; (iv) to make any other change that does not adversely affect the
rights of any holder of the Subordinated Debentures; (v) to comply with any
requirement for qualification of the Debenture Indenture
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under the Trust Indenture Act of 1939, as amended; and (vi) to set forth the
terms and conditions of any series of Subordinated Debentures.
Modifications of the Debenture Indenture with Approval
The Debenture Indenture contains provisions permitting the Company the
Debenture Trustee, with the consent of the holders of not less than a majority
in principal amount of the Subordinated Debentures which are affected by the
amendment or waiver, to amend the Debenture Indenture or the Subordinated
Debentures or to waive compliance by the Company by the Company with any
provisions of the Debenture Indenture or the Subordinated Debentures; provided
that no such amendment or waiver may, without the consent of the holder of each
outstanding Subordinated Debenture affected thereby, (a) reduce the principal
amount of the Subordinated Debentures, (b) reduce the percentage of principal
amount of outstanding Subordinated Debentures of any series, the consent of
holders of which is required for amendment of the Debenture Indenture or for
waiver of compliance with certain provisions of the Debenture Indenture or for
waiver of certain defaults, (c) change the stated maturity date of the principal
of, or the interest or the rate of interest on, the Subordinated Debentures, (d)
change the redemption provisions applicable to the Subordinated Debentures
adversely to the holders thereof, (e) impair the right to institute suit for the
enforcement of any payment with respect to the Subordinated Debentures, (f)
change the currency in which payment with respect to the Subordinated Debentures
are to be made, (g) change the subordination provisions applicable to the
Subordinated Debentures adversely to the holders thereof, or (h) waive a default
in the payment of the principal of, or interest on, any Subordinated Debenture.
Events of Default
The following are Events of Default under the Debenture Indenture: (i)
default for 15 days in payment of any interest on any series of the Subordinated
Debentures (other than as may be permitted by the terms thereof and as described
in a Prospectus Supplement); (ii) default in payment of principal of (or
premium, if any, on) any Subordinated Debentures; (iii) default for 60 days
after notice in the performance of any other covenant or agreement in the
Debenture Indenture or any series of Subordinated Debentures, or (iv) certain
events of bankruptcy, insolvency or reorganization of the Company. In case an
Event of Default under the Debenture Indenture shall occur and be continuing
(other than an Event of Default relating to bankruptcy, insolvency or
reorganization of the Company, in which case principal and interest on all of
the Subordinated Debentures shall become immediately due and payable), the
Debenture Trustee, Penelec Capital (as holder of the Subordinated Debentures) or
the
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Special Representative may declare the principal of all the Subordinated
Debentures to be due and payable. Under certain circumstances, a declaration of
acceleration with respect to Subordinated Debentures may be rescinded and past
defaults (except, unless theretofore cured, a default in the payment of
principal of or interest on the Subordinated Debentures) may be waived only by
the Special Representative or by Penelec Capital at the direction of the holders
of a majority in aggregate principal amount of the Subordinated Debentures
outstanding liquidation preference of Preferred Securities. The Company is
required to furnish to the Debenture Trustee annually a statement as to the
performance by the Company of its obligations under the Debenture Indenture and
as to any default in such performance.
Enforcement of Certain Rights of Holders of Preferred Securities
So long as any Subordinated Debentures are held by Penelec Capital, the
holders of the Preferred Securities will have the rights referred to under
"Description of the Preferred Securities--Voting Rights," including the right to
appoint a Special Representative authorized to exercise the rights of Penelec
Capital, as the holder of the Subordinated Debentures, to declare the principal
of and interest on the Subordinated Debentures due and payable and to enforce
the obligations of the Company under the Subordinated Debentures and the
Debenture Indenture directly against the Company, without first proceeding
against Penelec Capital or any other person or entity.
Consolidation, Merger, Sale or Conveyance
The Debenture Indenture provides that the Company may not consolidate with
or merge with or into, or sell, convey, transfer or lease all or substantially
all its assets (either in one transaction or a series of transactions) to any
person unless, among other things (i) the successor person shall be organized
and existing under the laws of the United States or any state thereof or the
District of Columbia, and shall expressly assume by a supplemental indenture all
of the obligations of the Company under the Subordinated Debentures and the
Debenture Indenture and (ii) immediately prior to and after giving effect to
such transaction, no Event of Default, and no event which, after notice or lapse
of time or both, would become an Event of Default, shall have happened and be
continuing. Upon any such consolidation, merger, sale, transfer or other
disposition of the assets of the Company substantially as an entirety, the
successor corporation formed by such consolidation or into which the Company is
merged or to which such transfer is made shall succeed to, and be substituted
for, and may exercise every right and power of, the Company under the Debenture
Indenture with the same effect as if such successor corporation had been named
as the Company therein and the Company will be released from all obligations
under the Debenture Indenture. For purposes of the Debenture Indenture, the
conveyance or other transfer by the
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Company of (a) all or any portion of its facilities for the generation of
electric energy, or (b) all of its facilities for the transmission of electric
energy, in each case considered alone or in combination with properties
described in the other clause, shall in no event be deemed to constitute a
conveyance or other transfer of all the assets of the Company, as or
substantially as an entirety.
Defeasance And Discharge
Under the terms of the Debenture Indenture, the Company will be deemed to
have paid and discharged the entire indebtedness of the Subordinated Debentures
if the Company irrevocably deposits with the Debenture Trustee or other paying
agent, in trust (i) cash and/or (ii) United States Government Obligations (as
defined in the Debenture Indenture), which through the payment of interest
thereon and principal thereof in accordance with their terms will provide cash
in an amount sufficient to pay all the principal of, premium, if any, and
interest on, the Subordinated Debentures then outstanding on the dates such
payments are due in accordance with the terms of the Subordinated Debentures. A
condition to any such discharge is the delivery by the Company to the Debenture
Trustee of either a private Internal Revenue Service Ruling or an opinion of
counsel to the effect that the holders of the Subordinated Debentures will not
recognize income, gain or loss for federal income tax purposes as a result of
such defeasance or discharge of the Debenture Indenture.
Information Concerning the Debenture Trustee
Subject to the provisions of the Debenture Indenture relating to its
duties, the Debenture Trustee will be under no obligation to exercise any of its
rights or powers under the Debenture Indenture, unless the Debenture Trustee
receives security and indemnity reasonably satisfactory to it. Subject to such
provision for indemnification, the holders of a majority in principal amount of
the Subordinated Debentures then outstanding thereunder or the Special
Representative will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee
thereunder, or exercising any trust or power conferred on the Debenture Trustee.
The Debenture Indenture contains limitations on the right of the Debenture
Trustee, as a creditor of the Company, to obtain payment of claims in certain
cases, or to realize on certain property received in respect of any such claim
as security or otherwise. In addition, the Debenture Trustee may be deemed to
have a conflicting interest and may be required to resign as Debenture Trustee
if at the time of default under the Debenture Indenture it is a creditor of the
Company. The United States Trust Company of New York also acts as the Senior
Note Trustee and the Mortgage Trustee.
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PLAN OF DISTRIBUTION
The Company and/or the Trust may sell the Senior Notes and Trust
Securities: (i) directly to purchasers; (ii) to or through underwriters; or
(iii) through agents or dealers. The Prospectus Supplement with respect to the
each series of Senior Notes and Trust Securities will set forth the terms of the
offering thereof, including the name or names of any such underwriters, agents
or dealers; the purchase price of and the net proceeds to the Company and/or the
Trust from such sale; any underwriting discounts and commissions or agency fees
and other items constituting underwriters' or agents' compensation; the initial
public offering price; any discounts or concessions allowed or reallowed or paid
to dealers and any securities exchange on which such series of Senior Notes or
Trust Securities may be listed. Any initial public offering price and any
discounts or concessions allowed or reallowed or paid to dealers may be changed
from time to time.
If underwriters are used in any sale, the Senior Notes or Trust
Securities, as the case may be, will be acquired by such underwriters for their
own account and may be resold from time to time in one or more transactions,
including negotiated transactions, at a fixed public offering price or at
varying prices determined at the time of sale. The Senior Notes and Trust
Securities may be offered to the public either through underwriting syndicates
represented by one or more managing underwriters or directly by one or more
firms acting as underwriters. The underwriter or underwriters with respect to a
particular underwritten offering will be named in the Prospectus Supplement
relating to such offering and, if an underwriting syndicate is used, the
managing underwriter or underwriters will be set forth on the cover of such
Prospectus Supplement. Unless otherwise set forth in the Prospectus Supplement
relating thereto, the obligations of the underwriters to purchase the Senior
Notes or Trust Securities, as the case may be, will be subject to certain
conditions precedent, and the underwriters will be obligated to purchase all
such series of Senior Notes or Trust Securities if any are purchased.
If dealers are utilized in a sale of Senior Notes or Trust Securities, the
Company and/or the Trust will sell such securities to the dealers as principal.
The dealers may then resell such Senior Notes or Trust Securities to the public
at varying prices to be determined by such dealers at the time of resale. The
names of the dealers and the terms of the transaction will be set forth in the
Prospectus Supplement relating thereto.
The Senior Notes and Trust Securities may be sold directly by the Company
and/or the Trust or through agents designated by the Company and/or the Trust
from time to time. Any agent involved in the offer or sale of the Senior Notes
or Trust Securities with respect to which this Prospectus is delivered
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will be named, and any commissions payable by the Company and/or the Trust to
such agent will be set forth, in the Prospectus Supplement relating thereto.
Unless otherwise indicated in the Prospectus Supplement, any such agent will be
acting on a best efforts basis for the period of its appointment.
Agents, dealers and underwriters may be entitled under agreements with the
Company and/or the Trust to indemnification by the Company and/or the Trust
against certain civil liabilities, including liabilities under the Securities
Act, or to contribution with respect to payments which such agents, dealers or
underwriters may be required to make in respect thereof. Agents, dealers and
underwriters may be customers of, engage in transactions with, or perform
services for the Company and/or the Trust in the ordinary course of business.
LEGAL MATTERS
Certain legal matters will be passed upon for the Company, the Trust and
Penelec Capital by Berlack, Israels & Liberman LLP, New York, New York and
Ballard Spahr Andrews & Ingersoll, LLP, Philadelphia, Pennsylvania and for the
underwriters by Thelen Reid & Priest LLP, New York, New York. Certain matters of
Delaware law relating to the validity of the Trust Securities and Preferred
Securities will be passed upon on behalf of the Company, the Trust, Penelec
Capital and the General Partner by Richards, Layton & Finger, P.A., Wilmington,
Delaware, special Delaware counsel to the Company, the Trust, Penelec Capital
and the General Partner. Berlack, Israels & Liberman LLP, Ballard Spahr Andrews
& Ingersoll, LLP and Thelen Reid & Priest LLP may rely on the opinion of
Richards, Layton & Finger, P.A. as to matters of Delaware law. Members and
attorneys of Berlack, Israels & Liberman LLP own an aggregate of 14,560 shares
of the Common Stock of the Company's parent, GPU, Inc.
EXPERTS
The consolidated financial statements and financial statement schedule,
included in the Company's Annual Report on Form 10-K for the year ended December
31, 1997, are incorporated herein by reference in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
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==================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER MADE
HEREBY EXCEPT AS CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS, AND
IF GIVEN OR MADE, NO SUCH INFORMATION OR REPRESENTATIONS SHOULD BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY THE COMPANY, PENELEC CAPITAL OR THE TRUST. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY THE TRUST SECURITIES OR THE SENIOR NOTES BY ANYONE IN ANY JURISDICTION IN
WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING
SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT
IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
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TABLE OF CONTENTS PAGE
Available Information
Incorporation of Certain Documents by Reference
Pennsylvania Electric Company
Penelec Capital Trust
Penelec Capital II, L.P.
Financing Program
Use of Proceeds
Company Coverage Ratios
Accounting Treatment
Description of Senior Notes
Description of Senior Note Mortgage Bonds
Description of the Trust Securities
Description of the Preferred Securities
Description of the Guarantee
Description of the Subordinated Debentures and the
Debenture Indenture
Plan of Distribution
Legal Matters
Experts
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Securities and Exchange Commission Registration Fee... $213,875
NYSE Listing Fee...................................... $ 50,000
Blue Sky Fees......................................... $ 5,000
* Accountants' Fees and Expenses........................ $ 25,000
* Company Counsel's Fees and Expenses................... $300,000
* Trustees' Fees and Expenses, including Counsel
and Authentication Fees............................... $ 30,000
* Printing of Registration Statement, Prospectus,
Prospectus, Supplements, Supplemental Indentures,
etc................................................... $ 25,000
* Rating Agencies' Fees................................. $ 50,000
* Miscellaneous......................................... $ 41,125
- ----------
*Total Expenses........................................ $740,000
- - ------------------------
*Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The By-Laws of the Company provide, in part, as follows:
"32. (a) A director shall not be personally liable for monetary damages as
such for any action taken, or any failure to take any action, on or after
January 27, 1987 unless the director has breached or failed to perform the
duties of his office under Section 1721 of the Pennsylvania Business Corporation
Law, and the breach or failure to perform constitutes self-dealing, willful
misconduct or recklessness. The provisions of this subsection (a) shall not
apply to the responsibility or liability of a director pursuant to any criminal
statute, or the liability of a director for the payment of taxes pursuant to
local, State or Federal law.
(b) The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
whether formal or informal, and whether brought by or in the right of the
corporation or otherwise, by reason of the fact that he was a director, officer
or employee of the corporation (and may indemnify any person who was an agent of
the corporation), or a person serving at the request of the corporation as a
director, officer,
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partner, fiduciary or trustee of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise to the fullest extent
permitted by law, including without limitation indemnification against expenses
(including attorneys' fees and disbursements), damages, punitive damages,
judgments, penalties, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such proceeding unless the
act or failure to act giving rise to the claim for indemnification is finally
determined by a court to have constituted willful misconduct or recklessness.
(c) The corporation shall pay the expenses (including attorneys' fees and
disbursements) actually and reasonably incurred in defending a civil or criminal
action, suit or proceeding on behalf of any person entitled to indemnification
under subsection (b) in advance of the final disposition of such proceeding upon
receipt of an undertaking by or on behalf of such person to repay such amount if
it shall ultimately be determined that he is not entitled to be indemnified by
the corporation, and may pay such expenses in advance on behalf of any agent on
receipt of a similar undertaking. The financial ability of such person to make
such repayment shall not be a prerequisite to the making of an advance.
(d) For purposes of this Section: (i) the corporation shall be deemed to
have requested an officer, director, employee or agent to serve as fiduciary
with respect to an employee benefit plan where the performance by such person of
duties to the corporation also imposes duties on, or otherwise involves services
by, such person as a fiduciary with respect to the plan; (ii) excise taxes
assessed with respect to any transaction with an employee benefit plan shall be
deemed "fines"; and (iii) action taken or omitted by such person with respect to
an employee benefit plan in the performance of duties for a purpose reasonably
believed to be in the interest of the participants and beneficiaries of the plan
shall be deemed to be for a purpose which is not opposed to the best interests
of the corporation.
(e) To further effect, satisfy or secure the indemnification obligations
provided herein or otherwise, the corporation may maintain insurance, obtain a
letter of credit, act as self-insurer, create a reserve, trust, escrow, cash
collateral or other fund or account, enter into indemnification agreements,
pledge or grant a security interest in any assets or properties of the
corporation, or use any other mechanism or arrangement whatsoever in such
amounts, at such costs, and upon such other terms and conditions as the Board of
Directors shall deem appropriate.
(f) All rights of indemnification under this Section shall be deemed a
contract between the corporation and the person entitled to indemnification
under this Section pursuant to which the corporation and each such person intend
to be legally bound. Any repeal, amendment or
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modification hereof shall be prospective only and shall not limit, but may
expand, any rights or obligations in respect of any proceeding whether commenced
prior to or after such change to the extent such proceeding pertains to actions
or failures to act occurring prior to such change.
(g) The indemnification, as authorized by this Section, shall not be
deemed exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any statute, agreement, vote of
shareholders or disinterested directors or otherwise, both as to action in any
official capacity and as to action in any other capacity while holding such
office. The indemnification and advancement of expenses provided by, or granted
pursuant to, this Section shall continue as to a person who has ceased to be an
officer, director, employee or agent in respect of matters arising prior to such
time, and shall inure to the benefit of the heirs, executors and administrators
of such person."
The Partnership Agreement provides, in part, as follows:
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 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.
"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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"Covered Person" shall mean any Partner, any Affiliate of a Partner or any
officers, directors, shareholders, partners, their respective Affiliates, or any
employee or agent of the Partnership or its Affiliates.
"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.
"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.
"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.
"Partnership" shall mean Penelec Capital II, L.P., a limited partnership
formed under the laws of the State of Delaware.
In addition, applicable Delaware partnership law provides authority for
limited partnerships to indemnify under certain circumstances any partner or
other person from and against any and all claims and demands.
Section 1741 of the Pennsylvania Business Corporation Law authorizes a
corporation to provide in its by-laws for indemnification to be granted under
certain circumstances to its officers, directors and other agents against
expenses and liabilities incurred in connection with proceedings arising out of
such persons having taken action or failed to take action on behalf of the
corporation.
The Trust Agreement provides, in part, as follows:
Section 10.4 Indemnification.
(a) (i) To the fullest extent permitted by applicable law, the Grantor
shall indemnify and hold harmless any Indemnified Person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Trust) by reason
of the fact that he is or was an Indemnified Person against expenses (including
reasonable
4
<PAGE>
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Trust, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the Indemnified Person did not
act in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Trust, and, with respect to any criminal
action or proceeding, had reasonable cause to believe that his conduct was
unlawful.
(ii) The Grantor shall indemnify, to the fullest extent permitted by
law, any Indemnified Person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action or suit by or in the right
of the Trust to procure a judgment in its favor by reason of the fact that he is
or was an Indemnified Person against expenses (including reasonable attorneys'
fees) actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the Trust
and except that no such indemnification shall be made in respect of any claim,
issue or matter as to which such Indemnified Person shall have been adjudged to
be liable to the Trust unless and only to the extent that the Court of Chancery
of Delaware or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which such Court of Chancery or such
other court shall deem proper.
(iii) To the extent that an Indemnified Person shall be successful
on the merits or otherwise (including dismissal of an action without prejudice
or the settlement of an action without admission of liability) in defense of any
action, suit or proceeding referred to in paragraphs (i) and (ii) of this
Section 10.4(a), or in defense of any claim, issue or matter therein, he shall
be indemnified, to the fullest extent permitted by law, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of this
Section 10.4(a) (unless ordered by a court) shall be made by the Grantor only as
authorized in the specific case upon a determination that indemnification of the
Indemnified Person is proper in the circumstances because he has met the
applicable standard of conduct set forth in paragraphs (i) and (ii).
5
<PAGE>
(v) To the fullest extent permitted by law, expenses (including
attorneys' fees) incurred by an Indemnified Person in defending a civil,
criminal, administrative or investigative action, suit or proceeding referred to
in paragraphs (i) and (ii) of this Section 10.4(a) shall be paid by the Grantor
in advance of the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of such Indemnified Person to repay
such amount if it shall ultimately be determined that he is not entitled to be
indemnified by the Grantor as authorized in this Section 10.4(a).
Notwithstanding the foregoing, no advance shall be made by the Grantor if a
determination is reasonably and promptly made that, based upon the facts known
to the Grantor at the time such determination is made, such Indemnified Person
acted in bad faith or in a manner that such Person did not believe to be in or
not opposed to the best interests of the Trust, or, with respect to any criminal
proceeding, that such Indemnified Person believed or had reasonable cause to
believe his conduct was unlawful. In no event shall any advance be made in
instances where the Grantor, independent legal counsel or Holder of the Trust
Securities reasonably determine that such Person deliberately breached his duty
to the Trust.
(vi) For purposes of this Section 10.4(a), references to "the Trust"
shall include, in addition to the resulting or surviving entity, any constituent
entity (including any constituent of a constituent) absorbed in a consolidation
or merger or conversion, so that any Person who is or was a director, trustee,
officer or employee of such constituent entity, or is or was serving at the
request of such constituent entity as a director, trustee, officer, employee or
agent of another entity, shall stand in the same position under the provisions
of this Section 10.4(a) with respect to the resulting or surviving entity as he
would have with respect to such constituent entity if its separate existence had
continued.
(vii) The indemnification and advancement of expenses provided by,
or granted pursuant to, this Section 10.4(a) shall, unless otherwise provided
when authorized or ratified, continue as to a Person who has ceased to be an
Indemnified Person and shall inure to the benefit of the heirs, executors and
administrators of such a person.
"Affiliate" of any specified Person means any other Person controlling or
controlled by or under common control with such specified Person. For the
purposes of this definition, "control" when used with respect to any specified
Person 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.
6
<PAGE>
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware Code,
12 Del. C. Section 3801 et seq., as it may be amended from time to time, or
any successor legislation.
"Company Indemnified Person" means: (a) any Regular Trustee; (b) any
Affiliate of any Regular Trustee; (c) any partners, employees,
representatives or agents of any Regular Trustee; or (d) any officer,
director, shareholder, member, partner, employee, representative or agent of
the Trust or its Affiliates.
"Fiduciary Indemnified Person" has the meaning set forth in Section
10.4(b) of the Trust Agreement.
"General Partner" means Penelec Preferred Capital II, Inc., a Delaware
corporation, as general partner of the Grantor, and any successor thereto
pursuant to the terms of the Partnership Agreement.
"Grantor" means Penelec Capital II, L.P., a Delaware limited partnership
formed pursuant to the Partnership Agreement, and any successor entity thereto.
"Holder" means the Person in whose name a certificate representing one or
more Trust Securities is registered on the Register maintained by the Registrar
for such purposes, such Person being a beneficial owner within the meaning of
the Business Trust Act.
"Indemnified Person" means: a Company Indemnified Person or a Fiduciary
Indemnified Person.
"Partnership Agreement" means the Amended and Restated Limited Partnership
Agreement of the Grantor dated as of _______, 1998, as amended from time to
time, together with any Action (as defined in the Partnership Agreement)
established by the General Partner.
"Person" means any natural person, 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 Securities" means the cumulative preferred securities,
representing preferred limited partner interests of the Grantor, or any
Successor Securities issued to the Trust and held by the Trustee from time to
time under this Trust Agreement for the benefit of the Holders.
"Property Trustee" has the meaning set forth in Section 7.3 of the
Trust Agreement.
7
<PAGE>
"Register" has the meaning set forth in Section 5.3 of the Trust
Agreement.
"Registrar" means any bank or trust company appointed to register Trust
Security certificates and to register transfers thereof as herein provided.
"Regular Trustee" has the meaning set forth in Section 7.5 of the Trust
Agreement.
"Successor Securities" has the meaning set forth in Section 13.02(e) of
the Partnership Agreement.
"Trust" means the trust governed by the Trust Agreement.
"Trust Security" or "Trust Securities" means a Trust Security issued
hereunder representing a beneficial interest in the Trust equal to and
representing a Preferred Security and evidenced by a certificate executed by the
Property Trustee pursuant to Article V of the Trust Agreement.
In addition, applicable Delaware trust law provides authority for trusts
to indemnify under certain circumstances any person from and against any and all
claims and demands.
ITEM 16. EXHIBITS.
1-A - Form of Underwriting Agreement relating to the Trust
Securities - to be filed by Form 8-K.
1-B - Form of Underwriting Agreement for the Senior Notes -
to be filed by Form 8-K.
3-A - Restated Articles of Incorporation of the Company -
Incorporated by reference to Exhibit 3A to the
Company's Annual Report on Form 10-K for the year
1991, SEC File No. 1-3522.
3-B - Amended By-Laws of the Company - Incorporated by
reference to Exhibit B-45 to GPU, Inc.'s Annual
Report on Form U5S for the year 1997, SEC File No.
30-126.
3-C - Certificate of Incorporation of General Partner.
3-D - By-Laws of General Partner.
8
<PAGE>
3-E - Certificate of Limited Partnership of Penelec Capital.
3-F - Form of Limited Partnership Agreement of Penelec
Capital.
3-G - Form of Amended and Restated Limited Partnership
Agreement of Penelec Capital.
3-H - Form of Action Creating Series A Preferred Securities.
4-A - Form of Subordinated Debenture Indenture.
4-A(1) - Cross-reference sheet showing location in the
Subordinated Debenture Indenture of provisions of
Sections 310(a) through 318(a) of the Trust Indenture
Act of 1939 - included in Exhibit 4-A hereto.
4-B - Form of Note Indenture for the Senior Notes.
4-B(a) - Cross-reference sheet showing location in the Note
Indenture of provisions of Sections 310(a) through
318(a) of the Trust Indenture Act of 1939 included in
Exhibit 4 -B hereto.
4-C - Form of Supplemental Indenture for the First Mortgage
Bonds - to be filed by amendment.
4-C(a) - Cross-reference sheet showing location in the
Supplemental Indenture of provisions of Sections 310(a)
through 318(a) of the Trust Indenture Act of 1939 - to
be filed by amendment.
4-D - Form of Statement of Terms and Conditions Relating to
the Proposals for the Senior Notes - to be filed by
amendment.
4-E - Form of Preferred Security Certificate - Incorporated
by reference to Exhibit A to Exhibit 3-G hereto.
4-F - Form of Subordinated Debenture - Incorporated by
reference to form of Subordinated Debenture contained
in Exhibit 4-A.
4-G - Form of Senior Notes - Incorporated by reference to
Exhibits A through D of Exhibit 4-B hereto.
9
<PAGE>
4-H - Form of First Mortgage Bonds- Incorporated by
reference to Exhibit A of Exhibit 4-C hereto.
4-I - Form of Payment and Guarantee Agreement.
4-J - Certificate of Trust for the Trust.
4-K - Trust Agreement for the Trust.
4-L - Form of Amended and Restated Trust Agreement for the
Trust.
4L(A) - Crossreference sheet showing location in the Amended
and Restated Trust Agreement of Sections 310(a)
through 318(a) of the Trust Indenture Act of 1939 -
included in Exhibit 4-L hereto.
4-M - Form of Certificate representing the Trust Securities
- incorporated by reference to Exhibit A to Exhibit
4-K hereto.
5-A - Opinion of Berlack, Israels & Liberman LLP- to be
filed by amendment.
5-B - Opinion of Ballard Spahr Andrews & Ingersoll, LLP- to
be filed by amendment.
5-C - Opinion of Richards, Layton & Finger, P.A. - to be
filed by amendment.
8 - Opinion of Carter, Ledyard & Milburn - to be filed by
amendment.
12-A - Statement Showing Computation of Ratio of Earnings to
Fixed Charges and Statement Showing Computation of
Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends. Incorporated by reference
to Exhibit 12A to the Company's Annual Report on Form
10-K for the year 1997, SEC File No. 1-3522.
13 - The Company's Annual Report on Form 10-K for the year
1997 - incorporated by reference to SEC File No
1-3522.
23-A - Consent of Berlack, Israels & Liberman LLP (to be
included in their opinion filed as Exhibit 5-A).
10
<PAGE>
23-B - Consent of Ballard Spahr Andrews & Ingersoll, LLP (to
be included in their opinion filed as Exhibit 5-B).
23-C - Consent of Richards, Layton & Finger, P.A. (to be
included in their opinion filed as Exhibit 5-C).
23-D - Consent of Carter, Ledyard & Milburn (to be included
in their opinion filed as Exhibit 8).
23-E - Consent of PricewaterhouseCoopers, LLP
24 - Power of Attorney-included in signature pages.
25-A - Statement of Eligibility under the Trust Indenture
Act of 1939 of United States Trust Company of New
York, as Trustee under the Senior Note Indenture and
the Debenture Indenture.
25-B - Statement of Eligibility under the Trust Indenture
Act of 1939 of The Bank of New York, as Property
Trustee under the Trust Agreement.
- ---------
The Exhibits listed above which have heretofore been filed with the
Securities and Exchange Commission and which are designated in prior filings as
noted above, are hereby incorporated by reference and made a part hereof with
the same effect as if filed herewith.
ITEM 17. UNDERTAKINGS.
The undersigned Registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "1933 Act");
(ii) to reflect in the Prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the Registration
Statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that
11
<PAGE>
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective Registration Statement; and
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
PROVIDED, HOWEVER, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrants pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the 1933 Act,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) That, for purposes of determining any liability under the 1933 Act,
each filing of the Registrants annual report pursuant to Section 13(a) or
Section 15(d) of the Exchange Act that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(5) That, for purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrants pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
12
<PAGE>
(6) That, for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(7) The Trust and Penelec Capital hereby undertake to provide to the
underwriter at the closing specified in the underwriting agreement certificates
in such denominations and registered in such names as required by the
underwriter to permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the 1933 Act may
be permitted to directors, officers and controlling persons of the Registrants
pursuant to the provisions under Item 15 above, or otherwise, the Registrants
have been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the 1933 Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrants of expenses
incurred or paid by a director, officer or controlling person of the Registrants
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer, or controlling person in connection with the securities being
registered, the Registrants will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the 1933 Act and will be governed by the
final adjudication of such issue.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing Form S-3 and has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Morristown, County of Morris, New Jersey, on the 21st day of August,
1998.
PENNSYLVANIA ELECTRIC COMPANY
By: /s/ Dennis Baldassari
----------------------
Name: Dennis Baldassari
Title: President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that Pennsylvania Electric Company and
each of its undersigned officers and directors hereby constitute and appoint
each of Ira H. Jolles, John G. Graham, and T.G. Howson its/his/her true and
lawful attorney-in-fact and agent with full power of substitution and
resubstitution for it/him/her and in its/his/her name, place and stead, in any
and all capacities, to sign all or any amendments (including post-effective
amendments) of and supplements to this Registration Statement on Form S-3 and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto each such
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, to all intents and purposes and as fully as said corporation itself
and each said officer or director might or could do in person, hereby ratifying
and confirming all that each such attorney-in-fact and agent, or his
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, the
Registration Statement has been signed below by the following persons in the
capacities with respect to Pennsylvania Electric Company and on the date
indicated:
Signature Title Date
- --------- ----- ----
/s/ F.D. Hafer Chairman, Chief August 21, 1998
- ------------------------
(F.D. Hafer) Executive Officer (Principal
Executive Officer) and Director
<PAGE>
/s/ D. Baldassari President and Director August 21, 1998
- ------------------------
(D. Baldassari)
/s/ J.G. Graham Vice President and August 21, 1998
- ------------------------
(J.G. Graham) Chief Financial Officer
(Principal Financial Officer)
/s/ D. W. Myers Vice President, August 21, 1998
- ------------------------
(D.W. Myers) Comptroller (Principal
Accounting Officer)
and Director
/s/ C.B. Snyder Director August 21, 1998
- ------------------------
(C. B. Snyder)
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing Form S-3 and has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Morristown, County of Morris, New Jersey, on the 21st day of August,
1998.
PENELEC CAPITAL II, L.P.
By: Penelec Preferred Capital II, Inc.
Its General Partner
By: /s/ Dennis Baldassari
------------------------
Name: Dennis Baldassari
Title: President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that Penelec Capital II, L.P. and the
undersigned director of its general partner, Penelec Preferred Capital II, Inc.,
hereby constitute and appoint each of Ira H. Jolles, John G. Graham, and T.G.
Howson its/his true and lawful attorney-in-fact and agent with full power of
substitution and resubstitution for it/him and in its/his name, place and stead,
in any and all capacities, to sign all or any amendments (including
post-effective amendments) of and supplements to this Registration Statement on
Form S-3 and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
each such attorney-in-fact and agent full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises, to all intents and purposes and as fully as said limited partnership
itself and said director might or could do in person, hereby ratifying and
confirming all that each such attorney-in-fact and agent, or his substitutes,
may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, the
Registration Statement has been signed below by the following person in the
capacity on behalf of Penelec Preferred Capital II, Inc., as the general partner
of Penelec Capital II, L.P., and on the date indicated:
Signature Title Date
- --------- ----- ----
/s/ D. Baldassari Sole Director August 21, 1998
- --------------------
(D. Baldassari)
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing Form S-3 and has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Morristown, County of Morris, New Jersey, on the 21st day of August,
1998.
PENELEC CAPITAL TRUST
By: Penelec Capital II, L.P.,
as grantor
By: Penelec Preferred Capital II, Inc.,
as general partner
By: /s/ Dennis Baldassari
------------------------
Name: Dennis Baldassari
Title: President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that Penelec Capital Trust and the
undersigned director of Penelec Preferred Capital II, Inc., the general partner
of the grantor, Penelec Capital II, L.P., hereby constitute and appoint each of
Ira H. Jolles, John G. Graham, and T.G. Howson its/his true and lawful
attorney-in-fact and agent with full power of substitution and resubstitution
for it/him and in its/his name, place and stead, in any and all capacities, to
sign all or any amendments (including post-effective amendments) of and
supplements to this Registration Statement on Form S-3 and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto each such attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, to all intents and
purposes and as fully as said trust itself and said director might or could do
in person, hereby ratifying and confirming all that each such attorney-in-fact
and agent, or his substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, the
Registration Statement has been signed below by the following person in the
capacity on behalf of Penelec Preferred Capital II, Inc., as general partner of
Penelec Capital II, L.P., as grantor of Penelec Capital Trust, on the date
indicated:
Signature Title Date
- --------- ----- ----
/s/ Dennis Baldassari Sole Director August 21, 1998
- ---------------------
(Dennis Baldassari)
EXHIBITS TO BE FILED BY EDGAR
Exhibit:
3-C - Certificate of incorporation of
General Partner.
3-D - By-Laws of General Partner.
3-E - Certificate of Limited Partnership of
Penelec Capital.
3-F - Form of Limited Partnership Agreement
of Penelec Capital.
3-G - Form of Amended and Restated Limited
Partnership Agreement of Penelec
Capital.
3-H - Form of Action Creating Series A
Preferred Securities.
4-A - Form of Subordinated Debenture
Indenture.
4-B - Form of Note Indenture for the Senior
Notes.
4-I - Form of Payment and Guarantee
Agreement.
4-J - Certificate of Trust for the Trust.
4-K - Trust Agreement for the Trust.
4-L - Form of Amended and Restated Trust
Agreement for the Trust.
23-E - Consent of PricewaterhouseCoopers, LLP.
<PAGE>
25-A - Statement of Eligibility under the
Trust Indenture Act of 1939 of United
States Trust Company of New York, as
Trustee under the Senior Note
Indenture and the Debenture Indenture.
25-B - Statement of Eligibility under the
Trust Indenture Act of 1939 of The
Bank of New York, as Property Trustee
under the Trust Agreement.
Exhibit 3-C
CERTIFICATE OF INCORPORATION
OF
PENELEC PREFERRED CAPITAL II, INC.
It is hereby certified that:
FIRST: The name of the corporation (hereinafter called the
-----
"corporation") is Penelec Preferred Capital II, Inc.
SECOND: The address, including street, number, city and county, of the
------
registered office of the corporation in the State of Delaware is 1013 Centre
Road, City of Wilmington, County of New Castle; and the name of the registered
agent of the corporation in the State of Delaware at such address is Corporation
Service Company.
THIRD: The nature of the business or purposes to be conducted or
-----
promoted by the corporation are as follows:
(1) To subscribe for and be a holder of general partner
interests of Penelec Capital II, L.P., a limited partnership formed
under the laws of the State of Delaware ("Penelec Capital"), to be a
general partner of Penelec Capital II and to discharge such duties and
take any and all such actions as may be necessary, appropriate or
desirable in such capacity as may from time to time be provided in
Penelec Capital's limited partnership agreement and applicable
provisions of law.
(2) To issue and sell its capital stock in exchange for cash
or other consideration to fund its acquisition of such general partner
interests and to enable it to have sufficient net worth for Penelec
Capital to be treated as a partnership for federal income tax purposes,
and/or to lend such cash or other consideration to the entity which
acquires such capital stock.
(3) The corporation shall not conduct any other business
except with respect to and incident to the activities provided for in
clauses (1) and (2) of this Article THIRD.
FOURTH: The total number of shares of stock which the corporation shall
------
have authority to issue is one hundred (100) shares, par value $.01 per share.
All such shares are of one class and are shares of Common Stock.
FIFTH: The name and the mailing address of the incorporator are as
-----
follows:
<PAGE>
NAME MAILING ADDRESS
---- ---------------
T.G. Howson c/o GPU Service, Inc.
310 Madison Avenue
Morristown, New Jersey 07962-1957
SIXTH: The corporation is to have perpetual existence.
-----
SEVENTH: The personal liability of the directors of the corporation is
--------
hereby eliminated to the fullest extent permitted by paragraph (7) of subsection
(b) of Section 102 of the General Corporation Law of the State of Delaware, as
the same may be amended and supplemented from time to time.
EIGHTH: Notwithstanding any other provision of law that may otherwise
------
so empower the corporation, for such time as Pennsylvania Electric Company, or
its successor or assign, is the sole stockholder of the corporation, the
corporation shall not, without the prior written consent of such sole
stockholder, do any of the following:
(1) dissolve or liquidate, in whole or in part;
(2) merge or consolidate with, or sell all or substantially
all of its assets to, any person, firm, corporation, partnership or
other entity unless, in the case of a merger or consolidation, the
surviving corporation in such merger or the corporation resulting from
such consolidation shall have a certificate of incorporation containing
provisions substantially identical to the provisions of Article THIRD
and this Article EIGHTH and, in the case of a sale of assets, the
acquiring corporation shall have assumed all of the liabilities and
obligations of this corporation and shall have a certificate of
incorporation containing provisions substantially identical to the
provisions of Article THIRD and this Article EIGHTH;
(3) to the extent permitted by law, file or consent to or
acquiesce in a petition seeking an order under the Federal Bankruptcy
Code, as amended, make an assignment for the benefit of creditors or
consent to or fail to contest the appointment of a custodian or
receiver of all or any substantial part of its property, or file a
petition or answer seeking, consenting to or acquiescing in the
granting of relief under any other applicable bankruptcy, insolvency or
similar law or statute of the United States of America or any state
thereof;
(4) amend this Certificate of Incorporation to alter in any
manner or delete Article THIRD or this Article EIGHTH; or
(5) incur any indebtedness.
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<PAGE>
NINTH: From time to time any of the provisions of this Certificate of
------
Incorporation may, subject to the provisions of paragraph (4) of Article EIGHTH,
be amended, altered or repealed, and other provisions authorized by the laws of
the State of Delaware at the time in force may be added or inserted in the
manner and at the time prescribed by said laws, and all rights at any time
conferred upon the stockholders of the corporation by this Certificate of
Incorporation are granted subject to the provisions of this Article NINTH.
TENTH: Unless and except to the extent that the By-Laws of the
-----------------------------------------------------------------
corporation so require, the election ofdirectors of the corporation need not be
by written ballot.
ELEVENTH: In furtherance and not in limitation of the powers conferred
--------
by the laws of the State of Delaware, the Board of Directors is expressly
authorized and empowered to make, alter and repeal the By-Laws of the
corporation, subject to the power of the stockholders of the corporation to
alter or repeal any By-Laws made by the Board of Directors.
IN WITNESS WHEREOF, I have hereunto set my hand this 20th day of
August, 1998.
/s/ T. G. Howson
----------------
T.G. Howson
Sole Incorporator
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Exhibit 3-D
================================================================================
------------------------
PENELEC PREFERRED CAPITAL II, INC.
By-Laws
______________, 1998
------------------------
================================================================================
<PAGE>
BY-LAWS
Offices
-------
1. The principal office of PENELEC PREFERRED CAPITAL II, INC. (the
"Corporation") shall be in Mellon Bank Center, Tenth and Market Streets,
Wilmington, DE 19801. The Corporation may also have offices at such other places
as the Board of Directors may from time to time designate or the business of the
Corporation may require.
Seal
- ----
2. The corporate seal shall have inscribed thereon the name of the
Corporation, the year of its organization, and the words "Corporate Seal" and
"Delaware". If authorized by the Board of Directors, the corporate seal may be
affixed to any certificates of stock, bonds, debentures, notes or other
engraved, lithographed or printed instruments, by engraving, lithographing or
printing thereon such seal or a facsimile thereof, and such seal or facsimile
thereof so engraved, lithographed or printed thereon shall have the same force
and effect, for all purposes, as if such corporate seal had been affixed thereto
by indentation.
Stockholders' Meetings
- ----------------------
3. All meetings of stockholders shall be held at the principal office
of the Corporation or at such other place as shall be stated in the notice of
the meeting. Such meetings
<PAGE>
shall be presided over by the chief executive officer of the Corporation, or, in
his absence, by such other officer as shall have been designated for the purpose
by the Board of Directors, except when by statute the election of a presiding
officer is required.
4. Annual meetings of stockholders shall be held during the month of
May in each year on such day and at such time as shall be determined by the
Board of Directors and specified in the notice of the meeting. At the annual
meeting, the stockholders entitled to vote shall elect by ballot a Board of
Directors and transact such other business as may properly be brought before the
meeting.
5. Except as otherwise provided by law or by the Certificate of
Incorporation, the holders of a majority of the shares of stock of the
Corporation issued and outstanding and entitled to vote, present in person or by
proxy, shall be requisite for, and shall constitute a quorum at, any meeting of
the stockholders. If, however, the holders of a majority of such shares of stock
shall not be present or represented by proxy at any such meeting, the
stockholders entitled to vote thereat, present in person or by proxy, shall have
power, by vote of the holders of a majority of the shares of capital stock
present or
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<PAGE>
represented at the meeting, to adjourn the meeting from time to time without
notice other than announcement at the meeting, until the holders of the amount
of stock requisite to constitute a quorum, as aforesaid, shall be present in
person or by proxy. At any adjourned meeting at which such quorum shall be
present, in person or by proxy, any business may be transacted which might have
been transacted at the meeting as originally noticed.
6. At each meeting of stockholders each holder of record of shares of
capital stock then entitled to vote shall be entitled to vote in person, or by
proxy appointed by instrument executed in writing by such stockholders or by his
duly authorized attorney; but no proxy shall be valid after the expiration of
eleven months from the date of its execution unless the stockholder executing it
shall have specified therein the length of time it is to continue in force,
which shall be for some specified period. Except as otherwise provided by law or
by the Certificate of Incorporation, each holder of record of shares of capital
stock entitled to vote at any meeting of stockholders shall be entitled to one
vote for every share of capital stock standing in his name on the books of the
Corporation. Shares of capital stock of the Corporation belonging to the
Corporation or to a corporation if a majority of the shares entitled to vote in
the election of directors of such other corporation is held, directly or
indirectly, by the Corporation, shall neither be entitled to vote nor be counted
for quorum purposes. All elections shall be determined by a plurality vote, and,
except as
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<PAGE>
otherwise provided by law or by the Certificate of Incorporation all other
matters shall be determined by a vote of the holders of a majority of the shares
of the capital stock present or represented at a meeting and voting on such
questions.
7. A complete list of the stockholders entitled to vote at any meeting
of stockholders, arranged in alphabetical order, with the residence of each, and
the number of shares held by each, shall be prepared by the Secretary and filed
in the principal office of the Corporation at least ten days before the meeting,
and shall be open to the examination of any stockholder at all times prior to
such meeting, during the usual hours for business, and shall be available at the
time and place of such meeting and open to the examination of any stockholder.
8. Special meetings of the stockholders for any purpose or purposes,
unless otherwise prescribed by law, may be called by the Chairman or by the
President, and shall be called by the chief executive officer or Secretary at
the request in writing of any three members of the Board of Directors, or at the
request in writing of holders of record of ten percent of the shares of capital
stock of the Corporation issued and outstanding. Business transacted at all
special meetings of the stockholders shall be confined to the purposes stated in
the call.
9. Notice of every meeting of stockholders, setting forth the time and
the place and briefly the purpose or purposes thereof, shall be mailed, not less
than ten nor more than sixty
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<PAGE>
days prior to such meeting, to each stockholder of record (at his address
appearing on the stock books of the Corporation, unless he shall have filed with
the Secretary of the Corporation a written request that notices intended for him
be mailed to some other address, in which case it shall be mailed to the address
designated in such request) as of a date fixed by the Board of Directors
pursuant to Section 41 of the By-Laws. Except as otherwise provided by law, the
Certificate of Incorporation or the By-Laws, items of business, in addition to
those specified in the notice of meeting, may be transacted at the annual
meeting.
Directors
- ---------
10. The business and affairs of the Corporation shall be managed by or
under the direction of its Board of Directors, which shall consist of not less
than one nor more than nine directors as shall be fixed from time to time by a
resolution adopted by a majority of the entire Board of Directors; provided,
however, that no decrease in the number of directors constituting the entire
Board of Directors shall shorten the term of any incumbent director. Each
director shall be at least twenty-one years of age. Directors need not be
stockholders of the Corporation. Directors shall be elected at the annual
meeting of stockholders, or, if any such election shall not be held, at a
stockholders' meeting called and held in accordance with the provisions of the
General Corporation Law of the State of Delaware. Each director shall serve
until the next annual meeting of stockholders and thereafter until his successor
shall
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<PAGE>
have been elected and shall qualify or until his earlier death, resignation or
removal.
11. In addition to the powers and authority by the By-Laws expressly
conferred upon it, the Board of Directors may exercise all such powers of the
Corporation and do all such lawful acts and things as are not by law or by the
Certificate of Incorporation, or by the By-Laws directed or required to be
exercised or done by the stockholders.
12. No contract or transaction between the Corporation and one or more
of its directors or officers, or between the Corporation and any other
corporation, partnership, association or other organization in which one or more
of its directors or officers are directors or officers, or have a financial
interest, shall be void or voidable solely for this reason, or solely because
the director or officer is present at or participates in the meeting of the
Board of Directors or committee thereof which authorizes the contract or
transaction, or solely because his votes are counted for such purpose, if: (1)
the material facts as to his relationship or interest and as to the contract or
transaction are disclosed or are known to the Board or the committee, and the
Board or committee in good faith authorizes the contract or transaction by the
affirmative votes of a majority of the disinterested directors, even though the
disinterested directors be less than a quorum; or (2) the
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<PAGE>
material facts as to his relationship or interest and as to the contract or
transaction are disclosed or are known to the stockholders entitled to vote
thereon, and the contract or transaction is specifically approved in good faith
by vote of the stockholders; or (3) the contract or transaction is fair as to
the Corporation as of the time it is authorized, approved or ratified, by the
Board, a committee thereof or the stockholders. Common or interested directors
may be counted in determining the presence of a quorum at a meeting of the Board
of Directors or of a committee which authorizes the contract or transaction.
Meetings of the Board of Directors
- ----------------------------------
13. The first meeting of the Board of Directors, for the purpose of
organization, the election of officers, and the transaction of any other
business which may come before the meeting, shall be held on call of the
President within one week after the annual meeting of stockholders. If the
President shall fail to call such meeting, it may be called by the Vice
President or by any director. Notice of such meeting shall be given in the
manner prescribed for Special Meetings of the Board of Directors.
14. Regular meetings of the Board of Directors may be held without
notice except for the purpose of taking action on matters as to which notice is
in the By-Laws required to be given, at such time and place as shall from time
to time be designated by the Board, but in any event at intervals of not more
than three months. Special meetings of the Board of Directors may be called by
the President or in the absence or disability of the
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<PAGE>
President, by a Vice President, or by any two directors, and may be held at the
time and place designated in the call and notice of the meeting.
15. Except as otherwise provided by the By-Laws, any item of business
may be transacted at any meeting of the Board of Directors, whether or not such
item of business shall have been specified in the notice of meeting. Where
notice of any meeting of the Board of Directors is required to be given by the
By-Laws, the Secretary or other officer performing his duties shall give notice
either personally or by telephone or telecopy at least twenty-four hours before
the meeting, or by mail at least three days before the meeting. Meetings may be
held at any time and place without notice if all the directors are present or if
those not present waive notice in writing either before or after the meeting.
16. At all meetings of the Board of Directors a majority of the
directors in office shall be requisite for, and shall constitute, a quorum for
the transaction of business, and the act of a majority of the directors present
at any meeting at which there is a quorum shall be the act of the Board of
Directors, except as may be otherwise specifically provided by law or by the
Certificate of Incorporation, as amended, or by the By-Laws.
17. Any regular or special meeting may be adjourned to any time or
place by a majority of the directors present at the
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<PAGE>
meeting, whether or not a quorum shall be present at such meeting, and no notice
of the adjourned meeting shall be required other than announcement at the
meeting.
Committees
----------
18. The Board of Directors may, by the vote of a majority of the
directors in office, create an Executive Committee, consisting of two or more
members, of whom one shall be the chief executive officer of the Corporation.
The other members of the Executive Committee shall be designated by the Board of
Directors from their number, shall hold office for such period as the Board of
Directors shall determine and may be removed at any time by the Board of
Directors. When a member of the Executive Committee ceases to be a director, he
shall cease to be a member of the Executive Committee. Except as otherwise
provided by applicable law, the Executive Committee shall have all the powers
specifically granted to it by the By-Laws and, between meetings of the Board of
Directors, may also exercise all the powers of the Board of Directors. The
Executive Committee shall have no power to revoke any action taken by the Board
of Directors, and shall be subject to any restriction imposed by law, by the
By-Laws, or by the Board of Directors.
19. The Executive Committee shall cause to be kept regular minutes of
its proceedings, which may be transcribed in the regular minute book of the
Corporation, and all such proceedings shall be reported to the Board of
Directors at its next succeeding meeting. A majority of the Executive Committee
shall
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<PAGE>
constitute a quorum at any meeting. The Board of Directors may by vote of a
majority of the total number of directors provided for in Section 10 of the
By-Laws fill any vacancies in the Executive Committee. The Executive Committee
shall designate one of its number as Chairman of the Executive Committee and
may, from time to time, prescribe rules and regulations for the calling and
conduct of meetings of the Committee, and other matters relating to its
procedure and the exercise of its powers.
20. From time to time the Board of Directors may appoint any other
committee or committees for any purpose or purposes, which committee or
committees shall have such powers and such tenure of office as shall be
specified in the resolution of appointment. The President of the Corporation
shall be a member ex officio of all committees of the Board.
Compensation and Reimbursement of Directors
-------------------------------------------
and Members of the Executive Committee
--------------------------------------
21. Directors, other than salaried officers of the Corporation or its
affiliates, shall receive compensation and benefits for their services as
directors, at such rate or under such conditions as shall be fixed from time to
time by the Board, and all directors shall be reimbursed for their reasonable
expenses, if any, of attendance at each regular or special meeting of the Board
of Directors.
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<PAGE>
22. Directors, other than salaried officers of the Corporation or its
affiliates, who are members of any committee of the Board, shall receive
compensation for their services as such members as shall be fixed from time to
time by the Board, and all directors shall be reimbursed for their reasonable
expenses, if any, in attending meetings of the Executive Committee or such other
Committees of the Board and of otherwise performing their duties as members of
such Committees.
Officers
--------
23. The officers of the Corporation shall be chosen by a vote of a
majority of the directors in office and shall be a President and a Secretary
and, in the discretion of the Board of Directors, one or more Vice Presidents, a
Treasurer, and a Comptroller, one or more Assistant Secretaries, one or more
Assistant Treasurers, and one or more Assistant Comptrollers. The President
shall be the chief executive officer of the Corporation. The President shall be
chosen from among the directors. Any two or more offices may be occupied and the
duties thereof may be performed by one person, but no officer shall execute,
acknowledge or verify any instrument in more than one capacity.
24. The salary and other compensation of the chief executive officer of
the Corporation shall be determined from time to time by the Board of Directors.
The salaries and other compensation of all other officers of the Corporation
shall be determined from time to time by the President.
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<PAGE>
25. The salary or other compensation of all employees other than
officers of the Corporation shall be fixed by the President of the Corporation
or by such other officer as shall be designated for that purpose by the Board of
Directors.
26. The Board of Directors may appoint such officers and such
representatives or agents as shall be deemed necessary, who shall hold office
for such terms, exercise such powers, and perform such duties as shall be
determined from time to time by the Board of Directors.
27. The officers of the Corporation shall hold office until the first
meeting of the Board of Directors after the next succeeding annual meeting of
stockholders and until their respective successors are chosen and qualify or
until their earlier death, resignation or removal. Any officer elected pursuant
to Section 23 of the By-Laws may be removed at any time, with or without cause,
by the vote of a majority of the directors in office. Any other officer and any
representative, employee or agent of the Corporation may be removed at any time,
with or without cause, by action of the Board of Directors, by the Executive
Committee, or the President of the Corporation, or such other officer as shall
have been designated for that purpose by the President of the Corporation.
The President
-------------
28. (a) The President shall preside at all meetings of the Board at
which he shall be present.
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<PAGE>
(b) The President of the Corporation:
(i) shall have supervision,
direction and control of the conduct of the business
of the Corporation, subject, however, to the control
of the Board of Directors and the Executive
Committee if there be one;
(ii) may sign in the name and on
behalf of the Corporation any and all contracts,
agreements or other instruments pertaining to
matters which arise in the ordinary course of
business of the Corporation, and, when authorized by
the Board of Directors or the Executive Committee,
if there be one, may sign in the name and on behalf
of the Corporation any and all contracts,
agreements, or other instruments of any nature
pertaining to the business of the Corporation;
(iii) may, unless otherwise directed
by the Board of Directors pursuant to Section 37 of
the By-Laws, attend in person or by substitute or
proxy appointed by him and act and vote on behalf of
the Corporation at all meetings of the stockholders
of any corporation in which the Corporation holds
stock and grant any consent, waiver, or power of
attorney in respect of such stock;
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<PAGE>
(iv) shall, whenever it may in his
opinion be necessary or appropriate, prescribe the
duties of officers and employees of the Corporation
whose duties are not otherwise defined; and
(v) shall have such other powers and
perform such other duties as may be prescribed from
time to time by law, by the By-Laws, or by the Board
of Directors.
Vice President
--------------
29. (a) The Vice President shall, in the absence or disability of the
President, have supervision, direction and control of the conduct of the
business of the Corporation, subject, however, to the control of the Directors
and the Executive Committee, if there be one.
(b) He may sign in the name of and on behalf of the Corporation any
and all contracts, agreements or other instruments pertaining to matters which
arise in the ordinary course of business of the Corporation, and when authorized
by the Board of Directors or the Executive Committee, if there be one, except in
cases where the signing thereof shall be expressly delegated by the Board of
Directors or the Executive Committee to some other officer or agent of the
Corporation.
(c) He may, at the request or in the absence or disability of the
President or in case of the failure of the
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<PAGE>
President to appoint a substitute or proxy as provided in Subsection 28(b)(iii)
of the By-Laws, unless otherwise directed by the Board of Directors pursuant to
Section 37 of the By-Laws, attend in person or by substitute or proxy appointed
by him and act and vote on behalf of the Corporation at all meetings of the
stockholders of any corporation in which the Corporation holds stock and grant
any consent, waiver or power of attorney in respect of such stock.
(d) He shall have such other powers and perform such other
duties as may be prescribed from time to time by law, by the By-Laws, or by the
Board of Directors.
(e) If there be more than one Vice President, the Board of
Directors may designate one or more of such Vice Presidents as an Executive Vice
President or a Senior Vice President. The Board of Directors may assign to such
Vice Presidents their respective duties and may designate the order in which the
respective Vice Presidents shall have supervision, direction and control of the
business of the Corporation in the absence or disability of the President.
The Secretary
-------------
30. (a) The Secretary shall attend all meetings of the Board of
Directors and all meetings of the stockholders and record all votes and the
minutes of all proceedings in books to be kept for that purpose; and he shall
perform like duties for the Executive Committee and any other committees created
by the
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<PAGE>
Board of Directors.
(b) He shall give, or cause to be given, notice of all
meetings of the stockholders, the Board of Directors, or the Executive Committee
or any other committee of the Board of Directors of which notice is required to
be given by law or by the By-Laws.
(c) He shall have such other powers and perform such other
duties as may be prescribed from time to time by law, by the By-Laws, or the
Board of Directors.
(d) Any records kept by the Secretary shall be the property of
the Corporation and shall be restored to the Corporation in case of his death,
resignation, retirement or removal from office.
(e) He shall be the custodian of the seal of the Corporation
and, pursuant to Section 44 of the By-Laws and in other instances where the
execution of documents on behalf of the Corporation is authorized by the By-Laws
or by the Board of Directors, may affix the seal to all instruments requiring it
and attest the ensealing and the execution of such instruments.
(f) He shall have control of the stock ledger, stock
certificate book and all books containing minutes of any meeting of the
stockholders, Board of Directors, or Executive Committee
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<PAGE>
or other committee created by the Board of Directors, and of all formal records
and documents relating to the corporate affairs of the Corporation.
(g) Any Assistant Secretary or Assistant Secretaries shall assist
the Secretary in the performance of his duties, shall exercise his powers and
duties at his request or in his absence or disability, and shall exercise such
other powers and duties as may be prescribed by the Board of Directors.
The Treasurer
-------------
31. (a) The Treasurer shall be responsible for the safekeeping of the
corporate funds and securities of the Corporation, and shall maintain and keep
in his custody full and accurate accounts of receipts and disbursements in books
belonging to the Corporation, and shall deposit all moneys and other funds of
the Corporation in the name and to the credit of the Corporation, in such
depositories as may be designated by the Board of Directors.
(b) He shall disburse the funds of the Corporation in such manner
as may be ordered by the Board of Directors, taking proper vouchers for such
disbursements.
(c) Pursuant to Section 44 of the By-Laws, he may, when authorized
by the Board of Directors, affix the seal to all instruments requiring it and
shall attest the ensealing and execution of said instruments.
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<PAGE>
(d) He shall exhibit at all reasonable times his accounts and
records to any director of the Corporation upon application during business
hours at the office of the Corporation where such accounts and records are kept.
(e) He shall render an account of all his transactions as
Treasurer at all regular meetings of the Board of Directors, or whenever the
Board may require it, and at such other times as may be requested by the Board
or by any director of the Corporation.
(f) If required by the Board of Directors, he shall give the
Corporation a bond, the premium on which shall be paid by the Corporation, in
such form and amount and with such surety or sureties as shall be satisfactory
to the Board, for the faithful performance of the duties of his office, and for
the restoration to the Corporation in case of his death, resignation, retirement
or removal from office, of all books, papers, vouchers, money and other property
of whatever kind in his possession or under his control belonging to the
Corporation.
(g) He shall perform all duties generally incident to the
office of Treasurer, and shall have other powers and duties as from time to time
may be prescribed by law, by the By-Laws, or by the Board of Directors.
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<PAGE>
(h) Any Assistant Treasurer or Assistant Treasurers shall assist
the Treasurer in the performance of his duties, shall exercise his powers and
duties at his request or in his absence or disability, and shall exercise such
other powers and duties as may be prescribed by the Board of Directors. If
required by the Board of Directors, any Assistant Treasurer shall give the
Corporation a bond, the premium on which shall be paid by the Corporation,
similar to that which may be required to be given by the Treasurer.
Comptroller
-----------
32. (a) The Comptroller of the Corporation shall be the principal
accounting officer of the Corporation and shall be accountable and report
directly to the Board of Directors. If required by the Board of Directors, the
Comptroller shall give the Corporation a bond, the premium on which shall be
paid by the Corporation in such form and amount and with such surety or sureties
as shall be satisfactory to the Board, for the faithful performance of the
duties of his office.
(b) He shall keep or cause to be kept full and complete books of
account of all operations of the Corporation and of its assets and liabilities.
(c) He shall have custody of all accounting records of the
Corporation other than the record of receipts and disbursements and those
relating to the deposit or custody of money or
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<PAGE>
securities of the Corporation, which shall be in the custody of the Treasurer.
(d) He shall exhibit at all reasonable times his books of
account and records to any director of the Corporation upon application during
business hours at the office of the Corporation where such books of account and
records are kept.
(e) He shall render reports of the operations and business and
of the condition of the finances of the Corporation at regular meetings of the
Board of Directors, and at such other times as he may be requested by the Board
or any director of the Corporation, and shall render a full financial report at
the annual meeting of the stockholders, if called upon to do so.
(f) He shall receive and keep in his custody an original copy
of each written contract made by or on behalf of the Corporation.
(g) He shall receive periodic reports from the Treasurer of
the Corporation of all receipts and disbursements, and shall see that correct
vouchers are taken for all disbursements for any purpose.
(h) He shall perform all duties generally incident to the
office of Comptroller, and shall have such other powers and duties as from time
to time may be prescribed by law, by the By-Laws, or by the Board of Directors.
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<PAGE>
(i) Any Assistant Comptroller or Assistant Comptrollers shall
assist the Comptroller in the performance of his duties, shall exercise his
powers and duties at his request or in his absence or disability and shall
exercise such other powers and duties as may be conferred or required by the
Board of Directors. If required by the Board of Directors, any Assistant
Comptroller shall give the Corporation a bond, the premium on which shall be
paid by the Corporation, similar to that which may be required to be given by
the Comptroller.
Vacancies
---------
33. If the office of any director becomes vacant by reason of death,
resignation, retirement, disqualification, or otherwise, the remaining
directors, by the vote of a majority of those then in office at a meeting, the
notice of which shall have specified the filling of such vacancy as one of its
purposes may choose a successor, who shall hold office for the unexpired term in
respect of which such vacancy occurs. If the office of any officer of the
Corporation shall become vacant for any reason, the Board of Directors, at a
meeting, the notice of which shall have specified the filling of such vacancy as
one of its purposes, may choose a successor who shall hold office for the
unexpired term in respect of which such vacancy occurred. Pending action by the
Board of Directors at such meeting, the Board of Directors or the Executive
Committee may choose a successor temporarily to serve as an officer of the
Corporation.
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<PAGE>
Resignations
------------
34. Any officer or any director of the Corporation may resign at any
time, such resignation to be made in writing and transmitted to the Secretary.
Such resignation shall take effect at the time specified therein, and unless
otherwise specified therein no acceptance of such resignation shall be necessary
to make it effective. Nothing herein shall be deemed to relieve any officer from
liability for breach of any contract of employment resulting from any such
resignation.
Duties of Officers May be Delegated
-----------------------------------
35. In case of the absence or disability of any officer of the
Corporation, or for any other reason the Board of Directors may deem sufficient,
the Board, by vote of a majority of the total number of directors provided for
in Section 10 of the By-Laws may, notwithstanding any provisions of the By-Laws,
delegate or assign, for the time being, the powers or duties, or any of them, of
such officer to any other officer or to any director.
Indemnification of Directors, Officers and Employees
----------------------------------------------------
36. (a) The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, whether formal or informal, and whether brought by or in the
right of the Corporation or otherwise ("proceeding"), by reason of the fact that
he was a director, officer or employee of the Corporation (and may indemnify any
person who was an agent of the
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<PAGE>
Corporation), or a person serving at the request of the Corporation as a
director, officer, partner, fiduciary or trustee of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise, to
the fullest extent permitted by law, including without limitation
indemnification against expenses (including attorneys' fees and disbursements),
damages, punitive damages, judgments, penalties, fines and amounts paid in
settlement actually and reasonably incurred by such person in connection with
such proceeding to the fullest extent permitted by applicable law.
(b) The Corporation shall pay the expenses (including
attorneys' fees and disbursements) actually and reasonably incurred in defending
a proceeding on behalf of any person entitled to indemnification under
subsection (a) in advance of the final disposition of such proceeding upon
receipt of an undertaking by or on behalf of such person to repay such amount if
it shall ultimately be determined that he is not entitled to be indemnified by
the Corporation, and may pay such expenses in advance on behalf of any agent on
receipt of a similar undertaking. The financial ability of such person to make
such repayment shall not be a prerequisite to the making of an advance.
(c) For purposes of this Section: (i) the Corporation shall be
deemed to have requested an officer, director, employee or agent to serve as
fiduciary with respect to an employee benefit plan where the performance by such
person of duties to
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<PAGE>
the Corporation also imposes duties on, or otherwise involves services by, such
person as a fiduciary with respect to the plan; (ii) excise taxes assessed with
respect to any transaction with an employee benefit plan shall be deemed
"fines"; and (iii) action taken or omitted by such person with respect to any
employee benefit plan in the performance of duties for a purpose reasonably
believed to be in the interest of the participants and beneficiaries of the plan
shall be deemed to be for a purpose which is not opposed to the best interests
of the Corporation.
(d) To further effect, satisfy or secure the indemnification
obligations provided herein or otherwise, the Corporation may maintain
insurance, obtain a letter of credit, act as self-insurer, create a reserve,
trust, escrow, cash collateral or other fund or account, enter into
indemnification agreements, pledge or grant a security interest in any assets or
properties of the Corporation, or use any other mechanism or arrangement
whatsoever in such amounts, at such costs, and upon such other terms and
conditions as the Board of Directors shall deem appropriate.
(e) All rights of indemnification under this Section shall be
deemed a contract between the Corporation and the person entitled to
indemnification under this Section pursuant to which the Corporation and each
such person intend to be legally bound. Any repeal, amendment or modification
hereof shall be prospective only and shall not limit, but may expand, any rights
or
-24-
<PAGE>
obligations in respect of any proceeding whether commenced prior to or after
such change to the extent such proceeding pertains to actions or failures to act
occurring prior to such change.
(f) The indemnification, as authorized by this Section, shall
not be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any statute,
agreement, vote of shareholder, or disinterested directors or otherwise, both as
to action in an official capacity and as to action in any other capacity while
holding such office. The indemnification and advancement of expenses provided
by, or granted pursuant to, this Section shall continue as to a person who has
ceased to be an officer, director, employee or agent in respect of matters
arising prior to such time, and shall inure to the benefit of the heirs,
executors and administrators of such person.
Stock of Other Corporations
---------------------------
37. The Board of Directors may authorize any director, officer or other
person on behalf of the Corporation to attend, act and vote at meetings of the
stockholders of any corporation in which the Corporation shall hold stock, and
to exercise thereat any and all of the rights and powers incident to the
ownership of such stock and to execute waivers of notice of such meetings and
calls therefor.
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<PAGE>
Certificate of Stock
--------------------
38. The certificates of stock of the Corporation shall be numbered and
shall be entered in the books of the Corporation as they are issued. They shall
exhibit the holder's name and number of shares and may include his address. No
fractional shares of stock shall be issued. Certificates of stock shall be
signed by the President or a Vice President and by the Treasurer or an Assistant
Treasurer or the Secretary or an Assistant Secretary, and shall be sealed with
the seal of the Corporation. Where any certificate of stock is signed by a
transfer agent or transfer clerk, who may be but need not be an officer or
employee of the Corporation, and by a registrar, the signature of any such
President, Vice President, Secretary, Assistant Secretary, Treasurer, or
Assistant Treasurer upon such certificate who shall have ceased to be such
before such certificate of stock is issued, it may be issued by the Corporation
with the same effect as if such officer had not ceased to be such at the date of
its issue.
Transfer of Stock
-----------------
39. Transfers of stock shall be made on the books of the Corporation
only by the person named in the certificate or by attorney, lawfully constituted
in writing, and upon surrender of the certificate therefor.
Fixing of Record Date
---------------------
40. The Board of Directors is hereby authorized to fix a time, not
exceeding fifty (50) days preceding the date of any
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<PAGE>
meeting of stockholders or the date fixed for the payment of any dividend or the
making of any distribution, or for the delivery of evidences of rights or
evidences of interests arising out of any change, conversion or exchange of
capital stock, as a record time for the determination of the stockholders
entitled to notice of and to vote at such meeting or entitled to receive any
such dividend, distribution, rights or interests as the case may be; and all
persons who are holders of record of capital stock at the time so fixed and no
others, shall be entitled to notice of and to vote at such meeting, and only
stockholders of record at such time shall be entitled to receive any such
notice, dividend, distribution, rights or interests.
Registered Stockholders
-----------------------
41. The Corporation shall be entitled to treat the holder of record of
any share or shares of stock as the holder in fact thereof and accordingly shall
not be bound to recognize any equitable or other claim to, or interest in, such
share on the part of any other person, whether or not it shall have express or
other notice thereof, save as expressly provided by statutes of the State of
Delaware.
Lost Certificates
-----------------
42. Any person claiming a certificate of stock to be lost or destroyed
shall make an affidavit or affirmation of that fact, whereupon a new certificate
may be issued of the same tenor and for the same number of shares as the one
alleged to be lost or destroyed; provided, however, that the Board of Directors
may
-27-
<PAGE>
require, as a condition to the issuance of a new certificate, the payment of the
reasonable expenses of such issuance or the furnishing of a bond of indemnity in
such form and amount and with such surety or sureties, or without surety, as the
Board of Directors shall determine, or both the payment of such expenses and the
furnishing of such bond, and may also require the advertisement of such loss in
such manner as the Board of Directors may prescribe.
Inspection of Books
-------------------
43. The Board of Directors may determine whether and to what extent,
and at what time the places and under what conditions and regulations, the
accounts and books of the Corporation (other than the books required by statute
to be open to the inspection of stockholders), or any of them, shall be open to
the inspection of stockholders, and no stockholder shall have any right to
inspect any account or book or document of the Corporation, except as such right
may be conferred by statutes of the State of Delaware or by the By-Laws or by
resolution of the Board of Directors or of the stockholders.
Checks, Notes, Bonds and Other Instruments
------------------------------------------
44. (a) All checks or demands for money and notes of the Corporation
shall be signed by such person or persons (who may but need not be an officer of
officers of the Corporation) as the Board of Directors may from time to time
designate, either directly or through such officers of the Corporation as shall,
by resolution of the Board of Directors, be authorized to designate
-28-
<PAGE>
such person or persons. If authorized by the Board of Directors, the signatures
of such persons, or any of them, upon any checks for the payment of money may be
made by engraving, lithographing or printing thereon a facsimile of such
signatures, in lieu of actual signatures, and such facsimile signatures so
engraved, lithographed or printed thereon shall have the same force and effect
as if such persons had actually signed the same.
(b) All bonds, mortgages and other instruments requiring a
seal, when required in connection with matters which arise in the ordinary
course of business or when authorized by the Board of Directors, shall be
executed on behalf of the Corporation by the President or a Vice President, and
the seal of the Corporation shall be thereupon affixed by the Secretary or an
Assistant Secretary, who shall, when required, attest the ensealing and
execution of said instrument. If authorized by the Board of Directors, a
facsimile of the seal may be employed and such facsimile of the seal may be
engraved, lithographed or printed and shall have the same force and effect as an
impressed seal. If authorized by the Board of Directors, the signatures of the
President or a Vice President and the Secretary or an Assistant Secretary upon
any engraved, lithographed or printed bonds, debentures, notes or other
instruments may be made by engraving, lithographing or printing thereon a
facsimile of such signatures, in lieu of actual signatures, and such facsimile
signatures so engraved, lithographed or printed thereon shall have the same
force and effect as if such officers had actually signed the same. In case any
officer who has signed, or whose
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<PAGE>
facsimile signature appears on, any such bonds, debentures, notes or other
instruments shall cease to be such officer before such bonds, debentures, notes
or other instruments shall have been delivered by the Corporation, such bonds,
debentures, notes or other instruments may nevertheless be adopted by the
Corporation and be issued and delivered as though the person who signed the
same, or whose facsimile signature appears thereon, had not ceased to be such
officer of the Corporation.
Receipts for Securities
-----------------------
45. All receipts for stocks, bonds or other securities received by the
Corporation shall be signed by the Treasurer or an Assistant Treasurer, or by
such other person or persons as the Board of Directors or Executive Committee
shall designate.
Fiscal Year
-----------
46. The fiscal year shall begin the first day of January in each year.
Dividends
47. (a) Dividends in the form of cash or securities, upon the capital
stock of the Corporation, to the extent permitted by law may be declared by the
Board of Directors at any regular or special meeting.
(b) The Board of Directors shall have power to fix and determine,
and from time to time to vary, the amount to be reserved as working capital; to
determine whether any, and if
-30-
<PAGE>
any, what part of any, surplus of the Corporation shall be declared as
dividends; to determine the date or dates for the declaration and payment or
distribution of dividends; and, before payment of any dividend or the making of
any distribution to set aside out of the surplus of the Corporation such amount
or amounts as the Board of Directors from time to time, in its absolute
discretion, may think proper as a reserve fund to meet contingencies, or for
equalizing dividends, or for such other purpose as it shall deem to be in the
interest of the Corporation.
Directors' Annual Statement
---------------------------
48. The Board of Directors shall upon request present or cause to be
presented at each annual meeting of stockholders, and when called for by vote of
the stockholders at any special meeting of the stockholders, a full and clear
statement of the business and condition of the Corporation.
Notices
-------
49. (a) Whenever under the provisions of the By-Laws notice is required
to be given to any director, officer of stockholder, it shall not be construed
to require personal notice, but, except as otherwise specifically provided, such
notice may be given in writing, by mail, by depositing a copy of the same in the
U.S. mail, postage prepaid, addressed to such stockholder, officer or director,
at his address as the same appears on the books of the Corporation.
-31-
<PAGE>
(b) A stockholder, director or officer may waive in writing
any notice required to be given to him by law or by the By-Laws.
Participation in Meetings by Telephone
--------------------------------------
50. At any meeting of the Board of Directors or the Executive Committee
or any other committee designated by the Board of Directors, one or more
directors may participate in such meeting in lieu of attendance in person by
means of the conference telephone or similar communications equipment by means
of which all persons participating in the meeting will be able to hear and
speak.
Oath of Judges of Election
--------------------------
51. The judges of election appointed to act at any meeting of the
stockholders shall, before entering upon the discharge of their duties, be sworn
faithfully to execute the duties of judge at such meeting with strict
impartiality and according to the best of their ability.
Amendments
----------
52. The By-Laws may be altered or amended by the affirmative vote of
the holders of a majority of the capital stock represented and entitled to vote
at a meeting of the stockholders duly held, provided that the notice of such
meeting shall have included notice of such proposed amendment. The By-Laws may
also be altered or amended by the affirmative vote of a majority of the
directors in office at a meeting of the Board of
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<PAGE>
Directors, the notice of which shall have included notice of the proposed
amendment. In the event of the adoption, amendment, or repeal of any By-Law by
the Board of Directors pursuant to this Section, there shall be set forth in the
notice of the next meeting of stockholders for the election of directors the
By-Law so adopted, amended, or repealed together with a concise statement of the
changes made. By the affirmative vote of the holders of a majority of the
capital stock represented and entitled to vote at such meeting, the By-Laws may,
without further notice, be altered or amended by amending or repealing such
action by the Board of Directors.
Exhibit 3-E
CERTIFICATE OF LIMITED PARTNERSHIP
OF
PENELEC CAPITAL II, L.P.
This Certificate of Limited Partnership of Penelec Capital II,
L.P. (the "Partnership") is being duly executed and filed by the undersigned
sole general partner of the Partnership for the purpose of forming a limited
partnership pursuant to the Delaware Revised Uniform Limited Partnership Act.
1. The name of the Partnership is Penelec Capital II, L.P.
2. The address of the registered office of the Partnership in
the State of Delaware is 1013 Centre Road, Wilmington, Delaware 19805. The
Partnership's registered agent at that address is Corporation Service Company.
3. The name and mailing address of the sole general partner of
the Partnership are:
NAME ADDRESS
---- -------
Penelec Preferred c/o GPU Service, Inc.
Capital II, Inc. 310 Madison Avenue
Morristown, New Jersey 07962-1957
IN WITNESS WHEREOF, the undersigned, constituting the sole
general partner of the Partnership, has caused this Certificate of Limited
Partnership to be duly executed as of the 20th day of August, 1998.
PENELEC PREFERRED CAPITAL II, INC.,
as General Partner
By:/s/ T. G. Howson
-------------------
Name: T.G. Howson
Title: Vice President
Exhibit 3-F
LIMITED PARTNERSHIP
AGREEMENT
OF
PENELEC CAPITAL II, L.P.
------------------------
The undersigned General Partner and Initial Limited Partner (jointly,
the "Partners") hereby form a limited partnership pursuant to and in accordance
with the Delaware Revised Uniform Limited Partnership Act (6 Del. C. Section
17-101, et seq.) (the "Delaware Act"), and hereby agree as follows:
1. Name. The name of the limited partnership formed hereby is
-----
PENELEC CAPITAL II, L.P. (the
"Partnership").
2. Purpose. The purpose and business of the Partnership shall be to
-------
engage in any lawful activity for which limited partnerships may be organized
under the Delaware Act.
3. Registered Office. The registered office of the Partnership in the
------------------
State of Delaware is 1013 Centre Road, City of Wilmington, County of New Castle.
4. Registered Agent. The name and address of the registered agent of
------------------
the Partnership for service of process on the Partnership in the State of
Delaware is Corporation Service Company, 1013 Centre Road, City of Wilmington,
County of New Castle, Delaware 19805.
<PAGE>
5. Partners. The names and mailing addresses of the General Partner and
--------
the Initial Limited Partner are as follows:
General Partner: Penelec Preferred Capital II, Inc.
- --------------
c/o GPU Service, Inc.
310 Madison Avenue
Morristown, New Jersey 07962-1957
Initial Limited Partner: T.G. Howson
- ----------------------
c/o GPU Service, Inc.
310 Madison Avenue
Morristown, New Jersey 07962-1957
6. Powers. The powers of the General Partner include all powers,
-------
statutory and otherwise, possessed by general partners under the laws of the
State of Delaware.
7. Dissolution. The Partnership shall dissolve, and its affairs shall
------------
be wound up, on May 1, 2063 or at such earlier time as (a) all of the partners
of the Partnership approve in writing, (b) an event of withdrawal of a general
partner has occurred under the Delaware Act, or (c) an entry of a decree of
judicial dissolution has occurred under Section 17-802 of the Delaware Act;
provided, however, the Partnership shall not be dissolved or required to be
wound up upon an event of withdrawal of a general partner described in Section
7(b) if (i) at the time of such event of withdrawal, there is at least one (1)
other general partner of the Partnership who carries on the business of the
Partnership (any remaining general partner being hereby authorized to carry on
the business of the Partnership), or (ii) within ninety (90) days after the
occurrence of such event of
-2-
<PAGE>
withdrawal, a majority in interest of the remaining partners (or such greater
percentage as is required by the Delaware Act) agree in writing to continue the
business of the Partnership and to the appointment, effective as of the date of
the event of withdrawal, of one (1) or more additional general partners of the
Partnership.
8. Capital Contributions. The Partners have contributed the following
----------------------
amounts, in cash, property or services rendered, or in a promissory note or
other obligation to contribute cash or to perform services:
General Partner . . . . . . . . . . . . $99.00
Initial Limited Partner . . . . . . . . $ 1.00
9. Allocations of Profit and Losses. The Partnership's profits and
----------------------------------
losses shall be allocated in proportion to the capital contributions of the
Partners which shall be reflected in a capital account for each of the Partners.
10. Distributions. Distributions to the Partners shall be in the same
-------------
proportion as their then capital account balances.
11. Assignments.
------------
(a) The Initial Limited Partner may transfer all or any part
of his partnership interest only with the consent of the General Partner, and
any transferee may be admitted as a substitute limited partner of the
Partnership only with the consent of the General Partner, whose consent in
either case may be withheld in the sole discretion of the General Partner.
-3-
<PAGE>
(b) The General Partner may transfer all or any part of its
partnership interest without the consent of the Initial Limited Partner, and
such transferee shall have all the rights and powers of the General Partner.
12. Withdrawal. Except as provided in Sections 11 and 13, no right is
----------
given to the Initial Limited Partner to withdraw from the Partnership. The
General Partner may withdraw from the Partnership without the consent of the
Initial Limited Partner, but no such withdrawal shall be effective until the
filing with the Secretary of State of the State of Delaware of an amendment to
the Partnership's Certificate of Limited Partnership naming a successor general
partner of the Partnership.
13. Additional Partners.
--------------------
(a) The General Partner may admit additional limited partners
of the Partnership. Immediately following the admission of one or more
additional limited partners of the Partnership, the Initial Limited Partner
shall withdraw from the Partnership and shall be entitled to receive forthwith
the return of its capital contribution, without interest or deduction.
(b) The Partnership shall continue as a limited partnership
under the Delaware Act after the admission of any additional limited partners of
the Partnership pursuant to this Section 13.
-4-
<PAGE>
(c) The admission of additional limited partners of the
Partnership pursuant to this Section 13 may be accomplished by the amendment and
restatement of this Limited Partnership Agreement and, if required by the
Delaware Act, the filing of an amendment and/or restatement to the Partnership's
Certificate of Limited Partnership with the Secretary of State of the State of
Delaware.
14. Merger. The approval of the Initial Limited Partner shall not be
------
required with respect to any merger of an entity into the Partnership.
IN WITNESS WHEREOF, the undersigned have duly executed this Limited
Partnership Agreement as of , 1998.
GENERAL PARTNER:
----------------
PENELEC PREFERRED CAPITAL II, INC.,
a Delaware corporation
By:____________________________
Name: D. Baldassari
Title: President
INITIAL LIMITED PARTNER:
------------------------
------------------------------
T.G. Howson
-5-
Exhibit 3-G
AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
OF PENELEC CAPITAL II, L.P.
This AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT, dated
as of , 1998, of Penelec Capital II, L.P., a Delaware limited partnership
(the "Partnership"), is made by and among Penelec Preferred Capital II, Inc., as
General Partner, T.G. Howson, as Class A Limited Partner, and the Persons (as
defined below) who become limited partners of the Partnership in accordance with
the provisions hereof.
WHEREAS, Penelec Preferred Capital II, Inc. and T.G. Howson
have heretofore formed a limited partnership pursuant to the Delaware Act (as
defined below), by filing a Certificate of Limited Partnership (as defined
below) with the Secretary of State of the State of Delaware on ,
1998, and entering into a Limited Partnership Agreement of the Partnership dated
as of , 1998 (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
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).
"Affiliate" shall mean, with respect to the Person to which it
refers, a Person that directly or indirectly through one or more intermediaries,
controls or is controlled by, or is under common control with, such subject
Person.
"Agreement" shall mean this Amended and Restated Limited
Partnership Agreement, as amended, modified, supplemented or restated from time
to time, including, without limitation, by any Action establishing a series of
Preferred Partner Interests.
<PAGE>
"Book Entry Interests" shall mean a beneficial interest in the
Certificates, ownership and transfers of which shall be made through book
entries by a Clearing Agency as described in Section 14.04.
"Business Day" shall mean any day other than a day on which
banking institutions in The City of New York are authorized or required by law
to close.
"Capital Account" shall have the meaning set forth in Section
4.01. For purposes of determining the Capital Accounts as set forth in Article
IV, partnership items shall be computed in the same manner as the Partnership
computes its income for Federal income tax purposes, rather than generally
accepted accounting principles, except that (1) a distribution in kind of
Partnership property shall be treated as a taxable disposition of such property
for its fair market value (taking into account Section 7701(g) of the Code) on
the date of distribution, and (2) adjustments shall be made in accordance with
Treasury Regulation Section 1.704-1(b)(2)(iv), which adjustments shall include
any income which is exempt from United States Federal income tax, all
Partnership losses and all expenses properly chargeable to the Partnership,
whether deductible or non-deductible and whether described in Section
705(a)(2)(B) of the Code, treated as so described pursuant to Treasury
Regulation Section 1.704-1(b)(2)(iv)(i), or otherwise.
"Certificate" shall mean a certificate substantially in the
form attached hereto as Exhibit A, evidencing a Preferred Partner Interest.
"Certificate of Limited Partnership" shall mean the
Certificate of Limited Partnership of the Partnership and any and all amendments
thereto and restatements thereof filed with the Secretary of State of the State
of Delaware.
"Class A Limited Partner" shall mean T.G. Howson in his
capacity as a limited partner of the Partnership.
"Clearing Agency" shall mean an organization registered as a
"Clearing Agency" pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" shall mean a broker dealer,
bank, other financial institution or other Person for whom from time to time a
Clearing Agency effects book entry transfers and pledges of securities deposited
with the Clearing Agency.
"Code" shall mean the United States Internal Revenue Code
of 1986 and (unless the context requires otherwise) the
2
<PAGE>
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.
"Global Certificate" shall mean a Certificate issued in the
form of a typewritten Certificate or Certificates representing the Book Entry
Interests to be delivered to a Clearing Agency in accordance with Section 14.04.
"Guarantee" shall mean the Payment and Guarantee Agreement to
be dated as of , 1998 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.
"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.
3
<PAGE>
"Indenture" shall mean the Indenture to be dated as of
, 1998, 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.
"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 or the
Trust 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
or the Trust, as the case may be, 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 and/or the Trust
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, neither the Partnership nor the Trust is 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.
4
<PAGE>
"Partners" shall mean the General Partner and the Limited
Partners.
"Partnership" shall mean Penelec Capital II, L.P., a limited
partnership formed under the laws of the State of Delaware.
"Penelec" shall mean Pennsylvania Electric Company and its
successors.
"Penelec Preferred" shall mean Penelec Preferred Capital II,
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 Distribution" shall have the meaning set
forth in Section 13.02(a)(i).
"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 Subordinated
Debentures of Penelec issued under the Indenture.
5
<PAGE>
"Tax Event" shall mean, with respect to any series of
Preferred Partner Interests, that the Partnership shall have obtained an opinion
of tax 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 such series of Preferred Partner Interests, there
is more than an insubstantial risk that (i) the Partnership or the Trust is
required by applicable tax laws to withhold or deduct amounts with respect to
distributions or other payments, (ii) the Partnership or the Trust will be
subject to Federal income tax with respect to interest received on the related
Subordinated Debentures or the Partnership or the Trust will otherwise not be
taxed as a partnership or a grantor trust, as the case may be, or (iii) interest
payable by Penelec to the Partnership on the related Subordinated Debentures
will not be deductible for Federal income tax purposes, or (iv) the Partnership
or the Trust is subject to more than a de minimis 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.
"Trust" shall mean Penelec Capital Trust, a Delaware business
trust, and any additional Trusts created by any Trust Agreements to, among other
things, acquire Preferred Partner Interests.
"Trust Agreement" shall mean the Amended and Restated Trust
Agreement of the Trust, dated , 1998, as amended or supplemented from
time to time, and any additional Trust Agreements entered into by the
Partnership as grantor.
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"Trust Securities" shall mean preferred beneficial interests
in the Trust, each representing a Preferred Partner Interest.
"Trustee" shall mean United States Trust Company of New York
or any other trustee under the Indenture.
"Underwriting Agreement" shall mean any Underwriting Agreement
entered into by the Trust, the Partnership and/or Penelec with regard to the
sale of Trust Securities, Preferred Partner Interests and/or other securities.
ARTICLE II - Continuation; Name; Purposes; Term; Definitions
------------------------------------------------------------
Section 2.01. Formation. The parties hereto hereby join
---------
together to continue the heretofore formed limited partnership which shall exist
under and be governed by the Delaware Act. The Partnership shall make any and
all filings or disclosures required under the laws of Delaware or otherwise with
respect to its continuation as a limited partnership, its use of a fictitious
name or otherwise as may be required. The Partnership shall be a limited
partnership among the Partners solely for the purposes specified in Section 2.03
hereof, and this Agreement shall not be deemed to create a partnership among the
Partners with respect to any activities whatsoever other than the activities
within the business purposes of the Partnership as specified in Section 2.03. No
Partner shall have any power to bind any other Partner with respect to any
matter except as specifically provided in this Agreement. No Partner shall be
responsible or liable for any indebtedness or obligation of any other Partner
incurred either before or after the execution of this Agreement. The assets of
the Partnership shall be owned by the Partnership as an entity, and no Partner
individually shall own any direct interest in the assets of the Partnership.
Section 2.02. Name and Place of Business. The name of the
----------------------------
Partnership is "Penelec Capital II, L.P." The Partnership may operate under the
name of "Penelec Capital II" 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, Second Floor, 919 N. Market Street, 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.
---------
(a) 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
7
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of all sales of Interests in the Partnership to purchase Subordinated Debentures
issued by Penelec pursuant to the Indenture, to act as the grantor of the Trust
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.
(b) In furtherance of the purposes set forth in Section
2.03(a) and without limiting the generality thereof, the Partnership may issue
Preferred Partner Interests for consideration other than cash, including
Subordinated Debentures, which consideration shall constitute payment for the
Preferred Partner Interests so issued.
Section 2.04. Term. The Partnership was formed on ,
----
1998 and shall continue without dissolution through June 30, 2063, 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
giving of consideration 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. A Person may also be admitted to the
Partnership as a Preferred Partner and become bound by this Agreement by
execution of this Agreement (by counterpart or otherwise).
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.
8
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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. With respect to each Person who is issued a
Preferred Partner Interest by the Partnership in connection with the initial
issuance by the Partnership of such Preferred Partner Interest, there shall be
contributed to the capital of the Partnership an amount equal to the Purchase
Price for such Preferred Partner Interest (such amount being such Person's
capital contribution to the Partnership).
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 or on behalf of 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 Account Balance of General
--------------------------------------------------------------
Partner. At all times throughout the term of the Partnership, the General
- -------
Partner shall maintain a Capital Account balance equal to at least 3% of the
total positive Capital Account balances for the Partnership. If necessary, the
General Partner shall immediately make additional contributions to satisfy this
requirement, which 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. The immediately preceding sentence shall not be
construed to limit the effect of Section 10.04 of this Agreement.
9
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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 (or
predecessor thereof), (b) the agreed value of any property subsequently
contributed to the capital of the Partnership by such Partner (or predecessor
thereof); and (c) items of income and gain allocated to such Partner (or
predecessor thereof). A Partner's Capital Account shall be decreased by: (a)
items of loss and deduction allocated to such Partner (or predecessor thereof);
and (b) any distributions made to such Partner (or predecessor thereof). In
addition to and notwithstanding the foregoing, Capital Accounts shall be
maintained at all times in accordance with the Capital Account maintenance rules
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 Preferred Partner Distributions accrued on such Preferred Partner Interests
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; and (ii) thereafter, all remaining items of income,
gain, loss, deduction or credit to the General Partner; provided however, that
the percentage of
10
<PAGE>
items of income, gain, loss, deduction or credit of the Partnership allocated to
the General Partner for any fiscal period shall at least equal three percent.
Section 5.02. Allocation Rules. For purposes of determining
-----------------
the profits, losses or any other items allocable to any period, profits, losses
and any such other items shall be determined on a daily, monthly or other basis,
as determined by the General Partner in its sole and absolute discretion using
any method that is permissible under Section 706 of the Code and the Treasury
Regulations thereunder. The Partners are aware of the income tax consequences of
the allocations made by this Article V and hereby agree to be bound by the
provisions of this Article V in reporting their shares of Partnership income and
loss for income tax purposes.
Section 5.03. Adjustments to Reflect Changes in Interests.
----------------------------------------------
Notwithstanding the foregoing, with respect to any Fiscal Year during which any
Partner's percentage interest in the Partnership changes, whether by reason of
the admission of a 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 this 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
11
<PAGE>
be determined by increasing the Partner's Capital Account by any amounts that
the Partner is obligated to restore to the Partnership pursuant to Treasury
Regulation Section 1.704-1(b)(2)(ii)(C) and 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
applicable Action creating the series of Preferred Partner Interests held by
them, 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. 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 or as otherwise
provided in an Action, 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 any other asset in kind from the Partnership even if the
percentage of the asset distributed to it
12
<PAGE>
exceeds a percentage of that asset which is equal to the percentage in which
such Partner shares in distributions from the Partnership.
Section 6.03. Withholding. The Partnership shall comply with
-----------
all withholding requirements under Federal, state and local law. To the extent
that the Partnership is required to withhold and pay over any amounts to any
authority with respect to distributions or allocations to or for the account of
any Partner, the amount withheld shall be deemed to be a distribution in the
amount of the withholding to or for the account of the Partner. In the event of
any claimed overwithholding, Partners shall be limited to an action against the
applicable jurisdiction. If the amount withheld was not withheld from actual
distributions, the Partnership may reduce subsequent distributions by the amount
of such withholding.
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, within 90
days after the end of each Fiscal Year of the Partnership, annual financial
statements of the Partnership, including a balance sheet of the Partnership as
of the end of such Fiscal Year and the related statements of income or loss. The
General Partner shall cause such financial statements to be delivered to each
Partner that so requests in writing, together with 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
13
<PAGE>
permitted by applicable law, keep confidential from the Partners for such period
of time as the General Partner deems reasonable any information which the
General Partner reasonably believes to be in the nature of trade secrets or
other information the disclosure of which the General Partner in good faith
believes is not in the best interest of the Partnership or could damage the
Partnership or its business or which the Partnership is required by law or by an
agreement with a third party to keep confidential.
(d) The General Partner may make, or revoke, in its sole and
absolute discretion, any elections for the Partnership that are permitted under
tax or other applicable laws, including elections under Section 704(c) of the
Code, provided that the General Partner shall not make any elections pursuant to
Section 754 of the Code.
Section 7.03. Banking. The Partnership shall maintain one or
-------
more bank accounts in the name and for the sole benefit of the Partnership. The
signatories for such accounts shall be designated by the General Partner.
Reserve cash, cash held pending the expenditure of funds for the business of the
Partnership or cash held pending a distribution to one or more of the Partners
may, but need not, 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.
14
<PAGE>
Section 7.06. Taxpayer Information. Any Person who holds a
---------------------
Preferred Partner Interest as a nominee for another Person is required to
furnish to the Partnership (a) the name, address and taxpayer identification
number of the beneficial owner and the nominee; (b) information as to whether
the beneficial owner is (1) a Person that is not subject to United States
taxation on its income regardless of source, (2) a foreign government, an
international organization or any wholly owned agency or instrumentality of
either of the foregoing, or (3) a tax-exempt entity; (c) the amount and
description of Preferred Partner Interest held, acquired or transferred for the
beneficial owner; and (d) certain other information, including the dates of
acquisitions and transfers, means of acquisitions and transfers and acquisition
cost for purchases, as well as the amount of net proceeds from sales.
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 this Agreement, the
Indenture, the Guarantee and the Delaware Act.
(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
15
<PAGE>
purposes. In this connection, the General Partner is authorized, in its sole and
absolute discretion, to take any action not inconsistent with applicable law,
the Certificate of Limited Partnership or this Agreement that does not
materially adversely affect the interests of holders of Preferred Partner
Interests that the General Partner determines in its sole and absolute
discretion to be necessary, advisable or desirable for such purposes.
Section 8.02. Fiduciary Duty.
--------------
(a) To the extent that, at law or in equity, an Indemnified
Person has duties (including fiduciary duties) and liabilities relating thereto
to the Partnership or to any other Covered Person, an Indemnified Person acting
under this Agreement shall not be liable to the Partnership or to any other
Covered Person for its good faith reliance on the provisions of this Agreement
or the advice of counsel selected by the Indemnified Person in good faith. The
provisions of this Agreement, to the extent that they restrict the duties and
liabilities of an Indemnified Person otherwise existing at law or in equity, are
agreed by the parties hereto to replace such other duties and liabilities of
such Indemnified Person.
(b) Unless otherwise expressly provided herein, (i) whenever a
conflict of interest exists or arises between an Indemnified Person and any
Covered Person, 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
16
<PAGE>
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) subject to the terms of this Agreement, 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;
(c) to pay directly (without any obligation to first exhaust
the assets of the Partnership) (i) all of the costs and expenses of the
Partnership (including, without limitation, costs and expenses relating to the
organization of, and offering of Preferred Partner Interests in, the Partnership
and costs and expenses relating to the operation of the Partnership, including
without limitation, costs and expenses of accountants, attorneys, statistical or
bookkeeping services and computing or accounting equipment, paying agent(s),
registrar(s), transfer agent(s), duplicating, travel and telephone and costs and
expenses incurred in connection with the acquisition, financing, and disposition
of Partnership assets) and (ii) all expenses of the Trust, any trustee thereof
and of the Partnership as grantor of the Trust;
(d) to take such action as it, in good faith, deems
appropriate and consistent with the terms of this Agreement to enforce the
Partnership's rights under the Subordinated Debentures and the Indenture; and
(e) to provide promptly to any trustee of the Trust a copy of
any notice of Default received by the General Partner pursuant to Section 7.05
of the Indenture.
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:
17
<PAGE>
(a) cause the Partnership to issue Interests, including
Preferred Partner Interests, and determine 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;
(h) take such action as may be necessary or appropriate to
permit the withdrawal and redeposit of Preferred Partner Interests as provided
for in the Trust Agreement;
(i) enter into and perform one or more Trust Agreements or
other organizational documents relating to the creation of one or more Preferred
Partners that will own Preferred Partner Interests, including by entering into
and performing agreements or documents referred to in such Trust Agreements or
other organizational documents, in each case on behalf of the Partnership; and
(j) 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.
18
<PAGE>
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.
19
<PAGE>
(d) Subject to the provisions of this Section 8.06, the
General Partner, in its sole and absolute discretion, shall establish all other
provisions relating to meetings of Partners, including notice of the time, place
or purpose of any meeting at which any matter is to be voted on by any Partners,
waiver of any such notice, action by consent without a meeting, the
establishment of a record date, quorum requirements, voting in person or by
proxy or any other matter with respect to the exercise of any such right to
vote; provided, however, that unless the General Partner has established a lower
percentage, a majority of the Partners entitled to vote thereat shall constitute
a quorum at all meetings of the Partners.
Section 8.07.Net Worth of General Partner. By execution of
-----------------------------
this Agreement, the General Partner represents and covenants that (a) as of the
date hereof and at all times during the existence of the Partnership it will
maintain a fair market value net worth (determined in accordance with generally
accepted accounting principles) of at least ten percent (10%) of the total
contributions to the Partnership less any redemptions, throughout the life of
the Partnership, in accordance with Rev. Proc. 89-12, 1989-1 C.B. 798, and Rev.
Proc. 92-88, 1992-2 C.B. 496, or such other amount as may be required from time
to time pursuant to any amendment, modification or successor to Rev. Proc. 89-12
and Rev. Proc. 92-88 (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 holders of the Subordinated Debentures or 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 [a majority] of the
aggregate stated liquidation preference of all series of Preferred Partner
Interests affected thereby, acting as a single class (or the Special
Representative acting on their behalf); 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
20
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without the prior consent of each holder of all series of Preferred Partner
Interests affected thereby. The General Partner shall not revoke any action
previously authorized or approved by a vote of any series of Preferred Partner
Interests. The General Partner shall notify all holders of such Preferred
Partner Interests of any notice of default received from the Trustee with
respect to such series of Subordinated Debentures. In addition, the General
Partner will not permit or cause the Partnership to file a voluntary petition in
bankruptcy without the approval of the holders of not less than [a majority] of
the aggregate stated liquidation preference of the outstanding Preferred Partner
Interests.
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
21
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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 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
22
<PAGE>
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-9 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 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.
Section 10.04. Withdrawal or Redeposit of Preferred Partner
---------------------------------------------
Interests. Nothing in this Article X or elsewhere in this Agreement (including,
- ---------
without limitation, Article XIV) shall restrict or limit the right of any Person
to withdraw or redeposit Preferred Partner Interests represented by Trust
Securities and to be admitted to the Partnership as a limited partner of the
Partnership or to withdraw as a limited partner of the Partnership in connection
with such withdrawal or redeposit, as the case may be, as provided for in the
Trust Agreement.
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
23
<PAGE>
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 (or such greater percentage in Interest as is
required by the Delaware Act) agree in writing or by vote 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 or dissolution and winding up
of Penelec;
(e) The written consent of the General Partner and all of the
Preferred Partners;
24
<PAGE>
(f) In the sole and absolute discretion of the General Partner
upon the happening of a Special Event (subject to any limitations set forth in
an Action); or
(g) In accordance with Section 13.02(f).
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 winding up 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 this Agreement or the
Action or Actions for such Series; and
(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.
25
<PAGE>
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 or not opposed to 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, restrictions and other terms and
provisions, whether in regard to distributions, return of capital or otherwise,
as may from time
26
<PAGE>
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 Preferred Partner Distribution rate (or
method of determining such rate) for Preferred Partner Interests of
such series and the first date upon which such Preferred Partner
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
27
<PAGE>
any requirement for the approval by the Preferred Partner 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;
and
(ix) 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 or any other Person, 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 or any other Person, 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 or similar 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 shall be admitted to the Partnership as a Preferred
Partner upon compliance with Section 2.06.
28
<PAGE>
Section 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
("Preferred Partner 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
shorter period, Preferred Partner Distributions will
be computed on the basis of the actual number of days
elapsed in such period, and payable in United States
dollars, in arrears, with a payment frequency
determined by the General Partner at the time of
issuance. In the event that any date on which
Preferred Partner Distributions are payable is not a
Business Day, then payment of such Preferred Partner
Distribution 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 Preferred Partner 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
29
<PAGE>
distributions paid or declared on any Preferred
Partner Interests is paid or declared on all
Preferred Partner Interests then outstanding on a pro
rata basis, on the date such distributions are paid
or declared, so that
(1) (x) the aggregate amount of
distributions paid or declared on such
series of Preferred Partner Interests bears
to (y) the aggregate amount of distributions
paid or declared on all such Preferred
Partner Interests outstanding the same ratio
as
(2) (x) the aggregate of all accumulated
arrears of unpaid distributions in respect
of such series of Preferred Partner
Interests bears to (y) the aggregate of all
accumulated arrears of unpaid distributions
in respect of all such Preferred Partner
Interests outstanding;
(B) pay or declare any distribution on any general
partner Interest; or
(C) redeem, purchase or otherwise acquire any
Preferred Partner Interests or any general partner
Interests;
until, in each case, such time as all accumulated and unpaid distributions on
all series of Preferred Partner Interests shall have been paid in full for all
distribution periods terminating on or prior to, in the case of clauses (A) and
(B), such payment and, in the case of clause (C), the date of such redemption,
purchase or acquisition.
(b) Notice of Redemption.
---------------------
(i) The Partnership may not redeem any outstanding
Preferred Partner Interests unless all accumulated
and unpaid distributions have been paid on all
Preferred Partner Interests for all 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; provided
30
<PAGE>
that not fewer than forty (40) days' notice will be
given with respect to the redemption of any Preferred
Partner Interests held by the Trust or any trustee
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 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) Notwithstanding the foregoing, however, any
Notice of Redemption in connection with an optional
redemption may state that it is subject to the
receipt by the Partnership of redemption funds on or
before such date fixed for redemption, which Notice
of Redemption shall be of no effect unless such funds
are so received on or before such date. If Notice of
Redemption shall have been given and, by 12:00 noon,
New York time, on the redemption date specified
therein, (i) if the Preferred Partner Interests are
then owned by The Depository Trust Company or its
successor securities depository, the Partnership
shall have irrevocably deposited with The Depository
Trust Company or such successor securities depository
funds sufficient to pay the applicable Redemption
Price and shall have given 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, or (ii) otherwise, if the
Partnership shall have made payment of the Redemption
Price to the holders of Preferred Partner Interests,
then on the date of such deposit or payment, 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
31
<PAGE>
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 each case with the same force and
effect as if made on such date. 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 Partner Interests
to be redeemed will be selected (i) if the Preferred
Partner Interests are then owned of record by The
Depository Trust Company or its successor securities
depository, according to a determination by The
Depository Trust Company or such successor securities
depository or (ii) otherwise, pro rata, by lot or by
other equitable means. 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
32
<PAGE>
aggregate liquidation distributions on all Preferred Partner Interests then
outstanding, then the amounts payable directly by the Partnership on 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. Notwithstanding anything in Section 8.01
-------------
hereof or elsewhere in this Agreement to the contrary, if (i) the Partnership
fails to pay distributions in full on a series of Preferred Partner Interests
for eighteen (18) consecutive months; (ii) an event of default as defined in the
Indenture 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
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 Subordinated
Debentures and the Indenture, including, without limitation, after failure to
pay interest for sixty (60) consecutive months, the payment of interest on the
Subordinated Debentures, and to enforce the obligations of Penelec under the
Guarantee. If a Special Representative has been appointed, the Special
Representative shall have the exclusive right to enforce, or direct the
enforcement of, the Partnership's rights under the Subordinated Debentures and
the Indenture. Notwithstanding anything in this Agreement to the contrary,
including, without limitation, the immediately preceding sentence, nothing in
this Agreement shall be deemed to adversely affect the right of a Preferred
Partner or an assignee of a Preferred Partner Interest to bring a derivative
action in accordance with and subject to Subchapter X of the Delaware Act.
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, in
33
<PAGE>
the name of the Partnership, in the name of the Preferred Partners or otherwise,
may, to the fullest extent permitted by law, institute or cause to be instituted
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 by virtue of acting in such capacity be
admitted as a general partner in the Partnership or otherwise be deemed to be a
general 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 months, 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 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 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.
34
<PAGE>
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 [a majority] 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 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, (ii) a description of any matter to be voted on at such meeting, and
(iii) instructions for the delivery of proxies.
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 or under any other circumstances provided for in this Agreement
or under the Delaware Act, any Preferred Partner Interests that are owned by
35
<PAGE>
Penelec or Penelec's parent, GPU, Inc., or any Person owned more than 50% by
Penelec or GPU, Inc., 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, convert, merge with or into, or be replaced by, or convey, transfer
or lease its properties and assets substantially as an entirety to any
corporation, limited liability company, limited partnership, trust (including a
business trust) or other entity, except with the prior approval of the Preferred
Partners holding not less than [a majority] of the aggregate stated liquidation
preference of such outstanding Preferred Partner Interests or as described below
or under Article XII. The General Partner may, without the consent of any
Person, cause the Partnership to consolidate, amalgamate, convert, 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, a
limited partnership or a trust (including a business trust) or other entity
organized as such under the laws of the United States or any state thereof or
the District of Columbia (a "Successor Entity"), 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 (the "Successor Securities") so long as the Successor
Securities rank, with regard 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)
the Preferred Partner Interests or the Successor Securities will not be delisted
from, or will be listed upon notification of issuance on, any national
securities exchange on which the Preferred Partner Interests or Successor
Securities are then listed, (iv) such merger, consolidation, amalgamation,
conversion, replacement, conveyance, transfer or lease does not cause the
Preferred Partner Interests or Successor Securities 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 consolidation, amalgamation, conversion, merger, replacement, conveyance,
transfer or lease does not adversely affect in any material respect the material
powers, preferences and special rights of the holders of the Preferred Partner
Interests or Successor Securities under the documents governing the Preferred
Partner Interests or Successor Securities, including, without limitation, the
voting rights
36
<PAGE>
provided for in Section 13.02(d) hereof (other than with respect to any dilution
of the holders of the Preferred Partner Interests or Successor Securities in the
Successor Entity), (vi) such Successor Entity has a purpose substantially
identical to that of the Partnership and (vii) prior to such merger,
consolidation, amalgamation, conversion, 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, conversion, replacement, conveyance, transfer or lease, (B) such
Successor Entity will be treated as either a partnership or a grantor trust for
Federal income tax purposes, (C) following such merger, consolidation,
amalgamation, conversion, 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, conversion, replacement, conveyance, transfer or
lease will not cause the holders of Preferred Partner Interests or Successor
Securities to be generally liable for the debts, obligations or liabilities of
the Partnership or the Successor Entity.
(f) Substitutions. Notwithstanding any other provision of this
-------------
Agreement to the contrary, the General Partner may, without the consent of any
Person, (i) form or cause to be formed a Successor Entity and contribute or
cause to be contributed the Subordinated Debentures (and any rights to receive
interest payments on such Subordinated Debentures) to the Successor Entity in
exchange for all of the equity or beneficial interests in the Successor Entity,
and (ii) dissolve the Partnership and, after satisfaction of liabilities to
creditors as required by the Delaware Act, cause the equity or beneficial
interests in the Successor Entity to be distributed to the General Partner and
the holders of each series of Preferred Partner Interests in liquidation of such
holders' respective Interests in the Partnership (a "Substitution Event"),
provided that a Substitution Event shall not be permitted to occur unless the
conditions set forth in the proviso in the second sentence of Section 13.02(e)
shall have been satisfied. The General Partner may, without the consent of any
Person, take any other action having similar consequences to the foregoing.
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. To the fullest extent
permitted by law, any transfer or purported transfer of any
37
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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 representing such transferor's entire Preferred Partner
Interest 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.
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, may, but need not, 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. Any such Certificates shall 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.
Except to the extent that definitive, fully registered Certificates (the
"Definitive Certificates") have been issued to the Preferred
38
<PAGE>
Partner Interest Owners pursuant to Section 14.06 or other Persons pursuant to
this Agreement, with respect to Global Certificates:
(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 such Global Certificates and receiving approvals, votes or
consents hereunder) as a Preferred Partner and the sole holder of such Global
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. With respect to such Global
Certificates, the initial Clearing Agency will make book entry transfers among
the Clearing Agency Participants and receive and transmit payments of
distributions on such Global Certificates to such Clearing Agency Participants;
(d) Subject in all respects to Section 14.07, to the
extent that the provisions of
this Section conflict with any other provisions of this Agreement as they relate
to Global Certificates, 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 who hold
Global Certificates, the Clearing Agency shall be deemed to represent such
percentage only to the extent that it has received instructions to such effect
from the Preferred Partner Interest Owners and/or Clearing Agency Participants
owning or representing, respectively, such required percentage of the beneficial
interests in such Global 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 who hold Global Certificates is
required under this Agreement, the General Partner shall give all such notices
and communications specified herein to be given to such Preferred Partners to
the Clearing Agency, and shall have no obligations to such Preferred Partner
Interest Owners.
39
<PAGE>
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 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, in relation to that series of Preferred
Partner Interests, 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.
Section 14.07. Definitive Certificates on Original Issuance.
----------------------------------------------
Notwithstanding anything in this Agreement to the contrary, including, without
limitation, Sections 14.04, 14.05 and 14.06, on original issuance, Certificates
may, but need not, be issued to The Depository Trust Company in the form of a
Global Certificate or Global Certificates in accordance with Section 14.04, and
may, but need not, be issued to any Person in the form of a Definitive
Certificate or Definitive Certificates in accordance with this Section 14.07.
Without limiting the generality of the foregoing, in connection with the
original issuance of Certificates as Definitive Certificates in accordance with
this Section 14.07, (i) a Clearing Agency or a nominee of the Clearing Agency
that is a limited partner of the Partnership in accordance with sections 14.03
and 14.04 with respect to one or more series of Preferred Partner Interests
shall continue to be a limited partner of the Partnership notwithstanding the
fact that another Person holding a Definitive Certificate issued in accordance
with this Section 14.07 has been admitted to the Partnership as a limited
partner of the Partnership with respect to one or more series of Preferred
Partner Interests, and (ii) Section 14.04, 14.05 and 14.06 shall be inapplicable
to a Person holding a Definitive Certificate issued in accordance with this
Section 14.07. The Definitive Certificates shall be printed,
40
<PAGE>
lithographed or engraved or may be produced in any other manner as is reasonably
acceptable to the General Partner, as is evidenced by its execution thereof.
Registration of transfers of Preferred Partner Interests will be effected
without charge by or on behalf of the Partnership, but upon payment of any tax
or other governmental charges which may be imposed in relation to it. The
Partnership will not be required to register or cause to be registered the
transfer of Preferred Partner Interests after such Preferred Partner Interests
have been called for redemption. Any Person receiving a Definitive Certificate
in accordance with this Section 14.07 shall be admitted to the Partnership as a
Preferred Partner pursuant to Section 2.06.
ARTICLE XV - General
--------------------
Section 15.01. Power of Attorney.
-----------------
(a) The Class A Limited Partner and each Preferred Partner
constitutes and appoints the General Partner and the Liquidating Trustee as its
true and lawful representative and attorney-in-fact, in its name, place and
stead, to make, execute, sign, acknowledge and deliver or file (i) all
instruments, documents and certificates which may from time to time be required
by any law to effectuate, implement and continue the valid and subsisting
existence of the Partnership, (ii) all instruments, documents and certificates
that may be required to effectuate the dissolution and termination of the
Partnership in accordance with the provisions hereof and Delaware law, (iii) all
other amendments of this Agreement or the Certificate of Limited Partnership and
other filings contemplated by this Agreement including, without limitation,
amendments reflecting the withdrawal of the General Partner, or the return, in
whole or in part, of the contribution of any Partner, or the addition,
substitution or increased contribution of any Partner, or any action of the
Partners duly taken pursuant to this Agreement whether or not such Partner voted
in favor of or otherwise approved such action, and (iv) any other instrument,
certificate or document required from time to time to admit a Partner, to effect
its substitution as a Partner, to effect the substitution of the Partner's
assignee as a Partner or to reflect any action of the Partners provided for in
this Agreement.
(b) The powers of attorney granted herein (i) shall be deemed
to be coupled with an interest, shall be irrevocable and shall survive the
death, insanity, incompetency or incapacity (or, in the case of a Partner that
is a corporation, association, partnership, limited liability company or trust,
shall survive the merger, consolidation, conversion, 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
41
<PAGE>
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.
(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
42
<PAGE>
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 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.
43
<PAGE>
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 conflict of laws.
Section 15.13. Amendments. Except as otherwise expressly
----------
provided herein or as otherwise required by law, this Agreement may be amended
by a written instrument executed by only the General Partner.
WHEREOF, the undersigned have executed this Agreement as of the date
first above written.
GENERAL PARTNER:
PENELEC PREFERRED CAPITAL II, INC.
By:
-------------------------------------
Name: T.G. Howson
Title: Vice President
CLASS A LIMITED PARTNER:
--------------------------------------
T.G. Howson
PREFERRED LIMITED PARTNER:
PENELEC CAPITAL TRUST
By:
Name:
-------------------------------------
Title: Regular Trustee
44
<PAGE>
Exhibit A
Certificate Evidencing Preferred Partner Interests
of
Penelec Capital II, L.P.
% Cumulative Preferred Partner
---
Interests, Series (liquidation preference
---
$ per Preferred Partner Interest)
---
Penelec Capital II, L.P., a Delaware limited partnership (the
"Partnership"), hereby certifies that (the "Holder") is the
registered owner of ( ) fully paid Preferred Partner
Interests of the Partnership designated the % Cumulative Preferred Partner
Interests, Series (liquidation preference $ 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 , 1998 of the Partnership
as the same may, from time
1
<PAGE>
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 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. 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 , 1998, as the same may be amended from time to time,
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 , 1998, as the same may be amended from time to
time (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 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.
2
<PAGE>
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 general liabilities 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
day of , 1998.
PENELEC CAPITAL II, L.P.
By: Penelec Preferred Capital II,
Inc., its General Partner
By:
-------------------------------------
Name: T.G. Howson
Title: Vice President
3
Exhibit 3-H
Action by the General Partner of Penelec Capital II, L.P.
Creating the % Cumulative
Preferred Partner Interests, Series A
Pursuant to Section 13.01 of the Amended and Restated Limited
Partnership Agreement of Penelec Capital II, L.P. dated as of , 1998
(as amended from time to time, the "Partnership Agreement"), Penelec Preferred
Capital II, Inc., as general partner (the "General Partner") of Penelec Capital
II, L.P. (the "Partnership"), desiring to state the designations, distribution
rights, redemption rights, preferences, privileges, limitations and other rights
of a new series of Preferred Partner Interests, hereby authorizes and
establishes such new series of Preferred Partner Interests according to the
following terms and conditions (each capitalized term used but not defined
herein shall have the meaning set forth in the Partnership Agreement):
(a) Designation. ( ) interests with
----------- ---------------- ---------
an aggregate liquidation preference of $______________ of the Preferred Partner
Interests of the Partnership, liquidation preference $ per Preferred Partner
Interest, are hereby designated as " % Cumulative 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
funds on hand legally available therefor, cumulative cash distributions at
a rate per annum of % of the stated liquidation preference of $
perSeries A Preferred Partner Interest per annum,commencing ,199_.
Distributions on the Series A Preferred Partner Interests which accrue from
the date of original issue to , 199_ shall be payable on ,
199_.
(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 funds on hand legally available therefor.
Distributions on the Series A
<PAGE>
Preferred Partner Interests will be deferred if and
for so long as Pennsylvania Electric Company
("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 in
respect thereof after the payment date therefor, to
the extent permitted by law, at the distribution rate
per annum applicable to the 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 the month in which the relevant
payment date falls.
(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 ,
, at the Redemption Price (as defined below).
(ii) Upon payment when due or redemption at any time
of the % Subordinated Debentures, Series A due
, (the "Debentures") issued by Penelec
pursuant to an Indenture dated as of , 1998
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 $ per Preferred Partner Interest plus
accumulated and unpaid distributions (whether or not
declared) to the date fixed for redemption, together
with any additional distributions accrued thereon
(the "Redemption Price").
-2-
<PAGE>
(iii) 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) 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, within ninety (90) days following
the occurrence of such Investment Company Act Event,
either in connection with a dissolution of the
Partnership, in which case liabilities to creditors
shall first be satisfied as required by the Delaware
Act, or otherwise, in liquidation of or exchange for
such holders' Interests in the Partnership, as the
case may be, provided, however, that the Partnership
shall have received an opinion of tax 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/or distribution.
(iv) If a Tax Event shall occur and be continuing,
the Partnership shall elect to: (1) redeem the Series
A Preferred Partner Interests in whole (but not in
part) at the Redemption Price within ninety (90) days
following the occurrence of such Tax Event, provided
that, if at the time there is available to the
General Partner the opportunity to eliminate, within
such ninety (90) day period, the Tax Event by taking
some ministerial action, such as filing a form or
making an election, or pursuing some other similar
reasonable measure
-3-
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) 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, within ninety (90) days following
the occurrence of such Tax Event, either in
connection with a dissolution of the Partnership, in
which case liabilities to creditors shall first be
satisfied as required by the Delaware Act, or
otherwise, in liquidation of or exchange for such
holders' Interests in the Partnership, as the case
may be, provided, however, that the Partnership shall
have received an opinion of tax 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/or 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)(iii) or (c)(iv) hereof or Section 13.02(f)of the
Partnership Agreement), 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 $__ 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 (the "Liquidation
Distribution").
-4-
<PAGE>
(e) 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 general liabilities
of Penelec.
(f) Voting Rights. 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.
IN WITNESS WHEREOF, the General Partner has executed this
Action as of , 1998.
PENELEC PREFERRED CAPITAL II, INC.
By:
---------------------------------
Name: T.G. Howson
Title: Vice President
-5-
Exhibit 4-A
PENNSYLVANIA ELECTRIC COMPANY
AND
UNITED STATES TRUST COMPANY OF NEW YORK,
As Trustee
INDENTURE
Dated as of ________, 1998
Providing for the Issuance of Subordinated
Debentures in Series and for the
____% Subordinated Debentures,
Series A, due ____
<PAGE>
PENNSYLVANIA ELECTRIC COMPANY
CROSS-REFERENCE TABLE
of Provisions of the Indenture
Required by the Trust Indenture Act of 1939
Trust Indenture Provision of
Act Section Indenture
----------- ---------
Section 310 (a)(1) 7.10
(a)(2) 7.10
(a)(3) Not Applicable
(a)(4) Not Applicable
(b) 7.08; 7.10; 11.01
(c) Not Applicable
Section 311 (a) 7.11
(b) 7.11
(c) Not Applicable
Section 312 (a) 2.06
(b) 11.03
(c) 11.03
Section 313 (a) 7.06
(b)(1) Not Applicable
(b)(2) 7.06
(c) 7.06; 11.02
(d) 7.06
Section 314 (a) 4.03; 11.02
(b) Not Applicable
(c)(1) 2.02; 11.04
(c)(2) 2.02; 11.04
(c)(3) Not Applicable
(d) Not Applicable
(e) 11.05
(f) Not Applicable
Section 315 (a) 7.01(2)
(b) 7.05; 11.02
(c) 7.01(1)
(d) 7.01(3)
(e) 6.11
Section 316 (a)(1)(A) 6.05
(a)(1)(B) 6.04
(a)(2) Not Applicable
(a)(last sentence) 2.09
(b) 6.07
Section 317 (a)(1) 6.08
(a)(2) 6.09
(b) 2.05
Section 318 (a) 11.01
- ----------------------------
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of the Indenture.
-i-
<PAGE>
INDENTURE BETWEEN PENNSYLVANIA ELECTRIC COMPANY
AND UNITED STATES TRUST COMPANY OF NEW YORK
DATED AS OF ________, 1998
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 . . . . . . . . . . . . . . . 6
SECTION 1.04 Rules of Construction . . . . . . . . . . . 7
SECTION 1.05 Acts of Holders . . . . . . . . . . . . . . 7
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
-ii-
<PAGE>
SECTION 2.13 Defaulted Interest. . . . . . . . . . . . . 17
ARTICLE 3
REDEMPTION
SECTION 3.01 Redemption Right, Obligation;
Notice to Trustee . . . . . . . . . . . . . 17
SECTION 3.02 Selection of Securities to be Redeemed . . 18
SECTION 3.03 Notice of Redemption; Conditional Notice. . 18
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 . . . . . . . . 22
SECTION 4.03 SEC Reports . . . . . . . . . . . . . . . . 22
SECTION 4.04 Compliance Certificates . . . . . . . . . . 23
SECTION 4.05 Further Instruments and Acts. . . . . . . . 23
SECTION 4.06 Investment Company Act . . . . . . . . . . 24
SECTION 4.07 Payments for Consents . . . . . . . . . . . 24
SECTION 4.08 Payments for Consents . . . . . . . . . . . 24
ARTICLE 5
SUCCESSOR CORPORATION
SECTION 5.01 When the Company May Merge, Etc. . . . . . 25
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01 Events of Default . . . . . . . . . . . . . 26
SECTION 6.02 Acceleration . . . . . . . . . . . . . . . 27
-iii-
<PAGE>
SECTION 6.03 Other Remedies . . . . . . . . . . . . . . 28
SECTION 6.04 Waiver of Past Defaults . . . . . . . . . . 28
SECTION 6.05 Control by Majority . . . . . . . . . . . . 28
SECTION 6.06 Limitation on Suits. . . . . . . . . . . . . 29
SECTION 6.07 Rights of Holders to Receive Payment. . . . 29
SECTION 6.08 Collection Suit by the Trustee. . . . . . . 30
SECTION 6.09 The Trustee May File Proofs of Claim. . . . 30
SECTION 6.10 Priorities. . . . . . . . . . . . . . . . 30
SECTION 6.11 Undertaking for Costs. . . . . . . . . . . 31
SECTION 6.12 Waiver of Stay, Extension or Usury Laws. . 31
ARTICLE 7
THE TRUSTEE
SECTION 7.01 Duties of the Trustee . . . . . . . . . . . 32
SECTION 7.02 Rights of the Trustee . . . . . . . . . . . 33
SECTION 7.03 Individual Rights of the Trustee. . . . . . 34
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. . . . . . . . . 35
SECTION 7.08 Replacement of Trustee. . . . . . . . . . . 35
SECTION 7.09 Successor Trustee by Merger . . . . . . . . 36
SECTION 7.10 Eligibility; Disqualification . . . . . . . 37
SECTION 7.11 Preferential Collection of Claims
Against the Company . . . . . . . . . . . . 37
-iv-
<PAGE>
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
SECTION 8.04 Return of Moneys Held by the Trustee and
Paying Agent Unclaimed for Three Years . . 39
ARTICLE 9
AMENDMENTS
SECTION 9.01 Without Consent of Holders . . . . . . . . 39
SECTION 9.02 With Consent of Holders. . . . . . . . . . 40
SECTION 9.03 Compliance with Trust Indenture Act. . . . 41
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. . 42
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. . . . . . . . . . . . . . . 45
-v-
<PAGE>
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
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 . . . . . . . . . . . . . . . . . 49
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
-vi-
<PAGE>
[FORM OF FACE OF THE SECURITY] . . . . . . . . . . . . . . . 52
Trustee's Certificate of Authentication. . . . . . . 53
[FORM OF REVERSE SIDE OF SECURITY] . . . . . . . . . . . . 54
1. Payment of Interest and Additional Interest 54
2. Deferral of Interest. . . . . . . . . . . 54
3. Method of Payment. . . . . . . . . . . . . 54
4. Paying Agent and Registrar. . . . . . . . . 55
5. Indenture. . . . . . . . . . . . . . . . . 55
6. Redemption. . . . . . . . . . . . . . . . . 55
7. Notice of Redemption; Conditional Notice. . 56
8. Subordination. . . . . . . . . . . . . . . 56
9. Denominations; Transfer; Exchange. . . . . . 56
10. Persons Deemed Owners. . . . . . . . . . . 56
11. Amendment; Waiver. . . . . . . . . . . . . 56
12. Defaults and Remedies. . . . . . . . . . . 57
13. Trustee Dealings with the Company. . . . . 57
14. No Recourse Against Others. . . . . . . . . 58
15. Abbreviations. . . . . . . . . . . . . . . 58
16. Unclaimed Money. . . . . . . . . . . . . . . 58
17. Discharge Prior to Maturity. . . . . . . . 58
18. Successor. . . . . . . . . . . . . . . . . 58
19. Governing Law. . . . . . . . . . . . . . . 58
ASSIGNMENT FORM. . . . . . . . . . . . . . . . . . . . . 59
-vii-
<PAGE>
INDENTURE, dated as of _____, 1998, 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 ____% Subordinated Debentures, Series A, due ____
(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.
"Action" means an Action as defined in Section 13.01(b) of the Limited
Partnership Agreement.
"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.
<PAGE>
"Business Day" means any day other than a day on which banking
institutions in The City of New York are authorized or required by law to close.
"Capital Lease Obligations" of a Person means any obligation which is
required to be classified and accounted for as a capital lease on the face of a
balance sheet of such Person prepared in accordance with GAAP.
"Capital Stock" means any and all shares, interests, rights to purchase,
warrants, options, participations or other equivalents of or interests in
(however designated) corporate stock, including any Preferred Stock.
"Company" means 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.
"Distribution Event" means a dissolution of Penelec Capital upon the
occurrence of a Special Event in connection with which Securities are
distributed to holders of Preferred Securities, as may be provided for in the
Limited Partnership Agreement or any Action.
"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.
"General Partner" means Penelec Preferred Capital II, Inc., in its
capacity as general partner of Penelec Capital, together with any successor
thereto that becomes a general partner of Penelec Capital pursuant to the terms
of the Limited Partnership Agreement.
"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.
-2-
<PAGE>
"Interest Payment Date" means the interest payment date specified in the
Securities.
"Issue Date" means the date on which the Securities are originally issued.
"Limited Partnership Agreement" means the Amended and Restated Limited
Partnership Agreement of Penelec Capital, as amended or supplemented from time
to time in accordance with the terms thereof.
"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.
"Penelec Capital" means Penelec Capital II, L.P., a Delaware limited
partnership, all of the Voting Interests of which are indirectly owned by the
Company through a Wholly Owned Subsidiary. Penelec Capital also means any
successor in interest to Penelec Capital II, L.P., regardless of its form,
including a business trust.
"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 Securities also means any securities
issued by Penelec Capital in substitution for the Preferred Securities,
including preferred undivided beneficial interests in the properties of a
business trust.
"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.
-3-
<PAGE>
"Record Date" with respect to any security means the date set to determine
the holders of any security entitled to participate in any distribution,
dividend, interest or other payment or to vote, consent, make a request or
exercise any other right associated with such security.
"Redemption Date" or "redemption date" means the date specified for the
redemption of Securities in accordance with the terms of the Securities and
Article 3 of this Indenture.
"Redemption Price" or "redemption price", with respect to any Security to
be redeemed, means the price at which it is to be redeemed pursuant to this
Indenture and the Securities.
"Regular Record Date", with respect to an interest payment on the
Securities, means the date set forth on the face of the Securities for the
determination of Holders entitled to receive payment of interest on the next
succeeding interest payment date.
"SEC" or "Commission" means the Securities and Exchange Commission.
"Securities" means any of the securities of any series issued,
authenticated and delivered under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Securityholder" or "Holder" means a Person in whose name a Security is
registered on the Registrar's books.
"Senior Indebtedness" means, without duplication, (i) the principal of and
premium (if any) in respect of (A) indebtedness of the Company for money
borrowed and (B) indebtedness evidenced by securities, debentures, bonds or
other similar instruments (including purchase money obligations) for payment of
which the Company is responsible or liable; (ii) all Capital Lease Obligations
of the Company; (iii) all obligations of the Company issued or assumed as the
deferred purchase price of property, all conditional sale obligations of the
Company and all obligations of the Company under any title retention agreement
(but excluding trade accounts payable arising in the ordinary course of
business); (iv) all obligations of the Company for the reimbursement of any
obligor on any letter of credit, banker's acceptance, security purchase facility
or similar credit transaction (other than obligations with respect to letters of
credit securing obligations (other than obligations described in (i) through
(iii) above) entered into in the ordinary course of business of the Company to
the extent such letters of credit are not drawn upon or, if and to the extent
drawn upon, such drawing is reimbursed no later than the third Business Day
following receipt by the Company of a demand for reimbursement following
-4-
<PAGE>
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.
"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 Preferred Securities
also means any Preferred Securities issued by Penelec Capital in substitution
for the Series A Preferred Securities originally issued by Penelec Capital.
"Series A Securities" means any of the Company's ____% Subordinated
Debentures, Series A, due ____, issued under this Indenture.
"Special Event" means a Special Event as defined in Article I of the
Limited Partnership Agreement.
"Special Representative" means a special representative appointed by the
holders of the Preferred Securities pursuant to Section 13.02(d) of the Limited
Partnership Agreement.
"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.
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"TIA" means the Trust Indenture Act of 1939, as amended and as in effect
on the date of this Indenture; provided, however, that if the TIA is amended
after such date, TIA means, to the extent required by any such amendment, the
TIA as so amended.
"Trust Officer" means the Chairman of the Board of Directors, the
President, or any other officer or assistant officer of the Trustee assigned by
the Trustee to administer its corporate trust matters.
"Trustee" means the party named as the "Trustee" in the first paragraph of
this Indenture until a successor replaces it 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.
"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
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"Register" . . . . . . . . . . . . . . . 2.04
"Registrar" . . . . . . . . . . . . . . . 2.04
"Successor" . . . . . . . . . . . . . . . 5.01
SECTION 1.03 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, such provision
is incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Holder or Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company and any other
obligor on the Securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule have the
meanings assigned to them by such definitions.
SECTION 1.04 Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned to
it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including, without limitation;
(5) words in the singular include the plural, and words in the plural
include the singular;
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(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.
(a) Any request, demand, authorization, direction, notice, consent,
election, waiver or other action provided by this Indenture to be made, 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.
(b) 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.
(c) The ownership of Securities shall be proved by the Register.
(d) 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.
(e) If the Company solicits from the Holders any request, demand,
authorization, direction, notice, consent, waiver or other Act, the Company may,
at its option, by or pursuant to a resolution of its Board of Directors, fix in
advance a record date for the determination of Holders entitled to give such
request, demand, authorization, direction, notice, consent, waiver or other Act,
but the Company shall have no obligation to
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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, if any;
(d) interest payment dates and the frequency of interest payments;
(e) Issue Date;
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(f) provisions, if any, authorizing the Company to extend the
interest payment dates;
(g) authorized denominations;
(h) the place or places for the payment of principal and for the
payment of interest;
(i) limitation, if any, upon the aggregate principal amount of
Securities of the series which may be issued;
(j) 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;
(k) 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;
(l) provisions, if any, for any sinking or analogous fund with
respect to the Securities of such series; and
(m) any other provisions expressing or referring to the terms and
conditions upon which the Securities of such series are to be issued under this
Indenture which are not in conflict with the provisions of this Indenture;
in each case as determined and specified by the Board of Directors. The Trustee
shall not authenticate and deliver Securities of any series (other than the
Series A Securities) upon initial issue unless the terms and conditions of such
series shall have been set forth in a supplemental indenture entered into
between the Company and the Trustee as provided in Section 9.01 hereof.
SECTION 2.02 Form of the Series A Securities; Denominations; Global
Security.
The Series A Securities and the Trustee's Certificate of Authentication
shall be substantially in the form of Exhibit A attached hereto. The terms and
provisions contained in the Series A Securities, a form of which is annexed
hereto as Exhibit A, shall constitute, and are hereby expressly made, a part of
this Indenture. The Company and the Trustee, by their execution and delivery of
this Indenture, expressly agree to such terms and provisions and to be bound
thereby.
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The Trustee shall authenticate and make available for delivery Series A
Securities for original issue in the aggregate principal amount of
$_____________ for issuance to Penelec Capital in consideration of a cash
payment equal to the principal amount thereof, upon a resolution of the Board of
Directors and a written order of the Company signed by two Officers of the
Company, but without any further action by the Company. Such order shall specify
the date on which the original issue of the Series A Securities is to be
authenticated and delivered. The aggregate principal amount of Series A
Securities outstanding at any time may not exceed $____________, except as
provided in Section 2.08 hereof.
The Series A Securities shall be issuable only in registered form without
coupons and only in denominations of $____ 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 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
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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 as Paying Agent, Registrar or co-Registrar or agent for service of notices
and demands.
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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, 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 ten days
before the subsequent special record date, the Company shall mail to each Holder
and to the
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Trustee a notice that states the subsequent special record date, the payment
date and the amount of defaulted interest to be paid.
ARTICLE 3
REDEMPTION
SECTION 3.01 Redemption Right, Obligation; Notice to Trustee.
(a) The Company, at its option, may redeem the Securities pursuant to
paragraph 6 of the Securities, subject to paragraph (c) hereof.
(b) If Penelec Capital redeems all or a portion of any series of Preferred
Securities, the Company shall also redeem, pursuant to paragraph 6 of the
Securities, all or a corresponding portion, as the case may be, of the series of
Securities that Penelec Capital purchased with the proceeds from the sale of
such series of Preferred Securities. The Company shall also redeem all
outstanding Securities upon the dissolution of Penelec Capital, except in
connection with a Distribution Event.
(c) 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 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.
(d) If the Company elects or is required 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.
SECTION 3.03 Notice of Redemption; Conditional Notice.
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
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(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.
If, when a notice of optional redemption is mailed, the Company shall not
have irrevocably directed the Trustee to apply towards such redemption funds
deposited with the Trustee or held by it for the redemption of the Securities
called for redemption, such notice may state that it is subject to the receipt
of the redemption monies by the Trustee on or before the Redemption Date, and in
such case, the notice of redemption shall be of no effect unless such monies are
so received on or before the Redemption Date.
SECTION 3.04 Effect of Notice of Redemption.
Subject to the provisions of the last paragraph of Section 3.03 hereof,
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, including Additional Interest, if any,
and accrued interest thereon, to the Redemption Date.
SECTION 3.05 Deposit of Redemption Price.
Subject to the provisions of the last paragraph of Section 3.03 hereof, 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
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Security of the same series equal in principal amount to the unredeemed portion
of such Security.
ARTICLE 4
COVENANTS
SECTION 4.01 Payment of the Securities.
(a) The Company shall pay the principal of and interest (including
interest accruing on or after the filing of a petition in bankruptcy or
reorganization relating to the Company, whether or not a claim for post-filing
interest is allowed in such proceeding) on the Securities on the dates and in
the manner provided in the Securities or pursuant to this Indenture. An
installment of principal or interest shall be considered paid on the applicable
date due if on such date the Trustee or the Paying Agent holds, in accordance
with this Indenture, money sufficient to pay all of such installment then due.
The Company shall pay interest on overdue principal and interest on overdue
installments of interest (including interest accruing during an Extension Period
(as hereinafter defined) and/or on or after the filing of a petition in
bankruptcy or reorganization relating to the Company, whether or not a claim for
post-filing interest is allowed in such proceeding), to the extent lawful, at
the rate 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
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and from time to time while the Series A Securities are outstanding, so long as
an Event of Default 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 or Redemption Date 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
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 any federal, state or
local taxes, duties, assessments or governmental charges of whatever nature
(other than withholding taxes), then the Company shall pay additional interest
("Additional Interest") on the Securities in such amounts as shall be required
so that the net amounts received and retained
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by Penelec Capital as a Securityholder after paying such taxes, duties,
assessments or charges will not be less than the amounts that Penelec Capital as
a Securityholder would have received had no such taxes, duties, assessments or
charges been imposed. The Company shall furnish the Trustee with an Officer's
Certificate or other written notice reporting the events described in this
subsection and their consequences.
(e) If and when Penelec Capital redeems the Series A Preferred Securities
in accordance with their terms, the Series A Securities shall become due and
payable in a principal amount equal to the aggregate stated liquidation
preference of such Series A Preferred Securities, together with all accrued and
unpaid interest, including Additional Interest, if any, and accrued interest
thereon to the date of payment. The Company shall furnish the Trustee with an
Officer's Certificate or other written notice reporting the events described in
this subsection and their consequences.
SECTION 4.02 Prohibition Against Dividends, etc. During an
Event of Default.
Neither the Company nor any Subsidiary shall declare or pay any dividend
on, or redeem, purchase, acquire or make a liquidation payment with respect to,
any of its Capital Stock, other than dividends paid to the Company by a Wholly
Owned 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, 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.
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SECTION 4.04 Compliance Certificates.
(a) The Company shall deliver to the Trustee within 90 days after the end
of each of the Company's fiscal years an Officer's Certificate, stating whether
or not the signer knows of any Default or Event of Default. Such certificate
shall contain a certification from the principal executive officer, principal
financial officer or principal accounting officer of the Company as to his or
her knowledge of the Company's compliance with all conditions and covenants
under this Indenture. For purposes of this Section 4.04(a), such compliance
shall be determined without regard to any period of grace or requirement of
notice provided under this Indenture. If such Officer does know of such a
Default or Event of Default, the certificate shall describe any such Default or
Event of Default, and its status. Such Officer's Certificate need not comply
with Section 11.04 hereof.
(b) The Company shall, so long as any of the Securities are outstanding,
deliver to the Trustee, as promptly as practicable after any Officer becomes
aware of any continuing Default or Event of Default, an Officer's Certificate
specifying such Default, Event of Default or other default and what action the
Company is taking or proposes to take with respect thereto.
(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 Relationship with Penelec Capital.
The Company agrees: (a) to maintain direct or indirect, through a
wholly owned subsidiary, 100% ownership of the General Partner and will cause
the General Partner to maintain 100% ownership of the general partner interests
in Penelec Capital; (b) to cause the General Partner to maintain fair market
value net worth of at least 10% of the total contributions less redemptions to
Penelec Capital and to maintain general partner interests representing 3% of all
interests in the capital, income, gain, loss, deduction and credit of Penelec
Capital; (c) to cause the General Partner to timely perform all of its duties as
General Partner of Penelec Capital (including the duty to pay distributions on
the Preferred Securities); and (d) to use its reasonable efforts to cause
Penelec Capital to remain a limited partnership and otherwise continue to be
treated as a partnership for United States federal income tax purposes.
SECTION 4.06 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
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the purposes of this Indenture.
SECTION 4.07 Investment Company Act.
The Company shall not become an investment company subject to registration
under the Investment Company Act of 1940, as amended.
SECTION 4.08 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.
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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:
(a) the Person formed by or surviving such consolidation or merger or to
which such sale, conveyance, transfer or lease shall have been made (the
"Successor") if other than the Company, is organized and existing under the laws
of the United States of America or any State thereof or the District of
Columbia, and the Successor (a) shall expressly assume by a supplemental
indenture, executed and delivered to the Trustee, in form satisfactory to the
Trustee, all the obligations of the Company under the Securities and the
Indenture, and (b) if any Preferred Securities are then outstanding, the
Successor shall expressly assume the Company's obligations under the Guarantee,
and shall become or acquire the general partner of, or any person with
substantially equivalent authority to act for, Penelec Capital; and
(b) 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.
Anything in this Indenture to the contrary notwithstanding, the sale,
conveyance or other transfer by the Company of (i) all or any portion of its
facilities for the generation of electric energy, or (ii) all of its facilities
for the transmission of electric energy, in each case considered alone or in
combination with properties described in the other clause, shall in no event be
deemed to constitute a sale, conveyance or other transfer of all the properties
of the Company, as or substantially as an entirety. The character of particular
facilities shall be determined in accordance with the Uniform System of Accounts
prescribed for public utilities and licensees subject to the Federal Power Act,
as amended, to the extent applicable.
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ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01 Events of Default.
An "Event of Default" occurs if one of the following shall have occurred
and be continuing:
(a) The Company defaults in the payment, when due and payable, of (i)
interest on any Security or Additional Interest, if any, and the default
continues for a period of 15 days, or (ii) 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;
(b) 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 60 days after receipt by the Company of a "Notice of
Default";
(c) The Company, pursuant to or within the meaning of any Bankruptcy Law:
(1) commences a voluntary case or proceeding;
(2) consents to the entry of an order for relief against it in an
involuntary case or proceeding;
(3) 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;
(4) makes a general assignment for the benefit of its creditors; or
(5) admits in writing its inability to pay its debts generally as
they become due; or
(d) A court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(l) is for relief against the Company in an involuntary case or
proceeding;
(2) appoints a Custodian of the Company or for all or
substantially all of its properties; or
(3) orders the liquidation of the Company;
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and in each case the order or decree remains unstayed and in effect for 90
days.
The foregoing will constitute Events of Default whatever the reason for
any such Event of Default and whether it is voluntary or involuntary or is
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body.
The term "Bankruptcy Law" means Title 11, United States Code, or any
similar Federal or state law for the relief of debtors. "Custodian" means any
receiver, trustee, assignee, liquidator, sequestrator, custodian or similar
official under any Bankruptcy Law.
A Default under clause (b) 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 (b) above after receipt of such notice. Any
such notice must specify the Default, demand that it be remedied and state that
such notice is a "Notice of Default."
SECTION 6.02 Acceleration.
If any Event of Default other than an Event of Default under clauses (c)
or (d) 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 or the Special
Representative may, by notice to the Company and the Trustee (each, an
"Acceleration Notice"), and the Trustee shall, upon the request of such Holders
or Special Representative, 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 (b) 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 (c) or (d) of Section 6.01
hereof occurs, the principal of and interest,
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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 Special Representative or Holders of a majority in aggregate principal
amount of the Securities at the time outstanding, by notice to the Trustee, may
rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events of Default have
been cured or waived except nonpayment of principal or interest that has become
due solely because of acceleration. No such rescission shall affect any
subsequent Default or impair any right consequent thereto.
SECTION 6.03 Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may, in its
own name or as trustee of an express trust, institute, pursue and prosecute any
proceeding, including, without limitation, any action at law or suit in equity
or other judicial or administrative proceeding to collect the payment of
principal of or interest on the Securities, or to enforce the performance of any
provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Securities or does not produce any of the Securities in the proceeding. A
delay or omission by the Trustee, the Special Representative 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 Special Representative or 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.
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SECTION 6.05 Control by Majority or the Special Representative.
The Holders of a majority in aggregate principal amount of the Securities
at the time outstanding or, in the event a Special Representative has been
appointed, the Special Representative, 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, including withholding notice to the Holders of
the Securities of any series of continuing default (except in the payment of the
principal (other than any mandatory sinking fund payment) of (or premium, if
any) or interest on any Securities of such series) if the Trustee considers it
in the interest of the Holders of such series of Securities to do so.
SECTION 6.06 Limitation on Suits.
Except as provided in Section 6.07 hereof, a Securityholder or the Special
Representative may not pursue any remedy with respect to this Indenture or the
Securities unless:
(a) the Holders or the Special Representative, as the case may be,
gives to the Trustee written notice stating that an Event of Default is
continuing;
(b) the Holders of at least a majority in aggregate principal amount
of the Securities at the time outstanding or the Special Representative, as the
case may be, make a written request to the Trustee to pursue the remedy;
(c) such Holder or Holders or the Special Representative, as the
case may be, offer to the Trustee reasonable security and indemnity against any
loss, liability or expense satisfactory to the Trustee;
(d) 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
(e) the Holders of a majority in aggregate principal amount of the
Securities at the time outstanding or the Special Representative, as the case
may be, do not give the Trustee a direction inconsistent with the request during
such 60 days.
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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(a) 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:
(a) to file and prove a claim for the whole amount of the principal
amount and interest on the Securities and to file such other papers or documents
as may be necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel) and of the Holders allowed
in such judicial proceeding; and
(b) 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,
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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 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 or a suit by the Special Representative.
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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 (or interest on such interest accrued during an
Extension Period or period of Default) 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.
(a) 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.
(b) Except during the continuance of an Event of Default, (i) the Trustee
need perform only those duties that are specifically set forth in this Indenture
and no others; and (ii) 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.
(c) 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:
(1) this paragraph (c) does not limit the effect of paragraphs (a)
and (b) of this Section 7.01;
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(2) 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;
(3) 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
(4) 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.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c) and (e) of this Section 7.01 and
to Section 7.02.
(e) 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:
(a) 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;
(b) 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;
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(c) 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;
(d) the Trustee may act through agents and shall not be responsible
for the misconduct or negligence of any agent appointed with due care;
(e) 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;
(f) 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
(g) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee reasonable security and indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction.
SECTION 7.03 Individual Rights of the Trustee.
The Trustee in its individual or any other capacity may become the owner
or pledgee of Securities and may otherwise deal with the Company or its
Affiliates with the same rights it would have if it were not the Trustee. Any
Paying Agent, Registrar or co-Registrar may do the same with like rights.
However, the Trustee must comply with Sections 7.10 and 7.11 hereof.
SECTION 7.04 The Trustee's Disclaimer.
The Trustee makes no representation as to the validity or adequacy of this
Indenture or the Securities, it shall not be accountable for the Company's use
of the proceeds from the Securities, and it shall not be responsible for any
statement in this Indenture or the Securities or any report or certificate
issued by the Company hereunder (other than the Trustee's Certificate of
Authentication), or the determination as to which beneficial owners are entitled
to receive any notices hereunder.
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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(a) 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:
(a) 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);
(b) 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
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(c) 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;
(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
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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.
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.
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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
(d) 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
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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
(y) 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 (z) 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 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
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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 or the Special Representative, may
amend or supplement this Indenture or the Securities:
(a) to cure any ambiguity, defect or inconsistency;
(b) to comply with Article 5 hereof;
(c) to provide for uncertificated Securities in addition to or in
place of certificated Securities;
(d) to make any other change that does not adversely affect the
rights of any Securityholder;
(e) to comply with any requirement of the SEC in connection with the
qualification of this Indenture under the TIA; or
(f) 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 amendment or waiver, or, in the event a Special
Representative has been appointed, with the written consent of the Special
Representative, 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
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Securityholder affected, such an amendment or waiver may not:
(a) 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;
(b) 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;
(c) 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;
(d) waive a Default in the payment of the principal of, or interest
on, any Security; or
(e) 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 the Special Representative and 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.
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In signing such amendment the Trustee shall be entitled to receive, and shall be
fully protected in relying upon, an Officer's Certificate and Opinion of Counsel
stating that such supplemental indenture is authorized or permitted by this
Indenture.
SECTION 9.07 Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article 9,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes and every Holder
of Securities theretofore or thereafter authenticated and made available for
delivery hereunder shall be bound thereby.
ARTICLE 10
SUBORDINATION
SECTION 10.01 Securities Subordinated to Senior Indebtedness.
Notwithstanding the provisions of Section 6.01 hereof or any other
provision herein or in the Securities, the Company and the Trustee and each
Holder by his acceptance thereof (a) covenant and agree that all payments by the
Company of the principal of and interest (which term for purposes of this
Article 10 shall include Additional Interest, if any, and any additional accrued
interest) on the Securities shall be subordinated in accordance with the
provisions of this Article 10 to the prior payment in full, in cash or cash
equivalents, of all amounts payable on Senior Indebtedness, and (b) acknowledge
that holders of Senior Indebtedness are or shall be relying on this Article 10.
SECTION 10.02 Priority and Payment of Proceeds in Certain Events;
Remedies Standstill.
(a) Upon any payment or distribution of assets or securities of the
Company, as the case may be, of any kind or character, whether in cash, property
or securities, upon any dissolution or winding up or total or partial
liquidation or reorganization of the Company, whether voluntary or involuntary,
or in bankruptcy, insolvency, receivership or other proceedings, all amounts
payable on Senior Indebtedness (including any interest accruing on such Senior
Indebtedness subsequent to the commencement of a bankruptcy, insolvency or
similar proceeding) shall first be paid in full in cash, or payment provided for
in cash or cash equivalents, before the Holders or the Trustee on behalf of the
Holders shall be entitled to receive from the Company any payment of principal
of or interest on or any other
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amounts in respect of the Securities or distribution of any assets or
securities. Before any payment may be made by the Company of the principal of or
interest on the Securities upon any such dissolution or winding up or
liquidation or reorganization, any payment or distribution of assets or
securities of the Company of any kind or character, whether in cash, property or
securities, to which the Holders or the Trustee on their behalf would be
entitled, except for the provisions of this Article 10, shall be made by the
Company or by any receiver, trustee in bankruptcy, liquidating trustee, agent or
other Person making such payment or distribution first to the holders of all
Senior Indebtedness or their representatives to the extent necessary to pay all
Senior Indebtedness in full after giving effect to any concurrent payment or
distribution to the holders of Senior Indebtedness.
(b) No direct or indirect payment by or on behalf of the Company of
principal of or interest on the Securities whether pursuant to the terms of the
Securities or upon acceleration or otherwise shall be made if, at the time of
such payment, there exists any default in the payment of all or any portion of
any Senior Indebtedness, or any other default affecting Senior Indebtedness
permitting its acceleration, as the result of which the maturity of Senior
Indebtedness has been accelerated, and the Trustee has received written notice
from any trustee, representative or agent for the holders of the Senior
Indebtedness or the holders of at least a majority in principal amount of the
Senior Indebtedness at the time outstanding of such default and acceleration,
and such default shall not have been cured or waived by or on behalf of the
holders of such Senior Indebtedness.
(c) If, notwithstanding the foregoing provision prohibiting such payment
or distribution, the Trustee, any Holder or the Special Representative 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
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certificate of the receiver, trustee in bankruptcy, liquidating trustee, agent
or other Person making any such payment or distribution, delivered to the
Trustee for the purpose of ascertaining the Persons entitled to participate in
such distribution, the holders of Senior Indebtedness and other indebtedness of
the Company, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this Article
10.
SECTION 10.03 Payments which May Be Made Prior to Notice.
Nothing in this Article 10 or elsewhere in this Indenture shall prevent (a
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 (b 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.
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SECTION 10.05 Trustee May Take Action to Effectuate Subordination.
Each Holder by his acceptance of the Securities authorizes and directs the
Trustee on his behalf to take such action as may be necessary or appropriate to
effectuate, as between the holders of Senior Indebtedness and the Holders, the
subordination and the subrogation as provided in this Article 10 and appoints
the Trustee his attorney-in-fact for any and all such purposes.
SECTION 10.06 Subrogation.
Upon the payment in full, in cash or cash equivalents, of all Senior
Indebtedness, the Holders shall be subrogated to the rights of the holders of
such Senior Indebtedness to receive payments or distributions of assets of the
Company made on such Senior Indebtedness until the Securities shall be paid in
full; and for the purposes of such subrogation, no payments or distributions to
holders of such Senior Indebtedness of any cash, property or securities to which
Holders of the Securities would be entitled, except for this Article 10, and no
payment pursuant to this Article 10 to holders of such Senior Indebtedness by
the Holders of the Securities, shall, as between the Company, its creditors
other than holders of such Senior Indebtedness and the Holders of the
Securities, be deemed to be a payment by the Company to or on account of such
Senior Indebtedness, it being understood that the provisions of this Article 10
are solely for the purpose of defining the relative rights of the holders of
such Senior Indebtedness, on the one hand, and the Holders of the Securities, on
the other hand.
If any payment or distribution to which the Holders of the Securities
would otherwise have been entitled but for the provisions of this Article 10
shall have been applied, pursuant to this Article 10, to the payment of all
Senior Indebtedness, then and in such case, the Holders of the Securities shall
be entitled to receive from the holders of such Senior Indebtedness at the time
outstanding any payments or distributions received by such holders of Senior
Indebtedness in excess of the amount sufficient to pay, in cash or cash
equivalents, all such Senior Indebtedness in full.
SECTION 10.07 Obligations of Company Unconditional; Reinstatement.
Nothing in this Article 10, or elsewhere in this Indenture or in any
Security, is intended to or shall impair, as between the Company and the Holders
of the Securities, the obligations of the Company, which are absolute and
unconditional, to pay to the
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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, the Special Representative
or any Holder from exercising all remedies otherwise permitted by applicable law
upon Default under this Indenture, subject to the rights, if any, under this
Article 10 of the holders of such Senior Indebtedness in respect of cash,
property or securities of the Company received upon the exercise of any such
remedy.
The failure to make a scheduled payment of principal of, or interest on,
the Securities by reason of Section 10.02 hereof shall not be construed as
preventing the occurrence of an Event of Default under Section 6.01 hereof;
provided, however, that if (a the conditions preventing the making of such
payment no longer exist, and (b 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
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<PAGE>
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) 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.
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<PAGE>
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
c/o GPU Service, Inc.
310 Madison Avenue
Morristown, New Jersey 07962-1957
Attention: Treasurer
Facsimile No.: (973) 644-4224
if to the Trustee:
United States Trust Company of New York
114 West 47th Street
New York, New York 10036
Attn: Corporate Trust Department,
Department B
Facsimile No.: (212) 852-1626
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,
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<PAGE>
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:
(a) 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
(b) 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.
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:
(a) a statement that each individual making such Officer's
Certificate or Opinion of Counsel has read such covenant or condition;
(b) 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;
(c) 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
(d) 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.
-51-
<PAGE>
SECTION 11.06 Severability Clause.
If any provision in this Indenture or in the Securities shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
SECTION 11.07 Rules by Trustee, Paying Agent and Registrar.
The Trustee may make reasonable rules for action by or a meeting of
Securityholders. The Registrar and Paying Agent may make reasonable rules for
their functions.
SECTION 11.08 Legal Holidays.
A "Legal Holiday" is any day other than a Business Day. If any specified
date (including a date for giving notice) is a Legal Holiday, the action to be
taken on such date shall be taken on the next succeeding day that is not a Legal
Holiday, and if such action is a payment in respect of the Securities, no
principal or interest installment shall accrue for the 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.
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<PAGE>
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.
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.
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<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the undersigned, being duly authorized, have executed
this Indenture on behalf of the respective parties hereto as of the date first
above written.
PENNSYLVANIA ELECTRIC COMPANY
By:
---------------------------
Name: T.G. Howson
Title: Vice President
UNITED STATES TRUST COMPANY OF NEW YORK
as Trustee
By:
---------------------------
Name: Louis P. Young
Title: Vice President
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<PAGE>
[FORM OF FACE OF THE SECURITY]
____% Subordinated Debentures, Series A,
due ____
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 , .
Interest Payment Dates: the last day of each
commencing on , 199 , except as provided in the Indenture.
Regular Record Dates: the 15th day of the month in which each Interest
Payment Date falls (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:
-----------------------------
Title:
-----------------------------
Dated:
-----------------------
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<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Securities referred
to in the within-mentioned Indenture.
UNITED STATES TRUST COMPANY OF NEW YORK
By:
---------------------------
Authorized Signatory
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<PAGE>
[FORM OF REVERSE SIDE OF SECURITY]
% Subordinated Debentures, Series A,
----
due
----
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 on each Interest Payment Date, commencing , 199 . 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 , . 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 in which each Interest Payment Date falls (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
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<PAGE>
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 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
, 1998 (the "Indenture"), between the Company and the Trustee. The
Indenture also provides for the issuance by the Company from time to time of
additional Securities of different series and with different terms and
conditions but subject, nevertheless, to the Indenture. The terms of the Series
A Securities include those stated herein and in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended (the "TIA"). Capitalized terms used herein and not defined herein have
the meanings ascribed thereto in the Indenture. The Series A Securities are
subject to all such terms, and Securityholders are referred to the Indenture and
the TIA for a statement of those terms.
The Series A Securities are general unsecured obligations of the Company
limited to $ aggregate principal amount.
6. Redemption
Optional. At the option of the Company, the Series A Securities are
redeemable from and after , , 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, including
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.
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Mandatory. If Penelec Capital II, L.P. (or any successor in interest)
redeems all or a portion of the Series A Preferred Securities (or any securities
issued in substitution for the Series A Preferred Securities), the Company is
required to redeem all or a corresponding portion, as the case may be, of the
Series A Securities in accordance with the provisions of the last two sentences
of the immediately preceding paragraph. The Company is also required to redeem
all outstanding Securities upon the dissolution of Penelec Capital II, L.P. (or
any successor in interest), except in connection with a Distribution Event.
7. Notice of Redemption; Conditional Notice.
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 $ of principal amount may be redeemed in
part but only in integral multiples of $ of principal amount.
In connection with an optional redemption, such notice may state that it
is subject to the receipt by the Trustee of funds from the Company on or before
the Redemption Date, in which event such notice shall be ineffective unless such
funds are so received.
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 $ of principal amount and integral multiples of $ . 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).
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<PAGE>
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 Special Representative or 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 Special Representative or 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 or the Special Representative, 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.
12. Defaults and Remedies
Under the Indenture, Events of Default include (i) default in payment of
the principal amount, or interest (including Additional Interest, if any), 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, the Special Representative, 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.
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<PAGE>
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 or the Special Representative 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).
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.
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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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<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)
-63-
Exhibit 4-B
PENNSYLVANIA ELECTRIC COMPANY
AND
UNITED STATES TRUST COMPANY OF NEW YORK
TRUSTEE
-----------------
INDENTURE
DATED AS OF , 1998
----- ---
================================================================================
<PAGE>
CROSS REFERENCE SHEET SHOWING THE LOCATION IN THE INDENTURE
OF THE PROVISIONS INSERTED PURSUANT TO SECTIONS 310
THROUGH 318(a),INCLUSIVE, OF THE TRUST INDENTURE ACT OF 1939
Trust Indenture Act Indenture
Section Section
310 (a) (1). . . . . . . . . . . . . . . . . . . . . . 9.09
(a) (2) . . . . . . . . . . . . . . . . . . . . . . . 9.09
(a) (3) . . . . . . . . . . . . . . . . . . .Not Applicable
(a) (4) . . . . . . . . . . . . . . . . . . .Not Applicable
(a) (5) . . . . . . . . . . . . . . . . . . . . . . . 9.09
(b) . . . . . . . . . . . . . . . . . . . . . . . . . 9.08
(c) . . . . . . . . . . . . . . . . . . . . .Not Applicable
311 (a) . . . . . . . . . . . . . . . . . . . . . . . 9.14
(b). . . . . . . . . . . . . . . . . . . . . . . . . .9.14
(c) . . . . . . . . . . . . . . . . . . . . .Not Applicable
312 (a) . . . . . . . . . . . . . . . . . .7.01 and 7.02(a)
(b). . . . . . . . . . . . . . . . . . . . . . .7.02(b)
(c). . . . . . . . . . . . . . . . . . . . . . .7.02(c)
313 (a) . . . . . . . . . . . . . . . . . . . . . .7.04(a)
(b). . . . . . . . . . . . . . . . . . . . . . .7.04(b)
(c). . . . . . . . . . . . . . . . . . . . . . .7.04(d)
(d). . . . . . . . . . . . . . . . . . . . . . .7.04(c)
314 (a). . . . . . . . . . . . . . . . . . . .7.03 and 6.06
(b) . . . . . . . . . . . . . . . . . . . . . . . . 6.05
(c) (1) . . . . . . . . . . . . . . . . . 1.03 and 15.05
(c) (2) . . . . . . . . . . . . . . . . . 1.03 and 15.05
(c) (3) . . . . . . . . . . . . . . . . . Not Applicable
(d) . . . . . . . . . . . . . . . . . . . .1.03 and 4.06
(e). . . . . . . . . . . . . . . . . . . . . . .15.05(b)
(f). . . . . . . . . . . . . . . . . . . .Not Applicable
315 (a) . . . . . . . . . . . . . . . . . . . . . . . .9.01
(b). . . . . . . . . . . . . . . . . . . . . . . . .8.08
(c). . . . . . . . . . . . . . . . . . . . . . . 9.01(a)
(d). . . . . . . . . . . . . . . . . . . . . . . 9.01(b)
(e). . . . . . . . . . . . . . . . . . . . . . . . .8.09
316 (a) . . . . . . . . . . . . . . . . . . .8.07 and 10.04
(b) . . . . . . . . . . . . . . . . . .8.04(b) and 13.02
(c).. . . . . . . . . . . . . . . . . . . . . . . .10.06
ii
<PAGE>
317 (a)(1) . . . . . . . . . . . . . . . . . . . . .8.02(b)
(a) (2) . . . . . . . . . . . . . . . . . . . . .8.02(c)
(b) . . . . . . . . . . . . . . . . . . . .5.02 and 6.04
318 (a) . . . . . . . . . . . . . . . . . . . . . . .15.07
- -------------------
NOTE: This cross-reference sheet shall not, for any purpose, be deemed to be a
part of the Indenture.
iii
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01 General . . . . . . . . . . . . . . . . . 1
Section 1.02 Trust Indenture Act . . . . . . . . . . . 1
Section 1.03 Definitions . . . . . . . . . . . . . . . 2
ARTICLE II
FORM, ISSUE, EXECUTION, REGISTRATION AND
EXCHANGE OF NOTES
Section 2.01 Form Generally. . . . . . . . . . . . . . 9
Section 2.02 Form Of Trustee's Certificate Of
Authentication . . . . . . . . . . . . . 9
Section 2.03 Amount Unlimited. . . . . . . . . . . . . 9
Section 2.04 Denominations, Dates, Interest
Payment And Record Dates . . . . . . . .10
Section 2.05 Execution, Authentication, Delivery
And Dating. . . . . . . . . . . . . . . .11
Section 2.06 Exchange And Registration Of Transfer
Of Notes. . . . . . . . . . . . . . . . .14
Section 2.07 Mutilated, Destroyed, Lost Or
Stolen Notes. . . . . . . . . . . . . . .15
Section 2.08 Temporary Notes . . . . . . . . . . . . .16
Section 2.09 Cancellation Of Notes Paid, Etc . . . . .17
Section 2.10 Interest Rights Preserved . . . . . . . .17
Section 2.11 Special Record Date . . . . . . . . . . .17
Section 2.12 Payment Of Notes. . . . . . . . . . . . .17
Section 2.13 Notes Issuable In The Form Of A
Global Note . . . . . . . . . . . . . . .18
ARTICLE III
REDEMPTION OF NOTES
Section 3.01 Applicability Of Article . . . . . . . . .21
Section 3.02 Notice Of Redemption; Selection Of Notes .21
Section 3.03 Payment Of Notes On Redemption; Deposit
Of Redemption Price. . . . . . . . . . . .22
iv
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ARTICLE IV
SENIOR NOTE FIRST MORTGAGE BONDS
Section 4.01 Delivery Of Initial Series Of Senior
Note First Mortgage Bonds . . . . . . 23
Section 4.02 Receipt . . . . . . . . . . . . . . .. 24
Section 4.03 Senior Note First Mortgage Bonds Held
By The Trustee. . . . . . . . . . . . 4
Section 4.04 No Transfer Of Senior Note First
Mortgage Bonds; Exceptions . . . . . . 24
Section 4.05 Delivery To The Company Of All Senior
Note First Mortgage Bonds . . . . . . 24
Section 4.06 Fair Value Certificate. . . . . . . 25
Section 4.07 Further Assurances. . . . . . . . . . 26
Section 4.08 Exchange And Surrender Of Senior Note
First Mortgage Bonds. . . . . . . . . 26
Section 4.09 Acceptance Of Additional Senior Note
First Mortgage Bonds. . . . . . . . . 27
Section 4.10 Terms Of Senior Note First Mortgage
Bonds. . . . . . . . . . . .. . . . . .27
Section 4.11 Senior Note First Mortgage Bonds As
Security For Notes. . . . . . . . . . 27
ARTICLE V
SATISFACTION AND DISCHARGE;
UNCLAIMED MONEYS
Section 5.01 Satisfaction And Discharge. . . . . . 28
Section 5.02 Deposited Moneys To Be Held In Trust
By Trustee. . . . . . . . . . . . . . 30
Section 5.03 Paying Agent To Repay Moneys Held . . 30
Section 5.04 Return Of Unclaimed Moneys. . . . . . 30
ARTICLE VI
PARTICULAR COVENANTS OF THE COMPANY
Section 6.01 Payment Of Principal And Interest. . . 30
Section 6.02 Offices For Payments, Etc. . . . . . . 30
Section 6.03 Appointment To Fill A Vacancy In
Office Of Trustee . . . . . . . . . . 31
Section 6.04 Provision As To Paying Agent . . . . . 31
Section 6.05 Opinions Of Counsel. . . . . . . . . . 32
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Section 6.06 Certificates And Notice To Trustee. . . 33
Section 6.07 Restrictions On Liens . . . . . . . . . . 33
Section 6.08 Restrictions On Sale And Lease-Back
Transactions. . . . . . . . . . . . . . 35
Section 6.09 Corporate Existence . . . . . . . . . . . 35
ARTICLE VII
NOTEHOLDER LISTS AND REPORTS BY
THE COMPANY AND THE TRUSTEE
Section 7.01 Company To Furnish Noteholder Lists . . . 36
Section 7.02 Preservation and Disclosure of
Noteholder Lists. . . . . . . . . . . . 36
Section 7.03 Reports By The Company. . . . . . . . . . 37
Section 7.04 Reports By The Trustee. . . . . . . . . . 38
ARTICLE VIII
REMEDIES OF THE TRUSTEE AND NOTEHOLDERS
ON EVENTS OF DEFAULT
Section 8.01 Events Of Default . . . . . . . . . . . 39
Section 8.02 Collection Of Indebtedness By Trustee;
Trustee May Prove Debt. . . . . . . . 41
Section 8.03 Application Of Proceeds. . . . . . . .. . 43
Section 8.04 Limitations On Suits By Noteholders. . . . 44
Section 8.05 Suits For Enforcement . . . . . . . . . . 44
Section 8.06 Powers And Remedies Cumulative; Delay Or
Omission Not Waiver Of Default. . . . 44
Section 8.07 Direction of Proceedings and Waiver of
Defaults By Majority of Noteholders . 45
Section 8.08 Notice of Default . . . . . . . . . . . . 45
Section 8.09 Undertaking To Pay Costs. . . . . . . . . 46
Section 8.10 Restoration of Rights on Abandonment of
Proceedings . . . . . . . . . . . . . 46
Section 8.11 Defaults Under The First Mortgage . . . . 46
Section 8.12 Waiver of Usury, Stay or Extension Laws . 46
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ARTICLE IX
CONCERNING THE TRUSTEE
Section 9.01 Duties and Responsibilities of Trustee. . 47
Section 9.02 Reliance on Documents, Opinions, Etc. . . 48
Section 9.03 No Responsibility For Recitals, Etc . . . 49
Section 9.04 Trustee, Authenticating Agent, Paying
Agent Or Registrar May Own Notes. . . 49
Section 9.05 Moneys To Be Held In Trust. . . . . . . . 49
Section 9.06 Compensation And Expenses Of Trustee. . . 49
Section 9.07 Officers' Certificate As Evidence . . . . 50
Section 9.08 Conflicting Interest Of Trustee . . . . . 50
Section 9.09 Existence And Eligibility Of Trustee. . . 50
Section 9.10 Resignation Or Removal Of Trustee . . . . 50
Section 9.11 Appointment Of Successor Trustee. . . . . 51
Section 9.12 Acceptance By Successor Trustee . . . . . 52
Section 9.13 Succession By Merger, Etc . . . . . . . . 52
Section 9.14 Limitations On Rights Of Trustee
As A Creditor . . . . . . . . . . . . 53
Section 9.15 Authenticating Agent. . . . . . . . . . . 53
ARTICLE X
CONCERNING THE NOTEHOLDERS
Section 10.01 Action By Noteholders . . . . . . . . . . 54
Section 10.02 Proof Of Execution By Noteholders . . . . 54
Section 10.03 Persons Deemed Absolute Owners. . . . . . 54
Section 10.04 Company-Owned Notes Disregarded . . . . . 54
Section 10.05 Revocation Of Consents; Future Holders
Bound . . . . . . . . . . . . . . .. . 55
Section 10.06 Record Date For Noteholder Acts . . . . . 55
ARTICLE XI
NOTEHOLDERS' MEETING
Section 11.01 Purposes Of Meetings. . . . . . . . . . . 56
Section 11.02 Call Of Meetings By Trustee . . . . . . . 56
Section 11.03 Call Of Meetings By Company Or
Noteholders . . . . . . . . . . . . . 56
Section 11.04 Qualifications For Voting . . . . . . . . 56
Section 11.05 Regulations . . . . . . . . . . . . . . . 57
Section 11.06 Voting. . . . . . . . . . . . . . . . . . 57
Section 11.07 Rights Of Trustee Or Noteholders
Not Delayed . . . . . . . . . . . . . 58
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ARTICLE XII
CONSOLIDATION, MERGER, SALE, TRANSFER OR CONVEYANCE
Section 12.01 Company May Consolidate, Etc. Only
On Certain Terms. . . . . . . . . . . . . 58
Section 12.02 Successor Corporation Substituted . . . . 59
ARTICLE XIII
SUPPLEMENTAL INDENTURES
Section 13.01 Supplemental Indentures Without Consent
Of Noteholders. . . . . . . . . . . . . . 59
Section 13.02 Supplemental Indentures With Consent
Of Noteholders. . . . . . . . . . . . . . 61
Section 13.03 Compliance With Trust Indenture Act;
Effect Of Supplemental Indentures . . . . 62
Section 13.04 Notation On Notes . . . . . . . . . . . . 62
Section 13.05 Evidence Of Compliance Of Supplemental
Indenture To Be Furnished Trustee . . . . 62
ARTICLE XIV
IMMUNITY OF INCORPORATORS,
STOCKHOLDERS, OFFICERS AND DIRECTORS
Section 14.01 Indenture And Notes Solely Corporate
Obligations . . . . . . . . . . . . . . . 63
ARTICLE XV
MISCELLANEOUS PROVISIONS
Section 15.01 Provisions Binding On Company's
Successors. . . . . . . . . . . . . . . . 63
Section 15.02 Official Acts By Successor Corporation. . 63
Section 15.03 Notices . . . . . . . . . . . . . . . . . 63
Section 15.04 Governing Law . . . . . . . . . . . . . . 64
Section 15.05 Evidence Of Compliance With Conditions
Precedent . . . . . . . . . . . . . . . . 64
Section 15.06 Business Days . . . . . . . . . . . . . . 65
Section 15.07 Trust Indenture Act To Control. . . . . . 65
Section 15.08 Table Of Contents, Headings, Etc. . . . . 65
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Section 15.09 Execution In Counterparts . . . . . . . . 65
Section 15.10 Manner Of Mailing Notice To Noteholders . 66
Section 15.11 Approval By Trustee Of Expert Or Counsel. 66
EXHIBIT A -Form of Global Note Prior to Release Date . A-1
EXHIBIT B - Form of Note Prior to Release Date . . . . B-1
EXHIBIT C - Form of Global Note Following Release Date C-1
EXHIBIT D - Form of Note Following Release Date. . . . D-1
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<PAGE>
THIS INDENTURE, dated as of , 1998, between PENNSYLVANIA ELECTRIC COMPANY,
a corporation duly organized and existing under the laws of the Commonwealth of
Pennsylvania (the "COMPANY"), and UNITED STATES TRUST COMPANY OF NEW YORK, as
trustee (the "TRUSTEE").
WITNESSETH
WHEREAS, for its lawful corporate purposes, the Company has duly
authorized the execution and delivery of this Indenture to provide for the
issuance from time to time of its Notes (as herein after defined), to be issued
as in this Indenture provided;
WHEREAS, subject to the provisions of Section 4.11 hereof, the Company has
issued a series of Senior Note First Mortgage Bonds (as hereinafter defined) and
has delivered such series to the Trustee to hold in trust for the benefit of the
respective Holders (as hereinafter defined) from time to time of the Notes, and,
subject to the terms and provisions hereof, the Company may deliver additional
Senior Note First Mortgage Bonds to the Trustee for such purpose or require the
Trustee to deliver to the Company, for cancellation, any and all Senior Note
First Mortgage Bonds held by the Trustee;
AND WHEREAS, all acts and things necessary to make this Indenture a valid
agreement according to its terms have been done and performed, and the execution
of this Indenture and the issue hereunder of the initial series of Notes have in
all respects been duly authorized;
NOW THEREFORE, THIS INDENTURE WITNESSETH:
That in order to declare the terms and conditions upon which the Notes
are, and are to be authenticated, issued and delivered, and in consideration of
the premises, of the purchase and acceptance of the Notes by the Holders thereof
and of the sum of one dollar duly paid to it by the Trustee at the execution of
this Indenture, the receipt whereof is hereby acknowledged, the Company,
intending to be legally bound hereby, covenants and agrees with the Trustee for
the equal and proportionate benefit of the respective Holders from time to time
of the Notes, as follows:
<PAGE>
ARTICLE I
DEFINITIONS
Section 1.01 General. The terms defined in this Article I (whether or not
capitalized and except as herein otherwise expressly provided or unless the
context otherwise requires) for all purposes of this Indenture and of any
indenture supplemental hereto shall have the respective meanings specified in
this Article I.
Section 1.02 Trust Indenture Act. (a) Whenever this Indenture refers to a
provision of the Trust Indenture Act of 1939 (the "TIA"), such provision is
incorporated by reference in and made a part of this Indenture.
(b) Unless otherwise indicated, all terms used in this Indenture
that are defined by the TIA, defined by the TIA by reference to another statute
or defined by a rule of the Commission under the TIA shall have the meanings
assigned to them in the TIA or such statute or rule as in force on the date of
execution of this Indenture.
Section 1.03 Definitions. For purposes of this Indenture, the
following terms shall have the following meanings.
"Authenticating Agent" shall mean any agent of the Trustee which shall be
appointed and acting pursuant to Section 9.15 hereof.
"Authorized Agent" shall mean any agent of the Company designated as such
by an Officers' Certificate delivered to the Trustee.
"Board Of Directors" shall mean the Board of Directors of the Company or
the Executive Committee of such Board or any other duly authorized committee of
such Board.
"Board Resolution" shall mean a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors or any duly authorized committee thereof and to be in
full force and effect on the date of such certification.
"Business Day" shall mean each day that is not a day on which banking
institutions or trust companies in the Borough of Manhattan, the City and State
of New York, or in the city where the corporate trust office of the Trustee is
located, are obligated or authorized by law or executive order to close.
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"Capital Lease" shall mean any lease which has been or would be
capitalized on the books of the lessee in accordance with GAAP.
"Capitalization" shall mean the total of all the following items appearing
on, or included in, the consolidated balance sheet of the Company: (i)
liabilities for indebtedness maturing more than twelve (12) months from the date
of determination; and (ii) common stock, preferred stock, Hybrid Preferred
Securities, premium on capital stock, capital surplus, capital in excess of par
value, and retained earnings (however the foregoing may be designated), less, to
the extent not otherwise deducted, the cost of shares of capital stock of the
Company held in its treasury. Subject to the foregoing, Capitalization shall be
determined in accordance with GAAP and practices applicable to the type of
business in which the Company is engaged and that are approved by independent
accountants regularly retained by the Company, and may be determined as of a
date not more than sixty (60) days prior to the happening of an event for which
such determination is being made.
"Commission" shall mean the United States Securities and Exchange
Commission, or if at any time hereafter the Commission is not existing or
performing the duties now assigned to it under the TIA, then the body performing
such duties.
"Company" shall mean the corporation named as the "Company" in the first
paragraph of this Indenture, and its successors and assigns permitted hereunder.
"Company Order" shall mean a written order signed in the name of the
Company by one of the Chairman, the President, any Vice President (whether or
not designated by a number or numbers or a word or words added before or after
the title "Vice President"), the Treasurer or an Assistant Treasurer, of the
Company, and delivered to the Trustee. At the Company's option, a Company Order
may take the form of a supplemental indenture to this Indenture.
"Consolidated Subsidiary" shall mean any Subsidiary whose accounts are or
are required to be consolidated with the accounts of the Company in accordance
with GAAP.
"Corporate Trust Office of The Trustee", or other similar term, shall mean
the corporate trust office of the Trustee, at which at any particular time its
corporate trust business shall be principally administered, which office is at
the date of the execution of this Indenture located at 114 West 47th Street,
25th Floor, New York, New York, 10036-1532.
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"Debt" shall mean any outstanding debt for money borrowed evidenced by
notes, debentures, bonds, or other securities, or guarantees of any thereof.
"Depositary" shall mean, unless otherwise specified in a Company Order
pursuant to Section 2.05 hereof, The Depository Trust Company, New York, New
York, or any successor thereto registered and qualified as a clearing agency
under the Securities Exchange Act of 1934, or other applicable statute or
regulation.
"Event Of Default" shall mean any event specified in Section 8.01 hereof,
continued for the period of time, if any, and after the giving of the notice, if
any, therein designated.
"Expert" shall mean any officer of the Company familiar with the terms of
the First Mortgage and this Indenture, any law firm, any investment banking
firm, or any other Person, satisfactory in the reasonable judgment of the
Trustee.
"First Mortgage" shall mean the Mortgage and Deed of Trust, dated as of
January 1, 1942, from the Company to United States Trust Company of New York, as
successor trustee, as supplemented and amended from time to time.
"First Mortgage Bonds" shall mean all first mortgage bonds issued by the
Company and outstanding under the First Mortgage, other than Senior Note First
Mortgage Bonds.
"GAAP" shall mean generally accepted accounting principles in the United
States of America, applied on a basis consistent with those used in the
preparation of any financial statements referred to herein, unless otherwise
stated herein.
"Global Note" shall mean a Note that, pursuant to Section 2.05 hereof, is
issued to evidence Notes, that is delivered to the Depositary or pursuant to the
instructions of the Depositary and that shall be registered in the name of the
Depositary or its nominee.
"Hybrid Preferred Securities" shall mean any preferred securities issued
by a Hybrid Preferred Securities Subsidiary, where such preferred securities
have the following characteristics:
(i) such Hybrid Preferred Securities Subsidiary lends substantially
all of the proceeds from the issuance of such preferred securities to the
Company, or a wholly owned subsidiary of the Company, in exchange for
Subordinated Indebtedness issued by the Company;
4
<PAGE>
(ii) such preferred securities contain terms providing for the
deferral of interest payments corresponding to provisions providing for the
deferral of interest payments on the related Subordinated Indebtedness; and
(iii) the Company makes periodic interest payments on the related
Subordinated Indebtedness, which interest payments are in turn used by the
Hybrid Preferred Securities Subsidiary to make corresponding payments to the
holders of the preferred securities.
"Hybrid Preferred Securities Subsidiary" shall mean any limited
partnership or business trust (or similar entity) (i) all of the general
partnership or common equity interest of which is owned (either directly or
indirectly through one or more wholly-owned Subsidiaries of the Company or any
Consolidated Subsidiary of the Company) at all times by the Company, (ii) that
has been formed for the purpose of issuing Hybrid Preferred Securities and (iii)
substantially all of the assets of which consist at all times solely of
Subordinated Indebtedness issued by the Company and payments made from time to
time on such Subordinated Indebtedness.
"Indenture" shall mean this instrument as originally executed or, if
amended or supplemented as herein provided, as so amended or supplemented.
"Interest Payment Date" shall mean (a) each date designated as such for
the payment of interest on a Note specified in a Company Order pursuant to
Section 2.05 hereof (provided that the first Interest Payment Date for any Note,
the Original Issue Date of which is after a Regular Record Date but prior to the
respective Interest Payment Date, shall be the Interest Payment Date following
the next succeeding Regular Record Date), (b) a date of maturity of such Note
and (c) only with respect to defaulted interest on such Note, the date
established by the Trustee for the payment of such defaulted interest pursuant
to Section 2.11 hereof.
"Lien" shall mean any mortgage, security interest, pledge or lien.
"Maturity," when used with respect to any Note, shall mean the date on
which the principal of such Note (together with all accumulated and accrued
interest) becomes due and payable as therein or herein provided, whether at the
stated maturity thereof or by declaration of acceleration, redemption or
otherwise.
"Mortgage Trustee" shall mean the Person serving as trustee at the time
under the First Mortgage.
5
<PAGE>
"Note" or "Notes" shall mean any Note or Notes, as the case may be,
authenticated and delivered under this Indenture, including any Global Note.
"Noteholder", "Holder of Notes" or "Holder" shall mean any Person in whose
name at the time a particular Note is registered on the books of the Trustee
kept for that purpose in accordance with the terms hereof.
"Officers' Certificate" when used with respect to the Company, shall mean
a certificate signed by one of the Chairman, the President, any Vice President
(whether or not designated by a number or numbers or a word or words added
before or after the title "Vice President"), and by one of the Chief Financial
Officer, Treasurer, any Assistant Treasurer, the Secretary or an Assistant
Secretary of the Company; provided, that no individual shall be entitled to sign
in more than one capacity.
"Operating Property" shall mean (i) any interest in real property owned by
the Company and (ii) any asset owned by the Company that is depreciable in
accordance with GAAP, excluding, in either case, any interest of the Company as
lessee under a Capital Lease (except for a lease that results from a Sale and
Lease-Back Transaction).
"Opinion Of Counsel" shall mean an opinion in writing signed by legal
counsel, who may be an employee of the Company, meeting the applicable
requirements of Section 15.05 hereof. If the Indenture requires the delivery of
an Opinion of Counsel to the Trustee, the text and substance of which has been
previously delivered to the Trustee, the Company may satisfy such requirement by
the delivery by the legal counsel that delivered such previous Opinion of
Counsel of a letter to the Trustee to the effect that the Trustee may rely on
such previous Opinion of Counsel as if such Opinion of Counsel was dated and
delivered the date delivery of such Opinion of Counsel is required. Any Opinion
of Counsel may contain reasonable conditions and qualifications satisfactory to
the Trustee.
"Original Issue Date" shall mean for a Note, or portion thereof, the date
upon which it, or such portion, was issued by the Company pursuant to this
Indenture and authenticated by the Trustee (other than in connection with a
transfer, exchange or substitution).
"Outstanding", when used with reference to Notes, shall, subject to
Section 10.04 hereof, mean, as of any particular time, all Notes authenticated
and delivered by the Trustee under this Indenture, except
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(a) Notes theretofore canceled by the Trustee or delivered to
the Trustee for cancellation;
(b) Notes, or portions thereof, for the payment or redemption of
which moneys in the necessary amount shall have been deposited in trust with the
Trustee or with any paying agent (other than the Company), provided that if such
Notes are to be redeemed prior to the maturity thereof, notice of such
redemption shall have been given as provided in Article III, or provisions
satisfactory to the Trustee shall have been made for giving such notice;
(c) Notes, or portions thereof, that have been paid and discharged
or are deemed to have been paid and discharged pursuant to the provisions of
this Indenture; and
(d) Notes in lieu of or in substitution for which other Notes shall
have been authenticated and delivered, or which have been paid, pursuant to
Section 2.07 hereof.
"Person" shall mean any individual, corporation, partnership, joint
venture, limited liability company, association, joint-stock company, trust,
unincorporated organization or government or any agent or political subdivision
thereof.
"Principal Executive Offices Of The Company" shall mean 2800 Pottsville
Pike, Reading, Pennsylvania 19605, or such other place where the main corporate
offices of the Company are located as designated in writing to the Trustee by an
Authorized Agent.
"Regular Record Date" shall mean, unless otherwise specified in a Company
Order pursuant to Section 2.05, for an Interest Payment Date for a particular
Note (a) the fifteenth day of the calendar month next preceding each Interest
Payment Date (unless the Interest Payment Date is the date of maturity of such
Note, in which event, the Regular Record Date shall be as described in clause
(b) hereof) and (b) the date of maturity of such Note.
"Related Series of Notes" shall mean, when used in reference to the First
Mortgage Bonds, Senior Notes Series A, the Company's Senior Notes, __% Due ____
Series A and, when used in reference to any other series of Senior Note First
Mortgage Bonds, shall mean the series of Notes in respect of which such series
of Senior Note First Mortgage Bonds were delivered to the Trustee pursuant to
Section 4.09 hereof upon the initial authentication and issuance of such series
of Notes pursuant to Section 2.05 hereof.
"Related Series of Senior Note First Mortgage Bonds" shall mean, when used
in reference to the Company's Senior Notes, __%
7
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Due ____Series A, the First Mortgage Bonds, Senior Notes Series A, and, when
used in reference to any other series of Notes, shall mean the series of Senior
Note First Mortgage Bonds delivered to the Trustee pursuant to Section 4.09
hereof in connection with the initial authentication and issuance of such series
of Notes pursuant to Section 2.05 hereof.
"Release Date" shall mean the earlier of (i) the date that all First
Mortgage Bonds, other than the Senior Note First Mortgage Bonds, have been
retired (at, before or after the maturity thereof) through payment, redemption,
purchase or otherwise and (ii) the date upon which the Trustee holds Senior Note
First Mortgage Bonds constituting not less than 80% in aggregate principal
amount of all outstanding First Mortgage Bonds.
"Responsible Officer" or "Responsible Officers" when used with respect to
the Trustee shall mean one or more of the following: the chairman of the board
of directors, the vice chairman of the board of directors, the chairman of the
executive committee, the president, any vice president (whether or not
designated by a number or a word or words added before or after the title "Vice
President"), the secretary, the treasurer, any trust officer, any assistant
trust officer, any second or assistant vice president, any assistant secretary,
any assistant treasurer, or any other officer or assistant officer of the
Trustee customarily performing functions similar to those performed by the
persons who at the time shall be such officers, respectively, or to whom any
corporate trust matter is referred because of his or her knowledge of and
familiarity with the particular subject.
"Sale and Lease-Back Transaction" shall mean any arrangement with any
Person providing for the leasing to the Company of any Operating Property
(except for leases for a term, including any renewal thereof, of not more than
forty-eight (48) months), which Operating Property has been or is to be sold or
transferred by the Company to such Person; provided, however, Sale and
Lease-Back Transaction shall not include any arrangement first entered into
prior to the date of this Indenture.
"Senior Note First Mortgage Bonds" shall mean the First Mortgage Bonds,
Senior Note Series A issued by the Company pursuant to the supplemental
indenture dated as of ________, 1998 to the First Mortgage and any other first
mortgage bonds issued by the Company under the First Mortgage pursuant to
supplemental indentures to the First Mortgage and delivered to the Trustee
pursuant to Section 4.09 hereof.
"Special Record Date" shall mean, with respect to any Note, the date
established by the Trustee in connection with the payment of defaulted interest
on such Note pursuant to Section 2.11 hereof.
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<PAGE>
"Stated Maturity" shall mean with respect to any Note, the last date on
which principal on such Note becomes due and payable as therein or herein
provided, other than by declaration of acceleration or by redemption.
"Subordinated Indebtedness" shall mean any unsecured Debt of the Company
(i) issued in exchange for the proceeds of Hybrid Preferred Securities and (ii)
subordinated to the rights of the Holders hereunder.
"Subsidiary" shall mean, as to any Person, any corporation or other entity
of which at least a majority of the securities or other ownership interest
having ordinary voting power (absolutely or contingently) for the election of
directors or other Persons performing similar functions are at the time owned
directly or indirectly by such Person.
"Tangible Assets" shall mean the amount shown as total assets on the
consolidated balance sheet of the Company, less the following: (i) intangible
assets including, but without limitation, such items as goodwill, trademarks,
trade names, patents, and unamortized debt discount and expense and (ii)
appropriate adjustments, if any, on account of minority interests. Tangible
Assets shall be determined in accordance with GAAP and practices applicable to
the type of business in which the Company is engaged and that are approved by
the independent accountants regularly retained by the Company, and may be
determined as of a date not more than sixty (60) days prior to the happening of
the event for which such determination is being made.
"Trustee" shall mean United States Trust Company of New York and, subject
to Article IX, shall also include any successor Trustee.
"U.S. Government Obligations" shall mean (i) direct non-callable
obligations of, or non-callable obligations guaranteed as to timely payment of
principal and interest by, the United States of America or obligations of a
person controlled or supervised by and acting as an agency or instrumentality
thereof for the payment of which obligations or guarantee the full faith and
credit of the United States is pledged, or (ii) certificates or receipts
representing direct ownership interests in obligations or specified portions
(such as principal or interest) of obligations described in clause (i) above,
which obligations are held by a custodian in safekeeping in a manner
satisfactory to the Trustee.
"Value" shall mean, with respect to a Sale and Lease-Back Transaction,
as of any particular time, the amount equal to the
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<PAGE>
greater of (i) the net proceeds to the Company from the sale or transfer of the
property leased pursuant to such Sale and Lease-Back Transaction or (ii) the net
book value of such property, as determined in accordance with GAAP by the
Company, in either case multiplied by a fraction, the numerator of which shall
be equal to the number of full years of the term of the lease that is part of
such Sale and Lease-Back Transaction remaining at the time of determination and
the denominator of which shall be equal to the number of full years of such
term, without regard, in any case, to any renewal or extension options contained
in such lease.
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ARTICLE II
FORM, ISSUE, EXECUTION, REGISTRATION AND
EXCHANGE OF NOTES
Section 2.01 Form Generally.
(a) If the Notes are in the form of a Global Note they shall be in
substantially the form set forth in Exhibit A (or, following the Release Date,
Exhibit C) to this Indenture, and, if the Notes are not in the form of a Global
Note, they shall be in substantially the form set forth in Exhibit B (or,
following the Release Date, Exhibit D) to this Indenture, or, in any case, in
such other form as shall be established by a Board Resolution, or a Company
Order pursuant to a Board Resolution, or in one or more indentures supplemental
hereto, in each case with such appropriate insertions, omissions, substitutions
and other variations as are required or permitted by this Indenture, or any
indentures supplemental hereto, and may have such letters, numbers or other
marks of identification and such legends or endorsements placed thereon as may
be required to comply with applicable rules of any securities exchange or of the
Depositary or with applicable law or as may, consistently herewith, be
determined by the officers executing such Notes, as evidenced by their execution
of such Notes.
(b) The definitive Notes shall be typed, printed, lithographed or engraved
on steel engraved borders or may be produced in any other manner, all as
determined by the officers executing such Notes, as evidenced by their execution
of such Notes.
Section 2.02 Form Of Trustee's Certificate Of Authentication. The
Trustee's certificate of authentication on all Notes shall be in substantially
the following form:
Trustee's Certificate of Authentication
This Note is one of the Notes of the series herein designated, described
or provided for in the within-mentioned Indenture.
United States Trust Company of New York
By:
----------------------------
Authorized Officer
Section 2.03 Amount Unlimited. The aggregate principal amount of Notes
that may be authenticated and delivered under this Indenture is unlimited,
subject to compliance with the provisions of this Indenture.
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Section 2.04 Denominations, Dates, Interest Payment And Record Dates
(a) The Notes shall be issuable in registered form without coupons in
denominations of $1,000 and integral multiples thereof or such other amount or
amounts as may be authorized by the Board of Directors or a Company Order
pursuant to a Board Resolution or in one or more indentures supplemental hereto;
provided, that the principal amount of a Global Note shall not exceed
$200,000,000 unless otherwise permitted by the Depositary.
(b) Each Note shall be dated and issued as of the date of its
authentication by the Trustee, and shall bear an Original Issue Date; each Note
issued upon transfer, exchange or substitution of a Note shall bear the Original
Issue Date or Dates of such transferred, exchanged or substituted Note, subject
to the provisions of Section 2.13(e) hereof.
(c) Each Note shall bear interest from the later of (1) its Original Issue
Date or the date specified in such Note or (2) the most recent date to which
interest has been paid or duly provided for with respect to such Note until the
principal of such Note is paid or made available for payment, and interest on
each Note shall be payable on each Interest Payment Date after the Original
Issue Date.
(d) Each Note shall mature on a stated maturity specified in the Note. The
principal amount of each Outstanding Note shall be payable on the maturity date
or dates specified therein.
(e) Unless otherwise specified in a Company Order pursuant to Section 2.05
hereof, interest on each of the Notes shall be calculated on the basis of a
360-day year of twelve 30-day months and shall be computed at a fixed rate until
the maturity of such Notes. The method of computing interest on any Notes not
bearing a fixed rate of interest shall be set forth in a Company Order pursuant
to Section 2.05 hereof. Unless otherwise specified in a Company Order pursuant
to Section 2.05 hereof, principal, interest and premium, if any, on the Notes
shall be payable in the currency of the United States.
(f) Except as provided in the following sentence, the Person in whose name
any Note is registered at the close of business on any Regular Record Date or
Special Record Date with respect to an Interest Payment Date for such Note shall
be entitled to receive the interest payable on such Interest Payment Date
notwithstanding the cancellation of such Note upon any registration of transfer,
exchange or substitution of such Note subsequent to such Regular Record Date or
Special Record Date and prior to such Interest Payment Date. Any interest
payable at maturity shall be paid to the Person to whom the principal of such
Note is payable.
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(g) So long as the Trustee is the registrar and paying agent, the Trustee
shall, as soon as practicable but no later than the Regular Record Date
preceding each applicable Interest Payment Date, provide to the Company a list
of the principal, interest and premium to be paid on Notes on such Interest
Payment Date. The Trustee shall assume responsibility for withholding taxes on
interest paid as required by law except with respect to any Global Note.
Section 2.05 Execution, Authentication, Delivery And Dating.
(a) The Notes shall be executed on behalf of the Company by one of its
Chairman, President, any Vice President (whether or not designated by a number
or numbers or a word or words added before or after the title "Vice President"),
its Treasurer or an Assistant Treasurer of the Company and attested by the
Secretary or an Assistant Secretary of the Company. The signature of any of
these officers on the Notes may be manual or facsimile. Typographical and other
minor errors or defects in any such signature shall not affect the validity or
enforceability of any Note that has been duly authenticated and delivered by the
Trustee.
(b) Notes bearing the manual or facsimile signatures of individuals who
were at the time of execution 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 Notes or did
not hold such offices at the date of such Notes.
(c) At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Notes executed by the Company to the
Trustee for authentication, together with or preceded by one or more Company
Orders for the authentication and delivery of such Notes, and the Trustee in
accordance with any such Company Order shall authenticate and make available for
delivery such Notes. The Notes shall be issued in series. Such Company Order
shall specify the following with respect to each series of Notes: (i) any
limitations on the aggregate principal amount of the Notes to be issued as part
of such series, (ii) the Original Issue Date for such series, (iii) the stated
maturity or maturities of Notes of such series, (iv) the interest rate or rates,
or method of calculation of such rate or rates, for such series and the date
from which such interest will accrue, (v) the terms, if any, regarding the
optional or mandatory redemption of such series, including redemption date or
dates of such series, if any, and the price or prices applicable to such
redemption, (vi) whether or not the Notes of such series shall be issued in
whole or in part in the
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form of a Global Note and, if so, the Depositary for such Global Note, (vii) the
designation of such series, (viii) if the form of the Notes of such series is
not as described in Exhibit A, Exhibit B, Exhibit C or Exhibit D hereto, the
form of the Notes of such series, (ix) the maximum annual interest rate, if any,
of the Notes permitted for such series, (x) any other information necessary to
complete the Notes of such series, (xi) if prior to the Release Date, the
designation of the Related Series of Senior Note First Mortgage Bonds being
delivered to the Trustee in connection with the issuance of such series of
Notes, (xii) the establishment of any office or agency pursuant to Section 6.02
hereof, and (xiii) any other terms of such series not inconsistent with this
Indenture. Prior to authenticating Notes of any series, and in accepting the
additional responsibilities under this Indenture in relation to such Notes, the
Trustee shall receive from the Company the following at or before the issuance
of the initial Note of such series of Notes, and (subject to Section 9.01
hereof) shall be fully protected in relying upon, unless and until such
documents have been superseded or revoked prior to such issuance:
(1) A Board Resolution authorizing such Company Order or Orders and,
if the form of Notes is established by a Board Resolution or a Company
Order pursuant to a Board Resolution, a copy of such Board Resolution;
(2) At the option of the Company, either an Opinion of Counsel or a
letter addressed to the Trustee permitting it to rely on an Opinion of
Counsel, stating substantially the following subject to customary
qualifications and exceptions:
(A) if the form of Notes has been established by or
pursuant to a Board Resolution, a Company Order pursuant to a Board
Resolution, or in a supplemental indenture as permitted by Section
2.01 hereof, that such form has been established in conformity with
this Indenture;
(B) that the Indenture has been duly authorized,
executed and delivered by the Company and constitutes a valid and
binding obligation of the Company, enforceable against the Company
in accordance with its terms, except as may be limited by applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or similar laws of general application relating to or
affecting the enforcement of creditors' rights, the application of
general principles of equity (regardless of whether such application
is made in a proceeding at law or in equity) and by an implied
covenant of good faith and fair dealing and except as enforcement of
provisions of
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the Indenture may be limited by state laws affecting the remedies
for the enforcement of the security provided for in the Indenture;
(C) if prior to the Release Date, that the Related
Series of Senior Note First Mortgage Bonds being delivered to the
Trustee in connection with the issuance of such series of Notes have
been duly authorized, executed and delivered, and that such Senior
Note First Mortgage Bonds are valid and binding obligations of the
Company, enforceable in accordance with their terms, except as may
be limited by applicable bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or similar laws of general
application relating to or affecting the enforcement of creditors'
rights and the application of general principles of equity
(regardless of whether such application is made in a proceeding at
law or in equity) and by an implied covenant of good faith and fair
dealing and except as enforcement of provisions thereof may be
limited by state laws affecting the remedies for the enforcement of
the security provided for in the First Mortgage; and that such
Senior Note First Mortgage Bonds are entitled to the benefit of the
First Mortgage, equally and ratably, with all First Mortgage Bonds
outstanding thereunder, except as to sinking fund provisions;
(D) that the Indenture and, if prior to the Release
Date, the First Mortgage are qualified to the extent necessary under
the TIA;
(E) that such Notes have been duly authorized and
executed by the Company, and when authenticated by the Trustee and
issued by the Company in the manner and subject to any conditions
specified in such Opinion of Counsel, will constitute valid and
binding obligations of the Company, enforceable in accordance with
their terms, except as may be limited by applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or
similar laws of general application relating to or affecting the
enforcement of creditors' rights, the application of general
principles of equity (regardless of whether such application is made
in a proceeding at law or in equity) and by an implied covenant of
good faith and fair dealing and except as enforcement of provisions
of this Indenture may be limited by state laws affecting the
remedies for the enforcement of the security provided for in this
Indenture;
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(F) that all consents or approvals of any federal or
state regulatory agency required in connection with the Company's
execution and delivery of this Indenture, such series of Notes and
any Senior Note First Mortgage Bonds have been obtained and are in
full force and effect (except that no statement need be made with
respect to state securities laws);
(G) if prior to the Release Date, that the First
Mortgage (except the supplemental indenture establishing the Related
Series of Senior Note First Mortgage Bonds being delivered to the
Trustee in connection with the issuance of such series of Notes) and
all financing statements have been duly filed and recorded in all
places where such filing or recording is necessary for the
perfection or preservation of the lien of the First Mortgage, and
the First Mortgage constitutes a valid and perfected first lien upon
the property purported to be covered thereby, subject only to
excepted encumbrances (as defined in the First Mortgage) and to
liens upon the property, if any, specifically identified in such
supplemental indenture prior to its recordation; and
(H) that all conditions that must be met by the Company
to issue Notes under this Indenture have been met.
(3) If prior to the Release Date, the certificate of an Expert
meeting the requirements of Section 4.06(a) hereof and a series of Senior
Note First Mortgage Bonds meeting the requirements of Section 4.10 hereof
(except that such certificate need not be delivered in connection with the
issue of the first series of Notes hereunder).
(4) An Officers' Certificate stating that (i) the Company is not,
and upon the authentication by the Trustee of the series of Notes, will
not be in default under any of the terms or covenants contained in this
Indenture, (ii) all conditions that must be met by the Company to issue
Notes under this Indenture have been met, and (iii) if prior to the
Release Date, the Related Series of Senior Note First Mortgage Bonds being
delivered to the Trustee meets the requirements of Section 4.10 hereof.
(d) No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by the manual or facsimile signature of an authorized
officer, and such certificate upon any Note shall be conclusive
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evidence, and the only evidence, that such Note has been duly authenticated and
delivered hereunder and is entitled to the benefits of this Indenture.
(e) If all Notes of a series are not to be authenticated and issued at one
time, the Company shall not be required to deliver the Company Order, Board
Resolutions, certificate of an Expert, Senior Note First Mortgage Bonds,
Officers' Certificate and Opinion of Counsel (including any of the foregoing
that would be otherwise required pursuant to Section 15.05 hereof) described in
Section 2.05(c) hereof at or prior to the authentication of each Note of such
series, if such items are delivered at or prior to the time of authentication of
the first Note of such series to be authenticated and issued. If all of the
Notes of a series are not authenticated and issued at one time, for each
issuance of Notes after the initial issuance of Notes, the Company shall be
required only to deliver to the Trustee the Note and a written request (executed
by one of the Chairman, the President, any Vice President, the Treasurer, or an
Assistant Treasurer) to the Trustee to authenticate such Note and to deliver
such Note in accordance with the instructions specified by such request. Any
such request shall constitute a representation and warranty by the Company that
the statements made in the Officers' Certificate delivered to the Trustee prior
to the authentication and issuance of the first Note of such series are true and
correct on the date thereof as if made on and as of the date thereof.
Section 2.06 Exchange And Registration Of Transfer Of Notes.
(a) Subject to Section 2.13 hereof, Notes may be exchanged for one or more
new Notes of any authorized denominations and of a like aggregate principal
amount, series and stated maturity and having the same terms and Original Issue
Date. Notes to be exchanged shall be surrendered at any of the offices or
agencies to be maintained pursuant to Section 6.02 hereof, and the Trustee shall
authenticate and deliver in exchange therefor the Note or Notes which the
Noteholder making the exchange shall be entitled to receive.
(b) The Trustee shall keep, at one of said offices or agencies, a register
or registers in which, subject to such reasonable regulations as it may
prescribe, the Trustee shall register or cause to be registered Notes and shall
register or cause to be registered the transfer of Notes as in this Article II
provided. Such register shall be in written form or in any other form capable of
being converted into written form within a reasonable time. At all reasonable
times, such register shall be open for inspection by the Company. Upon due
presentment for registration of transfer of any Note at any such office or
agency, the Company shall execute and the Trustee shall register, authenticate
and deliver in the name of the transferee or
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transferees one or more new Notes of any authorized denominations and of a like
aggregate principal amount, series and stated maturity and having the same terms
and Original Issue Date.
(c) All Notes presented for registration of transfer or for exchange,
redemption or payment shall be duly endorsed by, or be accompanied by a written
instrument or instruments of transfer in form satisfactory to the Company and
the Trustee and duly executed by, the Holder or the attorney in fact of such
Holder duly authorized in writing.
(d) No service charge shall be made for any exchange or registration of
transfer of Notes, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
therewith.
(e) The Trustee shall not be required to exchange or register the transfer
of any Notes selected, called or being called for redemption (including Notes,
if any, redeemable at the option of the Holder provided such Notes are then
redeemable at such Holder's option) except, in the case of any Note to be
redeemed in part, the portion thereof not to be so redeemed.
(f) If the principal amount, and applicable premium, of part, but not all,
of a Note is paid, then upon surrender to the Trustee of such Note, the Company
shall execute, and the Trustee shall authenticate, deliver and register, a Note
in an authorized denomination in aggregate principal amount equal to, and having
the same terms, Original Issue Date and series as, the unpaid portion of such
Note.
Section 2.07 Mutilated, Destroyed, Lost Or Stolen Notes. (a) If any Note
shall become mutilated or be destroyed, lost or stolen, the Company shall
execute, and upon its written request the Trustee shall authenticate and
deliver, a new Note of like form and principal amount and having the same terms
and Original Issue Date and bearing a number not contemporaneously Outstanding,
in exchange and substitution for the mutilated Note, or in lieu of and in
substitution for the Note so destroyed, lost or stolen. In every case the
applicant for a substituted Note shall furnish to the Company, the Trustee and
any paying agent or Authenticating Agent such security or indemnity as may be
required by them to save each of them harmless, and, in every case of
destruction, loss or theft of a Note, the applicant shall also furnish to the
Company and to the Trustee evidence to their satisfaction of the destruction,
loss or theft of such Note and of the ownership thereof.
(b) The Trustee shall authenticate any such substituted Note and deliver
the same upon the written request or authorization of any officer of the
Company. Upon the issuance of any substituted Note, the Company may require the
payment of a
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sum sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto and any other expenses connected therewith. If any Note
which has matured, is about to mature, has been redeemed or called for
redemption shall become mutilated or be destroyed, lost or stolen, the Company
may, instead of issuing a substituted Note, pay or authorize the payment of the
same (without surrender thereof except in the case of a mutilated Note) if the
applicant for such payment shall furnish to the Company, the Trustee and any
paying agent or Authenticating Agent such security or indemnity as may be
required by them to save each of them harmless and, in case of destruction, loss
or theft, evidence satisfactory to the Company and the Trustee of the
destruction, loss or theft of such Note and of the ownership thereof.
(c) Every substituted Note issued pursuant to this Section 2.07 by virtue
of the fact that any Note is mutilated, destroyed, lost or stolen shall
constitute an additional contractual obligation of the Company, whether or not
such destroyed, lost or stolen Note shall be found at any time, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Notes duly issued hereunder. All Notes shall be held and owned
upon the express condition that, to the extent permitted by law, the foregoing
provisions are exclusive with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Notes and shall preclude to the full extent
permitted by applicable law any and all other rights or remedies with respect to
the replacement or payment of negotiable instruments or other securities without
their surrender.
Section 2.08 Temporary Notes. Pending the preparation of definitive Notes,
the Company may execute and the Trustee shall authenticate and deliver temporary
Notes (printed, lithographed or otherwise reproduced). Temporary Notes shall be
issuable in any authorized denomination and substantially in the form of the
definitive Notes but with such omissions, insertions and variations as may be
appropriate for temporary Notes, all as may be determined by the Company. Every
such temporary Note shall be authenticated by the Trustee upon the same
conditions and in substantially the same manner, and with the same effect, as
the definitive Notes. Without unreasonable delay the Company shall execute and
shall deliver to the Trustee definitive Notes and thereupon any or all temporary
Notes shall be surrendered in exchange therefor at the Corporate Trust Office of
the Trustee, and the Trustee shall authenticate, deliver and register in
exchange for such temporary Notes an equal aggregate principal amount of
definitive Notes. Such exchange shall be made by the Company at its own expense
and without any charge therefor to the Noteholders. Until so exchanged, the
temporary Notes shall in all respects be entitled to the same benefits under
this Indenture as definitive Notes authenticated and delivered hereunder.
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Section 2.09 Cancellation Of Notes Paid, Etc. All Notes surrendered for
the purpose of payment, redemption, exchange or registration of transfer shall
be surrendered to the Trustee for cancellation and promptly canceled by it and
no Notes shall be issued in lieu thereof except as expressly permitted by this
Indenture. The Company shall surrender to the Trustee any Notes so acquired by
it and such Notes shall be canceled by the Trustee. No Notes shall be
authenticated in lieu of or in exchange for any Notes so canceled.
Section 2.10 Interest Rights Preserved. Each Note delivered under this
Indenture upon transfer of or in exchange for or in lieu of any other Note shall
carry all the rights to interest accrued and unpaid, and to accrue, which were
carried by such other Note, and each such Note shall be so dated that neither
gain nor loss of interest shall result from such transfer, exchange or
substitution.
Section 2.11 Special Record Date. If and to the extent that the Company
fails to make timely payment or provision for timely payment of interest on any
series of Notes (other than on an Interest Payment Date that is a maturity
date), that interest shall cease to be payable to the Persons who were the
Noteholders of such series at the applicable Regular Record Date. In that event,
when moneys become available for payment of the interest, the Trustee shall (a)
establish a date of payment of such interest and a Special Record Date for the
payment of that interest, which Special Record Date shall be not more than 15 or
fewer than 10 days prior to the date of the proposed payment and (b) mail notice
of the date of payment and of the Special Record Date not fewer than 10 days
preceding the Special Record Date to each Noteholder of such series at the close
of business on the 15th day preceding the mailing at the address of such
Noteholder, as it appeared on the register for the Notes. On the day so
established by the Trustee the interest shall be payable to the Holders of the
applicable Notes at the close of business on the Special Record Date.
Section 2.12 Payment Of Notes. Payment of the principal, interest and
premium, if any, on all Notes shall be payable as follows:
(a) On or before 9:30 a.m., New York City time, or such other time as
shall be agreed upon between the Trustee and the Company, of the day on which
payment of principal, interest and premium, if any, is due on any Global Note
pursuant to the terms thereof, the Company shall deliver to the Trustee funds
available on such date sufficient to make such payment, by wire transfer of
immediately available funds or by instructing the Trustee to withdraw sufficient
funds from an account maintained by the Company with the Trustee or such other
method as is acceptable to
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the Trustee. On or before 12:00 noon, New York City time, or such other time as
shall be agreed upon between the Trustee and the Depositary, of the day on which
any payment of interest is due on any Global Note (other than at maturity), the
Trustee shall pay to the Depositary such interest in same day funds. On or
before 1:00 p.m., New York City time, or such other time as shall be agreed upon
between the Trustee and the Depositary, of the day on which principal, interest
payable at maturity and premium, if any, is due on any Global Note, the Trustee
shall deposit with the Depositary the amount equal to the principal, interest
payable at maturity and premium, if any, by wire transfer into the account
specified by the Depositary. As a condition to the payment, at maturity or upon
redemption, of any part of the principal of, interest on and applicable premium
of any Global Note, the Depositary shall surrender, or cause to be surrendered,
such Global Note to the Trustee, whereupon a new Global Note shall be issued to
the Depositary pursuant to Section 2.06(f) hereof.
(b) With respect to any Note that is not a Global Note, principal,
applicable premium and interest due at the maturity of the Note shall be payable
in immediately available funds when due upon presentation and surrender of such
Note at the corporate trust office of the Trustee or at the authorized office of
any paying agent. Interest on any Note that is not a Global Note (other than
interest payable at maturity) shall be paid by check mailed to the Holder
thereof at such Holder's address as it appears on the register by check payable
in clearinghouse funds; provided that if the Trustee receives a written request
from any Holder of Notes, the aggregate principal amount of which having the
same Interest Payment Date equals or exceeds $10,000,000, on or before the
applicable Regular Record Date for such Interest Payment Date, interest shall be
paid by wire transfer of immediately available funds to a bank within the
continental United States designated by such Holder in its request or by direct
deposit into the account of such Holder designated by such Holder in its request
if such account is maintained with the Trustee or any paying agent.
(c) The Trustee shall receive the Senior Note First Mortgage Bonds from
the Company as provided in this Indenture and shall hold the Senior Note First
Mortgage Bonds, and any and all sums payable thereon or with respect thereto or
realized therefrom, in trust for the benefit of the holders of the Notes, as
herein provided. Subject to Article XIII hereof, all payments made by or on
behalf of the Company to the Trustee on a series of Senior Note First Mortgage
Bonds shall be deemed to be a payment by the Company pursuant to this Section
2.12 and shall be applied by the Trustee to pay, when due, principal of,
premium, if any, and/or interest on the Related Series of Notes and, to the
extent so applied, shall satisfy the Company's obligations on such Notes.
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Section 2.13 Notes Issuable In The Form Of A Global Note.
(a) If the Company shall establish pursuant to Section 2.05 hereof that
the Notes of a particular series are to be issued in whole or in part in the
form of one or more Global Notes, then the Company shall execute and the Trustee
shall, in accordance with Section 2.05 hereof and the Company Order delivered to
the Trustee thereunder, authenticate and deliver such Global Note or Notes,
which (i) shall represent, shall be denominated in an amount equal to the
aggregate principal amount of, and shall have the same terms as, the Outstanding
Notes of such series to be represented by such Global Note or Notes, (ii) shall
be registered in the name of the Depositary or its nominee, (iii) shall be
delivered by the Trustee to the Depositary or pursuant to the Depositary's
instruction and (iv) shall bear a legend substantially to the following effect:
"This Note is a Global Note registered in the name of the Depositary (referred
to herein) or a nominee thereof and, unless and until it is exchanged in whole
or in part for the individual Notes represented hereby, this Global Note may not
be transferred except as a whole by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary. Unless this
Global Note is presented by an authorized representative of The Depository Trust
Company (55 Water Street, New York, New York), to the Trustee for registration
of transfer, exchange or payment, and any certificate issued is registered in
the name of Cede & Co. or such other name as requested by an authorized
representative of The Depository Trust Company and any payment is made to Cede &
Co., any transfer, pledge or other use hereof for value or otherwise by or to
any person is wrongful since the registered owner hereof, Cede & Co., has an
interest herein" or such other legend as may be required by the rules and
regulations of the Depositary.
(b) Notwithstanding any other provision of Section 2.06 hereof or of this
Section 2.13, unless the terms of a Global Note expressly permit such Global
Note to be exchanged in whole or in part for individual Notes, a Global Note may
be transferred, in whole but not in part, only as described in the legend
thereto.
(c) (i) If at any time the Depositary for a Global Note notifies the
Company that it is unwilling or unable to continue as Depositary for such Global
Note or if at any time the Depositary for the Global Note shall no longer be
eligible or in good standing under the Securities Exchange Act of 1934 or other
applicable statute or regulation, the Company shall appoint a successor
Depositary with respect to such Global Note. If a successor Depositary for such
Global Note is not appointed by the
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Company within 90 days after the Company receives such notice or becomes aware
of such ineligibility, the Company's election pursuant to Section 2.05(c)(vi)
hereof shall no longer be effective with respect to the series of Notes
evidenced by such Global Note and the Company shall execute, and the Trustee,
upon receipt of a Company Order for the authentication and delivery of
individual Notes of such series in exchange for such Global Note, shall
authenticate and deliver, individual Notes of such series of like tenor and
terms in definitive form in an aggregate principal amount equal to the principal
amount of the Global Note in exchange for such Global Note. The Trustee shall
not be charged with knowledge or notice of the ineligibility of a Depositary
unless a Responsible Officer assigned to and working in its corporate trustee
administration department shall have actual knowledge thereof.
(ii) (A) The Company may at any time and in its sole discretion
determine that all Outstanding (but not less than all) Notes of a series issued
or issuable in the form of one or more Global Notes shall no longer be
represented by such Global Note or Notes. In such event the Company shall
execute, and the Trustee, upon receipt of a Company Order for the authentication
and delivery of individual Notes in exchange for such Global Note, shall
authenticate and deliver individual Notes of like tenor and terms in definitive
form in an aggregate principal amount equal to the principal amount of such
Global Note or Notes in exchange for such Global Note or Notes.
(B) Within seven days after the occurrence of an Event of
Default, the Company shall execute, and the Trustee shall authenticate and
deliver, Notes of such series in definitive registered form in any authorized
denominations and in aggregate principal amount equal to the principal amount of
the Global Notes in exchange for such Global Notes.
(iii) In any exchange provided for in any of the preceding two
paragraphs, the Company will execute and the Trustee will authenticate and
deliver individual Notes in definitive registered form in authorized
denominations. Upon the exchange of a Global Note for individual Notes, such
Global Note shall be canceled by the Trustee. Notes issued in exchange for a
Global Note pursuant to this Section shall be registered in such names and in
such authorized denominations as the Depositary for such Global Note, pursuant
to instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee. The Trustee shall deliver such Notes to the Depositary for
delivery to the persons in whose names such Notes are so registered, or if the
Depositary shall refuse or be unable to deliver such Notes, the Trustee shall
deliver such Notes to the persons in whose names such Notes are registered,
unless otherwise agreed upon between the Trustee and the Company, in
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which event the Company shall cause the Notes to be delivered to the persons in
whose names such Notes are registered.
(d) Neither the Company, the Trustee, any Authenticating Agent nor any
paying agent shall have any responsibility or liability for any aspect of the
records relating to, or payments made on account of, beneficial ownership
interests of a Global Note or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
(e) Pursuant to the provisions of this subsection, at the option of the
Trustee and upon 30 days' written notice to the Depositary but not prior to the
first Interest Payment Date of the respective Global Notes, the Depositary shall
be required to surrender any two or more Global Notes which have identical
terms, including, without limitation, identical maturities, interest rates and
redemption provisions (but which may have differing Original Issue Dates) to the
Trustee, and the Company shall execute and the Trustee shall authenticate and
deliver to, or at the direction of, the Depositary a Global Note in principal
amount equal to the aggregate principal amount of, and with all terms identical
to, the Global Notes surrendered thereto and that shall indicate each applicable
Original Issue Date and the principal amount applicable to each such Original
Issue Date. The exchange contemplated in this subsection shall be consummated at
least 30 days prior to any Interest Payment Date applicable to any of the Global
Notes surrendered to the Trustee. Upon any exchange of any Global Note with two
or more Original Issue Dates, whether pursuant to this Section or pursuant to
Section 2.06 or Section 3.03 hereof, the aggregate principal amount of the Notes
with a particular Original Issue Date shall be the same before and after such
exchange, after giving effect to any retirement of Notes and the Original Issue
Dates applicable to such Notes occurring in connection with such exchange.
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ARTICLE III
REDEMPTION OF NOTES
Section 3.01 Applicability Of Article. Such of the Notes as are, by their
terms, redeemable prior to their stated maturity date at the option of the
Company, may be redeemed by the Company at such times, in such amounts and at
such prices as may be specified therein and in accordance with the provisions of
this Article III.
Section 3.02 Notice Of Redemption; Selection Of Notes.
(a) The election of the Company to redeem any Notes shall be evidenced by
an Officer's Certificate which shall be given with notice of redemption to the
Trustee at least 45 days (or such shorter period acceptable to the Trustee in
its sole discretion) prior to the redemption date specified in such notice.
(b) Notice of redemption to each Holder of Notes to be redeemed as a whole
or in part shall be given by the Trustee, in the manner provided in Section
15.10 hereof, no less than 30 or more than 60 days prior to the date fixed for
redemption. Any notice which is given in the manner herein provided shall be
conclusively presumed to have been duly given, whether or not the Noteholder
receives the notice. In any case, failure duly to give such notice, or any
defect in such notice, to the Holder of any Note designated for redemption as a
whole or in part shall not affect the validity of the proceedings for the
redemption of any other Note.
(c) Each such notice shall specify the date fixed for redemption, the
places of redemption and the redemption price (or the method for calculation
thereof) at which such Notes are to be redeemed, and shall state that (subject
to subsection (e) of this Section) payment of the redemption price of such Notes
or portion thereof to be redeemed will be made upon surrender of such Notes at
such places of redemption, that interest accrued to the date fixed for
redemption will be paid as specified in such notice, and that from and after
such date interest thereon shall cease to accrue. If less than all of a series
of Notes having the same terms are to be redeemed, the notice shall specify the
Notes or portions thereof to be redeemed. If any Note is to be redeemed in part
only, the notice which relates to such Note shall state the portion of the
principal amount thereof to be redeemed, and shall state that, upon surrender of
such Note, a new Note or Notes having the same terms in aggregate principal
amount equal to the unredeemed portion thereof will be issued.
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(d) Unless otherwise provided by a supplemental indenture or Company Order
under Section 2.05 hereof, if less than all of a series of Notes, or any tranche
thereof, is to be redeemed, the Trustee shall select in such manner as it shall
deem appropriate and fair in its discretion the particular Notes to be redeemed
in whole or in part and shall thereafter promptly notify the Company in writing
of the Notes so to be redeemed. If less than all of a series of Notes
represented by a Global Note is to be redeemed, the particular Notes or portions
thereof of such series to be redeemed shall be selected by the Depositary for
such series of Notes in such manner as the Depositary shall determine. Notes
shall be redeemed only in denominations of $1,000, provided that any remaining
principal amount of a Note redeemed in part shall be a denomination authorized
under this Indenture.
(e) If at the time of the mailing of any notice of redemption at the
option of the Company, the Company shall not have irrevocably directed the
Trustee to apply funds then on deposit with the Trustee or held by it and
available to be used for the redemption of Notes to redeem all the Notes called
for redemption, such notice, at the election of the Company, may state that it
is conditional and subject to the receipt of the redemption moneys by the
Trustee on or before the date fixed for redemption and that such notice shall be
of no effect unless such moneys are so received on or before such date.
Section 3.03 Payment Of Notes On Redemption; Deposit Of Redemption
Price.
(a) If notice of redemption for any Notes shall have been given as
provided in Section 3.02 hereof and such notice shall not contain the language
permitted at the Company's option under Section 3.02(e) hereof, such Notes or
portions of Notes called for redemption shall become due and payable on the date
and at the places stated in such notice at the applicable redemption price,
together with interest accrued to the date fixed for redemption of such Notes.
Interest on the Notes or portions thereof so called for redemption shall cease
to accrue and such Notes or portions thereof shall be deemed not to be entitled
to any benefit under this Indenture except to receive payment of the redemption
price together with interest accrued thereon to the date fixed for redemption.
Upon presentation and surrender of such Notes at the place of payment specified
in such notice, such Notes or the specified portions thereof shall be paid and
redeemed at the applicable redemption price, together with interest accrued
thereon to the date fixed for redemption.
(b) If notice of redemption shall have been given as provided in Section
3.02 hereof and such notice shall contain the language permitted at the
Company's option under Section 3.02(e) hereof, such Notes or portions of Notes
called for redemption
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shall become due and payable on the date and at the places stated in such notice
at the applicable redemption price, together with interest accrued to the date
fixed for redemption of such Notes, and interest on the Notes or portions
thereof so called for redemption shall cease to accrue and such Notes or
portions thereof shall be deemed not to be entitled to any benefit under this
Indenture except to receive payment of the redemption price together with
interest accrued thereon to the date fixed for redemption; provided that, in
each case, the Company shall have deposited with the Trustee or a paying agent
on or prior to 11:00 a.m. New York City time on such redemption date an amount
sufficient to pay the redemption price together with interest accrued to the
date fixed for redemption. Upon the Company making such deposit and, upon
presentation and surrender of such Notes at such a place of payment in such
notice specified, such Notes or the specified portions thereof shall be paid and
redeemed at the applicable redemption price, together with interest accrued
thereon to the date fixed for redemption. If the Company shall not make such
deposit on or prior to the redemption date, the notice of redemption shall be of
no force and effect and the principal on such Notes or specified portions
thereof shall continue to bear interest as if the notice of redemption had not
been given.
(c) No notice of redemption of Notes shall be mailed during the
continuance of any Event of Default, except (1) that, when notice of redemption
of any Notes has been mailed, the Company shall redeem such Notes but only if
funds sufficient for that purpose have prior to the occurrence of such Event of
Default been deposited with the Trustee or a paying agent for such purpose, and
(2) that notices of redemption of all Outstanding Notes may be given during the
continuance of an Event of Default.
(d) Upon surrender of any Note redeemed in part only, the Company shall
execute, and the Trustee shall authenticate, deliver and register, a new Note or
Notes of authorized denominations in aggregate principal amount equal to, and
having the same terms, Original Issue Date or Dates and series as, the
unredeemed portion of the Note so surrendered.
ARTICLE IV
SENIOR NOTE FIRST MORTGAGE BONDS
Section 4.01 Delivery Of Initial Series Of Senior Note First Mortgage
Bonds. Subject to the provisions of Section 4.11 and Article V hereof, the
Company hereby (a) delivers to the Trustee, in connection with the initial
issuance of a series of Notes hereunder in an aggregate principal amount not to
exceed $ , Senior Note First Mortgage Bonds bearing the designation "First
Mortgage Bonds, Senior Note Series A" in the aggregate principal amount of $ ,
fully registered in
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the name of the Trustee, in trust for the benefit of the Holders from time to
time of the Notes issued under this Indenture as security for any and all
obligations of the Company under the Notes, including, but not limited to, (1)
the full and prompt payment of the principal of and premium, if any, on the
Notes when and as the same shall become due and payable in accordance with the
terms and provisions of this Indenture or the Notes, either at the stated
maturity thereof, upon acceleration of the maturity thereof or upon redemption,
and (2) the full and prompt payment of any interest on the Notes when and as the
same shall become due and payable in accordance with the terms and provisions of
this Indenture or the Notes and (b) delivers to the Trustee the certificate of
the Expert required by Section 4.06 hereof (if required).
Section 4.02 Receipt. The Trustee acknowledges receipt of the Senior Note
First Mortgage Bonds described in Section 4.01 hereof.
Section 4.03 Senior Note First Mortgage Bonds Held By The Trustee. The
Trustee shall, as the holder of Senior Note First Mortgage Bonds, attend such
meeting or meetings of bondholders under the First Mortgage or, at its option,
deliver its proxy in connection therewith, as relate to matters with respect to
which it is entitled to vote or consent. The Trustee shall vote all Senior Note
First Mortgage Bonds then held by it, or consent with respect thereto,
proportionally with the vote or consent of the holders of all other First
Mortgage Bonds which are outstanding under the First Mortgage, the holders of
which are eligible to vote or consent; provided, however, that the Trustee shall
not so vote in favor of, or so consent to, any amendment or modification of the
First Mortgage which, if it were an amendment or modification of this Indenture,
would require the consent of the Holders, without the prior consent, obtained in
the manner prescribed in Section 13.02 hereof, of the Holders of Outstanding
Notes which would be required under said Section 13.02 for such an amendment or
modification of this Indenture.
Section 4.04 No Transfer Of Senior Note First Mortgage Bonds; Exceptions.
Except (i) as required to effect an assignment to a successor trustee under this
Indenture, (ii) pursuant to Section 4.05 or Section 4.08 hereof, or (iii) in
compliance with a final order of a court of competent jurisdiction in connection
with any bankruptcy or reorganization proceeding of the Company, the Trustee
shall not sell, assign or transfer the Senior Note First Mortgage Bonds and the
Company shall issue stop transfer instructions to the Mortgage Trustee and any
transfer agent under the First Mortgage to effect compliance with this Section
4.04.
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Section 4.05 Delivery To The Company Of All Senior Note First Mortgage
Bonds. When the obligation of the Company to make payment with respect to the
principal of and premium, if any, and interest on all Senior Note First Mortgage
Bonds shall be satisfied or deemed satisfied pursuant to Section 4.11 or Section
5.01(b) hereof, the Trustee shall, upon written request of the Company and
receipt of the certificate of the Expert described in Section 4.06(b) hereof (if
such certificate is then required by Section 4.06(b) hereof), deliver to the
Company without charge therefor all of the Senior Note First Mortgage Bonds,
together with such appropriate instruments of transfer or release as may be
reasonably requested by the Company. All Senior Note First Mortgage Bonds
delivered to the Company in accordance with this Section 4.05 shall be delivered
by the Company to the Mortgage Trustee for cancellation.
Section 4.06 Fair Value Certificate. (a) Upon the delivery by the Company
to the Trustee of Senior Note First Mortgage Bonds pursuant to Section 4.01 or
Section 4.09 hereof, the Company shall simultaneously therewith deliver to the
Trustee a certificate of an Expert (1) stating that it is familiar with the
provisions of such Senior Note First Mortgage Bonds and of this Indenture; (2)
stating the principal amount of such Senior Note First Mortgage Bonds so
delivered, the stated interest rate (or method of calculation of interest) of
such Senior Note First Mortgage Bonds (if any) and the stated maturity date of
such Senior Note First Mortgage Bonds; (3) identifying the Notes being issued
contemporaneously therewith, and (4) stating the fair value to the Company of
such Senior Note First Mortgage Bonds. If the fair value to the Company of the
Senior Note First Mortgage Bonds so delivered, as described in the certificate
to be delivered pursuant to this Section 4.06(a), both (l) is equal to or
exceeds (A) $25,000 and (B) 1% of the principal amount of the Notes Outstanding
at the date of delivery of such Senior Note First Mortgage Bonds and (2)
together with the fair value to the Company, as described in the certificates to
be delivered pursuant to this Section 4.06(a), of all other Senior Note First
Mortgage Bonds delivered to the Trustee since the commencement of the then
current calendar year, is equal to or exceeds 10% of the principal amount of the
Notes Outstanding at the date of delivery of such Senior Note First Mortgage
Bonds, then the certificate required by this Section 4.06(a) shall (1) be
delivered by an Expert who shall be independent of the Company and (2) in
addition to the certifications described above, state the fair value to the
Company of all Senior Note First Mortgage Bonds delivered to the Trustee
pursuant to Section 4.09 hereof since the commencement of the then current year
as to which a certificate was not delivered by an Expert independent of the
Company.
(b) If Senior Note First Mortgage Bonds are delivered or surrendered
to the Company pursuant to Section 4.05 or 4.08
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hereof, the Company shall simultaneously therewith deliver to the Trustee a
certificate of an Expert (1) stating that it is familiar with the provisions of
such Senior Note First Mortgage Bonds and of this Indenture, (2) stating the
principal amount of such Senior Note First Mortgage Bonds so delivered, the
stated interest rate (or method of calculation of interest) of such Senior Note
First Mortgage Bonds (if any) and the stated maturity date of such Senior Note
First Mortgage Bonds, (3) if applicable, identifying the Notes, the payment of
the interest on and principal of which has been discharged hereunder, and (4)
stating that such delivery and release will not impair the lien of this
Indenture in contravention of the provisions of this Indenture. If, prior to the
Release Date, the fair value of the Senior Note First Mortgage Bonds so
delivered and released, as described in the certificate to be delivered pursuant
to this Section 4.06(b), both (l) is equal to or exceeds (A) $25,000 and (B) 1%
of the principal amount of the Outstanding Notes at the date of release of such
Senior Note First Mortgage Bonds and (2) together with the fair value, as
described in the certificates to be delivered pursuant to this Section 4.06(b),
of all other Senior Note First Mortgage Bonds released from the lien of this
Indenture since the commencement of the then current calendar year, is equal to
or exceeds 10% of the principal amount of the Notes Outstanding at the date of
release of such Senior Note First Mortgage Bonds, then the certificate required
by this Section 4.06(b) shall be delivered by an Expert who shall be independent
of the Company.
Section 4.07 Further Assurances. The Company, at its own expense, shall do
such further lawful acts and things, and execute and deliver such additional
conveyances, assignments, assurances, agreements, financing statements and
instruments, as may be necessary in order to better assign, assure and confirm
to the Trustee its interest in the Senior Note First Mortgage Bonds and for
maintaining, protecting and preserving such interest.
Section 4.08 Exchange And Surrender Of Senior Note First Mortgage Bonds.
At any time a Note shall cease to be entitled to any lien, benefit or security
under this Indenture pursuant to Section 5.01(b) hereof and the Company shall
have provided the Trustee with notice thereof, the Trustee shall surrender an
equal principal amount of the Related Series of Senior Note First Mortgage
Bonds, subject to the limitations of this Section 4.08, to the Company for
cancellation. The Trustee shall, together with such Senior Note First Mortgage
Bonds, deliver to the Company such appropriate instruments of transfer or
release as the Company may reasonably request. Prior to the surrender required
by this paragraph, the Trustee shall receive from the Company the following, and
(subject to Section 9.01 hereof) shall be fully protected in relying upon, an
Officers' Certificate stating (i) the aggregate Outstanding principal amount of
the Senior Note First Mortgage Bonds of the series surrendered by the Trustee,
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after giving effect to such surrender, (ii) the aggregate Outstanding principal
amount of the Related Series of Notes and (iii) that the surrender of the Senior
Note First Mortgage Bonds will not result in any default under this Indenture.
The Company shall not be permitted to cause the surrender or exchange of
all or any part of a series of Senior Note First Mortgage Bonds contemplated in
this Section, if, after such surrender or exchange, the aggregate Outstanding
principal amount of the Related Series of Notes would exceed the aggregate
Outstanding principal amount of such series of Senior Note First Mortgage Bonds
held by the Trustee. Any Senior Note First Mortgage Bonds received by the
Company pursuant to this Section 4.08 shall be delivered to the Mortgage Trustee
for cancellation. Notwithstanding anything herein to the contrary, until the
Release Date, the Company shall preserve and maintain the Lien of this
Indenture, and shall not permit, at any time prior to the Release Date, the
aggregate principal amount of Senior Note First Mortgage Bonds held by the
Trustee to be less than the aggregate amount of Notes Outstanding.
Section 4.09 Acceptance Of Additional Senior Note First Mortgage Bonds.
Upon the issuance of a series of Notes hereunder (other than the initial series
of Notes referred to in Section 4.01 hereof) at any time prior to the Release
Date, the Company shall deliver to the Trustee in trust for the benefit of the
Holders of the Notes as described in Section 4.11 hereof, and the Trustee shall
accept therefor, a Related Series of Senior Note First Mortgage Bonds registered
in the name of the Trustee conforming to the requirements of Section 4.10
hereof.
Section 4.10 Terms Of Senior Note First Mortgage Bonds. Each series of
Senior Note First Mortgage Bonds delivered to the Trustee pursuant to Section
4.01 or Section 4.09 hereof shall have the same stated maturity date and shall
be in the same aggregate principal amount as, and have redemption provisions
corresponding to, the Related Series of Notes being issued; it being expressly
understood that such Senior Note First Mortgage Bonds may, but need not, bear
interest, any such interest to be payable on the same Interest Payment Dates as
the Related Series of Notes being issued.
Section 4.11 Senior Note First Mortgage Bonds As Security For Notes. Until
the Release Date and subject to Article V hereof, Senior Note First Mortgage
Bonds delivered to the Trustee, for the benefit of the Holders of the Notes,
shall constitute part of the trust estate and security for any and all
obligations of the Company under the Notes, including, but not limited to (1)
the full and prompt payment of the principal of and premium, if any, on such
Notes when and as the same shall become due and payable in accordance with the
terms and provisions of this Indenture or the Notes, either at the stated
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maturity thereof, upon acceleration of the maturity thereof or upon redemption,
and (2) the full and prompt payment of any interest on such Notes when and as
the same shall become due and payable in accordance with the terms and
provisions of this Indenture or the Notes.
Notwithstanding anything in this Indenture to the contrary, from and
after the Release Date, the obligation of the Company to make payment with
respect to the principal of and premium, if any, and interest on the Senior Note
First Mortgage Bonds shall be deemed satisfied and discharged as provided in the
supplemental trust indenture or indentures to the First Mortgage creating such
Senior Note First Mortgage Bonds and the Senior Note First Mortgage Bonds shall
cease to secure in any manner Notes theretofore or subsequently issued. From and
after the Release Date, any conditions to the issuance of Notes that refer or
relate to Senior Note First Mortgage Bonds or the First Mortgage shall be
inapplicable.
After the issuance of the first series of Notes, the Company shall
not issue any additional First Mortgage Bonds under the First Mortgage other
than as collateral security for the Notes. The Company shall notify the Trustee
promptly of the occurrence of the Release Date. Notice of the occurrence of the
Release Date shall be given by the Trustee to the Holders of the Notes in the
manner provided in Section 15.10 hereof not later than 30 days after the Release
Date.
ARTICLE V
SATISFACTION AND DISCHARGE; UNCLAIMED MONEYS
Section 5.01 Satisfaction And Discharge.
(a) If at any time:
(1) the Company shall have paid or caused to be paid the principal
of and premium, if any, and interest on all the Outstanding Notes, as and
when the same shall have become due and payable,
(2) the Company shall have delivered to the Trustee for cancellation
all Outstanding Notes, or
(3) the Company shall have irrevocably deposited or caused to be
irrevocably deposited with the Trustee as trust funds the entire amount in
(A) cash, (B) U.S. Government Obligations maturing as to principal and
interest in such amounts and at such times as will insure the availability
of cash, or (C) a combination of cash and U.S. Government Obligations, in
any case sufficient, without reinvestment,
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as certified by an independent public accounting firm of national
reputation in a written certification delivered to the Trustee, to pay at
maturity or the applicable redemption date (provided that notice of
redemption shall have been duly given or irrevocable provision
satisfactory to the Trustee shall have been duly made for the giving of
any notice of redemption) all Outstanding Notes, including principal and
any premium, if any, and interest due or to become due to such date of
maturity, as the case may be, and, unless all Outstanding Notes are to be
due within 90 days of such deposit by redemption or otherwise, shall also
deliver to the Trustee an opinion of counsel expert in federal income tax
matters to the effect that the Company has received from, or there has
been published by, the Internal Revenue Service a ruling or similar
pronouncement by the Internal Revenue Service or that there has been a
change of law (collectively, an "External Tax Pronouncement"), in either
case to the effect that the Holders of the Notes will not recognize
income, gain or loss for federal income tax purposes as a result of such
defeasance or discharge of the Indenture, and if, in any such case, (x)
the Company shall also pay or cause to be paid all other sums payable
hereunder by the Company and (y) the Company has delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel each stating that all
conditions precedent herein provided for relating to the satisfaction and
discharge of this Indenture have been complied with, then this Indenture
shall cease to be of further effect (except as to (i) rights of
registration of transfer and exchange of Notes, (ii) substitution of
mutilated, defaced, destroyed, lost or stolen Notes, (iii) rights of
Noteholders to receive payments of principal thereof, and any premium and
interest thereon, upon the original stated due dates therefor or upon the
applicable redemption date (but not upon acceleration of maturity) from
the moneys and U.S. Government Obligations held by the Trustee pursuant to
Section 5.02 hereof, (iv) the rights and immunities of the Trustee
hereunder, (v) the obligations of the Company under Sections 6.02 and 6.03
hereof, (vi) the obligations and rights of the Trustee and the Company
under Section 5.04 hereof, and (vii) the duties of the Trustee with
respect to any of the foregoing), and the Company shall be deemed to have
paid and discharged the entire indebtedness represented by, and its
obligations under, the Notes, and the Trustee, on demand of the Company
and at the cost and expense of the Company, shall execute proper
instruments acknowledging such satisfaction and discharge of this
Indenture and the Trustee shall at the request of the Company release the
lien of this Indenture and return to the Company all Senior Note First
Mortgage Bonds and all other property and money held by it under this
Indenture and determined by it from time to time in accordance with the
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certification pursuant to this Section 5.01(a)(3) to be in excess of the
amount required to be held under this Section.
If the Notes are deemed to be paid and discharged pursuant to
Section 5.01(a)(3) hereof, within 60 days after those Notes are so deemed to be
paid and discharged, the Trustee shall cause a written notice to be given to
each Holder in the manner provided by Section 15.10 hereof. The notice shall:
(i) state that the Notes are deemed to be paid and discharged;
(ii) set forth a description of any U.S. Government Obligations and
cash held by the Trustee as described above;
(iii) if any Notes will be called for redemption, specify the date
or dates on which those Notes are to be called for redemption.
Notwithstanding the satisfaction and discharge of this Indenture,
the obligations of the Company to the Trustee under Section 9.06 hereof shall
survive.
(b) If the Company shall have paid or caused to be paid the principal of
and premium, if any, and interest on any Note, as and when the same shall have
become due and payable or the Company shall have delivered to the Trustee for
cancellation any Outstanding Note, such Note shall cease to be entitled to any
lien, benefit or security under this Indenture. Upon a Note of any series
ceasing to be entitled to any lien, benefit or security under this Indenture,
the obligation of the Company to make payment with respect to principal of and
premium, if any, and interest on a principal amount of the Related Series of
Senior Note First Mortgage Bonds equal to the principal amount of such Note
shall be satisfied and discharged and such portion of the principal amount of
such Senior Note First Mortgage Bonds shall cease to secure the Notes in any
manner.
(c) If the Company makes the deposit of cash and/or U.S. Government
Obligations with respect to one or more series of Notes required by Section
5.01(a) hereof and otherwise complies with the requirements of such Section
(except that the opinion of counsel referred to in Section 5.01(a)(3) need not
be based on an External Tax Pronouncement), then the Company shall be released
with respect to such series of Notes from its obligations under Sections 6.07,
6.08 and Article XII hereof; provided that no Event of Default shall be deemed
to have occurred as a result of the Company's noncompliance with such
obligations.
Section 5.02 Deposited Moneys To Be Held In Trust By Trustee. Subject
to Section 5.04, all moneys and U.S. Government Obligations deposited with
the Trustee pursuant to Section 5.01
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hereof, shall be held in trust and applied by it to the payment, either directly
or through any paying agent (including the Company if acting as its own paying
agent), to the Holders of the particular Notes for the payment or redemption of
which such moneys and U.S. Government Obligations have been deposited with the
Trustee of all sums due and to become due thereon for principal and premium, if
any, and interest.
Section 5.03 Paying Agent To Repay Moneys Held. Upon the satisfaction and
discharge of this Indenture all moneys then held by any paying agent for the
Notes (other than the Trustee) shall, upon written demand by the Company, be
repaid to the Company or paid to the Trustee, and thereupon such paying agent
shall be released from all further obligations with respect to such moneys.
Section 5.04 Return Of Unclaimed Moneys. Any moneys deposited with or paid
to the Trustee for payment of the principal of or any premium or interest on any
Notes and not applied but remaining unclaimed by the Holders of such Notes for
two years after the date upon which the principal of or any premium or interest
on such Notes, as the case may be, shall have become due and payable, shall be
repaid to the Company, subject to applicable abandoned property laws, by the
Trustee on written demand by the Company; and any Holder of any of such Notes
shall thereafter look only to the Company for any payment which such Holder may
be entitled to collect.
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ARTICLE VI
PARTICULAR COVENANTS OF THE COMPANY
Section 6.01 Payment Of Principal And Interest. The Company covenants and
agrees for the benefit of the Holders of the Notes that it will duly and
punctually pay or cause to be paid the principal of and any premium and
interest, if any, on, each of the Notes at the places, at the respective times
and in the manner provided in such Notes or in this Indenture.
Section 6.02 Offices For Payments, Etc. So long as any Notes are
Outstanding hereunder, the Company will maintain in the Borough of Manhattan,
The City of New York, State of New York an office or agency where the Notes may
be presented for payment, for exchange as in this Indenture provided and for
registration of transfer as in this Indenture provided. The Corporate Trust
Office of the Trustee shall serve as the initial location of such office.
The Company will maintain in the Borough of Manhattan, The City of New
York, State of New York an office or agency where notices and demands to or upon
the Company in respect of the Notes or this Indenture may be served. The
Corporate Trust Office of the Trustee shall serve as the initial location of
such office.
In case the Company shall fail to maintain any office or agency required
by this Section to be located in the Borough of Manhattan, The City of New York,
State of New York or shall fail to give such notice of the location or of any
change in the location of any of the above offices or agencies, presentations
and demands may be made and notices may be served at the Corporate Trust Office
of the Trustee, and, in such event, the Trustee shall act as the Company's agent
to receive all such presentations, surrenders, notices and demands.
The Company may from time to time designate one or more additional offices
or agencies where the Notes may be presented for payment, for exchange as in
this Indenture provided and for registration of transfer as in this Indenture
provided, and the Company may from time to time rescind any such designation;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain any office or agency provided
for in this Section. The Company will give to the Trustee prompt written notice
of any such designation or rescission thereof and of any change in the location
of any such other office or agency.
Section 6.03 Appointment To Fill A Vacancy In Office Of Trustee. The
Company, whenever necessary to avoid or fill a vacancy in the office of
Trustee, will appoint, in the manner
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provided in Section 9.11, a Trustee, so that there shall at all times be a
Trustee hereunder.
Section 6.04 Provision As To Paying Agent. The Trustee shall be the paying
agent for the Notes and, at the option of the Company, the Company may appoint
additional paying agents (including without limitation itself). Whenever the
Company shall appoint a paying agent other than the Trustee with respect to the
Notes, it will cause such paying agent to execute and deliver to the Trustee an
instrument in which such agent shall agree with the Trustee, subject to the
provisions of this Section:
(1) that such paying agent will hold all sums received by it as such
agent for the payment of the principal of, premium, if any, or interest,
on the Notes (whether such sums have been paid to it by the Company or by
any other obligor on the Notes) in trust for the benefit of the Holders of
the Notes, or of the Trustee until such sums shall be paid to such Holders
or otherwise disposed of as herein provided;
(2) that such paying agent will give the Trustee notice of any
failure by the Company (or by any other obligor on Notes) to make any
payment of the principal of, premium, if any, or interest on the Notes
when the same shall be due and payable; and
(3) that such paying agent will at any time during the continuance
of any such failure, upon the written request of the Trustee, forthwith
pay to the Trustee all sums so held in trust by such paying agent.
The Company will, on or prior to each due date of the principal of
and any premium, if any, or interest on the Notes, deposit with the paying agent
a sum sufficient to pay such principal and any premium or interest so becoming
due, such sum to be held in trust for the benefit of the Holders of the Notes
entitled to such principal of and any premium or interest, and (unless such
paying agent is the Trustee) the Company will promptly notify the Trustee of any
failure to take such action.
If the Company shall act as its own paying agent with respect to the
Notes, it will, on or before each due date of the principal of (and premium, if
any,) or interest, if any, on the Notes, set aside, segregate and hold in trust
for the benefit of the Holders of the Notes, a sum sufficient to pay such
principal (and premium, if any,) or interest, if any, so becoming due until such
sums shall be paid to such Holders or otherwise disposed of as herein provided.
The Company will promptly notify the Trustee of any failure to take such action.
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The Company may at any time pay or cause to be paid to the Trustee
all sums held in trust by it or any paying agent hereunder, as required by this
Section, such sums to be held by the Trustee upon the trusts herein contained,
and, upon such payment by any paying agent to the Trustee, such paying agent
shall be released from all further liability with respect to such money.
Anything in this Section to the contrary notwithstanding, the
agreement to hold sums in trust as provided in this Section is subject to the
provisions of Sections 5.03 and 5.04.
Section 6.05 Opinions Of Counsel. The Company will cause this
Indenture, any indentures supplemental to this Indenture, and any financing or
continuation statements to be promptly recorded and filed and rerecorded and
refiled in such a manner and in such places, as may be required by law in order
fully to preserve, protect and perfect the security of the Noteholders and all
rights of the Trustee, and shall deliver to the Trustee:
(a) promptly after the execution and delivery of this Indenture and
of any indenture supplemental to this Indenture but prior to the Release Date,
an Opinion of Counsel either stating that, in the opinion of such counsel, this
Indenture or such supplemental indenture and any financing or continuation
statements have been properly recorded and filed so as to make effective and to
perfect the interest of the Trustee intended to be created by this Indenture for
the benefit of the Holders from time to time of the Notes in the Senior Note
First Mortgage Bonds, and reciting the details of such action, or stating that,
in the opinion of such counsel, no such action is necessary to perfect or make
such interest effective and stating what, if any, action of the foregoing
character may reasonably be expected to become necessary prior to the next
succeeding to perfect, maintain and make such interest effective; and
(b) on or before , of each year, commencing , 1999, and prior to the
Release Date, an Opinion of Counsel either stating that in the opinion of such
counsel such action has been taken, since the date of the most recent Opinion of
Counsel furnished pursuant to this Section 6.05(b) or the first Opinion of
Counsel furnished pursuant to Section 6.05(a) hereof, with respect to the
recording, filing, rerecording, or refiling of this Indenture, each supplemental
indenture and any financing or continuation statements, as is necessary to
maintain and perfect the interest of the Trustee intended to be created by this
Indenture for the benefit of the Holders from time to time of the Notes in the
Senior Note First Mortgage Bonds, and reciting the details of such action, or
stating that in the
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opinion of such counsel no such action is necessary to maintain and perfect such
interest and stating what, if any, action of the foregoing character may
reasonably be expected to become necessary prior to the next succeeding
to maintain, perfect and make such security interest effective.
Section 6.06 Certificates And Notice To Trustee. The Company shall, on or
before , of each year, commencing , 1999, deliver to the Trustee a certificate
from its principal executive officer, principal financial officer or principal
accounting officer covering the preceding calendar year and stating whether or
not, to the knowledge of such Person, the Company has complied with all
conditions and covenants under this Indenture, and, if not, describing in
reasonable detail any failure by the Company to comply with any such conditions
or covenants. For purposes of this Section, compliance shall be determined
without regard to any period of grace or requirement of notice provided under
this Indenture.
Section 6.07 Restrictions On Liens (a) So long as any Notes are
Outstanding, the Company will not issue, assume, guarantee or permit to exist
after the Release Date any Debt secured by any Lien on any Operating Property of
the Company, whether owned at the date of this Indenture or thereafter acquired,
without in any such case effectively securing the Outstanding Notes (together
with, if the Company shall so determine, any other Debt of or guaranteed by the
Company ranking equally with, the Notes) equally and ratably with such Debt (but
only so long as such Debt is so secured); provided, however, that the foregoing
restriction shall not apply to Debt secured by any of the following:
(i)...Liens on any Operating Property existing at the time of
acquisition thereof (which Liens may also extend to subsequent repairs,
alterations and improvements to such Operating Property);
(ii)..Liens on operating property of a corporation existing at the
time such corporation is merged into or consolidated with the Company, or at the
time of a sale, lease, or other disposition of the properties of such
corporation or a division thereof as an entirety or substantially as an entirety
to the Company;
(iii).Liens on Operating Property to secure all or part of the cost
of acquiring, constructing, developing, or substantially repairing, altering, or
improving such property, or to secure indebtedness incurred to provide funds for
any such purpose or for reimbursement of funds previously expended for any such
purpose, provided such Liens are created or assumed contemporaneously with, or
within eighteen (18) months after,
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such acquisition or the completion of construction, development, or
substantial repair, alteration or improvement;
(iv) Liens in favor of any State, or any department, agency, or
instrumentality or political subdivision of any State, or for the benefit of
holders of securities issued by any such entity (or providers of credit
enhancement with respect to such securities), to secure any Debt (including,
without limitation, obligations of the Company with respect to industrial
development, pollution control or similar revenue bonds) incurred for the
purpose of financing all or any part of the purchase price or the cost of
constructing, developing, or substantially repairing, altering, or improving
Operating Property of the Company;
(v) Liens under the First Mortgage, subject to Section 4.11 hereof;
(vi) Liens under Section 9.06 hereof; or
(vii) Any extension, renewal or replacement (or successive
extensions, renewals, or replacements), in whole or in part, of any Lien
referred to in the foregoing clauses (i) to (vi), inclusive; provided, however,
that the principal amount of Debt secured thereby and not otherwise authorized
by said clauses (i) to (vi), inclusive, shall not exceed the principal amount of
Debt, plus any premium or fee payable in connection with any such extension,
renewal, or replacement, so secured at the time of such extension, renewal, or
replacement.
(b) Notwithstanding the provisions of Section 6.07(a), the Company may
issue, assume, or guarantee Debt, or permit to exist after the Release Date any
Debt, in each case, secured by Liens which would otherwise be subject to the
restrictions of Section 6.07(a) up to an aggregate principal amount that,
together with the principal amount of all other Debt of the Company secured by
Liens (other than Liens permitted by Section 6.07(a) that would otherwise be
subject to any of the foregoing restrictions) and the Value of all Sale and
Lease-Back Transactions in existence at such time (other than any Sale and
Lease-Back Transaction that, if such Sale and Lease-Back Transaction had been a
Lien, would have been permitted by Section 6.07(a), other than Sale and
Lease-Back Transactions permitted by Section 6.08 because the commitment by or
on behalf of the purchaser was obtained no later than eighteen (18) months after
the later of events described in (i) or (ii) of Section 6.08, and other than
Sale and Lease-Back Transactions as to which application of amounts have been
made in accordance with clause (z) of Section 6.08), does not at the time exceed
the greater of fifteen percent (15%) of Tangible Assets or fifteen percent (15%)
of Capitalization.
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(c) If the Company shall issue, assume, or guarantee any Debt secured by
any Lien and if Section 6.07(a) requires that the Outstanding Notes be secured
equally and ratably with such Debt, the Company will promptly execute, at its
expense, any instruments necessary to so equally and ratably secure the
Outstanding Notes and deliver the same to the Trustee along with:
(i) An Officers' Certificate stating that the covenant of the
Company contained in Section 6.07(a) has been complied with; and
(ii) An Opinion of Counsel to the effect that the Company has
complied with the covenant contained in Section 6.07(a), and that any
instruments executed by the Company in the performance of such covenant comply
with the requirements of such covenant.
In the event that the Company shall hereafter secure Outstanding
Notes equally and ratably with any other obligation or indebtedness pursuant to
the provisions of this Section 6.07, the Company will, upon the request of the
Trustee, enter into an indenture or agreement supplemental hereto and take such
other action, if any, as the Trustee may reasonably request to enable it to
enforce effectively the rights of the Holders of Outstanding Notes so secured,
equally and ratably with such other obligation or indebtedness.
Section 6.08 Restrictions On Sale And Lease-Back Transactions. So long as
any Notes are Outstanding, the Company will not enter into or permit to exist
after the Release Date any Sale and Lease-Back Transaction with respect to any
Operating Property if, in any case, the commitment by or on behalf of the
purchaser is obtained more than eighteen (18) months after the later of (i) the
completion of the acquisition, construction, or development of such Operating
Property or (ii) the placing in operation of such Operating Property or of such
Operating Property as constructed, developed, or substantially repaired,
altered, or improved, unless (x) the Company would be entitled pursuant to
Section 6.07(a) to issue, assume, guarantee or permit to exist Debt secured by a
Lien on such Operating Property without equally and ratably securing the Notes
or (y) the Company would be entitled pursuant to Section 6.07(b), after giving
effect to such Sale and Lease-Back Transaction, to incur $1.00 of additional
Debt secured by Liens (other than Liens permitted by Section 6.07(a)) or (z) the
Company shall apply or cause to be applied, in the case of a sale or transfer
for cash, an amount equal to the net proceeds thereof (but not in excess of the
net book value of such Operating Property at the date of such sale or transfer)
and, in the case of a sale or transfer otherwise than for cash, an amount equal
to the fair value (as determined by the Board of Directors) of the Operating
Property so leased, to the retirement, within one hundred eighty (180) days
after the
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effective date of such Sale and Lease-Back Transaction, of Notes (in accordance
with their terms) or other Debt of the Company ranking senior to, or equally
with, the Notes; provided, however, that the amount to be applied to such
retirement of Debt shall be reduced by an amount equal to the principal amount,
plus any premium or fee paid in connection with any redemption in accordance
with the terms of Debt voluntarily retired by the Company within such one
hundred eighty (180) day period, excluding retirement pursuant to mandatory
sinking fund or prepayment provisions and payments at maturity.
Section 6.09 Corporate Existence. Subject to the rights of the Company
under Article XII, the Company shall do or cause to be done all things necessary
to preserve and keep in full force and effect its corporate existence; provided,
however, that the Company shall not be required to preserve any such right or
franchise if, in the judgment of the Company, the preservation thereof is no
longer desirable in the conduct of the business of the Company.
ARTICLE VII
NOTEHOLDER LISTS AND REPORTS BY
THE COMPANY AND THE TRUSTEE
Section 7.01 Company To Furnish Noteholder Lists. The Company and any
other obligor on the Notes shall furnish or cause to be furnished to the Trustee
a list in such form as the Trustee may reasonably require of the names and
addresses of the Holders of the Notes:
(a) semi-annually and not more than 15 days after each Regular Record Date
for each Interest Payment Date that is not a maturity date, as of such Regular
Record Date, and such list need not include information received after such
date; and
(b) at such other times as the Trustee may request in writing, within 30
days after receipt by the Company of any such request, as of a date not more
than 15 days prior to the time such information is furnished, and such list need
not include information received after such date;
provided that if and so long as the Trustee shall be the registrar for the
Notes, such list shall not be required to be furnished.
Section 7.02 Preservation And Disclosure Of Noteholder Lists.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, all information as to the names and
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addresses of the Holders of the Notes (i) contained in the most recent lists
furnished to it as provided in Section 7.01, (ii) received by it in the capacity
of registrar for the Notes, if so acting, and (iii) filed with it within the two
preceding years pursuant to Section 7.04(d)(2). The Trustee may destroy any list
furnished to it as provided in Section 7.01 upon receipt of a new list so
furnished.
(b) In case three or more Holders of Notes (hereinafter referred to as
"applicants") apply in writing to the Trustee and furnish to the Trustee
reasonable proof that each such applicant has owned a Note for a period of at
least six months preceding the date of such application, and such application
states that the applicants desire to communicate with other Holders of Notes
with respect to their rights under this Indenture or under the Notes and such
application is accompanied by a copy of the form of proxy or other communication
which such applicants propose to transmit, then the Trustee shall, within five
Business Days after the receipt of such application, at its election, either
(i) afford to such applicants access to the information preserved at
the time by the Trustee in accordance with the provisions of subsection (a) of
this Section; or
(ii) inform such applicants as to the approximate number of Holders
whose names and addresses appear in the information preserved at the time by the
Trustee. in accordance with the provisions of such subsection (a) and as to the
approximate cost of mailing to such Holders the form of proxy or other
communication, if any, specified in such application.
If the Trustee shall elect not to afford to such applicants access
to such information, the Trustee shall, upon the written request of such
applicants, mail to each Holder of Notes, whose name and address appears in the
information preserved at the time by the Trustee in accordance with the
provisions of such subsection (a) a copy of the form of proxy or other
communication which is specified in such request, with reasonable promptness
after a tender to the Trustee of the material to be mailed and of payment, or
provision for the payment, of the reasonable expenses of mailing, unless within
five days after such tender the Trustee shall mail to such applicants and file
with the Commission, together with a copy of the material to be mailed, a
written statement to the effect that, in the opinion of the Trustee, such
mailing would be contrary to the best interests of the Holders or would be in
violation of applicable law. Such written statement shall specify the basis of
such opinion. If the Commission, after opportunity for a hearing upon the
objections specified in the written statement so filed, shall enter an order
refusing to sustain any of such objections or if, after the entry of an order
sustaining one or more of such objections, the Commission shall
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find, after notice and opportunity for hearing, that all the objections so
sustained have been met, and shall enter an order so declaring, the Trustee
shall mail copies of such material to all such Holders with reasonable
promptness after the entry of such order and the renewal of such tender;
otherwise the Trustee shall be relieved of any obligation or duty to such
applicants respecting their application.
(c) Each and every Holder of a Note, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the Trustee
nor any agent of the Company or the Trustee shall be held accountable by reason
of the disclosure of any such information as to the names and addresses of the
Holders of Notes in accordance with the provisions of subsection (b) of this
Section, regardless of the source from which such information was derived, and
that the Trustee shall not be held accountable by reason of mailing any material
pursuant to a request made under such subsection (b).
Section 7.03 Reports By The Company. The Company shall:
(a) file with the Trustee, within 15 days after the Company is required to
file the same with the Commission, copies of the annual reports and of the
information, documents and other reports (or copies of such portions of any of
the foregoing as the Commission may from time to time by rules and regulations
prescribe) which the Company may be required to file with the Commission
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934;
or, if the Company is not required to file information, documents or reports
pursuant to either of said Sections, then it will file with the Trustee and the
Commission, in accordance with rules and regulations prescribed from time to
time by the Commission, such of the supplementary and periodic information,
documents and reports which may be required pursuant to Section 13 of the
Securities Exchange Act of 1934 in respect of a security listed and registered
on a national securities exchange as may be prescribed from time to time in such
rules and regulations;
(b) file with the Trustee and the Commission, in accordance with rules and
regulations prescribed from time to time by the Commission, such additional
information, documents and reports with respect to compliance by the Company
with the conditions and covenants of this Indenture as may be required from time
to time by such rules and regulations; and
(c) transmit by mail to all Holders of Notes, within 30 days after the
filing thereof with the Trustee in the manner and to the extent provided in
Section 7.04(d), such summaries of any information, documents and reports
required to be filed by the Company pursuant to paragraphs (a) and (b) of this
Section as may be required by rules and regulations prescribed from time to time
by the Commission.
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Section 7.04 Reports By The Trustee.
(a) Annually, not later than August 15 of each year, the Trustee shall
transmit by mail a brief report dated as of such date that complies with Section
313(a) of the TIA (to the extent required by such Section).
(b) The Trustee shall from time to time transmit by mail brief reports
that comply, both in content and date of delivery, with Section 313(b) of the
TIA (to the extent required by such Section).
(c) A copy of each such report filed pursuant to this section shall, at
the time of such transmission to such Holders, be filed by the Trustee with each
stock exchange upon which any Notes are listed and also with the Commission. The
Company will notify the Trustee promptly in writing upon the listing of such
Notes on any stock exchange.
(d) Reports pursuant to this Section shall be transmitted
(1) by mail to all Holders of Notes, as their names and addresses
appear in the register for the Notes;
(2) by mail to such Holders of Notes as have, within the two years
preceding such transmission, filed their names and addresses with the
Trustee for such purpose;
(3) by mail, except in the case of reports pursuant to Section
7.04(b) and (c) hereof, to all Holders of Notes whose names and addresses
have been furnished to or received by the Trustee pursuant to Section 7.01
and 7.02(a)(ii) hereof; and
(4) at the time such report is transmitted to the Holders of the
Notes, to each exchange on which Notes are listed and also with the
Commission.
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ARTICLE VIII
REMEDIES OF THE TRUSTEE AND NOTEHOLDERS
ON EVENTS OF DEFAULT
Section 8.01 Events Of Default.
(a) If one or more of the following Events of Default shall have occurred
and be continuing:
(1) default in the payment of any installment of interest upon any
of the Notes as and when the same shall due and payable, and continuance
of such default for a period of sixty (60) days;
(2) default in the payment of the principal of or any premium on any
of the Notes as and when the same shall become due and payable;
(3) failure on the part of the Company duly to observe or perform
any other of the covenants or agreements on the part of the Company
contained in the Notes or in this Indenture for a period of ninety (90)
days after the date on which written notice specifying such failure,
stating that such notice is a "Notice of Default" hereunder and demanding
that the Company remedy the same, shall have been given to the Company by
the Trustee by registered mail, or to the Company and the Trustee by the
Holders of not less than 33% in aggregate principal amount of the Notes at
the time Outstanding;
(4) prior to the Release Date, a completed default (as defined in
the First Mortgage) has occurred and is continuing; provided, however,
that anything in this Indenture to the contrary notwithstanding, the
waiver or cure of such default under the First Mortgage and the rescission
and annulment of the consequences thereof under the First Mortgage shall
constitute a waiver of the corresponding Event of Default hereunder and a
rescission and annulment of the consequences thereof hereunder;
(5) a court having jurisdiction in the premises shall enter a decree
or order for relief in respect of the Company in an involuntary case under
any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, adjudging the Company a bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of the Company
under any applicable law, or appointing a receiver, liquidator, assignee,
custodian, trustee or sequestrator (or similar official) of the Company
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or for any substantial part of the property of the Company, or ordering
the winding up or liquidation of the affairs of the Company, and such
decree or order shall remain unstayed and in effect for a period of 90
consecutive days; or
(6) the Company shall commence a voluntary case or proceeding under
any applicable bankruptcy, insolvency, reorganization or other similar law
now or hereafter in effect or any other case or proceeding to be
adjudicated a bankrupt or insolvent, or consent to the entry of a decree
or order for relief in an involuntary case under any such law, or to the
commencement of any bankruptcy or insolvency case or proceeding against
it, or the filing by it of a petition or answer or consent seeking
reorganization or relief under any applicable law, or consent to the
filing of such petition or to the appointment or taking possession by a
receiver, liquidator, assignee, custodian, trustee or sequestrator (or
similar official) of the Company or for any substantial part of the
property of the Company, or make any general assignment for the benefit of
creditors, or the notice by it in writing of its inability to pay its
debts generally as they become due, or the taking of any corporate action
by the Company in furtherance of any such action;
then, unless the principal of all of the Notes shall have already become due and
payable, either the Trustee or the Holders of a majority in aggregate principal
amount of the Notes then Outstanding, by notice in writing to the Company (and
to the Trustee if given by such Holders), may declare the principal of all the
Notes to be due and payable immediately and upon any such declaration the same
shall become immediately due and payable, anything in this Indenture or in the
Notes contained to the contrary notwithstanding and, upon the Notes being
declared to be due and payable, the Trustee shall immediately file with the
Mortgage Trustee a written demand for redemption of all Senior Note First
Mortgage Bonds to the extent provided in the applicable provisions of the
supplemental indentures to the First Mortgage.
The foregoing paragraph, however, is subject to the condition that
if, at any time after the principal of the Notes shall have been so declared due
and payable, and before any judgment or decree for the payment of the moneys due
shall have been obtained or entered as hereinafter provided, and prior to the
acceleration of all of the first mortgage bonds issued and Outstanding under the
First Mortgage the Company shall pay or shall deposit with the Trustee a sum
sufficient to pay all matured installments of interest upon all of the Notes and
the principal of and any premium on any and all Notes which shall have become
due otherwise than by acceleration (with interest on overdue installments of
interest, to the extent that payment of
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such interest is enforceable under applicable law, and on such principal and
applicable premium at the rate borne by the Notes to the date of such payment or
deposit) and all sums paid or advanced by the Trustee hereunder, the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 9.06 hereof,
and any and all defaults under this Indenture, other than the non-payment of
principal of and accrued interest on Notes which shall have become due solely by
acceleration of maturity, shall have been cured or waived (including any
defaults under the First Mortgage, as evidenced by notice thereof from the
Mortgage Trustee to the Trustee) -- then and in every such case such payment or
deposit shall cause an automatic waiver of the Event of Default and its
consequences (including, if given, the written demand for redemption of all
Senior Note First Mortgage Bonds) and shall cause an automatic rescission and
annulment of the acceleration of the Notes; but no such waiver or rescission and
annulment shall extend to or shall affect any subsequent default, or shall
impair any right consequent thereon.
(b) If the Trustee shall have proceeded to enforce any right under this
Indenture and such proceedings shall have been discontinued or abandoned because
of such rescission or annulment or for any other reason or shall have been
determined adversely to the Trustee, then and in every such case the Company and
the Trustee shall be restored respectively to their several positions and rights
hereunder, and all rights, remedies and powers of the Company and the Trustee
shall continue as though no such proceeding had been taken.
Section 8.02 Collection Of Indebtedness By Trustee; Trustee May Prove
Debt.
(a) The Company covenants that if an Event of Default described in clause
(a)(1) or (a) (2) of Section 8.01 shall have occurred and be continuing, then,
upon demand of the Trustee, the Company shall pay to the Trustee, for the
benefit of the Holders of the Notes, the whole amount that then shall have so
become due and payable on all such Notes for principal or interest, as the case
may be, with interest upon the overdue principal and any premium and (to the
extent that payment of such interest is enforceable under applicable law) upon
the overdue installments of interest at the rate borne by the Notes; and, in
addition thereto, such further amounts as shall be sufficient to cover the costs
and expenses of collection, including reasonable compensation to the Trustee,
its agents, attorneys and counsel, any expenses or liabilities incurred by the
Trustee hereunder other than through its negligence or bad faith. Until such
demand is made by the Trustee, the Company may pay the principal of and interest
on the Notes to the Holders, whether or not the Notes be overdue.
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(b) In case the Company shall fail forthwith to pay such amounts upon such
demand, the Trustee, in its own name and as trustee of an express trust, shall
be entitled and empowered to institute any actions or proceedings at law or in
equity for the collection of the sums so due and unpaid, including, prior to the
Release Date, to exercise any rights to that end it may have as a holder of
Senior Note First Mortgage Bonds, and may enforce any such judgment or final
decree against the Company or any other obligor on the Notes and collect in the
manner provided by law out of the property of the Company or any other obligor
on such series of Notes wherever situated, the moneys adjudged or decreed to be
payable.
(c) In case there shall be pending proceedings relative to the Company or
any other obligor upon the Notes under Title 11 of the United States Code or any
other applicable Federal or state bankruptcy, insolvency or other similar law,
or in case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Company or its property or such other obligor, or in
case of any other comparable judicial proceedings relative to the Company or
such other obligor, or to the creditors or property of the Company or such other
obligor, the Trustee, irrespective of whether the principal of the Notes shall
then be due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Trustee shall have made any demand pursuant to the
provisions of this Section, shall be entitled and empowered, by intervention in
such proceedings or otherwise:
(1) to file and prove a claim or claims for the whole amount of the
principal and interest owing and unpaid in respect of the Notes, and to
file such other papers or documents as may be necessary or advisable in
order to have the claims of the Trustee (including, prior to the Release
Date, any claims of the Trustee as holder of Senior Note First Mortgage
Bonds and including any amounts due to the Trustee under Section 9.06
hereof) and of the Noteholders allowed in any judicial proceedings
relative to the Company or such other obligor, or to the creditors or
property of the Company or such other obligor; and
(2) to collect and receive any moneys or other property payable or
deliverable on any such claims, and to distribute all amounts received
with respect to the claims of the Noteholders and of the Trustee on their
behalf; and any trustee, receiver, liquidator, custodian or other similar
official is hereby authorized by each of the Noteholders to make payments
to the Trustee, and, in the event that the Trustee shall consent to the
making of the payments directly to the Noteholders, to pay to the Trustee
such amounts due pursuant to Section 9.06 hereof.
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(d) Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or vote for or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting the
Notes of any series 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
except to vote for the election of a trustee in bankruptcy or similar person.
(e) All rights of action and of asserting claims under this Indenture, or
under any of the Notes may be prosecuted and enforced by the Trustee without the
possession of any of the Notes or the production thereof at any trial or other
proceedings relative thereto, and any such action or proceedings instituted by
the Trustee shall be brought in its own name as trustee of an express trust, and
any recovery of judgment, subject to the payment of the expenses, disbursements
and compensation of the Trustee and its agents, attorneys and counsel, shall be
for the ratable benefit of the Holders of the Notes in respect of which such
action was taken.
(f) In any proceedings brought by the Trustee (and also any proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party), the Trustee shall be held to represent all the
Holders of the Notes in respect to which action as taken, and it shall not be
necessary to make any Holders of such Notes parties to any such proceedings.
Section 8.03 Application Of Proceeds. Any moneys collected by the Trustee
with respect to any of the Notes pursuant to this Article shall be applied in
the following order, at the date or dates fixed by the Trustee for the
distribution of such moneys, upon presentation of the several Notes, and
stamping thereon the payment, if only partially paid, and upon surrender thereof
if fully paid.
FIRST: To the payment of all amounts due to the Trustee pursuant to
Section 9.06 hereof;
SECOND: In case the principal of the Outstanding Notes in respect of which
such moneys have been collected shall not have become due and be unpaid, to the
payment of interest on the Notes, in the order of the maturity of the
installments of such interest, with interest (to the extent allowed by law) upon
the overdue installments of interest at the rate borne by the Notes, such
payments to be made ratably to the persons entitled thereto, and then to the
payment to the Holders entitled thereto of the unpaid principal of and
applicable premium on any of the Notes which shall have become due (other than
Notes previously called for redemption for the payment of which moneys are held
pursuant
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to the provisions of this Indenture), whether at stated maturity or by
redemption, in the order of their due dates, beginning with the earliest due
date, and if the amount available is not sufficient to pay in full all Notes due
on any particular date, then to the payment thereof ratably, according to the
amounts of principal and applicable premium due on that date, to the Holders
entitled thereto, without any discrimination or privilege;
THIRD: In case the principal of the Outstanding Notes in respect of which
such moneys have been collected shall have become due, by declaration or
otherwise, to the payment of the whole amount then owing and unpaid upon the
Notes for principal and any premium and interest thereon, with interest on the
overdue principal and any premium and (to the extent allowed by law) upon
overdue installments of interest at the rate borne by the Notes; and in case
such moneys shall be insufficient to pay in full the whole amount so due and
unpaid upon the Notes, then to the payment of such principal and any premium and
interest without preference or priority of principal and any premium over
interest, or of interest over principal and any premium or of any installment of
interest over any other installment of interest, or of any Note over any other
Note, ratably to the aggregate of such principal and any premium and accrued and
unpaid interest; and
FOURTH: To the payment of the remainder, if any, to the Company or its
successors or assigns, or to whomsoever may lawfully be entitled to the same,
or as a court of competent jurisdiction may determine.
Section 8.04 Limitations On Suits By Noteholders.
(a) No Holder of any Note shall have any right by virtue of or by availing
of any provision of this Indenture to institute any suit, action or proceeding
in equity or at law upon or under or with respect to this Indenture or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
such Holder previously shall have given to the Trustee written notice of an
Event of Default with respect to such Note and of the continuance thereof, as
hereinabove provided, and unless also Noteholders of a majority in aggregate
principal amount of the Notes then Outstanding affected by such Event of Default
shall have made written request upon the Trustee to institute such action, suit
or proceeding in its own name as Trustee hereunder and shall have offered to the
Trustee such reasonable indemnity as it may require against the costs, expenses
and liabilities to be incurred therein or thereby, and the Trustee for 60 days
after its receipt of such notice, request and offer of indemnity, shall have
neglected or refused to institute any such action, suit or proceeding; it being
understood and intended, and being expressly covenanted by the taker and Holder
of every Note with every other
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taker and Holder and the Trustee, that no one or more Holders of Notes shall
have any right in any manner whatever by virtue of or by availing of any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Holder of Notes, or to obtain or seek to obtain priority over or
preference to any other such Holder or to enforce any right under this
Indenture, except in the manner herein provided and for the equal, ratable and
common benefit of all Holders of Notes. For the protection and enforcement of
the provisions of this Section, each and every Noteholder and the Trustee shall
be entitled to such relief as can be given either at law or in equity.
(b) Notwithstanding any other provision in this Indenture, however, the
rights of any Holder of any Note to receive payment of the principal of and any
premium and interest on such Note, on or after the respective due dates
expressed in such Note or on the applicable redemption date, or to institute
suit for the enforcement of any such payment on or after such respective dates
are absolute and unconditional, and shall not be impaired or affected without
the consent of such Holder.
Section 8.05 Suits For Enforcement. In case an Event of Default has
occurred, has not been waived and is continuing hereunder, the Trustee may in
its discretion proceed to protect and enforce the rights vested in it by this
Indenture, including, prior to the Release Date, its rights as holder of the
Senior Note First Mortgage Bonds, by such appropriate judicial proceedings as
the Trustee shall deem most effectual to protect and enforce any of such rights,
either by suit in equity or by action at law or by proceeding in bankruptcy or
otherwise, whether for the specific enforcement of any covenant or agreement
contained in this Indenture or in aid of the exercise of any power granted to it
under this Indenture, or to enforce any other legal or equitable right vested in
the Trustee by this Indenture or by law.
Section 8.06 Powers And Remedies Cumulative; Delay Or Omission Not Waiver
Of Default. No right or remedy herein conferred upon or reserved to the Trustee
or to the Holders of Notes is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
No delay or omission of the Trustee or of any Holder of Notes to exercise
any right or power accruing upon any Event of Default occurring and continuing
as aforesaid shall impair any such right or power or shall be construed to be a
waiver of any such Event of Default or an acquiescence therein; and, subject to
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Section 8.04, every right and power given by this Indenture or by law to the
Trustee or to the Holders of Notes may be exercised from time to time, and as
often as shall be deemed expedient, by the Trustee or by the Holders of Notes,
as the case may be.
Section 8.07 Direction Of Proceedings And Waiver Of Defaults By
Majority Of Noteholders.
(a) The Holders of a majority in aggregate principal amount of the Notes
at the time Outstanding shall have the right to direct the time, method, and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee; provided that such
direction shall not be otherwise than in accordance with law and the provisions
of this Indenture; and provided further that (subject to Section 9.01 hereof)
the Trustee shall have the right to decline to follow any such direction if the
Trustee being advised by counsel determines that the action or proceeding so
directed may not lawfully be taken or if the Trustee in good faith by its board
of directors or trustees, executive committee, or a trust committee of directors
or trustees or Responsible Officers shall determine that the action or
proceeding so directed would involve the Trustee in personal liability. Nothing
in this Indenture shall impair the right of the Trustee in its discretion to
take any action deemed proper by the Trustee and which is not inconsistent with
such direction or directions by Noteholders.
(b) The Holders of a majority in aggregate principal amount of the Notes
at the time Outstanding may on behalf of all of the Holders of the Notes waive
any past default or Event of Default hereunder and its consequences except a
default in the payment of principal of or any premium or interest on the Notes.
Upon any such waiver the Company, the Trustee and the Holders of the Notes shall
be restored to their former positions and rights hereunder, respectively, but no
such waiver shall extend to any subsequent or other default or Event of Default
or impair any right consequent thereon. Upon any such waiver, such default shall
cease to exist and be deemed to have been cured and not to be continuing, and
any Event of Default arising therefrom shall be deemed to have been cured and
not to be continuing, for every purpose of this Indenture; but no such waiver
shall extend to any subsequent or other default or Event of Default or impair
any right consequent thereon.
Section 8.08 Notice Of Default. The Trustee shall, within 90 days after
the occurrence of a default with respect to the Notes, give to all Holders of
the Notes, in the manner provided in Section 15.10, notice of such default known
to the Trustee, unless such default shall have been cured or waived before the
giving of such notice, the term "default" for the purpose of this Section 8.08
being hereby defined to be any event which is or after notice or lapse of time
or both would become an Event of
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Default; provided that, except in the case of default in the payment of the
principal of or any premium or interest on any of the Notes, the Trustee shall
be protected in withholding such notice if and so long as its board of directors
or trustees, executive committee, or a trust committee of directors or trustees
or Responsible Officers in good faith determines that the withholding of such
notice is in the interests of the Holders of the Notes.
Section 8.09 Undertaking To Pay Costs. All parties to this Indenture
agree, and each Holder of any Note by acceptance thereof shall be deemed to have
agreed, that any court may in its discretion require, 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, suffered or omitted by it as Trustee, the
filing by any party litigant in such suit of an undertaking to pay the costs of
such suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; but this Section 8.09 shall not apply to any suit
instituted by the Trustee, or to any suit instituted by any Noteholder, or group
of Noteholders, holding in the aggregate more than 10% in principal amount of
the Notes Outstanding, or to any suit instituted by any Noteholder for the
enforcement of the payment of the principal of or any premium or interest on any
Note on or after the due date expressed in such Note or the applicable
redemption date.
Section 8.10 Restoration Of Rights On Abandonment Of Proceedings. In case
the Trustee or any Holder shall have proceeded to enforce any right under this
Indenture and such proceedings shall have been discontinued or abandoned for any
reason, or shall have been determined adversely to the Trustee or to such
Holder, then, and in every such case, the Company, the Trustee and the Holders
shall be restored respectively to their former positions and rights hereunder,
and all rights, remedies and powers of the Company, the Trustee and the Holders
shall continue as though no such proceedings had been taken.
Section 8.11 Defaults Under The First Mortgage. In addition to every other
right and remedy provided herein, the Trustee may exercise any right or remedy
available to the Trustee in its capacity as owner and holder of Senior Note
First Mortgage Bonds which arises as a result of a completed default under the
First Mortgage whether or not an Event of Default under this Indenture shall
then have occurred and be continuing.
Section 8.12 Waiver Of Usury, Stay Or Extension 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 usury,
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stay or extension law wherever enacted, now or at any time hereafter in force,
which may affect the covenants or the performance of 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.
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ARTICLE IX
CONCERNING THE TRUSTEE
Section 9.01 Duties And Responsibilities Of Trustee.
(a) The Trustee, prior to the occurrence of an Event of Default and after
the curing of all Events of Default which may have occurred, undertakes to
perform such duties and only such duties as are specifically set forth in this
Indenture. If an Event of Default has occurred (which has not been cured or
waived), the Trustee shall exercise such of the rights and powers vested in it
by this Indenture, and use the same degree of care and skill in their exercise,
as a prudent man would exercise or use under the circumstances in the conduct of
his own affairs.
(b) No provisions of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that:
(1) prior to the occurrence of any Event of Default and after the
curing or waiving of all Events of Default which may have occurred
(A) the duties and obligations of the Trustee shall be
determined solely by the express provisions of this Indenture, and
the Trustee shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this
Indenture, and no implied covenants or obligations shall be read
into this Indenture against the Trustee; and
(B) in the absence of bad faith or actual knowledge on
the part of the Trustee, the Trustee may conclusively rely, as to
the truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture;
but, in the case of any such certificates or opinions which by any
provision hereof are specifically required to be furnished to the
Trustee, the Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this
Indenture;
(2) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer or
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Officers of the Trustee, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the
direction, pursuant to this Indenture, of the Holders of a majority in
principal amount of the Notes, including, but not limited to, Section 8.07
hereof relating to the time, method and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust or power
conferred upon the Trustee under this Indenture.
Section 9.02 Reliance On Documents, Opinions, Etc. Except as
otherwise provided in Section 9.01 hereof:
(a) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, note or other paper or document
believed by it to be genuine and to have been signed or presented by the proper
party or parties;
(b) any request, direction, order or demand of the Company mentioned
herein shall be sufficiently evidenced by an Officers' Certificate (unless other
evidence in respect thereof is herein specifically prescribed); and any Board
Resolution may be evidenced to the Trustee by a copy thereof certified by the
Secretary or an Assistant Secretary of the Company;
(c) the Trustee may consult with counsel and any advice or 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
accordance with such advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request, order or direction of
any of the Noteholders, pursuant to this Indenture, unless such Noteholders
shall have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which may be incurred by such exercise;
(e) the Trustee shall not be liable for any action taken, suffered or
omitted by it in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Indenture;
(f) prior to the occurrence of an Event of Default hereunder and after the
curing or waiving of all Events of Default, the Trustee shall not be bound to
make any investigation
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into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, note or
other paper or document, unless requested in writing to do so by the Holders of
at least a majority in principal amount of the then Outstanding Notes; provided
that if the payment within a reasonable time to the Trustee of the costs,
expenses or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably assured to the
Trustee by the security afforded to it by this Indenture, the Trustee may
require reasonable indemnity against such expense or liability as a condition to
so proceeding; and
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or through agents or attorneys;
provided that the Trustee shall not be liable for the conduct or acts of any
such agent or attorney that shall have been appointed in accordance herewith
with due care.
Section 9.03 No Responsibility For Recitals, Etc. The recitals contained
herein and in the Notes (except in the certificate of authentication) shall be
taken as the statements of the Company, and the Trustee assumes no
responsibility for the correctness of the same. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Notes. The Trustee shall not be accountable for the use or application by the
Company of any Notes or the proceeds of any Notes authenticated and delivered by
the Trustee in conformity with this Indenture.
Section 9.04 Trustee, Authenticating Agent, Paying Agent Or Registrar May
Own Notes. The Trustee and any Authenticating Agent, paying agent or registrar,
in its individual or other capacity, may become the owner or pledgee of Notes
with the same rights it would have if it were not Trustee, Authenticating Agent
or paying agent.
Section 9.05 Moneys To Be Held In Trust. Subject to Section 5.04 hereof,
all moneys received by the Trustee shall, until used or applied as herein
provided, be held in trust for the purposes for which they were received, but
need not be segregated from other funds except to the extent required by law.
The Trustee may allow and credit to the Company interest on any money received
hereunder at such rate, if any, as may be agreed upon by the Company and the
Trustee from time to time as may be permitted by law.
Section 9.06 Compensation And Expenses Of Trustee. The Company
covenants and agrees to pay to the Trustee from time to time, and the Trustee
shall be entitled to, reasonable compensation (which shall not be limited by
any law in regard to
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the compensation of a trustee of an express trust), and the Company shall pay or
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
this Indenture (including the reasonable compensation and the reasonable
expenses and disbursements of its counsel and agents, including any
Authenticating Agents, and of all persons not regularly in its employ) except
any such expense, disbursement or advance as may arise from its negligence or
bad faith. The Company also covenants to indemnify the Trustee for, and to hold
it harmless against, any loss, liability or expense incurred without negligence
or bad faith on the part of the Trustee and 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. The obligations of the
Company under this Section 9.06 to compensate the Trustee and to pay or
reimburse the Trustee for expenses, disbursements and advances shall constitute
additional indebtedness hereunder. Such additional indebtedness shall be secured
by a lien prior to that of the Notes upon all property and funds held or
collected by the Trustee as such, except funds held in trust for the benefit of
the Holders of any particular Notes.
Section 9.07 Officers' Certificate As Evidence. Whenever in the
administration of this Indenture, the Trustee shall deem it necessary or
desirable that a matter be proved or established prior to the taking, suffering
or omitting of any action hereunder, such matter (unless other evidence in
respect thereof is herein specifically prescribed) may, in the absence of
negligence or bad faith on the part of the Trustee, be deemed to be conclusively
proved and established by an Officers' Certificate delivered to the Trustee, and
such Officers' Certificate, in the absence of negligence or bad faith on the
part of the Trustee, shall be full warrant to the Trustee for any action taken,
suffered or omitted by it under this Indenture in reliance thereon.
Section 9.08 Conflicting Interest Of Trustee. The Trustee shall be subject
to and shall comply with the provisions of Section 310(b) of the TIA. Nothing in
this Indenture shall be deemed to prohibit the Trustee or the Company from
making any application permitted pursuant to such section.
Section 9.09 Existence And Eligibility Of Trustee. There shall at all
times be a Trustee hereunder which Trustee shall at all times be a corporation
organized and doing business under the laws of the United States or any State
thereof or of the District of Columbia having a combined capital and surplus of
at least [$50,000,000] and which is authorized under such laws to exercise
corporate trust powers and is subject to supervision or examination by Federal
or State authorities. Such corporation shall have its principal place of
business in the Borough of
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Manhattan, The City of New York, State of New York, if there be such a
corporation in such location willing to act upon reasonable and customary terms
and conditions. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid authority,
then for the purposes of this Section 9.09, the combined capital and surplus
shall be deemed to be as set forth in its most recent report of condition so
published. No obligor upon the Notes or Person directly or indirectly
controlling, controlled by, or under common control with such obligor shall
serve as Trustee. If at any time the Trustee shall cease to be eligible in
accordance with this Section 9.09, the Trustee shall resign immediately in the
manner and with the effect specified in Section 9.10 hereof.
Section 9.10 Resignation Or Removal Of Trustee.
(a) Pursuant to the provisions of this Article, the Trustee may at any
time resign and be discharged of the trusts created by this Indenture by giving
at least 30 days prior written notice to the Company specifying the day upon
which such resignation shall take effect, and such resignation shall take effect
immediately upon the later of the appointment of a successor trustee and such
day.
(b) Any Trustee may be removed at any time by an instrument or concurrent
instruments in writing filed with such Trustee and signed and acknowledged by
the Holders of a majority in principal amount of the then Outstanding Notes or
by their attorneys in fact duly authorized.
(c) So long as no Event of Default has occurred and is continuing, and no
event has occurred and is continuing that, with the giving of notice or the
lapse of time or both, would become an Event of Default, the Company may remove
any Trustee upon written notice to the Holder of each Note Outstanding and the
Trustee and appoint a successor Trustee meeting the requirements of Section
9.09. The Company or the successor Trustee shall give notice to the Holders, in
the manner provided in Section 15.10, of such removal and appointment within 30
days of such removal and appointment.
(d) If at any time (i) the Trustee shall cease to be eligible in
accordance with Section 9.09 hereof and shall fail to resign after written
request therefor by the Company or by any Holder who has been a bona fide Holder
for at least six months, (ii) the Trustee shall fail to comply with Section 9.08
hereof after written request therefor by the Company or any such Holder, or
(iii) the Trustee shall become incapable of acting or shall be adjudged a
bankrupt or insolvent or a receiver of the Trustee or its property shall be
appointed or any public officer shall take charge or control of the Trustee or
of its property or affairs
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for the purpose of rehabilitation, conservation or liquidation, then the Trustee
may be removed forthwith by an instrument or concurrent instruments in writing
filed with the Trustee and either:
(1) signed by the Chairman, President or any Vice President of the
Company and attested by the Secretary or an Assistant Secretary of the
Company; or
(2) signed and acknowledged by the Holders of a majority in
principal amount of Outstanding Notes or by their attorneys in fact duly
authorized.
(e) Any resignation or removal of the Trustee shall not become effective
until acceptance of appointment by the successor Trustee as provided in Section
9.12 hereof.
Section 9.11 Appointment Of Successor Trustee.
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(a) If at any time the Trustee shall resign or be removed, the Company, by
a Board Resolution, shall promptly appoint a successor Trustee.
(b) The Company shall provide written notice of its appointment of a
successor Trustee to the Holder of each Note Outstanding following any such
appointment.
(c) If no appointment of a successor Trustee shall be made pursuant to
Section 9.11(a) hereof within 60 days after appointment shall be required, any
Noteholder or the resigning Trustee may apply to any court of competent
jurisdiction to appoint a successor Trustee. Said court may thereupon after such
notice, if any, as such court may deem proper and prescribe, appoint a successor
Trustee.
(d) Any Trustee appointed under this Section 9.11 as a successor Trustee
shall be a bank or trust company eligible under Section 9.09 hereof and
qualified under Section 9.08 hereof.
Section 9.12 Acceptance By Successor Trustee.
--------------------------------
(a) Any successor Trustee appointed as provided in Section 9.11 hereof
shall execute, acknowledge and deliver to the Company and to its predecessor
Trustee an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the predecessor Trustee shall become effective and
such successor Trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, duties and obligations of its
predecessor hereunder, with like effect as if originally named as Trustee
herein; but nevertheless, on the written request of the Company or of the
successor Trustee, the Trustee ceasing to act shall, upon payment of any amounts
then
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due it pursuant to Section 9.06 hereof, execute and deliver an instrument
transferring to such successor Trustee all the rights and powers of the Trustee
so ceasing to act, including all right, title, and interest in the Senior Note
First Mortgage Bonds. Upon request of any such successor Trustee, the Company
shall execute any and all instruments in writing in order more fully and
certainly to vest in and confirm to such successor Trustee all such rights and
powers. Any Trustee ceasing to act shall, nevertheless, retain a lien upon all
property or funds held or collected by such Trustee to secure any amounts then
due it pursuant to Section 9.06 hereof.
(b) No successor Trustee shall accept appointment as provided in this
Section 9.12 unless at the time of such acceptance such successor Trustee shall
be qualified under Section 9.08 hereof and eligible under Section 9.09 hereof.
(c) Upon acceptance of appointment by a successor Trustee as provided in
this Section 9.12, the successor Trustee shall mail notice of its succession
hereunder to all Holders of Notes as the names and addresses of such Holders
appear on the registry books.
Section 9.13 Succession By Merger, Etc.
--------------------------
(a) Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder without
the execution or filing of any paper or any further act on the part of any of
the parties hereto, provided such corporation shall be otherwise qualified and
eligible under this Article.
(b) If at the time such successor to the Trustee shall succeed to the
trusts created by this Indenture any of the Notes shall have been authenticated
but not delivered, any such successor to the Trustee may adopt the certificate
of authentication of any predecessor Trustee, and deliver such Notes so
authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Trustee may authenticate such Notes either
in the name of any predecessor hereunder or in the name of the successor
Trustee; and in all such cases such certificates shall have the full force which
it is anywhere in the Notes or in this Indenture provided that the certificates
of the Trustee shall have; provided that the right to adopt the certificate of
authentication of any predecessor Trustee or authenticate Notes in the name of
any predecessor Trustee shall apply only to its successor or successors by
merger, conversion or consolidation.
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Section 9.14 Limitations On Rights Of Trustee As A Creditor. The Trustee
shall be subject to, and shall comply with, the provisions of Section 311 of the
TIA.
Section 9.15 Authenticating Agent.
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(a) There may be one or more Authenticating Agents appointed by the
Trustee with the written consent of the Company, with power to act on its behalf
and subject to the direction of the Trustee in the authentication and delivery
of Notes in connection with transfers and exchanges under Sections 2.06, 2.07,
2.08, 2.13, 3.03, and 13.04 hereof, as fully to all intents and purposes as
though such Authenticating Agents had been expressly authorized by those
Sections to authenticate and deliver Notes. For all purposes of this Indenture,
the authentication and delivery of Notes by any Authenticating Agent pursuant to
this Section 9.15 shall be deemed to be the authentication and delivery of such
Notes "by the Trustee." Any such Authenticating Agent shall be a bank or trust
company or other Person of the character and qualifications set forth in Section
9.09 hereof.
(b) Any corporation into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which any Authenticating Agent
shall be a party, or any corporation succeeding to the corporate trust business
of any Authenticating Agent, shall be the successor of such Authenticating Agent
hereunder, if such successor corporation is otherwise eligible under this
Section 9.15, without the execution or filing of any paper or any further act on
the part of the parties hereto or such Authenticating Agent or such successor
corporation.
(c) Any Authenticating Agent may at any time resign by giving written
notice of resignation to the Trustee and to the Company. The Trustee may at any
time terminate the agency of any Authenticating Agent by giving written notice
of termination to such Authenticating Agent and to the Company. Upon receiving
such a notice of resignation or upon such a termination, or in case at any time
any Authenticating Agent shall cease to be eligible under this Section 9.15, the
Trustee may, with the written consent of the Company, appoint a successor
Authenticating Agent, and upon so doing shall give written notice of such
appointment to the Company and shall mail, in the manner provided in Section
15.10, notice of such appointment to the Holders of Notes.
(d) The Trustee agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services, and the Trustee shall be entitled
to be reimbursed for such payments, in accordance with Section 9.06 hereof.
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(e) Sections 9.02, 9.03, 9.06, 9.07 and 9.09 hereof shall be applicable to
any Authenticating Agent.
ARTICLE X
CONCERNING THE NOTEHOLDERS
Section 10.01 Action By Noteholders. Whenever in this Indenture it is
provided that the Holders of a specified percentage in aggregate principal
amount of the Notes may take any action, the fact that at the time of taking any
such action the Holders of such specified percentage have joined therein may be
evidenced (a) by any instrument or any number of instruments of similar tenor
executed by such Noteholders in person or by agent or proxy appointed in
writing, (b) by the record of such Noteholders voting in favor thereof at any
meeting of Noteholders duly called and held in accordance with Article XI
hereof, or (c) by a combination of such instrument or instruments and any such
record of such a meeting of Noteholders.
Section 10.02 Proof Of Execution By Noteholders.
(a) Subject to Sections 9.01, 9.02 and 11.05 hereof, proof of the
execution of any instruments by a Noteholder or the agent or proxy for such
Noteholder shall be sufficient if made in accordance with such reasonable rules
and regulations as may be prescribed by the Trustee or in such manner as shall
be satisfactory to the Trustee. The ownership of Notes shall be proved by the
register for the Notes maintained by the Trustee.
(b) The record of any Noteholders' meeting shall be proven in the manner
provided in Section 11.06 hereof.
Section 10.03 Persons Deemed Absolute Owners. Subject to Sections 2.04(f)
and 10.01 hereof, the Company, the Trustee, any paying agent and any
Authenticating Agent shall deem the person in whose name any Note shall be
registered upon the register for the Notes to be, and shall treat such person
as, the absolute owner of such Note (whether or not such Note shall be overdue)
for the purpose of receiving payment of or on account of the principal and
premium, if any, and interest on such Note, and for all other purposes; and
neither the Company nor the Trustee nor any paying agent nor any Authenticating
Agent shall be affected by any notice to the contrary. All such payments shall
be valid and effectual to satisfy and discharge the liability upon any such Note
to the extent of the sum or sums so paid.
Section 10.04 Company-Owned Notes Disregarded. In determining whether the
Holders of the requisite aggregate principal amount of Outstanding Notes have
concurred in any direction, consent or waiver under this Indenture, Notes which
are owned by the Company or any other obligor on the Notes or by
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any Person directly or indirectly controlling or controlled by or under direct
or indirect common control with the Company or any other obligor on the Notes
shall be disregarded and deemed not to be Outstanding for the purpose of any
such determination; provided that, for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, consent or waiver,
only Notes which the Trustee knows are so owned shall be so disregarded. Notes
so owned which have been pledged in good faith to third parties may be regarded
as Outstanding for the purposes of this Section 10.04 if the pledgee shall
establish the pledgee's right to take action with respect to such Notes and that
the pledgee is not a Person directly or indirectly controlling or controlled by
or under direct or indirect common control with the Company or any such other
obligor. In the case of a dispute as to such right, the Trustee may rely upon an
Opinion of Counsel and an Officers' Certificate to establish the foregoing.
Section 10.05 Revocation Of Consents; Future Holders Bound. Except as may
be otherwise required in the case of a Global Note by the applicable rules and
regulations of the Depositary, at any time prior to the taking of any action by
the Holders of the percentage in aggregate principal amount of the Notes
specified in this Indenture in connection with such action, any Holder of a
Note, which has been included in the Notes the Holders of which have consented
to such action may, by filing written notice with the Trustee at the Corporate
Trust Office of the Trustee and upon proof of ownership as provided in Section
10.02(a) hereof, revoke such action so far as it concerns such Note. Except as
aforesaid, any such action taken by the Holder of any Note shall be conclusive
and binding upon such Holder and upon all future Holders and owners of such Note
and of any Notes issued in exchange, substitution or upon registration of
transfer therefor, irrespective of whether or not any notation thereof is made
upon such Note or such other Notes.
Section 10.06 Record Date For Noteholder Acts. If the Company shall
solicit from the Noteholders any request, demand, authorization, direction,
notice, consent, waiver or other act, the Company may, at its option, by Board
Resolution, fix in advance a record date for the determination of Noteholders
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 the record
date, but only the Noteholders of record at the close of business on the record
date shall be deemed to be Noteholders for the purpose of determining whether
Holders of the requisite aggregate principal amount of Outstanding Notes have
authorized or agreed or consented to such request, demand, authorization,
direction, notice, consent, waiver or other act, and for that purpose the
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Outstanding Notes shall be computed as of the record date; provided that no such
request, demand, authorization, direction, notice, consent, waiver or other act
by the Noteholders on the record date shall be deemed effective unless it shall
become effective pursuant to this Indenture not later than six months after the
record date. Any such record date shall be at least 30 days prior to the date of
the solicitation to the Noteholders by the Company.
ARTICLE XI
NOTEHOLDERS' MEETING
Section 11.01 Purposes Of Meetings. A meeting of Noteholders may be called
at any time and from time to time pursuant to this Article XI for any of the
following purposes:
(a) to give any notice to the Company or to the Trustee, or to give any
directions to the Trustee, or to consent to the waiving of any Event of Default
hereunder and its consequences, or to take any other action authorized to be
taken by Noteholders pursuant to Article XIII;
(b) to remove the Trustee pursuant to Article IX;
(c) to consent to the execution of an indenture or indentures supplemental
hereto pursuant to Section 13.02 hereof; or
(d) to take any other action authorized to be taken by or on behalf of the
Holders of any specified aggregate principal amount of the Notes, as the case
may be, under any other provision of this Indenture or under applicable law.
Section 11.02 Call Of Meetings By Trustee. The Trustee may at any time
call a meeting of Holders of Notes to take any action specified in Section 11.01
hereof, to be held at such time and at such place as the Trustee shall
determine. Notice of every such meeting of Noteholders, setting forth the time
and the place of such meeting and in general terms the action proposed to be
taken at such meeting, shall be given to Holders of the Notes that may be
affected by the action proposed to be taken at such meeting in the manner
provided in Section 15.10 hereof. Such notice shall be given not less than 20
nor more than 90 days prior to the date fixed for such meeting.
Section 11.03 Call Of Meetings By Company Or Noteholders. If at any time
the Company, pursuant to a Board Resolution, or the Holders of at least 10% in
aggregate principal amount of the Notes then Outstanding, shall have requested
the Trustee to call a meeting of Noteholders, by written request setting forth
in
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reasonable detail the action proposed to be taken at the meeting, and the
Trustee shall not have mailed the notice of such meeting within 20 days after
receipt of such request, then the Company or such Noteholders may determine the
time and the place for such meeting and may call such meeting to take any action
authorized in Section 11.01 hereof, by giving notice thereof as provided in
Section 11.02 hereof.
Section 11.04 Qualifications For Voting. To be entitled to vote at any
meetings of Noteholders a Person shall (a) be a Holder of one or more Notes
affected by the action proposed to be taken or (b) be a Person appointed by an
instrument in writing as proxy by a Holder of one or more such Notes. The only
Persons who shall be entitled to be present or to speak at any meeting of
Noteholders shall be the Persons entitled to vote at such meeting and their
counsel and any representatives (including employees) of the Trustee and its
counsel and any representatives (including employees) of the Company and its
counsel.
Section 11.05 Regulations.
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(a) Notwithstanding any other provisions of this Indenture, the Trustee
may make such reasonable regulations as it may deem advisable for any meeting of
Noteholders in regard to proof of the holding of Notes and of the appointment of
proxies, and in regard to the appointment and duties of inspectors of votes, the
submission and examination of proxies, certificates and other evidence of the
right to vote, and such other matters concerning the conduct of the meeting as
it shall think fit.
(b) The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by the Noteholders as provided in Section 11.03 hereof, in which case
the Company or Noteholders calling the meeting, as the case may be, shall in
like manner appoint a temporary chairman. A permanent chairman and a permanent
secretary of the meeting shall be elected by the Holders of a majority in
aggregate principal amount of the Notes present in person or by proxy at the
meeting.
(c) Subject to Section 10.04 hereof, at any meeting each Noteholder or
proxy shall be entitled to one vote for each $1,000 principal amount of Notes
held or represented by such Noteholder; provided that no vote shall be cast or
counted at any meeting in respect of any Note determined to be not Outstanding.
The chairman of the meeting shall have no right to vote other than by virtue of
Notes held by such chairman or instruments in writing as aforesaid duly
designating such chairman as the Person to vote on behalf of other Noteholders.
At any meeting of Noteholders duly called pursuant to Section 11.02 or 11.03
hereof, the presence of Persons holding or representing Notes in an aggregate
principal amount sufficient to take action on any business for
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the transaction for which such meeting was called shall constitute a quorum. Any
meeting of Noteholders duly called pursuant to Section 11.02 or 11.03 hereof may
be adjourned from time to time by the Holders of a majority in aggregate
principal amount of the Notes present in person or by proxy at the meeting,
whether or not constituting a quorum, and the meeting may be held as so
adjourned without further notice.
Section 11.06 Voting. The vote upon any resolution submitted to any
meeting of Noteholders shall be by written ballots on which shall be subscribed
the signatures of the Holders of Notes or of their representatives by proxy and
the principal amount of Notes held or represented by them. The permanent
chairman of the meeting shall appoint two inspectors of votes who shall count
all votes cast at the meeting for or against any resolution and who shall make
and file with the secretary of the meeting their verified written reports in
duplicate of all votes cast at the meeting. A record in duplicate of the
proceedings of such meeting of Noteholders shall be prepared by the secretary of
the meeting and there shall be attached to said record the original reports of
the inspectors of votes on any vote by ballot taken thereat and affidavits by
one or more persons having knowledge of the facts setting forth a copy of the
notice of the meeting and showing that said notice was given as provided in
Section 11.02 hereof. The record shall show the aggregate principal amount of
the Notes voting in favor of or against any resolution. The record shall be
signed and verified by the affidavits of the permanent chairman and secretary of
the meeting and one of the duplicates shall be delivered to the Company and the
other to the Trustee to be preserved by the Trustee and the Trustee shall have
the ballots taken at the meeting attached to such duplicate. Any record so
signed and verified shall be conclusive evidence of the matters therein stated.
Section 11.07 Rights Of Trustee Or Noteholders Not Delayed. Nothing in
this Article XI shall be deemed or construed to authorize or permit, by reason
of any call of a meeting of Noteholders or any rights expressly or impliedly
conferred hereunder to make such call, any hindrance or delay in the exercise of
any right or rights conferred upon or reserved to the Trustee or to the Holders
of Notes under any of the provisions of this Indenture or of the Notes.
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ARTICLE XII
CONSOLIDATION, MERGER, SALE, TRANSFER OR CONVEYANCE
Section 12.01 Company May Consolidate, Etc. Only On Certain Terms. The
Company shall not consolidate with or merge into any other corporation or sell,
or otherwise dispose of its properties as or substantially as an entirety to any
Person unless the Company has delivered to the Trustee the supplemental
indenture referred to in (b) below and an Officers' Certificate and an Opinion
of Counsel each stating that such consolidation, merger, conveyance or transfer
and such supplemental indenture comply with this Article XII and that all
conditions precedent herein provided for have been complied with, and the
corporation formed by such consolidation or into which the Company is merged or
the Person which receives such properties pursuant to such sale, transfer or
other disposition (a) shall be a corporation organized and existing under the
laws of the United States of America, any state thereof or the District of
Columbia; (b) shall expressly assume, by an indenture supplemental hereto,
executed and delivered to the Trustee, in form reasonably satisfactory to the
Trustee, the due and punctual payment of the principal of and premium, if any,
and interest on all of the Notes and the performance of every covenant of this
Indenture on the part of the Company to be performed or observed and (c) if such
consolidation, merger, sale, transfer or other disposition occurs prior to the
Release Date, shall expressly assume, by an indenture supplemental to the First
Mortgage, executed and delivered to the Mortgage Trustee, the due and punctual
payment of the principal of and premium, if any, and interest on all of the
Senior Note First Mortgage Bonds and the performance of every covenant of the
First Mortgage on the part of the Company to be performed or observed.
Anything in this Indenture to the contrary notwithstanding, the conveyance
or other transfer by the Company of (a) all or any portion of its facilities for
the generation of electric energy, or (b) all of its facilities for the
transmission of electric energy, in each case considered alone or in any
combination with properties described in any other clause, shall in no event be
deemed to constitute a conveyance or other transfer of all the properties of the
Company, as or substantially as an entirety. The character of particular
facilities shall be determined in accordance with the Uniform System of Accounts
prescribed for public utilities and licensees subject to the Federal Power Act,
as amended, to the extent applicable.
Section 12.02 Successor Corporation Substituted. Upon any consolidation or
merger, or any sale, transfer or other disposition of the properties of the
Company substantially as an entirety in accordance with Section 12.01 hereof,
the successor corporation formed by such consolidation or into which the
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Company is merged or to which such sale, transfer or other disposition is made
shall succeed to, and be substituted for and may exercise every right and power
of, the Company under this Indenture with the same effect as if such successor
corporation had been named as the Company herein and the Company shall be
released from all obligations hereunder.
ARTICLE XIII
SUPPLEMENTAL INDENTURES
Section 13.01 Supplemental Indentures Without Consent Of Noteholders.
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(a) The Company, when authorized by Board Resolution, and the Trustee may
from time to time and at any time enter into an indenture or indentures
supplemental hereto for one or more of the following purposes:
(1) to make such provision in regard to matters or questions arising
under this Indenture as may be necessary or desirable, and not
inconsistent with this Indenture or prejudicial to the interests of the
Holders in any material respect, for the purpose of supplying any
omission, curing any ambiguity, or curing, correcting or supplementing any
defective or inconsistent provision;
(2) to change or eliminate any of the provisions of this Indenture,
provided that any such change or elimination shall become effective only
when there is no Note Outstanding created prior to the execution of such
supplemental indenture which is entitled to the benefit of such provision
or such change or elimination is applicable only to Notes issued after the
effective date of such change or elimination;
(3) to establish the form of Notes as permitted by Section 2.01
hereof or to establish or reflect any terms of any Note determined
pursuant to Section 2.05 hereof;
(4) to evidence the succession of another corporation to the Company
as permitted hereunder, and the assumption by any such successor of the
covenants of the Company herein and in the Notes;
(5) to grant to or confer upon the Trustee for the benefit of the
Holders any additional rights, remedies, powers or authority;
(6) to permit the Trustee to comply with any duties imposed upon it
by law;
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(7) to specify further the duties and responsibilities of, and to
define further the relationships among the Trustee, any Authenticating
Agent and any paying agent;
(8) to add to the covenants of the Company for the benefit of the
Holders of one or more series of Notes, to add to the security for the
Notes, to surrender a right or power conferred on the Company herein or to
add any Event of Default with respect to one or more series of Notes;
(9) to comply with the Company's obligations under Section 6.07; and
(10) to make any other change that is not prejudicial to the Holders
in any material respect.
(b) The Trustee is hereby authorized to join with the Company in the
execution of any such supplemental indenture, to make any further appropriate
agreements and stipulations which may be therein contained and to accept the
conveyance, transfer and assignment of any property thereunder, but the Trustee
shall not be obligated to enter into any such supplemental indenture which
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise.
(c) Any supplemental indenture authorized by this Section 13.01 may be
executed by the Company and the Trustee without the consent of the Holders of
any of the Notes at the time Outstanding, notwithstanding any of the provisions
of Section 13.02 hereof.
Section 13.02 Supplemental Indentures With Consent Of Noteholders.
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(a) With the consent (evidenced as provided in Section 10.01 hereof) of
the Holders of a majority in aggregate principal amount of the Notes at the time
Outstanding, the Company, when authorized by Board Resolution, and the Trustee
may from time to time and at any time enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of any
supplemental indenture or of modifying in any manner the rights of the
Noteholders; provided that no such supplemental indenture shall:
(1) change the maturity date of any Note, or reduce the rate (or
change the method of calculation thereof) or extend the time of payment of
interest thereon, or reduce the principal amount thereof or any premium
thereon, or change the coin or currency in which the principal of any Note
or any premium or interest thereon is payable, or
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change the date on which any Note may be redeemed or adversely affect the
rights of the Noteholders to institute suit for the enforcement of any
payment of principal of or any premium or interest on any Note, or impair
the interest hereunder of the Trustee in the Senior Note First Mortgage
Bonds, or prior to the Release Date, reduce the principal amount of any
series of Senior Note First Mortgage Bonds to an amount less than the
principal amount of the Related Series of Notes or alter the payment
provisions of such Senior Note First Mortgage Bonds in a manner adverse to
the Holders of the Notes, in each case without the consent of the Holder
of each Note so affected; or
(2) modify this Section 13.02(a) or reduce the aforesaid percentage
of Notes, the Holders of which are required to consent to any such
supplemental indenture or to reduce the percentage of Notes, the Holders
of which are required to waive Events of Default, in each case, without
the consent of the Holders of all of the Notes then Outstanding.
(b) Upon the request of the Company, accompanied by a copy of the Board
Resolution authorizing the execution of any such supplemental indenture, and
upon the filing with the Trustee of evidence of the consent of Noteholders as
aforesaid, the Trustee shall join with the Company in the execution of such
supplemental indenture unless such supplemental indenture affects the Trustee's
own rights, duties or immunities under this Indenture or otherwise, in which
case the Trustee may in its discretion, but shall not be obligated to, enter
into such supplemental indenture.
(c) A supplemental indenture which changes or eliminates any covenant or
other provision of this Indenture (or any supplemental indenture) which has
expressly been included solely for the benefit of one or more series of Notes,
or which modifies the rights of the Holders of Notes of such series with respect
to such covenant or provision, shall be deemed not to affect the rights under
this Indenture of the Holders of Notes of any other series.
(d) It shall not be necessary for the consent of the Holders of Notes
under this Section 13.02 to approve the particular form of any proposed
supplemental indenture, but it shall be sufficient if such consent shall approve
the substance thereof.
(e) Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to this Section 13.02, the Trustee shall give
notice in the manner provided in Section 15.10 hereof, setting forth in general
terms the
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substance of such supplemental indenture, to all Noteholders. Any failure of the
Trustee to give such notice or any defect therein shall not, however, in any way
impair or affect the validity of any such supplemental indenture.
Section 13.03 Compliance With Trust Indenture Act; Effect Of Supplemental
Indentures. Any supplemental indenture executed pursuant to this Article XIII
shall comply with the TIA. Upon the execution of any supplemental indenture
pursuant to this Article XIII, the Indenture shall be and be deemed to be
modified and amended in accordance therewith and the respective rights,
limitations of rights, obligations, duties and immunities under this Indenture
of the Trustee, the Company and the Noteholders shall thereafter be determined,
exercised and enforced hereunder subject in all respects to such modifications
and amendments, and all the terms and conditions of any such supplemental
indenture shall be and be deemed to be part of the terms and conditions of this
Indenture for any and all purposes.
Section 13.04 Notation On Notes. Notes authenticated and delivered after
the execution of any supplemental indenture pursuant to this Article XIII may
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 Notes so
modified as approved by the Trustee and the Board of Directors with respect to
any modification of this Indenture contained in any such supplemental indenture
may be prepared and executed by the Company, authenticated by the Trustee and
delivered in exchange for the Notes then Outstanding.
Section 13.05 Evidence Of Compliance Of Supplemental Indenture To Be
Furnished Trustee. The Trustee, subject to Sections 9.01 and 9.02 hereof, may
receive an Officers' Certificate and an Opinion of Counsel as conclusive
evidence that any supplemental indenture executed pursuant hereto complies with
the requirements of this Article XIII.
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ARTICLE XIV
IMMUNITY OF INCORPORATORS,
STOCKHOLDERS, OFFICERS AND DIRECTORS
Section 14.01 Indenture And Notes Solely Corporate Obligations. No
recourse for the payment of the principal of or any premium or interest on any
Note, or for any claim based thereon or otherwise in respect thereof, and no
recourse under or upon any obligation, covenant or agreement of the Company,
contained in this Indenture, the First Mortgage or in any supplemental
indenture, or in any Note or in any Senior Note First Mortgage Bond, or because
of the creation of any indebtedness represented thereby, shall be had against
any incorporator, stockholder, officer or director, as such, past, present or
future, of the Company or of any successor corporation, either directly or
through the Company or any successor corporation, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment or
penalty or otherwise; it being expressly understood that all such liability is
hereby expressly waived and released as a condition of, and as a consideration
for, the execution of this Indenture and the issuance of the Notes.
ARTICLE XV
MISCELLANEOUS PROVISIONS
Section 15.01 Provisions Binding On Company's Successors. All the
covenants, stipulations, promises and agreements made by the Company in this
Indenture shall bind its successors and assigns whether so expressed or not.
Section 15.02 Official Acts By Successor Corporation. Any act or
proceeding by any provision of this Indenture authorized or required to be done
or performed by any board, committee or officer of the Company shall and may be
done and performed with like force and effect by the like board, committee or
officer of any corporation that shall at the time be the lawful successor of the
Company.
Section 15.03 Notices. Any notice or demand which by any provision of this
Indenture is required or permitted to be given or served by the Trustee or by
the Noteholders on the Company may be given or served by being deposited postage
prepaid in a post office letter box addressed (until another address is filed by
the Company with the Trustee) at the principal executive offices of the Company,
to the attention of the Secretary. Any notice, direction, request or demand by
any Noteholder, the Company or
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the Mortgage Trustee to or upon the Trustee shall be deemed to have been
sufficiently given or made, for all purposes, if given or made in writing at
the Corporate Trust Office of the Trustee, Attention: Corporate Trust
Department.
SECTION 15.04 GOVERNING LAW. THIS INDENTURE AND EACH NOTE SHALL BE
GOVERNED BY AND DEEMED TO BE A CONTRACT UNDER, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF SAID STATE, EXCEPT AS MAY OTHERWISE BE REQUIRED BY
MANDATORY PROVISIONS OF LAW.
Section 15.05 Evidence Of Compliance With Conditions Precedent.
(a) Upon any application or demand by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee an
Officers' Certificate stating that all conditions precedent, if any, provided
for in this Indenture (including any covenants compliance with which constitutes
a condition precedent) relating to the proposed action have been complied with
and an Opinion of Counsel stating that, in the opinion of such counsel, all such
conditions precedent have been complied with.
(b) Each certificate or opinion provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or covenant
provided for in this Indenture (other than the certificates delivered pursuant
to Section 6.06 hereof) shall include (1) a statement that each Person making
such certificate or opinion has read such covenant or condition and the
definitions relating thereto; (2) a brief statement as to the nature and scope
of the examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based; (3) a statement that, in the
opinion of each such Person, such Person has made such examination or
investigation as is necessary to enable such Person to express an informed
opinion as to whether or not such covenant or condition has been complied with;
and (4) a statement as to whether or not, in the opinion of each such Person,
such condition or covenant has been complied with.
(c) In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
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(d) Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which such certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel delivered under the
Indenture may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or officers of the
Company stating that the information with respect to such factual matters is in
the possession of the Company, unless such person knows, or in the exercise of
reasonable care should know, that the certificate or opinion of representations
with respect to such matters are erroneous. Any opinion of counsel delivered
hereunder may contain standard exceptions and qualifications reasonably
satisfactory to the Trustee.
(e) Any certificate, statement or opinion of any officer of the Company,
or of counsel, may be based, insofar as it relates to accounting matters, upon a
certificate or opinion of or representations by an independent public accountant
or firm of accountants, unless such officer or counsel, as the case may be,
knows that the certificate or opinion or representations with respect to the
accounting matters upon which the certificate, statement or opinion of such
officer or counsel may be based as aforesaid are erroneous, or in the exercise
of reasonable care should know that the same are erroneous. Any certificate or
opinion of any firm of independent public accountants filed with the Trustee
shall contain a statement that such firm is independent.
(f) Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Section 15.06 Business Days. Unless otherwise provided pursuant to Section
2.05(c) hereof, in any case where the date of maturity of the principal of or
any premium or interest on any Note or the date fixed for redemption of any Note
is not a Business Day, then payment of such principal or any premium or interest
need not be made on such date but may be made on the next succeeding Business
Day with the same force and effect as if made on the date of maturity or the
date fixed for redemption, and, in the case of timely payment thereof, no
interest shall accrue for the period from and after such Interest Payment Date
or the date on which the principal or premium, if any, of the Note is required
to be paid.
Section 15.07 Trust Indenture Act To Control. If and to the extent
that any provision of this Indenture limits, qualifies or
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conflicts with the duties imposed by the TIA, such required provision of the TIA
shall govern.
Section 15.08 Table Of Contents, Headings, Etc. The table of contents and
the titles 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 15.09 Execution In Counterparts. This Indenture may be executed in
any number of counterparts, each of which shall be an original, but such
counterparts shall together constitute but one and the same instrument.
Section 15.10 Manner Of Mailing Notice To Noteholders.
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(a) Any notice or demand which by any provision of this Indenture is required or
permitted to be given or served by the Trustee or the Company to or on the
Holders of Notes, as the case may be, shall be given or served by first-class
mail, postage prepaid, addressed to the Holders of such Notes at their last
addresses as the same appear on the register for the Notes referred to in
Section 2.06, and any such notice shall be deemed to be given or served by being
deposited in a post office letter box in the form and manner provided in this
Section 15.10. In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give notice to any Holder
by mail, then such notification to such Holder as shall be made with the
approval of the Trustee shall constitute a sufficient notification for every
purpose hereunder.
(b) The Company shall also provide any notices required under this
Indenture by publication, but only to the extent that such publication is
required by the TIA, the rules and regulations of the Commission or any
securities exchange upon which any series of Notes is listed.
Section 15.11 Approval By Trustee Of Expert Or Counsel. Wherever the
Trustee is required to approve an Expert or counsel who is to furnish evidence
of compliance with conditions precedent in this Indenture, such approval by the
Trustee shall be deemed to have been given upon the taking of any action by the
Trustee pursuant to and in accordance with the certificate or opinion so
furnished by such Expert or counsel.
77
<PAGE>
IN WITNESS WHEREOF, the undersigned, being duly authorized, have
executed this Indenture on behalf of the respective parties hereto as of the
date first above written.
PENNSYLVANIA ELECTRIC COMPANY
By:
----------------------------
Name:
Title:
UNITED STATES TRUST COMPANY
OF NEW YORK
AS TRUSTEE
By
---------------------------
Name:
Title:
78
<PAGE>
EXHIBIT A
FORM OF GLOBAL NOTE
PRIOR TO RELEASE DATE
REGISTERED REGISTERED
THIS NOTE IS A GLOBAL NOTE REGISTERED IN THE NAME OF THE DEPOSITARY
(REFERRED TO HEREIN) OR A NOMINEE THEREOF AND, UNLESS AND UNTIL IT IS EXCHANGED
IN WHOLE OR IN PART FOR THE INDIVIDUAL NOTES REPRESENTED HEREBY, THIS GLOBAL
NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF
THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER
NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS
GLOBAL NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE TRUSTEE FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE &
CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
PENNSYLVANIA ELECTRIC COMPANY
SENIOR NOTE, % DUE SERIES
--- ------- ---
CUSIP: NUMBER:
ORIGINAL ISSUE DATE: PRINCIPAL AMOUNT:
INTEREST RATE: MATURITY DATE:
PENNSYLVANIA ELECTRIC COMPANY, a corporation duly organized and existing
under the laws of the Commonwealth of Pennsylvania (the "COMPANY"), for value
received hereby promises to pay to Cede & Co. or registered assigns, the
principal sum of
DOLLARS
on the Maturity Date set forth above, and to pay interest thereon from or from
the most recent Interest Payment Date to which interest has been paid or duly
provided for, semiannually in arrears on the and in each year, commencing on the
first such Interest Payment Date succeeding, at the per annum Interest Rate set
forth above, until the principal hereof is paid or made available for payment.
No interest shall accrue on the
<PAGE>
Maturity Date, so long as the principal amount of this Global Note is paid on
the Maturity Date. The interest so payable and punctually paid or duly provided
for on any such Interest Payment Date will, as provided in the Indenture, be
paid to the Person in whose name this Note is registered at the close of
business on the Regular Record Date for such interest, which shall be the
or , as the case may be, next
- ---------------------------- -----------------------
preceding such Interest Payment Date; provided that the first Interest Payment
Date for any part of this Note, the Original Issue Date of which is after a
Regular Record Date but prior to the applicable Interest Payment Date, shall be
the Interest Payment Date following the next succeeding Regular Record Date; and
provided that interest payable on the Maturity Date set forth above or, if
applicable, upon redemption or acceleration, shall be payable to the Person to
whom principal shall be payable. Except as otherwise provided in the Indenture
(as defined below), any such interest not so punctually paid or duly provided
for shall forthwith cease to be payable to the Holder on such Regular Record
Date and shall be paid to the Person in whose name this Note is registered at
the close of business on a Special Record Date for the payment of such defaulted
interest to be fixed by the Trustee, notice whereof shall be given to
Noteholders not more than fifteen days or fewer than ten days prior to such
Special Record Date.
This Global Note is a global security in respect of a duly authorized
issue of Senior Notes, % Due , Series (the "NOTES OF THIS SERIES", which term
includes any Global Notes representing such Notes) of the Company issued and to
be issued under an Indenture dated as of , 1998, between the Company and United
States Trust Company of New York, as trustee (the "TRUSTEE", which term includes
any successor Trustee under the Indenture) and indentures supplemental thereto
(collectively, the "INDENTURE"). Under the Indenture, one or more series of
notes may be issued and, as used herein, the term "Notes" refers to the Notes of
this Series and any other outstanding series of Notes. Reference is hereby made
to the Indenture for a more complete statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Company, the
Trustee and the Noteholders and of the terms upon which the Notes are and are to
be authenticated and delivered. This Global Note has been issued in respect of
the series designated on the first page hereof, limited in aggregate principal
amount to $ .
Prior to the Release Date (as hereinafter defined), the Notes will be
secured by first mortgage bonds (the "SENIOR NOTE FIRST MORTGAGE BONDS")
delivered by the Company to the Trustee for the benefit of the Holders of the
Notes, issued under the Mortgage and Deed of Trust, dated as of January 1, 1942,
from the Company to United States Trust Company of New York, as successor
trustee (the "MORTGAGE TRUSTEE"), as supplemented and modified (collectively,
the "FIRST MORTGAGE"). Reference is made to the
2
<PAGE>
First Mortgage and the Indenture for a description of the rights of the Trustee
as holder of the Senior Note First Mortgage Bonds, the property mortgaged and
pledged, the nature and extent of the security and the rights of the holders of
first mortgage bonds under the First Mortgage and the rights of the Company and
of the Mortgage Trustee in respect thereof, the duties and immunities of the
Mortgage Trustee and the terms and conditions upon which the Senior Note First
Mortgage Bonds are secured and the circumstances under which additional first
mortgage bonds may be issued.
From and after such time as the earlier of (i) the date that all First
Mortgage Bonds, other than the Senior Note First Mortgage Bonds, have been
retired (at, before or after the maturity thereof) through payment, redemption,
purchase or otherwise and (ii) the date upon which the Trustee holds Senior Note
First Mortgage Bonds constituting not less than 80% in aggregate principal
amount of all outstanding First Mortgage Bonds (the "Release Date"), the Senior
Note First Mortgage Bonds shall cease to secure the Notes in any manner. In
certain circumstances prior to the Release Date as provided in the Indenture,
the Company is permitted to reduce the aggregate principal amount of a series of
Senior Note First Mortgage Bonds held by the Trustee, but in no event prior to
the Release Date to an amount less than the aggregate outstanding principal
amount of the series of Notes initially issued contemporaneously with such
Senior Note First Mortgage Bonds.
Each Note of this Series shall be dated and issued as of the date of its
authentication by the Trustee and shall bear an Original Issue Date. Each Note
or Global Note issued upon transfer, exchange or substitution of such Note or
Global Note shall bear the Original Issue Date of such transferred, exchanged or
substituted Note or Global Note, as the case may be.
[Insert redemption and notice provisions, if any]
Interest payments for this Global Note shall be computed and paid on the
basis of a 360-day year of twelve 30-day months. If any Interest Payment Date or
date on which the principal of this Global Note is required to be paid is not a
Business Day, then payment of principal, premium or interest need not be made on
such date but may be made on the next succeeding Business Day with the same
force and effect as if made on such Interest Payment Date or date on which the
principal of this Global Note is required to be paid and, in the case of timely
payment thereof, no interest shall accrue for the period from and after such
Interest Payment Date or the date on which the principal of this Global Note is
required to be paid.
3
<PAGE>
The Company, at its option, and subject to the terms and conditions
provided in the Indenture, will be discharged from any and all obligations in
respect of the Notes (except for certain obligations including obligations to
register the transfer or exchange of Notes, replace stolen, lost or mutilated
Notes, maintain paying agencies and hold monies for payment in trust, all as set
forth in the Indenture) if the Company deposits with the Trustee cash, U.S.
Government Obligations which through the payment of interest thereon and
principal thereof in accordance with their terms will provide cash, or a
combination of cash and U.S. Government Obligations, in any event in an amount
sufficient, without reinvestment, to pay all the principal of and any premium
and interest on the Notes on the dates such payments are due in accordance with
the terms of the Notes.
If an Event of Default shall occur and be continuing, the principal of the
Notes may be declared due and payable in the manner and with the effect provided
in the Indenture and, upon such declaration, the Trustee shall demand the
redemption of the Senior Note First Mortgage Bonds to the extent provided in the
Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modifications of the rights and obligations of the
Company and the rights of the Noteholders under the Indenture at any time by the
Company and the Trustee with the consent of the Holders of not less than a
majority in principal amount of the outstanding Notes. Any such consent or
waiver by the Holder of this Global Note shall be conclusive and binding upon
such Holder and upon all future Holders of this Global Note and of any Note
issued upon the registration of transfer hereof or in exchange therefor or in
lieu thereof whether or not notation of such consent or waiver is made upon the
Note.
As set forth in and subject to the provisions of the Indenture, no Holder
of any Notes will have any right to institute any proceeding with respect to the
Indenture or for any remedy thereunder unless such Holder shall have previously
given to the Trustee written notice of a continuing Event of Default with
respect to such Notes, the Holders of not less than a majority in principal
amount of the outstanding Notes affected by such Event of Default shall have
made written request and offered reasonable indemnity to the Trustee to
institute such proceeding as Trustee and the Trustee shall have failed to
institute such proceeding within 60 days; provided, however, that such
limitations do not apply to a suit instituted by the Holder hereof for the
enforcement of payment of the principal of and any premium or interest on this
Note on or after the respective due dates expressed here.
4
<PAGE>
No reference herein to the Indenture and to provisions of this Global Note
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of and any premium and
interest on this Global Note at the times, places and rates and the coin or
currency prescribed in the Indenture.
As provided in the Indenture and subject to certain limitations therein
set forth, this Global Note may be transferred only as permitted by the legend
hereto.
Unless the certificate of authentication hereon has been executed by the
Trustee, directly or through an Authenticating Agent by manual or facsimile
signature of an authorized officer, this Global Note shall not be entitled to
any benefit under the Indenture or be valid or obligatory for any purpose.
All terms used in this Global Note which are defined in the Indenture
shall have the meanings assigned to them in the Indenture unless otherwise
indicated herein.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
PENNSYLVANIA ELECTRIC COMPANY
Dated: By:
-------------------------------
Title:
-------------------------------
Attest:
-------------------------------
Title:
-------------------------------
TRUSTEE'S CERTIFICATE
OF AUTHENTICATION
This Note is one of the Notes of the series herein designated, described or
provided for in the within-mentioned Indenture.
UNITED STATES TRUST COMPANY OF
NEW YORK, As Trustee
By:
------------------------------
Authorized Officer
5
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM -- as tenants in common UNIF GIFT
MIN ACT - Custodian
----- ------
(Cust) (Minor)
TEN ENT -- as tenants by the
entireties Under Uniform Gifts to Minors
JT TEN -- as joint tenants with right
of survivorship and not as tenants in
common
--------------------
State
Additional abbreviations may also be used though not in the
above list.
--------------------
FOR VALUE RECEIVED the undersigned hereby sell(s),
assign(s) and transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Please print or typewrite name and address
including postal zip code of assignee
- -------------------------------------------------
the within note and all rights thereunder, hereby irrevocably constituting and
appointing attorney to transfer said note on the books of the Company, with full
power of substitution in the premises.
6
<PAGE>
Dated:
------------------------
NOTICE: The signature to this
assignment must correspond with the
name as written upon the face of the
within instrument in every particular,
without alteration or enlargement or
any change whatever.
7
<PAGE>
EXHIBIT B
FORM OF NOTE
PRIOR TO RELEASE DATE
REGISTERED REGISTERED
PENNSYLVANIA ELECTRIC COMPANY
SENIOR NOTE, % DUE , SERIES
--- ----- ---
CUSIP: PRINCIPAL AMOUNT:
ORIGINAL ISSUE DATE: MATURITY DATE:
INTEREST RATE: NUMBER:
PENNSYLVANIA ELECTRIC COMPANY, a corporation of the Commonwealth of Pennsylvania
(the "COMPANY"), for value received hereby promises to pay to
or registered assigns, the principal sum of
DOLLARS
on the Maturity Date set forth above, and to pay interest thereon from
or from the most recent date to which interest has
been paid or duly provided for, semiannually in arrears on and in each year,
commencing on the first such Interest Payment Date succeeding , at the per annum
Interest Rate set forth above, until the principal hereof is paid or made
available for payment. No interest shall accrue on the Maturity Date, so long as
the principal amount of this Note is paid in full on the Maturity Date. The
interest so payable and punctually paid or duly provided for on any such
Interest Payment Date will, as provided in the Indenture (as defined below), be
paid to the Person in whose name this Note is registered at the close of
business on the Regular Record Date for such interest, which shall be the or ,
as the case may be, next preceding such Interest Payment Date; provided that the
first Interest Payment Date for any Note of this Series, the Original Issue Date
of which is after a Regular Record Date but prior to the applicable Interest
Payment Date, shall be the Interest Payment Date following the next succeeding
Regular Record Date; and provided, further, that interest payable on the
Maturity Date set forth above or, if applicable, upon redemption or
acceleration, shall be payable to the Person to whom principal shall be payable.
Except as otherwise provided in the Indenture (referred to on the reverse
hereof), any such interest not so punctually paid or duly provided for will
forthwith cease to be
<PAGE>
payable to the Holder on such Regular Record Date and shall be paid to the
Person in whose name this Note is registered at the close of business on a
Special Record Date for the payment of such defaulted interest to be fixed by
the Trustee, notice whereof shall be given to Noteholders not more than fifteen
days nor fewer than ten days prior to such Special Record Date. Principal,
applicable premium and interest due at the maturity of this Note shall be
payable in immediately available funds when due upon presentation and surrender
of this Note at the Corporate Trust Office of the Trustee or at the authorized
office of any paying agent in the Borough of Manhattan, the City and State of
New York. Interest on this Note (other than interest payable at maturity) shall
be paid by check in clearinghouse funds to the Holder as its name appears on the
register; provided that if the Trustee receives a written request from any
Holder of Notes (as defined below), the aggregate principal amount of all of
which having the same Interest Payment Date as this Note equals or exceeds
$10,000,000, on or prior to the applicable Regular Record Date, interest on this
Note shall be paid by wire transfer of immediately available funds to a bank
within the continental United States designated by such Holder in its request or
by direct deposit into the account of such Holder designated by such Holder in
its request if such account is maintained with the Trustee or any paying agent.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET FORTH
IN FULL ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES
HAVE THE SAME EFFECT AS IF SET FORTH IN FULL AT THIS PLACE.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof, directly or through an Authenticating
Agent by manual or facsimile signature of an authorized officer, this Note shall
not be entitled to any benefit under the Indenture or be valid or obligatory for
any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.
PENNSYLVANIA ELECTRIC COMPANY
Dated: By:
-------------------------
Title:
-------------------------
Attest:
-------------------------
Title:
-------------------------
2
<PAGE>
TRUSTEE'S CERTIFICATE
OF AUTHENTICATION
This Note is one of the Notes of the series herein designated, described or
provided for in the within-mentioned Indenture.
UNITED STATES TRUST COMPANY
OF NEW YORK, As Trustee
By:
-------------------------------------
Authorized Officer
3
<PAGE>
[FORM OF REVERSE OF NOTE]
PENNSYLVANIA ELECTRIC COMPANY SENIOR NOTE, % DUE , SERIES
--- ----- ----
This Note is one of a duly authorized issue of Senior Notes, % Due , Series (the
"NOTES OF THIS SERIES") of the Company issued and to be issued under an
Indenture dated as of , 1998 between the Company and United States Trust Company
of New York, as trustee (the "TRUSTEE", which term includes any successor
Trustee under the Indenture) and indentures supplemental thereto (collectively,
the "INDENTURE"). Under the Indenture, one or more series of notes may be issued
and, as used herein, the term "Notes" refers to the Notes of this Series and any
other outstanding series of Notes. Reference is hereby made to the Indenture for
a more complete statement of the respective rights, limitations of rights,
duties and immunities thereunder of the Company, the Trustee and the Noteholders
and of the terms upon which the Notes are and are to be authenticated and
delivered. This Note is one of the series designated on the face hereof, limited
in aggregate principal amount to $ .
Prior to the Release Date (as hereinafter defined), the Notes will be
secured by first mortgage bonds (the "SENIOR NOTE FIRST MORTGAGE BONDS")
delivered by the Company to the Trustee for the benefit of the Holders of the
Notes, issued under the Mortgage and Deed of Trust, dated as of January 1, 1942,
from the Company to United States Trust Company of New York, as successor
trustee (the "MORTGAGE TRUSTEE"), as supplemented and modified (collectively,
the "FIRST MORTGAGE"). Reference is made to the First Mortgage and the Indenture
for a description of the rights of the Trustee as holder of the Senior Note
First Mortgage Bonds, the property mortgaged and pledged, the nature and extent
of the security and the rights of the holders of first mortgage bonds under the
First Mortgage and the rights of the Company and of the Mortgage Trustee in
respect thereof, the duties and immunities of the Mortgage Trustee and the terms
and conditions upon which the Senior Note First Mortgage Bonds are secured and
the circumstances under which additional first mortgage bonds may be issued.
From and after such time as the earlier of (i) the date that all First
Mortgage Bonds, other than the Senior Note First Mortgage Bonds, have been
retired (at, before or after the maturity thereof) through payment, redemption,
purchase or otherwise and (ii) the date upon which the Trustee holds Senior Note
First Mortgage Bonds constituting not less than 80% in aggregate principal
amount of all outstanding First Mortgage Bonds (the "Release Date"), the Senior
Note First Mortgage Bonds shall cease to secure the notes in any manner. In
certain
4
<PAGE>
circumstances prior to the Release Date as provided in the Indenture, the
Company is permitted to reduce the aggregate principal amount of a series of
Senior Note First Mortgage Bonds held by the Trustee, but in no event prior to
the Release Date to an amount less than the aggregate outstanding principal
amount of the series of Notes initially issued contemporaneously with such
Senior Note First Mortgage Bonds.
[Insert redemption and notice provisions, if any]
Interest payments for this Note shall be computed and paid on the basis of a
360-day year of twelve 30-day months. If any Interest Payment Date or the date
on which the principal of this Note is required to paid is not a Business Day,
then payment of principal, premium or interest need not be made on such date but
may be made on the next succeeding Business Day with the same force and effect
as if made on such Interest Payment Date or the date on which the principal of
this Note is required to be paid, and, in the case of timely payment thereof, no
interest shall accrue for the period from and after such Interest Payment Date
or the date on which the principal of this Note is required to be paid.
The Company, at its option, and subject to the terms and conditions
provided in the Indenture, will be discharged from any and all obligations in
respect of the Notes (except for certain obligations including obligations to
register the transfer or exchange of Notes, replace stolen, lost or mutilated
Notes, maintain paying agencies and hold monies for payment in trust, all as set
forth in the Indenture) if the Company deposits with the Trustee cash, U.S.
Government Obligations which through the payment of interest thereon and
principal thereof in accordance with their terms will provide cash, or a
combination of cash and U.S. Government Obligations, in any event in an amount
sufficient, without reinvestment, to pay all the principal of and any premium
and interest on the Notes on the dates such payments are due in accordance with
the terms of the Notes.
If an Event of Default shall occur and be continuing, the principal of the
Notes may be declared due and payable in the manner and with the effect provided
in the Indenture and, upon such declaration, the Trustee shall demand the
redemption of the Senior Note First Mortgage Bonds to the extent provided in the
Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modifications of the rights and obligations of the
Company and the rights of the Noteholders under the Indenture at any time by the
Company and the Trustee with the consent of the Holders of not less than a
majority in principal amount of the outstanding Notes. Any such consent or
waiver by the Holder of this Note shall be conclusive
5
<PAGE>
and binding upon such Holder and upon all future Holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange therefor in
lieu thereof whether or not notation of such consent or waiver is made upon the
Note.
As set forth in and subject to the provisions of the Indenture, no Holder
of any Notes will have any right to institute any proceeding with respect to the
Indenture or for any remedy thereunder unless such Holder shall have previously
given to the Trustee written notice of a continuing Event of Default with
respect to such Notes, the Holders of not less than a majority in principal
amount of the outstanding Notes affected by such Event of Default shall have
made written request and offered reasonable indemnity to the Trustee to
institute such proceeding as Trustee and the Trustee shall have failed to
institute such proceeding within 60 days; provided, however, that such
limitations do not apply to a suit instituted by the Holder hereof for the
enforcement of payment of the principal of and any premium or interest on this
Note on or after the respective due dates expressed here.
No reference herein to the Indenture and to provisions of this Note or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and any premium and interest
on this Note at the times, places and rates and the coin or currency prescribed
in the Indenture.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Note is registrable in the Note register. Upon
surrender of this Note for registration or transfer at the corporate trust
office of the Trustee or such other office or agency as may be designated by the
Company in the Borough of Manhattan, the City and State of New York, endorsed by
or accompanied by a written instrument of transfer in form satisfactory to the
Company and the Note registrar, duly executed by the Holder hereof or the
attorney in fact of such Holder duly authorized in writing, one or more new
Notes of this Series of like tenor and of authorized denominations and for the
same aggregate principal amount will be issued to the designated transferee or
transferees.
The Notes of this Series are issuable only in registered form, without
coupons, in denominations of $1,000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Notes of this Series are exchangeable for a like aggregate principal amount of
Notes of this Series of like tenor and of a different authorized denomination,
as requested by the Holder surrendering the same.
6
<PAGE>
No service charge shall be made for any such registration of transfer or
exchange but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Note is registered as the owner thereof for all
purposes, whether or not this Note is overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
All terms used in this Note which are defined in the Indenture shall have
the meanings assigned to them in the Indenture.
7
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM -- as tenants in common UNIF GIFT
MIN ACT - Custodian
----- -------
(Cust) (Minor)
TEN ENT -- as tenants by the
entireties Under Uniform Gifts to Minors
JT TEN -- as joint tenants with right
of survivorship and not as tenants in
common
---------------------------
State
Additional abbreviations may also be used though not in the
above list.
--------------------
FOR VALUE RECEIVED the undersigned hereby sell(s),
assign(s) and transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Please print or typewrite name and address
including postal zip code of assignee
- -------------------------------------------------
the within note and all rights thereunder, hereby irrevocably constituting and
appointing attorney to transfer said note on the books of the Company, with full
power of substitution in the premises.
Dated:
----------------------
NOTICE: The signature to this assignment
must correspond with the name as written
upon the face of the within instrument in
every particular, without alteration or
enlargement or any change whatever.
8
<PAGE>
EXHIBIT C
FORM OF GLOBAL NOTE FOLLOWING RELEASE DATE
REGISTERED REGISTERED
THIS NOTE IS A GLOBAL NOTE REGISTERED IN THE NAME OF THE DEPOSITARY
(REFERRED TO HEREIN) OR A NOMINEE THEREOF AND, UNLESS AND UNTIL IT IS EXCHANGED
IN WHOLE OR IN PART FOR THE INDIVIDUAL NOTES REPRESENTED HEREBY, THIS GLOBAL
NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF
THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER
NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS
GLOBAL NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET, NEW YORK, NEW YORK), TO THE TRUSTEE FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN
THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE &
CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
PENNSYLVANIA ELECTRIC COMPANY
SENIOR NOTE, % DUE , SERIES
----- ---- ---
CUSIP: NUMBER:
ORIGINAL ISSUE DATE: PRINCIPAL AMOUNT:
INTEREST RATE: MATURITY DATE:
PENNSYLVANIA ELECTRIC COMPANY, a corporation duly organized and existing
under the laws of the Commonwealth of Pennsylvania (the "COMPANY"), for value
received hereby promises to pay to Cede & Co. or registered assigns, the
principal sum of
------------------------------
DOLLARS
on the Maturity Date set forth above, and to pay interest thereon or from the
most recent Interest Payment Date to which interest has been paid or duly
provided for, semiannually in arrears on the and in each year, commencing on the
first such Interest Payment Date succeeding
, at the per annum Interest Rate set forth above, until the
principal hereof is paid or made available for payment. No interest shall accrue
on the Maturity Date, so long as the principal amount of this Global Note is
paid on the Maturity Date. The interest so payable and punctually paid or duly
provided for on any such
<PAGE>
Interest Payment Date will, as provided in the Indenture, be paid to the Person
in whose name this Note is registered at the close of business on the Regular
Record Date for such interest, which shall be the or , as the case may be, next
preceding such Interest Payment Date; provided, that the first Interest Payment
Date for any part of this Note, the Original Issue Date of which is after a
Regular Record Date but prior to the applicable Interest Payment Date, shall be
the Interest Payment Date following the next succeeding Regular Record Date; and
provided, that interest payable on the Maturity Date set forth above or, if
applicable, upon redemption or acceleration, shall be payable to the Person to
whom principal shall be payable. Except as otherwise provided in the Indenture
(as defined below), any such interest not so punctually paid or duly provided
for will forthwith cease to be payable to the Holder on such Regular Record Date
and shall be paid to the Person in whose name this Note is registered at the
close of business on a Special Record Date for the payment of such defaulted
interest to be fixed by the Trustee, notice whereof shall be given to
Noteholders not more than fifteen days or fewer than ten days prior to such
Special Record Date.
This Global Note is a global security in respect of a duly authorized
issue of Senior Notes, % Due , Series __(the "NOTES OF THIS SERIES", which term
includes any Global Notes representing such Notes) of the Company issued and to
be issued under an Indenture dated as of , 1998 between the Company and United
States Trust Company of New York, as trustee (herein called the "TRUSTEE", which
term includes any successor Trustee under the Indenture) and indentures
supplemental thereto (collectively, the "INDENTURE"). Under the Indenture, one
or more series of notes may be issued and, as used herein, the term "Notes"
refers to the Notes of this Series and any other outstanding series of Notes.
Reference is hereby made to the Indenture for a more complete statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee and the Noteholders and of the terms upon which the
Notes are and are to be authenticated and delivered. This Global Note has been
issued in respect of the series designated on the first page hereof, limited in
aggregate principal amount to $ .
Each Note of this Series shall be dated and issued as of the date of its
authentication by the Trustee and shall bear an Original Issue Date. Each Note
or Global Note issued upon transfer, exchange or substitution of such Note or
Global Note shall bear the Original Issue Date of such transferred, exchanged or
substituted Note or Global Note, as the case may be.
[Insert redemption and notice provisions, if any]
2
<PAGE>
Interest payments for this Global Note shall be computed and paid on the
basis of a 360-day year of twelve 30-day months. If where any Interest Payment
Date or date on which the principal of this Global Note is required to be paid
is not a Business Day, then payment of principal, premium or interest need not
be made on such date but may be made on the next succeeding Business Day with
the same force and effect as if made on such Interest Payment Date or date on
which the principal of this Global Note is required to be paid and, in the case
of timely payment thereof, no interest shall accrue for the period from and
after such Interest Payment Date or the date on which the principal of this
Global Note is required to be paid.
The Company, at its option, and subject to the terms and conditions
provided in the Indenture, will be discharged from any and all obligations in
respect of the Notes (except for certain obligations including obligations to
register the transfer or exchange of Notes, replace stolen, lost or mutilated
Notes, maintain paying agencies and hold monies for payment in trust, all as set
forth in the Indenture) if the Company deposits with the Trustee cash, U.S.
Government Obligations which through the payment of interest thereon and
principal thereof in accordance with their terms will provide cash, or a
combination of cash and U.S. Government Obligations, in any event in an amount
sufficient, without reinvestment, to pay all the principal of and any premium
and interest on the Notes on the dates such payments are due in accordance with
the terms of the Notes.
If an Event of Default shall occur and be continuing, the principal of the
Notes may be declared due and payable in the manner and with the effect provided
in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modifications of the rights and obligations of the
Company and the rights of the Noteholders under the Indenture at any time by the
Company and the Trustee with the consent of the Holders of not less than a
majority in principal amount of the outstanding Notes. Any such consent or
waiver by the Holder of this Global Note shall be conclusive and binding upon
such Holder and upon all future Holders of this Global Note and of any Note
issued upon the registration of transfer hereof or in exchange therefor or in
lieu thereof whether or not notation of such consent or waiver is made upon the
Note.
As set forth in and subject to the provisions of the Indenture, no Holder
of any Notes will have any right to institute any proceeding with respect to the
Indenture or for any remedy thereunder unless such Holder shall have previously
given to the Trustee written notice of a continuing Event of Default with
respect to such Notes, the Holders of not less than a majority in principal
amount of the outstanding Notes affected by such Event of Default shall have
made written request and offered 3
<PAGE>
reasonable indemnity to the Trustee to institute such proceeding as Trustee and
the Trustee shall have failed to institute such proceeding within 60 days;
provided, however, that such limitations do not apply to a suit instituted by
the Holder hereof for the enforcement of payment of the principal of and any
premium or interest on this Note on or after the respective due dates expressed
here.
No reference herein to the Indenture and to provisions of this Global
Note or of the Indenture shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of and any premium and
interest on this Global Note at the times, places and rates and the coin or
currency prescribed in the Indenture.
As provided in the Indenture and subject to certain limitations therein
set forth, this Global Note may be transferred only as permitted by the legend
hereto.
Unless the certificate of authentication hereon has been executed by the
Trustee, directly or through an Authenticating Agent by manual or facsimile
signature of an authorized officer, this Global Note shall not be entitled to
any benefit under the Indenture or be valid or obligatory for any purpose.
All terms used in this Global Note which are defined in the Indenture
shall have the meanings assigned to them in the Indenture unless otherwise
indicated herein.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
PENNSYLVANIA ELECTRIC COMPANY
Dated: By:
----------------------------
Title:
----------------------------
Attest:
----------------------------
Title:
----------------------------
TRUSTEE'S CERTIFICATE
OF AUTHENTICATION
This Note is one of the Notes of the series herein designated, described or
provided for in the within-mentioned Indenture.
UNITED STATES TRUST COMPANY
OF NEW YORK, As Trustee
By:
--------------------------------
Authorized Officer
4
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM -- as tenants in common UNIF GIFT
MIN ACT - Custodian
----- ------
(Cust) (Minor)
TEN ENT -- as tenants by the
entireties Under Uniform Gifts to Minors
JT TEN -- as joint tenants with right
of survivorship and not as tenants in
common
-------------------------------
State
Additional abbreviations may also be used though not in the
above list.
--------------------
FOR VALUE RECEIVED the undersigned hereby sell(s),
assign(s) and transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Please print or typewrite name and address
including postal zip code of assignee
- -------------------------------------------------
the within note and all rights thereunder, hereby irrevocably constituting and
appointing attorney to transfer said note on the books of the Company, with full
power of substitution in the premises.
Dated:
----------------------
5
<PAGE>
NOTICE: The signature to this assignment
must correspond with the name as written
upon the face of the within instrument in
every particular, without alteration or
enlargement or any change whatever.
6
<PAGE>
EXHIBIT D
FORM OF NOTE FOLLOWING RELEASE DATE
REGISTERED REGISTERED
PENNSYLVANIA ELECTRIC COMPANY
SENIOR NOTE, % DUE , SERIES
--- ---- ---
CUSIP: PRINCIPAL AMOUNT:
ORIGINAL ISSUE DATE: MATURITY DATE:
INTEREST RATE: NUMBER:
PENNSYLVANIA ELECTRIC COMPANY, a corporation duly organized and existing
under the laws of the Commonwealth of Pennsylvania (the "COMPANY"), for value
received hereby promises to pay to
or registered assigns, the principal sum of
DOLLARS
on the Maturity Date set forth above, and to pay interest thereon from or from
the most recent date to which interest has been paid or duly provided for,
semiannually in arrears on and in each year, commencing on the first such
Interest Payment Date succeeding , at the per annum Interest Rate set forth
above, until the principal hereof is paid or made available for payment. No
interest shall accrue on the Maturity Date, so long as the principal amount of
this Note is paid in full on the Maturity Date. The interest so payable and
punctually paid or duly provided for on any such Interest Payment Date will, as
provided in the Indenture (as defined below), be paid to the Person in whose
name this Note is registered at the close of business on the Regular Record Date
for such interest, which shall be the or
, as the case may be, next preceding such Interest Payment Date;
provided that the first Interest Payment Date for any Note, the Original Issue
Date of which is after a Regular Record Date but prior to the applicable
Interest Payment Date, shall be the Interest Payment Date following the next
succeeding Regular Record Date; and provided, further that interest payable on
the Maturity Date set forth above or, if applicable, upon redemption or
acceleration, shall be payable to the Person to whom principal shall be payable.
Except as otherwise provided in the Indenture (referred to on the reverse
hereof), any such interest not so punctually paid or duly provided for will
forthwith cease to be payable to the Holder on such Regular Record Date and
shall be paid to the Person in whose name this Note is registered at the close
of business on a Special Record Date for the payment of such defaulted interest
to be fixed by the Trustee, notice whereof shall be given to
<PAGE>
Noteholders not more than fifteen days nor fewer than ten days prior to such
Special Record Date. Principal, applicable premium and interest due at the
maturity of this Note shall be payable in immediately available funds when due
upon presentation and surrender of this Note at the Corporate Trust Office of
the Trustee or at the authorized office of any paying agent in the Borough of
Manhattan, the City and State of New York. Interest on this Note (other than
interest payable at maturity) shall be paid by check in clearinghouse funds to
the Holder as its name appears on the register; provided that if the Trustee
receives a written request from any Holder of Notes (as defined below), the
aggregate principal amount of all of which having the same Interest Payment Date
as this Note equals or exceeds $10,000,000, on or prior to the applicable
Regular Record Date, interest on the Note shall be paid by wire transfer of
immediately available funds to a bank within the continental United States
designated by such Holder in its request or by direct deposit into the account
of such Holder designated by such Holder in its request if such account is
maintained with the Trustee or any paying agent.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET
FORTH IN FULL ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL
PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH IN FULL AT THIS PLACE.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof, directly or through an Authenticating
Agent by manual signature of an authorized officer, this Note shall not be
entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
PENNSYLVANIA ELECTRIC COMPANY
Dated: By:
----------------------------
Title:
----------------------------
Attest:
----------------------------
Title:
----------------------------
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This Note is one of the Notes of the series herein designated, described or
provided for in the within-mentioned Indenture.
UNITED STATES TRUST COMPANY
OF NEW YORK, As Trustee
By:
----------------------------
Authorized Officer
<PAGE>
[FORM OF REVERSE OF NOTE]
PENNSYLVANIA ELECTRIC COMPANY
SENIOR NOTE, % DUE , SERIES
--- ---- ---
This Note is one of a duly authorized issue of Senior Notes, % Due ,
Series Series (the "NOTES OF THIS SERIES") of the Company issued and to
be issued under an Indenture dated as of , 1998, between the Company and United
States Trust Company of New York, as trustee (herein called the "TRUSTEE", which
term includes any successor Trustee under the Indenture) and indentures
supplemental thereto (collectively, the "INDENTURE"). Under the Indenture, one
or more series of notes may be issued and, as used herein, the term "Notes"
refers to the Notes of this Series and any other outstanding series of Notes.
Reference is hereby made to the Indenture for a more complete statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee and the Noteholders and of the terms upon which the
Notes are and are to be authenticated and delivered. This Note is one of the
series designated on the face hereof, limited in aggregate principal amount to $
.
[Insert redemption and notice provisions, if any]
If less than all of this Note is to be redeemed, the Trustee shall
select, in such manner as it shall deem appropriate and fair, the particular
portion of this Note to be redeemed. Notice of redemption shall be given by mail
not less than 30 nor more than 60 days prior to the date fixed for redemption to
the Holder of this Note, all as provided in the Indenture. On and after the date
fixed for redemption (unless the Company shall default in the payment of this
Note or a portion hereof to be redeemed at the applicable redemption price),
interest on this Note or a portion hereof so called for redemption shall cease
to accrue.
Interest payments for this Note shall be computed and paid on the basis
of a 360-day year of twelve 30-day months. In any case where any Interest
Payment Date or the date on which the principal of this Note is required to paid
is not a Business Day, then payment of principal, premium or interest need not
be made on such date but may be made on the next succeeding Business Day with
the same force and effect as if made on such Interest Payment Date or the date
on which the principal of this Note is required to be paid, and, in the case of
timely payment thereof, no interest shall accrue for the period from and after
such Interest Payment Date or the date on which the principal of this Note is
required to be paid.
The Company, at its option, and subject to the terms and conditions
provided in the Indenture, will be discharged from any
<PAGE>
and all obligations in respect of the Notes (except for certain obligations
including obligations to register the transfer or exchange of Notes, replace
stolen, lost or mutilated Notes, maintain paying agencies and hold monies for
payment in trust, all as set forth in the Indenture) if the Company deposits
with the Trustee cash, U.S. Government Obligations which through the payment of
interest thereon and principal thereof in accordance with their terms will
provide cash, or a combination of cash and U.S. Government Obligations, in any
event in an amount sufficient, without reinvestment, to pay all the principal of
and any premium and interest on the Notes on the dates such payments are due in
accordance with the terms of the Notes.
If an Event of Default shall occur and be continuing, the principal of
the Notes may be declared due and payable in the manner and with the effect
provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modifications of the rights and obligations of the
Company and the rights of the Noteholders under the Indenture at any time by the
Company and the Trustee with the consent of the Holders of not less than a
majority in principal amount of the outstanding Notes. Any such consent or
waiver by the Holder of this Note shall be conclusive and binding upon such
Holder and upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange therefor in lieu thereof whether
or not notation of such consent or waiver is made upon the Note.
As set forth in and subject to the provisions of the Indenture, no
Holder of any Notes will have any right to institute any proceeding with respect
to the Indenture or for any remedy thereunder unless such Holder shall have
previously given to the Trustee written notice of a continuing Event of Default
with respect to such Notes, the Holders of not less than a majority in principal
amount of the outstanding Notes affected by such Event of Default shall have
made written request and offered reasonable indemnity to the Trustee to
institute such proceeding as Trustee and the Trustee shall have failed to
institute such proceeding within 60 days; provided, however, that such
limitations do not apply to a suit instituted by the Holder hereof for the
enforcement of payment of the principal of and any premium or interest on this
Note on or after the respective due dates expressed here.
No reference herein to the Indenture and to provisions of this Note or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and any premium and interest
on this Note at the times, places and rates and the coin or currency prescribed
in the Indenture.
<PAGE>
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Note is registrable in the Note register. Upon
surrender of this Note for registration or transfer at the corporate trust
office of the Trustee or such other office or agency as may be designated by the
Company in the Borough of Manhattan, the City and State of New York, endorsed by
or accompanied by a written instrument of transfer in form satisfactory to the
Company and the Note registrar, duly executed by the Holder hereof or the
attorney in fact of such Holder duly authorized in writing, one or more new
Notes of this Series of like tenor and of authorized denominations and for the
same aggregate principal amount will be issued to the designated transferee or
transferees.
The Notes of this Series are issuable only in registered form, without
coupons, in denominations of $1,000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Notes of this Series are exchangeable for a like aggregate principal amount of
Notes of this Series of like tenor and of a different authorized denomination,
as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or
exchange but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Note is registered as the owner thereof for all
purposes, whether or not this Note is overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
All terms used in this Note which are defined in the Indenture shall have the
meanings assigned to them in the Indenture.
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations: TEN COM -- as tenants in common
UNIF GIFT
MIN ACT - Custodian
----- ------
(Cust) (Minor)
TEN ENT -- as tenants by the
entireties Under Uniform Gifts to Minors
JT TEN -- as joint tenants with right
of survivorship and not as tenants in
common
-------------------------------
State
Additional abbreviations may also be used though not in the
above list.
--------------------
FOR VALUE RECEIVED the undersigned hereby sell(s),
assign(s) and transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Please print or typewrite name and address
including postal zip code of assignee
- -------------------------------------------------
the within note and all rights thereunder, hereby
irrevocably constituting and appointing
attorney to transfer said note on the books of the Company,
with full power of substitution in the premises.
Dated:
--------------------------
<PAGE>
NOTICE: The signature to this assignment
must correspond with the name as written
upon the face of the within instrument in
every particular, without alteration or
enlargement or any change whatever.
-2-
Exhibit 4-I
PAYMENT AND GUARANTEE AGREEMENT
THIS PAYMENT AND GUARANTEE AGREEMENT ("Guarantee Agreement"), dated as of ,
1998, is executed and delivered by Pennsylvania Electric Company, a
Pennsylvania corporation (the "Guarantor"), for the benefit of the Holder (as
defined below) from time to time of the Preferred Securities (as defined below)
of Penelec Capital II, L.P., a Delaware limited partnership (the "Issuer").
WHEREAS, the Issuer is issuing on the date hereof $ aggregate stated liquidation
preference of preferred limited partner interests of a series designated the %
Cumulative Preferred Securities, Series A (the "Preferred Securities"), and the
Guarantor desires to enter into this Guarantee Agreement for the benefit of the
Holder, as provided herein;
WHEREAS, the Issuer will use (i) the proceeds from the issuance and sale of the
Preferred Securities to the Holder and (ii) the capital contributions relating
to the issuance of the Issuer's general partner interests (the "Common
Securities") to Penelec Preferred Capital II, 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 Holder 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 , 1998 (as amended from time to time, 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 distributions on the Preferred Securities to the extent that the Issuer
has funds on hand legally available therefor, (ii) the Redemption Price (as
defined below) payable with respect to any Preferred Securities called for
redemption by the
<PAGE>
Issuer to the extent that the Issuer has funds on hand legally available
therefor, and (iii) upon a liquidation of the Issuer, other than in connection
with a distribution of Subordinated Debentures following a dissolution of the
Issuer resulting from a Special Event (as defined in the Limited Partnership
Agreement) (a "Distribution Event"), the lesser of (a) the Liquidation
Distribution (as defined below) and (b) the amount of assets of the Issuer
legally available for distribution to the Holder in liquidation of the Issuer.
"Holder" shall mean Penelec Capital Trust, a Delaware business trust
("Penelec Capital Trust"), or any other holder or holders 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 the Guarantor's parent, GPU, Inc., or any entity owned
more than 50% by the Guarantor or GPU, Inc., either directly or indirectly.
"Indenture" shall mean the Indenture dated as of , 1998 between the
Guarantor and United States Trust Company of New York, as Trustee, pursuant to
which the Guarantor has issued and/or will issue its Subordinated Debentures (as
defined below).
"Liquidation Distribution" shall mean the aggregate of the stated
liquidation preference of $ per Preferred Security, plus all accumulated and
unpaid distributions to the date of payment.
"Redemption Price" shall mean the aggregate of $ per Preferred Security,
plus all accumulated and unpaid distributions to the date fixed for redemption.
"Special Representative" shall mean any representative of the Holder
appointed pursuant to Section 13.02(d) of the Limited Partnership Agreement.
"Subordinated Debentures" shall mean the Guarantor's % Subordinated
Debentures, Series A, due , issued under and pursuant to the
Indenture.
"Trust Securities" shall mean beneficial interests in Penelec Capital
Trust, each representing a Preferred Security.
ARTICLE II
SECTION 2.01. The Guarantor hereby irrevocably and unconditionally agrees
to pay in full to the Holder 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
may have or assert against the Issuer, the General Partner, Penelec Capital
Trust or any trustee of Penelec Capital Trust. The Guarantor's obligation to
make a Guarantee Payment may be satisfied
-2-
<PAGE>
by direct payment by the Guarantor to the Holder or by payment of such amounts
by the Issuer to the Holder. Notwithstanding anything to the contrary herein,
the Guarantor retains all of its rights under Section 4.01(c) of the Indenture
to extend the interest payment period thereunder and the Guarantor shall not be
obligated hereunder to pay during an Extension Period (as defined in the
Indenture) any distributions on the Preferred Securities which are not paid by
the Issuer during such Extension Period.
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 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 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 Holder or the Special Representative to enforce, assert
or exercise any right, privilege, power or remedy conferred on the
Holder or the Special Representative 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.
-3-
<PAGE>
The Holder 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. The
General Partner or the Special Representative 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 Holder's right at
the Holder's 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) 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 Holder
against the Issuer in respect of any amounts paid to the Holder 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 Holder 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 Holder.
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 Holder; (ii) in the event of the appointment of a Special Representative,
the Special Representative may enforce this Guarantee Agreement on behalf of the
Holder 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 Holder; (iv) the
holders of Trust Securities, together with the holders of the Preferred
Securities other than Penelec Capital Trust, representing not less than 10% of
the aggregate stated liquidation preference of the Preferred Securities then
outstanding, have the right to direct the time, method and place of
-4-
<PAGE>
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 of Trust Securities, and any holder of Preferred Securities
other than Penelec Capital Trust, 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 months, the payment of interest on the Subordinated
Debentures, enforce the obligations of the Guarantor 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 of the 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 capital stock (other than
dividends to the Guarantor by a wholly-owned subsidiary of the Guarantor) 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 funds on hand legally available therefor) in all
material respects, provided that any permitted successor of the Guarantor under
the Indenture may
-5-
<PAGE>
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 an entity
that will be treated as a partnership or a grantor trust for United States
federal income tax purposes.
SECTION 3.03. So long as any of the Preferred Securities remain
outstanding, the Guarantor agrees to maintain its corporate existence; provided
that nothing herein shall preclude any transaction involving the Guarantor
pursuant to Section 5.01 of the Indenture.
SECTION 3.04. So long as any of the Preferred Securities remain
outstanding, the Guarantor agrees to maintain its corporate existence; provided
that, the Guarantor may 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, corporation,
partnership, limited liability company, joint venture association, joint stock
company, trust or unincorporated association if such entity formed by or
surviving such consolidation or merger or to which such sale, conveyance,
transfer or lease shall have been made, if other than the Guarantor, (i) is
organized and existing under the laws of the United States or any state thereof
or the District of Columbia, and (ii) shall expressly assume all the obligations
of the Guarantor under this Guarantee Agreement.
SECTION 3.05. This Guarantee Agreement will constitute an unsecured
obligation of the Guarantor and will rank subordinate and junior in right of
payment to all general liabilities of the Guarantor, except trade accounts
payable arising in the ordinary course of business.
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 Holder upon liquidation of the
Issuer or upon the occurrence 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 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 Holder.
The Guarantor may not assign its obligations hereunder without the prior
approval of the Holders of not less than [a majority] 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
-6-
<PAGE>
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 Holder, any termination of this Guarantee Agreement or any
waiver of compliance with any covenant hereunder shall be effected only with the
prior approval of the holders of Trust Securities, together with the holders of
Preferred Securities other than Penelec Capital Trust, representing not less
than [a majority] 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 Holder):
Pennsylvania Electric Company
c/o GPU Service, Inc.
310 Madison Avenue
Morristown, NJ 07962-1957
Facsimile No.: (973) 644-4224
Attention: Treasurer
All notices, requests or other communications required or permitted to be
given hereunder to the Holder shall be deemed given if in writing and delivered
by the Guarantor in the same manner as notices sent by the Issuer to the Holder.
SECTION 5.04. This Guarantee Agreement is solely for the benefit of the
Holder 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:
-----------------------------
Name: T.G. Howson
Title: Vice President
45959v2
Exhibit 4-J
CERTIFICATE OF TRUST
OF PENELEC CAPITAL TRUST
THIS Certificate of Trust of Penelec Capital Trust (the "Trust"), dated as
of August 20, 1998, is being duly executed and filed by the undersigned, as
trustees, to form a business trust under the Delaware Business Trust Act (12
Del. C. Section 3801, et seq.).
1. Name. The name of the business trust formed hereby is Penelec
Capital Trust.
2. Delaware Trustee. The name and business address of the trustee of the
Trust with a principal place of business in the State of Delaware is The Bank of
New York (Delaware), White Clay Center, Route 273, Newark, Delaware 19711.
IN WITNESS WHEREOF, the undersigned, being the trustees of the Trust, have
executed this Certificate of Trust as of the date first above written.
/s/ T.G. Howson
------------------------------------------
T.G. Howson, not in his individual
capacity but solely as trustee
/s/ P. R. Chatman
------------------------------------------
P. R. Chatman, not in her
individual capacity but solely
as trustee
/s/ M. E. Gramlich
------------------------------------------
M. E. Gramlich, not in her
individual capacity but solely
as trustee
THE BANK OF NEW YORK (DELAWARE), not in
its individual capacity
but solely as trustee
By: /s/ Mary Jane Morrissey
------------------------------------------
Name: Mary Jane Morrissey
Title: Authorized Signatory
THE BANK OF NEW YORK, not in its
individual capacity but solely as trustee
By: /s/ Mary Jane Schmalzel
------------------------------------------
Name: Mary Jane Schmalzel
Title: Vice President
Exhibit 4-K
TRUST AGREEMENT
OF
PENELEC CAPITAL TRUST
THIS TRUST AGREEMENT, of Penelec Capital Trust, is made as of August 20,
1998 (this "Trust Agreement"), by and among Penelec Capital II L.P., as
Depositor (the "Depositor"), The Bank of New York, as trustee (the "Property
Trustee"), T. G. Howson, P. R. Chatman and M. E. Gramlich, as trustees (the
"Regular Trustees"), and The Bank of New York (Delaware), a Delaware banking
corporation, as trustee (the "Delaware Trustee") (collectively the "Trustees").
The Depositor and the Trustees hereby agree as follows:
1. The trust created hereby shall be known as "Penelec Capital Trust "
(the "Trust"), in which name the Trustees or the Depositor, to the extent
provided herein, may conduct the business of the Trust, make and execute
contracts, and sue and be sued.
2. The Depositor hereby assigns, transfers, conveys and sets over to
the Trust the sum of $10. Such amount shall constitute the initial trust estate.
It is the intention of the parties hereto that the Trust created hereby
constitute a business trust under Chapter 38 of Title 12 of the Delaware Code,
12 Del. C. ss.3801, et seq. (the "Business Trust Act"), and that this document
constitute the governing instrument of the Trust. The Trustees are hereby
authorized and directed to execute and file a certificate of trust with the
Delaware Secretary of State in such form as the Trustees may approve.
3. The Depositor and the Trustees will enter into an Amended and
Restated Trust Agreement or Declaration satisfactory to each such party and
substantially in the form to be included as an exhibit to the Registration
Statement on Form S-3 (the "1933 Act Registration Statement") referred to below,
or in such other form as the Trustees and the Depositor may approve, to provide
for the contemplated operation of the Trust created hereby and the issuance of
the Trust Securities referred to therein. Prior to the execution and delivery of
such Amended and Restated Trust Agreement or Declaration, the Trustees shall not
have any duty or obligation hereunder or with respect of the Trust or the trust
estate, except as otherwise required by applicable law or as may be necessary to
obtain prior to such execution and delivery any licenses, consents or approvals
required by applicable law or otherwise. Notwithstanding the foregoing, the
Trustees may take all actions deemed proper as are necessary to effect the
transactions contemplated herein.
<PAGE>
4. The Depositor, as the sponsor of the Trust, is hereby authorized,
if the Depositor deems it necessary or appropriate to do, (i) to file with the
Securities and Exchange Commission (the "Commission") and to execute, in the
case of the 1933 Act Registration Statement and 1934 Act Registration Statement
(as herein defined), on behalf of the Trust, (a) the 1933 Act Registration
Statement, including pre-effective or post-effective amendments to such
Registration Statement, relating to the registration under the Securities Act of
1933, as amended (the "1933 Act"), of the Trust Securities of the Trust, (b) any
preliminary prospectus or prospectus supplement thereto relating to the Trust
Securities required to be filed under the 1933 Act, and (c) a Registration
Statement on Form 8-A or other appropriate form (the "1934 Act Registration
Statement") (including all pre-effective and post-effective amendments thereto)
relating to the registration of the Trust Securities of the Trust under the
Securities Exchange Act of 1934, as amended; (ii) to file with the New York
Stock Exchange or other exchange, and execute on behalf of the Trust a listing
application and all other applications, statements, certificates, agreements and
other instruments as shall be necessary or desirable to cause the Trust
Securities to be listed on the New York Stock Exchange or such other exchange;
(iii) to file and execute on behalf of the Trust such applications, reports,
surety bonds, irrevocable consents, appointments of attorney for service of
process and other papers and documents as shall be necessary or desirable to
register the Trust Securities under the securities or "Blue Sky" laws of such
jurisdictions as the Depositor, on behalf of the Trust, may deem necessary or
desirable; (iv) to execute, deliver and perform on behalf of the Trust an
underwriting agreement relating to the Trust Securities with the Depositor and
the underwriter or underwriters of the Trust Securities of the Trust; and (v) to
execute on behalf of the Trust such letters or representations with depositories
as shall be necessary or desirable. In the event that any filing referred to in
clauses (i)-(iii) above is required by the rules and regulations of the
Commission, the New York Stock Exchange or other exchange, or state securities
or Blue Sky laws to be executed on behalf of the Trust by the Trustees, the
Trustees, in their capacities as trustees of the Trust, are hereby authorized
and directed to join in any such filing and to execute on behalf of the Trust
any and all of the foregoing, it being understood that the Trustees, or either
of them, in their capacities as trustees of the Trust, shall not be required to
join any such filing or execute on behalf of the Trust any such document unless
required by the rules and regulations of the Commission, the New York Stock
Exchange or other exchange, or state securities or Blue Sky laws. In connection
with all of the foregoing, the Trustees, solely in their capacities as trustees
of the Trust, and the Depositor hereby constitute and appoint any one or more of
I.H. Jolles, J.G. Graham and T.G. Howson, with power in any one of them to act
singly, as his/her or its true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution for the Depositor or in the Depositor's
name, place and stead, in any and all capacities, to sign any and all amendments
(including all
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<PAGE>
pre-effective and post-effective amendments) to the 1933 Act Registration
Statement and the 1934 Act Registration Statement and to file the same, with all
exhibits thereto, and any other documents in connection therewith, with the
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in connection therewith, as fully to all intents and purposes as the
Depositor might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent or his/her respective substitute or substitutes,
shall do or cause to be done by virtue hereof.
5. This Trust Agreement may be executed in one or more counterparts.
6. The number of trustees of the Trust initially shall be five (5) and
thereafter the number of trustees of the Trust shall be such number as shall be
fixed from time to time by a written instrument signed by the Depositor which
may increase or decrease the number of trustees of the Trust; provided, however,
that to the extent required by the Business Trust Act, one trustee of the Trust
shall either be a natural person which is a resident of the State of Delaware
or, if not a natural person, an entity who has its principal place of business
in the State of Delaware. The Delaware Trustee represents and warrants that it
has and will retain its principal place of business in the State of Delaware.
Subject to the foregoing, the Depositor is entitled to appoint or remove without
cause any trustee of the Trust at any time. Any trustee of the Trust may resign
upon thirty days' prior notice to the Depositor.
7. This Trust Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware (without regard to conflict
of laws principles).
8. The Depositor agrees to indemnify and hold the Property Trustee,
the Regular Trustees and the Delaware Trustee harmless against any action, suit
proceeding as well as any loss, claim, liability or damage which may arise in
connection with the Property Trustee, the Regular Trustees' or the Delaware
Trustee's performance hereunder.
-3-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to
be duly executed as of the day and year first above written.
PENELEC CAPITAL II, L.P.
as Depositor
By: Penelec Preferred Capital II, Inc.
its General Partner
By: /s/ T. G. Howson
---------------------------------------------
THE BANK OF NEW YORK, not in its
individual capacity but solely as trustee of
the Trust
By: /s/ Mary Jane Schmalzel
---------------------------------------------
Name: Mary Jane Schmalzel
Title: Vice President
THE BANK OF NEW YORK (DELAWARE),
not in its individual capacity but
solely as trustee of the Trust
By: /s/ Mary Jane Morrissey
---------------------------------------------
Name: Mary Jane Morrissey
Title: Authorized Signatory
/s/ T. G. Howson
---------------------------------------------
T. G. Howson, not in his individual
capacity but solely as trustee
/s/ P. R. Chatman
---------------------------------------------
P. R. Chatman, not in his
individual capacity but solely as
trustee
/s/ M. E. Gramlich
---------------------------------------------
M. E. Gramlich, not in his
individual capacity but solely
as trustee
-4-
Exhibit 4L
AMENDED AND RESTATED TRUST AGREEMENT
OF
PENELEC CAPITAL TRUST
PENELEC CAPITAL II, L.P.
as Grantor
and
THE BANK OF NEW YORK (Delaware)
as Delaware Trustee
and
THE BANK OF NEW YORK
as Property Trustee
and
as Regular Trustees
Dated as of , 1998
-------------
<PAGE>
TABLE OF CONTENTS
ARTICLE I - DEFINITIONS 1
ARTICLE II - CONTINUATIUON OF TRUST 6
Section 2.1 Continuation of Trust 6
Section 2.2 Situs of Trust 7
ARTICLE III - TRUST INDENTURE ACT 7
Section 3.1 Trust Indenture Act; Application 7
Section 3.2 Lists of Holders of Trust Securities 7
Section 3.3 Reports by the Property Trustee 8
Section 3.4 Periodic Reports to Property Trustee 8
Section 3.5 Evidence of Compliance with
Conditions Precedent 8
Section 3.6 Trust Enforcement Events; Waiver 8
Section 3.7 Trust Enforcement Events; Notice 9
ARTICLE IV - ORGANIZATION 10
Section 4.1 Name 10
Section 4.2 Office 10
Section 4.3 Purpose 10
Section 4.4 Authority 10
Section 4.5 Title to Property of the Trust 11
Section 4.6 Power and Duties of the Regular
Trustees 11
Section 4.7 Prohibitions of Actions by the Trust
And the Trustees 13
Section 4.8 Powers and Duties of the Property
Trustee 14
Section 4.9 Certain Duties and Responsibilities
Of the Property Trustee 16
Section 4.10 Certain Rights of Property Trustee 18
Section 4.11 Delaware Trustee 20
Section 4.12 Not Responsible for Recitals or
Issuance of Trust Securities 20
Section 4.13 Execution of Documents 20
Section 4.14 Responsibilities of the Grantor 21
Section 4.15 Indemnification and Expenses of the
Property Trustee and the Delaware
Trustee 21
i
<PAGE>
ARTICLE V - FORM OF TRUST SECURITIES, EXECUTION AND
DELIVERY, TRANSFER AND SURRENDER OF TRUST SECURITIES 22
Section 5.1 Form and Transferability of Trust
Securities 22
Section 5.2 Issuance of Trust Securities 23
Section 5.3 Registration, Transfer and Exchange
Of Trust Securities 24
Section 5.4 Lost or Stolen Trust Securities, Etc. 25
Section 5.5 Cancellation and Destruction of
Surrendered Trust Securities 25
Section 5.6 Surrender of Trust Securities and
Withdrawal of Preferred Securities 25
Section 5.7 Redeposit of Preferred Securities 26
Section 5.8 Filing Proofs, Certificates and
Other Information 27
Section 5.9 CUSIP Numbers 27
ARTICLE VI - DISTRIBUTIONS AND OTHER RIGHTS OF HOLDERS
OF TRUST SECURITIES 28
Section 6.1 Distributions of Distributions on
Preferred Securities 28
Section 6.2 Redemptions of Preferred Securities 28
Section 6.3 Distributions in Liquidation of Grantor 29
Section 6.4 Fixing of Record Date for Holders of
Trust Securities 30
Section 6.5 Payment of Distributions 30
Section 6.6 Special Representative and Voting Rights 30
Section 6.7 Changes Affecting Preferred Securities and
Reclassifications, Recapitalizations, Etc. 31
ARTICLE VII - TRUSTEES 32
Section 7.1 Number of Trustees 32
Section 7.2 Delaware Trustee 32
Section 7.3 Property Trustee, Eligible 32
Section 7.4 Qualifications of the Regular Trustee
And the Delaware Trustee Generally 33
Section 7.5 Regular Trustees 33
Section 7.6 Delaware Trustee 33
Section 7.7 Appointment, Removal and Resignation
Of Trustees 34
Section 7.8 Vacancies among Trustees 35
Section 7.9 Effect of Vacancies 35
Section 7.10 Merger, Conversion, Consolidation or
Succession to Business 36
Section 7.11 Status of Trust 36
ii
<PAGE>
ARTICLE VIII - DISSOLUTION AND TERMINATION 36
Section 8.1 Dissolution of Trust 36
Section 8.2 Winding Up 37
ARTICLE IX - MERGER, CONSOLIDATION, ETC. OF GRANTOR OR
TRUST 37
Section 9.1 Limitation on Permitted Merger
Consolidation, Etc. of Grantor 37
Section 9.2 Mergers and Consolidations of Trust 37
ARTICLE X - LIMITATION OF LIABILITY OF HOLDERS OF
TRUST SECURITIES, TRUSTEES OR OTHERS 39
Section 10.1 Liability 39
Section 10.2 Exculpation 40
Section 10.3 Fiduciary Duty 41
Section 10.4 Indemnification 42
Section 10.5 Outside Businesses 45
ARTICLE XI - AMENDMENTS AND MEETINGS 45
Section 11.1 Amendments 45
Section 11.2 Meetings of the Holders of Trust
Securities; Action by Written Consent 48
ARTICLE XII - REPRESENTATIONS OF PROPERTY TRUSTEE AND
DELAWARE TRUSTEE 50
Section 12.1 Representations and Warranties of
Property Trustee 50
Section 12.2 Representations and Warranties of
Delaware Trustee 50
ARTICLE XIII - MISCELLANEOUS 51
Section 13.1 Notices 52
Section 13.2 Governing Law 52
Section 13.3 Intention of the Parties 52
Section 13.4 Headings 52
Section 13.5 Successors and Assigns 52
Section 13.6 Partial Enforceability 52
Section 13.7 Counterparts 52
Section 13.8 Agreement to be Bound 52
iii
<PAGE>
CROSS-REFERENCE TABLE*
SECTION OF
SECTION OF ACT TRUST AGREEMENT
-------------- ---------------
310(a)(1) and (2) 7.3(a)
310(a)(3) and (4) Inapplicable
310(b) 7.3(c)
310(c) Inapplicable
311(a) 3.2(b)
311(b) 3.2(b)
311(c) Inapplicable
312(a) 3.2(a)
312(b) 3.2(b)
312(c) 3.2(b)
313(a),(b)(2),(c) and (d) 3.3
313(b)(1) Inapplicable
314(a) 3.4 and 4.6(j)
314(b) Inapplicable
314(c)(1) and (2) 3.4 and 3.5
314(c)(3) Inapplicable
314(d) Inapplicable
314(e) 1.1
314(f) Inapplicable
315(a) and (d) 4.9(b)
315(b) 3.6(a)and 3.6(a)
315(c) 4.9(a)
315(e) 3.1(a)
316(a)(1) 3.69a) and 3.6(b)
316(a)(2) Not required
316(a) (last sentence) 1.1
316(b) 3.1(a)
316(c) 4.6(d)
317(a) 3.1(a)
317(b) 4.8(g)
318(a) 3.1(c)
- -------------------------
* This Cross-Reference Table does not constitute part of this Trust Agreement
and shall not affect the interpretation of any of its terms or provisions.
<PAGE>
AMENDED AND RESTATED TRUST AGREEMENT
AMENDED AND RESTATED TRUST AGREEMENT, dated as of , 1998 (as amended,
modified, supplemented or restated from time to time, the "Trust Agreement"), is
among PENELEC CAPITAL II, L.P., a Delaware limited partnership, as grantor, THE
BANK OF NEW YORK (Delaware), as trustee, the Regular Trustees (as defined
herein), THE BANK OF NEW YORK, as trustee, and the Holders (as defined herein).
W I T N E S S E T H:
--------------------
WHEREAS, the Trustees (as defined below) and the Grantor (as defined
below) established the Trust (as defined below) under the Delaware Business
Trust Act (12 Del. C. Section 3801, et seq.), pursuant to a Trust Agreement,
dated as of , 1998 (the "Original Trust Agreement"), and a Certificate of Trust
filed with the Secretary of State of the State of Delaware on , 1998; and
WHEREAS, the parties hereto desire to continue the Trust and to amend and
restate in its entirety the Original Trust Agreement; and
WHEREAS, the Trust proposes to issue Trust Securities (as defined below),
each representing a Preferred Security (as defined below) of the Grantor; and
WHEREAS, interests in the Trust are to be evidenced by Trust Security
certificates executed by the Property Trustee in accordance with this Trust
Agreement, which are to be delivered to the Holders;
NOW, THEREFORE, in consideration of the premises contained herein and
intending to be legally bound hereby, it is agreed by and among the parties
hereto to amend and restate in its entirety the Original Trust Agreement as
follows:
ARTICLE I
DEFINITIONS
The following definitions shall apply to the respective terms (in the
singular and plural forms of such terms) used in this Trust Agreement and the
Trust Securities:
"Affiliate" of any specified Person means any other Person controlling
or controlled by or under common control with such specified Person. For the
purposes of this definition, "control"
1
<PAGE>
when used with respect to any specified Person 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.
"Business Day" means any day other than a day on which banking
institutions in the City of New York or the State of Delaware are closed for
business.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware Code,
12 Del. C. Section 3801 et seq., as it may be amended from time to time, or
any successor legislation.
"Clearing Agency" means an organization registered as a "Clearing Agency"
pursuant to Section 17A of the Exchange Act that is acting as depository for the
Trust Securities. The initial clearing Agency shall be DTC.
"Commission" means the Securities and Exchange Commission.
"Company Indemnified Person" means: (a) any Regular Trustee; (b) any
Affiliate of any Regular Trustee; (c) any representatives or agents of any
Regular Trustee; or (d) any officer, director, shareholder, member, partner,
employee, representative or agent of the Trust or its Affiliates.
"Corporate Office" means the office of the Delaware Trustee at which, at
any particular time, its business in respect of matters governed by this Trust
Agreement shall be administered, which office at the date hereof is located at
White Clay Center, Rte. 273, Newark, Delaware 19711.
"Corporate Trust Office" means the principal corporate trust office of the
Property Trustee at which, at any particular time, its corporate trust business
shall be administered, which office at the date hereof is located at 101 Barclay
Street, 21st Floor, New York, NY 10286.
"Covered Person" means: (a) any officer, director, shareholder,
partner, member, representative, employee or agent of (i) the Trust or (ii)
the Trust's Affiliates; and (b) any Holder of Trust Securities.
"Delaware Trustee" has the meaning set forth in Section 7.2 of this
Trust Agreement.
"DTC" means The Depository Trust Company or any successor thereto.
"Distributions" has the meaning set forth in Article VI.
2
<PAGE>
"Fiduciary Indemnified Person" has the meaning set forth in Section
10.4(b) of this Trust Agreement.
"General Partner" means Penelec Preferred Capital II, Inc., a Delaware
corporation, as general partner of the Grantor, and any successor thereto
pursuant to the terms of the Partnership Agreement.
"Grantor" means Penelec Capital II, L.P., a Delaware limited partnership
formed pursuant to the Partnership Agreement, and any successor entity thereto.
"Guarantee" means the Payment and Guarantee Agreement dated as of
_____________, 1998, as amended from time to time, with respect to the Preferred
Securities and received by the Grantor from Penelec and delivered by the Grantor
to the Trust.
"Holder" means the Person in whose name a certificate representing one or
more Trust Securities is registered on the Register maintained by the Registrar
for such purposes, such Person being a beneficial owner within the meaning of
the Business Trust Act.
"Indemnified Person" means: a Company Indemnified Person or a Fiduciary
Indemnified Person.
"Legal Action" has the meaning set forth in Section 4.6(g) of this
Trust Agreement.
"Majority in liquidation amount of the Trust Securities" means, except as
provided in the terms of the Trust Securities or by the Trust Indenture Act,
Holders of outstanding Trust Securities, who are the record owners of more than
50% of the aggregate liquidation amount (including the stated amount that would
be paid on redemption, liquidation or otherwise, plus accumulated and unpaid
Distributions to the date upon which the voting percentages are determined) of
all outstanding Trust Securities.
"Ministerial Action" means a ministerial action (such as filing a form or
making an election or pursuing some other similar reasonable measure) which in
the sole judgment of the Grantor has or will cause no adverse effect on the
Trust, the Grantor, or the Holders of the Trust Securities and will involve no
material cost.
"1940 Act" means the Investment Company Act of 1940, as amended from time
to time, or any successor legislation.
"Officers' Certificate" means, with respect to any Person (who is not a
natural person), a certificate signed by two
3
<PAGE>
Responsible Officers of such Person, and, with respect to a natural person, a
certificate signed by such person. Any Officers' Certificate delivered with
respect to compliance with a condition or covenant provided for in this Trust
Agreement shall include:
(a) a statement that each officer signing the Officers' Certificate has
read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers' Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(d) a statement as to whether, in the opinion of each such officer, such
condition or covenant has been complied with.
"Partnership" means Penelec Capital II, L.P., a Delaware limited
partnership formed pursuant to the Partnership Agreement, and any successor
entity thereto.
"Partnership Agreement" means the Amended and Restated Limited Partnership
Agreement of the Grantor dated as of , 1998, as amended from time to time,
together with any Action (as defined in the Partnership Agreement) established
by the General Partner.
"Paying Agent" means the Person from time to time acting as Paying Agent
as provided in Section 4.8(g) of this Trust Agreement.
"Penelec" means Pennsylvania Electric Company, a Pennsylvania
corporation.
"Person" means any natural person, 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 Securities" means the cumulative preferred securities,
representing preferred limited partner interests of the Grantor, or any
Successor Securities issued to the Trust and held by the Trustee from time to
time under this Trust Agreement for the benefit of the Holders.
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"Property Account" has the meaning set forth in Section 4.8(c) of this
Trust Agreement.
"Property Trustee" has the meaning set forth in Section 7.3 of this
Trust Agreement.
"Quorum" means a majority of the Regular Trustees or, if there are only
two Regular Trustees, both of them.
"Register" has the meaning set forth in Section 5.3.
"Registrar" means any bank or trust company appointed to register Trust
Security certificates and to register transfers thereof as herein provided.
"Regular Trustee" has the meaning set forth in Section 7.5 of this
Trust Agreement.
"Responsible Officer" means, with respect to the Property Trustee, any
officer within the Corporate Trust Office of the Property Trustee and, with
respect to the Delaware Trustee, any officer within the Corporate Office of the
Delaware Trustee, including, in either case, any vice-president, any assistant
vice-president, any secretary, any assistant secretary, the treasurer, any
assistant treasurer or other officer of the Corporate Trust Office of the
Property Trustee or any authorized signatory of the Delaware Trustee, as the
case may be, customarily performing functions similar to those performed by any
of the above designated officers, who has direct responsibility for the
administration of the Trust, and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of that officer's knowledge of and familiarity with the particular
subject.
"Special Event" has the meaning set forth in Article I of the
Partnership Agreement.
"Special Representative" has the meaning set forth in Section 13.02(d)
of the Partnership Agreement.
"Successor Property Trustee" shall have the meaning set forth in
Section 7.7(b)(i).
"Successor Securities" has the meaning set forth in Section 13.02(e) of
the Partnership Agreement.
"Trust" means the trust governed by this Trust Agreement.
"Trust Agreement" means this Amended and Restated Trust Agreement, as the
same may be amended, modified or supplemented from time to time.
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"Trustees" mean the collective reference to the Delaware Trustee, the
Property Trustee, and the Regular Trustees.
"Trust Enforcement Event" means the occurrence, at any time, of (i)
arrearages on distributions on the Trust Securities that shall exist for
consecutive distribution periods or (ii) a default by Penelec in respect of
any of its obligations under the Guarantee.
"Trust Estate" means all right, title and interest of the Trust in and to
the Preferred Securities (including any Successor Securities), and all
distributions and payments with respect thereto, including payments by Penelec
under the Guarantee. "Trust Estate" shall not include any amounts paid or
payable to the Trustee pursuant to this Trust Agreement, including, without
limitation, fees, expenses and indemnities.
"Trust Indenture Act" means The Trust Indenture Act of 1939, as amended
from time to time, or any successor legislation.
"Trust Security" or "Trust Securities" means a Trust Security issued
hereunder representing a beneficial interest in the Trust equal to and
representing a Preferred Security and evidenced by a certificate authenticated
by the Property Trustee pursuant to Article V.
ARTICLE II
CONTINUATION OF TRUST
Section 2.1. Continuation of Trust
The Trust exists for the purpose described in Section 4.3 of this Trust
Agreement. The Grantor shall deliver to the Property Trustee for deposit in the
Trust a certificate representing the Preferred Securities for the benefit of the
Holders. Each Holder is intended by the Grantor to be the beneficial owner of
the number of Preferred Securities represented by the Trust Securities held by
such Holder, not to hold an undivided interest in all of the Preferred
Securities. To the fullest extent permitted by law, without the need for any
other action of any Person, including the Trustees and any other Holder, each
Holder shall be entitled to enforce in the name of the Trust the Trust's rights
under the Preferred Securities represented by the Trust Securities held by such
Holder and any recovery on such an enforcement action shall belong solely to
such Holder who brought the action, not to the Trust, the Trustees or any other
Holder
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individually or to Holders as a group. Subject to Article VIII, this Trust
shall be irrevocable.
Section 2.2. Situs of Trust. The Trust's bank account shall be
maintained with a bank in the State of New York. The Trust Estate shall be
held in the State of New York.
ARTICLE III
TRUST INDENTURE ACT
Section 3.1 Trust Indenture Act; Application
(a) This Trust Agreement is subject to the provisions of the Trust
Indenture Act that are required to be part of this Trust Agreement and shall, to
the extent applicable, be governed by such provisions, including, but not
limited to, Sections 315(e), 316(b) and 317(a) of the Trust Indenture Act.
(b) The Property Trustee shall be the only Trustee which is a Trustee for
the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this Trust Agreement
limits, qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such duties imposed by the Trust
Indenture Act shall control.
(d) The application of the Trust Indenture Act to this Trust Agreement
shall not affect the nature of the Trust Securities as securities representing
Preferred Securities pursuant to Section 2.1 of this Trust Agreement.
Section 3.2 Lists of Holders of Trust Securities.
(a) The Grantor and the Regular Trustees on behalf of the Trust shall
provide the Property Trustee unless the Property Trustee is the Registrar for
the Trust Securities (i) within 14 days after each record date for payment of
Distributions, a list, in such form as the Property Trustee may reasonably
require, of the names and addresses of the Holders of the Trust Securities
("List of Holders") as of such record date, provided that neither the Grantor
nor the Regular Trustees on behalf of the Trust shall be obligated to provide
such List of Holders at any time the List of Holders does not differ from the
most recent List of Holders given to the Property Trustee by the Grantor and the
Regular Trustees on behalf of the Trust, and (ii) at any other time, within 30
days of receipt by the Trust of a written request for a List of Holders, a List
of Holders as of a date no more than 14 days before such List of Holders is
given to the Property Trustee. The Property Trustee shall preserve, in as
current a
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form as is reasonably practicable, all information contained in Lists of Holders
given to it or which it receives in the capacity as Paying Agent (if acting in
such capacity) provided that the Property Trustee may destroy any List of
Holders previously given to it on receipt of a new List of Holders.
(b) The Property Trustee shall comply with its obligations under Sections
311(a), 311(b) and 312(b) of the Trust Indenture Act. The Property Trustee and
the Grantor are protected under Section 312(c) of the Trust Indenture Act.
Section 3.3 Reports by the Property Trustee. Within 60 days after May 31
of each year beginning with the May 31 next following the date of this Trust
Agreement, the Property Trustee shall provide to the Holders of the Trust
Securities such reports as are required by Section 313(a) of the Trust Indenture
Act, if any, in the form and in the manner provided by Section 313 of the Trust
Indenture Act. The Property Trustee shall also comply with Section 313(b) of the
Trust Indenture Act, if and as required, in the form and manner provided by
Section 313 of the Trust Indenture Act. The Property Trustee shall also comply
with the requirements of Section 313(d) of the Trust Indenture Act.
Section 3.4 Periodic Reports to Property Trustee. Each of the Grantor and
the Regular Trustees on behalf of the Trust shall provide to the Property
Trustee such documents, reports and information as are required by Section
314(a) of the Trust Indenture Act, if any, and the compliance certificate
required by Section 314(a) of the Trust Indenture Act in the form, in the manner
and at the times required by Section 314(a) of the Trust Indenture Act.
Section 3.5 Evidence of Compliance with Conditions Precedent. Each of the
Grantor and the Regular Trustees on behalf of the Trust shall provide to the
Property Trustee such evidence of compliance with any conditions precedent, if
any, provided for in this Trust Agreement that relate to any of the matters set
forth in Section 314(c) of the Trust Indenture Act. Any certificate or opinion
required to be given by an officer pursuant to Section 314(c)(1) may be given in
the form of an Officers' Certificate.
Section 3.6 Trust Enforcement Events; Waiver
(a) The Holders of a Majority in liquidation amount of the Trust
Securities may, by vote, on behalf of the Holders of all of the Trust
Securities, waive any past Trust Enforcement Event in respect of the Trust
Securities and its consequences, provided that, if the underlying event of
default:
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(i) is not waivable under the Guarantee or the Partnership
Agreement, the Trust Enforcement Event under this Trust Agreement shall also not
be waivable; or
(ii) requires the consent or vote of the Holders of greater than a
Majority in liquidation amount of the Trust Securities to be waived under the
Guarantee or the Preferred Securities to be waived under the Partnership
Agreement (a "Super Majority"), the Trust Enforcement Event under this Trust
Agreement may only be waived by the vote of the Holders of at least the relevant
Super Majority in liquidation amount of the Trust Securities.
The foregoing provisions of this Section 3.6(a) shall be in lieu of
Section 316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of
the Trust Indenture Act is hereby expressly excluded from this Trust Agreement
and the Trust Securities, as permitted by the Trust Indenture Act. Upon such
waiver, any such default shall cease to exist, and any Trust Enforcement Event
with respect to the Trust Securities arising therefrom shall be deemed to have
been cured, for every purpose of this Trust Agreement, but no such waiver shall
extend to any subsequent or other default or Trust Enforcement Event with
respect to the Trust Securities or impair any right consequent thereon.
(b) A waiver of non-performance or a default under the Partnership
Agreement or the Guarantee, as the case may be, at the direction of the Holders
of the Trust Securities or a Special Representative, of which the Property
Trustee shall have received notice, constitutes a waiver of the corresponding
Trust Enforcement Event under this Trust Agreement. The foregoing provisions of
this Section 3.6(b) shall be in lieu of Section 316(a)(1)(B) of the Trust
Indenture Act and such Section 316(a)(1)(B) of the Trust Indenture Act is hereby
expressly excluded from this Trust Agreement and the Trust Securities, as
permitted by the Trust Indenture Act.
Section 3.7 Trust Enforcement Event; Notice. The Property Trustee shall,
within 90 days after the occurrence of a Trust Enforcement Event, transmit by
mail, first class postage prepaid, to the Holders of the Trust Securities as the
names and addresses of the Holders appear on the books and records of the Trust,
notices of all defaults with respect to the Trust Securities actually known to a
Responsible Officer of the Property Trustee, unless such defaults have been
cured before the giving of such notice (the term "defaults" for the purposes of
this Section 3.7 being hereby defined to be defaults as defined in the Guarantee
or instances of non-performance under the Partnership Agreement, as the case may
be, not including any periods of grace provided
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for therein and irrespective of the giving of any notice provided therein);
provided that, the Property Trustee shall be protected in withholding such
notice if and so long as a Responsible Officer of the Property Trustee in good
faith determines that the withholding of such notice is in the interests of the
Holders of the Trust Securities. The Property Trustee shall not be deemed to
have knowledge of any default except if the Property Trustee shall have received
written notice or has actual notice of such default.
ARTICLE IV
ORGANIZATION
Section 4.1 Name. The Trust is named "Penelec Capital Trust", as such name
may be modified from time to time by the Regular Trustees following written
notice to the Holders of Trust Securities. The Trust's activities may be
conducted under the name of the Trust or any other name deemed advisable by the
Regular Trustees.
Section 4.2 Office. The address of the principal office of the Trust is
the Corporate Trust Office. On ten Business Days written notice to the Holders
of Trust Securities, the Regular Trustees may designate another principal
office.
Section 4.3 Purpose. The exclusive purposes and functions of the Trust are
(a) to issue and sell Trust Securities and to use the proceeds from such sales
to acquire the Preferred Securities, and (b) except as otherwise limited herein,
to engage in only those other activities necessary or incidental thereto. The
Trust shall not borrow money, issue debt or reinvest proceeds derived from
investments, pledge any of its assets, or otherwise undertake (or permit to be
undertaken) any activity that would be inconsistent with the Trust being
classified for United States federal income tax purposes as a grantor trust.
Section 4.4 Authority. Subject to the limitations provided in this Trust
Agreement and to the specific duties of the Property Trustee, the Regular
Trustees shall have exclusive and complete authority to carry out the purposes
of the Trust. An action taken by the Regular Trustees in accordance with their
powers shall constitute the act of and serve to bind the Trust and an action
taken by the Property Trustee on behalf of the Trust in accordance with its
powers shall constitute the act of and serve to bind the Trust. In dealing with
the Trustees and the Grantor acting on behalf of the Trust, no Person shall be
required to inquire into the authority of the Trustees or the Grantor to bind
the Trust. Persons dealing with the Trust are entitled to rely conclusively on
the power and authority of the Trustees and the Grantor as set forth in this
Trust Agreement.
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Section 4.5 Title to Property of the Trust. Except as provided in Section
4.8 with respect to the Preferred Securities and the Property Account or as
otherwise provided in this Trust Agreement, legal title to all assets of the
Trust shall be vested in the Trust. The Holders shall not have legal title to
any part of the assets of the Trust, but shall have a beneficial ownership
interest in certain Preferred Securities pursuant to Section 2.1 of this Trust
Agreement.
Section 4.6 Power and Duties of the Regular Trustees. The Regular Trustees
shall have exclusive power, duty and authority to cause the Trust to engage in
the following activities and shall use good faith in the performance of the
following duties and such other duties required to be performed by them under
this Trust Agreement:
(a) To issue and sell the Trust Securities in accordance with this Trust
Agreement, and to execute and deliver (after authentication thereof by the
Property Trustee certificates representing the Trust Securities; provided,
however, that there shall be no interests in the Trust other than the Trust
Securities;
(b) To acquire the Preferred Securities with the proceeds of the sales of
the Trust Securities, including the execution and delivery of the Partnership
Agreement in connection therewith on behalf of the Trust, as a limited partner;
provided, however, that the Regular Trustees shall cause legal title to the
Preferred Securities to be held of record in the name of the Property Trustee
for the benefit of the Holders of the Trust Securities;
(c) To give the Grantor and the Property Trustee prompt written notice of
the occurrence of a Trust Enforcement Event.
(d) To establish a record date with respect to all actions to be taken
hereunder that require a record date be established, including and with respect
to, for the purposes of Section 316(c) of the Trust Indenture Act,
Distributions, voting rights, redemptions and exchanges, and to issue relevant
notices to the Holders of Trust Securities as to such actions and applicable
record dates;
(e) To give prompt written notice to the Holders of the Trust Securities
and the Property Trustee of any notice received from the Partnership of the
General Partner's election not to make a current distribution on the Preferred
Securities under the Partnership Agreement;
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(f) To take all actions and perform such duties as may be required of the
Regular Trustees pursuant to the terms of the Trust Securities;
(g) To bring or defend, pay, collect, compromise, arbitrate, resort to
legal action, or otherwise adjust claims or demands of or against the Trust
("Legal Action"), unless, pursuant to Sections 4.8(f), the Property Trustee has
the power to bring such Legal Action;
(h) To 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;
(i) To cause the Trust to comply with the Trust's obligations under the
Trust Indenture Act;
(j) To give the certificate required by Section 314(a)(4) of the Trust
Indenture Act to the Property Trustee, which certificate may be executed by any
Regular Trustee;
(k) To incur expenses that are necessary or incidental to carry out any of
the purposes of the Trust;
(l) To act as, or appoint another Person to act as, Registrar and transfer
agent for the Trust Securities;
(m) To take all action that may be necessary or appropriate for the
preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of the
State of Delaware and of each other jurisdiction in which such existence is
necessary to protect the limited liability of the Holders of the Trust
Securities or to enable the Trust to effect the purposes for which the Trust was
created;
(n) To take any action, or to take no action, not inconsistent with this
Trust Agreement or with applicable law, that any Regular Trustee determines in
its discretion to be necessary or desirable in carrying out the activities of
the Trust as set out in this Section 4.6, including, but not limited to:
(i) causing the Trust not to be deemed to be an Investment Company
required to be registered under the 1940 Act;
(ii) taking no action which would be inconsistent with the Trust
being classified as a grantor trust for United States federal income tax
purposes; provided that such action does not materially adversely affect the
interests of Holders;
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(o) To take all action necessary to cause all applicable tax returns and
tax information reports that are required to be filed with respect to the Trust
to be duly prepared and filed by the Regular Trustees, on behalf of the Trust;
and
(p) To execute all documents or instruments, perform all duties and
powers, and do all things for and on behalf of the Trust in all matters
necessary or incidental to the foregoing.
Subject to this Section 4.6, the Regular Trustees shall have none of the
duties, liabilities, powers or the authority of the Property Trustee set forth
in Section 4.8.
The Regular Trustees must exercise the powers set forth in this Section
4.6 in a manner that is consistent with the purposes and functions of the Trust
set forth in Section 4.3, and the Regular Trustees shall not take any action
that is inconsistent with the purposes and functions of the Trust set forth in
Section 4.3. Any expenses incurred by the Regular Trustees pursuant to this
Section 4.6 shall be reimbursed by the General Partner pursuant to Section 8.03
of the Partnership Agreement and Section 4.15 of this Trust Agreement.
Section 4.7 Prohibition of Actions by the Trust and the Trustees. The
Trust shall not, and the Trustees shall cause the Trust not to, engage in any
activity other than as required or authorized by this Trust Agreement. In
particular, the Trust shall not and the Trustees shall cause the Trust not to:
(a) invest any proceeds received by the Trust from holding the Preferred
Securities, but shall distribute all such proceeds to Holders of Trust
Securities pursuant to the terms of this Trust Agreement and of the Trust
Securities;
(b) acquire any assets other than as expressly provided herein;
(c) possess Trust property for other than a Trust purpose;
(d) make any loans or incur any indebtedness or acquire any securities
other than the Preferred Securities;
(e) possess any power or otherwise act in such a way as to vary the Trust
assets or the terms of the Trust Securities in any way whatsoever;
(f) issue any securities or other evidences of beneficial ownership of, or
beneficial interest in, the Trust other than the Trust Securities;
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(g) other than as set forth herein, (A) cause the Special Representative
to direct the time, method and place of conducting any proceeding for any remedy
available to the Special Representative or exercising any trust or power
conferred upon the Special Representative with respect to the Preferred
Securities and the Guarantees, (B) cause the Special Representative to waive any
non-performance that is waivable under the Partnership Agreement, or (C) consent
to any amendment, modification or termination of the Partnership Agreement or
the Preferred Securities where such consent shall be required; and
(h) other than in connection with the liquidation of the Trust pursuant to
a Trust Enforcement Event or upon redemption of all the Trust Securities or
dissolution and winding up of the Trust in accordance with this Agreement, file
a certificate of cancellation of the Trust.
Section 4.8 Powers and Duties of the Property Trustee.
(a) The legal title to the Preferred Securities shall be owned by and held
of record in the name of the Property Trustee in trust for the benefit of the
Holders of the Trust Securities. The right, title and interest of the Property
Trustee to the Preferred Securities shall vest automatically in each Person who
may hereafter be appointed as Property Trustee in accordance with Section 7.7.
Such vesting and cessation of title shall be effective whether or not
conveyancing documents with regard to the Preferred Securities have been
executed and delivered.
(b) The Property Trustee shall not transfer its right, title and interest
in the Preferred Securities to the Regular Trustees or the Delaware Trustee (if
the Property Trustee does not also act as Delaware Trustee).
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-interest bearing trust
account (the "Property Account") in the name of and under the exclusive control
of the Property Trustee on behalf of the Holders of the Trust Securities and,
upon the receipt of payments of funds made in respect of the Preferred
Securities held by the Property Trustee, deposit such funds into the Property
Account and make payments to the Holders of the Trust Securities from the
Property Account in accordance with Article VI. Funds in the Property Account
shall be held uninvested until disbursed in accordance with this Trust
Agreement. The Property Account shall be an account that is maintained with a
banking institution authorized to exercise corporate trust powers and having a
combined capital and surplus of at least $50,000,000 and subject to supervision
or examination by federal or state authority;
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(ii) engage in such ministerial activities as shall be necessary or
appropriate to effect the redemption of the Trust Securities to the extent the
Preferred Securities are redeemed; and
(iii) upon written notice of distribution issued by the Regular
Trustees in accordance with the terms of the Trust Securities, engage in such
ministerial activities as shall be necessary or appropriate to effect the
distribution of the Trust Estate to Holders of Trust Securities.
(d) The Property Trustee shall take all actions and perform such duties
as may be specifically required of the Property Trustee pursuant to the terms of
this Trust Agreement.
(e) The Property Trustee shall take any Legal Action which arises out of
or in connection with (i) a Trust Enforcement Event of which a Responsible
Officer of the Property Trustee has actual knowledge or (ii) the Property
Trustee's duties and obligations under this Trust Agreement or the Trust
Indenture Act.
(f) The Property Trustee shall have the legal power to exercise all of
the rights, powers and privileges of a Holder of Preferred Securities and, if a
Trust Enforcement Event occurs and is continuing, the Property Trustee shall,
for the benefit of Holders of the Trust Securities, enforce its rights as Holder
of the Preferred Securities subject to the rights of the Holders pursuant to the
terms of this Trust Agreement.
(g) The Property Trustee may authorize one or more Persons (each, a
"Paying Agent") to pay Distributions, redemption payments or liquidation
payments on behalf of the Trust with respect to all Trust Securities and any
such Paying Agent shall comply with Section 317(b) of the Trust Indenture Act.
Any Paying Agent may be removed by the Property Trustee at any time and a
successor Paying Agent or additional Paying Agents may be appointed at any time
by the Property Trustee.
(h) The Property Trustee shall continue to serve as a Trustee until
either:
(i) the Trust has been completely liquidated and the proceeds of the
liquidation distributed to the Holders of Trust Securities pursuant to the terms
of the Trust Securities; or
(ii) a Successor Property Trustee has been appointed and has
accepted that appointment in accordance with Section 7.6.
Subject to this Section 4.8, the Property Trustee shall have none of the
duties, liabilities, powers or the authority of the Regular Trustees set forth
in Section 4.6.
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The Property Trustee must exercise the powers set forth in this Section
4.8 in a manner that is consistent with the purposes and functions of the Trust
set forth in Section 4.3, and the Property Trustee shall not take any action
that is inconsistent with the purposes and functions of the Trust set forth in
Section 4.3. Any expenses incurred by the Property Trustee pursuant to this
Section 4.8 shall be reimbursed by the General Partner pursuant to Section 8.03
of the Partnership Agreement and Section 4.15 of this Trust Agreement.
Section 4.9 Certain Duties and Responsibilities of the Property Trustee
(a) The Property Trustee, before the occurrence of any Trust Enforcement
Event and after the curing or waiver of all Trust Enforcement Events that may
have occurred, shall undertake to perform only such duties as are specifically
set forth in this Trust Agreement and no implied covenants shall be read into
this Trust Agreement against the Property Trustee. In case a Trust Enforcement
Event has occurred (that has not been cured or waived pursuant to Section 3.6)
of which a Responsible Officer of the Property Trustee has actual knowledge, the
Property Trustee shall exercise such of the rights and powers vested in it by
this Trust Agreement, and use the same degree of care and skill in their
exercise, as a prudent person would exercise or use under the circumstances in
the conduct of his or her own affairs.
(b) No provision of this Trust Agreement shall be construed to relieve the
Property Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of a Trust Enforcement Event and after
the curing or waiving of all such Trust Enforcement Events that may have
occurred:
(A) the duties and obligations of the Property Trustee shall be
determined solely by the express provisions of this Trust Agreement and the
Property Trustee shall not be liable except for the performance of such duties
and obligations as are specifically set forth in this Trust Agreement, and no
implied covenants or obligations shall be read into this Trust Agreement against
the Property Trustee; and
(B) in the absence of bad faith on the part of the Property Trustee,
the Property Trustee may conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed therein, upon any certificates or
opinions furnished to the Property Trustee and conforming to the requirements of
this Trust Agreement; but in the case of any such certificates or opinions that
by any provision hereof are
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specifically required to be furnished to the Property Trustee, the Property
Trustee shall be under a duty to examine the same to determine whether or not
they conform to the requirements of this Trust Agreement;
(ii) the Property Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Property Trustee,
unless it shall be proved that the Property Trustee was negligent in
ascertaining the pertinent facts;
(iii) the Property Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of not less than a Majority in liquidation amount of
the Trust Securities relating to the time, method and place of conducting any
proceeding for any remedy available to the Property Trustee, or exercising any
trust or power conferred upon the Property Trustee under this Trust Agreement;
(iv) no provision of this Trust Agreement shall require the
Property Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers, if it shall have reasonable grounds for
believing that the repayment of such funds or liability is not reasonably
assured to it under the terms of this Trust Agreement or indemnity reasonably
satisfactory to the Property Trustee against such risk or liability is not
reasonably assured to it;
(v) the Property Trustee's sole duty with respect to the custody,
safekeeping and physical preservation of the Preferred Securities and the
Property Account shall be to deal with such property in a similar manner as the
Property Trustee deals with similar property for its own account, subject to the
protections and limitations on liability afforded to the Property Trustee under
this Trust Agreement and the Trust Indenture Act;
(vi) the Property Trustee shall have no duty or liability for or
with respect to the value, genuineness, existence or sufficiency of the
Preferred Securities or the payment of any taxes or assessments levied thereon
or in connection therewith;
(vii) money held by the Property Trustee need not be segregated from
other funds held by it except in relation to the Property Account maintained by
the Property Trustee pursuant to Section 4.8(c)(i) and except to the extent
otherwise required by law; and
(viii) the Property Trustee shall not be responsible for monitoring
the compliance by the Regular Trustees or the
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Grantor with their respective duties under this Trust Agreement, nor shall the
Property Trustee be liable for any default or misconduct of the Regular Trustees
or the Grantor.
Section 4.10 Certain Rights of Property Trustee
(a) Subject to the provisions of Section 4.9:
(i) the Property Trustee may conclusively rely and shall be fully
protected in acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed, sent or presented
by the proper party or parties;
(ii) any direction or act of the Grantor or the Regular Trustees
acting on behalf of the Trust contemplated by this Trust Agreement shall be
sufficiently evidenced by an Officers' Certificate;
(iii) whenever in the administration of this Trust Agreement, the
Property Trustee shall deem it desirable that a matter be proved or established
before taking, suffering or omitting any action hereunder, the Property Trustee
(unless other evidence is herein specifically prescribed) may, in the absence of
bad faith on its part, request and conclusively rely upon an Officers'
Certificate which, upon receipt of such request, shall be promptly delivered by
the Grantor or the Regular Trustees;
(iv) the Property Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any financing or
continuation statement or any filing under tax or securities laws) or any
rerecording, refiling or re-registration thereof;
(v) the Property Trustee may, at the expense of the General Partner,
consult with counsel or other experts of its selection and the advice or opinion
of such counsel and experts with respect to legal matters or advice within the
scope of such experts' area of expertise 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 accordance with such advice or opinion;
such counsel may be counsel to the Grantor or any of its Affiliates, and may
include any of its employees. The Property Trustee shall have the right at any
time to seek instructions concerning the administration of this Trust Agreement
from any court of competent jurisdiction;
(vi) the Property Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this
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Trust Agreement at the request or direction of any Holder, unless such Holder
shall have provided to the Property Trustee security and indemnity, reasonably
satisfactory to the Property Trustee, against the fees, charges, costs, expenses
(including attorneys' fees and expenses and the expenses of the Property
Trustee's agents, nominees or custodians) and liabilities that might be incurred
by it in complying with such request or direction, including such reasonable
advances as may be requested by the Property Trustee provided, that, nothing
contained in this Section 4.10(a)(vi) shall be taken to relieve the Property
Trustee, upon the occurrence of a Trust Enforcement Event, of its obligation to
exercise the rights and powers vested in it by this Trust Agreement;
(vii) the Property 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, note, other evidence of indebtedness or other paper or
document, but the Property Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit;
(viii) the Property Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents, custodians, nominees or attorneys and the Property Trustee shall not be
responsible for any misconduct or negligence on the part of any agent or
attorney appointed with due care by it hereunder;
(ix) any action taken by the Property Trustee or its agents
hereunder shall bind the Trust and the Holders of the Trust Securities, and the
signature of the Property Trustee or its agents alone shall be sufficient and
effective to perform any such action and no third party shall be required to
inquire as to the authority of the Property Trustee to so act or as to its
compliance with any of the terms and provisions of this Trust Agreement, both of
which shall be conclusively evidenced by the Property Trustee's or its agent's
taking such action;
(x) whenever in the administration of this Trust Agreement the
Property Trustee shall deem it desirable to receive instructions with respect to
enforcing any remedy or right or taking any other action hereunder, the Property
Trustee (a) may request instructions from the Holders of the Trust Securities,
which instructions may only be given by the Holders of the same proportion in
liquidation amount of the Trust Securities as would be entitled to direct the
Property Trustee under the terms of this Trust Agreement in respect of such
remedy, right or action, (b) may refrain from enforcing such remedy or right or
taking
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such other action until such instructions are received, and (c) shall be
protected in conclusively relying on or acting in accordance with such
instructions; and
(xi) except as otherwise expressly provided by this Trust Agreement,
the Property Trustee shall not be under any obligation to take any action that
is discretionary under the provisions of this Trust Agreement.
In the event that the Property Trustee is also acting as Paying Agent,
transfer agent and security registrar, the rights and protections afforded to
the Property Trustee pursuant to this Article IV shall also be afforded to such
Paying Agent, transfer agent and security registrar.
(b) No provision of this Trust Agreement shall be deemed to impose any
duty or obligation on the Property Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Property Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Property Trustee
shall be construed to be a duty.
Section 4.11 Delaware Trustee. Notwithstanding any provision of this Trust
Agreement other than Section 7.2, the Delaware Trustee shall not be entitled to
exercise any powers, nor shall the Delaware Trustee have any of the duties,
liabilities and responsibilities or the authority of the Regular Trustees or
Property Trustee described in this Trust Agreement. Except as set forth in
Section 7.2, the Delaware Trustee shall be a Trustee for the sole and limited
purpose of fulfilling the requirements of Section 3807 of the Business Trust
Act. In no event shall the Property Trustee or the Delaware Trustee be liable
for any act or omission of any of the Regular Trustees hereunder.
Section 4.12 Not Responsible for Recitals or Issuance of Trust Securities
The recitals contained in this Trust Agreement and the Trust Securities shall be
taken as the statements of the Grantor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations as to
the value or condition of the property of the Trust or any part thereof. The
Trustees make no representations as to the validity or sufficiency of this Trust
Agreement or the Trust Securities.
Section 4.13 Execution of Documents Except as otherwise required by the
Business Trust Act or applicable law, any Regular Trustee is authorized to
execute on behalf of the Trust any
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documents that the Regular Trustees have the power and authority to cause the
Trust to execute pursuant to Section 4.6.
Section 4.14 Responsibilities of the Grantor. In connection with the
issuance and sale of the Trust Securities, the Grantor shall have the exclusive
right and responsibility to engage in the following activities on behalf of the
Trust:
(a) To execute and file with the Commission the registration statement on
Form S-3, including any amendments thereto, pertaining to the Trust Securities;
(b) To execute and file any documents or take any action as determined
necessary by the Grantor in order to qualify or register all or part of the
Trust Securities in any jurisdiction;
(c) To execute and file an application to the New York Stock Exchange,
Inc. or any other national stock exchange or the NASDAQ Stock Market's National
Market System for listing upon notice of issuance of the Trust Securities;
(d) To execute and file with the Commission a registration statement on
Form 8-A, including any amendments thereto, relating to the registration of the
Trust Securities under Section 12(b) of the Securities Exchange Act of 1934 (the
"Exchange Act");
(e) To negotiate, execute and enter into an underwriting agreement
providing for the sale of the Trust Securities.
Section 4.15 Indemnification and Expenses of the Property Trustee and the
Delaware Trustee. To the extent the Partnership fails to do so, the General
Partner agrees to indemnify the Property Trustee and the Delaware Trustee and
their respective officers, directors, employees and agents for, and to hold each
of them harmless against, any loss, liability or expense incurred without
negligence or bad faith on the part of the Property Trustee or the Delaware
Trustee, as the case may be, arising out of or in connection with the acceptance
or administration of the trust or trusts hereunder, including the costs and
expenses of defending either of them against any claim or liability in
connection with the exercise or performance of any of their respective powers or
duties hereunder; the provisions of this Section 4.15 shall survive the
resignation or removal of the Delaware Trustee or the Property Trustee or the
termination of this Trust Agreement.
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ARTICLE V
FORM OF TRUST SECURITIES, EXECUTION AND DELIVERY, TRANSFER AND SURRENDER OF
TRUST SECURITIES
Section 5.1. Form and Transferability of Trust Securities.
(a) Except as otherwise required by the Clearing Agency, Trust Securities
shall be evidenced by certificates engraved, printed or lithographed or may be
produced in any other manner as is reasonably acceptable to the Regular Trustees
and in substantially the form set forth in Exhibit A annexed to this Trust
Agreement, with the appropriate insertions, modifications and omissions, as
hereinafter provided.
(b) Certificates evidencing Trust Securities shall be (i) executed by one
or more of the Regular Trustees by manual or facsimile signature and (ii) upon
order of the Regular Trustees authenticated by the Property Trustee by manual
signature of an authorized signatory thereof. No certificate evidencing one or
more Trust Securities shall be entitled to any benefit under this Trust
Agreement or be valid or obligatory for any purpose unless it shall have been
executed and, authenticated as provided in this paragraph. The Registrar shall
record on the Register each Trust Security certificate executed as provided
above and delivered as hereinafter provided.
(c) Certificates evidencing Trust Securities shall be issued in minimum
denominations of $ liquidation amount and integral multiples of $ in excess
thereof. All Trust Security certificates shall be dated the date of their
authentication.
(d) Certificates evidencing Trust Securities may be endorsed with or have
incorporated in the text thereof such legends or recitals or changes not
inconsistent with the provisions of this Trust Agreement as may be required by
the Registrar or the Property Trustee or required to comply with any applicable
law or regulation or with the rules and regulations of any securities exchange
upon which the Trust Securities may be listed or to conform with any usage with
respect thereto.
(e) Title to any Trust Security certificate that is properly endorsed or
accompanied by a properly executed instrument of transfer or endorsement shall
be transferable by delivery with the same effect as in the case of a negotiable
instrument; provided, however, that until the transfer shall be registered on
the Register as provided in Section 5.3, the Trust, the Property Trustee, the
Regular Trustees, the Registrar and the Grantor may, notwithstanding any notice
to the contrary, treat the Holder thereof at such time as the absolute owner
thereof for
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the purpose of determining the Person entitled to distributions or to any notice
provided for in this Trust Agreement and for all other purposes.
Section 5.2. Issuance of Trust Securities.
(a) Upon receipt by the Property Trustee on behalf of the Trust of a
written order and a certificate or certificates for the Preferred Securities,
subject to the terms and conditions of this Trust Agreement, the Property
Trustee, shall authenticate and make available for delivery one or more
certificates evidencing the Trust Securities in the name of DTC's nominee, who
shall thereupon be the initial Holder of Trust Securities.
(b) If a Clearing Agency elects to discontinue its services as securities
depository with respect to the Trust Securities, the Grantor may, in its sole
discretion, appoint a successor Clearing Agency with respect to such Trust
Securities.
(c) If (x) a Clearing Agency elects to discontinue its services as
securities depository with respect to the Trust Securities and a successor
Clearing Agency is not appointed within 90 days after such discontinuance
pursuant to Section 5.2(b); (y) the Regular Trustees elect after consultation
with the Grantor to terminate the book-entry system through the Clearing Agency
with respect to the Trust Securities; or (z) there is a Trust Enforcement Event;
then:
(i) definitive Trust Security certificates shall be prepared by the
Regular Trustees on behalf of the Trust with respect to such Trust Securities;
and
(ii) upon notice by the Clearing Agency of its election to
discontinue its services, the Regular Trustees shall execute and deliver to the
Property Trustee for authentication such definitive certificates accompanied by
an authentication order and accompanied by registration instructions to be
delivered to Trust Security beneficial owners in accordance with the
instructions of the Clearing Agency. Neither the Trustees nor the Trust shall be
liable for any delay in delivery of such instructions and each of them may
conclusively rely on and shall be protected in relying on, said instructions of
the Clearing Agency. The Definitive Trust Security Certificates shall be
printed, lithographed or engraved or may be produced in any other manner as is
reasonably acceptable to the Property Trustee, as evidenced by its
authentication thereof, and may have such letters, numbers or other marks of
identification or designation and such legends or endorsements as the Regular
Trustee may deem appropriate, 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 stock exchange on which Trust Securities may be listed, or to conform to
usage.
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Section 5.3. Registration, Transfer and Exchange of Trust Securities. The
Property Trustee shall cause a Register (the "Register") to be kept at the
office of the Registrar in which, subject to such reasonable regulations as the
Property Trustee and the Registrar may prescribe, the Registrar shall provide
for the registration of Trust Security certificates and of transfers and
exchanges of Trust Security certificates as herein provided. The Grantor hereby
appoints The Bank of New York as the Registrar. The Registrar shall also act as
transfer agent. The Grantor may remove the Registrar and, upon removal or
resignation of the Registrar, appoint a successor Registrar. Subject to the
terms and conditions of this Trust Agreement, the Registrar shall register the
transfers on the Register from time to time of Trust Security certificates upon
any surrender thereof by the Holder in person or by a duly authorized attorney,
properly endorsed or accompanied by a properly executed instrument of transfer
or endorsement, together with evidence of the payment of any transfer taxes as
may be required by law. Upon such surrender, the Property Trustee shall, upon
the order of a Regular Trustees, authenticate and make available by delivery a
new Trust Security certificate representing the same number of Preferred
Securities in accordance with Section 5.1(b) and deliver the same to or upon the
order of the Person entitled thereto.
At the option of a Holder, Trust Security certificates may be exchanged
for other authorized denominations of Trust Security certificates of a like
aggregate liquidation amount. Upon surrender of a Trust Security certificate at
the office of the Registrar or such other office as the Property Trustee may
designate for the purpose of effecting an exchange of Trust Security
certificates, subject to the terms and conditions of this Trust Agreement, the
Property Trustee shall upon the order of a Regular Trustee authenticate and make
available for delivery a new Trust Security certificate of an authorized
denomination and of a like aggregate liquidation amount as the Trust Security
certificate surrendered.
As a condition precedent to the registration of the transfer or exchange
of any Trust Security certificate, the Registrar may require (i) production of
proof satisfactory to it as to the identity and genuineness of any signature;
and (ii) compliance with such regulations, if any, as the Delaware Trustee or
the Registrar may establish not inconsistent with the provisions of this Trust
Agreement.
No service charge shall be made to a Holder of Trust Securities for any
registration of transfer or exchange of Trust Security certificates, but the
Property Trustee or the Registrar shall require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
transfer or exchange of Trust Security certificates.
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Neither the Property Trustee nor the Registrar shall be required to
register the transfer of or exchange any Trust Security certificate for a period
beginning 15 days prior to the mailing of a notice of redemption and ending at
the close of business on the date of such mailing.
Section 5.4. Lost or Stolen Trust Securities, Etc. In case any Trust
Security certificate shall be mutilated, destroyed, lost or stolen and in the
absence of notice to the Property Trustee that such Trust Security has been
acquired by a protected purchaser (as such term is used in Section 8-405(a)(1)
of the Delaware Uniform Commercial Code), the Property Trustee shall upon the
order of a Regular Trustee, authenticate and make available for delivery a Trust
Security certificate of like form and tenor in exchange and substitution for
such mutilated Trust Security certificate or in lieu of and in substitution for
such destroyed, lost or stolen Trust Security certificate, provided, however,
that the Holder thereof provides the Property Trustee with (i) evidence
satisfactory to the Property Trustee of such destruction, loss or theft of such
Trust Security certificate, of the authenticity thereof and of his ownership
thereof, (ii) reasonable indemnification satisfactory to the Property Trustee,
and (iii) payment of any expense (including fees, charges and expenses of the
Property Trustee) in connection with such execution and delivery. Any duplicate
Trust Security certificate issued pursuant to this Section 5.4 shall constitute
complete and indefeasible evidence of beneficial ownership in the Trust, as if
originally issued, whether or not the lost, stolen or destroyed Trust Security
certificate shall be found at any time.
Section 5.5. Cancellation and Destruction of Surrendered Trust Securities.
All Trust Security certificates surrendered to the Property Trustee shall be
canceled by the Property Trustee and, upon receipt of written request from the
Regular Trustees, returned to the Regular Trustees.
Section 5.6. Surrender of Trust Securities and Withdrawal of Preferred
Securities. Any Person who is the beneficial owner (an "Owner") of the Trust
Securities represented by the global certificate held by a Clearing Agency as
reflected in the records of the Clearing Agency or successor Clearing Agency or,
if a participant in the Clearing Agency is not the Owner, then as reflected in
the records of a Person maintaining an account with such Clearing Agency
(directly or indirectly), in accordance with the rules of such Clearing Agency,
may withdraw all, but not less than all, of the Preferred Securities represented
by such Trust Securities by providing a written notice and an agreement to be
bound by the terms of the Partnership Agreement to the Property Trustee at the
Corporate Trust Office or at such other office as the Property Trustee may
designate for such withdrawals, all in form satisfactory to the Regular
Trustees. Within three (3)
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business days after such request has been properly made, (i) the Owner or the
Owner's agent shall instruct the Clearing Agency to reduce the number of Trust
Securities represented by the global certificate held by the Property Trustee on
behalf the Clearing Agency by an amount equal to the number of Trust Securities
to be so withdrawn by the Owner, (ii) the Partnership shall issue to the Owner a
certificate, in form substantially similar to that certificate attached as
Exhibit A to the Partnership Agreement, representing the number of Preferred
Securities so withdrawn (and equal to the number of Trust Securities so reduced
pursuant to subsection (i) hereof) and (iii) the Property Trustee, on behalf of
the Trust, shall notify the Partnership of the withdrawal and the Partnership
shall reduce the number of Preferred Securities represented by the global
certificate held by the Property Trustee by a like amount. If an Owner of Trust
Securities withdraws Preferred Securities in accordance with this Section 5.6,
such Owner of Trust Securities shall cease to be an Owner with respect to the
withdrawn Trust Securities.
An Owner who wishes to withdraw Preferred Securities in accordance with
this Section 5.6 will be required to provide the Grantor with a completed Form
W-9 or such other documents or information as are requested by the Grantor for
tax reporting purposes and thereafter shall be admitted to the Grantor as a
preferred limited partner of the Grantor upon such Owner's receipt of a
certificate evidencing such Preferred Securities registered in such Owner's
name.
The Partnership shall deliver the Preferred Securities represented by the
surrendered Trust Securities to the Owner in accordance with this Section 5.6,
at the request, risk and expense of the Owner and for the account of the Owner
thereof, such delivery may be made at such other place as may be designated by
such Owner.
Notwithstanding anything in this Section 5.6 to the contrary, if the
Preferred Securities represented by Trust Securities have been called for
redemption in accordance with the Partnership Agreement, no Owner of such Trust
Securities may withdraw any or all of the Preferred Securities represented by
such Trust Securities.
Section 5.7. Redeposit of Preferred Securities. Subject to the terms and
conditions of this Trust Agreement, any holder of Preferred Securities may
redeposit withdrawn Preferred Securities under this Trust Agreement by delivery
to the Partnership of a certificate or certificates for the Preferred Securities
to be deposited, properly endorsed or accompanied, if required by the
Partnership, by a properly executed instrument of transfer or endorsement in
form satisfactory to the Partnership and in compliance with the terms of the
Partnership Agreement, together
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with all such certifications as may be required by the Partnership in its sole
discretion and in accordance with the provisions of the Partnership Agreement.
Within a reasonable period after such deposit is properly made, the Partnership
shall issue the redeposited Preferred Securities to the Property Trustee, and
the Regular Trustees shall instruct the Property Trustee by written order to
increase the number of Trust Securities represented by the global certificate
held by the Property Trustee by an amount equal to the Preferred Securities to
be deposited. The Trust Securities that represent such redeposited Preferred
Securities will not be issued in certificated form. The Partnership will accept
the deposit of such Preferred Securities only upon payment by such holder of
Preferred Securities to the Partnership of all taxes and other governmental
charges and any fees payable in connection with such deposit and the transfer of
the deposited Preferred Securities.
If required by the Partnership, Preferred Securities presented for deposit
at any time shall also be accompanied by an agreement or assignment, or other
instrument satisfactory to the Partnership, that will provide for the prompt
transfer to the Property Trustee or its nominee of any distribution or other
right that any Person in whose name the Preferred Securities are registered may
thereafter receive upon or in respect of such deposited Preferred Securities, or
in lieu thereof such agreement of indemnity or other agreement as shall be
satisfactory to the Property Trustee.
Section 5.8. Filing Proofs, Certificates and Other Information. Any Person
presenting Preferred Securities for redeposit in accordance with Section 5.7 may
be required from time to time to file such proof of residence or other
information, to execute such Preferred Security certificates and to make such
representations and warranties as the Partnership may reasonably deem necessary
or proper. The Partnership may withhold or delay the delivery of any Trust
Security or Trust Securities, the transfer, redemption or exchange of any Trust
Security or Trust Securities or the making of any distribution until such proof
or other information is filed, such certificates are executed or such
representations and warranties are made.
Section 5.9. CUSIP Numbers. The Trust, in issuing the Trust Securities,
may use "CUSIP" numbers applicable to such Trust Securities (if then generally
in use), and the Property 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 Trust 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 Trust Securities and any redemption shall
not be affected by any defect in or omission of such numbers.
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ARTICLE VI
DISTRIBUTIONS AND OTHER RIGHTS OF HOLDERS OF TRUST SECURITIES
Section 6.1. Distributions on Preferred Securities. Whenever the Property
Trustee shall receive any cash distribution representing a distribution on the
Preferred Securities (whether or not distributed by the Grantor on the regular
distribution date therefor) or payment under the Guarantee in respect thereof,
the Property Trustee acting directly or through any Paying Agent shall
distribute to Holders of Trust Securities as of the record date fixed pursuant
to Section 6.4, such amounts in proportion to the respective numbers of
Preferred Securities represented by the Trust Securities held by such Holders
(the "Distributions"). Distributions on the Trust Securities will be deferred if
and for so long as the Partnership defers payments to the Trust on Preferred
Securities. The Partnership will provide the Property Trustee with five days
notice of its intention to defer payment to the Trust.
Section 6.2. Redemptions of Preferred Securities. Whenever the Grantor
shall elect or is required to redeem Preferred Securities in accordance with the
Partnership Agreement, it shall (unless otherwise agreed in writing with the
Property Trustee) give the Property Trustee not less than 40 days' prior notice
thereof to redeem the Trust Securities. The Property Trustee shall, as directed
by the Grantor, mail, or cause to be mailed, first-class postage prepaid, notice
of the redemption of the Trust Securities to be redeemed in connection herewith,
not less than 30 and not more than 90 days prior to the date fixed for
redemption (the "Redemption Date") of the Trust Securities. Such notice shall be
mailed to the Holders of the Trust Securities to be redeemed, at the addresses
of such Holders as the same appear on the records of the Registrar. No defect in
the notice of redemption or in the mailing or delivery thereof or publication of
its contents shall affect the validity of the redemption proceedings. The
Grantor shall provide the Property Trustee with such notice, and each such
notice and the notice of redemption from the Property Trustee to the Holders
shall state: the Redemption Date; the redemption price at which the Trust
Securities are to be redeemed; that all outstanding Trust Securities are to be
redeemed or, in the case of a redemption of fewer than all outstanding Trust
Securities, the number of such Trust Securities to be so redeemed; the place or
places where Trust Securities to be redeemed are to be surrendered for
redemption; and specifying the CUSIP number assigned to the Trust Securities. In
case fewer than all the outstanding Trust Securities are to be redeemed, the
Trust Securities to be redeemed shall be selected by lot or pro rata (as nearly
as may be practicable without creating fractional Trust Securities) or by any
other equitable method determined by the Property Trustee.
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If, when a notice redemption is mailed, the notice of redemption shall be of no
effect unless such monies are so received on or before the Redemption Date.
The Grantor agrees that if a partial redemption of the Preferred
Securities would result in a delisting of the Trust Securities from any national
exchange on which the Trust Securities are then listed, the Grantor will redeem
the Preferred Securities only in whole.
On the date of any such redemption of Trust Securities, provided that the
Grantor (or Penelec pursuant to the Guarantee) shall then have deposited with
the Trust the aggregate amount payable upon redemption of the Trust Securities
to be redeemed, the Property Trustee, on behalf of the Trust, shall redeem
(using the funds so deposited with it) Trust Securities representing the same
number of Preferred Securities (in like denominations and like aggregate
liquidation amounts) redeemed by the Grantor.
Notice having been mailed by the Trustee as aforesaid, from and after the
Redemption Date (unless the Grantor shall have failed to redeem the Preferred
Securities to be redeemed by it as set forth in the Grantor's notice provided
for in this Section 6.2 and Penelec shall have failed to pay the redemption
price of the Preferred Securities under the Guarantee), the Trust Securities
called for redemption shall be deemed no longer to be outstanding and all rights
of the Holders of Trust Securities (except the right to receive the redemption
price in cash upon surrender of Trust Securities) shall cease and terminate.
Upon surrender in accordance with said notice of the Trust Securities endorsed
or assigned for transfer, if the Property Trustee shall so require, the Holders
of such Trust Securities shall receive for each such Trust Security an amount
equal to the redemption price for each Preferred Security, in addition to
accrued and unpaid Distributions thereon to the date fixed for redemption.
If fewer than all of the Trust Securities of any Holder are called for
redemption, the Property Trustee will deliver to the Holder of such Trust
Securities upon surrender of the certificate evidencing such Trust Securities a
new certificate evidencing the number of Trust Securities not called for
redemption.
Section 6.3. Distributions in Liquidation of Grantor. Upon and to the
extent of receipt by the Trust of any distribution (of monies or subordinated
debentures as provided in the Partnership Agreement) from the Grantor, upon the
liquidation of the Grantor or otherwise, or any payment under the Guarantee in
respect thereof, after satisfaction of creditors of the Trust as required by
applicable law, the Property Trustee shall distribute, in cash or in kind, to
the Holders of Trust Securities as of the record
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date fixed pursuant to Section 6.4, the Trust Estate, in proportion to the
respective number of Preferred Securities which were represented by the Trust
Securities held by such Holders.
Section 6.4. Fixing of Record Date for Holders of Trust Securities. The
record date for Distributions provided for in Section 6.5 shall be the 15th day
of the month in which the Distributions date falls. Whenever any other
Distribution (other than upon any redemption) shall become payable, or whenever
the Property Trustee shall receive notice of any meeting at which holders of
Preferred Securities are entitled to vote or of which holders of Preferred
Securities are entitled to notice, the Regular Trustees shall in each such
instance fix a record date (which shall be the same date as the record date
fixed by the General Partner with respect to the Preferred Securities, of which
the Regular Trustees shall promptly inform the Property Trustee) for the
determination of the Holders of Trust Securities who shall be entitled (i) to
receive such Distribution, and (ii) to receive notice of, and to give
instructions for the exercise of voting rights at, any such meeting.
Section 6.5. Payment of Distributions. The Property Trustee shall act as
Paying Agent and designates the Corporate Trust Office as the place of payment
of the redemption price of and of Distributions in liquidation on the Trust
Securities. The aforesaid appointment and designation shall remain in effect
until changed by the Property Trustee. Payments of Distributions on the Trust
Securities shall be payable by check mailed to the addresses of the Holders
thereof as of the record date on and commencing . Payments of the redemption
price of Trust Securities shall be made upon surrender of such Trust Securities
at the office of the Paying Agent. Interest will be computed on the basis of a
360-day year of twelve 30 day months. If such payment date is not a business day
then such payment date shall be on the business day immediately preceeding such
payment date. The Grantor shall pay semiannual Distributions on, the redemption
price of, and distributions in liquidation on, the Preferred Securities directly
to the Paying Agent for distribution to the Holders of the Trust Securities in
accordance with the terms of this Trust Agreement.
Section 6.6. Special Representative and Voting Rights.
(a) If the holders of the Preferred Partner Interests (as defined in the
Partnership Agreement), acting as a single class, are entitled to appoint and
authorize a Special Representative pursuant to Section 13.02(d) of the
Partnership Agreement, upon written notice from the Partnership, the Property
Trustee shall notify the Holders of the Trust Securities of such right, request
direction of each Holder of a Trust Security as to the appointment of a Special
Representative and vote the Preferred
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Securities represented by such Trust Security in accordance with such direction.
If the General Partner fails to convene a general meeting of the Partnership as
required in Section 13.02(d) of the Partnership Agreement, upon written notice
of the Partnership, the Property Trustee shall notify the Holders of the Trust
Securities and, if so directed by the Holders of Trust Securities representing
Preferred Securities constituting at least 10% of the aggregate stated
liquidation preference of the outstanding Preferred Partner Interests (as
defined in the Partnership Agreement), shall convene such meeting.
(b) Upon receipt of notice of any meeting at which the Holders of
Preferred Securities are entitled to vote, the Property Trustee shall, as soon
as practicable thereafter, mail to the Holders of Trust Securities a notice,
which shall be provided by the General Partner and which shall contain (i) such
information as is contained in such notice of meeting, (ii) a statement that the
Holders of Trust Securities at the close of business on a specified record date
fixed pursuant to Section 6.4 will be entitled, subject to any applicable
provision of law or of the Partnership Agreement, to instruct the Property
Trustee as to the exercise of the voting rights pertaining to the amount of
Preferred Securities represented by their respective Trust Securities, and (iii)
a brief statement as to the manner in which such instructions may be given. Upon
the written request of a Holder of a Trust Security on such record date, the
Property Trustee shall vote or cause to be voted the number of Preferred
Securities represented by such Trust Security in accordance with the
instructions set forth in such request. The Grantor hereby agrees to take all
reasonable action that may be deemed necessary by the Property Trustee in order
to enable the Property Trustee to vote such Preferred Securities or cause such
Preferred Securities to be voted. In the absence of specific instructions from
the Holder of a Trust Security, the Property Trustee will abstain from voting to
the extent of the Preferred Securities represented by such Trust Security.
Section 6.7. Changes Affecting Preferred Securities and Reclassifications,
Recapitalizations, Etc Upon any consolida- tion, amalgamation, conversion,
merger, replacement or convey- ance, transfer or lease by the Partnership of its
properties and assets as an entirety in accordance with Section 13.02(e) of the
Partnership Agreement, the Property Trustee shall, upon the instructions of the
Grantor, treat any Successor Securities or other property (including cash) that
shall be received by the Property Trustee in exchange for or upon conversion of
or in respect of the Preferred Securities as part of the Trust Estate, and Trust
Securities then outstanding shall thenceforth represent the proportionate
interests of Holders thereof in the new deposited property so received in
exchange for or upon conversion or in respect of such Preferred Securities.
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ARTICLE VII
TRUSTEES
Section 7.1 Number of Trustees. The number of Trustees initially
shall be five (5), and:
(a) At any time before the issuance of any Trust Securities, the Grantor
may, by written instrument, increase or decrease the number of Trustees; and
(b) After the issuance of any Trust Securities, the number of Trustees may
be increased or decreased by vote of the Holders of Trust Securities; provided,
however, that the number of Trustees shall in no event be less than one (1);
provided further that (1) if required by the Business Trust Act, one Trustee
shall be the Delaware Trustee; and (2) one Trustee shall be the Property Trustee
for so long as this Trust Agreement is required to qualify as an indenture under
the Trust Indenture Act, and such Property Trustee may also serve as Delaware
Trustee if it meets the applicable requirements.
Section 7.2 Delaware Trustee. If required by the Business Trust Act,
one Trustee (the "Delaware Trustee") shall be:
(a) A natural person who is a resident of the State of Delaware; or
(b) If not a natural person, an entity which has its principal place of
business in the State of Delaware, and otherwise meets the requirements of
applicable law, provided that, if the Property Trustee has its principal place
of business in the State of Delaware and otherwise meets the requirements of
applicable law, then the Property Trustee may also be the Delaware Trustee (in
which case Section 4.11 shall have no application).
Section 7.3 Property Trustee; Eligibility.
(a) There shall at all times for so long as this Trust Agreement is
required to qualify as an indenture under the Trust Indenture Act, be one
Trustee which shall act as Property Trustee (the "Property Trustee") which
shall:
(i) not be an Affiliate of the Grantor; and
(ii) be a corporation organized and doing business under the laws of
the United States of America or any state or territory thereof or of the
District of Columbia, or a Person permitted by the Commission to act as an
institutional trustee under the Trust Indenture Act, authorized under such laws
to
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exercise corporate trust powers, having a combined capital and surplus of at
least $50,000,000, and subject to supervision or examination by federal, state,
territorial or District of Columbia authority. If such Person publishes reports
of condition at least annually, pursuant to law or to the requirements of the
supervising or examining authority referred to above, then for the purposes of
this Section 7.3(a)(ii), the combined capital and surplus of such Person shall
be deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published.
(b) If at any time for so long as this Trust Agreement is required to
qualify as an indenture under the Trust Indenture Act, the Property Trustee
shall cease to be eligible to so act under Section 7.3(a), the Property Trustee
shall immediately resign in the manner and with the effect set forth in Section
7.7(c).
(c) If the Property Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Property Trustee shall in all respects comply with the provisions of Section
310(b) of the Trust Indenture Act.
(d) The initial Property Trustee shall be: The Bank of New York, 101
Barclay Street, Floor 21 West, New York, New York 10286.
Section 7.4 Qualifications of the Regular Trustees and the Delaware
Trustee Generally. Each Regular Trustee and the Delaware Trustee (unless the
Property Trustee also acts as Delaware Trustee) shall be either a natural person
who is at least 21 years of age or a legal entity that shall act through one or
more Responsible Officers.
Section 7.5 Regular Trustees. The initial Regular Trustees shall be:
Except as expressly set forth in this Trust Agreement and except if a
meeting of the Regular Trustees is called with respect to any matter over which
the Regular Trustees have power to act, any power of the Regular Trustees may be
exercised by, or with the consent of, any one such Regular Trustee.
Section 7.6 Delaware Trustee. The initial Delaware Trustee shall be:
The Bank of New York (Delaware), White Clay Center, Route 273, Newark,
Delaware 19711.
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Section 7.7 Appointment, Removal and Resignation of Trustees
(a) Subject to Section 7.7(b), Trustees may be appointed or removed
without cause at any time by the Grantor.
(b) (i) The Trustee that acts as Property Trustee shall not be removed
until a successor Trustee possessing the qualifications to act as Property
Trustee under Section 7.3 (a "Successor Property Trustee") has been appointed
and has accepted such appointment by written instrument executed by such
Successor Property Trustee and delivered to the removed Property Trustee, the
Regular Trustees and the Grantor;
(ii) The Trustee that acts as Delaware Trustee shall not be removed
until a successor Trustee possessing the qualifications to act as Delaware
Trustee under Sections 7.2 and 7.4 (a "Successor Delaware Trustee") has been
appointed and has accepted such appointment by written instrument executed by
such Successor Delaware Trustee and delivered to the removed Delaware Trustee,
the Regular Trustees and the Grantor;
(iii) No removal of the Property Trustee or the Delaware Trustee
shall be effective until all of the fees, charges, and expenses incurred by such
entity have been paid.
(c) A Trustee appointed to office shall hold office until his or its
successor shall have been appointed or until his or its dissolution,
termination, bankruptcy, death, removal or resignation. Any Trustee may resign
from office (without need for prior or subsequent accounting) by an instrument
in writing signed by the Trustee and delivered to the Grantor and the Trust,
which resignation shall take effect upon such delivery or upon such later date
as is specified therein; provided, however, that:
(i) no such resignation of the Trustee that acts as the Property
Trustee shall be effective:
(A) until a Successor Property Trustee has been appointed and has
accepted such appointment by instrument executed by such Successor Property
Trustee and delivered to the Trust, the Grantor, the Regular Trustees and the
resigning Property Trustee; or
(B) until the assets of the Trust have been completely liquidated
and the proceeds thereof distributed to the Holders of the Trust Securities;
(ii) no such resignation of the Trustee that acts as the Delaware
Trustee shall be effective until a Successor Delaware Trustee has been appointed
and has accepted such
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appointment by instrument executed by such Successor Delaware Trustee and
delivered to the Trust, the Grantor, the Regular Trustees and the resigning
Delaware Trustee; and
(iii) no such resignation of the Property Trustee or the Delaware
Trustee shall be effective until all of the fees, charges, and expenses incurred
by such entity have been paid.
(d) The Grantor shall use its best efforts to promptly appoint a Successor
Delaware Trustee or Successor Property Trustee, as the case may be, if the
Delaware Trustee or the Property Trustee delivers an instrument of resignation
in accordance with this Section 7.7.
(e) If no Successor Property Trustee or Successor Delaware Trustee shall
have been appointed and accepted appointment as provided in this Section 7.7
within 30 days after delivery to the Grantor and the Trust of an instrument of
resignation, the resigning Property Trustee or Delaware Trustee, as applicable,
may petition any court of competent jurisdiction for appointment of a Successor
Property Trustee or Successor Delaware Trustee. Such court may thereupon, after
prescribing such notice, if any, as it may deem proper and prescribe, appoint a
Successor Property Trustee or Successor Delaware Trustee, as the case may be.
(f) No Property Trustee or Delaware Trustee shall be liable for the acts
or omissions to act of any Successor Property Trustee or Successor Delaware
Trustee, as the case may be.
Section 7.8 Vacancies among Trustees. If a Trustee ceases to hold office
for any reason and the number of Trustees is not reduced pursuant to Section
7.1, or if the number of Trustees is increased pursuant to Section 7.1, a
vacancy shall occur. A resolution certifying the existence of such vacancy by
the Regular Trustees or, if there are more than two Regular Trustees, a majority
of the Regular Trustees shall be conclusive evidence of the existence of such
vacancy. The vacancy shall be filled with a Trustee appointed in accordance with
Section 7.7.
Section 7.9 Effect of Vacancies. The death, resignation, retirement,
removal, bankruptcy, dissolution, liquidation, incompetence or incapacity to
perform the duties of a Trustee shall not operate to dissolve, terminate or
annul the Trust or terminate this Trust Agreement. Whenever a vacancy in the
number of Regular Trustees shall occur, until such vacancy is filled by the
appointment of a Regular Trustee in accordance with Section 7.8, the Regular
Trustees in office, regardless of their number, shall have all the powers
granted to the Regular Trustees and shall discharge all the duties imposed upon
the Regular Trustees by this Trust Agreement.
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Section 7.10 Merger, Conversion, Consolidation or Succession to Business.
Any Person into which the Property Trustee or the Delaware Trustee, as the case
may be, may be merged or converted or with which either may be consolidated, or
any Person resulting from any merger, conversion or consolidation to which the
Property Trustee or the Delaware Trustee, as the case may be, shall be a party,
or any Person succeeding to all or substantially all the corporate trust
business of the Property Trustee or the Delaware Trustee, as the case may be,
shall be the Successor Property Trustee or the Successor Delaware Trustee, as
the case may be, hereunder, provided such Person shall be otherwise qualified
and eligible under this Article, without the execution or filing of any paper or
any further act on the part of any of the parties hereto.
Section 7.11 Status of Trust. It is intended that the Trust shall not be
an "Investment Company" under the 1940 Act.
ARTICLE VIII
DISSOLUTION AND TERMINATION
Section 8.1. Dissolution of Trust
(a) The Trust shall dissolve:
(i) upon the bankruptcy, insolvency or dissolution of the Grantor;
(ii) upon the entry of a decree of judicial dissolution of the
Grantor or the Trust; or
(iii) when all of the Trust Securities shall have been called for
redemption and the amounts necessary for redemption thereof shall have been paid
to the Holders in accordance with the terms of the Trust Securities.
(b) As soon as is practicable after the occurrence of an event referred to
in Section 8.1(a), and upon completion of the winding up of the Trust in
accordance with Section 8.2, the Regular Trustees shall prepare and file a
certificate of cancellation with the Secretary of State of the State of
Delaware. This Trust Agreement will terminate upon the effective time and date
of the certificate of cancellation filed with the Secretary of State of the
State of Delaware. Upon termination of this Trust Agreement and the Trust in
accordance with the foregoing, the respective obligations and responsibilities
of the Trustees and the Grantor shall terminate.
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Section 8.2. Winding Up. After the dissolution of the Trust and after the
satisfaction of creditors of the Trust, if any, as required by applicable law,
the remaining assets of the Trust shall be distributed in cash or in kind to the
Holders of the Trust Securities pro rata in proportion to the respective numbers
of Preferred Securities represented by the Trust Securities held by such
Holders.
ARTICLE IX
MERGER, CONSOLIDATION, ETC. OF GRANTOR OR TRUST
Section 9.1. Limitation on Permitted Merger Consolidation, Etc. of
Grantor. The Grantor agrees that it will not consolidate, amalgamate, merge with
or into, or be replaced by, or convey, transfer or lease its properties and
assets substantially in their entirety to any Person without the consent of the
Holders of [a majority] of the aggregate liquidation amount (including the
stated amount that would be paid on redemption, liquidation or otherwise, plus
accumulated and unpaid Distributions to the date upon which the voting
percentages are determined) of the Trust Securities unless permitted by Section
13.02(e) of the Partnership Agreement and (i) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not cause the
Trust Securities to be delisted by any national securities exchange or other
organization on which the Trust Securities are then listed, (ii) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease does not
cause the Trust Securities 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 of 1933, as amended, and
(iii) prior to such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, Grantor has received an opinion of counsel (which
may be regular counsel to Penelec or an Affiliate, but not an employee thereof)
experienced in such matters to the effect that Holders of outstanding Trust
Securities will not recognize any gain or loss for Federal income tax purposes
as a result of the merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease.
Section 9.2. Mergers and Consolidations of Trust
(a) The Trust may not consolidate, amalgamate, convert, merge with or
into, or be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, except as described in Article VIII
and this Article IX.
(b) The Trust may, with the consent of the Grantor and without the consent
of the Holders of the Trust Securities, the
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Delaware Trustee, the Property Trustee or the Regular Trustees consolidate,
amalgamate, merge, convert, with or into, or be replaced by a trust organized as
such under the laws of any State of the United States; provided that:
(i) if the Trust is not the survivor, such successor entity (the
"Successor Entity") either:
(A) expressly assumes all of the obligations of the Trust under the
Trust Securities; or
(B) substitutes for the Trust Securities other securities having
substantially the same terms as the Trust Securities (the "Successor Trust
Securities") so long as the Successor Trust Securities rank the same as the
Trust Securities rank with respect to Distributions, assets and payments upon
liquidation, redemption and otherwise;
(ii) the Grantor expressly acknowledges a trustee of the Successor
Entity that possesses the same powers and duties as the Property Trustee as the
Holder of the Preferred Securities;
(iii) the Trust Securities or any Successor Trust Securities are
listed, or any Successor Trust Securities will be listed upon notification of
issuance, on any national securities exchange or with another organization on
which the Trust Securities are then listed or quoted;
(iv) such merger, conversion, consolidation, amalgamation or
replacement does not cause the Trust Securities (including any Successor Trust
Securities) to be downgraded by any nationally recognized statistical rating
organization;
(v) such merger, conversion, consolidation, amalgamation or
replacement does not adversely affect the rights, preferences and privileges of
the Holders of the Trust Securities (including any Successor Trust Securities)
in any material respect;
(vi) such Successor Entity has a purpose substantially identical to
that of the Trust; and
(vii) prior to such merger, conversion, consolidation, amalgamation
or replacement, the Grantor has received an opinion of counsel (which may be
regular counsel to Penelec or an Affiliate, but not an employee thereof) to the
Trust experienced in such matters to the effect that:
(A) such merger, conversion, consolidation, amalgamation or
replacement will not adversely affect the rights, preferences and privileges of
the Holders of the Trust Securities (including any Successor Trust Securities)
in any material
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respect (other than with respect to any dilution of the Holders' interest in
the new entity);
(B) following such merger, conversion, consolidation, amalgamation
or replacement, neither the Trust nor the Successor Entity will be required to
register as an Investment Company under the 1940 Act;
(C) following such merger, conversion, consolidation, amalgamation
or replacement, the Trust (or the Successor Entity) will not be classified as an
association or a publicly traded partnership taxable as a corporation for United
States federal income tax purposes; and
(D) following such merger, conversion, consolidation, amalgamation
or replacement, the Partnership will not be classified as an association or a
publicly traded partnership taxable as a corporation for United States federal
income tax purposes.
(c) The Trust shall not, except with the consent of Holders of 100% in
liquidation amount of the Trust Securities, consolidate, amalgamate, convert,
merge with or into, or be replaced by any other entity or permit any other
entity to consolidate, amalgamate, merge with or into, or replace it if such
consolidation, amalgamation, conversion, merger or replacement would cause the
Trust or Successor Entity to be classified as an association or a publicly
traded partnership taxable as a corporation for United States federal income tax
purposes.
ARTICLE X
LIMITATION OF LIABILITY OF HOLDERS OF TRUST SECURITIES, TRUSTEES OR OTHERS
Section 10.1 Liability.
(a) Except as expressly set forth in this Trust Agreement and the terms of
the Trust Securities, the Grantor and the Trustees shall not be:
(i) personally liable for the return of any portion of the capital
contributions (or any return thereon) of the Holders of the Trust Securities,
which shall be made solely from assets of the Trust; and
(ii) required to pay to the Trust or to any Holder of Trust
Securities any deficit upon dissolution or termination of the Trust or
otherwise.
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(b) Notwithstanding any other provision herein, the Grantor, by entering
into this Trust Agreement, agrees that it shall be liable directly to any
creditor or claimant of or against the Trust for the entire amount of all of the
debts and obligations of the Trust (other than obligations to the Holders of
Trust Securities in their capacities as Holders) to the extent not satisfied out
of the Trust's assets as if the Grantor were the general partner of a limited
partnership formed under the Delaware Revised Uniform Limited Partnership Act.
This Section 10.1(b) will automatically terminate upon (i) the adoption of final
or temporary United States federal tax regulations which, if the Trust were not
classified as a grantor trust for United States federal income tax purposes,
would result in the classification of the Trust as a partnership for United
States federal income tax purposes without regard to its organic characteristics
and (ii) the taking of such action, if any, by the Trust or the Holders of Trust
Securities as may be necessary to achieve such classification.
(c) Pursuant to Section 3803(a) of the Business Trust Act, the Holders of
the Trust Securities shall be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit organized
under the General Corporation Law of the State of Delaware.
Section 10.2 Exculpation
(a) No Company Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust or any Covered Person for any
loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Company Indemnified Person in good faith on behalf of the Trust
and in a manner such Company Indemnified Person reasonably believed to be within
the scope of the authority conferred on such Company Indemnified Person by this
Trust Agreement or by law, except that a Company Indemnified Person shall be
liable for any such loss, damage or claim incurred by reason of such Company
Indemnified Person's gross negligence or willful misconduct with respect to such
acts or omissions.
(b) A Company Indemnified Person shall be fully protected in relying in
good faith upon the records of the Trust and upon such information, opinions,
reports or statements presented to the Trust by any Person as to matters the
Company Indemnified 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 Trust, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts
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pertinent to the existence and amount of assets from which Distributions to
Holders of Trust Securities might properly be paid.
Section 10.3 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
Trust or to any other Covered Person, an Indemnified Person acting under this
Trust Agreement shall not be liable to the Trust or to any other Covered Person
for its good faith reliance on the provisions of this Trust Agreement. The
provisions of this Trust Agreement, to the extent that they restrict the duties
and liabilities of an Indemnified Person otherwise existing at law or in equity
(other than the duties imposed on the Property Trustee under the Trust Indenture
Act), are agreed by the parties hereto to replace such other duties and
liabilities of such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between an
Indemnified Person and any Covered Person; or
(ii) whenever this Trust 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 Trust
or any Holder of Trust Securities, the Indemnified Person shall resolve such
conflict of interest, take such action or provide 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, 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 Trust 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 Trust Agreement an Indemnified Person is permitted or
required to make a decision:
(i) in its "discretion" or under a grant of similar authority, the
Indemnified Person shall be entitled to consider 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 Trust or any
other Person; or
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(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 Trust Agreement or by
applicable law.
Section 10.4 Indemnification.
(a) (i) To the fullest extent permitted by applicable law, the Grantor
shall indemnify and hold harmless any Company Indemnified Person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Trust) by reason
of the fact that he is or was a Company Indemnified Person against expenses
(including reasonable attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the Trust,
and, with respect to any criminal action or proceeding, had no reasonable cause
to believe his conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the Company Indemnified Person did not act in good faith and in a manner which
he reasonably believed to be in or not opposed to the best interests of the
Trust, and, with respect to any criminal action or proceeding, had reasonable
cause to believe that his conduct was unlawful.
(ii) The Grantor shall indemnify, to the fullest extent permitted by
law, any Company Indemnified Person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action or suit by or in the
right of the Trust to procure a judgment in its favor by reason of the fact that
he is or was a Company Indemnified Person against expenses (including reasonable
attorneys' fees) actually and reasonably incurred by him in connection with the
defense or settlement of such action or suit if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the Trust and except that no such indemnification shall be made in respect of
any claim, issue or matter as to which such Company Indemnified Person shall
have been adjudged to be liable to the Trust unless and only to the extent that
the Court of Chancery of Delaware or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which such Court
of Chancery or such other court shall deem proper.
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(iii) To the extent that a Company Indemnified Person shall be
successful on the merits or otherwise (including dismissal of an action without
prejudice or the settlement of an action without admission of liability) in
defense of any action, suit or proceeding referred to in paragraphs (i) and (ii)
of this Section 10.4(a), or in defense of any claim, issue or matter therein, he
shall be indemnified, to the fullest extent permitted by law, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of this
Section 10.4(a) (unless ordered by a court) shall be made by the Grantor only as
authorized in the specific case upon a determination that indemnification of the
Company Indemnified Person is proper in the circumstances because he has met the
applicable standard of conduct set forth in paragraphs (i) and (ii). Such
determination shall be made (1) by the Regular Trustees by a majority vote of a
Quorum consisting of such Regular Trustees who were not parties to such action,
suit or proceeding, or (2) if such Quorum is not obtainable, or, even if
obtainable, if a Quorum of disinterested Regular Trustees so directs, by
independent legal counsel in a written opinion.
(v) To the fullest extent permitted by law, expenses (including
reasonable attorneys' fees) incurred by a Company Indemnified Person in
defending a civil, criminal, administrative or investigative action, suit or
proceeding referred to in paragraphs (i) and (ii) of this Section 10.4(a) shall
be paid by the Grantor in advance of the final disposition of such action, suit
or proceeding upon receipt of an undertaking by or on behalf of such Company
Indemnified Person to repay such amount if it shall ultimately be determined
that he is not entitled to be indemnified by the Grantor as authorized in this
Section 10.4(a). Notwithstanding the foregoing, no advance shall be made by the
Grantor if a determination is reasonably and promptly made (i) by the Regular
Trustees by a majority vote of a Quorum of disinterested Regular Trustees, or
(ii) if such a Quorum is not obtainable, or, even if obtainable, if a Quorum of
disinterested Regular Trustees so directs, by independent legal counsel in a
written opinion that, based upon the facts known to the Regular Trustees at the
time such determination is made, such Company Indemnified Person acted in bad
faith or in a manner that such Person did not believe to be in or not opposed to
the best interests of the Trust, or, with respect to any criminal proceeding,
that such Company Indemnified Person believed or had reasonable cause to believe
his conduct was unlawful. In no event shall any advance be made in instances
where the Regular Trustees, independent legal counsel or Holder of the Trust
Securities reasonably determine that such Person deliberately breached his duty
to the Trust.
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(vi) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other paragraphs of this Section 10.4(a) shall not be
deemed exclusive of any other rights to which those seeking indemnification and
advancement of expenses may be entitled under any agreement, vote of
shareholders or disinterested directors of the Grantor or Holders of the Trust
Securities or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office. All rights to
indemnification under this Section 10.4(a) shall be deemed to be provided by a
contract between the Grantor and each Company Indemnified Person who serves in
such capacity at any time while this Section 10.4(a) is in effect. Any repeal or
modification of this Section 10.4(a) shall not affect any rights or obligations
then existing.
(vii) The Grantor or the Trust may purchase and maintain insurance
on behalf of any Person who is or was a Company Indemnified Person against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the Grantor would have the
power to indemnify him against such liability under the provisions of this
Section 10.4(a).
(viii) For purposes of this Section 10.4(a), references to "the
Trust" shall include, in addition to the resulting or surviving entity, any
constituent entity (including any constituent of a constituent) absorbed in a
consolidation or merger or conversion, so that any Person who is or was a
director, trustee, officer or employee of such constituent entity, or is or was
serving at the request of such constituent entity as a director, trustee,
officer, employee or agent of another entity, shall stand in the same position
under the provisions of this Section 10.4(a) with respect to the resulting or
surviving entity as he would have with respect to such constituent entity if its
separate existence had continued.
(ix) The indemnification and advancement of expenses provided by, or
granted pursuant to, this Section 10.4(a) shall, unless otherwise provided when
authorized or ratified, continue as to a Person who has ceased to be a Company
Indemnified Person and shall inure to the benefit of the heirs, executors and
administrators of such a person.
(b) The Grantor shall indemnify, to the fullest extent permitted by law,
the (i) Property Trustee, (ii) the Delaware Trustee, (iii) any Affiliate of the
Property Trustee and the Delaware Trustee, and (iv) any officers, directors,
shareholders, members, partners, employees, representatives, custodians,
nominees or agents of the Property Trustee and the Delaware Trustee (each of the
Persons in (i) through (iv) being referred to as a "Fiduciary Indemnified
Person") for, and to hold each
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Fiduciary Indemnified Person harmless against, any loss, damage, claim,
liability or expense including taxes (other than taxes based on the income of
such Fiduciary Indemnified Trustee) incurred without negligence or bad faith on
the part of the Fiduciary Indemnified Person arising out of or in connection
with the acceptance or administration of the trust or trusts hereunder,
including the costs and expenses (including reasonable legal fees and expenses)
of defending itself against or investigating any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder.
Section 10.5 Outside Businesses. Any Covered Person, the Grantor, the
Delaware Trustee, the Regular Trustees and the Property Trustee (subject to
Section 7.3(c)) may engage in or possess an interest in other business ventures
of any nature or description, independently or with others, similar or
dissimilar to the business of the Trust, and the Trust and the Holders of Trust
Securities shall have no rights by virtue of this Trust Agreement in and to such
independent ventures or the income or profits derived therefrom, and the pursuit
of any such venture, even if competitive with the business of the Trust, shall
not be deemed wrongful or improper. No Covered Person, the Grantor, the Delaware
Trustee, the Regular Trustees nor the Property Trustee shall be obligated to
present any particular investment or other opportunity to the Trust even if such
opportunity is of a character that, if presented to the Trust, could be taken by
the Trust, and any Covered Person, the Grantor, the Regular Trustees, the
Delaware Trustee and the Property Trustee 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 or other opportunity. Any Covered Person,
the Delaware Trustee, the Regular Trustees and the Property Trustee may engage
or be interested in any financial or other transaction with the Grantor or any
Affiliate of the Grantor, or may act as depository for, trustee or agent for, or
act on any committee or body of holders of, securities or other obligations of
the Grantor or its Affiliates.
ARTICLE XI
AMENDMENTS AND MEETINGS
Section 11.1 Amendments
(a) Except as otherwise provided in this Trust Agreement or by any
applicable terms of the Trust Securities, this Trust Agreement may only be
amended by a written instrument approved and executed by:
(i) the Regular Trustees (or, if there are more than two Regular
Trustees, a majority of the Regular Trustees);
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(ii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Property Trustee, the Property Trustee;
(iii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Delaware Trustee, the Delaware Trustee;
(b) no amendment shall be made, and any such purported amendment shall be
void and ineffective:
(i) unless, in the case of any proposed amendment, the Property
Trustee shall have first received an Officers' Certificate from the Grantor that
such amendment is permitted by, and conforms to, the terms of this Trust
Agreement (including the terms of the Trust Securities);
(ii) unless, in the case of any proposed amendment that affects the
rights, powers, duties, obligations or immunities of the Property Trustee, the
Regular Trustees or the Delaware Trustee, the Property Trustee, the Regular
Trustees or the Delaware Trustee, as the case may be, shall have first received
an opinion of counsel (who may be counsel to the Grantor or the Trust) that such
amendment is permitted by, and conforms to, the terms of this Trust Agreement
(including the terms of the Trust Securities); and
(iii) to the extent the result of such amendment would be to:
(A) cause the Trust to not be classified for purposes of United
States federal income taxation as a grantor trust;
(B) cause the Partnership to be classified for purposes of United
States federal income tax as an association or a publicly traded partnership
taxable as a corporation;
(C) reduce or otherwise adversely affect the powers of the Property
Trustee in contravention of the Trust Indenture Act; or
(D) cause the Trust to be deemed to be an Investment Company
required to be registered under the 1940 Act.
(c) In the event the consent of the Property Trustee, as the Holder of the
Preferred Securities, is required under the Partnership Agreement with respect
to any amendment, modification or termination of the Partnership Agreement or
the Preferred Securities, the Property Trustee shall request the direction of
the Holders of the Trust Securities with respect to such amendment, modification
or termination and shall vote with
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respect to such amendment, modification or termination as directed by a Majority
in liquidation amount of the Trust Securities voting together as a single class;
provided, however, that where a consent under the Partnership Agreement would
require the consent of a Super Majority of the Holders of Preferred Securities,
the Property Trustee may only give such consent at the direction of the Holders
of at least the proportion in liquidation amount of the Trust Securities which
the relevant Super Majority represents of the aggregate liquidation amount of
the Preferred Securities outstanding; provided, further, that the Property
Trustee shall not be obligated to take any action in accordance with the
directions of the Holders of the Trust Securities under this Section 11.1(c)
unless the Property Trustee has obtained an opinion of independent tax counsel
to the effect that such action is not inconsistent with the Trust being
classified as a grantor trust for United States federal income tax purposes;
(d) At such time after the Trust has issued any Trust Securities that
remain outstanding, any amendment that would (i) materially adversely affect the
powers, preferences or special rights of the Trust Securities or (ii) provide
for the dissolution, winding-up or termination of the Trust other than pursuant
to the terms of this Trust Agreement, may be effected only with the approval of
the Holders of at least a Majority in liquidation amount of the Trust
Securities;
(e) Section 10.1(c) and this Section 11.1 shall not be amended without the
consent of all of the Holders of the Trust Securities;
(f) Notwithstanding Section 11.1(c), this Trust Agreement may be amended
without the consent of the Holders of the Trust Securities by the Grantor or the
General Partner and the Property Trustee:
(i) to cure any ambiguity or correct any mistake;
(ii) to correct or supplement any provision in this Trust Agreement
that may be defective or inconsistent with any other provision of this Trust
Agreement or to make any other provisions with respect to matters or questions
arising under this Trust Agreement provided that any such action shall not
materially adversely affect the interests of the Holders;
(iii) to evidence the succession of another Person to the Grantor or
the General Partner and the assumption by any such successor of the covenants of
the Grantor or the General Partner herein contained; or
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(iv) to add to the covenants of the Grantor or the General Partner
for the benefit of the Holders, or to surrender any right or power herein
conferred upon the Grantor or the General Partner; or
(v) to conform to any change in the 1940 Act or written change in
interpretation or application of the rules and regulations promulgated
thereunder by any legislative body, court, government agency or regulatory
authority;
(vi) to conform to any change in the Trust Indenture Act or written
change in interpretation or application of the rules and regulations promulgated
thereunder by any legislative body, court, government agency or regulatory
authority; and
(vii) to modify, eliminate and add to any provision of this Trust
Agreement to such extent as may be necessary or desirable; provided that such
amendments do not have a material adverse effect on the rights, preferences or
privileges of the Holders of the Trust Securities.
Section 11.2 Meetings of the Holders of Trust Securities; Action by
Written Consent.
(a) Meetings of the Holders of Trust Securities may be called at any time
by the Regular Trustees (or as provided in the terms of this Trust Agreement) to
consider and act on any matter on which Holders of Trust Securities are entitled
to act under the terms of this Trust Agreement, the Partnership Agreement, the
rules of any stock exchange on which the Trust Securities are listed or admitted
for trading, the Business Trust Act or other applicable law. The Regular
Trustees shall call a meeting of the Holders of Trust Securities if directed to
do so by the Holders of at least 10% in liquidation amount of the Trust
Securities. Such direction shall be given by delivering to the Regular Trustees
one or more calls in writing stating that the signing Holders of Trust
Securities wish to call a meeting and indicating the general or specific purpose
for which the meeting is to be called. Any Holders of Trust Securities calling a
meeting shall specify in writing the certificates held by the Holders of Trust
Securities exercising the right to call a meeting and only those Trust
Securities specified shall be counted for purposes of determining whether the
required percentage set forth in the second sentence of this paragraph has been
met.
(b) Except to the extent otherwise provided in the Trust Agreement, the
following provisions shall apply to meetings of Holders of Trust Securities:
(i) notice of any such meeting shall be given to all the Holders of
Trust Securities having a right to vote thereat at
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least 7 days and not more than 60 days before the date of such meeting. Any
action that may be taken at a meeting of the Holders of Trust Securities may be
taken without a meeting if a consent in writing setting forth the action so
taken is signed by the Holders of Trust Securities owning not less than the
minimum amount of Trust Securities in liquidation amount that would be necessary
to authorize or take such action at a meeting at which all Holders of Trust
Securities having a right to vote thereon were present and voting. Prompt notice
of the taking of action without a meeting shall be given to the Holders of Trust
Securities entitled to vote who have not consented in writing. The Regular
Trustees may specify that any written ballot submitted to the Holder for the
purpose of taking any action without a meeting shall be returned to the Trust
within the time specified by the Regular Trustees;
(ii) each Holder of a Trust Security may authorize any Person to act
for it by proxy on all matters in which a Holder of Trust Securities is entitled
to participate, including waiving notice of any meeting, or voting or
participating at a meeting. No proxy shall be valid after the expiration of 11
months from the date thereof unless otherwise provided in the proxy. Every proxy
shall be revocable at the pleasure of the Holder of Trust Securities executing
it. Except as otherwise provided herein, all matters relating to the giving,
voting or validity of proxies shall be governed by the General Corporation Law
of the State of Delaware relating to proxies, and judicial interpretations
thereunder, as if the Trust were a Delaware corporation and the Holders of the
Trust Securities were shareholders of a Delaware corporation;
(iii) each meeting of the Holders of the Trust Securities shall be
conducted by the Regular Trustees or by such other Person that the Regular
Trustees may designate; and
(iv) unless the Business Trust Act, this Trust Agreement, the Trust
Indenture Act or the listing rules of any stock exchange on which the Trust
Securities are then listed for trading, otherwise provide, the Regular Trustees,
in their sole discretion, shall establish all other provisions relating to
meetings of Holders of Trust Securities, including notice of the time, place or
purpose of any meeting at which any matter is to be voted on by any Holders of
Trust Securities, 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.
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ARTICLE XII
REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE
Section 12.1 Representations and Warranties of Property Trustee. The
Trustee that acts as initial Property Trustee represents and warrants to the
Trust and to the Grantor at the date of this Trust Agreement, and each Successor
Property Trustee represents and warrants to the Trust and the Grantor at the
time of the Successor Property Trustee's acceptance of its appointment as
Property Trustee that:
(a) The Property Trustee is a banking corporation with trust powers, duly
organized, validly existing and in good standing under the laws of the state of
its domicile or under federal law, with trust power and authority to execute and
deliver, and to carry out and perform its obligations under the terms of, this
Trust Agreement;
(b) The execution, delivery and performance by the Property Trustee of
this Trust Agreement has been duly authorized by all necessary corporate action
on the part of the Property Trustee. This Trust Agreement has been duly executed
and delivered by the Property Trustee;
(c) The execution, delivery and performance of this Trust Agreement by the
Property Trustee do not conflict with or constitute a breach of the Articles of
Incorporation or Bylaws of the Property Trustee; and
Section 12.2 Representations and Warranties of Delaware Trustee. The
Trustee that acts as initial Delaware Trustee represents and warrants to the
Trust and to the Grantor at the date of this Trust Agreement, and each Successor
Delaware Trustee represents and warrants to the Trust and the Grantor at the
time of the Successor Delaware Trustee's acceptance of its appointment as
Delaware Trustee that:
(a) The Delaware Trustee is a Delaware banking corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
with power and authority to execute and deliver, and to carry out and perform
its obligations under the terms of, this Trust Agreement;
(b) The Delaware Trustee has been authorized to perform its obligations
under the Certificate of Trust of the Trust and this Trust Agreement; and
(c) The Delaware Trustee is an entity which has its principal place of
business in the State of Delaware.
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ARTICLE XIII
MISCELLANEOUS
Section 13.1. All notices provided for in this Trust Agreement shall be in
writing, duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by registered or certified mail, as follows:
(a) If given to the Trust, in care of the Regular Trustees at the Trust's
mailing address set forth below (or such other address as the Trust may give
notice of):
-----------------------
-----------------------
-----------------------
-----------------------
-----------------------
(b) If given to the Delaware Trustee, at the mailing address set forth
below (or such other address as the Delaware Trustee may give notice of):
The Bank of New York (Delaware)
White Clay Center, Route 273
Newark, DE 19711
Attention: Corporate Trust Trustee Department
(c) If given to the Property Trustee, at the mailing address set forth
below (or such other address as the Property Trustee may give notice of):
The Bank of New York
101 Barclay Street, 21st Floor
New York, NY 10286
Attention: Corporate Trust Administration
Fax: (212) 815-5915
(d) if given to any other Holder, at the address set forth on the books
and records of the Trust.
(e) if given to the Grantor, at the address set forth below (or such other
address as the Grantor may give notice of):
-----------------------
-----------------------
-----------------------
-----------------------
-----------------------
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All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
Section 13.2 Governing Law. This Trust Agreement and the rights of the
parties hereunder shall be governed by and construed in accordance with the
internal laws of the State of Delaware and all rights and remedies shall be
governed by such laws without regard to principles of conflict of laws.
Section 13.3 Intention of the Parties. It is the intention of the parties
hereto that the Trust be classified for United States federal income tax
purposes as a grantor trust. The provisions of this Trust Agreement shall be
interpreted to further this intention of the parties.
Section 13.4 Headings. Headings contained in this Trust Agreement are
inserted for convenience of reference only and do not affect the interpretation
of this Trust Agreement or any provision hereof.
Section 13.5 Successors and Assigns. Whenever in this Trust Agreement any
of the parties hereto is named or referred to, the successors and assigns of
such party shall be deemed to be included, and all covenants and agreements in
this Trust Agreement by the Grantor and the Trustees shall bind and inure to the
benefit of their respective successors and assigns, whether so expressed.
Section 13.6 Partial Enforceability. If any provision of this Trust
Agreement, or the application of such provision to any Person or circumstance,
shall be held invalid, the remainder of this Trust Agreement, or the application
of such provision to Persons or circumstances other than those to which it is
held invalid, shall not be affected thereby.
Section 13.7 Counterparts. This Trust Agreement may contain more than one
counterpart of the signature page and this Trust Agreement may be executed by
the affixing of the signature of each of the Trustees and a duly authorized
officer of the Grantor to one of such counterpart signature pages. All of such
counterpart signature pages shall be read as though one, and they shall have the
same force and effect as though all of the signers had signed a single signature
page.
Section 13.8 Agreement to be Bound. The acceptance of a Trust
Security or any interest therein by or on behalf of a
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Holder of Trust Securities or a beneficial owner, without signature or further
manifestation of consent, shall constitute the unconditional acceptance by such
Holder or owner of all the terms and provisions of this Trust Agreement.
IN WITNESS WHEREOF, each of the undersigned has caused these presents to
be executed as of the day and year first above written.
--------------------------------
, Regular Trustee
--------------------------------
, Regular Trustee
--------------------------------
, Regular Trustee
THE BANK OF NEW YORK (DELAWARE),
as Delaware Trustee
By:---------------------------
- ------------------------------- Name:
Title:
THE BANK OF NEW YORK, as Property
Trustee
By:---------------------------
Name:
Title:
PENELEC CAPITAL II, L.P.
as Grantor
By: Penelec Preferred Capital II, Inc.
its General Partner
By:---------------------------
Name:
Title:
Accepted and Agreed (with respect
to Section 4.15 only)
PENELEC PREFERRED CAPITAL II, INC.
By:----------------------------
Name:
Title:
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THIS TRUST SECURITY IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE
TRUST AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITORY TRUST COMPANY (THE "DEPOSITORY") OR A NOMINEE OF THE DEPOSITORY. THIS
TRUST SECURITY IS EXCHANGEABLE FOR TRUST SECURITIES REGISTERED IN THE NAME OF
PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE ONLY IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE TRUST AGREEMENT AND NO TRANSFER OF THIS TRUST
SECURITY (OTHER THAN A TRANSFER OF THIS TRUST SECURITY AS A WHOLE BY THE
DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO
THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY) MA BE REGISTERED EXCEPT IN
LIMITED CIRCUMSTANCES.
UNLESS THIS TRUST SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK) TO PENELEC CAPITAL
TRUST OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
TRUST SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME
AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND
ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
No. Trust Securities
---------- ----------
(liquidation amount $ per
------
Trust Security)
Cusip #
-------------
EXHIBIT A
TRUST SECURITIES
OF PENELEC CAPITAL TRUST,
a Delaware Business Trust,
each Representing a Cumulative Preferred Security of
Penelec Capital II, L.P. (a Delaware limited partnership)
is the registered owner of Trust Securities
----------------- --------------
("Trust Securities"), each representing a cumulative preferred limited partner
interest (the "Preferred Securities") of Penelec Capital II, L.P., a Delaware
limited partnership (the "Grantor"), deposited in trust by the Grantor with the
Property Trustee pursuant to an Amended and Restated Trust Agreement of Penelec
Capital Trust dated as of , 1998 (as amended or supplemented from time to time,
the "Trust Agreement") among the Grantor, The Bank of New York (Delaware), not
in its individual capacity, but solely as Delaware Trustee (the "Delaware
Trustee"), The Bank of New York, not in its individual capacity, but solely as
Property Trustee (the "Property Trustee"), the Regular Trustees (collectively,
the "Trustees") and the Holders (as defined in the Trust Agreement). Subject to
the terms of the Trust Agreement, the registered Holder hereof is entitled to a
full interest in the same number of Preferred Securities held by the Property
Trustee under the Trust Agreement, as are represented by the Trust Securities,
including the distribution, voting, liquidation and other rights of the
Preferred Securities specified in the Amended and Restated Limited Partnership
Agreement of the Grantor, as amended or supplemented from time to time, a copy
of which is on file at the Corporate Trust Office.
1. The Trust Agreement. The Trust Securities are issued upon the terms and
conditions set forth in the Trust Agreement. The Trust Agreement (a copy of
which is on file at the Corporate Trust Office of the Property Trustee) sets
forth the rights of Holders of Trust Securities and the rights and duties of the
Trustees and the Grantor. The statements made herein are summaries of certain
provisions of the Trust Agreement and are subject to the detailed provisions
thereof, to which reference is hereby made. In the event of any conflict or
discrepancy between the provisions hereof and the provisions of the Trust
Agreement, the provisions of the Trust Agreement will govern. Unless otherwise
expressly herein provided, all defined terms used herein shall have the meanings
ascribed thereto in the Trust Agreement.
2. Enforcement of Rights; Withdrawal of Preferred Securities. To the
fullest extent permitted by law, without the need for any other action of any
Person, including the Trustees and any other Holder, each Holder shall be
entitled to enforce in the name of the Trust the Trust's rights under the
Preferred Securities represented by the Trust Securities held by such Holder and
any recovery on such enforcement action shall belong solely to such Holder who
brought the action, not to the Trust, the Trustees or any other Holder
individually or to Holders as a group. Any beneficial owner of Trust Securities
may withdraw all, but not less than all, of the Preferred Securities represented
by such Trust Securities by providing a written notice and an agreement to be
bound by the terms of the Partnership Agreement to the Property Trustee at the
Corporate Trust Office, with evidence of beneficial ownership in form
satisfactory to the Property Trustee; provided, however, that the Grantor shall
not issue any fractional number of Preferred Securities.
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3. Distributions on Preferred Securities. Whenever and to the extent the
Property Trustee shall receive any cash distribution representing a distribution
on the Preferred Securities (whether or not distributed by the Grantor on the
regular distribution date therefor) or payment by Pennsylvania Electric Company
("Penelec") under the Payment and Guarantee Agreement dated as of , 1998 (as
amended and supplemented from time to time, the "Guarantee") in respect thereof,
the Property Trustee acting directly or through any Paying Agent shall
distribute to Holders of Trust Securities as of the record date therefor, such
amounts in proportion to the respective numbers of Preferred Securities
represented by the Trust Securities held by such Holders.
4. Redemptions of Preferred Securities. Whenever the Grantor shall elect
or is required to redeem Preferred Securities in accordance with the Partnership
Agreement, it shall (unless otherwise agreed in writing with the Property
Trustee) give the Property Trustee not less than 40 days' prior notice thereof
to redeem the Trust Securities. The Property Trustee shall, as directed by the
Grantor, mail, with first-class postage prepaid, notice of the redemption of the
Trust Securities to be redeemed, not less than 30 and not more than 90 days
prior to the date fixed for redemption of such Trust Securities. Such notice
shall be mailed to the Holders of the Trust Securities, at the addresses of such
Holders as the same appear on the records of the Trust. No defect in the notice
of redemption or in the mailing or delivery thereof or publication of its
contents shall affect the validity of the redemption proceedings. In case fewer
than all the outstanding Trust Securities are to be redeemed, the Trust
Securities to be redeemed shall be selected by lot or pro rata (as nearly as may
be practicable without creating fractional shares) or by any other equitable
method determined by the Grantor. On the date of any such redemption of such
Trust Securities, provided that the Grantor (or Penelec pursuant to the
Guarantee) shall then have deposited with the Trust the aggregate amount payable
upon redemption of the Trust Securities to be redeemed, the Property Trustee, on
behalf of the Trust, shall redeem (using the funds so deposited with it) Trust
Securities representing the same number of Preferred Securities in like
denominations and like liquidation amount to be redeemed by the Grantor.
5. Distributions in Liquidation. Upon receipt by the Property Trustee of
any distribution from the Grantor, or otherwise upon the liquidation of the
Grantor, or any payment under the Guarantee in respect thereof, after
satisfaction of creditors of the Trust required by applicable law, the Property
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Trustee shall distribute to Holders of Trust Securities as of the record date
therefor, such amounts in proportion to the respective number of Preferred
Securities which were represented by the Trust Securities held by such Holders.
6. Fixing of Record Date for Holders of Trust Securities. The record date
for the Distributions provided for in the Trust Agreement shall be on the 15th
day of the month in which the Distribution date falls. Whenever any other
distribution (other than upon any redemption) shall become payable, or whenever
the Property Trustee shall receive notice of any meeting at which holders of
Preferred Securities are entitled to vote or of which holders of Preferred
Securities are entitled to notice, the Property Trustee shall in each such
instance fix a record date (which shall be the same date as the record date
fixed by the General Partner with respect to the Preferred Securities) for the
determination of the Holders of Trust Securities who shall be entitled (i) to
receive such distribution or (ii) to receive notice of, and to give instructions
for the exercise of voting rights at, any such meeting.
7. Payment of Distributions. Payments of Distributions on the Trust
Securities shall be payable by check mailed to the addresses of the Holders
thereof on the record date and and commencing . Payments of the redemption price
of Trust Securities and distributions in liquidation shall be made against
surrender of such Trust Securities at the office of The Bank of New York, as the
Paying Agent. Interest will be computed on the basis of a 360-day year of twelve
30 day months. If such payment date is not a business day then such payment date
shall be on the business day immediately preceeding such payment date.
8. Special Representative; Voting Rights. (a) If the holders of the
Preferred Partner Interests (as defined in the Partnership Agreement), acting as
a single class, are entitled to appoint and authorize a Special Representative
pursuant to Section 13.02(d) of the Partnership Agreement, upon written notice,
the Property Trustee shall notify the Holders of the Trust Securities of such
right, request direction of each Holder of a Trust Security and vote the
Preferred Securities represented by such Trust Security in accordance with such
direction. If the General Partner fails to convene a general meeting of the
Partnership as required in Section 13.02(d) of the Partnership Agreement, upon
written notice, the Property Trustee shall notify the Holders of the Trust
Securities and, if so directed by the Holders of Trust Securities representing
Preferred Securities
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<PAGE>
constituting at least 10% of the aggregate stated liquidation preference of the
outstanding Preferred Partner Interests (as defined in the Partnership
Agreement), shall convene such meeting.
(b) Upon receipt of notice by the Regular Trustee of any meeting at which
the holders of Preferred Securities are entitled to vote, the Property Trustee
shall, as soon as practicable thereafter, mail to the Holders of Trust
Securities a notice, which shall be provided by the Grantor and which shall
contain (i) such information as is contained in such notice of meeting, (ii) a
statement that the Holders of Trust Securities at the close of business on a
specified record date therefor will be entitled, subject to any applicable
provision of law or of the Partnership Agreement, to instruct the Property
Trustee as to the exercise of the voting rights pertaining to the amount of
Preferred Securities represented by their respective Trust Securities, and (iii)
a brief statement as to the manner in which such instructions may be given. Upon
the written request of a Holder of a Trust Security on such record date, the
Property Trustee shall vote or cause to be voted the number of Preferred
Securities represented by the Trust Securities in accordance with the
instructions set forth in such request. In the absence of specific instructions
from the Holder of a Trust Security, the Property Trustee will abstain from
voting to the extent of the Preferred Securities represented by such Trust
Security.
9. Changes Affecting Preferred Securities and Reclassifications,
Recapitalizations, Etc. Upon any consolidation, amalgamation, merger,
replacement or conveyance, transfer or lease by the Grantor of its properties
and assets substantially in their entirety in accordance with Section 13.02(e)
of the Partnership Agreement, the Property Trustee shall, upon the instructions
of the Grantor, treat any Successor Securities or other property that shall be
received by the Property Trustee in exchange for or upon conversion of or in
respect of the Preferred Securities as part of the Trust Estate, and Trust
Securities then outstanding shall thenceforth represent the proportionate
interests of Holders thereof in the new deposited property so received in
exchange for or upon conversion or in respect of such Preferred Securities.
10. Transfer and Exchange of Trust Securities. Subject to the terms and
conditions of the Trust Agreement, the Registrar shall register the transfer on
the Register from time to time of Trust Security certificates upon any surrender
thereof by the Holder in person or by a duly authorized attorney, properly
endorsed or accompanied by a properly executed instrument of
5
<PAGE>
transfer or endorsement, together with evidence of the payment of any transfer
taxes as may be required by law. Upon such surrender, a Regular Trustee shall
execute a new Trust Security representing the same aggregate number of the Trust
Securities surrendered in accordance with the Trust Agreement and make available
for delivery the same to or upon the order of the Person entitled thereto.
Upon surrender of a Trust Security at the Corporate Trust Office or such
other office as the Property Trustee may designate for the purpose of effecting
an exchange of Trust Security certificates, subject to the terms and conditions
of the Trust Agreement, a Regular Trustee execute and the Property Trustee shall
authenticate and make available for delivery a new Trust Security certificate
representing the same number of Preferred Securities as the Trust Security
certificate surrendered.
As a condition precedent to the registration of a transfer or exchange of
any Trust Security certificate, the Registrar, may require (i) the production of
proof satisfactory to it as to the identity and genuineness of any signature;
and (ii) compliance with such regulations, if any, as the Property Trustee or
the Registrar may establish not inconsistent with the provisions of the Trust
Agreement.
Neither the Property Trustee nor the Registrar shall be required (a) to
register the transfer or exchange of any Trust Security certificate for a period
beginning at the opening of business 15 days prior to the mailing of a notice of
redemption for the Trust Securities and ending at the close of business on the
date of such mailing or (b) to transfer or exchange Trust Securities called or
being called for redemption in whole or in part.
11. Title to Trust Securities. It is a condition of the Trust Securities,
and every successive Holder hereof by accepting or holding the same consents and
agrees, that title to this Trust Security certificate, when properly endorsed or
accompanied by a properly executed instrument of transfer or endorsement, is
transferable by delivery with the same effect as in the case of a negotiable
instrument; provided, however, that until the transfer of this Trust Security
certificate shall be registered on the Register, the Trust, the Property
Trustee, the Regular Trustees, the Registrar and the Grantor may,
notwithstanding any notice to the contrary, treat the Holder hereof at such time
as the absolute owner hereof for the purpose of determining the Person entitled
to distributions or to any notice provided for in the Trust Agreement and for
all other purposes.
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12. Reports, Inspection of Transfer Books. The Property Trustee shall make
available for inspection by Holders of Trust Securities at the Corporate Trust
Office and at such other places as it may from time to time deem advisable
during normal business hours for any purpose reasonably related to such Holders
interest in the Trust any reports and communications received by the Property
Trustee as the record holder of Preferred Securities. The Registrar shall keep
books at the Corporate Trust Office for the registration of transfer of Trust
Securities, which books at all reasonable times will be open for inspection by
the Holders of Trust Securities as and to the extent provided by applicable law
and for any purpose reasonably related to the Holders' interest in the Trust.
13. Supplemental Trust Agreement. The Grantor or the General Partner may,
and the Property Trustee shall, at any time and from time to time, without the
consent of the Holders, enter into one or more agreements supplemental hereto,
in form satisfactory to the Property Trustee, for any of the following purposes:
(a) to evidence the succession of another Person to the Grantor or the General
Partner and the assumption by any such successor of the covenants of the Grantor
or the General Partner herein contained; (b) to add to the covenants of the
Grantor or the General Partner for the benefit of the Holders, or to surrender
any right or power herein conferred upon the Grantor or the General Partner;
(c)(i) to correct or supplement any provision herein which may be defective or
inconsistent with any other provision herein or (ii) to make any other
provisions with respect to matters or questions arising under this Trust
Agreement, provided that any such action taken under subsection (ii) hereof
shall not materially adversely affect the interests of the Holders; or (d) to
cure any ambiguity or correct any mistake. Any other amendment or agreement
supplemental hereto must be in writing and approved by Holders of the percentage
of the then outstanding Trust Securities required by the Trust Agreement.
14. Governing Law. The Trust Agreement and this Trust Security and all
rights thereunder and hereunder and provisions thereof and hereof shall be
governed by, and construed in accordance with, the law of the State of Delaware
without giving effect to principles of conflict of laws.
15. Trust Security Non-Assessable and Fully Paid. Holders of Trust
Securities shall not be personally liable for obligations of the Trust, the
interest in the Trust represented by the Trust Securities shall be
non-assessable for any losses or expenses of the Trust or for any reason
whatsoever and the Trust
7
<PAGE>
Securities upon issuance in accordance with the Trust Agreement are and shall be
deemed fully paid.
16. Liability of Holders of Trust Securities. Holders of Trust Securities
shall be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware.
17. No Preemptive Rights. No Holder shall be entitled as a matter of right
to subscribe for or purchase, or have any preemptive or other similar right with
respect to, any part of any new or additional interest in the Trust, whether now
or hereafter authorized and whether issued for cash or other consideration or by
way of distribution.
This Trust Security certificate shall not be entitled to any benefits
under the Trust Agreement or be valid or obligatory for any purpose unless this
Trust Security certificate shall have been executed manually.
THE PROPERTY TRUSTEE IS NOT RESPONSIBLE FOR THE VALIDITY OF ANY PREFERRED
SECURITIES. THE PROPERTY TRUSTEE ASSUMES NO RESPONSIBILITY FOR THE CORRECTNESS
OF THE FOREGOING DESCRIPTION WHICH CAN BE TAKEN AS A STATEMENT OF THE GRANTOR
SUMMARIZING CERTAIN PROVISIONS OF THE TRUST AGREEMENT. THE PROPERTY TRUSTEE
MAKES NO WARRANTIES OR REPRESENTATIONS AS TO THE VALIDITY, GENUINENESS OR
SUFFICIENCY OF PREFERRED SECURITIES OR OF TRUST SECURITIES; AS TO THE VALIDITY
OR SUFFICIENCY OF THE TRUST AGREEMENT; AS TO THE VALUE OF TRUST SECURITIES OR AS
TO ANY RIGHT, TITLE OR INTEREST OF THE HOLDERS OF TRUST SECURITIES IN AND TO
TRUST SECURITIES.
Dated: , 1998
--------------
PENELEC CAPITAL TRUST
By:
-----------------------------
Name:
Title: Regular Trustee
Authenticated:
This is one of the Securities referred
to in the within mentioned Trust Agreement
The Bank of New York,
as Property Trustee
By:
-------------------------
Authorized Signatory
8
<PAGE>
[FORM OF ASSIGNMENT]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers
unto the within Trust Security Certificate and all rights and interests
represented by the Trust Securities evidenced thereby, and hereby irrevocably
constitutes and appoints attorney, to transfer the same on the books of the
within-named Property Trustee, with full power of substitution in the premises.
Dated: Signature:
----------------- ----------------------
NOTE: The signature to this assignment
must correspond with the name as written
upon the face of the Trust Security in
every particular, without alteration or
enlargement or any change whatever.
Signature Guarantee:
- -----------------------
9
<PAGE>
Notice of Withdrawal
To: Bank of New York
101Barclay Street
21st Floor
New York, New York 10286
Attn: Corporate Trust Administration
Re: Penelec Capital Trust - Cusip #
, ("Holder"), DTC participant number , requests the
------------------- ----
withdrawal of Shares with liquidation value of $ of the Preferred Securities
represented by such Trust Securities that are presently owned by the Holder and
held in global form by the Bank of New York as custodian for the Depository
Trust Company. In accordance with the terms of Section 5.6 of the Trust
Agreement governing said Preferred Securities.
By:
-------------------------------------
, Holder
Signature Guarantee [Signature
must be guaranteed by an eligible
guarantor institution or participant in a
signature medallion guarantee program]
Exhibit 23-E
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
Pennsylvania Electric Company (the "Company") on Form S-3 of our report dated
February 4, 1998, on our audits of the consolidated financial statements and
financial statement schedule of Pennsylvania Electric Company as of December 31,
1997 and 1996, and for each of the years ended December 31, 1997, 1996, and
1995, which report is included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1997. We also consent to the reference to our Firm
under the caption "Experts".
PricewaterhouseCoopers LLP
New York, New York
August 25, 1998
Exhibit 25-A
FORM T-1
===========================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
------------------
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)___/__/___
------------------
UNITED STATES TRUST COMPANY OF NEW YORK (Exact name of
trustee as specified in its charter)
New York 13-3818954
(Jurisdiction of incorporation (I.R.S. employer
if not a U.S. national bank) identification No.)
114 West 47th Street 10036-1532
New York, NY (Zip Code)
(Address of principal
executive offices)
------------------
Pennsylvania Electric Company
(Exact name of obligor as specified in its charter)
Pennsylvania 25-0718085
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
2800 Pottsville Pike
Reading, Pennsylvania 19605
(Address of principal executive offices) (Zip Code)
------------------
% Senior Notes
% Deferrable Interest Subordinated Debentures
(Title of the indenture securities)
===========================================
<PAGE>
GENERAL
1. General Information
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which it
is subject.
Federal Reserve Bank of New York (2nd District), New
York, New York
(Board of Governors of the Federal Reserve System)
Federal Deposit Insurance Corporation, Washington, D.C.
New York State Banking Department, Albany, New York
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
2. Affiliations with the Obligor
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None
3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15:
Pennsylvania Electric Company currently is not in default under any of its
outstanding securities for which United States Trust Company of New York is
Trustee. Accordingly, responses to Items 3, 4, 5, 6, 7, 8, 9, 10, 11, 12,
13, 14 and 15 of Form T-1 are not required under General Instruction B.
16. List of Exhibits
T-1.1 -- Organization Certificate, as amended, issued by the State
of New York Banking Department to transact business as a
Trust Company, is incorporated by reference to Exhibit
T-1.1 to Form T-1 filed on September 15, 1995 with the
Commission pursuant to the Trust Indenture Act of 1939,
as amended by the Trust Indenture Reform Act of 1990
(Registration No. 33-97056).
-2-
<PAGE>
16. List of Exhibits
(cont'd)
T-1.2 -- Included in Exhibit T-1.1.
T-1.3 -- Included in Exhibit T-1.1.
T-1.4 -- The By-Laws of United States Trust Company of New York,
as amended, is incorporated by reference to Exhibit T-1.4
to Form T-1 filed on September 15, 1995 with the
Commission pursuant to the Trust Indenture Act of 1939,
as amended by the Trust Indenture Reform Act of 1990
(Registration No.
33-97056).
T-1.6 -- The consent of the trustee required by Section 321(b) of
the Trust Indenture Act of 1939, as amended by the Trust
Indenture Reform Act of 1990.
T-1.7 -- A copy of the latest report of condition of the trustee
pursuant to law or the requirements of its supervising or
examining authority.
NOTE
As of July 29, 1998, the trustee had 2,999,020 shares of Common Stock
outstanding, all of which are owned by its parent company, U.S. Trust
Corporation. The term "trustee" in Item 2, refers to each of United States
Trust Company of New York and its parent company, U. S. Trust Corporation.
In answering Item 2 in this statement of eligibility as to matters peculiarly
within the knowledge of the obligor or its directors, the trustee has relied
upon information furnished to it by the obligor and will rely on information to
be furnished by the obligor and the trustee disclaims responsibility for the
accuracy or completeness of such information.
-3-
<PAGE>
Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee,
United States Trust Company of New York, a corporation organized and existing
under the laws of the State of New York, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of New York, and State of New York, on the 30th day
of July, 1998.
UNITED STATES TRUST COMPANY
OF NEW YORK, Trustee
By:
-------------------------
Louis P. Young
Vice President
-4-
<PAGE>
Exhibit T-1.6
The consent of the trustee required by Section 321(b) of the Act.
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
January 7, 1997
Securities and Exchange Commission 450 5th Street, N.W.
Washington, DC 20549
Gentlemen:
Pursuant to the provisions of Section 321(b) of the Trust Indenture Act of 1939,
as amended by the Trust Indenture Reform Act of 1990, and subject to the
limitations set forth therein, United States Trust Company of New York ("U.S.
Trust") hereby consents that reports of examinations of U.S. Trust by Federal,
State, Territorial or District authorities may be furnished by such authorities
to the Securities and Exchange Commission upon request therefor.
Very truly yours,
UNITED STATES TRUST COMPANY
OF NEW YORK
/s/Gerard F. Ganey
----------------------------
By: Gerard F. Ganey
Senior Vice President
-5-
<PAGE>
EXHIBIT T-1.7
UNITED STATES TRUST COMPANY OF NEW YORK
CONSOLIDATED STATEMENT OF CONDITION
MARCH 31, 1998
($ IN THOUSANDS)
ASSETS
Cash and Due from Banks $ 303,692
Short-Term Investments 325,044
Securities, Available for Sale 650,954
Loans 1,717,101
Less: Allowance for Credit Losses 16,546
---------------
Net Loans 1,700,555
Premises and Equipment 58,868
Other Assets 120,865
---------------
Total Assets $3,159,978
===============
LIABILITIES
Deposits:
Non-Interest Bearing $ 602,769
Interest Bearing 1,955,571
---------------
Total Deposits 2,558,340
Short-Term Credit Facilities 293,185
Accounts Payable and Accrued Liabilities 136,396
---------------
Total Liabilities $2,987,921
===============
STOCKHOLDER'S EQUITY
Common Stock 14,995
Capital Surplus 49,541
Retained Earnings 105,214
Unrealized Gains on Securities
Available for Sale (Net of Taxes) 2,307
---------------
Total Stockholder's Equity 172,057
---------------
Total Liabilities and
Stockholder's Equity $3,159,978
===============
I, Richard E. Brinkmann, Senior Vice President & Comptroller of the named bank
do hereby declare that this Statement of Condition has been prepared in
conformance with the instructions issued by the appropriate regulatory authority
and is true to the best of my knowledge and belief.
Richard E. Brinkmann, SVP & Controller
May 6, 1998
-6-
Exhibit 25-B
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington,D. C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) / /
--------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
One Wall Street, New York, N.Y. 10286
(Address of Principal executive offices) (zip code)
---------------
PENELEC CAPITAL TRUST
(Exact name of obligor as specified in its charter)
Delaware None
(State or other jurisdiciton of (I.R.S. employer)
incorporation or organization identification no.)
(Address of principal executive offices) (Zip code)
----------------------
Trust Securities
(Title of the indenture securities)
<PAGE>
1. General information. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
Name Address
Superintendent of Banks of 2 Rector Street,
the State of New York New York, N.Y. 12203
Federal Reserve Bank of 33 Liberty Plaza
New York New York, N.Y. 10045
Federal Deposit Insurance Washington, D.C. 20429
Corporation
New York Clearing House New York, New York 10005
Association
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.If the obligor is an affiliate of the trustee,
describe each such affiliation.
None.
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission, are
incorporated herein by reference as an exhibit hereto, pursuant to Rule
7a-29 under the Trust Indenture Act of 1939 (the "Act") and 17 C.F.R.
229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No.
33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
-2-
<PAGE>
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or
examining authority.
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 20th day of August, 1998.
THE BANK OF NEW YORK
By: /s/ Remo J. Reale
---------------------------
Name: Remo J. Reale
Title: Assistant Vice
President
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 20th day of August, 1998.
THE BANK OF NEW YORK
By: /s/REMO J. REALE
---------------------------
Name: REMO J. REALE
Title: ASSISTANT VICE
PRESIDENT
-4-
<PAGE>
EXHIBIT 7
Consolidated Report of Condition of THE BANK OF NEW YORK of 48 Wall Street, New
York, NY 10286 And Foreign and Domestic Subsidiaries a member of the Federal
Reserve System, at the close of business March 31, 1998, published in accordance
with a call made by the Federal Reserve Bank of this District pursuant to the
provisions of the Federal Reserve Act.
ASSETS Dollar Amount In
Thousands
Cash and balances due from depository
institutions: Non interest bearing
balances and currency and coin $6,397,993
Interest-bearing balances 1,138,362
Securities:
Held-to-maturity securities 1,062,074
Available-for-sale securities 4,167,240
Federal Funds Sold And Securities
purchased under agreements to resell 391,650
Loans and lease financing receivables:
Loans and leases, net of unearned income 36,538,242
LESS: Allowance for loan and loan losss 631,725
LESS: Allocated transfer risk reserve 0
Loans and leases, net of unearned income,
allowance, and reserve 35,906,517
Assets held in trading accounts 2,145,149
Premises and fixed assets (including
capitalized leases) 663,928
Other real estate owned 10,895
Investment in unconsolidated subsidiaries
and associated companies 237,991
Customers' liability to this bank on
acceptances outstanding 992,747
Intangible assets 1,072,517
Other assets 1,643,173
---------
Total assets $55,830,236
==========
LIABILITIES
Deposits:
In domestic offices $24,849,054
Noninterest-bearing 10,011,422
Interest-bearing 14,837,632
In foreign offices, Edge and Agreement
subsidiaries, and IBFs 15,319,002
-5-
<PAGE>
Noninterest-bearing 707,820
Interest-bearing 14,611,182
Federal funds purchased and Securities
sold under agreements to repurchase 1,906,066
Demand notes issued to the U.S. Treasury 215,985
Trading liabilities 1,591,288
Other borrowed money:
With remaining maturity of one year or less 1,991,119
With remainign maturity of more than one
year through three year 0
With remaining maturity of more than three
years 25,574
Bank's liability on acceptances executed
and outstanding 998,145
Subordinated notes and debentures 1,314,000
Other liabilities 2,421,281
Total liabilities 50,631,514
EQUITY CAPITAL
Common Stock 1,135,284
Surplus 731,319
Undivided profits and capital reserves 3,328,050
Net unrealized holding gains (losses) on
available-for-sale securities 40,198
Cumulative foreign currency translation
adjustments (36,121)
--------
Total equity capital 5,198,722
---------
Total liabilities and equity capital
$55,830,236
===========
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Robert E. Keilman
We the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
Thomas A. Ranyi
Alan R. Griffith Directors
J. Carter Bacot
-6-
