As filed with the Securities and Exchange Commission on May 22, 1995.
Registration No. 33-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
THE POTOMAC EDISON COMPANY
(Exact name of registrant as specified in its charter)
MARYLAND AND VIRGINIA 13-5323955
(State of incorporation) (I.R.S. Employer Identification No.)
10435 Downsville Pike
Hagerstown, MD 21740-1766
(301) 790-3400
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
NANCY H. GORMLEY, Esq.
Vice President
Allegheny Power System, Inc.
12 East 49th Street
New York, New York 10017
(212) 752-2121
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
ROBERT E. BUCKHOLZ, JR., Esq. JONATHAN I. MARK, Esq.
Sullivan & Cromwell Cahill Gordon & Reindel
125 Broad Street 80 Pine Street
New York, New York 10004 New York, New York 10005
Approximate date of commencement of proposed sale to the public:
From time to time after the effective date of this Registration Statement.
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]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Amount maximum maximum Amount of
Title of each class of to be offering price aggregate registration
securities to be registered registered(1) per unit(2)(3) offering price(2)(3) fee
<S> <C> <C> <C> <C>
Debt Securities $ 61,834,900(4) 100% $ 61,834,900 $21,323
</TABLE>
(1) In United States dollars or the equivalent thereof in any other currency,
currency unit or units, or composite currency or currencies.
(2) Estimated solely for the purpose of calculating the registration fee.
(3) Exclusive of accrued interest and accrued amortization of discount, if any.
(4) Or if any Debt Securities are issued at a discount, such greater principal
amount as shall result in aggregate proceeds to the Company of $61,834,900.
<PAGE>
The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the registrant
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 or until this registration statement shall become
effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
<PAGE>
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 an 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>
PROSPECTUS
SUBJECT TO COMPLETION, DATED MAY 22, 1995
THE POTOMAC EDISON COMPANY
DEBT SECURITIES
The Potomac Edison Company (the "Company") may offer and sell,
from time to time in one or more series, or all at one time in one or more
series, up to $61,834,900 aggregate principal amount of its debt securities
(the "Debt Securities") at prices and on terms to be determined at the time of
sale. This Prospectus will be supplemented by one or more prospectus
supplements ("Prospectus Supplement") which will set forth for each offering
of Debt Securities, the aggregate principal amount, maturity, interest rate
(or method of calculating the interest rate), any redemption provisions, any
subordination provisions, offering price, any listing on a securities
exchange, proceeds to the Company, and any other specific terms of the
particular series of Debt Securities. Unless otherwise provided in a
Prospectus Supplement, the sale of one series of Debt Securities will not be
contingent upon the sale of any other series of Debt Securities.
The Company may sell Debt Securities to or through underwriters,
and also may sell Debt Securities directly to other purchasers or through
agents. The Prospectus Supplement will set forth the names of any
underwriters or agents involved in the sale of the Debt Securities in respect
of which this Prospectus is being delivered, the principal amounts, if any, to
be purchased by underwriters and the compensation, if any, of such
underwriters or agents. See "Plan of Distribution".
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
<PAGE>
AVAILABLE INFORMATION
The Potomac Edison Company (the "Company"), 10435 Downsville Pike,
Hagerstown, Maryland 21740-1766 (tel. 301-790-3400), is subject to the
informational requirements of the Securities Exchange Act of 1934 and in
accordance therewith files reports and other information with the Securities
and Exchange Commission (the "Commission"). Such reports and other
information filed by the Company can be inspected at the public reference
facilities of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549;
500 West Madison Street, Chicago, Illinois 60661; and 7 World Trade Center,
New York, New York 10048. Copies of such material can be obtained from the
Public Reference Section of the Commission at prescribed rates. Requests
should be directed to the Commission's Public Reference Section, 450 Fifth
Street, N.W., Washington, D.C. 20549. Certain securities of the Company are
listed on the Philadelphia Stock Exchange, and reports and other information
concerning the Company can be inspected at the offices of such Exchange.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by the Company with
the Commission pursuant to the Securities Exchange Act of 1934, are hereby
incorporated by reference in this Prospectus:
(i) The Annual Report of the Company on Form 10-K for the year
ended December 31, 1994 (the "Annual Report");
(ii) Report on Form 8-K dated February 15, 1995; and
(iii) The Quarterly Report of the Company on Form 10-Q for the
Quarter ended March 31, 1995.
All documents filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after the date of
this Prospectus and prior to the termination of the offering of the Securities
offered hereby shall be deemed to be incorporated in this Prospectus by
reference and to be a part hereof from the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
herein or in any subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as modified or
superseded, to constitute a part of this Prospectus.
The Company hereby undertakes to provide without charge to each
person to whom a copy of this Prospectus has been delivered, on the written or
oral request of any such person, a copy of any or all of the documents
referred to above which have been or may be incorporated by reference in this
Prospectus, other than exhibits to such documents. Requests for such copies
should be directed to: The Potomac Edison Company, 10435 Downsville Pike,
Hagerstown, Maryland 21740-1766, Attention: Mr. Dale F. Zimmerman, Secretary
and Treasurer (tel. 301-790-6240).
<PAGE>
THE COMPANY
The Company, incorporated in Maryland in 1923 and in Virginia in
1974, is an electric utility operating in portions of Maryland, Virginia and
West Virginia. It also owns generating capacity in Pennsylvania. The Company
is a wholly-owned subsidiary of Allegheny Power System, Inc. and, together
with Monongahela Power Company ("Monongahela"), West Penn Power Company ("West
Penn") and Allegheny Generating Company ("AGC") (collectively, the
"affiliates"), makes up the Allegheny Power integrated electric utility system
(the "System"). The Company owns 28% of the common stock of AGC, and
Monongahela and West Penn own the remainder of AGC's common stock. AGC owns
an undivided 40% interest (840 MW) in a pumped-storage hydroelectric station
in Bath County, Virginia, which is operated by an unaffiliated company.
SELECTED INFORMATION
The following selected information is qualified in its entirety by
the detailed information appearing elsewhere in this Prospectus and by the
information and financial statements (including the notes thereto) appearing
in the documents incorporated in this Prospectus by reference.
<TABLE>
<CAPTION>
12 Months Ended Years Ended December 31,
March 31, 1995 1994 1993 1992 1991 1990
Generating capability at end of
period (KW in Thousands):
Company-owned:
<S> <C> <C> <C> <C> <C> <C>
Coal-fired.................................... 1,831 1,831 1,831 1,831 1,831 1,831
Pumped-storage (a)............................ 235 235 235 235 235 235
Hydro......................................... 6 6 10 10 11 10
Maximum hour peak demand
(KW in Thousands)................................ 2,431 2,595 2,233 1,987 1,915 1,930
Sales (kWh in Millions):
Retail customers................................. 11,553 11,691 11,432 10,755 10,549 10,309
Nonaffiliated utilities (b)...................... 3,116 3,194 3,861 5,394 5,649 6,818
Other, including affiliates (b).................. 640 654 649 617 615 594
Customers (at end of period)...................... 363,559 361,355 354,288 346,740 338,870 332,006
(a) Capacity entitlement through percentage ownership of AGC.
(b) Amount for 1990 has been reclassified for comparative purposes to
reflect a change in a Federal Energy Regulatory Commission
classification.
</TABLE>
<TABLE>
<CAPTION>
CAPITALIZATION
March 31, 1995 December 31, 1994
Amount Percent Amount Percent
(Thousands of Dollars) (Thousands of Dollars)
<S> <C> <C> <C> <C>
Common Stock, Other Paid-in Capital, and Retained Earnings..... $ 667,207 50.1% $ 658,146 49.7%
Preferred Stock:
Not Subject to Mandatory Redemption.......................... 36,378 2.7 36,378 2.7
Subject to Mandatory Redemption.............................. 24,257 1.8 25,200 1.9
Long-Term Debt................................................. 604,119 45.4 604,749 45.7
Total Capitalization................................... $1,331,961 100.0% $1,324,473 100.0%
</TABLE>
<PAGE>
INCOME STATEMENT SUMMARY
The following summary income information as to the years ended
December 31, 1990 through 1994 and the twelve months ended March 31, 1995
should be read in conjunction with the audited Financial Statements
contained in the Annual Report. The unaudited income information for the
twelve months ended March 31, 1995 reflects all adjustments (which
consist only of normal recurring adjustments) which in the Company's opinion
are necessary for a fair presentation of that period.
<TABLE>
<CAPTION>
12 Months Ended Years Ended December 31,
March 31, 1995 1994* 1993 1992 1991 1990
(Thousands of Dollars) (Thousands of Dollars)
Income Statement Data:
<S> <C> <C> <C> <C> <C> <C>
Total Operating Revenues**............. $ 754,064 $ 759,365 $ 712,585 $ 687,887 $ 674,077 $ 697,544
Operating Income....................... 109,955 112,322 101,716 92,148 82,113 80,757
Income Before Interest
Charges.............................. 123,949 126,236 114,464 104,704 93,587 93,286
Interest Charges....................... 46,134 44,253 40,997 37,228 35,346 31,706
Income Before Cumulative Effect
of Accounting Change................. 77,815 81,983 73,467 67,476 58,241 61,580
Cumulative Effect of Accounting Change. - 16,471 - - - -
Net Income............................. 77,815 98,454 73,467 67,476 58,241 61,580
Ratio of Earnings to Fixed
Charges.............................. 3.24 3.46 3.34 3.40 3.20 3.56
</TABLE>
* Income Statement Data includes the cumulative effect of an accounting
change to record unbilled revenues recorded in the first quarter of
1994. The Ratio of Earnings to Fixed Charges is before the cumulative
effect of the accounting change.
** Amount for 1990 has been reclassified for comparative purposes to
reflect a change in a Federal Energy Regulatory Commission
classification.
USE OF PROCEEDS
The net proceeds from the sale of the Debt Securities will be
used to redeem or tender for outstanding preferred stock.
<TABLE>
<CAPTION>
CONSTRUCTION AND FINANCING
Construction expenditures by the Company in 1994 amounted to $143 million and for
1995 and 1996 are expected to aggregate $92 million and $98 million, respectively. In 1994,
these expenditures included $51 million for environmental control technology, of which $39
million was for compliance with the Clean Air Act Amendments of 1990 (the "CAAA"). The 1995
and 1996 estimated expenditures include $29 million and $19 million, respectively, for
environmental control technology, of which $12 million and $5 million, respectively, are to
cover costs of compliance with the CAAA. Allowance for funds used during construction
(AFUDC)(shown below) has been reduced for carrying charges on CAAA expenditures that are
being collected through currently approved base rates.
1994 1995 1996
(Millions of Dollars)
<S> <C> <C> <C>
Generation.............................................. $ 55.6 $ 31.3 $ 29.7
Transmission and Distribution........................... 81.3 58.4 64.9
Other................................................... 5.9 2.6 3.6
Total............................................. $142.8 $ 92.3 $ 98.2
Allowance for Funds used During Construction
Included Above........................................ $ 5.9 $ 2.1 $ 1.8
</TABLE>
<PAGE>
In connection with its construction and demand-side
management programs, the Company must make estimates of the availability
and cost of capital as well as the future demands of its customers that
are necessarily subject to regional, national, and international
developments, changing business conditions, and other factors. The
construction of facilities and their cost are affected by laws and
regulations, lead times in manufacturing, availability of labor,
materials and supplies, inflation, interest rates, and licensing, rate,
environmental, and other proceedings before regulatory authorities. As
a result, the Company's future plans are subject to continuing review
and substantial change.
The Company has financed its construction program through
internally generated funds, first mortgage bond and preferred stock
issues, pollution control and solid waste disposal notes, instalment
loans, long-term lease arrangements, equity investments by its parent,
and, where necessary, interim short-term debt. The future ability of
the Company to finance its construction program by these means depends
on many factors, including creditworthiness, rate levels sufficient to
provide internally generated funds and adequate revenues to produce a
satisfactory return on the common equity portion of the Company's
capital structure and to support the issuance of senior and other
securities.
DESCRIPTION OF DEBT SECURITIES
General
The Debt Securities may be issued in one or more series under an
Indenture to be dated as of May 31, 1995, between the Company and The
Bank of New York, as Trustee (the "Trustee"). The following summary does not
purport to be complete and is subject in all respects to the provisions
of, and is qualified in its entirety by reference to, the Indenture and
the Debt Securities, the forms of which are filed, or will be filed, as
exhibits to the registration statement of which this Prospectus forms a
part, or as an exhibit to a Report on Form 8-K to be incorporated by
reference in such Prospectus. Whenever particular provisions or defined
terms in such documents are referred to herein or in a Prospectus
Supplement, such provisions or terms are incorporated by reference
herein or therein, as the case may be.
The Debt Securities will be unsecured obligations of the Company
and, unless otherwise provided in a Prospectus Supplement relating to a
particular series of Debt Securities, will be subordinated obligations
of the Company.
Reference is made to the Prospectus Supplement relating to any
particular issue of Debt Securities for the following terms: (1) the
title of such Debt Securities; (2) any limit on the aggregate principal
amount of such Debt Securities or the series of which they are a part;
<PAGE>
(3) the date or dates on which the principal of any of such Debt
Securities will be payable; (4) the rate or rates at which any of such
Debt Securities will bear interest, if any, the date or dates from which
any such interest will accrue, the Interest Payment Dates on which any
such interest will be payable, including the right, if any, to defer the
payment of interest, and the Regular Record Date for any such interest
payable on any Interest Payment Date; (5) the place or places where the
principal of and any premium and interest on any of such Debt Securities
will be payable; (6) the period or periods within which, the price or
prices at which and the terms and conditions on which any of such Debt
Securities may be redeemed, in whole or in part, at the option of the
Company; (7) the obligation, if any, of the Company to redeem or
purchase any of such Debt Securities pursuant to any sinking fund or
analogous provision or at the option of the Holder thereof, and the
period or periods within which, the price or prices at which and the
terms and conditions on which any of such Debt Securities will be
redeemed or purchased, in whole or in part, pursuant to any such
obligation; (8) the denominations in which any of such Debt Securities
will be issuable, if other than denominations of $1,000 and any integral
multiple thereof; (9) if the amount of principal of or any premium or
interest on any of such Debt Securities may be determined with reference
to an index or pursuant to a formula, the manner in which such amounts
will be determined; (10) if other than the currency of the United States
of America, the currency, currencies, or currency units in which the
principal of or any premium or interest on any of such Debt Securities
will be payable and the manner of determining the equivalent thereof in
the currency of the United States of America for any purpose, including
for purposes of determining the principal amount deemed to be
Outstanding at any time; (11) if the principal of or any premium or
interest on any of such Debt Securities is to be payable, at the
election of the Company or the Holder thereof, in one or more currencies
or currency units other than those in which such Debt Securities are
stated to be payable, the currency, currencies or currency units in
which payment of any such amount as to which such election is made will
be payable, the periods within which and the terms and conditions upon
which such election is to be made and the amount so payable (or the
manner in which such amount is to be determined); (12) if other than the
entire principal amount thereof, the portion of the principal amount of
any of such Debt Securities which will be payable upon declaration of
acceleration of the Maturity thereof; (13) if the principal amount
payable at the Stated Maturity of any of such Debt Securities will not
be determinable as of any one or more dates prior to the Stated
Maturity, the amount which will be deemed to be such principal amount as
of any such date for any purpose, including the principal amount thereof
which will be due and payable upon any Maturity other than the Stated
Maturity or which will be deemed to be Outstanding as of any such date
(or, in any such case, the manner in which such deemed principal amount
is to be determined); (14) if applicable, that such Debt Securities, in
whole or any specified part, are defeasible pursuant to the provisions
of the Indenture described under "Defeasance and Covenant Defeasance -
Defeasance and Discharge" or "Defeasance and Covenant Defeasance -
Defeasance of Certain Covenants," or under both such captions; (15)
<PAGE>
whether any of such Debt Securities will be issuable in whole or in part
in the form of one or more Global Securities and, if so, the respective
Depositaries for such Global Securities, the form of any legend or
legends to be borne by any such Global Security in addition to or in
lieu of the legend referred to under "Global Securities" and any
transfer of such Global Security in whole or in part may be registered,
in the names of Persons other than the Depositary for such Global
Security or its nominee; (16) any addition to or change in the Events of
Default applicable to any of such Debt Securities and any change in the
right of the Trustee or the Holders to declare the principal amount of
any of such Debt Securities due and payable; (17) any addition to or
change in the covenants in the Indenture; and (18) any other terms of
such Debt Securities not inconsistent with the provisions of the
Indenture. (Section 301).
Debt Securities, including Original Issue Discount Securities, may
be sold at a substantial discount below their principal amount. Certain
special United States federal income tax considerations (if any)
applicable to Debt Securities sold at an original issue discount may be
described in the applicable Prospectus Supplement. In addition, certain
special United States federal income tax or other considerations (if
any) applicable to any Debt Securities which are denominated in a
currency or currency unit other than United States dollars may be
described in the applicable Prospectus Supplement.
Except as otherwise described in the Prospectus Supplement, the
covenants contained in the Indenture would not afford holders of Debt
Securities protection in the event of a highly-leveraged transaction
involving the Company.
Subordination
The Indenture provides that, unless otherwise provided in a
supplemental indenture or a Board Resolution and described in the
applicable Prospectus Supplement, the Debt Securities will be
subordinate and subject in right of payment to the prior payment in full
of all Senior Debt of the Company, whether outstanding as of the date of
the Indenture or thereafter incurred. (Section 1401). The balance of
the information under this section assumes that the relevant
supplemental indenture or Board Resolution results in the corresponding
series of Debt Securities being subordinated obligations of the Company.
No payment of principal of (including redemption and sinking fund
payments), premium, if any, or interest on, the Debt Securities may be
made if any Senior Debt is not paid when due, any applicable grace
period with respect to such default has ended and such default has not
been cured or waived, or if the maturity of any Senior Debt has been
accelerated because of a default. (Section 1402). Upon any
distribution of assets of the Company to creditors upon any dissolution,
winding-up, liquidation or reorganization, whether voluntary or
involuntary or in bankruptcy, insolvency, receivership or other
proceedings, all principal of, and premium, if any, and interest due or
<PAGE>
to become due on, all Senior Debt must be paid in full before the
holders of the Debt Securities are entitled to receive or retain any
payment. (Section 1403). Subject to the payment in full of all Senior
Debt, the rights of the holders of the Debt Securities will be
subrogated to the rights of the holders of Senior Debt to receive
payments or distributions applicable to Senior Debt until all amounts
owing on the Debt Securities are paid in full. (Section 1404).
The term "Senior Debt" shall mean the principal of, premium, if
any, interest on and any other payment due pursuant to any of the
following, whether outstanding at the date of execution of the Indenture
or thereafter incurred, created or assumed:
(a) all indebtedness of the Company evidenced by notes,
debentures, bonds, or other securities sold by the Company for
money, including all first mortgage bonds of the Company
outstanding from time to time;
(b) all indebtedness of others of the kinds described in the
preceding clause (a) assumed by or guaranteed in any manner by the
Company, including through an agreement to purchase, contingent or
otherwise; and
(c) all renewals, extensions, or refundings of indebtedness
of the kinds described in any of the preceding clauses (a) and
(b);
unless, in the case of any particular indebtedness, renewal, extension
or refunding, the instrument creating or evidencing the same or the
assumption or guarantee of the same expressly provides that such
indebtedness, renewal, extension or refunding is not superior in right
of payment to or is pari passu with the Debt Securities. (Section 101).
The Indenture does not limit the aggregate amount of Senior Debt
that the Company may issue. As of March 31, 1995, outstanding Senior
Debt of the Company aggregated approximately $604 million.
Form, Exchange, and Transfer
The Debt Securities of each series will be issuable only in fully
registered form without coupons and, unless otherwise specified in the
applicable Prospectus Supplement, in denominations of $1,000 and any
integral multiple thereof. (Section 302).
At the option of the Holder, subject to the terms of the Indenture
and the limitations applicable to Global Securities, Debt Securities of
any series will be exchangeable for other Debt Securities of the same
series, of any authorized denomination and of like tenor and aggregate
principal amount. (Section 305).
Subject to the terms of the Indenture and the limitations
applicable to Global Securities, Debt Securities may be presented for
<PAGE>
exchange as provided above or for registration of transfer (duly
endorsed or with the form of transfer endorsed thereon duly executed) at
the office of the Security Registrar or at the office of any transfer
agent designated by the Company for such purpose. No service charge
will be made for any registration of transfer or exchange of Debt
Securities, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection
therewith. Such transfer or exchange will be effected upon the Security
Registrar or such transfer agent, as the case may be, being satisfied
with the documents of title and identity of the person making the
request. The Company has appointed the Trustee as Security Registrar.
Any transfer agent (in addition to the Security Registrar) initially
designated by the Company for any Debt Securities will be named in the
applicable Prospectus Supplement. (Section 305). The Company may at any
time designate additional transfer agents or rescind the designation of
any transfer agent or approve a change in the office through which any
transfer agent acts, except that the Company will be required to
maintain a transfer agent in each Place of Payment for the Debt
Securities of each series. (Section 1002).
If the Debt Securities of any series (or of any series and
specified tenor) are to be redeemed in part, the Company will not be
required to (i) issue, register the transfer of, or exchange any Debt
Security of that series (or of that series and specified tenor, as the
case may be) during a period beginning at the opening of business 15
days before the day of mailing of a notice of redemption of any such
Debt Security that may be selected for redemption and ending at the
close of business on the day of such mailing or (ii) register the
transfer of or exchange any Debt Security so selected for redemption, in
whole or in part, except the unredeemed portion of any such Debt
Security being redeemed in part. (Section 305).
Global Securities
Some or all of the Debt Securities of any series may be
represented, in whole or in part, by one or more Global Securities which
will have an aggregate principal amount equal to that of the Debt
Securities represented thereby. Each Global Security will be registered
in the name of a Depositary or a nominee thereof identified in the
applicable Prospectus Supplement, will be deposited with such Depositary
or nominee or a custodian therefor and will bear a legend regarding the
restrictions on exchanges and registration of transfer thereof referred
to below and any such other matters as may be provided for pursuant to
the Indenture.
Notwithstanding any provision of the Indenture or any Debt
Security described herein, no Global Security may be exchanged in whole
or in part for Debt Securities registered, and no transfer of a Global
Security in whole or in part may be registered, in the name of any
Person other than the Depositary for such Global Security or any nominee
of such Depositary unless (i) the Depositary has notified the Company
that it is unwilling or unable to continue as Depositary for such Global
<PAGE>
Security or has ceased to be qualified to act as such as required by the
Indenture, (ii) there shall have occurred and be continuing an Event of
Default with respect to the Debt Securities represented by such Global
Security or (iii) there shall exist such circumstances, if any, in
addition to or in lieu of those described above as may be described in
the applicable Prospectus Supplement. All securities issued in exchange
for a Global Security or any portion thereof will be registered in such
names as the Depositary may direct. (Sections 204 and 305).
As long as the Depositary, or its nominee, is the registered
Holder of a Global Security, the Depositary or such nominee, as the case
may be, will be considered the sole owner and Holder of such Global
Security and the Debt Securities represented thereby for all purposes
under the Debt Securities and the Indenture. Except in the limited
circumstances referred to above, owners of beneficial interests in a
Global Security will not be entitled to have such Global Security or any
Debt Securities represented thereby registered in their names, will not
receive or be entitled to receive physical delivery of certificated Debt
Securities in exchange therefor and will not be considered to be the
owners or Holders of such Global Security or any Debt Securities
represented thereby for any purpose under the Debt Securities or the
Indenture. All payments of principal of and any premium and interest on
a Global Security will be made to the Depositary or its nominee, as the
case may be, as the Holder thereof. The laws of some jurisdictions
require that certain purchasers of securities take physical delivery of
such securities in definitive form. These laws may impair the ability
to transfer beneficial interests in a Global Security.
Ownership of beneficial interests in a Global Security will be
limited to institutions that have accounts with the Depositary or its
nominee ("participants") and to persons that may hold beneficial
interests through participants. In connection with the issuance of any
Global Security, the Depositary will credit, on its book-entry
registration and transfer system, the respective principal amounts of
Debt Securities represented by the Global Security to the accounts of
its participants. Ownership of beneficial interests in a Global
Security will be shown only on, and the transfer of those ownership
interests will be effected only through, records maintained by the
Depositary (with respect to participants' interests) or such
participants (with respect to interests of persons held by such
participants on their behalf). Payments, transfers, exchanges, and
other matters relating to beneficial interests in a Global Security may
be subject to various policies and procedures adopted by the Depositary
from time to time. None of the Company, the Trustee or any agent of the
Company or the Trustee will have any responsibility or liability for any
aspect of the Depositary's or any participant's records relating to, or
for payments made on account of, beneficial interests in a Global
Security, or for maintaining, supervising, or reviewing any records
relating to such beneficial interests.
Secondary trading in notes and debentures of corporate issuers is
generally settled in clearing-house or next-day funds. In contrast,
<PAGE>
beneficial interests in a Global Security, in some cases, may trade in
the Depositary's same-day funds settlement system, in which secondary
market trading activity in those beneficial interests would be required
by the Depositary to settle in immediately available funds. There is no
assurance as to the effect, if any, that settlement in immediately
available funds would have on trading activity in such beneficial
interests. Also, settlement for purchases of beneficial interests in a
Global Security upon the original issuance thereof may be required to be
made in immediately available funds.
Payment and Paying Agents
Unless otherwise indicated in the applicable Prospectus
Supplement, payment of interest on a Debt Security on any Interest
Payment Date will be made to the Person in whose name such Debt Security
(or one or more Predecessor Debt Securities) is registered at the close
of business on the Regular Record Date for such interest. (Section 307).
Unless otherwise indicated in the applicable Prospectus
Supplement, principal of and any premium and interest on the Debt
Securities of a particular series will be payable at the office of such
Paying Agent or Paying Agents as the Company may designate for such
purpose from time to time, except that at the option of the Company
payment of any interest may be made by check mailed to the address of
the Person entitled thereto as such address appears in the Security
Register. Unless otherwise indicated in the applicable Prospectus
Supplement, the principal corporate trust office of The Bank of New York
will be designated as the Company's sole Paying Agent for payments with
respect to Debt Securities of each series. Any other Paying Agents
initially designated by the Company for the Debt Securities of a
particular series will be named in the applicable Prospectus Supplement.
The Company may at any time designate additional Paying Agents or
rescind the designation of any Paying Agent or approve a change in the
office through which any Paying Agent acts, except that the Company will
be required to maintain a Paying Agent in each Place of Payment for the
Debt Securities of a particular series. (Section 1002).
All moneys paid by the Company to a Paying Agent for the payment
of the principal of or any premium or interest on any Debt Security
which remain unclaimed at the end of two years after such principal,
premium or interest has become due and payable will be repaid to the
Company, and the Holder of such Debt Security thereafter may look only
to the Company for payment thereof. (Section 1003).
Consolidation, Merger, and Sale of Assets
The Company may not consolidate with or merge into any other
Person or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, and may not permit any
Person to consolidate with or merge into the Company or convey,
transfer, or lease its properties and assets substantially as an
entirety to the Company, unless (i) the successor Person (if any) is a
<PAGE>
corporation, partnership, trust or other entity organized and validly
existing under the laws of any domestic jurisdiction and assumes the
Company's obligations on the Debt Securities and under the Indenture,
(ii) immediately after giving effect to the 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 occurred and be continuing
and (iii) certain other conditions are met. (Section 801).
Events of Default
Each of the following will constitute an Event of Default under
the Indenture with respect to Debt Securities of any series: (a) failure
to pay principal of or any premium on any Debt Security of that series
when due; (b) failure to pay any interest on any Debt Securities of that
series when due, continued for 30 days; (c) failure to deposit any
sinking fund payment, when due, in respect of any Debt Security of that
series; (d) failure to perform any other covenant of the Company in the
Indenture (other than a covenant included in the Indenture solely for
the benefit of a series other than that series), continued for 60 days
after written notice has been given by the Trustee, or the Holders of at
least 10% in principal amount of the Outstanding Debt Securities of that
series, as provided in the Indenture; provided, however, that no notice
by the Trustee to the Holders of such an occurrence shall be given until
at least 30 days after the occurrence of such failure to perform; and
(e) certain events in bankruptcy, insolvency or reorganization. (Section
501).
If an Event of Default (other than an Event of Default described
in clause (e) above) with respect to the Debt Securities of any series
at the time Outstanding shall occur and be continuing, either the
Trustee or the Holders of at least 25% in aggregate principal amount of
the Outstanding Debt Securities of that series by notice as provided in
the Indenture may declare the principal amount of the Debt Securities of
that series (or, in the case of any Debt Security that is an Original
Issue Discount Security or the principal amount of which is not then
determinable, such portion of the principal amount of such Debt
Security, or such other amount in lieu of such principal amount, as may
be specified in the terms of such Debt Security) to be due and payable
immediately. If an Event of Default described in clause (e) above with
respect to the Debt Securities of any series at the time Outstanding
shall occur, the principal amount of all the Debt Securities of that
series (or, in the case of any such Original Issue Discount Debt
Security or other Debt Security, such specified amount) will
automatically, and without any action by the Trustee or any Holder,
become immediately due and payable. After any such acceleration, but
before a judgment or decree based on acceleration, the Holders of a
majority in aggregate principal amount of the Outstanding Debt
Securities of that series may, under certain circumstances, rescind and
annul such acceleration if all Events of Default, other than the non-
payment of accelerated principal (or other specified amount), have been
cured or waived as provided in the Indenture. (Section 502). For
information as to waiver of defaults, see "Modification and Waiver."
<PAGE>
Subject to the provisions of the Indenture relating to the duties
of the Trustee in case an Event of Default shall occur and be
continuing, the Trustee will be under no obligation to exercise any of
its rights or powers under the Indenture at the request or direction of
any of the Holders, unless such Holders shall have offered to the
Trustee reasonable indemnity. (Section 603). Subject to such provisions
for the indemnification of the Trustee, the Holders of a majority in
principal amount of the Outstanding Debt Securities of any series will
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, with respect to the Debt
Securities of that series. (Section 512).
No Holder of a Debt Security of any series will have any right to
institute any proceeding with respect to the Indenture, or for the
appointment of a receiver or a trustee, or for any other remedy
thereunder, unless (i) such Holder has previously given to the Trustee
written notice of a continuing Event of Default with respect to the Debt
Securities of that series, (ii) the Holders of at least 25% in aggregate
principal amount of the Outstanding Debt Securities of that series have
made written request, and such Holder or Holders have offered reasonable
indemnity, to the Trustee to institute such proceeding as trustee and
(iii) the Trustee has failed to institute such proceeding, and has not
received from the Holders of a majority in aggregate principal amount of
the Outstanding Debt Securities of that series a direction inconsistent
with such request, within 60 days after such notice, request and offer.
(Section 507). However, such limitations do not apply to a suit
instituted by a Holder of a Debt Security for the enforcement of payment
of the principal of or any premium or interest on such Debt Security on
or after the applicable due date specified in such Debt Security.
(Section 508).
The Company will be required to furnish to the Trustee annually a
statement by certain of its officers as to whether or not the Company,
to their knowledge, is in default in the performance or observance of
any of the terms, provisions and conditions of the Indenture and, if so,
specifying all such known defaults. (Section 1004).
Modification and Waiver
Modifications and amendments of the Indenture may be made by the
Company and the Trustee with the consent of the Holders of not less than
a majority in aggregate principal amount of the Outstanding Debt
Securities of each series affected by such modification or amendment;
provided, however, that no such modification or amendment may, without
the consent of the Holder of each Outstanding Debt Security affected
thereby, (a) change the Stated Maturity of the principal of, or any
instalment of principal of or interest on, any Debt Security, (b) reduce
the principal amount of, or any premium or interest on, any Debt
Security, (c) reduce the amount of principal of an Original Issue
Discount Security or any other Debt Security payable upon acceleration
of the Maturity thereof, (d) change the place or currency of payment of
<PAGE>
principal of, or any premium or interest on, any Debt Security, (e)
impair the right to institute suit for the enforcement of any payment on
or with respect to any Debt Security, (f) modify the subordination
provisions in a manner adverse to the Holders of the Debt Securities,
(g) reduce the percentage in principal amount of Outstanding Debt
Securities of any series, the consent of whose Holders is required for
modification or amendment of the Indenture, (h) reduce the percentage in
principal amount of Outstanding Debt Securities of any series necessary
for waiver of compliance with certain provisions of the Indenture or for
waiver of certain defaults or (i) modify such provisions with respect to
modification and waiver. (Section 902).
The Holders of not less than a majority in aggregate principal
amount of the Outstanding Debt Securities of any series may waive
compliance by the Company with certain restrictive provisions of the
Indenture with respect to such series. (Section 1008). The Holders of a
majority in principal amount of the Outstanding Debt Securities of any
series may waive any past default under the Indenture with respect to
such series, except a default in the payment of principal, premium, or
interest and certain covenants and provisions of the Indenture which
cannot be amended without the consent of the Holder of each Outstanding
Debt Security of such series affected. (Section 513).
The Indenture provides that in determining whether the Holders of
the requisite principal amount of the Outstanding Debt Securities have
given or taken any direction, notice, consent, waiver, or other action
under the Indenture as of any date, (i) the principal amount of an
Original Issue Discount Security that will be deemed to be Outstanding
will be the amount of the principal thereof that would be due and
payable as of such date upon acceleration of the Maturity thereof to
such date, (ii) if, as of such date, the principal amount payable at the
Stated Maturity of a Debt Security is not determinable (for example,
because it is based on an index), the principal amount of such Debt
Security deemed to be Outstanding as of such date will be an amount
determined in the manner prescribed for such Debt Security and (iii) the
principal amount of a Debt Security denominated in one or more foreign
currencies or currency units that will be deemed to be Outstanding will
be the U.S. dollar equivalent, determined as of such date in the manner
prescribed for such Debt Security, of the principal amount of such Debt
Security (or, in the case of a Debt Security described in clause (i) or
(ii) above, of the amount described in such clause). Certain Debt
Securities, including those for whose payment or redemption money has
been deposited or set aside in trust for the Holders and those that have
been fully defeased pursuant to Section 1302, will not be deemed to be
Outstanding. (Section 101).
Except in certain limited circumstances, the Company will be
entitled to set any day as a record date for the purpose of determining
the Holders of Outstanding Debt Securities of any series entitled to
give or take any direction, notice, consent, waiver, or other action
under the Indenture, in the manner and subject to the limitations
provided in the Indenture. In certain limited circumstances, the
<PAGE>
Trustee will be entitled to set a record date for action by Holders. If
a record date is set for any action to be taken by Holders of a
particular series, such action may be taken only by persons who are
Holders of Outstanding Debt Securities of that series on the record
date. To be effective, such action must be taken by Holders of the
requisite principal amount of such Debt Securities within a specified
period following the record date. For any particular record date, this
period will be 180 days or such shorter period as may be specified by
the Company (or the Trustee, if it set the record date), and may be
shortened or lengthened (but not beyond 180 days) from time to time.
(Section 104).
Defeasance and Covenant Defeasance
If and to the extent indicated in the applicable Prospectus
Supplement, the Company may elect, at its option at any time, to have
the provisions of Section 1302, relating to defeasance and discharge of
indebtedness, or Section 1303, relating to defeasance of certain
restrictive covenants in the Indenture, applied to the Debt Securities
of any series, or to any specified part of a series. (Section 1301).
Defeasance and Discharge. The Indenture will provide that, upon
the Company's exercise of its option (if any) to have Section 1302
applied to any Debt Securities, the Company will be discharged from all
its obligations with respect to such Debt Securities (except for certain
obligations to exchange or register the transfer of Debt Securities, to
replace stolen, lost or mutilated Debt Securities, to maintain paying
agencies and to hold moneys for payment in trust) upon the deposit in
trust for the benefit of the Holders of such Debt Securities of money or
U.S. Government Obligations, or both, which, through the payment of
principal and interest in respect thereof in accordance with their
terms, will provide money in an amount sufficient to pay the principal
of and any premium and interest of such Debt Securities on the
respective Stated Maturities in accordance with the terms of the
Indenture and such Debt Securities. Such defeasance or discharge may
occur only if, among other things, the Company has delivered to the
Trustee an Opinion of Counsel to the effect that the Company has
received from, or there has been published by, the United States
Internal Revenue Service a ruling, or there has been a change in tax
law, in either case to the effect that Holders of such Debt Securities
will not recognize 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, in the same manner and at the
same times as would have been the case if such deposit, defeasance and
discharge were not to occur. (Sections 1302 and 1304).
Defeasance of Certain Covenants. The Indenture provides that,
upon the Company's exercise of its option (if any) to have Section 1303
applied to any Debt Securities, the Company may omit to comply with
certain restrictive covenants that may be described in the applicable
Prospectus Supplement, and the occurrence of certain Events of Default,
which are described above in clause (d) (with respect to such
<PAGE>
restrictive covenants) in the first paragraph under "Events of Default"
and any that may be described in the applicable Prospectus Supplement,
will be deemed not to be or result in an Event of Default and the
provisions of the Indenture relating to subordination (if otherwise
applicable) will cease to be effective, in each case with respect to
such Debt Securities. The Company, in order to exercise such option,
will be required to deposit, in trust for the benefit of the Holders of
such Debt Securities, money or U.S. Government Obligations, or both,
which, through the payment of principal and interest in respect thereof
in accordance with their terms, will provide money in an amount
sufficient to pay the principal of and any premium and interest on such
Debt Securities on the respective Stated Maturities in accordance with
the terms of the Indenture and such Debt Securities. The Company will
also be required, among other things, to deliver to the Trustee an
Opinion of Counsel to the effect that Holders of such Debt Securities
will not recognize gain or loss for federal income tax purposes as a
result of such deposit and defeasance of certain obligations and will be
subject to federal income tax on the same amount, in the same manner and
at the same times as would have been the case if such deposit and
defeasance were not to occur. In the event the Company exercised this
option with respect to any Debt Securities and such Debt Securities were
declared due and payable because of the occurrence of any Event of
Default, the amount of money and U.S. Government Obligations so
deposited in trust would be sufficient to pay amounts due on such Debt
Securities at the time of their respective Stated Maturities but may not
be sufficient to pay amounts due on such Debt Securities upon any
acceleration resulting from such Event of Default. In such case, the
Company would remain liable for such payments. (Sections 1303 and 1304).
Notices
Notices to Holders of Debt Securities will be given by mail to the
addresses of such Holders as they may appear in the Security Register.
(Sections 101 and 106).
Title
The Company, the Trustee, and any agent of the Company or the
Trustee may treat the Person in whose name a Debt Security is registered
as the absolute owner thereof (whether or not such Debt Security may be
overdue) for the purpose of making payment and for all other purposes.
(Section 308).
Governing Law
The Indenture and the Debt Securities will be governed by, and
construed in accordance with, the law of the State of New York. (Section
112).
<PAGE>
Regarding the Trustee
The Trustee under the Indenture is The Bank of New York. The
Company maintains normal banking arrangements with The Bank of New York.
PLAN OF DISTRIBUTION
The Company will sell the Debt Securities from time to time
through underwriters, dealers or agents in either negotiated or
competitively bid transactions. Any Debt Securities acquired by any
underwriters 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, at
market prices prevailing at the time of sale or at varying prices
determined at the time of sale. The underwriter or underwriters with
respect to a particular underwritten offering of Debt Securities 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 page of such Prospectus Supplement. The
applicable Prospectus Supplement will also set forth the purchase price
of the Debt Securities offered and the proceeds to the Company from such
sale, any underwriting discounts and other items constituting
underwriters' compensation, any initial public offering price and any
discounts or concessions allowed or reallowed or paid to dealers and
other specific terms of the particular Securities. Underwriters,
dealers and agents that participate in the distribution of Debt
Securities may be deemed to be underwriters and any discounts or
commissions received by them from the Company and any profit on the
resale of Debt Securities by them may be deemed to be underwriting
discounts and commissions under the Securities Act of 1933.
Unless otherwise set forth in a Prospectus Supplement, the
obligations of the underwriters to purchase any Debt Securities will be
subject to certain conditions precedent, and the underwriters will be
obligated to purchase all of the particular Debt Securities offered
thereby if any are purchased. Underwriters and dealers may be entitled,
under agreements to be entered into with the Company, to indemnification
against certain civil liabilities, including liabilities under the
Securities Act of 1933.
VALIDITY OF THE DEBT SECURITIES
The validity of the Debt Securities offered hereby will be passed
upon for the Company by Sullivan & Cromwell, New York, New York, and for
the underwriters by Cahill Gordon & Reindel, a partnership including a
professional corporation, New York, New York. On matters of local law,
those firms will rely on Robert R. Winter, Esq., Vice President, Legal
Services of the Company.
<PAGE>
EXPERTS
The financial statements incorporated in this Prospectus by
reference to the Annual Report have been so incorporated in reliance on
the reports of Price Waterhouse LLP, independent accountants, given on
the authority of said firm as experts in auditing and accounting.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Estimated
Amounts
Filing fee
Securities and Exchange Commission-1933 Act.................... $ 21,323*
Securities and Exchange Commission-1935 Act.................... $ 667*
Rating agency fees............................................... $ 15,000
Services of counsel.............................................. $ 60,000
Trustees Fees and Expenses....................................... $ 7,000
Services of independent accountants.............................. $ 17,000
Blue Sky fees and expenses....................................... $ 8,000
Miscellaneous.................................................... $ 10,000
Total....................................................... $138,990
* Actual.
Item 15. Indemnification of Directors and Officers.
Under Article IX of the Articles of Incorporation of the Company,
Article 6 of the By-Laws of the Company, Sections 13.1-697 and 13.1-702 of the
Virginia Stock Corporation Act, and Section 2-418 of the Corporations and
Associations Article of the Annotated Code of Maryland, directors and officers
are entitled to indemnification by the Company against liability which they
may incur in their respective capacities as directors and officers under
certain circumstances. Directors' and Officers' Liability Insurance is
carried in an amount of $80,000,000 with a $500,000 corporate reimbursement.
In the Purchase Agreement each Underwriter will agree to indemnify
the directors and certain officers of the Company against liabilities
resulting from information the Underwriter supplies for the Registration
Statement.
Item 16. Exhibits.
Exhibit
Number
1 Form of Standard Purchase Agreement Provisions - Debt
Securities.
4(a) Form of Indenture Relating to Debt Securities.
4(b) Form of Debt Securities (to be filed as an Exhibit by means
of a Form 8-K).
5 Opinion and consent of Sullivan & Cromwell.
12 Statement re Computation of Ratios.
II-1
<PAGE>
23(a) Consent of Price Waterhouse LLP, Independent Accountants.
23(b) Consent of Sullivan & Cromwell (Filed as part of Exhibit 5
hereto).
24 Power of Attorney. (Contained in the "Signatures" page
hereof.)
25 Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939 of The Bank of New York.
26(a) Form of Notice of Invitation for Competitive Bids for Debt
Securities.
26(b) Form of Invitation for Competitive Bids for Debt Securities.
27 Financial Data Schedules.
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made of the securities registered hereby, 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;
(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;
(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 by the registrant pursuant
to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this registration statement.
II-2
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, 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
Securities Act of 1933, each filing of the registrant's annual report pursuant
to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that
is incorporated by reference in this registration statement 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.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions described under Item 15,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant 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 registrant 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 Act and will be governed by the final adjudication
of such issue.
II-3
<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 on 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 New York, State of New York, on the
22nd day of May.
THE POTOMAC EDISON COMPANY
By KLAUS BERGMAN
(Klaus Bergman, Chairman)
KNOW ALL MEN BY THESE PRESENTS that each of the undersigned officers and
directors of The Potomac Edison Company, a Maryland and Virginia corporation,
for himself or herself and not for one another, does hereby constitute and
appoint STANLEY I. GARNETT, II, ESQ. and NANCY H. GORMLEY, ESQ. and each of
them, a true and lawful attorney in his or her name, place and stead, in any and
all capacities, to sign his or her name to any and all amendments, including
post-effective amendments, to this Registration Statement, and to cause the same
to be filed with the Securities and Exchange Commission, granting unto said
attorneys and each of them full power and authority to do and perform any act
and thing necessary and proper to be done in the premises, as fully and to all
intents and purposes as the undersigned could do if personally present, and each
of the undersigned for himself or herself hereby ratifies and confirms all that
said attorneys or any one of them shall lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on May 22, 1995.
Signature Title
KLAUS BERGMAN Chairman of the Board,
(Klaus Bergman) Chief Executive Officer and Director
(principal executive officer)
DALE F. ZIMMERMAN Secretary and Treasurer
(Dale F. Zimmerman) (principal financial officer)
THOMAS J. KLOC Comptroller
(Thomas J. Kloc) (principal accounting officer)
ELEANOR BAUM Director
(Eleanor Baum)
WILLIAM L. BENNETT Director
(William L. Bennett)
II-4
<PAGE>
Signature Title
STANLEY I. GARNETT, II Director
(Stanley I. Garnett, II)
WENDELL F. HOLLAND Director
(Wendell F. Holland)
PHILLIP E. LINT Director
(Phillip E. Lint)
EDWARD H. MALONE Director
(Edward H. Malone)
FRANK A. METZ, JR. Director
(Frank A. Metz, Jr.)
ALAN J. NOIA Director
(Alan J. Noia)
JAY S. PIFER President and Director
(Jay S. Pifer)
STEVEN H. RICE Director
(Steven H. Rice)
GUNNAR E. SARSTEN Director
(Gunnar E. Sarsten)
PETER L. SHEA Director
(Peter L. Shea)
PETER J. SKRGIC Director
(Peter J. Skrgic)
II-5
<PAGE>
INDEX TO EXHIBITS
Sequential page
Exhibits number
1 Form of Standard Purchase Agreement
Provisions - Debt Securities.
4(a) Form of Indenture Relating to Debt Securities.
4(b) Form of Debt Securities (to be filed
as Exhibit by means of Form 8-K).
5 Opinion and consent of Sullivan & Cromwell.
12 Statement re Computation of Ratios.
23(a) Consent of Price Waterhouse LLP,
Independent Accountants.
23(b) Consent of Sullivan & Cromwell
(Filed as part of Exhibit 5 hereto).
24 Power of Attorney.
(Contained in the "Signatures" page hereof.)
25 Form T-1 Statement of Eligibility under the
Trust Indenture Act of 1939 of The Bank of New York.
26(a) Form of Notice of Invitation for Competitive Bids
for Debt Securities.
26(b) Form of Invitation for Competitive Bids
for Debt Securities.
27 Financial Data Schedules.
II-6
EXHIBIT 1
THE POTOMAC EDISON COMPANY
STANDARD PURCHASE AGREEMENT PROVISIONS-
DEBT SECURITIES
INCLUDING
FORM OF PURCHASE AGREEMENT
STANDARD PURCHASE AGREEMENT PROVISIONS-
DEBT SECURITIES
From time to time the Company may enter into purchase
agreements that provide for the sale of designated securities to the
purchaser or purchasers named therein. The standard provisions set forth
herein shall be incorporated by reference in such purchase agreement, a
form of which is set forth in Schedule II attached hereto ("Purchase
Agreement"). The Purchase Agreement, including the provisions
incorporated therein by reference, is herein sometimes referred to as
"this Agreement". Unless otherwise defined in Schedule I attached
hereto, terms defined or set forth in the Purchase Agreement are used
herein as therein defined.
1. Introductory. The Company proposes to issue and sell from
time to time Debt Securities registered under the registration statements
referred to in Section 2(a) (the "Securities"). The Securities will be
issued under an Indenture (as defined in Schedule I attached hereto) and
will have varying designations, interest rates and times of payment of
any interest, maturities, redemption provisions and other terms, with all
such terms for any particular series of the Securities being determined at
the time of the sale. The Securities involved in any such offering are
hereinafter referred to as the "New Securities", and the purchaser or
purchasers, as the case may be, which agree to purchase the same are
hereinafter referred to as the "Purchasers" of such New Securities. The
terms "you" and "your" refer to those Purchasers who sign the Purchase
Agreement either on behalf of themselves only or on behalf of
themselves and as representatives of the several Purchasers named in
Schedule A thereto as representatives of the several Purchasers named in
Schedule A thereto ("Schedule A"), as the case may be, unless one of
such Purchasers shall have been appointed representative
("Representative") of all of the Purchasers who sign the Purchase
Agreement, in which case the terms "you" and "your" shall mean such
Purchaser acting in its capacity of Representative. If there shall be only
one Purchaser named in Schedule A, the terms "Purchasers" and
"Representatives" shall mean such Purchaser. All obligations of the
Purchasers are several and not joint.
2. Representations and Warranties of the Company. The
Company represents and warrants to and agrees with each Purchaser
that:
(a) One or more registration statements on Form S-3
relating to the Securities including a prospectus and all
documents incorporated by reference therein have been filed with
the Securities and Exchange Commission (the "Commission")
and have become effective. Each such registration statement,
including the prospectus set forth therein and all prior
amendments and supplements thereto (other than supplements
and amendments relating to Securities that are not New
Securities), including all documents filed as a part thereof or
incorporated by reference therein, are hereinafter collectively
referred to as the "Registration Statement" and the most recent
prospectus included therein, as amended or supplemented by a
prospectus supplement with respect to the offering of New
Securities referred to in Section 1, including all material
incorporated by reference therein, is hereinafter referred to as
the "Prospectus".
(b) The Registration Statement and Prospectus in all
material respects comply with the provisions of the Securities
Act of 1933, as amended (the "Act"), and the applicable rules
and regulations of the Commission thereunder (the "Rules and
Regulations") and the Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act"), the Registration Statement does not
contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make
the statements therein not misleading, and the Prospectus does
not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances
under which they were made, not misleading and all documents
incorporated therein by reference, as of the respective dates on
which they were filed, complied in all material respects with the
requirements of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the pertinent published rules
and regulations thereunder (the "Exchange Act Rules and
Regulations") and, on said dates, and at the time of purchase,
when read together with the Prospectus, or the Prospectus as it
may be otherwise amended or supplemented, will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in the light of circumstances under which they were
made, not misleading, except that the Company makes no
warranty or representation to any Purchaser with respect to any
statement contained in, or any matter omitted from, the
Registration Statement or Prospectus, which statements were
made, or matters omitted, in reliance upon and in conformity
with information furnished in writing to the Company through
you for use in the Registration Statement and Prospectus.
(c) Since the respective dates as of which information is
given in the Registration Statement and Prospectus, there has
been no material and unfavorable change in the condition of the
Company, financial or otherwise, other than as referred to in the
Registration Statement and Prospectus.
(d) The consummation of the transactions herein
contemplated and the performance by the Company of the terms
of the Purchase Agreement will not result in the breach by the
Company of any term of, or constitute a default under, any other
material agreement or undertaking of the Company.
3. Delivery and Payment. Payment for the New Securities shall
be made to the Company or its order by certified or official bank check
or checks in New York Clearing House (next day) funds at the office of
the Company's Counsel against the delivery of the New Securities to you
for the respective accounts of the Purchasers at the office of the Trustee
or at such other place as shall be agreed to by the Company and you.
Such payment and delivery shall be made at 10:00 A.M., New York
time, on the date set forth in the Purchase Agreement, unless another
time shall be agreed to by the Company and by you or unless postponed
in accordance with the provisions of Section 8 hereof. The time at which
payment and delivery are actually made is hereinafter sometimes called
the "time of purchase".
The New Securities so delivered shall be definitive Securities in
registered form without coupons, in denominations specified in Schedule
B. Definitive Securities, at the option of the Company, may be printed
or lithographed on steel engraved borders. You shall specify the
denominations of the New Securities to be delivered and the names and
addresses in which each New Security is to be registered, by notice
delivered to the Company not later than 10:00 A.M., New York time,
on the third business day preceding the time of purchase. For the
purpose of expediting the checking of the New Securities by you, the
Company agrees to make the New Securities available to you at said
office of the Trustee not later than 2:00 P.M., New York time, on the
first business day preceding the time of purchase.
4. Covenants of the Company. The Company covenants and
agrees with the several Purchasers:
(a) To cause the Prospectus to be filed with the
Commission pursuant to Rule 424 of the Rules and Regulations
as soon as practical, but in no event later than 5:30 P.M., New
York time, on the first business day following the date of this
Agreement unless approved by the Representative and, whenever
the Company learns of any action of the Commission or its staff
affecting the effectiveness of the Registration Statement, to
advise the Representative thereof promptly.
(b) To make generally available to its security holders (as
contemplated by Section 11(a) of the Act and Rule 158 of the
Rules and Regulations) an earnings statement of the Company
covering a 12-month period beginning the first day of the first
fiscal quarter occurring after the effective date of the Registration
Statement, as soon as reasonably practicable after the termination
of such 12-month period.
(c) To advise the Representative of each proposed
amendment or supplement to the Registration Statement or
Prospectus with respect to the New Securities and to file no such
amendment or supplement to which the Representative shall
reasonably object in writing.
(d) To deliver to the Purchasers' counsel without charge
one executed copy of the Registration Statement (including all
amendments thereto and all exhibits not incorporated by
reference) and sufficient conformed copies of the Registration
Statement (without exhibits) for distribution of one to each
Purchaser and to deliver to the Representative as many copies of
the Prospectus as the Representative may reasonably request.
(e) As long as the New Securities are outstanding, to
deliver to the Representative upon request, and to each Purchaser
who may so request, as soon as practicable after the end of each
fiscal year a balance sheet of the Company, as of the end of such
year, and statements of income, retained earnings, capitalization,
and cash flows of the Company for such year, all as certified by
its regular independent accountants, and to deliver to the
Representative upon request, as soon as practicable after the end
of each quarterly period, income statements of the Company for
the 12 months ended with the end of such quarterly period. If the
Company should have active subsidiaries, such financial
statements shall be on a consolidated basis to the extent the
accounts of the Company and its subsidiaries are consolidated in
the financial statements regularly published by the Company.
(f) For three months after the date of any Purchase
Agreement, to cooperate in qualifying the New Securities under
the securities laws and legal investment laws of such jurisdictions
within the United States and its territories as the Representative
may reasonably request and pay the filing fees and expenses,
including reasonable fees and disbursements of Purchasers'
Counsel paid in connection therewith, except that the Company
will not submit to any State requirements which it deems unduly
burdensome.
(g) To apply the net proceeds received from the sale of
the New Securities as stated in the Registration Statement.
(h) Except as herein otherwise provided, to pay all
expenses and taxes (except transfer taxes) in connection with (i)
the preparation and filing by it of the Registration Statement, (ii)
the issuance and delivery of the New Securities, (iii) the
preparation, execution, filing and recording of any supplemental
indenture, and (iv) the printing and delivery to the Purchasers,
through the Representative, of reasonable quantities of copies of
the Registration Statement and the Prospectus, and any
amendment or supplement thereto, except as otherwise provided
in paragraph (i) of this Section. The Company shall not,
however, be required to pay any amount for any expenses of the
Representative or any of the Purchasers (other than as
contemplated by Section 4(f) (above), except that, if the sale of
the New Securities provided for herein is not consummated
because any condition to the obligations of the Purchasers set
forth in Section 5 hereof or any condition to the obligations of
the Company in Section 6 hereof is not satisfied, or because of
any refusal, inability or failure of the Company to perform any
agreement herein or to comply with any provision hereof other
than by reason of a default by any Purchasers, or the Purchase
Agreement shall be terminated in accordance with the provisions
of Section 7, the Company will reimburse the Representative for
the reasonable fees and disbursements of Purchasers' Counsel,
whose fees and disbursements the Purchasers agree to pay in
every other circumstance. The Company shall not in any event
be liable to any of the Purchasers for damages on account of loss
of anticipated profits.
(i) During such period of time after the effective date of
the Registration Statement as the Purchasers are required by law
to deliver a prospectus in connection with any sale of the New
Securities contemplated by the Prospectus, if any event relating
to or affecting the Company or of which the Company shall be
advised in writing by you shall occur which in the Company's
opinion should be set forth in a supplement or amendment to the
Prospectus in order to make the Prospectus not misleading in
light of the circumstances when it is delivered to a purchaser of
the New Securities, to amend or supplement the Prospectus by
either (i) preparing and filing with the Commission and
furnishing to you at the Company's expense a reasonable number
of copies of a supplement or supplements or an amendment or
amendments to the Prospectus or (ii) making an appropriate
filing pursuant to Section 13 or 14 of the Exchange Act, which
will supplement or amend the Prospectus so that, as
supplemented or amended, it will not contain an untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements
therein, in light of the circumstances when the Prospectus is
delivered to a purchaser of the New Securities, not misleading;
provided that should such event relate solely to the activities of
any of the Purchasers, then the Purchasers shall assume all of the
expenses in connection with preparing any such supplement or
amendment.
(j) During such period of time after the date hereof as a
prospectus relating to the New Securities is required to be
delivered under the Act, to file promptly all documents required
to be filed with the Commission pursuant to Section 13 or 14 of
the Exchange Act.
5. Conditions to Purchasers' Obligations. The obligations of
each Purchaser hereunder to purchase New Securities are subject to the
accuracy at the time of purchase of the representations and warranties of
the Company herein, to performance by the Company of its obligations
to be performed hereunder at or prior to the time of purchase, and to the
following further conditions at the time of purchase:
(a) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceeding
for such an order shall be pending or, to the knowledge of the
Company, threatened and the Representative shall have received
a certificate, dated at the time of purchase and signed by an
officer of the Company, to the effect that no such stop order is
in effect and that no proceedings for such purpose are pending
before, or to the knowledge of the Company threatened by, the
Commission.
(b) All necessary orders of the Commission under the
Public Utility Holding Company Act of 1935 and of the State
Commission(s) authorizing the issuance and sale of the New
Securities shall be in full force and effect, and no such order
shall contain any provision unacceptable to the Representative or
the Company in their respective reasonable judgments (but all
provisions of any such orders heretofore entered and furnished
to the Representative are deemed acceptable to the Representative
and the Company).
(c) The Representative shall receive the opinions, dated
the time of purchase, of Purchasers' Counsel; Sullivan &
Cromwell; and Local Counsel, substantially in the form supplied
to you before the date of the Purchase Agreement, with
conformed copies thereof for the other Purchasers.
(d) The Representative shall receive a letter of Price
Waterhouse, dated the time of purchase, in substantially the form
supplied to you before the date of the Purchase Agreement.
(e) There shall have been no material and unfavorable
change in the condition of the Company, financial or otherwise,
from that set forth in the Registration Statement and Prospectus,
the representations and warranties of the Company herein shall
be true and correct as of the time of purchase and the
Representative shall have received a certificate to that effect
dated as of the time of purchase, signed by the Chairman, the
President or a Vice President of the Company.
6. Conditions to Company's Obligations. The obligations of the
Company hereunder are subject to the conditions set forth in paragraphs
(a) and (b) of Section 5 hereof.
7. Termination of Agreement. If a public offering of the New
Securities is to be made by the Purchasers, this Agreement may be
terminated at any time prior to 5:00 P.M., New York time, on the first
business day following the date of this Agreement (but not after the
initial public offering of the New Securities) by the Representative with
the consent of the Purchasers (including the Representative) who have
agreed to purchase in the aggregate 50% or more of the aggregate
principal amount of the New Securities agreed to be purchased
hereunder, if trading in securities on the New York Stock Exchange shall
have been suspended or limited, or minimum prices shall have been
established on such exchange, or a banking moratorium shall have been
declared by either Federal or New York State authorities. This agreement
may also be terminated by the Representative, with like consent whether
or not a public offering of the New Securities has been made, at any time
prior to the time of purchase, if the Company or any of its subsidiaries
shall have sustained a loss by fire, flood, accident or other calamity that
is substantial with respect to the property of the Company and its
subsidiaries as a whole and that, in the reasonable judgment of the
Representative, shall render it inadvisable to proceed with the delivery
of the New Securities, whether or not such loss shall have been insured.
The time of the "initial public offering", for the purposes of this
Section 7, shall mean the time, after the execution of this Agreement, of
the release by the Representative for publication of the first newspaper
advertisement referring to the New Securities, or the time, after the
execution of this Agreement, at which the New Securities are first
generally offered by the Purchasers to the public or to dealers by letter
or telegram or otherwise, whichever shall first occur.
If this Agreement is terminated as provided in this Section 7, the
Company and each other Purchaser shall be notified promptly by
telephone or telegram, confirmed by letter. If this Agreement shall not
be carried out by any Purchaser for any reason permitted hereunder or
if the sale of the New Securities to the Purchasers as herein contemplated
shall not be carried out because the Company shall be unable in good
faith to comply with any of the terms hereof or if the Company shall not
deliver the New Securities because the conditions set forth in Section 6
hereof are not satisfied, the Company shall not be under any obligation
under this Agreement (except that the Company shall remain liable to the
extent provided in Sections 4(f), 4(h), 9 and 11 hereof) and the
Purchasers (except any Purchasers in default hereunder) shall be under
no liability to the Company (except that the Purchasers shall remain
liable to the extent provided in Sections 10 and 11 hereof) nor be under
any liability under this Agreement to one another.
8. Default of Purchasers. If any Purchaser or Purchasers default
in their obligations to purchase New Securities hereunder and the
aggregate principal amount of New Securities which such defaulting
Purchaser or Purchasers agreed but failed to purchase is 10% of the
principal amount of New Securities or less, the Representative may make
arrangements satisfactory to the Company for the purchase of such New
Securities by other persons, including any of the Purchasers, but if no
such arrangements are made by the time of purchase the non-defaulting
Purchasers shall be obligated severally, in proportion to their respective
commitments hereunder, to purchase the New Securities which such
defaulting Purchasers agreed but failed to purchase. If any Purchaser or
Purchasers so default and the aggregate principal amount of New
Securities with respect to which such default or defaults occur is more
than the above percentage and arrangements satisfactory to the
Representative and the Company for the purchase of such New Securities
by other persons are not made within 36 hours after such default, this
Agreement will terminate without liability on the part of any non-
defaulting Purchaser or the Company, except as provided in
Sections 4(f), 4(h), 9, 10 and 11. In the event that any Purchaser or
Purchasers default in their obligation to purchase New Securities
hereunder, the Company may, by prompt written notice to the non-
defaulting Purchasers, postpone the time of purchase for a period of not
more than five full business days in order to effect whatever changes
may thereby be made necessary in the Registration Statement or the
Prospectus or in any other documents, and the Company will promptly
file any amendments to the Registration Statement or supplements to the
Prospectus which may thereby be made necessary. Nothing in this
Section 8, however, shall operate to limit any rights which the Company
may have against any Purchaser who shall for any reason other than a
reason permitted hereunder fail to purchase the principal amount of New
Securities purchasable by it upon tender thereof in accordance with the
terms of this Agreement. The term "Purchaser" as used in this
Agreement shall refer to and include each purchaser substituted under
this Section 8, with like effect as if said substituted Purchaser had
originally been named in Schedule A.
9. Indemnity by the Company. The Company agrees to
indemnify, defend and hold harmless each Purchaser and each person,
if any, who controls any Purchaser within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act, from and against any loss,
expense, liability or claim (including the reasonable cost of investigation
and reasonable legal and other expenses) which, jointly or severally, any
such Purchaser or person may incur under the Act, or otherwise, insofar
as such loss, expense, liability or claim arises out of or is based upon
any alleged untrue statement of a material fact contained in the
Registration Statement (or in the Registration Statement as amended by
any post-effective amendment thereof) or in the Prospectus (the term
"Prospectus" for the purpose of this Section 9 shall be deemed to include
any preliminary prospectus, the prospectus included in the Registration
Statement at the time it became effective, any preliminary prospectus
supplement, the Prospectus, the Prospectus as amended or supplemented
and any document incorporated by reference therein pursuant to Item 12
of Form S-3), or arises out of or is based upon any alleged omission to
state a material fact required to be stated in either such Registration
Statement or such Prospectus or necessary to make the statements made
in such Registration Statement not misleading or necessary to make the
statements in such Prospectus, in light of the circumstances under which
they were made, not misleading, unless such alleged untrue statement or
omission was made in conformity with written information given to the
Company by the Purchaser through the Representative expressly for use
therein or arises out of any statement or omission in the Statement of
Eligibility of the Trustee under the Indenture, provided, however, that
with respect to any untrue statement or omission or alleged untrue
statement or omission made in any preliminary prospectus or in the
Prospectus included in the Registration Statement at the time it became
effective, the indemnity agreement contained in this paragraph shall not
inure to the benefit of any Purchaser (or of any person controlling such
Purchaser) on account of any such loss, claim, damage or liability arising
from the sale of the New Securities to any person unless a copy of the
Prospectus (excluding any documents incorporated by reference therein),
as then supplemented or amended, shall have been given or sent to such
person by or on behalf of such Purchaser with or prior to the written
confirmation of such sale. The Company's agreement to indemnify or
reimburse any such Purchaser or person with respect to any such loss,
expense, liability or claim is expressly conditioned upon its being notified
of the action in connection therewith brought against such Purchaser or
person by letter or telegram addressed to the Company within ten days
after the summons or other first legal process which discloses the nature
of the liability or claim shall have been personally served upon such
Purchaser or person (or after he shall have received notice of such
service upon any agent designated by him) but failure so to notify the
Company shall not relieve the Company from any liability which it may
have to such Purchaser or person otherwise than on account of the
indemnity agreement contained in this Section 9. The Company shall be
entitled to assume the investigation of any liability or claim or the
defense of any suit brought to enforce any such liability or claim and the
Purchaser or person against whom such suit is brought shall be entitled
to participate in such investigation and defense. If the Company assumes
the investigation and defense, such investigation and defense shall be
conducted by counsel of good standing chosen by the Company and
satisfactory to such Purchaser or person, and in such case such Purchaser
or person shall bear the expense of his investigation and the fees and
expenses of any additional counsel retained by him, except those incurred
after notifying the Company of such claim and prior to being advised by
the Company of its intention to assume such investigation or defense. If
the Company does not assume the investigation of any such claim or the
defense of any such suit, or if the Company shall agree in writing to pay
such fees and expenses or if such Purchaser or person shall reasonably
conclude that there may be defenses available to it or them which are
different from or in addition to those available to the Company, the
Company will reimburse such Purchaser or person for the reasonable
fees and expenses of any counsel retained by him; provided however,
that in such event the Company shall be entitled, at its own expense, to
participate in the investigation or defense.
The Company's indemnity agreement contained in this Section
9 and its warranties and representations in this Agreement shall remain
in full force and effect regardless of any investigation made by or on
behalf of any Purchaser or controlling person, and shall survive any
termination of this Agreement or the issuance and delivery of the New
Securities.
The Company agrees promptly to notify the Purchasers of the
commencement of any litigation or proceedings against the Company or
any of its officers or directors in connection with the issuance and sale
of the New Securities, or such Registration Statement or Prospectus.
10. Warranties of and Indemnity by Purchasers.
(a) Each Purchaser warrants and represents that the
information furnished in writing to the Company through the
Representative for use in the Registration Statement or in the
Prospectus does not contain an untrue statement of a material
fact and does not omit to state a material fact in connection with
such information required to be stated therein or necessary to
make such information when used in such Registration Statement
not misleading, or necessary to make such information when
used in such Prospectus, in light of the circumstances under
which it was used, not misleading. Each Purchaser, in addition
to any other information furnished to the Company through the
Representative for use in the Registration Statement and
Prospectus, hereby authorizes the Representative to furnish to the
Company the information with regard to the terms of offering of
the New Securities by such Purchaser, for use in the Registration
Statement.
(b) Each Purchaser severally agrees to indemnify, defend
and hold harmless the Company and its directors and officers
and each other Purchaser and each person, if any, who controls
the Company or any other Purchaser within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, from
and against any loss, expense, liability or claim (including the
reasonable cost of investigation and reasonable legal and other
expenses) which, jointly or severally, the Company or any such
person may incur under the Act or otherwise, insofar as such
loss, expense, liability or claim arises out of or is based upon
any alleged untrue statement of a material fact contained in
information furnished in writing to the Company through the
Representative for use in the Registration Statement (or in the
Registration Statement as amended by any post-effective
amendment thereto), or in the Prospectus (or in the Prospectus
as amended or supplemented), or arises out of or is based upon
any alleged omission from information furnished in writing to
the Company on behalf of any Purchaser through the
Representative to state a material fact in connection with such
information required to be stated therein or necessary to make
such information when used in such Registration Statement not
misleading, or necessary to make such information when used in
such Prospectus, in light of the circumstances under which it was
used, not misleading. The agreement of such Purchaser to
indemnify or reimburse the Company or any such person with
respect to any such loss, expense, liability or claim is expressly
conditioned upon such Purchaser being notified of the action in
connection therewith brought against the Company or any such
person, by letter or telegram addressed to such Purchaser, within
ten days after the summons or other first legal process which
discloses the nature of the liability or claim shall have been
personally served upon the Company or any such person (or
after the Company or any such person shall have received notice
of such service on any agent designated by the Company or any
such person), but failure so to notify such Purchaser shall not
relieve such Purchaser from any liability which it may have to
the Company or any such person otherwise than on account of
the indemnity agreement contained in this Section 10(b). Such
Purchaser shall be entitled to assume the investigation of any
liability or claim and the defense of any suit brought to enforce
any such liability or claim, if such liability or claim is based
solely upon such alleged misstatement or omission on the part of
such Purchaser, and the Company or any person against whom
such action is brought shall be entitled to participate in such
investigation and defense. If such Purchaser shall be entitled to
assume and does assume the investigation and defense, such
investigation and defense shall be conducted by counsel of good
standing chosen by such Purchaser and satisfactory to the Com-
pany or such person, and in such case the Company or such
person shall bear the expenses of its investigation and the fees
and expenses of any additional counsel retained by it except
those incurred after notifying such Purchaser of such claim and
prior to being advised by such Purchaser of its intention to
assume such investigation or defense. If such Purchaser shall be
entitled to assume but does not assume the investigation of any
such claim or the defense of any such suit, or if such Purchaser
shall agree in writing to pay such fees and expenses or if the
Company or such person shall reasonably conclude that there
may be defenses available to it or them which are different from
or in addition to those available to such Purchaser, such
Purchaser will reimburse the Company or such person for the
reasonable fees and expenses of any counsel retained by it;
provided, however, that in such event, such Purchaser shall be
entitled, at its own expense, to participate in the investigation or
defense.
The indemnity agreement on the part of such Purchaser
contained in this Section 10(b) and the warranties and
representations of such Purchaser contained in this Agreement
shall remain in full force and effect regardless of any
investigation made by or on behalf of the Company or such
person, and shall survive any termination of this Agreement or
the issuance and delivery of the New Securities.
Each Purchaser agrees promptly to notify the Company
and each other Purchaser of the commencement of any litigation
or proceedings against such Purchaser in connection with the
issuance and sale of the New Securities, or such Registration
Statement or Prospectus.
11. Contribution by the Company and the Purchasers.
(a) If the indemnification provided for in Section 9 or
Section 10 is unavailable to an indemnified party under such
Sections in respect of any losses, expenses, liabilities or claims
referred to therein, then each applicable indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to
the amount paid or payable by such indemnified party as a result
of such losses, expenses, liabilities or claims (i) in such
proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Purchaser on
the other hand from the offering of the New Securities or (ii) if
the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also
the relative fault of the Company on the one hand and of the
Purchasers on the other in connection with the statements or
omissions which resulted in such losses, expenses, liabilities or
claims, as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand
and the Purchasers on the other shall be deemed to be in the
same proportion as the total proceeds from the offering (net of
underwriting discounts and commissions but before deducting
expenses) received by the Company bear to the underwriting
discounts and commissions received by the Purchasers, in each
case as set forth in the table on the cover page of the Prospectus
or Prospectus Supplement with respect to the New Securities if
the same be so set forth. The relative fault of the Company on
the one hand and of the Purchasers on the other shall be
determined by reference to, among other things, whether the
untrue statement or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates
to information supplied by the Company or by the Purchasers
through you and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable by a party as
a result of the losses, claims, damages and liabilities referred to
above shall be deemed to include any legal or other fees or
expenses reasonably incurred by such party in connection with
investigating or defending any claim or action.
(b) The Company and the Purchasers agree that it would
not be just and equitable if contribution pursuant to this Section
11 were determined by pro rata allocation (even if the Purchasers
were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 11, no
Purchaser shall be required to contribute any amount in excess
of the amount by which the total price at which the New
Securities purchased by it and distributed to the public were
offered to the public exceeds the amount of any damages which
such Purchaser has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled
to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Purchasers' obligations to
contribute pursuant to this Section 11 are several in proportion
to their respective underwriting commitments and not joint.
(c) The contribution agreement contained in this Section
11 shall remain in full force and effect regardless of any
investigation made by or on behalf of any Purchaser, or any
person who controls any Purchaser within the meaning of Section
15 of the Act or Section 20 of the Exchange Act, or by or on
behalf of the Company, its directors and officers or any person
who controls the Company within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act, and shall survive any
termination of this Agreement or the issuance and delivery of the
New Securities.
12. Notices. All notices hereunder shall, unless otherwise
expressly permitted, be in writing and be delivered at or mailed to the
following address, or be sent by telegram to the following address: if to
the Purchasers or you, to you at your address as it appears in the
Purchase Agreement and if to the Company, to the Company c/o
Allegheny Power System, Inc., 12 East 49th Street, New York, New
York 10017.
13. Parties in Interest. The Agreement herein set forth has been
and is made solely for the benefit of the Purchasers and the Company,
and the directors, officers and controlling persons referred to in Sections
9, 10 and 11 hereof, and their respective successors, assigns, executors
and administrators and no other person shall acquire or have any right
under or by virtue of this Agreement.
The section headings in this Agreement have been inserted as a
matter of convenience of reference and are not part of this Agreement.
The terms "Purchasers", "persons", "firms" and "corporations" as used
herein shall include the singular of such terms as well as the plural. The
term "successor" to any Purchaser shall not include any subsequent
holder of the New Securities merely by reason of such holding.
14. Construction. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
SCHEDULE I
DEFINITIONS
"Company" means The Potomac Edison Company, a Maryland
and Virginia corporation.
"Indenture" means the Indenture, dated as of _________, 1995,
between the Company and The Bank of New York, as Trustee, as may
be supplemented from time to time.
"Purchasers' Counsel" means Cahill Gordon & Reindel with
offices at 80 Pine Street, New York, New York 10005.
"Local Counsel" means Robert R. Winter, Esq.
"State Commission" means The Maryland Public Service
Commission and the Virginia State Corporation Commission.
SCHEDULE II
PURCHASE AGREEMENT
Date:
To: The Potomac Edison Company
c/o Allegheny Power System, Inc.,
12 East 49th Street
New York, New York 10017
Dear Sirs:
Referring to the Debt Securities of The Potomac Edison
Company (the "Company") covered by Registration Statement No.
33- (the "Registration Statement"), on the basis of the
representations, warranties and agreements contained in the Standard
Purchase Agreement Provisions-Debt Securities (referred to below) and
this Agreement, but subject to the terms and conditions herein set forth,
the Purchasers named in Schedule A hereto ("Purchasers") agree to
purchase, severally and not jointly, and the Company agrees to sell to the
Purchasers, severally and not jointly, $ aggregate principal
amount of the Debt Securities specified in Schedule B hereto (the "New
Securities") in the respective principal amounts set forth opposite the
names of the Purchasers on Schedule A hereto.
The New Securities will be offered initially as set forth in the
Prospectus Supplement relating to such New Securities.
The New Securities will have the terms set forth in Schedule B
hereto.
All of the provisions contained in the document entitled
"Standard Purchase Agreement Provisions-Debt Securities", a copy of
which has been filed as Exhibit I to the Registration Statement No.
33- and has been previously furnished to us, are hereby
incorporated by reference in their entirety and shall be deemed to be a
part of this Agreement to the same extent as if such provisions had been
set forth in full herein.
The "time of purchase" (as defined in Section 3 of the
aforementioned Standard Purchase Agreement Provisions) shall be
, 19 .
This Agreement may be executed in one or more counterparts
and it is not necessary that the signatures of all parties appear on the
same counterpart, but such counterparts together shall constitute but one
and the same agreement.
We represent that we are authorized to act for the several
Purchasers named in Schedule A hereto in connection with this financing
and any action under this Agreement by any of us will be binding upon
all the Purchasers. If the foregoing is in accordance with your under-
standing of our agreement, kindly sign and return to us the enclosed
duplicate hereof, whereupon it will become a binding agreement between
the Company and the several Purchasers in accordance with its terms.
Very truly yours,
As Representative of the
Purchasers
By
The foregoing Purchase Agreement is hereby
confirmed as of the date first above written
By
SCHEDULE A
Principal
Amount
of New
Securities to
Purchaser be Purchased
[Names of Purchasers].......... $
Total $
SCHEDULE B
Title of New Securities:
[ %] [Floating Rate] [Zero Coupon] [Subordinated]
[Notes] [Debentures] due
Aggregate principal amount:
$
Price to Public:
___% of the principal amount of the New Securities,
plus accrued interest from
Purchase Price by Purchasers:
___% of the principal amount of the New Securities,
plus accrued interest from
Maturity:
Interest Rate:
[ %] [Zero Coupon] [See Floating Rate Provisions]
Interest Payment Dates:
[months and dates]
Redemption Provisions:
[No provisions for redemption]
[The New Securities may be redeemed, otherwise than
through the sinking fund, in whole or in part at the
option of the Company, in the amount of [$] or an
integral multiple thereof, [on or after , at the
following redemption prices (expressed in percentages of
principal amount). If [redeemed on or before ,
%, and if] redeemed during the 12-month period
beginning ,
Redemption
Year Price
and thereafter at 100% of their principal amount, together in each case
with accrued interest to the redemption date.]
[on any interest payment date falling in or after ,
, at the election of the Company, at a redemption
price equal to the principal amount thereof, plus accrued
interest to the date of redemption.]
[Other possible redemption provisions, such as
mandatory redemption upon occurrence of certain events
or redemption for changes in tax law]
[Restriction on refunding]
Sinking Fund Provisions:
[No sinking fund provisions]
[The New Securities are entitled to the benefit of a
sinking fund to retire [$] principal amount of New
Securities on in each of the years through
at 100% of their principal amount plus accrued
interest] [, together with [cumulative] [noncumulative]
redemptions at the option of the Company to retire an
additional [$] principal amount of New Securities in the
years through at 100% of their principal amount
plus accrued interest].
Subordination:
The provisions of the Indenture relating to Subordination [do
not] apply to the New Securities.
Defeasance:
The provisions of the Indenture relating to Defeasance and
Discharge and Covenant Defeasance [do not] apply to the New
Securities.
[Floating rate provisions:
[describe such provisions]]
Denominations:
Closing Location:
Names and addresses of Representatives:
Designated Representatives:
Address for Notices, etc.:
Other Terms:
THE POTOMAC EDISON COMPANY
TO
THE BANK OF NEW YORK,
Trustee
______________
Indenture
Dated as of ..............., 1995
______________
THE POTOMAC EDISON COMPANY
Certain Sections of this Indenture relating to Sections 310 through 318,
inclusive, of the Trust Indenture Act of 1939:
Trust Indenture
Act Section Indenture Section
Section 310(a)(1) 609
(a) (2) 609
(a) (3) Not Applicable
(a) (4) Not Applicable
(b) 608
610
Section 311(a) 613
(b) 613
Section 312(a) 701
702
(b) 702
(c) 702
Section 313(a) 703
(b) 703
(c) 703
(d) 703
Section 314(a) 704
(a)(4) 101
1004
(b) Not Applicable
(c)(1) 102
(c)(2) 102
(c)(3) Not Applicable
(d) Not Applicable
(e) 102
Section 315(a) 601
(b) 602
(c) 601
(d) 601
(e) 514
Section 316(a) 101
(a)(1)(A) 502
512
(a)(1)(B) 513
(a)(2) Not Applicable
(b) 508
(c) 104
Section 317(a)(1) 503
(a)(2) 504
(b) 1003
Section 318(a) 107
___________________
Note: This reconciliation and tie shall not,
for any purpose, be deemed to be a part of the Indenture.
TABLE OF CONTENTS
__________
Page
Parties 1
Recitals of the Company 1
ARTICLE ONE
Definitions and Other Provisions of General Application
Section 101. Definitions:
Act 2
Affiliate; control 2
Authenticating Agent 2
Board of Directors 2
Board Resolution 2
Business Day 2
Commission 2
Company 2
Company Request; Company Order 2
Conditional Redemption 3
Corporate Trust Office 3
corporation 3
Covenant Defeasance 3
Defaulted Interest 3
Defeasance 3
Depositary 3
Event of Default 3
Exchange Act 3
Expiration Date 3
Global Security 3
Holder 3
Indenture 3
interest 3
Interest Payment Date 3
Investment Company Act 4
Maturity 4
Notice of Default 4
Officers' Certificate 4
Opinion of Counsel 4
Original Issue Discount Security 4
Outstanding 4
Paying Agent 5
Person 5
Place of Payment 5
Predecessor Security 5
Redemption Date 5
Redemption Price 5
Regular Record Date 5
Responsible Officer 6
Securities 6
Securities Act 6
Security Register and Security Registrar 6
Senior Debt 6
Special Record Date 6
Stated Maturity 6
Subsidiary 6
Trust Indenture Act 7
Trustee 7
U.S. Government Obligation 7
Vice President 7
Section 102. Compliance Certificates and Opinions 7
Section 103. Form of Documents Delivered to Trustee 8
Section 104. Acts of Holders; Record Dates 8
Section 105. Notices, Etc., to Trustee and Company 10
Section 106. Notice to Holders; Waiver 10
Section 107. Conflict with Trust Indenture Act 11
Section 108. Effect of Headings and Table of Contents 11
Section 109. Successors and Assigns 11
Section 110. Separability Clause 11
Section 111. Benefits of Indenture 11
Section 112. Governing Law 12
Section 113. Legal Holidays 12
ARTICLE TWO
Security Forms
Section 201. Forms Generally 12
Section 202. Form of Face of Security 13
Section 203. Form of Reverse of Security 14
Section 204. Form of Legend for Global Securities 19
Section 205. Form of Trustee's Certificate of Authentication 19
ARTICLE THREE
The Securities
Section 301. Amount Unlimited; Issuable in Series 19
Section 302. Denominations 22
Section 303. Execution, Authentication, Delivery and Dating 22
Section 304. Temporary Securities 24
Section 305. Registration, Registration of Transfer and Exchange
24
Section 306. Mutilated, Destroyed, Lost and Stolen Securities 26
Section 307. Payment of Interest; Interest Rights Preserved 27
Section 308. Persons Deemed Owners 28
Section 309. Cancellation 28
Section 310. Computation of Interest 28
Section 311. CUSIP Numbers 28
ARTICLE FOUR
Satisfaction and Discharge
Section 401. Satisfaction and Discharge of Indenture 29
Section 402. Application of Trust Money 30
ARTICLE FIVE
Remedies
Section 501. Events of Default 30
Section 502. Acceleration of Maturity; Rescission and Annulment
31
Section 503. Collection of Indebtedness and Suits for
Enforcement by Trustee 32
Section 504. Trustee May File Proofs of Claim 33
Section 505. Trustee May Enforce Claims Without Possession
of Securities 34
Section 506. Application of Money Collected 34
Section 507. Limitation on Suits 34
Section 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest 35
Section 509. Restoration of Rights and Remedies 35
Section 510. Rights and Remedies Cumulative 35
Section 511. Delay or Omission Not Waiver 36
Section 512. Control by Holders 36
Section 513. Waiver of Past Defaults 36
Section 514. Undertaking for Costs 36
Section 515. Waiver of Usury, Stay or Extension Laws 37
ARTICLE SIX
The Trustee
Section 601. Certain Duties and Responsibilities 37
Section 602. Notice of Defaults 37
Section 603. Certain Rights of Trustee 38
Section 604. Not Responsible for Recitals or Issuance of Securities
39
Section 605. May Hold Securities 39
Section 606. Money Held in Trust 39
Section 607. Compensation and Reimbursement 39
Section 608. Conflicting Interests 40
Section 609. Corporate Trustee Required; Eligibility 40
Section 610. Resignation and Removal; Appointment of Successor
40
Section 611. Acceptance of Appointment by Successor 42
Section 612. Merger, Conversion, Consolidation or Succession
to Business 43
Section 613. Preferential Collection of Claims Against Company 43
Section 614. Appointment of Authenticating Agent 43
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company
Section 701. Company to Furnish Trustee Names and Addresses
of Holders 45
Section 702. Preservation of Information; Communications
to Holders 45
Section 703. Reports by Trustee 46
Section 704. Reports by Company 46
ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease
Section 801. Company May Consolidate, Etc., Only on
Certain Terms 47
Section 802. Successor Substituted 47
ARTICLE NINE
Supplemental Indentures
Section 901. Supplemental Indentures Without Consent of Holders
48
Section 902. Supplemental Indentures with Consent of Holders 49
Section 903. Execution of Supplemental Indentures 50
Section 904. Effect of Supplemental Indentures 50
Section 905. Conformity with Trust Indenture Act 50
Section 906. Reference in Securities to Supplemental Indentures 50
ARTICLE TEN
Covenants
Section 1001. Payment of Principal, Premium and Interest 51
Section 1002. Maintenance of Office or Agency 51
Section 1003. Money for Securities Payments to Be Held in Trust 51
Section 1004. Statement by Officers as to Default 52
Section 1005. Existence 53
Section 1006. Maintenance of Properties 53
Section 1007. Payment of Taxes and Other Claims 53
Section 1008. Waiver of Certain Covenants 53
Section 1009. Calculation of Original Issue Discount 54
ARTICLE ELEVEN
Redemption of Securities
Section 1101. Applicability of Article 54
Section 1102. Election to Redeem; Notice to Trustee 54
Section 1103. Selection by Trustee of Securities to Be Redeemed 55
Section 1104. Notice of Redemption 55
Section 1105. Deposit of Redemption Price 56
Section 1106. Securities Payable on Redemption Date 56
Section 1107. Securities Redeemed in Part 57
ARTICLE TWELVE
Sinking Funds
Section 1201. Applicability of Article 57
Section 1202. Satisfaction of Sinking Fund Payments
with Securities 57
Section 1203. Redemption of Securities for Sinking Fund 58
ARTICLE THIRTEEN
Defeasance and Covenant Defeasance
Section 1301. Company's Option to Effect Defeasance or
Covenant Defeasance 58
Section 1302. Defeasance and Discharge 58
Section 1303. Covenant Defeasance 59
Section 1304. Conditions to Defeasance or Covenant Defeasance 59
Section 1305. Deposited Money and U.S. Government Obligations
to Be Held in Trust; Miscellaneous Provisions 61
ARTICLE FOURTEEN
Subordination of Securities
Section 1401. Securities Subordinate to Senior Debt 62
Section 1402. Payment Over of Proceeds Upon Default 63
Section 1403. Payment Over of Proceeds Upon Dissolution, Etc. 63
Section 1404. Subrogation to Rights of Holders of Senior Debt 64
Section 1405. Trustee to Effectuate Subordination 65
Section 1406. Notice to Trustee 65
Section 1407. Rights of Trustee as Holder of Senior Debt;
Preservation of Trustee's Rights 66
Section 1408. Trustee Not Fiduciary for Holders of Senior Debt 66
Section 1409. No Waiver of Subordination Provisions 67
Section 1410. Defeasance of this Article Fourteen 67
Testimonium 68
Signatures and Seals 68
Acknowledgements 69
INDENTURE, dated as of ............, 1995, between THE
POTOMAC EDISON COMPANY, a corporation duly organized and
existing under the laws of the State of Maryland and the State of Virginia
(herein called the Company), having its principal office at 10435
Downsville Pike, Hagerstown, Maryland 21740-1766, and THE BANK
OF NEW YORK, a New York banking corporation, as Trustee (herein
called the Trustee).
Recitals of the Company
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured
debentures, notes or other evidences of indebtedness (herein called the
Securities), to be issued in one or more series as in this Indenture
provided.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
Now, Therefore, This Indenture Witnesseth:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually agreed, for the equal and
proportionate benefit of all Holders of the Securities or of series thereof,
as follows:
ARTICLE ONE
Definitions and Other Provisions
of General Application
Section 101. Definitions.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned
to them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted
accounting principles;
(4) unless the context otherwise requires, any reference to an
Article or a Section refers to an Article or a Section, as the case may
be, of this Indenture; and
(5) the words herein, hereof and hereunder and other words of
similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision.
Act, when used with respect to any Holder, has the meaning specified
in Section 104.
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. 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.
Authenticating Agent means any Person authorized by the Trustee
pursuant to Section 614 to act on behalf of the Trustee to authenticate
Securities of one or more series.
Board of Directors means either the board of directors of the
Company or any duly authorized committee of that board.
Board Resolution means 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 and to be in full force and effect on
the date of such certification, and delivered to the Trustee.
Business Day, when used with respect to any Place of Payment, means
each Monday, Tuesday, Wednesday, Thursday and Friday which is not
a day on which banking institutions in that Place of Payment are
authorized or obligated by law or executive order to close.
Commission means the Securities and Exchange Commission, from
time to time constituted, created under the Exchange Act, or, if at any
time after the execution of this instrument such Commission is not
existing and performing the duties now assigned to it under the Trust
Indenture Act, then the body performing such duties at such time.
Company means the Person named as the Company in the first
paragraph of this instrument until a successor Person shall have become
such pursuant to the applicable provisions of this Indenture, and
thereafter Company shall mean such successor Person.
Company Request or Company Order means a written request or order
signed in the name of the Company by its Chairman of the Board, its
Vice Chairman of the Board, its President or a Vice President, and by
its Treasurer, an Assistant Treasurer, its Secretary or an Assistant
Secretary, and delivered to the Trustee.
Conditional Redemption has the meaning specified in Section 1104.
Corporate Trust Office means the principal office of the Trustee in
New York, New York at which at any particular time its corporate trust
business shall be administered, which currently is 101 Barclay Street,
Floor 21 west, New York, New York 10286.
corporation means a corporation, association, company, joint-stock
company or business trust.
Covenant Defeasance has the meaning specified in Section 1303.
Defaulted Interest has the meaning specified in Section 307.
Defeasance has the meaning specified in Section 1302.
Depositary means, with respect to Securities of any series issuable in
whole or in part in the form of one or more Global Securities, a clearing
agency registered under the Exchange Act that is designated to act as
Depositary for such Securities as contemplated by Section 301.
Event of Default has the meaning specified in Section 501.
Exchange Act means the Securities Exchange Act of 1934 and any
statute successor thereto, in each case as amended from time to time.
Expiration Date has the meaning specified in Section 104.
Global Security means a Security that evidences all or part of the
Securities of any series and bears the legend set forth in Section 204 (or
such legend as may be specified as contemplated by Section 301 for such
Securities).
Holder means a Person in whose name a Security is registered in the
Security Register.
Indenture means this instrument as originally executed and as it may
from time to time be supplemented or amended by one or more
indentures supplemental hereto entered into pursuant to the applicable
provisions hereof, including, for all purposes of this instrument and any
such supplemental indenture, the provisions of the Trust Indenture Act
that are deemed to be a part of and govern this instrument and any such
supplemental indenture, respectively. The term Indenture shall also
include the terms of particular series of Securities established as contem-
plated by Section 301.
interest, when used with respect to an Original Issue Discount Security
which by its terms bears interest only after Maturity, means interest
payable after Maturity.
Interest Payment Date, when used with respect to any Security, means
the Stated Maturity of an instalment of interest on such Security.
Investment Company Act means the Investment Company Act of 1940
and any statute successor thereto, in each case as amended from time to
time.
Maturity, when used with respect to any Security, means the date on
which the principal of such Security or an instalment of principal
becomes due and payable as therein or herein provided, whether at the
Stated Maturity or by declaration of acceleration, call for redemption or
otherwise.
Notice of Default means a written notice of the kind specified in
Section 501(4).
Officers' Certificate means a certificate signed by the Chairman of the
Board, a Vice Chairman of the Board, the President or a Vice President,
and by the Treasurer, an Assistant Treasurer, the Comptroller, the
Secretary or an Assistant Secretary, of the Company, and delivered to
the Trustee. One of the officers signing an Officers' Certificate given
pursuant to Section 1004 shall be the principal executive, financial or
accounting officer of the Company.
Opinion of Counsel means a written opinion of counsel, who may be
counsel for the Company, and who shall be acceptable to the Trustee.
Original Issue Discount Security means any Security which provides
for an amount less than the principal amount thereof to be due and
payable upon a declaration of acceleration of the Maturity thereof
pursuant to Section 502.
Outstanding, when used with respect to Securities, means, as of the
date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:
(1) Securities theretofore cancelled by the Trustee or delivered
to the Trustee for cancellation;
(2) Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Trustee or
any Paying Agent (other than the Company) in trust or set aside and
segregated in trust by the Company (if the Company shall act as its
own Paying Agent) for the Holders of such Securities; provided that,
if such Securities are to be redeemed, notice of such redemption has
been duly given pursuant to this Indenture or provision therefor satis-
factory to the Trustee has been made;
(3) Securities as to which Defeasance has been effected pursuant
to Section 1302; and
(4) Securities which have been paid pursuant to Section 306 or
in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other than any
such Securities in respect of which there shall have been presented to
the Trustee proof satisfactory to it that such Securities are held by a
bona fide purchaser in whose hands such Securities are valid
obligations of the Company;
provided, however, that in determining whether the Holders of the
requisite principal amount of the Outstanding Securities have given, made
or taken any request, demand, authorization, direction, notice, consent,
waiver or other action hereunder as of any date, (A) the principal amount
of an Original Issue Discount Security which shall be deemed to be
Outstanding shall be the amount of the principal thereof which would be
due and payable as of such date upon acceleration of the Maturity thereof
to such date pursuant to Section 502, (B) if, as of such date, the principal
amount payable at the Stated Maturity of a Security is not determinable,
the principal amount of such Security which shall be deemed to be
Outstanding shall be the amount as specified or determined as
contemplated by Section 301, (C) the principal amount of a Security
denominated in one or more foreign currencies or currency units which
shall be deemed to be Outstanding shall be the U.S. dollar equivalent,
determined as of such date in the manner provided as contemplated by
Section 301, of the principal amount of such Security (or, in the case of
a Security described in Clause (A) or (B) above, of the amount
determined as provided in such Clause), and (D) Securities owned by the
Company or any other obligor upon the Securities or any Affiliate of the
Company or of such other obligor shall be disregarded and deemed not
to be Outstanding, except that, in determining whether the Trustee shall
be protected in relying upon any such request, demand, authorization,
direction, notice, consent, waiver or other action, only Securities which
the Trustee actually knows to be so owned shall be so disregarded.
Securities so owned which have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the satisfaction of
the Trustee the pledgee's right so to act with respect to such Securities
and that the pledgee is not the Company or any other obligor upon the
Securities or any Affiliate of the Company or of such other obligor.
Paying Agent means any Person authorized by the Company to pay
the principal of or any premium or interest on any Securities on behalf
of the Company.
Person means any individual, corporation, partnership, joint venture,
trust, unincorporated organization or government or any agency or
political subdivision thereof.
Place of Payment, when used with respect to the Securities of any
series, means the place or places where the principal of and any premium
and interest on the Securities of that series are payable as specified as
contemplated by Section 301.
Predecessor Security of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced
by such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 306 in exchange for
or in lieu of a mutilated, destroyed, lost or stolen Security shall be
deemed to evidence the same debt as the mutilated, destroyed, lost or
stolen Security.
Redemption Date, when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to
this Indenture.
Redemption Price, when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
Regular Record Date for the interest payable on any Interest Payment
Date on the Securities of any series means the date specified for that
purpose as contemplated by Section 301.
Responsible Officer, when used with respect to the Trustee, means the
chairman or any vice-chairman of the board of directors, the chairman
or any vice-chairman of the executive committee of the board of
directors, the chairman of the trust committee, the president, any vice
president, the secretary, any assistant secretary, the treasurer, any
assistant treasurer, the cashier, any assistant cashier, any trust officer or
assistant trust officer, the controller or any assistant controller or any
other officer of the Trustee customarily performing functions similar to
those performed by any of the above designated officers and also means,
with respect to a particular corporate trust matter, any other officer to
whom such matter is referred because of his knowledge of and
familiarity with the particular subject.
Securities has the meaning stated in the first recital of this Indenture
and more particularly means any Securities authenticated and delivered
under this Indenture.
Securities Act means the Securities Act of 1933 and any statute
successor thereto, in each case as amended from time to time.
Security Register and Security Registrar have the respective meanings
specified in Section 305.
Senior Debt of the Company means the principal of, premium, if any,
interest on and any other payment due pursuant to any of the following,
whether outstanding at the date of execution of this Indenture or
thereafter incurred, created or assumed: (a) all indebtedness of the
Company evidenced by notes, debentures, bonds or other securities sold
by the Company for money, including all first mortgage bonds of the
Company outstanding from time to time, (b) all indebtedness of others
of the kinds described in the preceding clause (a) assumed by or
guaranteed in any manner by the Company, including through an
agreement to purchase, contingent or otherwise, and (c) all renewals,
extensions or refundings of indebtedness of the kinds described in any of
the preceding clauses (a) and (b) unless, in the case of any particular
indebtedness, renewal, extension or refunding, the instrument creating
or evidencing the same or the assumption or guarantee of the same
expressly provides that such indebtedness, renewal, extension or
refunding is not superior in right of payment to or is pari passu with the
Securities.
Special Record Date for the payment of any Defaulted Interest means
a date fixed by the Trustee pursuant to Section 307.
Stated Maturity, when used with respect to any Security or any
instalment of principal thereof or interest thereon, means the date
specified in such Security as the fixed date on which the principal of such
Security or such instalment of principal or interest is due and payable.
Subsidiary means a corporation more than 50% of the outstanding
voting stock of which is owned, directly or indirectly, by the Company
or by one or more other Subsidiaries, or by the Company and one or
more other Subsidiaries. For the purposes of this definition, voting stock
means stock which ordinarily has voting power for the election of direc-
tors, whether at all times or only so long as no senior class of stock has
such voting power by reason of any contingency.
Trust Indenture Act means the Trust Indenture Act of 1939 as in force
at the date as of which this instrument was executed; provided, however,
that in the event the Trust Indenture Act of 1939 is amended after such
date, Trust Indenture Act means, to the extent required by any such
amendment, the Trust Indenture Act of 1939 as so amended.
Trustee means the Person named as the Trustee in the first paragraph
of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
Trustee shall mean or include each Person who is then a Trustee
hereunder, and if at any time there is more than one such Person,
Trustee as used with respect to the Securities of any series shall mean the
Trustee with respect to Securities of that series.
U.S. Government Obligation has the meaning specified in
Section 1304.
Vice President, when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a
number or a word or words added before or after the title vice president.
Section 102. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to
take any action under any provision of this Indenture, the Company shall
furnish to the Trustee such certificates and opinions as may be required
under the Trust Indenture Act. Each such certificate or opinion shall be
given in the form of an Officers' Certificate, if to be given by an officer
of the Company, or an Opinion of Counsel, if to be given by counsel,
and shall comply with the requirements of the Trust Indenture Act and
any other requirements set forth in this Indenture.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (except for
certificates provided for in Section 1004) shall include,
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
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 individual, he
has made such examination or investigation as is necessary to enable
him 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, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 103. Form of Documents Delivered to Trustee.
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.
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 his certificate or
opinion is based are erroneous. Any such certificate or opinion of
counsel 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 counsel knows,
or in the exercise of reasonable care should know, that the certificate or
opinion or representations with respect to such matters are erroneous.
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 104. Acts of Holders; Record Dates.
Any request, demand, authorization, direction, notice, consent, waiver
or other action provided or permitted by this Indenture to be given, made
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 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 the 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 (subject to Section 601) conclusive in favor of the
Trustee and the Company, if made in the manner provided in this
Section.
The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual
signing such instrument or writing acknowledged to him the execution
thereof. Where such execution is by a signer acting in a capacity other
than his individual capacity, such certificate or affidavit shall also
constitute sufficient proof of his authority. The fact and date of the
execution of any such instrument or writing, or the authority of the
Person executing the same, may also be proved in any other manner
which the Trustee deems sufficient.
The ownership of Securities shall be proved by the Security Register.
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.
The Company may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities of any series entitled
to give, make or take any request, demand, authorization, direction,
notice, consent, waiver or other action provided or permitted by this
Indenture to be given, made or taken by Holders of Securities of such
series, provided that the Company may not set a record date for, and the
provisions of this paragraph shall not apply with respect to, the giving
or making of any notice, declaration, request or direction referred to in
the next paragraph. If any record date is set pursuant to this paragraph,
the Holders of Outstanding Securities of the relevant series on such
record date, and no other Holders, shall be entitled to take the relevant
action, whether or not such Holders remain Holders after such record
date; provided that no such action shall be effective hereunder unless
taken on or prior to the applicable Expiration Date by Holders of the
requisite principal amount of Outstanding Securities of such series on
such record date. Nothing in this paragraph shall be construed to prevent
the Company from setting a new record date for any action for which a
record date has previously been set pursuant to this paragraph
(whereupon the record date previously set shall automatically and with
no action by any Person be cancelled and of no effect), and nothing in
this paragraph shall be construed to render ineffective any action taken
by Holders of the requisite principal amount of Outstanding Securities of
the relevant series on the date such action is taken. Promptly after any
record date is set pursuant to this paragraph, the Company, at its own
expense, shall cause notice of such record date, the proposed action by
Holders and the applicable Expiration Date to be given to the Trustee in
writing and to each Holder of Securities of the relevant series in the
manner set forth in Section 106.
The Trustee may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities of any series entitled
to join in the giving or making of (i) any Notice of Default, (ii) any
declaration of acceleration referred to in Section 502, (iii) any request to
institute proceedings referred to in Section 507(2) or (iv) any direction
referred to in Section 512, in each case with respect to Securities of such
series. If any record date is set pursuant to this paragraph, the Holders
of Outstanding Securities of such series on such record date, and no
other Holders, shall be entitled to join in such notice, declaration,
request or direction, whether or not such Holders remain Holders after
such record date; provided that no such action shall be effective
hereunder unless taken on or prior to the applicable Expiration Date by
Holders of the requisite principal amount of Outstanding Securities of
such series on such record date. Nothing in this paragraph shall be
construed to prevent the Trustee from setting a new record date for any
action for which a record date has previously been set pursuant to this
paragraph (whereupon the record date previously set shall automatically
and with no action by any Person be cancelled and of no effect), and
nothing in this paragraph shall be construed to render ineffective any
action taken by Holders of the requisite principal amount of Outstanding
Securities of the relevant series on the date such action is taken.
Promptly after any record date is set pursuant to this paragraph, the
Trustee, at the Company's expense, shall cause notice of such record
date, the proposed action by Holders and the applicable Expiration Date
to be given to the Company in writing and to each Holder of Securities
of the relevant series in the manner set forth in Section 106.
With respect to any record date set pursuant to this Section, the party
hereto which sets such record dates may designate any day as the
Expiration Date and from time to time may change the Expiration Date
to any earlier or later day; provided that no such change shall be
effective unless notice of the proposed new Expiration Date is given to
the other party hereto in writing, and to each Holder of Securities of the
relevant series in the manner set forth in Section 106, on or prior to the
existing Expiration Date. If an Expiration Date is not designated with
respect to any record date set pursuant to this Section, the party hereto
which set such record date shall be deemed to have initially designated
the 180th day after such record date as the Expiration Date with respect
thereto, subject to its right to change the Expiration Date as provided in
this paragraph. Notwithstanding the foregoing, no Expiration Date shall
be later than the 180th day after the applicable record date.
Without limiting the foregoing, a Holder entitled hereunder to take
any action hereunder with regard to any particular Security may do so
with regard to all or any part of the principal amount of such Security or
by one or more duly appointed agents each of which may do so pursuant
to such appointment with regard to all or any part of such principal
amount.
Section 105. Notices, Etc., to Trustee and Company.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with the Trustee at its Corporate Trust Office,
Attention: Corporate Trust Trustee Administration, or
(2) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage
prepaid, to the Company addressed to it at the address of its principal
office specified in the first paragraph of this instrument or at any other
address previously furnished in writing to the Trustee by the
Company.
Section 106. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to each
Holder affected by such event, at his address as it appears in the Security
Register, not later than the latest date (if any), and not earlier than the
earliest date (if any), prescribed for the giving of such notice. In any
case where notice to Holders is given by mail, neither the failure to mail
such notice, nor any defect in any notice so mailed, to any particular
Holder shall affect the sufficiency of such notice with respect to other
Holders. Where this Indenture provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such
notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Holders shall be filed
with the Trustee, but such filing shall not be a condition precedent to the
validity of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by
mail, then such notification as shall be made with the approval of the
Trustee shall constitute a sufficient notification for every purpose
hereunder.
Section 107. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with a provision
of the Trust Indenture Act which is required under such Act to be a part
of and govern this Indenture, the latter provision shall control. If any
provision of this Indenture modifies or excludes any provision of the
Trust Indenture Act which may be so modified or excluded, the latter
provision shall be deemed to apply to this Indenture as so modified or to
be excluded, as the case may be.
Section 108. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
Section 109. Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.
Section 110. Separability Clause.
In case 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 111. Benefits of 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, the holders of Senior Debt and the Holders, any benefit or
any legal or equitable right, remedy or claim under this Indenture.
Section 112. Governing Law.
This Indenture and the Securities shall be governed by and construed
in accordance with the law of the State of New York, without regard to
conflicts of laws principles.
Section 113. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date or
Stated Maturity of any Security shall not be a Business Day at any Place
of Payment, then (notwithstanding any other provision of this Indenture
or of the Securities (other than a provision of any Security which
specifically states that such provision shall apply in lieu of this Section))
payment of interest or principal (and premium, if any) need not be made
at such Place of Payment on such date, but may be made on the next
succeeding Business Day at such Place of Payment with the same force
and effect as if made on the Interest Payment Date or Redemption Date,
or at the Stated Maturity.
ARTICLE TWO
Security Forms
Section 201. Forms Generally.
The Securities of each series shall be in substantially the form set forth
in this Article, or in such other form as shall be established by or
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, 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 the rules of any securities exchange or
Depositary therefor or as may, consistently herewith, be determined by
the officers executing such Securities, as evidenced by their execution
thereof. If the form of Securities of any series is established by action
taken pursuant to a Board Resolution, a copy of an appropriate record of
such action shall be certified by the Secretary or an Assistant Secretary
of the Company and delivered to the Trustee at or prior to the delivery
of the Company Order contemplated by Section 303 for the
authentication and delivery of such Securities.
The definitive Securities shall be printed, lithographed or engraved on
steel engraved borders or may be produced in any other manner, all as
determined by the officers executing such Securities, as evidenced by
their execution of such Securities.
Section 202. Form of Face of Security.
Insert any legend required by the Internal Revenue Code and the
regulations thereunder.
THE POTOMAC EDISON COMPANY
..........................................................................
No. ......... $ ........
CUSIP No.______
THE POTOMAC EDISON COMPANY, a corporation duly
organized and existing under the laws of Pennsylvania (herein called the
Company, which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
................................, or registered assigns, the principal sum of
............................. Dollars on .................................
[if the Security is to bear interest prior to Maturity, insert - , and to pay
interest thereon from ............. or from the most recent Interest
Payment Date to which interest has been paid or duly provided for,
[monthly][quarterly][semi-annually] on ................... in
each year, commencing ........., at the rate of ....% per annum, until the
principal hereof is paid or made available for payment [if applicable,
insert - , provided that any principal and premium, and any such
instalment of interest, which is overdue shall bear interest at the rate of
...% per annum (to the extent that the payment of such interest shall be
legally enforceable), from the dates such amounts are due until they are
paid or made available for payment, and such interest shall be payable
on demand]. The interest so payable, and punctually paid or duly pro-
vided for, on any Interest Payment Date will, as provided in such
Indenture, be paid to the Person in whose name this Security (or one or
more Predecessor Securities) is registered at the close of business on the
Regular Record Date for such interest, which shall be the .............
(whether or not a Business Day)[, as the case may be,] next preceding
such Interest Payment Date. 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 may either be paid to the Person in whose
name this Security (or one or more Predecessor Securities) 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 Holders of Securities of this series not less than 10 days prior
to such Special Record Date, or be paid at any time in any other lawful
manner not inconsistent with the requirements of any securities exchange
on which the Securities of this series may be listed, and upon such notice
as may be required by such exchange, all as more fully provided in said
Indenture].
[If the Security is not to bear interest prior to Maturity, insert - The
principal of this Security shall not bear interest except in the case of a
default in payment of principal upon acceleration, upon redemption or at
Stated Maturity and in such case the overdue principal and any overdue
premium shall bear interest at the rate of ....% per annum (to the extent
that the payment of such interest shall be legally enforceable), from the
dates such amounts are due until they are paid or made available for
payment. Interest on any overdue principal or premium shall be payable
on demand. [Any such interest on overdue principal or premium which
is not paid on demand shall bear interest at the rate of ......% per annum
(to the extent that the payment of such interest on interest shall be legally
enforceable), from the date of such demand until the amount so
demanded is paid or made available for payment. Interest on any overdue
interest shall be payable on demand.]]
Payment of the principal of (and premium, if any) and [if
applicable, insert - any such] interest on this Security will be made at the
office or agency of the Company maintained for that purpose in New
York, New York, in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public
and private debts [if applicable, insert - ; provided, however, that at the
option of the Company payment of interest may be made by check
mailed to the address of the Person entitled thereto as such address shall
appear in the Security Register].
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this
Security 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 under its corporate seal.
Dated:
THE POTOMAC EDISON COMPANY
By...................................................
Attest:
.........................................
Section 203. Form of Reverse of Security.
This Security is one of a duly authorized issue of securities of the
Company (herein called the Securities), issued and to be issued in one or
more series under an Indenture, dated as of ............., 1995 (herein
called the Indenture, which term shall have the meaning assigned to it in
such instrument), between the Company and The Bank of New York, as
Trustee (herein called the Trustee, which term includes any successor
trustee under the Indenture), and reference is hereby made to the
Indenture for a statement of the respective rights, limitations of rights,
duties and immunities thereunder of the Company, the Trustee, the
holders of Senior Debt and the Holders of the Securities and of the terms
upon which the Securities are, and are to be, authenticated and delivered.
This Security is one of the series designated on the face hereof [if
applicable, insert - , limited in aggregate principal amount to $...........].
[If applicable, insert - The Securities of this series are subject to
redemption upon not less than 30 days' notice by mail, [if applicable,
insert - (1) on ........... in any year commencing with the year ...... and
ending with the year ...... through operation of the sinking fund for this
series at a Redemption Price equal to 100% of the principal amount, and
(2)] at any time [if applicable, insert - on or after .........., ....], as a
whole or in part, at the election of the Company, at the following
Redemption Prices (expressed as percentages of the principal amount):
If redeemed [if applicable, insert - on or before ..............., ...%, and
if redeemed] during the 12-month period beginning ............. of the
years indicated,
Redemption Redemption
Year Price Year Price
and thereafter at a Redemption Price equal to .....% of the principal
amount, together in the case of any such redemption [if applicable,
insert - (whether through operation of the sinking fund or otherwise)]
with accrued interest to the Redemption Date, but interest installments
whose Stated Maturity is on or prior to such Redemption Date will be
payable to the Holders of such Securities, or one or more Predecessor
Securities, of record at the close of business on the relevant Record
Dates referred to on the face hereof, all as provided in the Indenture.]
[If applicable, insert - The Securities of this series are subject to
redemption upon not less than 30 days' notice by mail, (1) on ............
in any year commencing with the year .... and ending with the year ....
through operation of the sinking fund for this series at the Redemption
Prices for redemption through operation of the sinking fund (expressed
as percentages of the principal amount) set forth in the table below, and
(2) at any time [if applicable, insert - on or after ............], as a whole
or in part, at the election of the Company, at the Redemption Prices for
redemption otherwise than through operation of the sinking fund
(expressed as percentages of the principal amount) set forth in the table
below: If redeemed during the 12-month period beginning ............ of
the years indicated,
Redemption Price
For Redemption Redemption Price For
Through Operation Redemption Otherwise
of the Than Through Operation
Year Sinking Fund of the Sinking Fund
and thereafter at a Redemption Price equal to .....% of the principal
amount, together in the case of any such redemption (whether through
operation of the sinking fund or otherwise) with accrued interest to the
Redemption Date, but interest installments whose Stated Maturity is on
or prior to such Redemption Date will be payable to the Holders of such
Securities, or one or more Predecessor Securities, of record at the close
of business on the relevant Record Dates referred to on the face hereof,
all as provided in the Indenture.]
[If applicable, insert - Notwithstanding the foregoing, the Company
may not, prior to ............., redeem any Securities of this series as
contemplated by [if applicable, insert - Clause (2) of] the preceding
paragraph as a part of, or in anticipation of, any refunding operation by
the application, directly or indirectly, of moneys borrowed having an
interest cost to the Company (calculated in accordance with generally
accepted financial practice) of less than .....% per annum.]
[If applicable, insert - The sinking fund for this series provides for the
redemption on ............ in each year beginning with the year ....... and
ending with the year ...... of [if applicable, insert - not less than
$.......... (mandatory sinking fund) and not more than] $.........
aggregate principal amount of Securities of this series. Securities of this
series acquired or redeemed by the Company otherwise than through [if
applicable, insert - mandatory] sinking fund payments may be credited
against subsequent [if applicable, insert - mandatory] sinking fund
payments otherwise required to be made [if applicable, insert - , in the
inverse order in which they become due].]
[If the Security is subject to redemption of any kind, insert - In the
event of redemption of this Security in part only, a new Security or
Securities of this series and of like tenor for the unredeemed portion
hereof will be issued in the name of the Holder hereof upon the cancella-
tion hereof.]
The indebtedness evidenced by this Security is, to the extent provided
in the Indenture, subordinated and subject in right of payment to the
prior payment in full of all Senior Debt, and this Security is issued
subject to the provisions of the Indenture with respect thereto. Each
Holder of this Security, by accepting the same, (a) agrees to and shall be
bound by such provisions, (b) authorizes and directs the Trustee on his
behalf to take such action as may be necessary or appropriate to
acknowledge or effectuate the subordination so provided and (c) appoints
the Trustee his attorney-in-fact for any and all such purposes. Each
Holder hereof, by his acceptance hereof, hereby waives all notice of the
acceptance of the subordination provisions contained herein and in the
Indenture by each holder of Senior Debt, whether now outstanding or
hereafter incurred, and waives reliance by each such Holder upon said
provisions.
[If applicable, insert - The Indenture contains provisions for
defeasance at any time of [the entire indebtedness of this Security] [or]
[certain restrictive covenants and Events of Default with respect to this
Security] [, in each case] upon compliance with certain conditions set
forth in the Indenture.]
[If the Security is not an Original Issue Discount Security, insert - If
an Event of Default with respect to Securities of this series shall occur
and be continuing, the principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in
the Indenture.]
[If the Security is an Original Issue Discount Security, insert - If an
Event of Default with respect to Securities of this series shall occur and
be continuing, an amount of principal of the Securities of this series may
be declared due and payable in the manner and with the effect provided
in the Indenture. Such amount shall be equal to insert formula for
determining the amount. Upon payment (i) of the amount of principal so
declared due and payable and (ii) of interest on any overdue principal,
premium and interest (in each case to the extent that the payment of such
interest shall be legally enforceable), all of the Company's obligations in
respect of the payment of the principal of and premium and interest, if
any, on the Securities of this series shall terminate.]
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of
the Company and the rights of the Holders of the Securities of each
series to be affected under the Indenture at any time by the Company and
the Trustee with the consent of the Holders of a majority in principal
amount of the Securities at the time Outstanding of each series to be
affected. The Indenture also contains provisions permitting the Holders
of specified percentages in principal amount of the Securities of each
series at the time Outstanding, on behalf of the Holders of all Securities
of such series, to waive compliance by the Company with certain
provisions of the Indenture and certain past defaults under the Indenture
and their consequences. Any such consent or waiver by the Holder of
this Security shall be conclusive and binding upon such Holder and upon
all future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this
Security.
As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or
trustee or for any other remedy thereunder, unless such Holder shall
have previously given the Trustee written notice of a continuing Event
of Default with respect to the Securities of this series, the Holders of not
less than 25% in principal amount of the Securities of this series at the
time Outstanding shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default as Trustee and
offered the Trustee reasonable indemnity, and the Trustee shall not have
received from the Holders of a majority in principal amount of Securities
of this series at the time Outstanding a direction inconsistent with such
request, and shall have failed to institute any such proceeding, for 60
days after receipt of such notice, request and offer of indemnity. The
foregoing shall not apply to any suit instituted by the Holder of this
Security for the enforcement of any payment of principal hereof or any
premium or interest hereon on or after the respective due dates expressed
herein.
No reference herein to the Indenture and no provision of this Security
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 Security at the times, place and rate, and
in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at
the office or agency of the Company in any place where the principal of
and any premium and interest on this Security are payable, duly endorsed
by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed by,
the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Securities of this series and of like tenor, of
authorized denominations and for the same aggregate principal amount,
will be issued to the designated transferee or transferees.
The Securities of this series are issuable only in registered form
without coupons in denominations of $....... and any integral multiple
thereof. As provided in the Indenture and subject to certain limitations
therein set forth, Securities of this series are exchangeable for a like
aggregate principal amount of Securities of this series and of like tenor
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.
Interest on the Security shall be computed on the basis of a 360-day
year of twelve 30-day months.
Prior to due presentment of this Security 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 Security is registered as the
owner hereof for all purposes, whether or not this Security be overdue,
and neither the Company, the Trustee nor any such agent shall be
affected by notice to the contrary.
This Security shall be governed by and construed in accordance with
the laws of the State of New York, without regard to conflicts of laws
principles.
All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
Section 204. Form of Legend for Global Securities.
Unless otherwise specified as contemplated by Section 301 for the
Securities evidenced thereby, every Global Security authenticated and
delivered hereunder shall bear a legend in substantially the following
form:
This Security is a Global Security within the meaning of the
Indenture hereinafter referred to and is registered in the
name of a Depositary or a nominee thereof. This Security may
not be exchanged in whole or in part for a Security
registered, and no transfer of this Security in whole or in
part may be registered, in the name of any Person other than
such Depositary or a nominee thereof, except in the limited
circumstances described in the Indenture.
Section 205. Form of Trustee's Certificate of Authentication.
The Trustee's certificates of authentication shall be in substantially the
following form:
This is one of the Securities of the series designated therein referred
to in the within-mentioned Indenture.
THE BANK OF NEW YORK,
As Trustee
By.........................................
Authorized Signatory
ARTICLE THREE
The Securities
Section 301. Amount Unlimited; Issuable in Series.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution and, subject to
Section 303, set forth, or determined in the manner provided, in an
Officers' Certificate, or established in one or more indentures
supplemental hereto, prior to the issuance of Securities of any series,
(1) the title of the Securities of the series (which shall distinguish
the Securities of the series from Securities of any other series);
(2) any limit upon the aggregate principal amount of the Securities
of the series which may be authenticated and delivered under this
Indenture (except for Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other
Securities of the series pursuant to Section 304, 305, 306, 906 or 1107
and except for any Securities which, pursuant to Section 303, are
deemed never to have been authenticated and delivered hereunder);
(3) the Person to whom any interest on a Security of the series
shall be payable, if other than the Person in whose name that Security
(or one or more Predecessor Securities) is registered at the close of
business on the Regular Record Date for such interest;
(4) the date or dates on which the principal of any Securities of
the series is payable;
(5) the rate or rates at which any Securities of the series shall bear
interest, if any, the date or dates from which any such interest shall
accrue, the Interest Payment Dates on which any such interest shall be
payable and the Regular Record Date for any such interest payable on
any Interest Payment Date;
(6) the right, if any, to extend the interest payment periods, and
the duration and other terms and conditions of any such extension;
(7) the place or places where the principal of and any premium
and interest on any Securities of the series shall be payable;
(8) the period or periods within which, the price or prices at
which and the terms and conditions upon which any Securities of the
series may be redeemed, in whole or in part, at the option of the
Company and, if other than by a Board Resolution, the manner in
which any election by the Company to redeem the Securities shall be
evidenced;
(9) the obligation, if any, of the Company to redeem or purchase
any Securities of the series pursuant to any sinking fund or analogous
provisions or at the option of the Holder thereof and the period or
periods within which, the price or prices at which and the terms and
conditions upon which any Securities of the series shall be redeemed
or purchased, in whole or in part, pursuant to such obligation;
(10) if other than denominations of $1,000 and any integral
multiple thereof, the denominations in which any Securities of the
series shall be issuable;
(11) if the amount of principal of or any premium or interest on
any Securities of the series may be determined with reference to an
index or pursuant to a formula, the manner in which such amounts
shall be determined;
(12) if other than the currency of the United States of America, the
currency, currencies or currency units in which the principal of or any
premium or interest on any Securities of the series shall be payable
and the manner of determining the equivalent thereof in the currency
of the United States of America for any purpose, including for
purposes of the definition of Outstanding in Section 101;
(13) if the principal of or any premium or interest on any Securities
of the series is to be payable, at the election of the Company or the
Holder thereof, in one or more currencies or currency units other than
that or those in which such Securities are stated to be payable, the
currency, currencies or currency units in which the principal of or any
premium or interest on such Securities as to which such election is
made shall be payable, the periods within which and the terms and
conditions upon which such election is to be made and the amount so
payable (or the manner in which such amount shall be determined);
(14) if other than the entire principal amount thereof, the portion
of the principal amount of any Securities of the series which shall be
payable upon declaration of acceleration of the Maturity thereof
pursuant to Section 502;
(15) if the principal amount payable at the Stated Maturity of any
Securities of the series will not be determinable as of any one or more
dates prior to the Stated Maturity, the amount which shall be deemed
to be the principal amount of such Securities as of any such date for
any purpose thereunder or hereunder, including the principal amount
thereof which shall be due and payable upon any Maturity other than
the Stated Maturity or which shall be deemed to be Outstanding as of
any date prior to the Stated Maturity (or, in any such case, the manner
in which such amount deemed to be the principal amount shall be
determined);
(16) if applicable, that the Securities of the series, in whole or any
specified part, shall be defeasible pursuant to Section 1302 or
Section 1303 or both such Sections and, if other than by a Board
Resolution, the manner in which any election by the Company to
defease such Securities shall be evidenced;
(17) if applicable, that any Securities of the series shall be issuable
in whole or in part in the form of one or more Global Securities and,
in such case, the respective Depositaries for such Global Securities,
the form of any legend or legends which shall be borne by any such
Global Security in addition to or in lieu of that set forth in Section 204
and any circumstances in addition to or in lieu of those set forth in
Clause (2) of the last paragraph of Section 305 in which any such
Global Security may be exchanged in whole or in part for Securities
registered, and any transfer of such Global Security in whole or in
part may be registered, in the name or names of Persons other than
the Depositary for such Global Security or a nominee thereof;
(18) any addition to or change in the Events of Default which
applies to any Securities of the series and any change in the right of
the Trustee or the requisite Holders of such Securities to declare the
principal amount thereof due and payable pursuant to Section 502;
(19) any addition to or change in the covenants set forth in Article
Ten which applies to Securities of the series; and
(20) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture, except as permitted
by Section 901(5)).
All Securities of any one series shall be substantially identical except
as to denomination and except as may otherwise be provided in or
pursuant to the Board Resolution referred to above and (subject to
Section 303) set forth, or determined in the manner provided, in the
Officers' Certificate referred to above or in any such indenture
supplemental hereto.
If any of the terms of the series are established by action taken
pursuant to a Board Resolution, a copy of an appropriate record of such
action shall be certified by the Secretary or an Assistant Secretary of the
Company and delivered to the Trustee at or prior to the delivery of the
Officers' Certificate setting forth the terms of the series.
The Securities shall be subordinated in right of payment to Senior
Debt as provided in Article Fourteen.
Section 302. Denominations.
The Securities of each series shall be issuable only in registered form
without coupons and only in such denominations as shall be specified as
contemplated by Section 301. In the absence of any such specified
denomination with respect to the Securities of any series, the Securities
of such series shall be issuable in denominations of $1,000 and any
integral multiple thereof.
Section 303. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its
Chairman of the Board, its Vice Chairman of the Board, its President or
one of its Vice Presidents, under its corporate seal reproduced thereon
attested by its Secretary or one of its Assistant Secretaries. The signature
of any of these officers 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.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities of any series
executed by the Company to the Trustee for authentication, together with
a Company Order for the authentication and delivery of such Securities,
and the Trustee in accordance with the Company Order shall authenticate
and make available for delivery such Securities. If the form or terms of
the Securities of the series have been established by or pursuant to one
or more Board Resolutions as permitted by Sections 201 and 301, in
authenticating such Securities, and accepting the additional
responsibilities under this Indenture in relation to such Securities, the
Trustee shall be entitled to receive, and (subject to Section 601) shall be
fully protected in relying upon, an Opinion of Counsel stating,
(1) if the form of such Securities has been established by or
pursuant to Board Resolution as permitted by Section 201, that such
form has been established in conformity with the provisions of this
Indenture;
(2) if the terms of such Securities have been established by or
pursuant to Board Resolution as permitted by Section 301, that such
terms have been established in conformity with the provisions of this
Indenture;
(3) that such Securities, when authenticated and delivered 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 legally binding obligations of the Company enforceable in
accordance with their terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to
general equity principles; and
(4) that the approval of all regulatory authorities required under
the Federal laws of the United States and the laws of the
Commonwealth of Pennsylvania in connection with the issuance of
such Securities has been obtained and such Securities are being issued
in conformity with such approvals.
If such form or terms have been so established, the Trustee shall not be
required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a
manner which is not reasonably acceptable to the Trustee.
Notwithstanding the provisions of Section 301 and of the preceding
paragraph, if all Securities of a series are not to be originally issued at
one time, it shall not be necessary to deliver the Officers' Certificate
otherwise required pursuant to Section 301 or the Company Order and
Opinion of Counsel otherwise required pursuant to such preceding
paragraph at or prior to the authentication of each Security of such series
if such documents are delivered at or prior to the authentication upon
original issuance of the first Security of such series to be issued.
Each Security shall be dated the date of its authentication.
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 substantially in the form provided for
herein executed by the Trustee by manual signature, and such certificate
upon any Security shall be conclusive evidence, and the only evidence,
that such Security has been duly authenticated and delivered hereunder.
Notwithstanding the foregoing, if any Security shall have been
authenticated and delivered hereunder but never issued and sold by the
Company, and the Company shall deliver such Security to the Trustee
for cancellation as provided in Section 309, for all purposes of this
Indenture such Security shall be deemed never to have been authenticated
and delivered hereunder and shall never be entitled to the benefits of this
Indenture.
Section 304. Temporary Securities.
Pending the preparation of definitive Securities of any series, the
Company may execute, and upon Company Order the Trustee shall
authenticate and make available for delivery, temporary Securities which
are printed, lithographed, typewritten, mimeographed or otherwise
produced, in any authorized denomination, substantially of the tenor of
the definitive Securities in lieu of which they are issued and with such
appropriate insertions, omissions, substitutions and other variations as the
officers executing such Securities may determine, as evidenced by their
execution of such Securities.
If temporary Securities of any series are issued, the Company will
cause definitive Securities of that series to be prepared without
unreasonable delay. After the preparation of definitive Securities of such
series, the temporary Securities of such series shall be exchangeable for
definitive Securities of such series upon surrender of the temporary
Securities of such series at the office or agency of the Company in a
Place of Payment for that series, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Securities of
any series, the Company shall execute and the Trustee shall authenticate
and make available for delivery in exchange therefor one or more
definitive Securities of the same series, of any authorized denominations
and of like tenor and aggregate principal amount. Until so exchanged,
the temporary Securities of any series shall in all respects be entitled to
the same benefits under this Indenture as definitive Securities of such
series and tenor.
Section 305. Registration, Registration of Transfer and Exchange.
The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register (the register maintained in such office and in any
other office or agency of the Company in a Place of Payment being
herein sometimes collectively referred to as the Security Register) in
which, subject to such reasonable regulations as it may prescribe, the
Company shall provide for the registration of Securities and of transfers
of Securities. The Trustee is hereby appointed Security Registrar for the
purpose of registering Securities and transfers of Securities as herein
provided.
Upon surrender for registration of transfer of any Security of a series
at the office or agency of the Company in a Place of Payment for that
series, the Company shall execute, and the Trustee shall authenticate and
make available for delivery, in the name of the designated transferee or
transferees, one or more new Securities of the same series, of any
authorized denominations and of like tenor and aggregate principal
amount.
At the option of the Holder, Securities of any series may be exchanged
for other Securities of the same series, of any authorized denominations
and of like tenor and aggregate principal amount, upon surrender of the
Securities to be exchanged at such office or agency. Whenever any
Securities are so surrendered for exchange, the Company shall execute,
and the Trustee shall authenticate and make available for delivery, the
Securities which the Holder making the exchange is entitled to receive.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the
same debt, and entitled to the same benefits under this Indenture, as the
Securities surrendered upon such registration of transfer or exchange.
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 Security Registrar duly
executed, by the Holder thereof or his attorney duly authorized in
writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of
Securities, other than exchanges pursuant to Section 304, 906 or 1107
not involving any transfer.
If the Securities of any series (or of any series and specified tenor) are
to be redeemed in part, the Company shall not be required (A) to issue,
register the transfer of or exchange any Securities of that series (or of
that series and specified tenor, as the case may be) during a period
beginning at the opening of business 15 days before the day of the
mailing of a notice of redemption of any such Securities selected for
redemption under Section 1103 and ending at the close of business on the
day of such mailing, or (B) to register the transfer of or exchange any
Security so selected for redemption in whole or in part, except the
unredeemed portion of any Security being redeemed in part.
The provisions of Clauses (1), (2), (3) and (4) below shall apply only
to Global Securities:
(1) Each Global Security authenticated under this Indenture shall
be registered in the name of the Depositary designated for such Global
Security or a nominee thereof and delivered to such Depositary or a
nominee thereof or custodian therefor, and each such Global Security
shall constitute a single Security for all purposes of this Indenture.
(2) Notwithstanding any other provision in this Indenture, no
Global Security may be exchanged in whole or in part for Securities
registered, and no transfer of a Global Security in whole or in part
may be registered, in the name of any Person other than the
Depositary for such Global Security or a nominee thereof unless (A)
such Depositary (i) has notified the Company that it is unwilling or
unable to continue as Depositary for such Global Security or (ii) has
ceased to be a clearing agency registered under the Exchange Act,
(B) there shall have occurred and be continuing an Event of Default
with respect to such Global Security or (C) there shall exist such
circumstances, if any, in addition to or in lieu of the foregoing as have
been specified for this purpose as contemplated by Section 301.
(3) Subject to Clause (2) above, any exchange of a Global
Security for other Securities may be made in whole or in part, and all
Securities issued in exchange for a Global Security or any portion
thereof shall be registered in such names as the Depositary for such
Global Security shall direct.
(4) Every Security authenticated and delivered upon registration
of transfer of, or in exchange for or in lieu of, a Global Security or
any portion thereof, whether pursuant to this Section, Section 304,
306, 906 or 1107 or otherwise, shall be authenticated and delivered
in the form of, and shall be, a Global Security, unless such Security
is registered in the name of a Person other than the Depositary for
such Global Security or a nominee thereof.
Section 306. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee, the Company
shall execute and the Trustee shall authenticate and make available for
delivery in exchange therefor a new Security of the same series and of
like tenor and principal amount and bearing a number not
contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i) evidence
to their satisfaction of the destruction, loss or theft of any Security and
(ii) such security or indemnity as may be required by them to save each
of them and any agent of either 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 and the
Trustee shall authenticate and make available for delivery, in lieu of any
such destroyed, lost or stolen Security, a new Security of the same series
and of like tenor and principal amount and bearing a number not con-
temporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its
discretion may, instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, 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)
connected therewith.
Every new Security of any series issued pursuant to this Section in lieu
of any destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the
destroyed, lost or stolen Security shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Indenture equally
and proportionately with any and all other Securities of that series duly
issued hereunder.
The provisions of this Section 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 307. Payment of Interest; Interest Rights Preserved.
Except as otherwise provided as contemplated by Section 301 with
respect to any series of Securities, interest on any Security which is
payable, and is punctually paid or duly provided for, on any Interest
Payment Date shall be paid to the Person in whose name that Security
(or one or more Predecessor Securities) is registered at the close of
business on the Regular Record Date for such interest.
Any interest on any Security of any series which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date
(herein called Defaulted Interest) shall forthwith cease to be payable to
the Holder on the relevant Regular Record Date by virtue of having been
such Holder, and such Defaulted Interest may be paid by the Company,
at its election in each case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Securities of such series
(or their respective Predecessor Securities) are registered at the
close of business on a Special Record Date for the payment of such
Defaulted Interest, which shall be fixed in the following manner.
The Company shall notify the Trustee in writing of the amount of
Defaulted Interest proposed to be paid on each Security of such
series and the date of the proposed payment, and at the same time
the Company shall deposit with the Trustee an amount of money
equal to the aggregate amount proposed to be paid in respect of
such Defaulted Interest or shall make arrangements satisfactory to
the Trustee for such deposit prior to the date of the proposed
payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this
Clause provided. Thereupon the Trustee shall fix a Special Record
Date for the payment of such Defaulted Interest which shall be not
more than 15 days and not less than 10 days prior to the date of the
proposed payment and not less than 10 days after the receipt by the
Trustee of the notice of the proposed payment. The Trustee shall
promptly notify the Company of such Special Record Date and, in
the name and at the expense of the Company, shall cause notice of
the proposed payment of such Defaulted Interest and the Special
Record Date therefor to be given to each Holder of Securities of
such series in the manner set forth in Section 106, not less than
10 days prior to such Special Record Date. Notice of the proposed
payment of such Defaulted Interest and the Special Record Date
therefor having been so mailed, such Defaulted Interest shall be
paid to the Persons in whose names the Securities of such series (or
their respective Predecessor Securities) are registered at the close
of business on such Special Record Date and shall no longer be
payable pursuant to the following Clause (2).
(2) The Company may make payment of any Defaulted Interest
on the Securities of any series in any other lawful manner not
inconsistent with the requirements of any securities exchange on
which such Securities may be listed, and upon such notice as may
be required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this
Clause, such manner of payment shall be deemed practicable by the
Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Security shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such
other Security.
Section 308. Persons Deemed Owners.
Prior to due presentment of a Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name such Security is registered as the owner
of such Security for the purpose of receiving payment of principal of and
any premium and (subject to Section 307) any interest on such Security
and for all other purposes whatsoever, whether or not such Security be
overdue, and neither the Company, the Trustee nor any agent of the
Company or the Trustee shall be affected by notice to the contrary.
Section 309. Cancellation.
All Securities surrendered for payment, redemption, registration of
transfer or exchange or for credit against any sinking fund payment shall,
if surrendered to any Person other than the Trustee, be delivered to the
Trustee and shall be promptly cancelled by it. The Company may at any
time deliver to the Trustee for cancellation any Securities previously
authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and may deliver to the Trustee (or
to any other Person for delivery to the Trustee) for cancellation any
Securities previously authenticated hereunder which the Company has not
issued and sold, and all Securities so delivered shall be promptly
cancelled by the Trustee. No Securities shall be authenticated in lieu of
or in exchange for any Securities cancelled as provided in this Section,
except as expressly permitted by this Indenture. All cancelled Securities
held by the Trustee shall be disposed of as directed by a Company
Order; provided, however, that the Trustee shall not be required to
destroy such cancelled securities.
Section 310. Computation of Interest.
Except as otherwise specified as contemplated by Section 301 for
Securities of any series, interest on the Securities of each series shall be
computed on the basis of a 360-day year of twelve 30-day months.
Section 311. CUSIP Numbers.
The Company in issuing the Securities may use CUSIP numbers (if
then generally in use), and, if so, the Trustee shall use CUSIP numbers
in notices of redemption as a convenience to Holders; provided that any
such notice may 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 a redemption and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such redemption
shall not be affected by any defect in or omission of such numbers.
ARTICLE FOUR
Satisfaction and Discharge
Section 401. Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of further
effect (except as to any surviving rights of registration of transfer or
exchange of Securities herein expressly provided for), and the Trustee,
at the expense of the Company, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered (other
than (i) Securities which have been destroyed, lost or stolen and
which have been replaced or paid as provided in Section 306 and
(ii) Securities for whose payment money has theretofore been
deposited in trust or segregated and held in trust by the Company
and thereafter repaid to the Company or discharged from such trust,
as provided in Section 1003) have been delivered to the Trustee for
cancellation; or
(B) all such Securities not theretofore delivered to the Trustee
for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity
within one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice
of redemption by the Trustee in the name, and at the expense, of
the Company,
and the Company, in the case of (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee as trust funds
in trust for the purpose money in an amount sufficient to pay and
discharge the entire indebtedness on such Securities not theretofore
delivered to the Trustee for cancellation, for principal and any
premium and interest to the date of such deposit (in the case of
Securities which have become due and payable) or to the Stated
Maturity or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums
payable hereunder by the Company; and
(3) 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.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 607, the
obligations of the Company to any Authenticating Agent under
Section 614 and, if money shall have been deposited with the Trustee
pursuant to subclause (B) of Clause (1) of this Section, the obligations of
the Trustee under Section 402 and the last paragraph of Section 1003
shall survive.
Section 402. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 1003, all
money deposited with the Trustee pursuant to Section 401 shall be held
in trust and applied by it, in accordance with the provisions of the
Securities and this Indenture, to the payment, either directly or through
any Paying Agent (including the Company acting as its own Paying
Agent) as the Trustee may determine, to the Persons entitled thereto, of
the principal and any premium and interest for whose payment such
money has been deposited with the Trustee.
ARTICLE FIVE
Remedies
Section 501. Events of Default.
Event of Default, wherever used herein with respect to Securities of
any series, means any one of the following events (whatever the reason
for such Event of Default and whether it shall be occasioned by the
provisions of Article Fourteen or be voluntary or involuntary or be
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):
(1) default in the payment of any interest upon any Security of that
series when it becomes due and payable, and continuance of such
default for a period of 30 days; or
(2) default in the payment of the principal of or any premium on
any Security of that series at its Maturity; provided that the failure to
redeem any Security subject to a Conditional Redemption shall not be
an Event of Default if any event on which such redemption is so
conditioned does not occur before the Redemption Date; or
(3) default in the deposit of any sinking fund payment, when and
as due by the terms of a Security of that series; or
(4) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture (other than a covenant or
warranty a default in whose performance or whose breach is elsewhere
in this Section specifically dealt with or which has expressly been
included in this Indenture solely for the benefit of series of Securities
other than that series), and continuance of such default or breach for
a period of 60 days after there has been given, by registered or
certified mail, to the Company by the Trustee or to the Company and
the Trustee by the Holders of at least 10% in principal amount of the
Outstanding Securities of that series a written notice specifying such
default or breach and requiring it to be remedied and stating that such
notice is a Notice of Default hereunder; or
(5) the entry by a court having jurisdiction in the premises of (A) a
decree or order for relief in respect of the Company in an involuntary
case or proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or (B) a decree or
order 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 Federal or State law, or appointing a custodian, receiver,
liquidator, assignee, trustee, sequestrator or other similar official of
the Company or of any substantial part of its property, or ordering the
winding up or liquidation of its affairs, and the continuance of any
such decree or order for relief or any such other decree or order
unstayed and in effect for a period of 60 consecutive days; or
(6) the commencement by the Company of a voluntary case or
proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or of any other case or
proceeding to be adjudicated a bankrupt or insolvent, or the consent
by it to the entry of a decree or order for relief in respect of the
Company in an involuntary case or proceeding under any applicable
Federal or State bankruptcy, insolvency, reorganization or other
similar 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
Federal or State law, or the consent by it to the filing of such petition
or to the appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee, sequestrator or other similar official of
the Company or of any substantial part of its property, or the making
by it of an assignment for the benefit of creditors, or the admission by
it in writing of its inability to pay its debts generally as they become
due, or the taking of corporate action by the Company in furtherance
of any such action; or
(7) any other Event of Default provided with respect to Securities
of that series.
Section 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default (other than an Event of Default specified in
Section 501(5) or 501(6)) with respect to Securities of any series at the
time Outstanding occurs and is continuing, then in every such case the
Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series may declare the principal amount of
all the Securities of that series (or, if any Securities of that series are
Original Issue Discount Securities, such portion of the principal amount
of such Securities as may be specified by the terms thereof) to be due
and payable immediately, by a notice in writing to the Company (and to
the Trustee if given by Holders), and upon any such declaration such
principal amount (or specified amount) shall become immediately due
and payable. If an Event of Default specified in Section 501(5) or 501(6)
with respect to Securities of any series at the time Outstanding occurs,
the principal amount of all the Securities of that series (or, if any
Securities of that series are Original Issue Discount Securities, such
portion of the principal amount of such Securities as may be specified by
the terms thereof) shall automatically, and without any declaration or
other action on the part of the Trustee or any Holder, become
immediately due and payable.
At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree
for payment of the money due has been obtained by the Trustee as
hereinafter in this Article provided, the Holders of a majority in principal
amount of the Outstanding Securities of that series, by written notice to
the Company and the Trustee, may rescind and annul such declaration
and its consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue interest on all Securities of that series,
(B) the principal of (and premium, if any, on) any Securities of
that series which have become due otherwise than by such
declaration of acceleration and any interest thereon at the rate or
rates prescribed therefor in such Securities,
(C) to the extent that payment of such interest is lawful, interest
upon overdue interest at the rate or rates prescribed therefor in such
Securities, and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel;
and
(2) all Events of Default with respect to Securities of that series,
other than the non-payment of the principal of Securities of that series
which have become due solely by such declaration of acceleration,
have been cured or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
Section 503. Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Company covenants that if
(1) default is made in the payment of any interest on any Security
when such interest becomes due and payable and such default
continues for a period of 30 days, or
(2) default is made in the payment of the principal of (or premium,
if any, on) any Security at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit
of the Holders of such Securities, the whole amount then due and
payable on such Securities for principal and any premium and interest
and, to the extent that payment of such interest shall be legally en-
forceable, interest on any overdue principal and premium and on any
overdue interest, at the rate or rates prescribed therefor in such
Securities, and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel.
If an Event of Default with respect to Securities of any series occurs
and is continuing, the Trustee may in its discretion proceed to protect
and enforce its rights and the rights of the Holders of Securities of such
series by such appropriate judicial proceedings as the Trustee shall deem
most effectual to protect and enforce any such rights, whether for the
specific enforcement of any covenant or agreement in this Indenture or
in aid of the exercise of any power granted herein, or to enforce any
other proper remedy.
Section 504. Trustee May File Proofs of Claim.
In case of any judicial proceeding relative to the Company (or any
other obligor upon the Securities), its property or its creditors, the
Trustee shall be entitled and empowered, by intervention in such
proceeding or otherwise, to take any and all actions authorized under the
Trust Indenture Act in order to have claims of the Holders and the
Trustee allowed in any such proceeding. In particular, the Trustee shall
be authorized to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same; and
any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized
by each Holder to make such payments to the Trustee and, in the event
that the Trustee shall consent to the making of such payments directly to
the Holders, to pay to 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 607.
No provision of this Indenture 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; provided, however, that the Trustee may, on
behalf of the Holders, vote for the election of a trustee in bankruptcy or
similar official and be a member of a creditors' or other similar
committee.
Section 505. Trustee May Enforce Claims Without Possession of
Securities.
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession
of any of the Securities or the production thereof in any proceeding
relating thereto, and any such proceeding instituted by the Trustee shall
be brought in its own name as trustee of an express trust, and any
recovery of judgment shall, after provision for the payment of the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, be for the ratable benefit of the Holders
of the Securities in respect of which such judgment has been recovered.
Section 506. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee
and, in case of the distribution of such money on account of principal or
any premium or interest, upon presentation of the Securities and the
notation thereon of the payment if only partially paid and upon surrender
thereof if fully paid:
First: To the payment of all amounts due the Trustee under
Section 607; and
Second: Subject to Article Fourteen, to the payment of the
amounts then due and unpaid for principal of and any premium and
interest on the Securities in respect of which or for the benefit of
which such money has been collected, ratably, without preference or
priority of any kind, according to the amounts due and payable on
such Securities for principal and any premium and interest,
respectively.
Section 507. Limitation on Suits.
No Holder of any Security of any series shall have any right to
institute any proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless
(1) such Holder has previously given written notice to the Trustee
of a continuing Event of Default with respect to the Securities of that
series;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series shall have made written request
to the Trustee to institute proceedings in respect of such Event of
Default in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a
majority in principal amount of the Outstanding Securities of that
series;
it being understood and intended that no one or more of such Holders
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 of such Holders, or to obtain or to seek to obtain
priority or preference over any other of such Holders or to enforce any
right under this Indenture, except in the manner herein provided and for
the equal and ratable benefit of all of such Holders.
Section 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest.
Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of and any premium and (subject to
Section 307) interest on such Security on the respective Stated Maturities
expressed in such Security (or, in the case of redemption, on the
Redemption Date) and to institute suit for the enforcement of any such
payment, and such rights shall not be impaired without the consent of
such Holder.
Section 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined
adversely to the Trustee or to such Holder, then and in every such case,
subject to any determination in such proceeding, the Company, the
Trustee and the Holders shall be restored severally and respectively to
their former positions hereunder and thereafter all rights and remedies of
the Trustee and the Holders shall continue as though no such proceeding
had been instituted.
Section 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in the last
paragraph of Section 306, no right or remedy herein conferred upon or
reserved to the Trustee or to the Holders 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.
Section 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any
Securities to exercise any right or remedy accruing upon any Event of
Default shall impair any such right or remedy or constitute a waiver of
any such Event of Default or an acquiescence therein. Every right and
remedy given by this Article or by law to the Trustee or to the Holders
may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders, as the case may be.
Section 512. Control by Holders.
The Holders of a majority in principal amount of the Outstanding
Securities of any series 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, with
respect to the Securities of such series, provided that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture, and
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
Section 513. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series may on behalf of the Holders of all
the Securities of such series waive any past default hereunder with
respect to such series and its consequences, except a default
(1) in the payment of the principal of or any premium or interest
on any Security of such series, or
(2) in respect of a covenant or provision hereof which under
Article Nine cannot be modified or amended without the consent of
the Holder of each Outstanding Security of such series affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
Section 514. 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,
suffered or omitted by it as Trustee, a court may require any party
litigant in such suit to file an undertaking to pay the costs of such suit,
and may assess costs against any such party litigant, in the manner and
to the extent provided in the Trust Indenture Act; provided that neither
this Section nor the Trust Indenture Act shall be deemed to authorize any
court to require such an undertaking or to make such an assessment in
any suit instituted by the Company or the Trustee.
Section 515. 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, 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.
ARTICLE SIX
The Trustee
Section 601. Certain Duties and Responsibilities.
The duties and responsibilities of the Trustee shall be as provided by
the Trust Indenture Act. Notwithstanding the foregoing, no provision of
this Indenture shall require the Trustee to expend or risk its own funds
or otherwise incur any financial liability in the performance of any of its
duties hereunder, or in the exercise of any of its rights or powers, if it
shall have reasonable grounds for believing that repayment of such funds
or adequate indemnity against such risk or liability is not reasonably
assured to it. Whether or not therein expressly so provided, every
provision of this Indenture relating to the conduct or affecting the
liability of or affording protection to the Trustee shall be subject to the
provisions of this Section.
Section 602. Notice of Defaults.
If a default occurs hereunder with respect to Securities of any series,
the Trustee shall give the Holders of Securities of such series notice of
such default as and to the extent provided by the Trust Indenture Act;
provided, however, that in the case of any default of the character
specified in Section 501(4) with respect to Securities of such series, no
such notice to Holders shall be given until at least 30 days after the
occurrence thereof. For the purpose of this Section, the term default
means any event which is, or after notice or lapse of time or both would
become, an Event of Default with respect to Securities of such series.
Section 603. Certain Rights of Trustee.
Subject to the provisions of Section 601:
(1) the Trustee may rely and shall be 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 or
presented by the proper party or parties;
(2) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company
Order, and any resolution of the Board of Directors shall be
sufficiently evidenced by a Board Resolution;
(3) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence
of bad faith on its part, rely upon an Officers' Certificate;
(4) the Trustee may consult with counsel of its selection and the
written 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;
(5) 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 or
indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction;
(6) 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, note, other evidence of indebtedness 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 shall determine 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;
(7) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through
agents or attorneys and the 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; and
(8) the Trustee shall not be liable for any action taken, suffered,
or omitted to be taken by it in good faith and reasonably believed by
it to be authorized or within the discretion or rights or powers
conferred upon it by this Indenture.
Section 604. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements
of the Company, and neither the Trustee nor any Authenticating Agent
assumes any responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Securities. Neither the Trustee nor any Authenticating Agent shall be
accountable for the use or application by the Company of Securities or
the proceeds thereof.
Section 605. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any
Security Registrar or any other agent of the Company, in its individual
or any other capacity, may become the owner or pledgee of Securities
and, subject to Sections 608 and 613, may otherwise deal with the
Company with the same rights it would have if it were not Trustee,
Authenticating Agent, Paying Agent, Security Registrar or such other
agent.
Section 606. Money Held in Trust.
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
be under no liability for interest on any money received by it hereunder
except as otherwise agreed in writing with the Company.
Section 607. Compensation and Reimbursement.
The Company agrees
(1) to pay to the Trustee from time to time such compensation as
the Company and the Trustee shall from time to time agree in writing
for all services rendered by it hereunder (which compensation shall
not be limited by any provision of law in regard to the compensation
of a trustee of an express trust);
(2) except as otherwise expressly provided herein, 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 disbursements of its agents and counsel), except any
such expense, disbursement or advance as may be attributable to its
negligence or bad faith; and
(3) to indemnify each of the Trustee or any predecessor Trustee
for, and to hold it harmless against, any and all loss, damage, claims,
liability or expense including taxes (other than taxes based upon the
income of the Trustee) incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or admini-
stration of the trust or trusts hereunder, 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 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 607, except with respect to
funds held in trust for the benefit of the Holders of particular Securities.
When the Trustee incurs expenses or renders services in connection
with an Event of Default specified in Section 501(5) or Section 501(6),
the expenses (including the reasonable charges and expenses of its
counsel) and the compensation for the services are intended to constitute
expenses of administration under any applicable Federal or State
bankruptcy, insolvency or other similar law.
The provisions of this Section shall survive the termination of this
Indenture.
Section 608. Conflicting Interests.
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate
such interest or resign, to the extent and in the manner provided by, and
subject to the provisions of, the Trust Indenture Act and this Indenture.
To the extent permitted by such Act, the Trustee shall not be deemed to
have a conflicting interest by virtue of being a trustee under this
Indenture with respect to Securities of more than one series.
Section 609. Corporate Trustee Required; Eligibility.
There shall at all times be one (and only one) Trustee hereunder with
respect to the Securities of each series, which may be Trustee hereunder
for Securities of one or more other series. Each Trustee shall be a Person
that is eligible pursuant to the Trust Indenture Act to act as such, and has
a combined capital and surplus of at least $50,000,000. If any such
Person publishes reports of condition at least annually, pursuant to law
or to the requirements of its supervising or examining authority, then for
the purposes of this Section and to the extent permitted by the Trust
Indenture Act, 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. If at any time the Trustee with
respect to the Securities of any series shall cease to be eligible in accor-
dance with the provisions of this Section, it shall resign immediately in
the manner and with the effect hereinafter specified in this Article.
Section 610. Resignation and Removal; Appointment of Successor.
No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with
the applicable requirements of Section 611.
The Trustee may resign at any time with respect to the Securities of
one or more series by giving written notice thereof to the Company.
The Trustee may be removed at any time with respect to the Securities
of any series by Act of the Holders of a majority in principal amount of
the Outstanding Securities of such series, delivered to the Trustee and to
the Company.
If the instrument of acceptance by a successor Trustee required by
Section 611 shall not have been delivered to the Trustee within 30 days
after the giving of such notice of resignation or removal, the Trustee
resigning or being removed may petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the
Securities of such series.
If at any time:
(1) the Trustee shall fail to comply with Section 608 after written
request therefor by the Company or by any Holder who has been a
bona fide Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 609 and
shall fail to resign after written request therefor by the Company or
by any such Holder, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (A) the Company by a Board Resolution may
remove the Trustee with respect to all Securities, or (B) subject to
Section 514, any Holder who has been a bona fide Holder of a Security
for at least six months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the removal of
the Trustee with respect to all Securities and the appointment of a
successor Trustee or Trustees.
If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any cause, with
respect to the Securities of one or more series, the Company, by a Board
Resolution, shall promptly appoint a successor Trustee or Trustees with
respect to the Securities of that or those series (it being understood that
any such successor Trustee may be appointed with respect to the
Securities of one or more or all of such series and that at any time there
shall be only one Trustee with respect to the Securities of any particular
series) and shall comply with the applicable requirements of Section 611.
If, within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee with respect to the
Securities of any series shall be appointed by Act of the Holders of a
majority in principal amount of the Outstanding Securities of such series
delivered to the Company and the retiring Trustee, the successor Trustee
so appointed shall, forthwith upon its acceptance of such appointment in
accordance with the applicable requirements of Section 611, become the
successor Trustee with respect to the Securities of such series and to that
extent supersede the successor Trustee appointed by the Company. If no
successor Trustee with respect to the Securities of any series shall have
been so appointed by the Company or the Holders and accepted appoint-
ment in the manner required by Section 611, any Holder who has been
a bona fide Holder of a Security of such series for at least six months
may, on behalf of himself and all others similarly situated, petition any
court of competent jurisdiction for the appointment of a successor
Trustee with respect to the Securities of such series.
The Company shall give notice of each resignation and each removal
of the Trustee with respect to the Securities of any series and each
appointment of a successor Trustee with respect to the Securities of any
series to all Holders of Securities of such series in the manner provided
in Section 106. Each notice shall include the name of the successor
Trustee with respect to the Securities of such series and the address of
its Corporate Trust Office.
Section 611. Acceptance of Appointment by Successor.
In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company and to the retiring
Trustee an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Trustee shall become effective and
such successor Trustee, without any further act, deed or conveyance,
shall become vested with all the rights, powers, trusts and duties of the
retiring Trustee; but, on the request of the Company or the successor
Trustee, such retiring Trustee shall, upon payment of its charges, execute
and deliver an instrument transferring to such successor Trustee all the
rights, powers and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor Trustee all property and money
held by such retiring Trustee hereunder.
In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the
Company, the retiring Trustee and each successor Trustee with respect
to the Securities of one or more series shall execute and deliver an
indenture supplemental hereto wherein each successor Trustee shall
accept such appointment and which (1) shall contain such provisions as
shall be necessary or desirable to transfer and confirm to, and to vest in,
each successor Trustee all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities of that or those series to
which the appointment of such successor Trustee relates, (2) if the
retiring Trustee is not retiring with respect to all Securities, shall contain
such provisions as shall be deemed necessary or desirable to confirm that
all the rights, powers, trusts and duties of the retiring Trustee with
respect to the Securities of that or those series as to which the retiring
Trustee is not retiring shall continue to be vested in the retiring Trustee,
and (3) shall add to or change any of the provisions of this Indenture as
shall be necessary to provide for or facilitate the administration of the
trusts hereunder by more than one Trustee, it being understood that
nothing herein or in such supplemental indenture shall constitute such
Trustees co-trustees of the same trust and that each such Trustee shall be
trustee of a trust or trusts hereunder separate and apart from any trust or
trusts hereunder administered by any other such Trustee; and upon the
execution and delivery of such supplemental indenture the resignation or
removal of the retiring Trustee shall become effective to the extent pro-
vided therein and each such successor Trustee, without any further act,
deed or conveyance, shall become vested with all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of
that or those series to which the appointment of such successor Trustee
relates; but, on request of the Company or any successor Trustee, such
retiring Trustee shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder
with respect to the Securities of that or those series to which the
appointment of such successor Trustee relates.
Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in
and confirming to such successor Trustee all such rights, powers and
trusts referred to in the first or second preceding paragraph, as the case
may be.
No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible
under this Article.
Section 612. Merger, Conversion, Consolidation or Succession to
Business.
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 the corpo-
rate trust business of the Trustee, shall be the successor of the Trustee
hereunder, provided such corporation 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. In case any
Securities shall have been authenticated, but not delivered, by the Trustee
then in office, any successor by merger, conversion or consolidation to
such authenticating Trustee may adopt such authentication and deliver the
Securities so authenticated with the same effect as if such successor
Trustee had itself authenticated such Securities.
Section 613. Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the Company
(or any other obligor upon the Securities), the Trustee shall be subject to
the provisions of the Trust Indenture Act regarding the collection of
claims against the Company (or any such other obligor).
Section 614. Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents with
respect to one or more series of Securities which shall be authorized to
act on behalf of the Trustee to authenticate Securities of such series
issued upon original issue and upon exchange, registration of transfer or
partial redemption thereof or pursuant to Section 306, and Securities so
authenticated shall be entitled to the benefits of this Indenture and shall
be valid and obligatory for all purposes as if authenticated by the Trustee
hereunder. Wherever reference is made in this Indenture to the authen-
tication and delivery of Securities by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating
Agent and a certificate of authentication executed on behalf of the
Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company and shall at all times be a corporation
organized and doing business under the laws of the United States of
America, any State thereof or the District of Columbia, authorized under
such laws to act as Authenticating Agent, having a combined capital and
surplus of not less than $50,000,000 and subject to supervision or
examination by Federal or State authority. If such Authenticating Agent
publishes reports of condition at least annually, pursuant to law or to the
requirements of said supervising or examining authority, then for the
purposes of this Section, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.
If at any time an Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section, such Authenticating Agent
shall resign immediately in the manner and with the effect specified in
this Section.
Any corporation into which an 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 such
Authenticating Agent shall be a party, or any corporation succeeding to
the corporate agency or corporate trust business of an Authenticating
Agent, shall continue to be an Authenticating Agent, provided such
corporation shall be otherwise eligible under this Section, without the
execution or filing of any paper or any further act on the part of the
Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Company. The Trustee may at
any time terminate the agency of an Authenticating Agent by giving
written notice thereof 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 such Authenticating Agent shall cease to be
eligible in accordance with the provisions of this Section, the Trustee
may appoint a successor Authenticating Agent which shall be acceptable
to the Company and shall give notice of such appointment in the manner
provided in Section 106 to all Holders of Securities of the series with
respect to which such Authenticating Agent will serve. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall
become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating
Agent. No successor Authenticating Agent shall be appointed unless
eligible under the provisions of this Section.
The Company agrees to pay to each Authenticating Agent from time
to time reasonable compensation for its services under this Section.
If an appointment with respect to one or more series is made pursuant
to this Section, the Securities of such series may have endorsed thereon,
in addition to the Trustee's certificate of authentication, an alternative
certificate of authentication in the following form:
This is one of the Securities of the series designated therein referred
to in the within-mentioned Indenture.
THE BANK OF NEW YORK,
As Trustee
By......................................,
As Authenticating Agent
By.......................................
Authorized Officer
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company
Section 701. Company to Furnish Trustee Names and Addresses of
Holders.
The Company will furnish or cause to be furnished to the Trustee
(1) monthly, quarterly or semi-annually, as the case may, be on
each Regular Record Date, a list, in such form as the Trustee may
reasonably require, of the names and addresses of the Holders of
Securities of each series as of such Regular Record Date, and
(2) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such
request, a list of similar form and content as of a date not more
than 15 days prior to the time such list is furnished;
excluding from any such list names and addresses received by the Trustee
in its capacity as Security Registrar.
Section 702. Preservation of Information; Communications to Holders.
The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most
recent list furnished to the Trustee as provided in Section 701 and the
names and addresses of Holders received by the Trustee in its capacity
as Security Registrar. The Trustee may destroy any list furnished to it as
provided in Section 701 upon receipt of a new list so furnished.
The rights of Holders to communicate with other Holders with respect
to their rights under this Indenture or under the Securities, and the
corresponding rights and privileges of the Trustee, shall be as provided
by the Trust Indenture Act.
Every Holder of Securities, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the
Trustee nor any agent of either of them shall be held accountable by
reason of any disclosure of information as to names and addresses of
Holders made pursuant to the Trust Indenture Act.
Section 703. Reports by Trustee.
The Trustee shall transmit to Holders such reports concerning the
Trustee and its actions under this Indenture as may be required pursuant
to the Trust Indenture Act at the times and in the manner provided
pursuant thereto. If required by Section 313(a) of the Trust Indenture
Act, the Trustee shall, within sixty days after each May 15 following the
date of this Indenture deliver to Holders a brief report, dated as of such
May 15, which complies with the provisions of such Section 313(a).
A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Trustee with each stock exchange upon which
any Securities are listed, with the Commission and with the Company.
The Company will promptly notify the Trustee when any Securities are
listed on any stock exchange.
Section 704. Reports by Company.
The Company shall file with the Trustee and the Commission, and
transmit to Holders, such information, documents and other reports, and
such summaries thereof, as may be required pursuant to the Trust
Indenture Act at the times and in the manner provided pursuant to such
Act; provided that any such information, documents or reports required
to be filed with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act shall be filed with the Trustee within 15 days after the
same is so required to be filed with the Commission.
ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease
Section 801. Company May Consolidate, Etc., Only on Certain Terms.
The Company shall not consolidate with or merge into any other
Person or convey, transfer or lease its properties and assets substantially
as an entirety to any Person, and the Company shall not permit any
Person to consolidate with or merge into the Company or convey, trans-
fer or lease its properties and assets substantially as an entirety to the
Company, unless:
(1) in case the Company shall consolidate with or merge into
another Person or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, the Person formed by such
consolidation or into which the Company is merged or the Person
which acquires by conveyance or transfer, or which leases, the
properties and assets of the Company substantially as an entirety shall
be a corporation, partnership, unincorporated organization or trust,
shall be organized and validly existing under the laws of the United
States of America, any State thereof or the District of Columbia and
shall expressly assume, by an indenture supplemental hereto, executed
and delivered to the Trustee, in form satisfactory to the Trustee, the
due and punctual payment of the principal of and any premium and
interest on all the Securities and the performance or observance of
every covenant of this Indenture on the part of the Company to be
performed or observed;
(2) immediately after giving effect to such transaction and treating
any indebtedness which becomes an obligation of the Company or any
Subsidiary as a result of such transaction as having been incurred by
the Company or such Subsidiary at the time of 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; and
(3) the Company has delivered to the Trustee an Officers' Certifi-
cate and an Opinion of Counsel, each stating that such consolidation,
merger, conveyance, transfer or lease and, if a supplemental indenture
is required in connection with such transaction, such supplemental
indenture comply with this Article and that all conditions precedent
herein provided for relating to such transaction have been complied
with.
Section 802. Successor Substituted.
Upon any consolidation of the Company with, or merger of the
Company into, any other Person or any conveyance, transfer or lease of
the properties and assets of the Company substantially as an entirety in
accordance with Section 801, the successor Person formed by such
consolidation or into which the Company is merged or to which such
conveyance, transfer or lease 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 Person had been
named as the Company herein, and thereafter, except in the case of a
lease, the predecessor Person shall be relieved of all obligations and
covenants under this Indenture and the Securities.
ARTICLE NINE
Supplemental Indentures
Section 901. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized
by a Board Resolution, and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto, in
form satisfactory to the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the Company
and the assumption by any such successor of the covenants of the
Company herein and in the Securities; or
(2) to add to the covenants of the Company for the benefit of the
Holders of all or any series of Securities (and if such covenants are to
be for the benefit of less than all series of Securities, stating that such
covenants are expressly being included solely for the benefit of such
series) or to surrender any right or power herein conferred upon the
Company; or
(3) to add any additional Events of Default for the benefit of the
Holders of all or any series of Securities (and if such additional Events
of Default are to be for the benefit of less than all series of Securities,
stating that such additional Events of Default are expressly being
included solely for the benefit of such series); or
(4) to add to or change any of the provisions of this Indenture to
such extent as shall be necessary to permit or facilitate the issuance of
Securities in bearer form, registrable or not registrable as to principal,
and with or without interest coupons, or to permit or facilitate the
issuance of Securities in uncertificated form; or
(5) to add to, change or eliminate any of the provisions of this
Indenture in respect of one or more series of Securities, provided that
any such addition, change or elimination (A) shall neither (i) apply to
any Security of any series created prior to the execution of such
supplemental indenture and entitled to the benefit of such provision
nor (ii) modify the rights of the Holder of any such Security with
respect to such provision or (B) shall become effective only when
there is no such Security Outstanding; or
(6) to establish the form or terms of Securities of any series as
permitted by Sections 201 and 301; or
(7) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one
or more series and to add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee,
pursuant to the requirements of Section 611; or
(8) to cure any ambiguity, to correct or supplement any provision
herein which may be defective or inconsistent with any other provision
herein, or to make any other provisions with respect to matters or
questions arising under this Indenture, provided that such action
pursuant to this Clause (8) shall not adversely affect the interests of
the Holders of Securities of any series in any material respect.
Section 902. Supplemental Indentures With Consent of Holders.
With the consent of the Holders of not less than a majority in principal
amount of the Outstanding Securities of each series affected by such
supplemental indenture, by Act of said Holders delivered to the Company
and the Trustee, the Company, when authorized by a Board Resolution,
and the Trustee may 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
modifying in any manner the rights of the Holders of Securities of such
series under this Indenture; provided, however, that no such supplemental
indenture shall, without the consent of the Holder of each Outstanding
Security affected thereby,
(1) change the Stated Maturity of the principal of, or any
instalment of principal of or interest on, any Security, or reduce the
principal amount thereof or the rate of interest thereon or any
premium payable upon the redemption thereof, or reduce the amount
of the principal of an Original Issue Discount Security or any other
Security which would be due and payable upon a declaration of
acceleration of the Maturity thereof pursuant to Section 502, or change
any Place of Payment where, or the coin or currency in which, any
Security or any premium or interest thereon is payable, or impair the
right to institute suit for the enforcement of any such payment on or
after the Stated Maturity thereof (or, in the case of redemption, on or
after the Redemption Date), or modify the provisions of this Indenture
with respect to the subordination of the Securities in a manner adverse
to the Holders, or
(2) reduce the percentage in principal amount of the Outstanding
Securities of any series, the consent of whose Holders is required for
any such supplemental indenture, or the consent of whose Holders is
required for any waiver (of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences)
provided for in this Indenture, or
(3) modify any of the provisions of this Section, Section 513 or
Section 1008, except to increase any such percentage or to provide
that certain other provisions of this Indenture cannot be modified or
waived without the consent of the Holder of each Outstanding Security
affected thereby; provided, however, that this clause shall not be
deemed to require the consent of any Holder with respect to changes
in the references to the Trustee and concomitant changes in this
Section and Section 1008, or the deletion of this proviso, in
accordance with the requirements of Sections 611 and 901(7).
A supplemental indenture which changes or eliminates any covenant or
other provision of this Indenture which has expressly been included
solely for the benefit of one or more particular series of Securities, or
which modifies the rights of the Holders of Securities of such series with
respect to such covenant or other provision, shall be deemed not to affect
the rights under this Indenture of the Holders of Securities of any other
series.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but
it shall be sufficient if such Act shall approve the substance thereof.
Section 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications
thereby of the trusts created by this Indenture, the Trustee shall be
entitled to receive, and (subject to Section 601) shall be fully protected
in relying upon, an Opinion of Counsel stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture. The
Trustee may, but 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.
Section 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article,
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 delivered hereunder shall be bound thereby.
Section 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act.
Section 906. Reference in Securities to Supplemental Indentures.
Securities of any series authenticated and delivered after the execution
of any supplemental indenture pursuant to this Article 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 Company, 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 such series.
ARTICLE TEN
Covenants
Section 1001. Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay the principal of and any
premium and interest on the Securities of that series in accordance with
the terms of the Securities and this Indenture.
Section 1002. Maintenance of Office or Agency.
The Company will maintain in each Place of Payment for any series
of Securities an office or agency where Securities of that series may be
presented or surrendered for payment, where Securities of that series
may be surrendered for registration of transfer or exchange and where
notices and demands to or upon the Company in respect of the Securities
of that series and this Indenture may be served. The Company will give
prompt written notice to the Trustee of the location, and any change in
the location, of such office or agency. If at any time the Company shall
fail to maintain 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 Corporate Trust
Office of the Trustee, and the Company hereby appoints the Trustee as
its agent to receive all such presentations, surrenders, notices and
demands.
The Company may also from time to time designate one or more other
offices or agencies where the Securities of one or more series may be
presented or surrendered for any or all such purposes and may from time
to time rescind such designations; provided, however, that no such
designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in each Place of Payment for
Securities of any series for such purposes. The Company will give
prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency.
Section 1003. Money for Securities Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent with
respect to any series of Securities, it will, on or before each due date of
the principal of or any premium or interest on any of the Securities of
that series, segregate and hold in trust for the benefit of the Persons
entitled thereto a sum sufficient to pay the principal and any premium
and interest so becoming due until such sums shall be paid to such
Persons or otherwise disposed of as herein provided and will promptly
notify the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents for any
series of Securities, it will, prior to each due date of the principal of or
any premium or interest on any Securities of that series, deposit with a
Paying Agent a sum sufficient to pay such amount, such sum to be held
as provided by the Trust Indenture Act, and (unless such Paying Agent
is the Trustee) the Company will promptly notify the Trustee of its action
or failure so to act.
The Company will cause each Paying Agent for any series of
Securities other than the Trustee to execute and deliver to the Trustee an
instrument in which such Paying Agent shall agree with the Trustee,
subject to the provisions of this Section, that such Paying Agent will
(1) comply with the provisions of the Trust Indenture Act applicable to
it as a Paying Agent and (2) during the continuance of any default by the
Company (or any other obligor upon the Securities of that series) in the
making of any payment in respect of the Securities of that series, upon
the written request of the Trustee, forthwith pay to the Trustee all sums
held in trust by such Paying Agent for payment in respect of the
Securities of that series.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose,
pay, or by Company Order direct any Paying Agent to pay, to the
Trustee all sums held in trust by the Company or such Paying Agent,
such sums to be held by the Trustee upon the same trusts as those upon
which such sums were held by the Company or such Paying Agent; 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.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of or any
premium or interest on any Security of any series and remaining
unclaimed for two years after such principal, premium or interest has
become due and payable shall be paid to the Company on Company
Request, or (if then held by the Company) shall be discharged from such
trust; and the Holder of such Security shall thereafter, as an unsecured
general creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall
thereupon cease; provided, however, that the Trustee or such Paying
Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in a newspaper
published in the English language, customarily published on each
Business Day and of general circulation in the Borough of Manhattan,
The City of New York, notice that such money remains unclaimed and
that, after a date specified therein, which shall not be less than 30 days
from the date of such publication, any unclaimed balance of such money
then remaining will be repaid to the Company.
Section 1004. Statement by Officers as to Default.
The Company will deliver to the Trustee, within 120 days after the
end of each fiscal year of the Company ending after the date hereof, an
Officers' Certificate, stating whether or not to the best knowledge of the
signers thereof the Company is in default in the performance and
observance of any of the terms, provisions and conditions of this
Indenture (without regard to any period of grace or requirement of notice
provided hereunder) and, if the Company shall be in default, specifying
all such defaults and the nature and status thereof of which they may
have knowledge.
In addition, the Company shall file with the Trustee written notice of
the occurrence of any Event of Default within ten Business Days of its
becoming aware of any such Event of Default.
Section 1005. Existence.
Subject to Article Eight, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its
existence, rights (charter and statutory) and franchises; provided,
however, that the Company shall not be required to preserve any such
right or franchise if the Board of Directors shall determine that the
preservation thereof is no longer desirable in the conduct of the business
of the Company and that the loss thereof is not disadvantageous in any
material respect to the Holders.
Section 1006. Maintenance of Properties.
The Company will cause all properties used or useful in the conduct
of its business or the business of any Subsidiary to be maintained and
kept in good condition, repair and working order and supplied with all
necessary equipment and will cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof, all as in
the judgment of the Company may be necessary so that the business
carried on in connection therewith may be properly and advantageously
conducted at all times; provided, however, that nothing in this Section
shall prevent the Company from discontinuing the operation or main-
tenance of any of such properties if such discontinuance is, in the
judgment of the Company, desirable in the conduct of its business or the
business of any Subsidiary and not disadvantageous in any material
respect to the Holders.
Section 1007. Payment of Taxes and Other Claims.
The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (1) all taxes, assessments and
governmental charges levied or imposed upon the Company or any
Subsidiary or upon the income, profits or property of the Company or
any Subsidiary, and (2) all lawful claims for labor, materials and supplies
which, if unpaid, might by law become a lien upon the property of the
Company or any Subsidiary; provided, however, that the Company shall
not be required to pay or discharge or cause to be paid or discharged any
such tax, assessment, charge or claim whose amount, applicability or
validity is being contested in good faith by appropriate proceedings.
Section 1008. Waiver of Certain Covenants.
Except as otherwise specified as contemplated by Section 301 for
Securities of such series, the Company may, with respect to the
Securities of any series, omit in any particular instance to comply with
any term, provision or condition set forth in any covenant provided
pursuant to Section 301(19), 901(2) or 901(6) for the benefit of the
Holders of such series if before the time for such compliance the Holders
of at least a majority in principal amount of the Outstanding Securities
of such series shall, by Act of such Holders, either waive such
compliance in such instance or generally waive compliance with such
term, provision or condition, but no such waiver shall extend to or affect
such term, provision or condition except to the extent so expressly
waived, and, until such waiver shall become effective, the obligations of
the Company and the duties of the Trustee in respect of any such term,
provision or condition shall remain in full force and effect.
Section 1009. Calculation of Original Issue Discount.
The Company shall file with the Trustee promptly at the end of each
calendar year a written notice specifying the amount of original issue
discount (including daily rates and accrual periods) accrued on
Outstanding Securities as of the end of such year.
ARTICLE ELEVEN
Redemption of Securities
Section 1101. Applicability of Article.
Securities of any series which are redeemable before their Stated
Maturity shall be redeemable in accordance with their terms and (except
as otherwise specified as contemplated by Section 301 for such
Securities) in accordance with this Article.
Section 1102. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall be
evidenced by a Board Resolution or in another manner specified as
contemplated by Section 301 for such Securities. In case of any
redemption at the election of the Company of the Securities of any series
(including any such redemption affecting only a single Security), the
Company shall, at least (a) 40 days prior to the Redemption Date fixed
by the Company in the case of a redemption of all of the Securities of
any series or (b) 45 days prior to the Redemption Date fixed by the
Company in the case of a redemption of less than all of the Securities of
any series (in each case unless a shorter notice shall be satisfactory to the
Trustee), notify the Trustee of such Redemption Date, of the principal
amount of Securities of such series to be redeemed and, if applicable, of
the tenor of the Securities to be redeemed. In the case of any redemption
of Securities prior to the expiration of any restriction on such redemption
provided in the terms of such Securities or elsewhere in this Indenture,
the Company shall furnish the Trustee with an Officers' Certificate
evidencing compliance with such restriction.
Section 1103. Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities of any series are to be redeemed (unless
all the Securities of such series and of a specified tenor are to be
redeemed or unless such redemption affects only a single Security), the
particular Securities to be redeemed shall be selected not more than
60 days prior to the Redemption Date by the Trustee, from the Outstand-
ing Securities of such series not previously called for redemption, by
such method as the Trustee shall deem fair and appropriate and which
may provide for the selection for redemption of a portion of the principal
amount of any Security of such series, provided that the unredeemed
portion of the principal amount of any Security shall be in an authorized
denomination (which shall not be less than the minimum authorized
denomination) for such Security. If less than all the Securities of such
series and of a specified tenor are to be redeemed (unless such
redemption affects only a single Security), the particular Securities to be
redeemed shall be selected not more than 60 days prior to the
Redemption Date by the Trustee, from the Outstanding Securities of such
series and specified tenor not previously called for redemption in
accordance with the preceding sentence.
The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption as aforesaid and, in case of any
Securities selected for partial redemption as aforesaid, the principal
amount thereof to be redeemed.
The provisions of the two preceding paragraphs shall not apply with
respect to any redemption affecting only a single Security, whether such
Security is to be redeemed in whole or in part. In the case of any such
redemption in part, the unredeemed portion of the principal amount of
the Security shall be in an authorized denomination (which shall not be
less than the minimum authorized denomination) for such Security.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall
relate, in the case of any Securities redeemed or to be redeemed only in
part, to the portion of the principal amount of such Securities which has
been or is to be redeemed.
Section 1104. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the
Redemption Date, to each Holder of Securities to be redeemed, at his
address appearing in the Security Register.
All notices of redemption shall identify the Securities to be redeemed
(including CUSIP number, if applicable) and state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all the Outstanding Securities of any series con-
sisting of more than a single Security are to be redeemed, the identifi-
cation (and, in the case of partial redemption of any such Securities,
the principal amounts) of the particular Securities to be redeemed and,
if less than all the Outstanding Securities of any series consisting of
a single Security are to be redeemed, the principal amount of the
particular Security to be redeemed,
(4) that on the Redemption Date the Redemption Price will
become due and payable upon each such Security to be redeemed and,
if applicable, that interest thereon will cease to accrue on and after
said date,
(5) the place or places where each such Security is to be
surrendered for payment of the Redemption Price,
(6) that the redemption is for a sinking fund, if such is the case,
and
(7) if a notice of redemption relates to a Conditional Redemption
(as defined below), the event or events the occurrence of which is a
condition to such redemption.
Except as provided below, notice of redemption of Securities to be
redeemed at the election of the Company shall be given by the Company
or, at the Company's written request, by the Trustee in the name and at
the expense of the Company and shall be irrevocable.
A notice of redemption may provide that it is subject to the occurrence
of any event before the Redemption Date specified in such notice
(Conditional Redemption) and such notice of Conditional Redemption
shall be of no effect unless all such conditions to the redemption have
occurred before the Redemption Date or have been waived by the
Company.
Section 1105. Deposit of Redemption Price.
Prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own
Paying Agent, segregate and hold in trust as provided in Section 1003)
an amount of money sufficient to pay the Redemption Price of, and
(except if the Redemption Date shall be an Interest Payment Date)
accrued interest on, all the Securities which are to be redeemed on that
date.
Section 1106. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable
at the Redemption Price therein specified, and from and after such date
(unless the Company shall default in the payment of the Redemption
Price and accrued interest) such Securities shall cease to bear interest.
Upon surrender of any such Security for redemption in accordance with
said notice, such Security shall be paid by the Company at the
Redemption Price, together with accrued interest to the Redemption
Date; provided, however, that, unless otherwise specified as contemplated
by Section 301, installments of interest whose Stated Maturity is on or
prior to the Redemption Date will be payable to the Holders of such
Securities, or one or more Predecessor Securities, registered as such at
the close of business on the relevant Record Dates according to their
terms and the provisions of Section 307.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal and any premium shall,
until paid, bear interest from the Redemption Date at the rate prescribed
therefor in the Security.
Section 1107. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be
surrendered at a Place of Payment therefor (with, if the Company or the
Trustee so requires, due endorsement by, or a written instrument of
transfer in form satisfactory to the Company and the Trustee duly
executed by, the Holder thereof or his attorney duly authorized in
writing), and the Company shall execute, and the Trustee shall
authenticate and make available for delivery to the Holder of such
Security without service charge, a new Security or Securities of the same
series and of like tenor, of any authorized denomination as requested by
such Holder, in aggregate principal amount equal to and in exchange for
the unredeemed portion of the principal of the Security so surrendered.
ARTICLE TWELVE
Sinking Funds
Section 1201. Applicability of Article.
The provisions of this Article shall be applicable to any sinking fund
for the retirement of Securities of any series except as otherwise
specified as contemplated by Section 301 for such Securities.
The minimum amount of any sinking fund payment provided for by
the terms of any Securities is herein referred to as a mandatory sinking
fund payment, and any payment in excess of such minimum amount
provided for by the terms of such Securities is herein referred to as an
optional sinking fund payment. If provided for by the terms of any
Securities, the cash amount of any sinking fund payment may be subject
to reduction as provided in Section 1202. Each sinking fund payment
shall be applied to the redemption of Securities as provided for by the
terms of such Securities.
Section 1202. Satisfaction of Sinking Fund Payments with Securities.
The Company (1) may deliver Outstanding Securities of a series (other
than any previously called for redemption) and (2) may apply as a credit
Securities of a series which have been redeemed either at the election of
the Company pursuant to the terms of such Securities or through the
application of permitted optional sinking fund payments pursuant to the
terms of such Securities, in each case in satisfaction of all or any part of
any sinking fund payment with respect to any Securities of such series
required to be made pursuant to the terms of such Securities as and to the
extent provided for by the terms of such Securities; provided that the
Securities to be so credited have not been previously so credited. The
Securities to be so credited shall be received and credited for such pur-
pose by the Trustee at the Redemption Price, as specified in the
Securities so to be redeemed, for redemption through operation of the
sinking fund and the amount of such sinking fund payment shall be
reduced accordingly.
Section 1203. Redemption of Securities for Sinking Fund.
Not less than 35 days prior to each sinking fund payment date for any
Securities, the Company will deliver to the Trustee an Officers'
Certificate specifying the amount of the next ensuing sinking fund
payment for such Securities pursuant to the terms of such Securities, the
portion thereof, if any, which is to be satisfied by payment of cash and
the portion thereof, if any, which is to be satisfied by delivering and
crediting Securities pursuant to Section 1202 and will also deliver to the
Trustee any Securities to be so delivered. Not less than 32 days prior to
each such sinking fund payment date, the Trustee shall select the
Securities to be redeemed upon such sinking fund payment date in the
manner specified in Section 1103 and cause notice of the redemption
thereof to be given in the name of and at the expense of the Company in
the manner provided in Section 1104. Such notice having been duly
given, the redemption of such Securities shall be made upon the terms
and in the manner stated in Sections 1106 and 1107.
ARTICLE THIRTEEN
Defeasance and Covenant Defeasance
Section 1301. Company's Option to Effect Defeasance or Covenant
Defeasance.
The Company may elect, at its option at any time, to have
Section 1302 or Section 1303 applied to any Securities or any series of
Securities, as the case may be, designated pursuant to Section 301 as
being defeasible pursuant to such Section 1302 or 1303, in accordance
with any applicable requirements provided pursuant to Section 301 and
upon compliance with the conditions set forth below in this Article. Any
such election shall be evidenced by a Board Resolution or in another
manner specified as contemplated by Section 301 for such Securities.
Section 1302. Defeasance and Discharge.
Upon the Company's exercise of its option (if any) to have this
Section applied to any Securities or any series of Securities, as the case
may be, the Company shall be deemed to have been discharged from its
obligations, and the provisions of Article Fourteen shall cease to be
effective, with respect to such Securities as provided in this Section on
and after the date the conditions set forth in Section 1304 are satisfied
(hereinafter called Defeasance). For this purpose, such Defeasance means
that the Company shall be deemed to have paid and discharged the entire
indebtedness represented by such Securities and to have satisfied all its
other obligations under such Securities and this Indenture insofar as such
Securities are concerned (and the Trustee, at the expense of the
Company, shall execute proper instruments acknowledging the same),
subject to the following which shall survive until otherwise terminated or
discharged hereunder: (1) the rights of Holders of such Securities to
receive, solely from the trust fund described in Section 1304 and as more
fully set forth in such Section, payments in respect of the principal of
and any premium and interest on such Securities when payments are due,
(2) the Company's obligations with respect to such Securities under
Sections 304, 305, 306, 1002 and 1003, (3) the rights, powers, trusts,
duties and immunities of the Trustee hereunder and (4) this Article.
Subject to compliance with this Article, the Company may exercise its
option (if any) to have this Section applied to any Securities
notwithstanding the prior exercise of its option (if any) to have
Section 1303 applied to such Securities.
Section 1303. Covenant Defeasance.
Upon the Company's exercise of its option (if any) to have this
Section applied to any Securities or any series of Securities, as the case
may be, (1) the Company shall be released from its obligations under
Section 801(3), Sections 1006 through 1007, inclusive, and any
covenants provided pursuant to Section 301(19), 901(2) or 901(6) for the
benefit of the Holders of such Securities, (2) the occurrence of any event
specified in Sections 501(4) (with respect to any of Section 801(3),
Sections 1006 through 1007, inclusive, and any such covenants provided
pursuant to Section 301(19), 901(2) or 901(6)) and 501(7) shall be
deemed not to be or result in an Event of Default and (3) the provisions
of Article Fourteen shall cease to be effective, in each case with respect
to such Securities as provided in this Section on and after the date the
conditions set forth in Section 1304 are satisfied (hereinafter called
Covenant Defeasance). For this purpose, such Covenant Defeasance
means that, with respect to such Securities, the Company may omit to
comply with and shall have no liability in respect of any term, condition
or limitation set forth in any such specified Section (to the extent so
specified in the case of Section 501(4)) or Article Fourteen, whether
directly or indirectly by reason of any reference elsewhere herein to any
such Section or Article or by reason of any reference in any such Section
or Article to any other provision herein or in any other document, but
the remainder of this Indenture and such Securities shall be unaffected
thereby.
Section 1304. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to the application of
Section 1302 or Section 1303 to any Securities or any series of
Securities, as the case may be:
(1) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee which satisfies the
requirements contemplated by Section 609 and agrees to comply with
the provisions of this Article applicable to it) as trust funds in trust for
the purpose of making the following payments, specifically pledged as
security for, and dedicated solely to, the benefits of the Holders of
such Securities, (A) money in an amount, or (B) U.S. Government
Obligations which through the scheduled payment of principal and
interest in respect thereof in accordance with their terms will provide,
not later than one day before the due date of any payment, money in
an amount, or (C) a combination thereof, in each case sufficient, in
the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee, to pay and discharge, and which shall be applied by the
Trustee (or any such other qualifying trustee) to pay and discharge,
the principal of and any premium and interest on such Securities on
the respective Stated Maturities, in accordance with the terms of this
Indenture and such Securities. As used herein, U.S. Government
Obligation means (x) any security which is (i) a direct obligation of
the United States of America for the payment of which the full faith
and credit of the United States of America is pledged or (ii) an
obligation of a Person controlled or supervised by and acting as an
agency or instrumentality of the United States of America the payment
of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America, which, in either case (i)
or (ii), is not callable or redeemable at the option of the issuer thereof,
and (y) any depositary receipt issued by a bank (as defined in
Section 3(a)(2) of the Securities Act) as custodian with respect to any
U.S. Government Obligation which is specified in Clause (x) above
and held by such bank for the account of the holder of such depositary
receipt, or with respect to any specific payment of principal of or
interest on any U.S. Government Obligation which is so specified and
held, provided that (except as required by law) such custodian is not
authorized to make any deduction from the amount payable to the
holder of such depositary receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or the specific
payment of principal or interest evidenced by such depositary receipt.
(2) In the event of an election to have Section 1302 apply to any
Securities or any series of Securities, as the case may be, the
Company shall have delivered to the Trustee an Opinion of Counsel
stating that (A) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or (B) since the
date of this instrument, there has been a change in the applicable
Federal income tax law, in either case (A) or (B) to the effect that,
and based thereon such opinion shall confirm that, the Holders of such
Securities will not recognize gain or loss for Federal income tax
purposes as a result of the deposit, Defeasance and discharge to be
effected with respect to such Securities and will be subject to Federal
income tax on the same amount, in the same manner and at the same
times as would be the case if such deposit, Defeasance and discharge
were not to occur.
(3) In the event of an election to have Section 1303 apply to any
Securities or any series of Securities, as the case may be, the
Company shall have delivered to the Trustee an Opinion of Counsel
to the effect that the Holders of such Securities will not recognize gain
or loss for Federal income tax purposes as a result of the deposit and
Covenant Defeasance to be effected with respect to such Securities and
will be subject to Federal income tax on the same amount, in the same
manner and at the same times as would be the case if such deposit and
Covenant Defeasance were not to occur.
(4) The Company shall have delivered to the Trustee an Officers'
Certificate to the effect that neither such Securities nor any other
Securities of the same series, if then listed on any securities exchange,
will be delisted as a result of such deposit.
(5) No event which is, or after notice or lapse of time or both
would become, an Event of Default with respect to such Securities or
any other Securities shall have occurred and be continuing at the time
of such deposit or, with regard to any such event specified in
Sections 501(5) and (6), at any time on or prior to the 90th day after
the date of such deposit (it being understood that this condition shall
not be deemed satisfied until after such 90th day).
(6) Such Defeasance or Covenant Defeasance shall not cause the
Trustee to have a conflicting interest within the meaning of the Trust
Indenture Act (assuming all Securities are in default within the
meaning of such Act).
(7) Such Defeasance or Covenant Defeasance shall not result in
a breach or violation of, or constitute a default under, any other
agreement or instrument to which the Company is a party or by which
it is bound.
(8) Such Defeasance or Covenant Defeasance shall not result in
the trust arising from such deposit constituting an investment company
within the meaning of the Investment Company Act unless such trust
shall be registered under such Act or exempt from registration
thereunder.
(9) At the time of such deposit, (A) no default in the payment of
any principal of or premium or interest on any Senior Debt shall have
occurred and be continuing, (B) no event of default with respect to
any Senior Debt shall have resulted in such Senior Debt becoming,
and continuing to be, due and payable prior to the date on which it
would otherwise have become due and payable (unless payment of
such Senior Debt has been made or duly provided for), and (C) no
other event of default with respect to any Senior Debt shall have
occurred and be continuing permitting (after notice or lapse of time or
both) the holders of such Senior Debt (or a trustee on behalf of such
holders) to declare such Senior Debt due and payable prior to the date
on which it would otherwise have become due and payable.
(10) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent with respect to such Defeasance or Covenant Defeasance
have been complied with.
Section 1305. Deposited Money and U.S. Government Obligations to
Be Held in Trust; Miscellaneous Provisions.
Subject to the provisions of the last paragraph of Section 1003, all
money and U.S. Government Obligations (including the proceeds
thereof) deposited with the Trustee or other qualifying trustee (solely for
purposes of this Section, the Trustee and any such other trustee are
referred to collectively as the Trustee) pursuant to Section 1304 in
respect of any Securities shall be held in trust and applied by the Trustee,
in accordance with the provisions of such Securities and this Indenture,
to the payment, either directly or through any such Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee
may determine, to the Holders of such Securities, of all sums due and to
become due thereon in respect of principal and any premium and
interest, but money so held in trust need not be segregated from other
funds except to the extent required by law. Money and U.S. Government
Obligations so held in trust shall not be subject to the provisions of
Article Fourteen.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to Section 1304 or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of Outstanding
Securities.
Anything in this Article to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon Company
Request any money or U.S. Government Obligations held by it as
provided in Section 1304 with respect to any Securities which, in the
opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, are
in excess of the amount thereof which would then be required to be
deposited to effect the Defeasance or Covenant Defeasance, as the case
may be, with respect to such Securities.
ARTICLE FOURTEEN
Subordination of Securities
Section 1401. Securities Subordinate to Senior Debt.
The Company covenants and agrees, and each Holder of Securities
issued hereunder by his acceptance thereof likewise covenants and
agrees, that all Securities shall be issued subject to the provisions of this
Article Fourteen; and each Holder of a Security, whether upon original
issue or upon transfer or assignment thereof, accepts and agrees to be
bound by such provisions.
The payment of the principal of, premium, if any and interest on all
Securities issued hereunder shall, to the extent and in the manner
hereinafter set forth, be subordinate and subject in right of payment to
the prior payment in full of all Senior Debt, whether outstanding at the
date of this Indenture or thereafter incurred.
No provision of this Article Fourteen shall prevent the occurrence of
any default or Event of Default hereunder.
Section 1402. Payment Over of Proceeds Upon Default.
In the event and during the continuation of any default in the payment
of principal, premium, interest or any other payment due on any Senior
Debt continuing beyond the period of grace, if any, specified in the
instrument evidencing such Senior Debt, unless and until such default
shall have been cured or waived or shall have ceased to exist, and in the
event that the maturity of any Senior Debt has been accelerated because
of a default, then no payment shall be made by the Company with
respect to the principal (including redemption and sinking fund payments)
of, or premium, if any, or interest on the Securities.
In the event that, notwithstanding the foregoing, any payment shall be
received by the Trustee or any holder when such payment is prohibited
by the preceding paragraph of this Section 1402, such payment shall be
held in trust for the benefit of, and shall be paid over or delivered to, the
holders of Senior Debt or their respective representatives, or to the
trustee or trustees under any indenture pursuant to which any of such
Senior Debt may have been issued, as their respective interests may
appear, but only to the extent that the holders of the Senior Debt (or
their representative or representatives or a trustee) notify the Trustee
within 90 days of such payment of the amounts then due and owing on
the Senior Debt and only the amounts specified in such notice to the
Trustee shall be paid to the holders of Senior Debt.
Section 1403. Payment Over of Proceeds Upon Dissolution, Etc.
Upon any payment by the Company, or distribution of assets of the
Company of any kind or character, whether in cash, property or
securities, to creditors upon any dissolution or winding-up or liquidation
or reorganization of the Company, whether voluntary or involuntary or
in bankruptcy, insolvency, receivership or other proceedings, all amounts
due or to become due upon all Senior Debt shall first be paid in full, or
payment thereof provided for in money in accordance with its terms,
before any payment is made on account of the principal (and premium,
if any) or interest on the Securities; and upon any such dissolution or
winding-up or liquidation or reorganization any payment by the
Company, or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, to which the Holders
of the Securities or the Trustee would be entitled, except for the
provisions of this Article Fourteen, shall be paid by the Company or by
any receiver, trustee in bankruptcy, liquidating trustee, agent or other
person making such payment or distribution, or by the Holders of the
Securities or by the Trustee under this Indenture if received by them or
it, directly to the holders of Senior Debt (pro rata to such holders on the
basis of the respective amounts of Senior Debt held by such holders, as
calculated by the Company) or their representative or representatives, or
to the trustee or trustees under any indenture pursuant to which any
instruments evidencing any Senior Debt may have been issued, as their
respective interests may appear, to the extent necessary to pay all Senior
Debt in full, in money or money's worth, after giving effect to any
concurrent payment or distribution to or for the holders of Senior Debt,
before any payment or distribution is made to the holders of Securities
or to the Trustee.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether
in cash, property or securities, prohibited by the foregoing, shall be
received by the Trustee or the holders of the Securities before all Senior
Debt is paid in full, or provision is made for such payment in money in
accordance with its terms, such payment or distribution shall be held in
trust for the benefit of and shall be paid over or delivered to the holders
of Senior Debt or their representative or representatives, or to the trustee
or trustees under any indenture pursuant to which any instruments
evidencing any Senior Debt may have been issued, as their respective
interests may appear, as calculated by the Company, for application to
the payment of all Senior Debt remaining unpaid to the extent necessary
to pay all Senior Debt in full in money in accordance with its terms,
after giving effect to any concurrent payment or distribution to or for the
holders of such Senior Debt.
For purposes of this Article Fourteen, the words, cash, property or
securities shall not be deemed to include shares of stock of the Company
as reorganized or readjusted, or securities of the Company or any other
corporation provided for by a plan of reorganization or readjustment, the
payment of which is subordinated at least to the extent provided in this
Article Fourteen with respect to the Securities to the payment of all
Senior Debt which may at the time be outstanding; provided that (i) the
Senior Debt is assumed by the new corporation, if any, resulting from
any such reorganization or readjustment, and (ii) the rights of the holders
of the Senior Debt are not, without the consent of such holders, altered
by such reorganization or readjustment. The consolidation of the
Company with, or the merger of the Company into, another corporation
or the liquidation or dissolution of the Company following the
conveyance or transfer of its property as an entirety, or substantially as
an entirety, to another corporation upon the terms and conditions
provided for in Article Eight hereof shall not be deemed a dissolution,
winding-up, liquidation or reorganization for the purposes of this
Section 1403 if such other corporation shall, as a part of such
consolidation, merger, conveyance or transfer, comply with the
conditions stated in Article Eight hereof. Nothing in Section 1402 or in
this Section 1403 shall apply to claims of, or payments to, the Trustee
under or pursuant to Section 607.
Section 1404. Subrogation to Rights of Holders of Senior Debt.
Subject to the payment in full of all Senior Debt, the rights of the
holders of the Securities shall be subrogated to the rights of the holders
of Senior Debt to receive payments or distributions of cash, property or
securities of the Company applicable to the Senior Debt until the
principal (and premium, if any) and interest on the Securities shall be
paid in full; and, for the purposes of such subrogation, no payment or
distributions to the holders of the Senior Debt of any cash, property or
securities to which the holders of the Securities or the Trustee would be
entitled except for the provisions of this Article Fourteen, and no
payment over pursuant to the provisions of this Article Fourteen, to or
for the benefit of the holders of Senior Debt by holders of the Securities
or the Trustee, shall, as between the Company, its creditors other than
holders of Senior Debt, and the Holders of the Securities, be deemed to
be a payment by the Company to or on account of the Senior Debt. It is
understood that the provisions of this Article Fourteen are and are
intended solely for the purposes of defining the relative rights of the
holders of the Securities, on the one hand, and the holders of the Senior
Debt on the other hand.
Nothing contained in this Article Fourteen or elsewhere in this
Indenture or in the Securities is intended to or shall impair, as between
the Company, its creditors other than the holders of Senior Debt, and the
holders of the Securities, the obligation of the Company, which is
absolute and unconditional, to pay to the holders of the Securities the
principal of (and premium, if any) 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
Senior Debt, nor shall anything herein or therein prevent the Trustee or
the holder of any Security from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture, subject to
the rights, if any, under this Article Fourteen of the holders of Senior
Debt in respect of cash, property or securities of the Company received
upon the exercise of any such remedy.
Upon any payment or distribution of assets of the Company referred
to in this Article Fourteen, the Trustee, subject to the provision of
Article Six, and the holders of the Securities shall be entitled to rely
upon any order or decree made by any court of competent jurisdiction in
which such dissolution, winding-up, liquidation or reorganization
proceedings are pending, or a certificate of the receiver, trustee in
bankruptcy, liquidation trustee, agent or other person making such
payment or distribution, delivered to the Trustee or to the Holders of the
Securities, for the purposes of ascertaining the persons entitled to
participate in such distribution, the holders of the Senior Debt 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 Fourteen.
Section 1405. Trustee to Effectuate Subordination.
Each Holder of a Security by his acceptance thereof authorizes and
directs the Trustee in his behalf to take such action as may be necessary
or appropriate to effectuate the subordination provided in this Article
Fourteen and appoints the Trustee his attorney-in-fact for any and all
such purposes.
Section 1406. Notice to Trustee.
The Company shall give prompt written notice to a Responsible
Officer of the Trustee of any fact known to the Company which would
prohibit the making of any payment of monies to or by the Trustee in
respect of the Securities pursuant to the provisions of this Article
Fourteen. Notwithstanding the provisions of this Article Fourteen or any
other provision of this Indenture, the Trustee shall not be charged with
knowledge of the existence of any facts which would prohibit the making
of any payment of monies to or by the Trustee in respect of the
Securities pursuant to the provisions of this Article Fourteen, unless and
until a Responsible Officer of the Trustee shall have received written
notice thereof at the Principal Office of the Trustee from the Company
or a holder or holders of Senior Debt or from any trustee therefor; and
before the receipt of any such written notice, the Trustee, subject to the
provisions of Article Six, shall be entitled in all respects to assume that
no such facts exist; provided, however, that if the Trustee shall not have
received the notice provided for in this Section 1406 at least two
Business Days prior to the date upon which by the terms hereof any
money may become payable for any purpose (including, without
limitation, the payment of the principal of (or premium, if any) or
interest on any Security), then, anything herein contained to the contrary
notwithstanding, the Trustee shall have full power and authority to
receive such money and to apply the same to the purposes for which they
were received, and shall not be affected by any notice to the contrary
which may be received by it within two Business Days prior to such
date.
The Trustee, subject to the provisions of Article Six, shall be entitled
to rely on the delivery to it of a written notice by a person representing
himself to be a holder of Senior Debt (or a trustee on behalf of such
holder) to establish that such notice has been given by a holder of Senior
Debt or a trustee on behalf of any such holder or holders. In the event
that the Trustee determines in good faith that further evidence is required
with respect to the right of any person as a holder of Senior Debt to
participate in any payment or distribution pursuant to this Article
Fourteen, the Trustee may request such person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Debt
held by such Person, the extent to which such person is entitled to
participate in such payment or distribution and any other facts pertinent
to the right of such person under this Article Fourteen, and if such
evidence is not furnished the Trustee may defer any payment to such
person pending judicial determination as to the right of such person to
receive such payment.
Section 1407. Rights of Trustee as Holder of Senior Debt; Preservation
of Trustee's Rights.
The Trustee in its individual capacity shall be entitled to all the rights
set forth in this Article Fourteen in respect of any Senior Debt at any
time held by it, to the same extent as any other holder of Senior Debt,
and nothing in this Indenture shall deprive the Trustee of any of its rights
as such holder.
Nothing in this Article Fourteen shall apply to claims of, or payments
to, the Trustee under or pursuant to Section 607.
Section 1408. Trustee Not Fiduciary for Holders of Senior Debt.
The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt and, subject to the provisions of Article Six, the
Trustee shall not be liable to any holder of Senior Debt if it shall in good
faith mistakenly pay over or deliver to holders of Securities, the
Company or any other person money or assets to which any holder of
Senior Debt shall be entitled by virtue of this Article Fourteen or
otherwise. With respect to the holders of Senior Debt, the Trustee
undertakes to perform or to observe only such of its covenants or
obligations as are specifically set forth in this Article Fourteen and no
implied covenants or obligations with respect to holders of Senior Debt
shall be read into this Indenture against the Trustee.
Section 1409. No Waiver of Subordination Provisions.
No right of any present or future holder of any Senior Debt to enforce
subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the
Company or by any act or failure to act, in good faith, by any such
holder, or by any noncompliance by the Company with the terms,
provisions and covenants of this Indenture, regardless of any knowledge
thereof which any such holder may have or otherwise be charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Debt may, at any time and from time to time,
without the consent of or notice to the Trustee or the holders of the
Securities, without incurring responsibility to the holders of the Securities
and without impairing or releasing the subordination provided in this
Article or the obligations hereunder of the holders of the Securities to the
holders of Senior Debt, do any one or more of the following: (i) change
the manner, place or terms of payment or extend the time of payment of,
or renew or alter, Senior Debt, or otherwise amend or supplement in any
manner Senior Debt or any instrument evidencing the same or any
agreement under which Senior Debt is outstanding; (ii) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or
otherwise securing Senior Debt; (iii) release any person liable in any
manner for the collection of Senior Debt; and (iv) exercise or refrain
from exercising any rights against the Company and any other person.
Section 1410. Defeasance of this Article Fourteen.
The subordination of the securities provided by this Article Fourteen
is expressly made subject to the provisions for Defeasance or Covenant
Defeasance in Article Thirteen hereof and, anything herein to the
contrary notwithstanding, upon the effectiveness of any such Defeasance
or Covenant Defeasance, the Securities then outstanding shall thereupon
cease to be subordinated pursuant to this Article Fourteen.
This instrument may be executed in any number of counterparts, each
of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
In Witness Whereof, the parties hereto have caused this Indenture
to be duly executed, and their respective corporate seals to be hereunto
affixed and attested, all as of the day and year first above written.
WEST PENN POWER
COMPANY
By.............................
Attest: [SEAL]
......................................
THE BANK OF NEW
YORK, as Trustee
By.............................
Attest: [SEAL]
......................................
State of New York )
) ss.:
County of New York )
On the .... day of ..........., 1995, before me personally came
..........................., to me known, who, being by me duly sworn, did
depose and say that he is .................... of THE POTOMAC EDISON
COMPANY, one of the corporations described in and which executed
the foregoing instrument; that he knows the seal of said corporation; that
the seal affixed to said instrument is such corporate seal; that it was so
affixed by authority of the Board of Directors of said corporation; and
that he signed his name thereto by like authority.
...............................................
State of New York )
) ss.:
County of New York )
On the .... day of ..........., 1995, before me personally came
..........................., to me known, who, being by me duly sworn, did
depose and say that he is .................... of THE BANK OF NEW
YORK, one of the corporations described in and which executed the
foregoing instrument; that he knows the seal of said corporation; that the
seal affixed to said instrument is such corporate seal; that it was so
affixed by authority of the Board of Directors of said corporation; and
that he signed his name thereto by like authority.
May 22, 1995
The Potomac Edison Company,
10435 Downsville Pike,
Hergerstown, Maryland 21740.
Dear Sirs:
In connection with the registration under the
Securities Act of 1933 (the "Act") of $61,834,900 principal
amount of debt securities (the "Securities") of The Potomac
Edison Company, a Maryland and Virginia corporation (the
"Company"), we, as your counsel, have examined such
corporate records, certificates and other documents, and
such questions of law, as we have considered necessary or
appropriate for the purposes of this opinion.
Upon the basis of such examination, we advise you
that, in our opinion, when the Registration Statement has
become effective under the Act, the Indenture relating to
the Securities has been duly authorized, executed and
delivered, the terms of the Securities and of their issuance
and sale have been duly established in conformity with the
Indenture so as not to violate any applicable law or result
in a default under or breach of any agreement or instrument
binding upon the Company or of the Company's articles of
incorporation and so as to comply with any requirement or
restriction imposed by any court or governmental body having
jurisdiction over the Company, and the Securities have been
duly executed and authenticated in accordance with the
Indenture and issued and sold as contemplated in the
Registration Statement and in conformity with any orders
under the Public Utility Holding Company Act of 1935 and of
the Public Service Commission of Maryland and the State
Corporation Commission of Virginia relating to the
Securities, the Securities will constitute valid and legally
binding obligations of the Company, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium
and similar laws of general applicability relating to or
affecting creditors' rights and to general equity
principles.
We note that, as of the date of this opinion, a
judgment for money in an action based on a Security
denominated in a foreign currency or currency unit in a
Federal or state court in the United States ordinarily would
be enforced in the United States only in United States
dollars. The date used to determine the rate of conversion
of the foreign currency or currency unit in which a
particular Security is denominated into United States
dollars will depend upon various factors, including which
court renders the judgment. In the case of a Security
denominated in a foreign currency, a state court in the
State of New York rendering a judgment on such Security
would be required under Section 27 of the New York Judiciary
Law to render such judgment in the foreign currency in which
the Security is denominated, and such judgment would be
converted into United States dollars at the exchange rate
prevailing on the date of entry of the judgment.
In rendering the foregoing opinion, we have relied
as to certain matters on information obtained from public
officials, officers of the Company and other sources
believed by us to be responsible.
We hereby consent to the filing of this opinion as
an exhibit to the Registration Statement and to the refer-
ences to us under the heading "Validity of the New Debt
Securities" in the Prospectus. In giving such consent, we
do not thereby admit that we are in the category of persons
whose consent is required under Section 7 of the Act.
Very truly yours,
SULLIVAN & CROMWELL
<TABLE>
<CAPTION>
Exhibit 12(a)
THE POTOMAC EDISON COMPANY
COMPUTATION IN SUPPORT OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLAR AMOUNTS IN THOUSANDS)
12 Months Years Ended December 31,
Ended
3/31/95 1994 1993 1992 1991 1990
Earnings:
<S> <C> <C> <C> <C> <C> <C>
Net income $77,815 $81,983 $73,467 $67,476 $58,241 $61,580
Fixed charges (see below) 49,017 47,329 44,501 40,156 37,665 34,101
Income taxes 31,751 34,339 30,630 28,923 24,510 25,876
Total Earnings $158,583 $163,651 $148,598 $136,555 $120,416 $121,557
Fixed Charges:
Interest on long-term debt $46,277 $44,706 $42,695 $38,081 $35,053 $29,485
Other interest 1,786 1,750 1,107 1,311 1,778 3,564
Estimated interest component
of rentals 954 873 699 764 834 1,052
Total Fixed Charges $49,017 $47,329 $44,501 $40,156 $37,665 $34,101
Ratio of Earnings to Fixed Cha 3.24 3.46 3.34 3.40 3.20 3.56
</TABLE>
Exhibit 23(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report
dated February 2, 1995, of The Potomac Edison Company appearing in the
Consolidated Annual Report for Allegheny Power System, Inc., Allegheny
Generating Company, Monongahela Power Company, The Potomac Edison Company and
West Penn Power Company on Form 10-K for the year ended December 31, 1994. We
also consent to the reference to us under the heading "EXPERTS" in such
Prospectus.
PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
May 22, 1995
New York, New York
EXHIBIT 25
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
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.)
48 Wall Street, New York, New York 10286
(Address of principal executive office) (Zip Code)
The Potomac Edison Company
(Exact name of obligor as specified in its charter)
Maryland and Virginia 13-5323955
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
10435 Downsville Pike
Hagerstown, MD 21740-1766
(Address of Principal Executive Offices) (Zip Code)
Debt 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.
Superintendent of Banks of the State of New York
2 Rector Street, New York,
N.Y. 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York
33 Liberty Street
New York, NY 10045
Federal Deposit Insurance Corporation
Washington, DC 20429
New York Clearing House Association
New York, New York
(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. (See Note on page 3.)
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission,
are incorporated herein by reference as exhibits hereto, pursuant to Rule 7a-
29 under the Trust Indenture Act of 1939 (the "Act") and Rule 24 of the
Commission's Rules of Practice.
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. (Exhibits 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 Statements
No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration
Statement No. 33-29637.)
4. A copy of existing By-Laws of the Trustee. (Exhibit 4 to 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).
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.
NOTE
In as much as this Form T-1 is filed prior to the ascertainment by the
Trustee of all facts on which to base a responsive answer to Item 2, the
answer to said Item is based on incomplete information.
Item 2 may, however, be considered as correct unless amended by an
amendment to this Form T-1.
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 26th day of April, 1995.
THE BANK OF NEW YORK
By
Name: Mary LaGumina
Title: Assistant Vice President
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business
December 31, 1994, published in accordance with a call made by the
Federal Reserve Bank of this District pursuant to the provisions of
the Federal Reserve Act.
Dollar Amounts
ASSETS in Thousands
Cash and balances due from depos- itory institutions:
Noninterest-bearing balances and
currency and coin .................. $ 2,715,471
Interest-bearing balances .......... 853,709
Securities:
Held-to-maturity securities ........ 1,346,480
Available-for-sale securities ...... 1,564,425
Federal funds sold in domestic
offices of the bank ................ 5,557,770
Loans and lease financing
receivables:
Loans and leases, net of unearned
income .................24,091,702
LESS: Allowance for loan and
lease losses ..............581,958
LESS: Allocated transfer risk
reserve .....................31,502
Loans and leases, net of unearned
income, allowance, and reserve 23,478,242
Assets held in trading accounts ...... 746,396
Premises and fixed assets (including
capitalized leases) ................ 624,567
Other real estate owned .............. 46,570
Investments in unconsolidated
subsidiaries and associated
companies .......................... 181,905
Customers' liability to this bank on
acceptances outstanding ............ 794,339
Intangible assets .................... 77,527
Other assets ......................... 1,300,004
Total assets ......................... $39,287,405
LIABILITIES
Deposits:
In domestic offices ................ $18,681,498
Noninterest-bearing .......7,230,562
Interest-bearing .........11,450,936
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ... 10,611,477
Noninterest-bearing ..........69,012
Interest-bearing .........10,542,465
Federal funds purchased and secu- rities sold under agreements to
re- purchase in domestic offices of
the bank and of its Edge and
Agreement subsidiaries, and in
IBFs:
Federal funds purchased ............ 1,033,228
Securities sold under agreements
to repurchase .................... 31,875
Demand notes issued to the U.S.
Treasury ........................... 141,663
Trading liabilities .................. 562,071
Other borrowed money:
With original maturity of one year
or less .......................... 1,576,410
With original maturity of more than
one year ......................... 243,955
Bank's liability on acceptances exe- cuted and outstanding
.............. 796,534
Subordinated notes and debentures .... 1,056,320
Other liabilities .................... 1,490,732
Total liabilities .................... 36,225,763
EQUITY CAPITAL
Common stock ........................ 942,284
Surplus ............................. 525,666
Undivided profits and capital
reserves .......................... 1,654,282
Net unrealized holding gains
(losses) on available-for-sale
securities ........................ ( 54,920)
Cumulative foreign currency transla- tion adjustments
.................. ( 5,670)
Total equity capital ................ 3,061,642
Total liabilities and equity
capital ........................... $39,287,405
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. Renyi _
J. Carter Bacot _ Directors
Alan R. Griffith _
_
Exhibit 26(a)
, 19
(Individual letter sent to each
prospective underwriter)
Dear :
The Potomac Edison Company (the "Company") has on file with the
Securities and Exchange Commission an effective shelf Registration Statement
on Form S-3, pursuant to Rule 415, which contains a Prospectus relating to $
million of Debt Securities. I have enclosed an information package including
three (3) copies of the Registration Statement, the related Prospectus, the
Standard Purchase Agreement Provisions - Debt Securities, and an Underwriter's
Questionnaire. Also enclosed is one set of documents incorporated by
reference, including the Annual Report for the Company on Form 10-K for the
year ended December 31, 1994, and the Company's Quarterly Reports on Form 10-Q
for the quarters ended , 19 .
Although we have set no specific date to go to market, it is our
present intention to solicit proposals for the purchase of probably
$ million principal amount of Debt Securities during the month of
. We anticipate giving 48 hours' notice of the date that we would like
to receive proposals. Notice will be given by a hand-delivered or faxed
letter to underwriters specifying the planned sale date and providing
information with respect to the principal amount, maturity date, interest
payment dates, redemption provisions, sinking fund provisions, if any, and any
other special rights, restrictions and terms and conditions of the Debt
Securities upon which your proposals will be solicited.
Arrangements will be made with sufficient advance notice regarding
any due diligence investigation of the Company you wish to undertake. Cahill
Gordon & Reindel is counsel for the underwriters and may be contacted by
calling Jonathan I. Mark at (212) 701-3100. If you have any questions, please
call the undersigned or Nancy L. Campbell, Vice President and Treasurer at
(212) 752-2121. Additional copies of the enclosed documents will be provided
upon request.
Sincerely,
Stanley I. Garnett, II
Enclosures
Exhibit 26(b)
, 19
HAND DELIVERY
(Individual letter sent to each
prospective underwriter on
attached distribution letter)
Dear :
The Potomac Edison Company (the "Company") filed a shelf Registration
Statement on Form S-3, pursuant to Rule 415, with the Securities and Exchange
Commission on , 1995. The Registration Statement, which became
effective on , 19 , contains a Prospectus relating to $ million of
Debt Securities. By transmittal letter dated , 19 , we provided
copies of the Registration Statement, the related Prospectus, documents
incorporated by reference, the Underwriters' Questionnaire and the Purchase
Agreement. Enclosed herewith are five copies of a proof of the Prospectus
Supplement.
It is our intention to receive proposals for the purchase of $ million
principal amount of Debt Securities maturing on , 19 , (the "New Debt
Securities") on , 19 , at A.M. This amount and date will remain
in effect unless notification is made to the contrary. Proposals may be made by
telephone to a designated representative of the Company. You will be notified
of your contact prior to bidding. Each offer is to specify the coupon rate and
the proceeds to the Company. Two copies of the enclosed Purchase Agreement
should be completed and returned with the terms of your offer and be available
for execution immediately upon acceptance by the Company of a winning proposal.
A completed Underwriters' Questionnaire should be returned to Nancy L. Campbell,
Vice President and Treasurer, prior to . Acceptance will be based on
the lowest "annual cost of money" to the Company, i.e., the yield based on the
stated maturity, the interest rate and the price to the Company (exclusive of
accrued interest) contained in the offer to purchase, determined by conventional
debt yield calculations.
The Company requires a coupon rate in multiples of 1/8 of 1% and a price
(exclusive of accrued interest) to be paid to the Company for the New Debt
Securities of not less than % or more than % of principal amount. Interest
will accrue from the [first day of the month in which the New Debt Securities
are purchased] [the date of purchase of the New Debt Securities] and will be
paid commencing , 19 . [The Company would have the right,
from time to time, to defer payment of interest on its New Debt Securities for
up to five years; provided that (i) at the end of any such deferral period the
Company would be required to pay all interest then accrued and unpaid (together
with interest thereon at the rate borne by such New Debt Securities), and (ii)
during any such deferral period, the Company may not be permitted to declare or
pay any dividend on, or redeem or otherwise acquire, any of its capital stock.]
The New Debt Securities will have a year maturity, no cash sinking fund
and may be redeemable on or after at the option of the Company at a
price equal to their principal amount, plus any accrued and unpaid interest,
plus a premium amount, if any.
The information set forth above is a summary of provisions more fully
described in the Prospectus and Prospectus Supplement, and reference should be
made to the Prospectus and Prospectus Supplement for such information and for
information with respect to other provisions of the New Debt Securities.
We have been informed that our junior subordinated debentures will be given
the following ratings: Moody's ( ), Standard & Poor's ( ), and Fitch ( ).
The closing will be on , 19 .
We will be available by telephone to discuss with you matters regarding
your due diligence investigation of the Company on , 19 , at A.M.
You may contact the undersigned or Ms. Campbell at (212) 752-2121.
Sincerely,
Stanley I. Garnett, II
Enclosures
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> 0
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<EXCHANGE-RATE> 1
<CASH> 1,921
<SECURITIES> 0
<RECEIVABLES> 90,495
<ALLOWANCES> 1,604
<INVENTORY> 53,830
<CURRENT-ASSETS> 158,870
<PP&E> 1,996,312
<DEPRECIATION> 689,254
<TOTAL-ASSETS> 1,646,661
<CURRENT-LIABILITIES> 104,622
<BONDS> 604,119
<COMMON> 447,700
24,257
36,378
<OTHER-SE> 219,507
<TOTAL-LIABILITY-AND-EQUITY> 1,646,661
<SALES> 754,065
<TOTAL-REVENUES> 754,065
<CGS> 505,430
<TOTAL-COSTS> 614,055
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 46,133
<INCOME-PRETAX> 107,870
<INCOME-TAX> 30,055
<INCOME-CONTINUING> 77,815
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 77,815
<EPS-PRIMARY> 0<F1>
<EPS-DILUTED> 0<F1>
<FN>
<F1>All common stock is owned by parent. No EPS required.
</FN>
</TABLE>
