EXHIBIT 26-B
METROPOLITAN EDISON COMPANY
Statement of
Terms and Conditions Relating to Proposals
for the Purchase of
Senior Notes
Metropolitan Edison Company ("Company") expects to issue from time to time
through ---------- in one or more series not more than $250,000,000 aggregate
principal amount of its Senior Notes, to be secured by one or more series of the
Company's Senior First Mortgage Bonds. The Company will invite proposals, in
accordance with the notice provisions and the other terms and conditions hereof,
for the purchase of all or a portion of such Senior Notes. The Senior Notes to
be issued in response to proposals therefor are referred to herein as the
"Notes". Proposals for the purchase of the Notes may be transmitted to the
Company only in accordance with the terms and conditions hereof. Any
communication received by the Company relating to the purchase of the Notes
other than as contemplated herein shall be treated as market information and not
as a proposal.
1. Information Concerning the Company and the Notes.
Prospective purchasers may examine at the office of GPU Service, Inc. 310
Madison Avenue, Morristown, New Jersey 07962, at any time during business hours,
copies of the following:
(a) the Senior Note Indenture, dated as of ------, 1999, and all
indentures supplemental thereto and, when available, the form of Supplemental
Indenture thereto to be dated as of the date on which the Notes are issued
("Indenture" and "Supplemental Indenture" respectively), to United States Trust
Company of New York, as Trustee ("Trustee"), under which the Notes are to be
issued;
(b) the Indenture, dated November 1, 1944, and all indentures supplemental
thereto and, when available, the form of Supplemental Indenture, thereto to be
dated as of the date on which the Senior Note First Mortgage Bonds are issued,
to United States Trust Company of New York, as Successor Trustee, under which
the Senior Note First Mortgage Bonds are to be issued;
(c) the Registration Statement (including exhibits, the prospectus
contained therein ("Prospectus"), and the documents incorporated therein by
reference), and any amendments or supplements thereto, relating to the Notes,
filed with the Securities and Exchange Commission ("SEC") under the Securities
Act of 1933, as amended ("Registration Statement");
(d) the Securities Certificate and any amendments or supplements thereto
(including exhibits) ("Securities Certificate")of the Company relating to the
issuance and sale of the Notes, as filed with the Pennsylvania Public Utility
Commission ("PaPUC") and the related order or orders of the PaPUC;
(e) the Form of Proposal ("Proposal") to be used by prospective purchasers
in offering to purchase each series of Notes, which includes the form of
Purchase Agreement for the purchase of the Notes ("Purchase Agreement");
(f) (1) if requested by a single prospective purchaser or a
Representative, as defined below, a form of survey by Thelen Reid & Priest LLP,
who are the counsel referred to in Section 8 hereof, with respect to the
legality of the Notes as investments for savings banks, life and certain other
insurance companies and fiduciaries in certain jurisdictions, and (2) form of a
preliminary Blue Sky survey by that firm with respect to the qualification of
the Notes for sale under the securities laws of various jurisdictions; and
(g) one or more statements, when available, with respect to proposals to
purchase the Notes and the terms of the Notes, which shall specify for each
series of Notes being offered (1) the date and time for the submission of
proposals to purchase the Notes, (2) the aggregate principal amount of Notes,
(3) the series designation of the Notes, (4) the minimum and maximum percentages
of principal amounts which may be specified in the Proposal as the purchase
price for the Notes, (5) the term of the Notes, which shall not be less than one
year nor more than 35 years, (6) the terms and conditions upon which the Notes
may be redeemed, either at the option of the Company, pursuant to any sinking
fund for the Notes or otherwise, and (7) such other provisions as may be
necessary or desirable to establish the terms and conditions of the Notes and
the terms of proposals therefor.
Copies of items (d) and (e) and copies of the Supplemental Indenture and
the Registration Statement (excluding exhibits) will be supplied in reasonable
quantities to prospective purchasers on request. The Company will make copies of
the form of Supplemental Indenture and of the statement(s) referred to in item
(g) above available to prospective purchasers as soon as practicable, but in no
event less than 24 hours prior to the time for the submission of proposals.
The Company reserves the right to amend the Registration Statement and
Prospectus and the Securities Certificate, and to make changes in the form of
Supplemental Indenture, and in the form of any other documents relating to
the issuance and sale of the Notes, at any time and from time to time with
the approval of Thelen Reid & Priest LLP, or as may be provided in the
Purchase Agreement after such agreement has become effective. The
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Company will give telephonic notice, confirmed in writing, of the date and time
for the receipt of proposals and of any such amendments and changes to its
request for proposals, which in its opinion are material, made prior to the
submission of proposals, to any person who will be submitting a proposal and who
notifies the Company c/o GPU Service, Inc. 310 Madison Avenue, Morristown, New
Jersey 07962 Attn: T.G. Howson, Vice President and Treasurer, that it desires
such notice and furnishes the name, address and telephone number of the person
to whom such notice shall be given. The notice of any such amendment or change
need not include the text thereof, but the text thereof may be examined at said
office. The Notes will be issuable only in fully registered form.
2. Form and Content of Proposals.
Each proposal for a series of Notes must be for the purchase of the entire
principal amount of such series for which proposals are being received, and
shall specify (i) the interest rate (which shall be a multiple of 1/8 of 1%) on
the Notes and (ii) the price to be paid to the Company for the Notes, which
price shall be stated as a percent of the principal amount of the Notes and
shall be not less than nor more than the minimum and maximum percentages of the
principal amount thereof specified in a statement referred to in Section 1(g)
hereof, plus, unless otherwise directed in a statement referred to in Section
1(g) hereof, accrued interest from the first day of the month in which the Notes
are issued to the date of delivery of and payment for the Notes.
Proposals may be made by a single prospective purchaser or by a group of
prospective purchasers. No prospective purchaser who makes a separate single
proposal may participate in a group proposal, and no prospective purchaser who
participates in one group proposal may participate in another group proposal.
In the case of a proposal by a group of prospective purchasers, the
several members of the group shall act through a duly authorized representative
or representatives (herein referred to as the "Representative"), who shall be
named as Representative in such group proposal and who may be included in the
group. If a proposal of a group of prospective purchasers is accepted, the
obligations of the members of the group shall be several and not joint,
including the obligation to purchase the principal amount of Notes set forth
opposite the respective names of such members in Schedule A to such group
proposal.
If a proposal is submitted by a Representative on behalf of a group of
prospective purchasers, and the principal amount of Notes to be purchased by any
member of the group is incorrectly stated in Schedule A to such proposal, the
Representative may
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correct any such error or errors forthwith upon discovery thereof. If no such
correction is made or if, after all such corrections are made, the total
principal amount set forth in said Schedule A is more or less than the entire
principal amount of Notes for which proposals are being received, then the total
principal amount of Notes offered to be purchased by the Representative shall be
deemed to be increased or decreased, as the case may be, to the extent of the
discrepancy.
All proposals must be signed by a single prospective purchaser or, in the
case of a proposal by a group of prospective purchasers, by their Representative
on behalf of the group, and must be submitted in duplicate.
3. Certain Representations by the Prospective Purchasers to be Furnished
to the Company.
By submitting a proposal for the Notes, each prospective purchaser shall
be deemed to represent to the Company, as of the date of the proposal for the
Notes, that, except as stated to the Company in writing prior to the time for
receipt of proposals for the Notes:
(a) neither such prospective purchaser nor any of its directors,
officers or partners have a material relationship with the Company or the
Company's parent, GPU, Inc.;
(b) such prospective purchaser and its directors and officers or
partners, as a group, do not own beneficially 10% or more of any class of
capital stock of the Company or the Company's parent, GPU, Inc.;
(c) neither such prospective purchaser nor any of its directors,
executive officers or partners directly or indirectly controls or is
directly or indirectly controlled by or is under direct common control of
the Trustee;
(d) such prospective purchaser and its directors, executive officers
or partners, as a group, do not own beneficially more than 10% of the
voting securities of the Trustee;
(e) neither the Trustee nor any director, executive officer or
partner thereof is a "director, officer, partner, employee, appointee or
representative" of such prospective purchaser, as those terms are defined
in or pursuant to the Trust Indenture Act of 1939, as amended ("1939
Act");
(f) other than any matters disclosed to the Company pursuant to
paragraphs (c), (d) and (e) above, there is no relationship between such
prospective purchaser or any director, executive officer or partner
thereof and any bank
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that would disqualify such bank under the 1939 Act that is currently
acting as trustee from so acting with respect to any of the Company's debt
securities;
(g) such prospective purchaser is not a "holding company", a
"subsidiary company" of a "holding company", or an "affiliate" or
"associate company" of a "holding company" or of a "public utility
company", each as defined in the Public Utility Holding Company Act of
1935, as amended ("1935 Act");
(h) such prospective purchaser has not prepared any report or
memorandum for external use in connection with the proposed offering; and
(i) such prospective purchaser's commitment to purchase the Notes
will not result in a violation of the financial responsibility
requirements of Rule 15c3-1 under the Securities Exchange Act of 1934, as
amended, and is not prohibited or restricted by any action of the SEC or
of any national securities exchange applicable to such prospective
purchaser.
4. Submission of Proposals.
As set forth below and in a statement to be furnished to prospective
purchasers pursuant to Section 1(g) hereof, the Company will receive proposals
by telephone, confirmed in writing (including facsimile). The "time for the
submission of proposals" as used herein shall mean the earliest time designated
in a statement to be furnished to prospective purchasers pursuant to Section
1(f) hereof for submission of telephonic proposals to the Company.
(a) Each telephonic proposal, confirmed in writing, for the Notes
must be received by the Company on the date and no later than the time
designated by the Company in a statement furnished to prospective
purchasers pursuant to Section 1(g) hereof. Such telephonic proposals must
be directed to the person and telephone number specified therein by the
Company for each prospective purchaser and must provide the Company with
(i) the name of any single prospective purchaser or all members of a group
of prospective purchasers and the Representative of such group, (ii) a
telephone number at which such proposal may be immediately confirmed and
the name of the individual who will provide confirmation, (iii) the
interest rate to be borne by the Notes and (iv) the price to be paid to
the Company for the Notes stated as a percent of the principal amount of
the Notes. Such telephonic proposals must be confirmed in writing by means
of a duly executed proposal in writing on the form of Proposal (with
Schedule A thereto
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completed), or by other similar written instrument acceptable to the
Company and providing the information required in this paragraph to be set
forth, which must be delivered to the offices of Berlack, Israels &
Liberman LLP, 120 West 45th Street, New York, New York 10036, Attention:
Douglas E. Davidson, Esq., by 5:00 p.m. on such date, and sent by
facsimile transmission to the offices of the Company at the telephone
number specified by the company in a statement furnished to prospective
purchasers pursuant to Section 1(g) hereof, as soon as possible but in no
event more than one hour after the time specified as the deadline for
receipt of telephonic proposals. Except as set forth in the fourth
paragraph of Section 2 hereof, any failure by a prospective purchaser to
confirm a telephonic proposal in a timely manner by a duly executed
proposal in writing on the form of Proposal or other similar written
instrument acceptable to the Company, with all information properly
specified therein, may result in such telephonic proposal being rejected
as not in the proper form as specified by the Company.
(b) The Company reserves the right, in its discretion from time to
time, to postpone the times or date for telephonic submission and written
confirmation of proposals, and will give telephonic notice confirmed in
writing of any such postponement to any prospective purchaser who shall
have furnished its name to the Company for such purpose pursuant to
Section 1 hereof.
(c) The Company reserves the right to designate, not less than 24
hours prior to the time, or postponed time, specified for submission of
proposals, a principal amount less than the principal amount originally
specified in the Company's request for proposals for the purchase of the
Notes, in which event the principal amount so designated shall be deemed
to be the principal amount of the Notes.
5. Acceptance or Rejection of Proposals.
Subject to the reservations set forth below, the decision of the Company
with respect to the proposals submitted will be announced not later than three
hours after the time designated for submission of proposals on the date
designated for such submission as specified in each case by the Company in a
statement furnished to prospective purchasers pursuant to Section 1(g) hereof,
or at such later time or date as may be fixed by the Company as provided in
Section 4(b) hereof. Within three hours of the receipt of proposals, the Company
will (subject to the provisions and reservations stated below) accept the
proposal which will provide the Company with the lowest "annual cost of money".
Said "annual cost of money" in respect of each proposal shall be determined by
the Company as twice the semi-annual rate
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necessary to discount the semi-annual debt service payments (interest or
interest and principal as due) to amounts which in the aggregate equal the
purchase price for the Notes, exclusive of accrued interest. The decision of the
Company with respect to the lowest "annual cost of money" shall in all cases be
final. Each proposal will be accepted or rejected in its entirety. All proposals
shall be irrevocable until three hours after the time for submission of
proposals, unless sooner rejected.
If two or more such proposals provide an identical lowest "annual cost of
money" to the Company, then the Company (unless it shall reject all proposals)
shall by oral or telephonic announcement give the makers of such identical
proposals the opportunity (the duration of which shall be in the Company's
discretion, but shall not extend beyond one hour after such announcement) to
improve their proposals, such improved proposals to be made in a manner similar
to that specified in a statement furnished to prospective purchasers pursuant to
Section 1(g) hereof, adjusted to reflect the new proposal submission and
confirmation times. The Company will accept, subject to the reservations stated
below, the improved proposal which will provide the lowest "annual cost of
money" to the Company. If no improved proposal is so made, or if on
resubmission, two or more proposals providing an identical lowest "annual cost
of money" to the Company are again received, the Company may, in its sole
discretion and without liability to the maker of any other proposal, accept any
one of the identical proposals providing the lowest "annual cost of money" to
the Company.
Notwithstanding the foregoing provision hereof, the Company reserves the
right:
(a) to reject all proposals (at or after the submission and
confirmation thereof irrespective of the terms stated therein), and
(b) to reject the proposal of any prospective purchaser or of any
group of prospective purchasers (i) if such prospective purchaser or any
member of such group of prospective purchasers is in such relationship
with the Trustee as would disqualify the Trustee from acting as Trustee
under the Indenture if the proposal of such prospective purchaser or group
of prospective purchasers shall be accepted, (ii) if the Company, in the
opinion of its counsel, may not lawfully sell the Notes to such
prospective purchaser or to any member of such group of prospective
purchasers, and, in either such event, in the case of a group of
prospective purchasers, if within one hour after the time for submission
of proposals, the member or members of such group causing such
disqualification or illegality have not withdrawn from the group and the
remaining members, including substituted members, if any are
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permitted by the Company, have not agreed to purchase the Notes which such
withdrawing member or members have offered to purchase, (iii) if the
Company is not satisfied with the financial responsibility of such
prospective purchaser or any member of any such group of prospective
purchasers, or (iv) if the acceptance of such proposal might, in the
judgment of the Company, bring about the risk of a delay in the sale of
the Notes.
6. Determination of Redemption of the Notes.
As soon as practicable after the acceptance of a proposal, any applicable
redemption prices of the Notes will be determined by the Company in accordance
with a statement furnished to prospective purchasers pursuant to the statement
referred to in Section 1(g) hereof. Such determination by the Company shall be
final.
7. Purchase Agreement.
Upon the acceptance of a proposal for the Notes, the Company will
forthwith signify such acceptance by signing a duplicate or reproduction copy of
the proposal of the successful purchaser, or, in the case of a proposal by a
group of purchasers, of the Representative on its behalf. Upon such acceptance
of a proposal, the Purchase Agreement shall become effective without any
separate execution thereof, and thereafter all rights of the Company and of the
successful purchaser, or group of purchasers, shall be determined solely in
accordance with the terms of the proposal and such Purchase Agreement, subject,
however, to such changes therein as may be appropriate if the successful
purchaser or group of purchasers shall not contemplate a public offering of the
Notes. Forthwith upon such acceptance of any proposal, the successful purchaser
or, in the case of a proposal by a group of purchasers, the Representative on
its behalf, shall furnish to the Company in writing the information which is (i)
required to supplement the Prospectus and for the filing thereof, (ii) required
to be filed by the Company with the PaPUC and (iii) required to be filed with
the SEC under the 1935 Act.
8. Opinion of Counsel for the Purchasers.
Thelen Reid & Priest LLP has been selected by the Company as counsel to
give to the successful purchaser or purchasers an opinion with respect to the
legal matters specified in Section 5(e) of the Purchase Agreement. Such counsel
has participated from the standpoint of prospective purchasers of the Notes in
the preparation of the proposal papers and the documents under which the Notes
are to be issued and have reviewed or will review the corporate proceedings and
the registration procedure with respect to the authorization and issuance of the
Notes. They have also prepared the survey referred to in Section 1(f)(2) hereof.
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Prospective purchasers may confer with Thelen Reid & Priest LLP with respect to
any of the foregoing matters. The compensation and disbursements of such counsel
are to be paid by the successful purchaser or purchasers, except as otherwise
provided in the Purchase Agreement, and any prospective purchaser and any
Representative of a group of prospective purchasers may obtain from such
counsel, upon request, advice regarding the amount of such compensation and an
estimate of the amount of such disbursements.
9. Miscellaneous.
The Company reserves the right to waive any irregularity, which it deems
to be immaterial, in complying with any of the foregoing terms and conditions.
METROPOLITAN EDISON COMPANY
------------------------------------
By: T. G. Howson
Vice President and Treasurer
[date]
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