Exhibit 4-A
PENNSYLVANIA ELECTRIC COMPANY
AND
UNITED STATES TRUST COMPANY OF NEW YORK,
As Trustee
INDENTURE
Dated as of ________, 1998
Providing for the Issuance of Subordinated
Debentures in Series and for the
____% Subordinated Debentures,
Series A, due ____
PENNSYLVANIA ELECTRIC COMPANY
CROSS-REFERENCE TABLE
of Provisions of the Indenture
Required by the Trust Indenture Act of 1939
Trust Indenture Provision of
Act Section Indenture
----------- ---------
Section 310 (a)(1) 7.10
(a)(2) 7.10
(a)(3) Not Applicable
(a)(4) Not Applicable
(b) 7.08; 7.10; 11.01
(c) Not Applicable
Section 311 (a) 7.11
(b) 7.11
(c) Not Applicable
Section 312 (a) 2.06
(b) 11.03
(c) 11.03
Section 313 (a) 7.06
(b)(1) Not Applicable
(b)(2) 7.06
(c) 7.06; 11.02
(d) 7.06
Section 314 (a) 4.03; 11.02
(b) Not Applicable
(c)(1) 2.02; 11.04
(c)(2) 2.02; 11.04
(c)(3) Not Applicable
(d) Not Applicable
(e) 11.05
(f) Not Applicable
Section 315 (a) 7.01(2)
(b) 7.05; 11.02
(c) 7.01(1)
(d) 7.01(3)
(e) 6.11
Section 316 (a)(1)(A) 6.05
(a)(1)(B) 6.04
(a)(2) Not Applicable
(a)(last sentence) 2.09
(b) 6.07
Section 317 (a)(1) 6.08
(a)(2) 6.09
(b) 2.05
Section 318 (a) 11.01
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Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of the Indenture.
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INDENTURE BETWEEN PENNSYLVANIA ELECTRIC COMPANY
AND UNITED STATES TRUST COMPANY OF NEW YORK
DATED AS OF ________, 1998
TABLE OF CONTENTS
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01 Definitions . . . . . . . . . . . . . . . . 1
SECTION 1.02 Other Definitions . . . . . . . . . . . . . 6
SECTION 1.03 Incorporation by Reference of Trust
Indenture Act . . . . . . . . . . . . . . . 6
SECTION 1.04 Rules of Construction . . . . . . . . . . . 7
SECTION 1.05 Acts of Holders . . . . . . . . . . . . . . 7
ARTICLE 2
THE SECURITIES; THE SERIES A SECURITIES
SECTION 2.01 Issue of Securities Generally . . . . . . . 9
SECTION 2.02 Form of the Series A Securities;
Denominations; Global Security . . . . . . 10
SECTION 2.03 Execution and Authentication. . . . . . . . 11
SECTION 2.04 Registrar and Paying Agent. . . . . . . . . 12
SECTION 2.05 Paying Agent to Hold Money in Trust . . . . 13
SECTION 2.06 Securityholder Lists. . . . . . . . . . . . 13
SECTION 2.07 Transfer and Exchange . . . . . . . . . . . 13
SECTION 2.08 Replacement Securities. . . . . . . . . . . 14
SECTION 2.09 Outstanding Securities;
Determinations of Holders' Action . . . . . 15
SECTION 2.10 Temporary Securities. . . . . . . . . . . . 16
SECTION 2.11 Cancellation . . . . . . . . . . . . . . . 16
SECTION 2.12 CUSIP Numbers . . . . . . . . . . . . . . . 17
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SECTION 2.13 Defaulted Interest. . . . . . . . . . . . . 17
ARTICLE 3
REDEMPTION
SECTION 3.01 Redemption Right, Obligation;
Notice to Trustee . . . . . . . . . . . . . 17
SECTION 3.02 Selection of Securities to be Redeemed . . 18
SECTION 3.03 Notice of Redemption; Conditional Notice. . 18
SECTION 3.04 Effect of Notice of Redemption. . . . . . . 19
SECTION 3.05 Deposit of Redemption Price . . . . . . . . 20
SECTION 3.06 Securities Redeemed in Part . . . . . . . . 20
ARTICLE 4
COVENANTS
SECTION 4.01 Payment of the Securities . . . . . . . . . 20
SECTION 4.02 Prohibition Against Dividends, etc.
During an Event of Default . . . . . . . . 22
SECTION 4.03 SEC Reports . . . . . . . . . . . . . . . . 22
SECTION 4.04 Compliance Certificates . . . . . . . . . . 23
SECTION 4.05 Further Instruments and Acts. . . . . . . . 23
SECTION 4.06 Investment Company Act . . . . . . . . . . 24
SECTION 4.07 Payments for Consents . . . . . . . . . . . 24
SECTION 4.08 Payments for Consents . . . . . . . . . . . 24
ARTICLE 5
SUCCESSOR CORPORATION
SECTION 5.01 When the Company May Merge, Etc. . . . . . 25
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01 Events of Default . . . . . . . . . . . . . 26
SECTION 6.02 Acceleration . . . . . . . . . . . . . . . 27
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SECTION 6.03 Other Remedies . . . . . . . . . . . . . . 28
SECTION 6.04 Waiver of Past Defaults . . . . . . . . . . 28
SECTION 6.05 Control by Majority . . . . . . . . . . . . 28
SECTION 6.06 Limitation on Suits. . . . . . . . . . . . . 29
SECTION 6.07 Rights of Holders to Receive Payment. . . . 29
SECTION 6.08 Collection Suit by the Trustee. . . . . . . 30
SECTION 6.09 The Trustee May File Proofs of Claim. . . . 30
SECTION 6.10 Priorities. . . . . . . . . . . . . . . . 30
SECTION 6.11 Undertaking for Costs. . . . . . . . . . . 31
SECTION 6.12 Waiver of Stay, Extension or Usury Laws. . 31
ARTICLE 7
THE TRUSTEE
SECTION 7.01 Duties of the Trustee . . . . . . . . . . . 32
SECTION 7.02 Rights of the Trustee . . . . . . . . . . . 33
SECTION 7.03 Individual Rights of the Trustee. . . . . . 34
SECTION 7.04 The Trustee's Disclaimer. . . . . . . . . . 34
SECTION 7.05 Notice of Defaults. . . . . . . . . . . . . 34
SECTION 7.06 Reports by Trustee to Holders . . . . . . . 34
SECTION 7.07 Compensation and Indemnity. . . . . . . . . 35
SECTION 7.08 Replacement of Trustee. . . . . . . . . . . 35
SECTION 7.09 Successor Trustee by Merger . . . . . . . . 36
SECTION 7.10 Eligibility; Disqualification . . . . . . . 37
SECTION 7.11 Preferential Collection of Claims
Against the Company . . . . . . . . . . . . 37
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ARTICLE 8
SATISFACTION AND DISCHARGE OF INDENTURE;
DEFEASANCE OF CERTAIN OBLIGATIONS; UNCLAIMED MONEYS
SECTION 8.01 Satisfaction and Discharge of Indenture. . 37
SECTION 8.02 Application by Trustee of Funds Deposited
for Payment of Securities. . . . . . . . . 38
SECTION 8.03 Repayment of Moneys Held by Paying Agent. 38
SECTION 8.04 Return of Moneys Held by the Trustee and
Paying Agent Unclaimed for Three Years . . 39
ARTICLE 9
AMENDMENTS
SECTION 9.01 Without Consent of Holders . . . . . . . . 39
SECTION 9.02 With Consent of Holders. . . . . . . . . . 40
SECTION 9.03 Compliance with Trust Indenture Act. . . . 41
SECTION 9.04 Revocation and Effect Of Consents, Waivers
and Actions. . . . . . . . . . . . . . . . 41
SECTION 9.05 Notation on or Exchange of Securities. . . 41
SECTION 9.06 Trustee to Sign Supplemental Indentures. . 42
SECTION 9.07 Effect of Supplemental Indentures. . . . . 42
ARTICLE 10
SUBORDINATION
SECTION 10.01 Securities Subordinated to Senior
Indebtedness . . . . . . . . . . . . . . . 42
SECTION 10.02 Priority and Payment of Proceeds in
Certain Events; Remedies Standstill. . . . 42
SECTION 10.03 Payments which May Be Made Prior to
Notice . . . . . . . . . . . . . . . . . . 44
SECTION 10.04 Rights of Holders of Senior Indebtedness
Not to Be Impaired . . . . . . . . . . . . 44
SECTION 10.05 Trustee May Take Action to Effectuate
Subordination. . . . . . . . . . . . . . . 45
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SECTION 10.06 Subrogation . . . . . . . . . . . . . . . 45
SECTION 10.07 Obligations of Company Unconditional;
Reinstatement . . . . . . . . . . . . . . 45
SECTION 10.08 Trustee Entitled to Assume Payments Not
Prohibited in Absence of Notice . . . . . 46
SECTION 10.09 Right of Trustee to Hold Senior
Indebtedness. . . . . . . . . . . . . . . 47
ARTICLE 11
MISCELLANEOUS
SECTION 11.01 Trust Indenture Act Controls. . . . . . . 47
SECTION 11.02 Notices . . . . . . . . . . . . . . . . . 47
SECTION 11.03 Communication by Holders with Other
Holders . . . . . . . . . . . . . . . . . 48
SECTION 11.04 Certificate and Opinion as to Conditions
Precedent . . . . . . . . . . . . . . . . 48
SECTION 11.05 Statements Required in Certificate or
Opinion . . . . . . . . . . . . . . . . . 49
SECTION 11.06 Severability Clause . . . . . . . . . . . 49
SECTION 11.07 Rules by Trustee, Paying Agent and
Registrar . . . . . . . . . . . . . . . . 49
SECTION 11.08 Legal Holidays. . . . . . . . . . . . . . 49
SECTION 11.09 Governing Law . . . . . . . . . . . . . . 50
SECTION 11.10 No Recourse Against Others. . . . . . . . 50
SECTION 11.11 Successors. . . . . . . . . . . . . . . . 50
SECTION 11.12 Multiple Original Copies of this
Indenture . . . . . . . . . . . . . . . . 50
SECTION 11.13 No Adverse Interpretation of Other
Agreements. . . . . . . . . . . . . . . . 50
SECTION 11.14 Table of Contents; Headings, Etc. . . . . 50
SECTION 11.15 Benefits of the Indenture . . . . . . . . 51
SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . 51
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[FORM OF FACE OF THE SECURITY] . . . . . . . . . . . . . . . 52
Trustee's Certificate of Authentication. . . . . . . 53
[FORM OF REVERSE SIDE OF SECURITY] . . . . . . . . . . . . 54
1. Payment of Interest and Additional Interest 54
2. Deferral of Interest. . . . . . . . . . . 54
3. Method of Payment. . . . . . . . . . . . . 54
4. Paying Agent and Registrar. . . . . . . . . 55
5. Indenture. . . . . . . . . . . . . . . . . 55
6. Redemption. . . . . . . . . . . . . . . . . 55
7. Notice of Redemption; Conditional Notice. . 56
8. Subordination. . . . . . . . . . . . . . . 56
9. Denominations; Transfer; Exchange. . . . . . 56
10. Persons Deemed Owners. . . . . . . . . . . 56
11. Amendment; Waiver. . . . . . . . . . . . . 56
12. Defaults and Remedies. . . . . . . . . . . 57
13. Trustee Dealings with the Company. . . . . 57
14. No Recourse Against Others. . . . . . . . . 58
15. Abbreviations. . . . . . . . . . . . . . . 58
16. Unclaimed Money. . . . . . . . . . . . . . . 58
17. Discharge Prior to Maturity. . . . . . . . 58
18. Successor. . . . . . . . . . . . . . . . . 58
19. Governing Law. . . . . . . . . . . . . . . 58
ASSIGNMENT FORM. . . . . . . . . . . . . . . . . . . . . 59
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INDENTURE, dated as of _____, 1998, by and between Pennsylvania Electric
Company, a Pennsylvania corporation (the "Company"), and United States Trust
Company of New York, as trustee (the "Trustee").
Whereas, the Company desires to borrow money from time to time and to
issue securities from time to time, in one or more series, including securities
to be issued from time to time to one or more of its Subsidiaries, as in this
Indenture provided; and
Whereas, the Company has authorized the issuance of the initial series of
securities to be known as the ____% Subordinated Debentures, Series A, due ____
(the "Series A Securities"), and to provide therefor, the Company has duly
authorized the execution and delivery of this Indenture, and all things
necessary to make the Series A Securities when duly issued and executed by the
Company and authenticated and delivered hereunder, the valid obligations of the
Company, and to make this Indenture a valid and binding agreement of the
Company, in accordance with its terms, have been done;
Now, therefore, each party, intending to be legally bound hereby, agrees
as follows for the equal and ratable benefit of the Holders of the Series A
Securities:
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01 Definitions.
"Action" means an Action as defined in Section 13.01(b) of the Limited
Partnership Agreement.
"Affiliate" of any specified Person means any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. When used with respect to any Person,
"control" means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Board of Directors" means the Board of Directors of the Company or any
committee thereof duly authorized to act on behalf of such Board, and any
resolution of the Board of Directors means any resolution of the Board of
Directors or any committee thereof duly authorized to act on behalf of such
Board.
"Business Day" means any day other than a day on which banking
institutions in The City of New York are authorized or required by law to close.
"Capital Lease Obligations" of a Person means any obligation which is
required to be classified and accounted for as a capital lease on the face of a
balance sheet of such Person prepared in accordance with GAAP.
"Capital Stock" means any and all shares, interests, rights to purchase,
warrants, options, participations or other equivalents of or interests in
(however designated) corporate stock, including any Preferred Stock.
"Company" means Pennsylvania Electric Company until a Successor replaces
it pursuant to Article 5 of this Indenture and, thereafter, shall mean the
Successor.
"Default" means any event which is, or after notice or passage of time, or
both, would be, an Event of Default.
"Distribution Event" means a dissolution of Penelec Capital upon the
occurrence of a Special Event in connection with which Securities are
distributed to holders of Preferred Securities, as may be provided for in the
Limited Partnership Agreement or any Action.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board.
"General Partner" means Penelec Preferred Capital II, Inc., in its
capacity as general partner of Penelec Capital, together with any successor
thereto that becomes a general partner of Penelec Capital pursuant to the terms
of the Limited Partnership Agreement.
"Guarantee" means the Payment and Guarantee Agreement, or other guaranty,
if any, of the Company of the payment of periodic cash distributions, and
payments on liquidation or redemption, with respect to the Preferred Securities
of any series.
"Indenture" means this indenture, as amended or supplemented from time to
time in accordance with the terms hereof, including the provisions of the TIA
that are deemed to be a part hereof.
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"Interest Payment Date" means the interest payment date specified in the
Securities.
"Issue Date" means the date on which the Securities are originally issued.
"Limited Partnership Agreement" means the Amended and Restated Limited
Partnership Agreement of Penelec Capital, as amended or supplemented from time
to time in accordance with the terms thereof.
"Officer" means, with respect to any corporation, the Chairman of the
Board, the Chief Executive Officer, the President, any Vice President, the
Treasurer or any Assistant Treasurer or the Secretary or any Assistant Secretary
of such corporation.
"Officer's Certificate" means a written certificate containing the
applicable information specified in Sections 11.04 and 11.05 hereof, signed in
the name of the Company by any one of its Officers, and delivered to the
Trustee.
"Opinion of Counsel" means a written opinion containing the applicable
information specified in Sections 11.04 and 11.05 hereof, by legal counsel who
is reasonably acceptable to the Trustee.
"Penelec Capital" means Penelec Capital II, L.P., a Delaware limited
partnership, all of the Voting Interests of which are indirectly owned by the
Company through a Wholly Owned Subsidiary. Penelec Capital also means any
successor in interest to Penelec Capital II, L.P., regardless of its form,
including a business trust.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof or any
other entity.
"Preferred Securities" means the securities representing limited partner
interests of Penelec Capital of any series with a preference in respect of cash
distributions and amounts payable on liquidation over the Voting Interests
indirectly owned by the Company. Preferred Securities also means any securities
issued by Penelec Capital in substitution for the Preferred Securities,
including preferred undivided beneficial interests in the properties of a
business trust.
"Preferred Stock" means any class of Capital Stock of an issuer that is
preferred as to dividends or rights in liquidation as compared with any other
class of Capital Stock of the same issuer.
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"Record Date" with respect to any security means the date set to determine
the holders of any security entitled to participate in any distribution,
dividend, interest or other payment or to vote, consent, make a request or
exercise any other right associated with such security.
"Redemption Date" or "redemption date" means the date specified for the
redemption of Securities in accordance with the terms of the Securities and
Article 3 of this Indenture.
"Redemption Price" or "redemption price", with respect to any Security to
be redeemed, means the price at which it is to be redeemed pursuant to this
Indenture and the Securities.
"Regular Record Date", with respect to an interest payment on the
Securities, means the date set forth on the face of the Securities for the
determination of Holders entitled to receive payment of interest on the next
succeeding interest payment date.
"SEC" or "Commission" means the Securities and Exchange Commission.
"Securities" means any of the securities of any series issued,
authenticated and delivered under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Securityholder" or "Holder" means a Person in whose name a Security is
registered on the Registrar's books.
"Senior Indebtedness" means, without duplication, (i) the principal of and
premium (if any) in respect of (A) indebtedness of the Company for money
borrowed and (B) indebtedness evidenced by securities, debentures, bonds or
other similar instruments (including purchase money obligations) for payment of
which the Company is responsible or liable; (ii) all Capital Lease Obligations
of the Company; (iii) all obligations of the Company issued or assumed as the
deferred purchase price of property, all conditional sale obligations of the
Company and all obligations of the Company under any title retention agreement
(but excluding trade accounts payable arising in the ordinary course of
business); (iv) all obligations of the Company for the reimbursement of any
obligor on any letter of credit, banker's acceptance, security purchase facility
or similar credit transaction (other than obligations with respect to letters of
credit securing obligations (other than obligations described in (i) through
(iii) above) entered into in the ordinary course of business of the Company to
the extent such letters of credit are not drawn upon or, if and to the extent
drawn upon, such drawing is reimbursed no later than the third Business Day
following receipt by the Company of a demand for reimbursement following
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payment on the letter of credit); (v) all obligations of the type referred to in
clauses (i) through (iv) of other Persons for the payment of which the Company
is responsible or liable as obligor, guarantor or otherwise; and (vi) all
obligations of the type referred to in clauses (i) through (v) of other Persons
secured by any lien on any property or asset of the Company (whether or not such
obligation is assumed by the Company), the amount of such obligation being
deemed to be the lesser of the value of such property or assets or the amount of
the obligation so secured; provided, however, that Senior Indebtedness does not
include endorsements of negotiable instruments for collection in the ordinary
course of business. Notwithstanding anything to the contrary in the foregoing,
Senior Indebtedness shall not include any indebtedness that is by its terms
subordinated to or pari passu with the Securities or any indebtedness between or
among the Company and any Affiliates.
"Series A Preferred Securities" means the securities representing limited
partner interests of Penelec Capital, with a preference in respect of cash
distributions and amounts payable on liquidation over the Voting Interests
indirectly owned by the Company, the proceeds of the sale of which are used by
Penelec Capital to purchase Series A Securities. Series A Preferred Securities
also means any Preferred Securities issued by Penelec Capital in substitution
for the Series A Preferred Securities originally issued by Penelec Capital.
"Series A Securities" means any of the Company's ____% Subordinated
Debentures, Series A, due ____, issued under this Indenture.
"Special Event" means a Special Event as defined in Article I of the
Limited Partnership Agreement.
"Special Representative" means a special representative appointed by the
holders of the Preferred Securities pursuant to Section 13.02(d) of the Limited
Partnership Agreement.
"Stated Maturity" means, with respect to any security, the date specified
in such security as the fixed date on which the principal of such security is
due and payable, including pursuant to any mandatory prepayment provision.
"Subsidiary" means any corporation, association, partnership, limited
liability company or other business entity of which more than 50% of the total
voting power of all the Voting Stock or Voting Interests is at the time owned or
controlled, directly or indirectly, by (i) the Company, (ii) the Company and one
or more Subsidiaries, or (iii) one or more Subsidiaries.
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"TIA" means the Trust Indenture Act of 1939, as amended and as in effect
on the date of this Indenture; provided, however, that if the TIA is amended
after such date, TIA means, to the extent required by any such amendment, the
TIA as so amended.
"Trust Officer" means the Chairman of the Board of Directors, the
President, or any other officer or assistant officer of the Trustee assigned by
the Trustee to administer its corporate trust matters.
"Trustee" means the party named as the "Trustee" in the first paragraph of
this Indenture until a successor replaces it pursuant to the applicable
provisions of this Indenture and, thereafter, shall mean such successor.
"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable at the issuer's option.
"Voting Interests" means interests (including partnership interests)
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or a trustee of an entity or to direct the
management of the affairs of such entity.
"Voting Stock" means, with respect to a corporation, all classes of
Capital Stock then outstanding of such corporation normally entitled to vote in
elections of directors.
"Wholly Owned Subsidiary" means a Subsidiary all the Voting Stock or
Voting Interests of which (other than directors' qualifying shares) are owned by
the Company or another Wholly Owned Subsidiary.
SECTION 1.02 Other Definitions.
TERM DEFINED IN SECTION
"Act" . . . . . . . . . . . . . . . . . . 1.05
"Additional Interest. . . . . . . . . . . 4.01
"Bankruptcy Law" . . . . . . . . . . . . 6.01
"Control" . . . . . . . . . . . . . . . . 1.01
"Custodian" . . . . . . . . . . . . . . . 6.01
"Event of Default". . . . . . . . . . . . 6.01
"Extension Period" . . . . . . . . . . . 4.01
"Legal Holiday" . . . . . . . . . . . . . 11.08
"Notice of Default" . . . . . . . . . . . 6.01
"Paying Agent" . . . . . . . . . . . . . 2.04
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"Register" . . . . . . . . . . . . . . . 2.04
"Registrar" . . . . . . . . . . . . . . . 2.04
"Successor" . . . . . . . . . . . . . . . 5.01
SECTION 1.03 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, such provision
is incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Holder or Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company and any other
obligor on the Securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule have the
meanings assigned to them by such definitions.
SECTION 1.04 Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned to
it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including, without limitation;
(5) words in the singular include the plural, and words in the plural
include the singular;
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(6) "herein," "hereof" and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or
other subdivision; and
(7) whenever the masculine gender is used herein, it shall be deemed to
include the female gender and the neuter, as well.
SECTION 1.05. Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent,
election, waiver or other action provided by this Indenture to be made, given or
taken by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of Holders signing such
instrument or instruments. Proof of execution of any such instrument or of a
writing appointing any such agent shall be sufficient for any purpose of this
Indenture and conclusive in favor of the Trustee and the Company, if made in the
manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any manner which the Trustee deems
sufficient.
(c) The ownership of Securities shall be proved by the Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Security shall bind every future Holder of the
same Security and the holder of every Security issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made upon such
Security.
(e) If the Company solicits from the Holders any request, demand,
authorization, direction, notice, consent, waiver or other Act, the Company may,
at its option, by or pursuant to a resolution of its Board of Directors, fix in
advance a record date for the determination of Holders entitled to give such
request, demand, authorization, direction, notice, consent, waiver or other Act,
but the Company shall have no obligation to
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do so. If such a record date is fixed, such request, demand, authorization,
direction, notice, consent, waiver or other Act may be given before or after
such record date, but only the Holders of record at the close of business on
such record date shall be deemed to be Holders for the purposes of determining
whether Holders of the requisite proportion of outstanding Securities have
authorized or agreed or consented to such request, demand, authorization,
direction, notice, consent, waiver or other Act, and for that purpose the
outstanding Securities shall be computed as of such record date.
ARTICLE 2
THE SECURITIES; THE SERIES A SECURITIES
SECTION 2.01 Issue of Securities Generally.
The Securities may be issued in one or more series as from time to time
shall be authorized by the Board of Directors.
The Securities of each series and the Trustee's Certificate of
Authentication shall be substantially in the forms to be attached as exhibits to
this Indenture or supplemental indenture providing for their issuance, but in
the case of Securities other than Series A Securities, with such inclusions,
omissions and variations as are authorized or permitted by this Indenture. The
Securities may have such letters, numbers or other marks of identification or
designation and such legends or endorsements printed, lithographed or engraved
thereon as the Company may deem appropriate and as are not inconsistent with the
provisions of this Indenture, or as may be required to comply with any law or
with any rule or regulation made pursuant thereto or with any rule or regulation
of any securities exchange on which the Securities may be listed, or to conform
to usage. Each Security shall be dated the date of its authentication.
The several series of Securities may differ from the Series A Securities,
and as and between series, in respect of any or all of the following matters:
(a) designation;
(b) date or dates of maturity, which may be serial;
(c) rate (or method of determining the rate) of interest or
Additional Interest, if any;
(d) interest payment dates and the frequency of interest payments;
(e) Issue Date;
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(f) provisions, if any, authorizing the Company to extend the
interest payment dates;
(g) authorized denominations;
(h) the place or places for the payment of principal and for the
payment of interest;
(i) limitation, if any, upon the aggregate principal amount of
Securities of the series which may be issued;
(j) provisions, if any, with regard to any obligation of the Company
to permit the exchange of the Securities of such series into stock or other
securities of the Company or of any other corporations or entities;
(k) provisions, if any, reserving to the Company the right to redeem
all or any part of the Securities of such series before maturity at such time or
times, upon such notice and at such redemption price or prices (together with
accrued interest to the date of redemption) as may be specified in the
respective forms of Securities;
(l) provisions, if any, for any sinking or analogous fund with
respect to the Securities of such series; and
(m) any other provisions expressing or referring to the terms and
conditions upon which the Securities of such series are to be issued under this
Indenture which are not in conflict with the provisions of this Indenture;
in each case as determined and specified by the Board of Directors. The Trustee
shall not authenticate and deliver Securities of any series (other than the
Series A Securities) upon initial issue unless the terms and conditions of such
series shall have been set forth in a supplemental indenture entered into
between the Company and the Trustee as provided in Section 9.01 hereof.
SECTION 2.02 Form of the Series A Securities; Denominations; Global
Security.
The Series A Securities and the Trustee's Certificate of Authentication
shall be substantially in the form of Exhibit A attached hereto. The terms and
provisions contained in the Series A Securities, a form of which is annexed
hereto as Exhibit A, shall constitute, and are hereby expressly made, a part of
this Indenture. The Company and the Trustee, by their execution and delivery of
this Indenture, expressly agree to such terms and provisions and to be bound
thereby.
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The Trustee shall authenticate and make available for delivery Series A
Securities for original issue in the aggregate principal amount of
$_____________ for issuance to Penelec Capital in consideration of a cash
payment equal to the principal amount thereof, upon a resolution of the Board of
Directors and a written order of the Company signed by two Officers of the
Company, but without any further action by the Company. Such order shall specify
the date on which the original issue of the Series A Securities is to be
authenticated and delivered. The aggregate principal amount of Series A
Securities outstanding at any time may not exceed $____________, except as
provided in Section 2.08 hereof.
The Series A Securities shall be issuable only in registered form without
coupons and only in denominations of $____ and any integral multiple thereof.
Initially, the Series A Securities shall be issued as a temporary
certificate in global form, that is, as one Security for the total principal
amount of the Series A Securities to be outstanding, registered in the name of
Penelec Capital. If and when the Series A Securities are registered in the name
of a custodian, the custodian shall be responsible for maintaining records of
the names and addresses of, and the principal amounts owned by, the beneficial
owners of its global Security. After initial issuance, the Series A Securities
may be transferred or exchanged in accordance with Section 2.07 hereof.
SECTION 2.03 Execution and Authentication.
The Securities shall be executed on behalf of the Company by its Chief
Executive Officer, its President or one of its Vice Presidents, under its
corporate seal imprinted or reproduced thereon attested by its Secretary or one
of its Assistant Secretaries. The signature of any such Officer on the
Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals who
were at any time the proper Officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
Certificate of Authentication duly executed by the Trustee by manual signature
of an authorized officer, and such certificate upon any Security shall be
conclusive evidence, and the only evidence, that such Security
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has been duly authenticated and made available for delivery hereunder.
The Trustee shall act as the initial authenticating agent. Thereafter, the
Trustee, with the concurrence of the Company, may appoint an authenticating
agent. An authenticating agent may authenticate Securities whenever the Trustee
may do so. Each reference in this Indenture to authentication by the Trustee
includes authentication by such agent. An authenticating agent has the same
rights as a Paying Agent to deal with the Company or an Affiliate of the
Company.
SECTION 2.04 Registrar and Paying Agent.
The Company shall maintain or cause to be maintained, within the State of
New York, an office or agency where the Securities may be presented for
registration of transfer or for exchange ("Registrar"), an office or agency
where Securities may be presented or surrendered for redemption or payment
("Paying Agent"), and an office or agency where notices and demands to or upon
the Company in respect of the Securities and this Indenture may be served. The
Registrar shall keep a register (the "Register") of the Securities and of their
transfer and exchange. The Register shall be open to inspection by the Company
and the Trustee at all reasonable times. The Company may have one or more
co-Registrars and one or more additional Paying Agents. The terms Paying Agent
and Registrar include any additional paying agent and co-Registrar. The
corporate trust office of the Trustee at 114 West 47th Street, New York, New
York, 10036, Attention: Corporate Trust Department, Department B, shall
initially be the location for the Registrar, Paying Agent and agent for service
of notice or demands on the Company.
The Company shall enter into an appropriate agency agreement with any
Registrar, Paying Agent or co-Registrar (if not the Trustee or the Company). The
agreement shall implement the provisions of this Indenture that relate to such
agent. The Company shall give prompt written notice to the Trustee of any change
of location of such office or agency. If at any time the Company shall fail to
maintain or cause to be maintained any such required office or agency or shall
fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the address of the
Trustee set forth in Section 11.02 hereof. The Company shall notify the Trustee
of the name and address of any such agent. If the Company fails to maintain a
Registrar, Paying Agent or agent for service of notices or demands, the Trustee
shall act as such and shall be entitled to appropriate compensation therefor
pursuant to Section 7.07 hereof. The Company or any Affiliate of the Company may
act as Paying Agent, Registrar or co-Registrar or agent for service of notices
and demands.
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The Company may also from time to time designate one or more other offices
or agencies where the Securities may be presented or surrendered for any or all
such purposes and may from time to time rescind such designations. The Company
will give prompt written notice to the Trustee of any such designation or
rescission and of any change in location of any such other office or agency.
SECTION 2.05 Paying Agent to Hold Money in Trust.
Except as otherwise provided herein, prior to each due date of the
principal and interest on any Security, the Company shall deposit with the
Paying Agent a sum of money sufficient to pay such principal and interest so
becoming due. The Company shall require each Paying Agent (other than the
Trustee or the Company) to agree in writing that such Paying Agent shall hold in
trust for the benefit of Securityholders or the Trustee all money held by the
Paying Agent for the payment of principal and interest on the Securities and
shall notify the Trustee of any default by the Company in making any such
payment. At any time during the continuance of any such default, the Paying
Agent shall, upon the request of the Trustee, forthwith pay to the Trustee all
money so held in trust and account for any money disbursed by it. The Company at
any time may require a Paying Agent to pay all money held by it to the Trustee
and to account for any money disbursed by it. Upon doing so, the Paying Agent
shall have no further liability for the money so paid over to the Trustee. If
the Company, a Subsidiary or an Affiliate of either of them acts as Paying
Agent, it shall segregate the money held by it as Paying Agent and hold it as a
separate trust fund.
SECTION 2.06 Securityholder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Securityholders. If the Trustee is not the Registrar, the Company shall cause to
be furnished to the Trustee on or before the Record Date for each interest
payment date and at such other times as the Trustee may request in writing,
within five Business Days of such request, a list, in such form as the Trustee
may reasonably require, of the names and addresses of Securityholders.
SECTION 2.07 Transfer and Exchange.
When Securities of any series are presented to the Registrar or a
co-Registrar with a request to register the transfer or to exchange them for an
equal principal amount of Securities of the
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same series of other authorized denominations, the Registrar shall register the
transfer or make the exchange as requested if its requirements for such
transactions are met. To permit registrations of transfer and exchanges of
Securities of any series, the Company shall execute and the Trustee shall
authenticate Securities of the same series, all at the Registrar's request.
Every Security presented or surrendered for registration of transfer or
for exchange shall (if so required by the Company or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by the Holder or his
attorney duly authorized in writing.
The Company shall not charge a service charge for any registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
pay all taxes, assessments or other governmental charges that may be imposed in
connection with the transfer or exchange of the Securities from the
Securityholder requesting such transfer or exchange (other than any exchange of
a temporary Security for a definitive Security not involving any change in
ownership).
The Company shall not be required to make, and the Registrar need not
register, transfers or exchanges of (a) any Security for a period beginning at
the opening of business five days before the mailing of a notice of redemption
of Securities and ending at the close of business on the day of such mailing or
(b) any Security selected, called or being called for redemption, except, in the
case of any Security to be redeemed in part, the portion thereof not to be
redeemed.
SECTION 2.08 Replacement Securities.
If (a) any mutilated Security is surrendered to the Company or the
Trustee, or (b) the Company and the Trustee receive evidence to their
satisfaction of the destruction, loss or theft of any Security, and there is
delivered to the Company and the Trustee such security or indemnity as may be
required by them to save each of them harmless, then, in the absence of notice
to the Company or the Trustee that such Security has been acquired by a bona
fide purchaser, the Company shall execute in exchange for any such mutilated
Security of any series or in lieu of any such destroyed, lost or stolen Security
of any series, a new Security of the same series and of like tenor and principal
amount, bearing a number not contemporaneously outstanding, and the Trustee
shall authenticate and make such new Security available for delivery.
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In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, or is about to be redeemed by the Company
pursuant to Article 3 hereof, the Company in its discretion may, instead of
issuing a new Security, pay or purchase such Security, as the case may be.
Upon the issuance of any new Securities under this Section 2.08, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) in connection
therewith.
Every new Security issued pursuant to this Section 2.08 in lieu of any
mutilated, destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company whether or not the mutilated,
destroyed, lost or stolen Security shall be at any time enforceable by anyone,
and shall be entitled to all benefits of this Indenture equally and ratably with
any and all other Securities duly issued hereunder.
The provisions of this Section 2.08 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 2.09 Outstanding Securities; Determinations of Holders' Action.
Securities outstanding at any time are all the Securities authenticated by
the Trustee except for those canceled by it, those delivered to it for
cancellation, those mutilated, destroyed, lost or stolen Securities referred to
in Section 2.08 hereof, those redeemed by the Company pursuant to Article 3
hereof, and those described in this Section 2.09 as not outstanding. A Security
does not cease to be outstanding because the Company or a Subsidiary or
Affiliate thereof holds the Security; provided, however, that in determining
whether the Holders of the requisite principal amount of Securities have given
or concurred in any request, demand, authorization, direction, notice, consent
or waiver hereunder, Securities owned by the Company or any Affiliate or
Subsidiary of the Company (other than Penelec Capital, so long as any of its
Preferred Securities are outstanding) shall be disregarded and deemed not to be
outstanding; provided, further, that if the Trustee is making such
determination, it shall disregard only such Securities as it knows to be owned
by the Company or any Affiliate or Subsidiary thereof. Securities owned by
Penelec Capital shall be deemed to be outstanding, so long as any of its
Preferred Securities are outstanding.
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Subject to the foregoing, only Securities outstanding at the time of such
determination shall be considered in any such determination (including
determinations pursuant to Articles 3, 6 and 9).
If a Security is replaced pursuant to Section 2.08, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
If the Paying Agent (other than the Company) holds, in accordance with
this Indenture, whenever payment of principal on the Securities is due, whether
at Stated Maturity, upon acceleration or on a Redemption Date, money sufficient
to pay the Securities payable on that date, then immediately on the date of
Stated Maturity, upon acceleration or on such Redemption Date, as the case may
be, such Securities shall cease to be outstanding, and interest, if any, on such
Securities shall cease to accrue.
SECTION 2.10 Temporary Securities.
Until definitive Securities are ready for delivery, the Company may
execute temporary Securities, and upon the Company's written request, signed by
two Officers of the Company, the Trustee shall authenticate and make such
temporary Securities available for delivery. Temporary Securities shall be
printed, lithographed, typewritten, mimeographed or otherwise produced, in any
authorized denomination, substantially of the tenor of the definitive Securities
of the same series in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the Officers of the
Company executing such Securities may determine, as conclusively evidenced by
their execution of such Securities.
If temporary Securities of any series are issued (except for the global
form of certificate issued initially as described in Section 2.02 hereof), the
Company shall cause definitive Securities of the same series to be prepared
without unreasonable delay. After the preparation of definitive Securities, the
temporary Securities of the same series shall be exchangeable for such
definitive Securities upon surrender of such temporary Securities at the office
or agency of the Company designated for such purpose pursuant to Section 2.04
hereof, without charge to the Holder. Upon surrender for cancellation of any one
or more temporary Securities of any series, the Company shall execute a like
principal amount of definitive Securities of the same series of authorized
denominations, and the Trustee, upon written request of the Company signed by
two Officers of the Company, shall authenticate and make such Securities
available for delivery in exchange therefor. Until so exchanged, the temporary
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Securities shall in all respects be entitled to the same benefits under this
Indenture as definitive Securities.
SECTION 2.11 Cancellation.
All Securities surrendered for payment, redemption by the Company pursuant
to Article 3 hereof or registration of transfer or exchange shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly canceled by the Trustee. The Company may at any time
deliver to the Trustee for cancellation any Securities previously authenticated
and made available for delivery hereunder which the Company may have acquired in
any manner whatsoever, and all Securities so delivered shall be promptly
canceled by the Trustee. The Company may not reissue, or issue new Securities to
replace, Securities it has paid or delivered to the Trustee for cancellation. No
Securities shall be authenticated in lieu of or in exchange for any Securities
canceled as provided in this Section 2.11, except as expressly permitted by this
Indenture. All canceled Securities held by the Trustee shall be destroyed by the
Trustee, and the Trustee shall deliver a certificate of destruction to the
Company.
SECTION 2.12 CUSIP Numbers.
The Company, in issuing the Securities of any series, may use "CUSIP"
numbers applicable to such series (if then generally in use), and the Trustee
shall use CUSIP numbers in notices of redemption or exchange as a convenience to
Holders; provided that any such notice shall state that no representation is
made as to the correctness of such numbers either as printed on the Securities
or as contained in any notice of redemption or exchange and that reliance may be
placed only on the other identification numbers printed on the Securities and
any redemption shall not be affected by any defect in or omission of such
numbers.
SECTION 2.13 Defaulted Interest.
If the Company defaults in a payment of interest on the Securities, it
shall pay the defaulted interest, plus (to the extent lawful) any interest
payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, and such special record date, as used in this
Section 2.13 with respect to the payment of any defaulted interest, shall mean
the 15th day next preceding the date fixed by the Company for the payment of
defaulted interest, whether or not such day is a Business Day. At least ten days
before the subsequent special record date, the Company shall mail to each Holder
and to the
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Trustee a notice that states the subsequent special record date, the payment
date and the amount of defaulted interest to be paid.
ARTICLE 3
REDEMPTION
SECTION 3.01 Redemption Right, Obligation; Notice to Trustee.
(a) The Company, at its option, may redeem the Securities pursuant to
paragraph 6 of the Securities, subject to paragraph (c) hereof.
(b) If Penelec Capital redeems all or a portion of any series of Preferred
Securities, the Company shall also redeem, pursuant to paragraph 6 of the
Securities, all or a corresponding portion, as the case may be, of the series of
Securities that Penelec Capital purchased with the proceeds from the sale of
such series of Preferred Securities. The Company shall also redeem all
outstanding Securities upon the dissolution of Penelec Capital, except in
connection with a Distribution Event.
(c) The Company may not redeem (or otherwise purchase) less than all of
the Securities of any series if as a result of such partial redemption (or
purchase) such series of the Securities would be delisted from any national
securities exchange on which they are then listed, and in such case if the
Company elects to redeem (or otherwise purchase) any of the Securities of such
series, it shall redeem (or otherwise purchase) all of them. If as a result of
the redemption by Penelec Capital of any series of Preferred Securities, such
series would be delisted from any national securities exchange on which such
series is then listed, the Company shall also redeem all of the Securities that
were purchased by Penelec Capital with the proceeds from the sale of such series
of Preferred Securities.
(d) If the Company elects or is required to redeem Securities pursuant to
paragraph 6 of the Securities, it shall notify the Trustee in writing of the
Redemption Date, the aggregate principal amount of Securities to be redeemed and
the Redemption Price. The Company shall give such notice to the Trustee at least
45 days before the Redemption Date (unless a shorter notice shall be
satisfactory to the Trustee).
SECTION 3.02 Selection of Securities to be Redeemed.
If less than all the outstanding Securities of any series are to be
redeemed at any time, the Trustee shall select the Securities of such series to
be redeemed in compliance with the requirements of the principal national
securities exchange, if
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any, on which the Securities are listed, or if the Securities are not listed on
a national securities exchange, on a pro rata basis, by lot or, any other method
the Trustee considers fair and appropriate. If all of the Securities of the
series to be partially redeemed are held in global form by the Depository Trust
Company or any successor securities depository, as custodian, it shall select
the Securities by lot. The Trustee shall make the selection at least 30 days,
but not more than 90 days, before the Redemption Date from outstanding
Securities not previously called for redemption. Securities and portions of them
the Trustee selects shall be in authorized denominations only. Provisions of
this Indenture that apply to Securities called for redemption also apply to
portions of Securities called for redemption. The Trustee shall notify the
Company promptly of the Securities or portions of Securities to be redeemed.
SECTION 3.03 Notice of Redemption; Conditional Notice.
At least 30 days but not more than 90 days before a Redemption Date, the
Company shall mail or cause to be mailed a notice of redemption by first-class
mail, postage prepaid, to each Holder of Securities to be redeemed at the
Holder's last address, as it appears on the Register. A copy of such notice
shall be mailed to the Trustee when the notice is mailed to Holders of
Securities. At the Company's written request, the Trustee shall give the notice
of redemption in the Company's name and at its expense.
The notice shall identify the Securities (by series and by certificate
number) to be redeemed, the provision of the Securities or this Indenture
pursuant to which the Securities called for redemption are being redeemed and
shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) the CUSIP number (subject to Section 2.12 hereof);
(4) the name and address of the Paying Agent;
(5) that Securities called for redemption must be surrendered to the
Paying Agent to collect the Redemption Price;
(6) if fewer than all the outstanding Securities of any series are to be
redeemed, the identification and principal amounts of the particular Securities
to be redeemed and that, on and after the Redemption Date, upon surrender of
such Securities, a new Security or Securities of the same series in principal
amount equal to the unredeemed portion thereof will be issued; and
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(7) that, unless the Company defaults in making such redemption payment,
interest will cease to accrue on Securities called for redemption on and after
the Redemption Date.
If, when a notice of optional redemption is mailed, the Company shall not
have irrevocably directed the Trustee to apply towards such redemption funds
deposited with the Trustee or held by it for the redemption of the Securities
called for redemption, such notice may state that it is subject to the receipt
of the redemption monies by the Trustee on or before the Redemption Date, and in
such case, the notice of redemption shall be of no effect unless such monies are
so received on or before the Redemption Date.
SECTION 3.04 Effect of Notice of Redemption.
Subject to the provisions of the last paragraph of Section 3.03 hereof,
after notice of redemption is given, all Securities called for redemption become
due and payable on the Redemption Date and at the Redemption Price. Upon the
later of the Redemption Date and the date such Securities are surrendered to the
Trustee or the Paying Agent, such Securities shall be paid at the Redemption
Price, plus accrued and unpaid interest, including Additional Interest, if any,
and accrued interest thereon, to the Redemption Date.
SECTION 3.05 Deposit of Redemption Price.
Subject to the provisions of the last paragraph of Section 3.03 hereof, on
or prior to a Redemption Date, the Company shall irrevocably deposit with the
Trustee or the Paying Agent (or if the Company or an Affiliate is the Paying
Agent, the Company shall segregate and hold in trust or cause such Affiliate to
segregate and hold in trust) money sufficient to pay the Redemption Price of,
and accrued and unpaid interest, including Additional Interest, if any, and
accrued interest thereon, on all Securities to be redeemed on that date. After
the Redemption Date, interest ceases to accrue on the Securities to be redeemed
with respect to which the Company has deposited sufficient money to pay the
Redemption Price and accrued interest whether or not such Securities are
surrendered for payment. Subject to applicable law, the Trustee or the Paying
Agent shall return to the Company three years after the Redemption Date any
money deposited with it and not applied for redemption.
SECTION 3.06 Securities Redeemed in Part.
Upon surrender of a Security of any series that is redeemed in part,
the Trustee shall authenticate for the Holder a new
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Security of the same series equal in principal amount to the unredeemed portion
of such Security.
ARTICLE 4
COVENANTS
SECTION 4.01 Payment of the Securities.
(a) The Company shall pay the principal of and interest (including
interest accruing on or after the filing of a petition in bankruptcy or
reorganization relating to the Company, whether or not a claim for post-filing
interest is allowed in such proceeding) on the Securities on the dates and in
the manner provided in the Securities or pursuant to this Indenture. An
installment of principal or interest shall be considered paid on the applicable
date due if on such date the Trustee or the Paying Agent holds, in accordance
with this Indenture, money sufficient to pay all of such installment then due.
The Company shall pay interest on overdue principal and interest on overdue
installments of interest (including interest accruing during an Extension Period
(as hereinafter defined) and/or on or after the filing of a petition in
bankruptcy or reorganization relating to the Company, whether or not a claim for
post-filing interest is allowed in such proceeding), to the extent lawful, at
the rate per annum borne by the Securities in default, which interest on overdue
interest shall accrue from the date such amounts became overdue, or from such
other date as may be specified in the Securities.
(b) Notwithstanding paragraph (a) of this Section 4.01 or any other
provision herein to the contrary, if before an event occurs which, under the
terms of the Series A Preferred Securities, results in a distribution of Series
A Securities to the holders of the Series A Preferred Securities in liquidation
of their interests in Penelec Capital, the Company makes a payment under the
Guarantee, the Company shall receive a credit for any payment it makes (i) in
lieu of a periodic distribution to the holders of the Series A Preferred
Securities pursuant to the Guarantee, and the Company shall have no obligation
to pay interest on the Series A Securities in the amount of such payment and
(ii) in lieu of a liquidation or redemption distribution to the holders of the
Series A Preferred Securities pursuant to the Guarantee, and the Company shall
have no obligation to pay the principal of the Series A Securities in the amount
of such payment. The Company shall notify the Trustee and the Holders of any
credit to which it is entitled hereunder.
(c) Notwithstanding paragraph (a) of this Section 4.01 or any other
provision herein to the contrary, the Company shall have the right in its sole
and absolute discretion at any time
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and from time to time while the Series A Securities are outstanding, so long as
an Event of Default has not occurred and is not continuing, to extend the
interest payment period for up to 60 consecutive months, but not beyond the
Stated Maturity or Redemption Date of such Securities, provided that at the end
of each such period (referred to herein as an "Extension Period") the Company
shall pay all interest then accrued and unpaid (together with interest thereon
at the rate specified in the title of the Series A Securities to the extent
permitted by applicable law); and provided that, during any such Extension
Period, neither the Company nor any Subsidiary, (i) shall declare or pay any
dividend on, or redeem, purchase, acquire or make a liquidation payment with
respect to, any of its Capital Stock (other than dividends paid to the Company
by a Wholly Owned Subsidiary), or (ii) pay any interest on any Securities of any
other series then outstanding. Prior to the termination of an Extension Period,
the Company may shorten or may further extend the interest payment period,
provided that such Extension Period together with all such further extensions
may not exceed 60 consecutive months. If Penelec Capital is the sole holder of
the Securities, the Company shall give Penelec Capital notice of its selection
of such extended interest payment period one Business Day prior to the earlier
of (i) the date any distributions on Preferred Securities are payable or (ii)
the date Penelec Capital is required to give notice to any national securities
exchange on which the Preferred Securities are listed or other applicable
self-regulatory organization or to the holders of the Preferred Securities of
the record date or the date such distribution is payable, but in any event not
less than one Business Day prior to such record date. The Company shall cause
Penelec Capital to give notice of the Company's selection of such extended
interest payment period to the holders of the Preferred Securities. If Penelec
Capital shall not be the sole holder of the Securities, the Company will give
the holders of the Securities notice of its selection of such extended interest
payment period ten Business Days prior to the earlier of (i) the Interest
Payment Date or (ii) the date the Company is required to give notice of the
record or payment date of such related interest payment to any national
securities exchange on which the Securities are then listed or other applicable
self-regulatory organization or to holders of the Securities, but in any event
not less than two Business Days prior to such record date. The Company shall
give or cause the Trustee to give such notice of the Company's selection of such
extended interest payment period to the Holders.
(d) If and when Penelec Capital is required to pay any federal, state or
local taxes, duties, assessments or governmental charges of whatever nature
(other than withholding taxes), then the Company shall pay additional interest
("Additional Interest") on the Securities in such amounts as shall be required
so that the net amounts received and retained
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by Penelec Capital as a Securityholder after paying such taxes, duties,
assessments or charges will not be less than the amounts that Penelec Capital as
a Securityholder would have received had no such taxes, duties, assessments or
charges been imposed. The Company shall furnish the Trustee with an Officer's
Certificate or other written notice reporting the events described in this
subsection and their consequences.
(e) If and when Penelec Capital redeems the Series A Preferred Securities
in accordance with their terms, the Series A Securities shall become due and
payable in a principal amount equal to the aggregate stated liquidation
preference of such Series A Preferred Securities, together with all accrued and
unpaid interest, including Additional Interest, if any, and accrued interest
thereon to the date of payment. The Company shall furnish the Trustee with an
Officer's Certificate or other written notice reporting the events described in
this subsection and their consequences.
SECTION 4.02 Prohibition Against Dividends, etc. During an
Event of Default.
Neither the Company nor any Subsidiary shall declare or pay any dividend
on, or redeem, purchase, acquire or make a liquidation payment with respect to,
any of its Capital Stock, other than dividends paid to the Company by a Wholly
Owned Subsidiary, if at such time (a) there shall have occurred any event that,
with the giving of notice or the lapse of time or both, would constitute an
Event of Default, or (b) any Preferred Securities are at the time outstanding
and the Company is in default under the Guarantee.
SECTION 4.03 SEC Reports.
The Company shall file with the Trustee, within 15 days after it files
them with the SEC, copies of its annual report and of the information, documents
and other reports (or copies of such portions of any of the foregoing as the SEC
may by rules and regulations prescribe) which the Company is required to file
with the SEC pursuant to Sections 13 or 15(d) of the Exchange Act. If the
Company is not subject to the reporting requirements of Sections 13 or 15(d) of
the Exchange Act, the Company shall file with the Trustee and the SEC, in
accordance with the rules and regulations prescribed by the SEC, such of the
supplementary and periodic information, documents and reports which may be
required pursuant to Section 13 of the Exchange Act, in respect of a security
listed and registered on a national securities exchange as may be prescribed in
such rules and regulations. The Company shall also comply with the provisions of
Section 314(a) of the TIA.
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SECTION 4.04 Compliance Certificates.
(a) The Company shall deliver to the Trustee within 90 days after the end
of each of the Company's fiscal years an Officer's Certificate, stating whether
or not the signer knows of any Default or Event of Default. Such certificate
shall contain a certification from the principal executive officer, principal
financial officer or principal accounting officer of the Company as to his or
her knowledge of the Company's compliance with all conditions and covenants
under this Indenture. For purposes of this Section 4.04(a), such compliance
shall be determined without regard to any period of grace or requirement of
notice provided under this Indenture. If such Officer does know of such a
Default or Event of Default, the certificate shall describe any such Default or
Event of Default, and its status. Such Officer's Certificate need not comply
with Section 11.04 hereof.
(b) The Company shall, so long as any of the Securities are outstanding,
deliver to the Trustee, as promptly as practicable after any Officer becomes
aware of any continuing Default or Event of Default, an Officer's Certificate
specifying such Default, Event of Default or other default and what action the
Company is taking or proposes to take with respect thereto.
(c) The Company shall deliver to the Trustee any information reasonably
requested by the Trustee in connection with the compliance by the Trustee or the
Company with the TIA.
SECTION 4.05 Relationship with Penelec Capital.
The Company agrees: (a) to maintain direct or indirect, through a
wholly owned subsidiary, 100% ownership of the General Partner and will cause
the General Partner to maintain 100% ownership of the general partner interests
in Penelec Capital; (b) to cause the General Partner to maintain fair market
value net worth of at least 10% of the total contributions less redemptions to
Penelec Capital and to maintain general partner interests representing 3% of all
interests in the capital, income, gain, loss, deduction and credit of Penelec
Capital; (c) to cause the General Partner to timely perform all of its duties as
General Partner of Penelec Capital (including the duty to pay distributions on
the Preferred Securities); and (d) to use its reasonable efforts to cause
Penelec Capital to remain a limited partnership and otherwise continue to be
treated as a partnership for United States federal income tax purposes.
SECTION 4.06 Further Instruments and Acts.
Upon request of the Trustee, the Company shall execute and deliver such
further instruments and do such further acts as may be reasonably necessary or
proper to carry out more effectively
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the purposes of this Indenture.
SECTION 4.07 Investment Company Act.
The Company shall not become an investment company subject to registration
under the Investment Company Act of 1940, as amended.
SECTION 4.08 Payments for Consents.
Neither the Company nor any Subsidiary shall, directly or indirectly, pay
or cause to be paid any consideration, whether by way of interest, fee or
otherwise, to any Holder of any Securities for or as an inducement to any
consent, waiver or amendment of any of the terms or provisions of this Indenture
or the Securities unless such consideration is offered to be paid or agreed to
be paid to all Holders of the Securities who so consent, waive or agree to amend
in the time frame set forth in the documents soliciting such consent, waiver or
agreement.
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ARTICLE 5
SUCCESSOR CORPORATION
SECTION 5.01 When the Company May Merge, Etc.
The Company may not consolidate with or merge with or into, or sell,
convey, transfer or lease all or substantially all of its assets (either in one
transaction or a series of transactions) to, any Person unless:
(a) the Person formed by or surviving such consolidation or merger or to
which such sale, conveyance, transfer or lease shall have been made (the
"Successor") if other than the Company, is organized and existing under the laws
of the United States of America or any State thereof or the District of
Columbia, and the Successor (a) shall expressly assume by a supplemental
indenture, executed and delivered to the Trustee, in form satisfactory to the
Trustee, all the obligations of the Company under the Securities and the
Indenture, and (b) if any Preferred Securities are then outstanding, the
Successor shall expressly assume the Company's obligations under the Guarantee,
and shall become or acquire the general partner of, or any person with
substantially equivalent authority to act for, Penelec Capital; and
(b) the Company delivers to the Trustee an Officer's Certificate and an
Opinion of Counsel, each stating that such consolidation, merger, sale,
conveyance, transfer or lease and such supplemental indenture comply with this
Indenture.
The Successor will be the successor to the Company, and will be
substituted for, and may exercise every right and power and become the obligor
on the Securities with the same effect as if the Successor had been named as,
the Company herein. The predecessor shall be released from the obligations of
the Company set forth in this Indenture and in the Securities.
Anything in this Indenture to the contrary notwithstanding, the sale,
conveyance or other transfer by the Company of (i) all or any portion of its
facilities for the generation of electric energy, or (ii) all of its facilities
for the transmission of electric energy, in each case considered alone or in
combination with properties described in the other clause, shall in no event be
deemed to constitute a sale, conveyance or other transfer of all the properties
of the Company, as or substantially as an entirety. The character of particular
facilities shall be determined in accordance with the Uniform System of Accounts
prescribed for public utilities and licensees subject to the Federal Power Act,
as amended, to the extent applicable.
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ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01 Events of Default.
An "Event of Default" occurs if one of the following shall have occurred
and be continuing:
(a) The Company defaults in the payment, when due and payable, of (i)
interest on any Security or Additional Interest, if any, and the default
continues for a period of 15 days, or (ii) the principal of any Security when
the same becomes due and payable at maturity, upon acceleration, on any
Redemption Date, or otherwise; provided that the failure of the Company to pay
interest or Additional Interest on any series of Securities during an Extension
Period applicable to the Securities of such series shall not constitute a
default hereunder;
(b) The Company defaults in the performance of, fails to comply with, any
of its other covenants or agreements in the Securities or this Indenture and
such failure continues for 60 days after receipt by the Company of a "Notice of
Default";
(c) The Company, pursuant to or within the meaning of any Bankruptcy Law:
(1) commences a voluntary case or proceeding;
(2) consents to the entry of an order for relief against it in an
involuntary case or proceeding;
(3) consents to the appointment of a Custodian of it or for all or
substantially all of its property, and such Custodian is not discharged within
90 days;
(4) makes a general assignment for the benefit of its creditors; or
(5) admits in writing its inability to pay its debts generally as
they become due; or
(d) A court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(l) is for relief against the Company in an involuntary case or
proceeding;
(2) appoints a Custodian of the Company or for all or
substantially all of its properties; or
(3) orders the liquidation of the Company;
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and in each case the order or decree remains unstayed and in effect for 90
days.
The foregoing will constitute Events of Default whatever the reason for
any such Event of Default and whether it is voluntary or involuntary or is
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body.
The term "Bankruptcy Law" means Title 11, United States Code, or any
similar Federal or state law for the relief of debtors. "Custodian" means any
receiver, trustee, assignee, liquidator, sequestrator, custodian or similar
official under any Bankruptcy Law.
A Default under clause (b) above is not an Event of Default until the
Trustee notifies the Company, or the Holders of at least a majority in aggregate
principal amount of the Securities at the time outstanding notify the Company
and the Trustee, of the Default and the Company does not cure such Default
within the time specified in clause (b) above after receipt of such notice. Any
such notice must specify the Default, demand that it be remedied and state that
such notice is a "Notice of Default."
SECTION 6.02 Acceleration.
If any Event of Default other than an Event of Default under clauses (c)
or (d) of Section 6.01 hereof occurs and is continuing, the Trustee may, by
notice to the Company, or the Holders of at least a majority in aggregate
principal amount of the Securities at the time outstanding or the Special
Representative may, by notice to the Company and the Trustee (each, an
"Acceleration Notice"), and the Trustee shall, upon the request of such Holders
or Special Representative, declare the principal of and accrued and unpaid
interest, including Additional Interest, if any, and accrued interest thereon,
on all of the Securities to be due and payable. Upon such a declaration, such
principal and interest shall be due and payable immediately.
The Company shall deliver to the Trustee, as promptly as practicable after
it obtains knowledge thereof, written notice in the form of an Officer's
Certificate of any event which with the giving of notice and the lapse of time
would become an Event of Default under clause (b) of Section 6.01 hereof, its
status and what action the Company is taking or proposes to take with respect
thereto.
If an Event of Default specified in clauses (c) or (d) of Section 6.01
hereof occurs, the principal of and interest,
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including Additional Interest, if any, on all the Securities shall ipso facto
become and be immediately due and payable without any declaration or other act
on the part of the Trustee or any Securityholders.
The Special Representative or Holders of a majority in aggregate principal
amount of the Securities at the time outstanding, by notice to the Trustee, may
rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events of Default have
been cured or waived except nonpayment of principal or interest that has become
due solely because of acceleration. No such rescission shall affect any
subsequent Default or impair any right consequent thereto.
SECTION 6.03 Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may, in its
own name or as trustee of an express trust, institute, pursue and prosecute any
proceeding, including, without limitation, any action at law or suit in equity
or other judicial or administrative proceeding to collect the payment of
principal of or interest on the Securities, or to enforce the performance of any
provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Securities or does not produce any of the Securities in the proceeding. A
delay or omission by the Trustee, the Special Representative or any
Securityholder in exercising any right or remedy accruing upon an Event of
Default shall not impair the right or remedy or constitute a waiver of, or
acquiescence in, the Event of Default. No remedy is exclusive of any other
remedy. All available remedies are cumulative.
SECTION 6.04 Waiver of Past Defaults.
Subject to Section 6.07 hereof, the Special Representative or the Holders
of a majority in aggregate principal amount of the Securities of any series at
the time outstanding, by notice to the Trustee (and without notice to any other
Securityholder), may waive an existing Default or Event of Default affecting the
Securities of such series and its consequences. When a Default is waived, it is
deemed cured and shall cease to exist, but no such waiver shall extend to any
subsequent or other Default or impair any consequent right.
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SECTION 6.05 Control by Majority or the Special Representative.
The Holders of a majority in aggregate principal amount of the Securities
at the time outstanding or, in the event a Special Representative has been
appointed, the Special Representative, may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture or that
the Trustee determines in good faith is unduly prejudicial to the rights of
other Securityholders or would involve the Trustee in personal liability. The
Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction, including withholding notice to the Holders of
the Securities of any series of continuing default (except in the payment of the
principal (other than any mandatory sinking fund payment) of (or premium, if
any) or interest on any Securities of such series) if the Trustee considers it
in the interest of the Holders of such series of Securities to do so.
SECTION 6.06 Limitation on Suits.
Except as provided in Section 6.07 hereof, a Securityholder or the Special
Representative may not pursue any remedy with respect to this Indenture or the
Securities unless:
(a) the Holders or the Special Representative, as the case may be,
gives to the Trustee written notice stating that an Event of Default is
continuing;
(b) the Holders of at least a majority in aggregate principal amount
of the Securities at the time outstanding or the Special Representative, as the
case may be, make a written request to the Trustee to pursue the remedy;
(c) such Holder or Holders or the Special Representative, as the
case may be, offer to the Trustee reasonable security and indemnity against any
loss, liability or expense satisfactory to the Trustee;
(d) the Trustee does not comply with the request within 60 days
after receipt of the notice, the request and the offer of security and
indemnity; and
(e) the Holders of a majority in aggregate principal amount of the
Securities at the time outstanding or the Special Representative, as the case
may be, do not give the Trustee a direction inconsistent with the request during
such 60 days.
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A Securityholder may not use this Indenture to prejudice the rights of any
other Securityholder or to obtain a preference or priority over any other
Securityholder.
SECTION 6.07 Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any
Holder to receive payment of the principal amount of or interest on the
Securities held by such Holder, on or after the respective due dates expressed
in the Securities (in the case of interest, as the same may be extended pursuant
to the provisions of this Indenture and the Securities) or any Redemption Date,
or to bring suit for the enforcement of any such payment on or after such
respective dates shall not be impaired or affected adversely without the consent
of each such Holder.
SECTION 6.08 Collection Suit by the Trustee.
If an Event of Default described in Section 6.01(a) hereof occurs and is
continuing, the Trustee may recover judgment in its own name and as trustee of
an express trust against the Company or any obligor on the Securities for the
whole amount owing with respect to the Securities and the amounts provided for
in Section 7.07 hereof.
SECTION 6.09 The Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relating to the Company or its properties or assets, the
Trustee shall be entitled and empowered, by intervention in such proceeding or
otherwise:
(a) to file and prove a claim for the whole amount of the principal
amount and interest on the Securities and to file such other papers or documents
as may be necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel) and of the Holders allowed
in such judicial proceeding; and
(b) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same; and any Custodian in
any such judicial proceeding is hereby authorized by each Holder to make such
payments to the Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the Holders,
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to pay the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.07 hereof.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
SECTION 6.10 Priorities.
If the Trustee collects any money pursuant to this Article 6, it shall pay
out the money in the following order:
FIRST: to the Trustee for amounts due under Section 7.07 hereof;
SECOND: to Securityholders for amounts due and unpaid on the
Securities for the principal amount, Redemption Price or interest, if any, as
the case may be, ratably, without preference or priority of any kind,
according to such amounts due and payable on the Securities; and
THIRD: the balance, if any, to the Company.
The Trustee may fix a record date and payment date for any payment to
Securityholders pursuant to this Section 6.10.
SECTION 6.11 Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant (other than the Trustee) in the suit of an undertaking to pay the costs
of the suit, and the court in its discretion may assess reasonable costs,
including reasonable attorneys' fees and expenses, against any party litigant in
the suit, having due regard to the merits and good faith of the claims or
defenses made by the party litigant. This Section 6.11 does not apply to a suit
by the Trustee, a suit by a Holder pursuant to Section 6.07 hereof or a suit by
Holders of more than 10% in aggregate principal amount of the Securities at the
time outstanding or a suit by the Special Representative.
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SECTION 6.12 Waiver of Stay, Extension or Usury Laws.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law or any usury or
other law wherever enacted, now or at any time hereafter in force, that would
prohibit or forgive the Company from paying all or any portion of the principal
or interest on the Securities (or interest on such interest accrued during an
Extension Period or period of Default) as contemplated herein or affect the
covenants or the performance by the Company of its obligations under this
Indenture; and the Company (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.
ARTICLE 7
THE TRUSTEE
SECTION 7.01 Duties of the Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise the rights and powers vested in it by this Indenture and use the
same degree of care and skill in its exercise as a prudent man would exercise or
use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default, (i) the Trustee
need perform only those duties that are specifically set forth in this Indenture
and no others; and (ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture. However, in the
case of any certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee shall examine
the certificates and opinions to determine whether or not they conform to the
requirements of this Indenture.
(c) No provision in this Indenture shall relieve the Trustee from
liability for its own negligent action, its own negligent failure to act or its
own willful misconduct, except that:
(1) this paragraph (c) does not limit the effect of paragraphs (a)
and (b) of this Section 7.01;
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(2) the Trustee shall not be liable for any error of judgment made
in good faith by a Trust Officer unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction received by
it pursuant to Section 6.05 hereof; and
(4) the Trustee may refuse to perform any duty or exercise any right
or power or extend or risk its own funds or otherwise incur any financial
liability unless it receives security and indemnity reasonably satisfactory to
it against any loss, liability or expense.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c) and (e) of this Section 7.01 and
to Section 7.02.
(e) Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall not be
liable for interest on any money held by it hereunder.
SECTION 7.02 Rights of the Trustee.
Except as otherwise provided in Section 7.01 hereof:
(a) the Trustee may rely on any document believed by it to be
genuine and to have been signed or presented by the proper person. The Trustee
shall not be bound to make any investigation into the facts or matters stated in
any resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture or other paper or document,
but the Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit, and, if the Trustee
determines to make such further inquiry or investigation, it shall be entitled
to examine the books, records and premises of the Company, personally or by
agent or attorney;
(b) whenever the Trustee is requested by the Company to act or
refrain from acting hereunder, the Trustee may require an Officer's Certificate
directing it to act or refrain from so acting, and, if appropriate, an Opinion
of Counsel. The Trustee shall not be liable for any action it takes or omits to
take in the absence of bad faith in reliance on such Officer's Certificate and
Opinion of Counsel;
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(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may in the absence of bad faith on its part,
rely upon an Officer's Certificate;
(d) the Trustee may act through agents and shall not be responsible
for the misconduct or negligence of any agent appointed with due care;
(e) the Trustee shall not be liable for any action it takes or omits
to take in good faith which it reasonably believes to be authorized or within
its rights or powers;
(f) the Trustee may consult with counsel of its selection and the
advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reliance thereon; and
(g) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee reasonable security and indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction.
SECTION 7.03 Individual Rights of the Trustee.
The Trustee in its individual or any other capacity may become the owner
or pledgee of Securities and may otherwise deal with the Company or its
Affiliates with the same rights it would have if it were not the Trustee. Any
Paying Agent, Registrar or co-Registrar may do the same with like rights.
However, the Trustee must comply with Sections 7.10 and 7.11 hereof.
SECTION 7.04 The Trustee's Disclaimer.
The Trustee makes no representation as to the validity or adequacy of this
Indenture or the Securities, it shall not be accountable for the Company's use
of the proceeds from the Securities, and it shall not be responsible for any
statement in this Indenture or the Securities or any report or certificate
issued by the Company hereunder (other than the Trustee's Certificate of
Authentication), or the determination as to which beneficial owners are entitled
to receive any notices hereunder.
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SECTION 7.05 Notice of Defaults.
If a Default occurs and is continuing and if it is known to the Trustee,
the Trustee shall mail to each Securityholder, as their names and addresses
appear on the Security Register, notice of the Default within 90 days after it
becomes known to the Trustee unless such Default shall have been cured or
waived. Except in the case of a Default described in Section 6.01(a) hereof, the
Trustee may withhold such notice if and so long as a committee of Trust Officers
in good faith determines that the withholding of such notice is in the interests
of Securityholders. The second sentence of this Section 7.05 shall be in lieu of
the proviso to TIA Section 315(b). Said proviso is hereby expressly excluded
from this Indenture, as permitted by the TIA.
SECTION 7.06 Reports by Trustee to Holders.
Within 60 days after each May 31 beginning with the May 31 next following
the date of this Indenture, the Trustee shall mail to each Securityholder a
brief report dated as of such May 31 in accordance with and to the extent
required under TIA Section 313.
A copy of each report at the time of its mailing to Securityholders shall
be filed with the Company, the SEC and each securities exchange on which the
Securities are listed. The Company agrees to promptly notify the Trustee
whenever the Securities become listed on any securities exchange and of any
delisting thereof.
SECTION 7.07 Compensation and Indemnity.
The Company agrees:
(a) to pay to the Trustee from time to time such compensation as
shall be agreed in writing between the Company and the Trustee for all services
rendered by it hereunder (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust);
(b) to reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the reasonable
compensation and the expenses and advances of its agents and counsel), including
all reasonable expenses and advances incurred or made by the Trustee in
connection with any membership on any creditors' committee, except any such
expense or advance as may be attributable to its negligence or bad faith; and
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(c) to indemnify the Trustee, its officers, directors and
shareholders, for, and to hold it harmless against, any and all loss, liability
or expense, incurred without negligence or bad faith on its part, arising out of
or in connection with the acceptance or administration of this trust, including
the costs and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder.
The Trustee shall have a claim and lien prior to the Securities as to all
property and funds held by it hereunder for any amount owing it or any
predecessor Trustee pursuant to this Section 7.07, except with respect to funds
held in trust for the payment of principal of or interest on particular
Securities.
The Company's payment obligations pursuant to this Section 7.07 are not
subject to Article 10 of this Indenture and shall survive the discharge of this
Indenture. When the Trustee renders services or incurs expenses after the
occurrence of a Default specified in Section 6.01 hereof, the compensation for
services and expenses are intended to constitute expenses of administration
under any Bankruptcy Law.
SECTION 7.08 Replacement of Trustee.
The Trustee may resign by so notifying the Company in writing at least 30
days prior to the date of the proposed resignation; provided, however, no such
resignation shall be effective until a successor Trustee has accepted its
appointment pursuant to this Section 7.08. The Holders of a majority in
aggregate principal amount of the Securities at the time outstanding may remove
the Trustee by so notifying the Trustee in writing and may appoint a successor
Trustee, which shall be subject to the consent of the Company unless an Event of
Default has occurred and is continuing. The Trustee shall resign if:
(1) the Trustee fails to comply with Section 7.10 hereof;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or public officer takes charge of the Trustee or its
property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office of
Trustee for any reason, the Company shall promptly appoint a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment to the
retiring Trustee and
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to the Company. Thereupon the resignation or removal of the retiring Trustee
shall become effective, and the successor Trustee shall have all the rights,
powers and duties of the Trustee under this Indenture. The successor Trustee
shall mail a notice of its succession to Securityholders. Subject to payment of
all amounts owing to the Trustee under Section 7.07 hereof and subject further
to its lien under Section 7.07, the retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee. If a successor Trustee
does not take office within 30 days after the retiring Trustee resigns or is
removed, the retiring Trustee, the Company or the Holders of a majority in
aggregate principal amount of the Securities at the time outstanding may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee fails to comply with Section 7.10 hereof, any
Securityholder may petition any court of competent jurisdiction for its removal
and the appointment of a successor Trustee.
SECTION 7.09 Successor Trustee by Merger.
If the Trustee consolidates with, merges or converts into, or transfers
all or substantially all its corporate trust business or assets (including this
Trusteeship) to, another corporation, the resulting, surviving or transferee
corporation without any further act shall, with the concurrence of the Company,
be the successor Trustee.
SECTION 7.10 Eligibility; Disqualification.
The Trustee shall at all times satisfy the requirements of TIA Sections
310(a)(1) and 310(a)(2). The Trustee shall have a combined capital and surplus
of at least $50,000,000 as set forth in its most recent published annual report
of condition. The Trustee shall comply with TIA Section 310(b). In determining
whether the Trustee has conflicting interests as defined in TIA Section
310(b)(1), the provisions contained in the proviso to TIA Section 310(b)(1)
shall be deemed incorporated herein.
SECTION 7.11 Preferential Collection of Claims Against the Company.
If and when the Trustee shall be or become a creditor of the Company, the
Trustee shall be subject to the provisions of the TIA regarding the collection
of claims against the Company.
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ARTICLE 8
SATISFACTION AND DISCHARGE OF INDENTURE;
DEFEASANCE OF CERTAIN OBLIGATIONS; UNCLAIMED MONEYS
SECTION 8.01 Satisfaction and Discharge of Indenture.
The Company shall be deemed to have paid and discharged the entire
indebtedness on all Securities outstanding upon the deposit referred to in
subparagraph (a) below, and the provisions of this Indenture with respect to the
Securities shall no longer be in effect (except as to (1) the rights of
registration of transfer, substitution and exchange of Securities, (2) the
replacement of apparently mutilated, defaced, destroyed, lost or stolen
Securities, (3) the rights of Holders to receive payments of principal thereof
and interest thereon, (4) the rights of the Holders as beneficiaries hereof with
respect to the property so deposited with the Trustee payable to all or any of
them, (5) the obligation of the Company to maintain an office or agency for
payments on and registration of transfer of the Securities, and (6) the rights,
obligations and immunities of the Trustee hereunder) and the Trustee shall, at
the request and expense of the Company, execute proper instruments acknowledging
the same, if:
(a) the Company has irrevocably deposited or caused to be
irrevocably deposited with the Trustee as trust funds in trust, specifically
pledged as security for, and dedicated solely to, the benefit of the Holders (i)
cash in an amount, or (ii) U.S. Government Obligations, maturing as to principal
and interest at such times and in such amounts as will ensure the availability
of cash, or (iii) a combination thereof, sufficient to pay the principal of, and
interest on, all Securities then outstanding, whether at the Stated Maturity,
upon acceleration or upon the redemption of the Securities;
(b) no Default or Event of Default with respect to the Securities
has occurred and is continuing on the date of such deposit or occurs as a result
of such deposit;
(c) the Company has delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all conditions
precedent relating to the defeasance contemplated by this provision have been
complied with; and
(d) the Company has delivered to the Trustee (i) either a private
Internal Revenue Service ruling or an Opinion of Counsel to the effect that the
Holders will not recognize income, gain or loss for federal income tax purposes
as a result of such deposit, defeasance and discharge and will be subject to
federal income tax on the same amount and in the manner and at
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the same times as would have been the case if such deposit, defeasance and
discharge had not occurred, and (ii) an Opinion of Counsel to the effect that
(y) the deposit shall not result in the Company, the Trustee or the trust being
deemed to be an "investment company" under the Investment Company Act of 1940,
as amended, and (z) such deposit creates a valid trust in which the Holders of
the Securities have the sole beneficial ownership interest or that the Holders
of the Securities have a nonavoidable first priority security interest in such
trust. Notwithstanding the foregoing, the Company's obligations to pay principal
of and interest, including Additional Interest, if any, on the Securities shall
continue until the Internal Revenue Service ruling or Opinion of Counsel
referred to in clause (i) above is provided with regard to and without reliance
upon such obligations continuing to be obligations of the Company.
SECTION 8.02 Application by Trustee of Funds Deposited for Payment of
Securities.
Subject to Section 8.04 and Article 10 of this Indenture, all moneys
deposited with the Trustee pursuant to Section 8.01 hereof shall be held in
trust and applied by it to the payment, either directly or through any Paying
Agent (including the Company acting as its own Paying Agent), to the Holders of
the particular Securities for the payment or redemption of which such moneys
have been deposited with the Trustee, of all sums due and to become due thereon
for principal and interest; but such money need not be segregated from other
funds except to the extent required by law.
SECTION 8.03 Repayment of Moneys Held by Paying Agent.
In connection with the satisfaction and discharge of this Indenture, all
moneys then held by any Paying Agent under this Indenture shall, upon demand of
the Company, be repaid to it or paid to the Trustee, and thereupon such Paying
Agent shall be released from all further liability with respect to such moneys.
SECTION 8.04 Return of Moneys Held by the Trustee and Paying Agent
Unclaimed for Three Years.
Any moneys deposited with or paid to the Trustee or any Paying Agent for
the payment of the principal or interest on any Security and not applied but
remaining unclaimed for three years after the date when such principal or
interest shall have become due and payable shall, upon the written request of
the Company and unless otherwise required by mandatory provisions of applicable
escheat or abandoned or unclaimed property laws, be repaid to the Company by the
Trustee or such Paying Agent, and
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the Holder of such Security shall, unless otherwise required by mandatory
provisions of applicable escheat or abandoned or unclaimed property laws,
thereafter look only to the Company for any payment which such Holder may be
entitled to collect, and all liability of the Trustee or any Paying Agent with
respect to such moneys shall thereupon cease.
ARTICLE 9
AMENDMENTS
SECTION 9.01 Without Consent of Holders.
From time to time, when authorized by a resolution of the Board of
Directors, the Company and the Trustee, without notice to or the consent of the
Holders of the Securities issued hereunder or the Special Representative, may
amend or supplement this Indenture or the Securities:
(a) to cure any ambiguity, defect or inconsistency;
(b) to comply with Article 5 hereof;
(c) to provide for uncertificated Securities in addition to or in
place of certificated Securities;
(d) to make any other change that does not adversely affect the
rights of any Securityholder;
(e) to comply with any requirement of the SEC in connection with the
qualification of this Indenture under the TIA; or
(f) to set forth the terms and conditions, which shall not be
inconsistent with this Indenture, of the series of Securities (other than the
Series A Securities) that are to be issued hereunder and the form of Securities
of such series.
SECTION 9.02 With Consent of Holders.
With the written consent of the Holders of at least a majority in
aggregate principal amount of any series of Securities at the time outstanding,
who are affected by any amendment or waiver, or, in the event a Special
Representative has been appointed, with the written consent of the Special
Representative, the Company and the Trustee may amend this Indenture or the
Securities or may waive future compliance by the Company with any provisions of
this Indenture or the Securities of such series. However, without the consent of
each
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Securityholder affected, such an amendment or waiver may not:
(a) reduce the principal amount of the Securities, or reduce the
principal amount of the Securities the Holders of which must consent to an
amendment of this Indenture or a waiver;
(b) change the Stated Maturity of the principal of, or the interest
or rate of interest on the Securities, change adversely to the Holders the
redemption provisions of Article 3 hereof or in the Securities, or impair the
right to institute suit for the enforcement of any such payment or make any
Security payable in money or securities other than that stated in the Security;
(c) make any change in Article 10 hereof that adversely affects the
rights of the Holders of the Securities or any change to any other section
hereof that adversely affects their rights under Article 10 hereof;
(d) waive a Default in the payment of the principal of, or interest
on, any Security; or
(e) change Section 6.07 hereof.
It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent approves the substance thereof.
If certain Holders agree to defer or waive certain obligations of the
Company hereunder with respect to Securities held by them, such deferral or
waiver shall not affect the rights of any other Holder to receive the payment or
performance required hereunder in a timely manner, unless such deferral or
waiver complies with the requirements of this Section 9.02.
After an amendment or waiver under this Section 9.02 becomes effective,
the Company shall mail to the Special Representative and to each Holder affected
by such amendment or waiver a notice briefly describing the amendment or waiver.
Any failure of the Company to mail such notices, or any defect therein, shall
not, however, in any way impair or affect the validity of such amendment or
waiver.
SECTION 9.03 Compliance with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article 9 shall
comply with the TIA.
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SECTION 9.04 Revocation and Effect Of Consents, Waivers and Actions.
Until an amendment, waiver or other action by Holders becomes effective, a
consent to it or any other action by a Holder of a Security hereunder is a
continuing consent by the Holder and every subsequent Holder of that Security or
portion of the Security that evidences the same obligation as the consenting
Holder's Security, even if notation of the consent, waiver or action is not made
on the Security. However, any such Holder or subsequent Holder may revoke the
consent, waiver or action as to such Holder's Security or portion of the
Security if the Trustee receives the notice of revocation before the consent of
the requisite aggregate principal amount of the Securities at the time
outstanding has been obtained and not revoked. After an amendment, waiver or
action becomes effective, it shall bind every Securityholder, except as provided
in Section 9.02 hereof.
The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders entitled to consent to any amendment or
waiver. If a record date is fixed, then, notwithstanding the first two sentences
of the immediately preceding paragraph, those Persons who were Holders at such
record date or their duly designated proxies, and only those Persons, shall be
entitled to consent to such amendment, supplement or waiver or to revoke any
consent previously given, whether or not such Persons continue to be Holders
after such record date.
SECTION 9.05 Notation on or Exchange of Securities.
Securities authenticated and made available for delivery after the
execution of any supplemental indenture pursuant to this Article 9 may, and
shall, if required by the Trustee, bear a notation in form approved by the
Trustee as to any matter provided for in such supplemental indenture. If the
Company shall so determine, new Securities of any series so modified as to
conform, in the opinion of the Trustee and the Board of Directors, to any such
supplemental indenture may be prepared and executed by the Company and
authenticated and made available for delivery by the Trustee in exchange for
outstanding Securities of the same series.
SECTION 9.06 Trustee to Sign Supplemental Indentures.
The Trustee shall sign any supplemental indenture authorized pursuant to
this Article 9 if the supplemental indenture does not adversely affect the
rights, duties, liabilities or immunities of the Trustee. If it does, the
Trustee may, but need not, sign it.
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In signing such amendment the Trustee shall be entitled to receive, and shall be
fully protected in relying upon, an Officer's Certificate and Opinion of Counsel
stating that such supplemental indenture is authorized or permitted by this
Indenture.
SECTION 9.07 Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article 9,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes and every Holder
of Securities theretofore or thereafter authenticated and made available for
delivery hereunder shall be bound thereby.
ARTICLE 10
SUBORDINATION
SECTION 10.01 Securities Subordinated to Senior Indebtedness.
Notwithstanding the provisions of Section 6.01 hereof or any other
provision herein or in the Securities, the Company and the Trustee and each
Holder by his acceptance thereof (a) covenant and agree that all payments by the
Company of the principal of and interest (which term for purposes of this
Article 10 shall include Additional Interest, if any, and any additional accrued
interest) on the Securities shall be subordinated in accordance with the
provisions of this Article 10 to the prior payment in full, in cash or cash
equivalents, of all amounts payable on Senior Indebtedness, and (b) acknowledge
that holders of Senior Indebtedness are or shall be relying on this Article 10.
SECTION 10.02 Priority and Payment of Proceeds in Certain Events;
Remedies Standstill.
(a) Upon any payment or distribution of assets or securities of the
Company, as the case may be, of any kind or character, whether in cash, property
or securities, upon any dissolution or winding up or total or partial
liquidation or reorganization of the Company, whether voluntary or involuntary,
or in bankruptcy, insolvency, receivership or other proceedings, all amounts
payable on Senior Indebtedness (including any interest accruing on such Senior
Indebtedness subsequent to the commencement of a bankruptcy, insolvency or
similar proceeding) shall first be paid in full in cash, or payment provided for
in cash or cash equivalents, before the Holders or the Trustee on behalf of the
Holders shall be entitled to receive from the Company any payment of principal
of or interest on or any other
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amounts in respect of the Securities or distribution of any assets or
securities. Before any payment may be made by the Company of the principal of or
interest on the Securities upon any such dissolution or winding up or
liquidation or reorganization, any payment or distribution of assets or
securities of the Company of any kind or character, whether in cash, property or
securities, to which the Holders or the Trustee on their behalf would be
entitled, except for the provisions of this Article 10, shall be made by the
Company or by any receiver, trustee in bankruptcy, liquidating trustee, agent or
other Person making such payment or distribution first to the holders of all
Senior Indebtedness or their representatives to the extent necessary to pay all
Senior Indebtedness in full after giving effect to any concurrent payment or
distribution to the holders of Senior Indebtedness.
(b) No direct or indirect payment by or on behalf of the Company of
principal of or interest on the Securities whether pursuant to the terms of the
Securities or upon acceleration or otherwise shall be made if, at the time of
such payment, there exists any default in the payment of all or any portion of
any Senior Indebtedness, or any other default affecting Senior Indebtedness
permitting its acceleration, as the result of which the maturity of Senior
Indebtedness has been accelerated, and the Trustee has received written notice
from any trustee, representative or agent for the holders of the Senior
Indebtedness or the holders of at least a majority in principal amount of the
Senior Indebtedness at the time outstanding of such default and acceleration,
and such default shall not have been cured or waived by or on behalf of the
holders of such Senior Indebtedness.
(c) If, notwithstanding the foregoing provision prohibiting such payment
or distribution, the Trustee, any Holder or the Special Representative shall
have received any payment on account of the principal of or interest on the
Securities (other than as permitted by subsections (a) and (b) of this Section
10.02) when such payment is prohibited by this Section 10.02 and before all
amounts payable on Senior Indebtedness are paid in full in cash or cash
equivalents, then and in such event (subject to the provisions of Section 10.08
hereof) such payment or distribution shall be received and held in trust for the
holders of Senior Indebtedness and shall be paid over or delivered first to the
representatives of the holders of the Senior Indebtedness remaining unpaid to
the extent necessary to pay such Senior Indebtedness in full in cash or cash
equivalents.
Upon any payment or distribution of assets or securities referred to in
this Article 10, the Trustee and the Holders shall be entitled to rely upon any
order or decree of a court of competent jurisdiction in which such dissolution,
winding up, liquidation or reorganization proceedings are pending, and upon a
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certificate of the receiver, trustee in bankruptcy, liquidating trustee, agent
or other Person making any such payment or distribution, delivered to the
Trustee for the purpose of ascertaining the Persons entitled to participate in
such distribution, the holders of Senior Indebtedness and other indebtedness of
the Company, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this Article
10.
SECTION 10.03 Payments which May Be Made Prior to Notice.
Nothing in this Article 10 or elsewhere in this Indenture shall prevent (a
the Company, except under the conditions described in Section 10.02 hereof, from
making payments of principal of and interest on the Securities or from
depositing with the Trustee any monies for such payments, or (b the application
by the Trustee of any monies deposited with it for the purpose of making such
payments of principal of and interest on the Securities, to the Holders entitled
thereto, unless at least one day prior to the date when such payment would
otherwise (except for the prohibitions contained in Section 10.02 hereof) become
due and payable, the Trustee shall have received the written notice provided for
in Section 10.02(b) hereof.
SECTION 10.04 Rights of Holders of Senior Indebtedness Not to Be Impaired.
No right of any present or future holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time or in any way be
prejudiced or impaired by any good faith act or omission to act by any such
holder, or by any noncompliance by the Company with the terms and provisions and
covenants herein regardless of any knowledge thereof any such holder may have or
otherwise be charged with.
The provisions of this Article 10 are intended to be for the benefit of,
and shall be enforceable directly by, the holders of Senior Indebtedness.
Notwithstanding anything to the contrary in this Article 10, to the extent
the Holders or the Trustee have paid over or delivered to any holder of Senior
Indebtedness any payment or distribution received on account of the principal
of, or interest on, the Securities to which any other holder of Senior
Indebtedness shall be entitled to share in accordance with Section 10.02 hereof,
no holder of Senior Indebtedness shall have a claim or right against the Holders
or the Trustee with respect to any such payment or distribution or as a result
of the failure to make payments or distributions to such other holder of Senior
Indebtedness.
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SECTION 10.05 Trustee May Take Action to Effectuate Subordination.
Each Holder by his acceptance of the Securities authorizes and directs the
Trustee on his behalf to take such action as may be necessary or appropriate to
effectuate, as between the holders of Senior Indebtedness and the Holders, the
subordination and the subrogation as provided in this Article 10 and appoints
the Trustee his attorney-in-fact for any and all such purposes.
SECTION 10.06 Subrogation.
Upon the payment in full, in cash or cash equivalents, of all Senior
Indebtedness, the Holders shall be subrogated to the rights of the holders of
such Senior Indebtedness to receive payments or distributions of assets of the
Company made on such Senior Indebtedness until the Securities shall be paid in
full; and for the purposes of such subrogation, no payments or distributions to
holders of such Senior Indebtedness of any cash, property or securities to which
Holders of the Securities would be entitled, except for this Article 10, and no
payment pursuant to this Article 10 to holders of such Senior Indebtedness by
the Holders of the Securities, shall, as between the Company, its creditors
other than holders of such Senior Indebtedness and the Holders of the
Securities, be deemed to be a payment by the Company to or on account of such
Senior Indebtedness, it being understood that the provisions of this Article 10
are solely for the purpose of defining the relative rights of the holders of
such Senior Indebtedness, on the one hand, and the Holders of the Securities, on
the other hand.
If any payment or distribution to which the Holders of the Securities
would otherwise have been entitled but for the provisions of this Article 10
shall have been applied, pursuant to this Article 10, to the payment of all
Senior Indebtedness, then and in such case, the Holders of the Securities shall
be entitled to receive from the holders of such Senior Indebtedness at the time
outstanding any payments or distributions received by such holders of Senior
Indebtedness in excess of the amount sufficient to pay, in cash or cash
equivalents, all such Senior Indebtedness in full.
SECTION 10.07 Obligations of Company Unconditional; Reinstatement.
Nothing in this Article 10, or elsewhere in this Indenture or in any
Security, is intended to or shall impair, as between the Company and the Holders
of the Securities, the obligations of the Company, which are absolute and
unconditional, to pay to the
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Holders the principal of, and interest on, the Securities as and when the same
shall become due and payable in accordance with their terms, or is intended to
or shall affect the relative rights of the Holders of the Securities and
creditors of the Company other than the holders of the Senior Indebtedness, nor
shall anything herein or therein prevent the Trustee, the Special Representative
or any Holder from exercising all remedies otherwise permitted by applicable law
upon Default under this Indenture, subject to the rights, if any, under this
Article 10 of the holders of such Senior Indebtedness in respect of cash,
property or securities of the Company received upon the exercise of any such
remedy.
The failure to make a scheduled payment of principal of, or interest on,
the Securities by reason of Section 10.02 hereof shall not be construed as
preventing the occurrence of an Event of Default under Section 6.01 hereof;
provided, however, that if (a the conditions preventing the making of such
payment no longer exist, and (b the Holders of the Securities are made whole
with respect to such omitted payments, the Event of Default relating thereto
(including any failure to pay any accelerated amounts) shall be automatically
waived, and the provisions of the Indenture shall be reinstated as if no such
Event of Default had occurred.
SECTION 10.08 Trustee Entitled to Assume Payments Not Prohibited in
Absence of Notice.
The Trustee or Paying Agent shall not be charged with the knowledge of the
existence of any facts which would prohibit the making of any payment to or by
the Trustee or Paying Agent, unless and until the Trustee or Paying Agent shall
have received written notice thereof from the Company or one or more holders of
Senior Indebtedness or from any trustee or agent therefor or unless the Trustee
or Paying Agent otherwise had actual knowledge thereof; and, prior to the
receipt of any such written notice or actual knowledge, the Trustee or Paying
Agent may conclusively assume that no such facts exist.
Unless at least one day prior to the date when by the terms of this
Indenture any monies are to be deposited by the Company with the Trustee or any
Paying Agent for any purpose (including, without limitation, the payment of the
principal of or the interest on any Security), the Trustee or Paying Agent
shall, except where no notice is necessary or where notice is deemed given in
Sections 10.02 and 10.03 hereof, have received with respect to such monies the
notice provided for in the preceding sentence, the Trustee or Paying Agent shall
have full power and authority to receive and apply such monies to the purpose
for which they were received. Neither of them shall be affected by any notice to
the contrary, which may be received by either on or
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after such date. The foregoing shall not apply to the Paying Agent if the
Company is acting as Paying Agent. Nothing in this Section 10.08 shall limit the
right of the holders of Senior Indebtedness to recover payments as contemplated
by Section 10.02 hereof. The Trustee or Paying Agent shall be entitled to rely
on the delivery to it of a written notice by a Person representing himself or
itself to be a holder of such Senior Indebtedness (or a trustee on behalf of, or
other representative of, such holder) to establish that such notice has been
given by a holder of such Senior Indebtedness or a trustee or representative on
behalf of any such holder. The Trustee shall not be deemed to have any fiduciary
duty to the holders of Senior Indebtedness.
SECTION 10.09 Right of Trustee to Hold Senior Indebtedness.
The Trustee and any Paying Agent shall be entitled to all of the rights
set forth in this Article 10 in respect of any Senior Indebtedness at any time
held by them to the same extent as any other holder of such Senior Indebtedness,
and nothing in this Indenture shall be construed to deprive the Trustee or any
Paying Agent of any of its rights as such holder.
ARTICLE 11
MISCELLANEOUS
SECTION 11.01 Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by operation of subsection (c) of Section 318 of the TIA, the
imposed duties shall control. The provisions of Sections 310 to 317, inclusive,
of the TIA that impose duties on any Person (including provisions automatically
deemed included in an indenture unless the indenture provides that such
provisions are excluded) are a part of and govern this Indenture, except as, and
to the extent, they are expressly excluded from this Indenture, as permitted by
the TIA.
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SECTION 11.02 Notices.
Any notice or communication shall be in writing and delivered in person or
mailed by first-class mail, postage prepaid, addressed as follows:
if to the Company:
Pennsylvania Electric Company
c/o GPU Service, Inc.
310 Madison Avenue
Morristown, New Jersey 07962-1957
Attention: Treasurer
Facsimile No.: (973) 644-4224
if to the Trustee:
United States Trust Company of New York
114 West 47th Street
New York, New York 10036
Attn: Corporate Trust Department,
Department B
Facsimile No.: (212) 852-1626
The Company or the Trustee, by giving notice to the other, may designate
additional or different addresses for subsequent notices of communications. Upon
request from the holder, if any, of Senior Indebtedness, the Company shall
notify such holder of any such additional or different addresses of which the
Company receives notice from the Trustee.
Any notice or communication given to a Securityholder shall be mailed to
the Securityholder at the Securityholder's address as it appears on the Register
of the Registrar and shall be sufficiently given if mailed within the time
prescribed.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not received by the addressee.
If the Company mails a notice or communication to the Securityholders, it
shall mail a copy to the Trustee and each Registrar, Paying Agent or
co-Registrar.
SECTION 11.03 Communication by Holders with Other Holders.
Securityholders may communicate, pursuant to TIA Section 312(b), with
other Securityholders with respect to their rights under this Indenture or
the Securities. The Company, the Trustee,
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the Registrar, the Paying Agent and anyone else shall have the protection of TIA
Section 312(c).
SECTION 11.04 Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take any
action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officer's Certificate (complying with Section 11.05 hereof)
stating that, in the opinion of such Officer, all conditions precedent to the
taking of such action have been complied with; and
(b) if appropriate, an Opinion of Counsel (complying with Section
11.05 hereof) stating that, in the opinion of such counsel, all such conditions
precedent to the taking of such action have been complied with.
SECTION 11.05 Statements Required in Certificate or Opinion.
Each Officer's Certificate and Opinion of Counsel with respect to
compliance with a covenant or condition provided for in this Indenture shall
include:
(a) a statement that each individual making such Officer's
Certificate or Opinion of Counsel has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
Officer's Certificate or Opinion of Counsel are based;
(c) a statement that, in the opinion of each such individual, he or
she has made such examination or investigation as is necessary to enable him or
her to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(d) a statement that, in the opinion of such individual, such
covenant or condition has been complied with; provided, however, that with
respect to matters of fact not involving any legal conclusion, an Opinion of
Counsel may rely on an Officer's Certificate or certificates of public
officials.
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SECTION 11.06 Severability Clause.
If any provision in this Indenture or in the Securities shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
SECTION 11.07 Rules by Trustee, Paying Agent and Registrar.
The Trustee may make reasonable rules for action by or a meeting of
Securityholders. The Registrar and Paying Agent may make reasonable rules for
their functions.
SECTION 11.08 Legal Holidays.
A "Legal Holiday" is any day other than a Business Day. If any specified
date (including a date for giving notice) is a Legal Holiday, the action to be
taken on such date shall be taken on the next succeeding day that is not a Legal
Holiday, and if such action is a payment in respect of the Securities, no
principal or interest installment shall accrue for the intervening period;
except that if any payment is due on a Legal Holiday and the next succeeding day
that is not a Legal Holiday is in the next succeeding calendar year, such
payment shall be made on the Business Day immediately preceding such Legal
Holiday.
SECTION 11.09 Governing Law.
This Indenture and the Securities shall be governed by and construed in
accordance with the laws of the State of New York, as applied to contracts made
and performed within the State of New York, without regard to its principles of
conflicts of laws.
SECTION 11.10 No Recourse Against Others.
No director, officer, employee or stockholder, as such, of the Company
shall have any liability for any obligations of the Company under the Securities
or this Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Securityholder
shall waive and release all such liability. The waiver and release shall be part
of the consideration for the issue of the Securities.
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SECTION 11.11 Successors.
All agreements of the Company in this Indenture and the Securities shall
bind its successors and assigns. All agreements of the Trustee in this Indenture
shall bind its successors and assigns.
SECTION 11.12 Multiple Original Copies of this Indenture.
The parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together represent the same
agreement. Any signed copy shall be sufficient proof of this Indenture.
SECTION 11.13 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or any Subsidiary. Any such indenture, loan or
debt agreement may not be used to interpret this Indenture.
SECTION 11.14 Table of Contents; Headings, Etc.
The Table of Contents, Cross-Reference Table, and headings of the Articles
and Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part hereof, and shall in no way modify or
restrict any of the terms or provisions hereof.
SECTION 11.15 Benefits of the Indenture.
Nothing in this Indenture or in the Securities, express or implied, shall
give to any person, other than the parties hereto and their successors hereunder
and the Holders, any benefit or any legal or equitable right, remedy or claim
under this Indenture, except as expressly provided in Article 10 hereof.
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SIGNATURES
IN WITNESS WHEREOF, the undersigned, being duly authorized, have executed
this Indenture on behalf of the respective parties hereto as of the date first
above written.
PENNSYLVANIA ELECTRIC COMPANY
By:
---------------------------
Name: T.G. Howson
Title: Vice President
UNITED STATES TRUST COMPANY OF NEW YORK
as Trustee
By:
---------------------------
Name: Louis P. Young
Title: Vice President
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[FORM OF FACE OF THE SECURITY]
____% Subordinated Debentures, Series A,
due ____
No. $
-------------------------- ------------
Pennsylvania Electric Company, a Pennsylvania corporation (the "Company", which
term includes any successor corporation under the Indenture hereinafter referred
to), promises to pay to or registered assigns, the principal amount of Dollars
on , .
Interest Payment Dates: the last day of each
commencing on , 199 , except as provided in the Indenture.
Regular Record Dates: the 15th day of the month in which each Interest
Payment Date falls (or if all the Securities are held in book-entry-only
form, the Business Day immediately preceding the applicable Interest Payment
Date).
This Security shall not be valid until an authorized officer of the
Trustee manually signs the Trustee's Certificate of Authentication below.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof which shall for all purposes have the same effect as
if set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Security to be signed
manually or by facsimile by its duly authorized officers and a facsimile of its
corporate seal to be affixed hereto or imprinted hereon.
Pennsylvania Electric Company
By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
Dated:
-----------------------
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TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Securities referred
to in the within-mentioned Indenture.
UNITED STATES TRUST COMPANY OF NEW YORK
By:
---------------------------
Authorized Signatory
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[FORM OF REVERSE SIDE OF SECURITY]
% Subordinated Debentures, Series A,
----
due
----
1. Payment of Interest and Additional Interest
Pennsylvania Electric Company, a Pennsylvania corporation (the "Company"),
promises to pay interest on the principal amount of this Security (the "Series A
Securities") at the rate per annum shown in its title above. Interest will be
payable on each Interest Payment Date, commencing , 199 . Interest on this
Security will accrue for each day that elapses from the most recent date to
which interest has been paid, or if no interest has been paid, from the date of
its authentication, to the next Interest Payment Date; provided that, if there
is no existing Event of Default in the payment of interest and if this Security
is authenticated between a record date referred to on the face hereof and the
next succeeding Interest Payment Date, interest shall accrue from such next
succeeding Interest Payment Date. Interest will be computed on the basis of a
360-day year of twelve 30-day months. Under certain circumstances, the Company
may be required to pay Additional Interest.
The Company shall pay interest on overdue principal and interest on
overdue installments of interest, to the extent lawful, at the rate per annum
borne by this Security.
2. Deferral of Interest
The Company may at any time and from time to time, if it is not in default
in the payment of interest on the Series A Securities, extend the interest
payment period on the Series A Securities for up to 60 consecutive months, but
not later than , . At the end of such period the Company will pay all interest
then accrued and unpaid (including interest on such interest if legally
permitted), provided that during such interest extension period, which the
Company may shorten at its option, neither the Company nor any Subsidiary will
declare or pay any dividend on or purchase, redeem or acquire or make a
liquidation payment on its Capital Stock.
3. Method of Payment
The Company will pay interest on the Series A Securities (except defaulted
interest) to the persons who are registered Holders at the close of business on
the 15th day of the month in which each Interest Payment Date falls (or if all
the Series A Securities are held in book-entry-only form, on the Business Day
immediately preceding the Interest Payment Date) even if the
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Series A Security is thereafter canceled on registration of transfer or
registration of exchange. Holders must surrender Securities to a Paying Agent to
collect principal payments. The Company will pay principal and interest in money
of the United States that at the time of payment is legal tender for payment of
public and private debts. However, the Company may pay principal and interest by
its check payable in such money. It may mail an interest payment to a
Securityholder's registered address.
4. Paying Agent and Registrar
Initially, the Trustee will act as Paying Agent and Registrar. The Company
may appoint and change any Paying Agent or Registrar without notice, other than
notice to the Trustee. The Company or an Affiliate of the Company may act as
Paying Agent, Registrar or co-Registrar.
5. Indenture
The Company issued the Series A Securities under an Indenture, dated as of
, 1998 (the "Indenture"), between the Company and the Trustee. The
Indenture also provides for the issuance by the Company from time to time of
additional Securities of different series and with different terms and
conditions but subject, nevertheless, to the Indenture. The terms of the Series
A Securities include those stated herein and in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended (the "TIA"). Capitalized terms used herein and not defined herein have
the meanings ascribed thereto in the Indenture. The Series A Securities are
subject to all such terms, and Securityholders are referred to the Indenture and
the TIA for a statement of those terms.
The Series A Securities are general unsecured obligations of the Company
limited to $ aggregate principal amount.
6. Redemption
Optional. At the option of the Company, the Series A Securities are
redeemable from and after , , as a whole, or from time to time in part. The
amount to be paid on redemption (the "Redemption Price") shall be equal to 100%
of the principal amount thereof plus accrued and unpaid interest, including
Additional Interest, if any, and accrued interest thereon, to the Redemption
Date. The Company must notify the Trustee of its election to redeem the Series A
Securities at least 45 days before the Redemption Date.
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Mandatory. If Penelec Capital II, L.P. (or any successor in interest)
redeems all or a portion of the Series A Preferred Securities (or any securities
issued in substitution for the Series A Preferred Securities), the Company is
required to redeem all or a corresponding portion, as the case may be, of the
Series A Securities in accordance with the provisions of the last two sentences
of the immediately preceding paragraph. The Company is also required to redeem
all outstanding Securities upon the dissolution of Penelec Capital II, L.P. (or
any successor in interest), except in connection with a Distribution Event.
7. Notice of Redemption; Conditional Notice.
Notice of redemption will be mailed at least 30 days but not more than 90
days before the Redemption Date to each Holder of Series A Securities to be
redeemed at the Holder's registered address. Interest on the Securities to be
redeemed by the Company will cease to accrue after the Redemption Date. Series A
Securities in denominations larger than $ of principal amount may be redeemed in
part but only in integral multiples of $ of principal amount.
In connection with an optional redemption, such notice may state that it
is subject to the receipt by the Trustee of funds from the Company on or before
the Redemption Date, in which event such notice shall be ineffective unless such
funds are so received.
8. Subordination
The Securities are subordinated to Senior Indebtedness (as that term
essentially, debt for borrowed money - is defined in the Indenture). To the
extent provided in the Indenture, Senior Indebtedness must be paid before the
Securities may be paid. The Company agrees, and each Securityholder by accepting
a Security agrees, to such subordination and authorizes the Trustee to give it
effect.
9. Denominations; Transfer; Exchange
The Series A Securities are in registered form, without coupons, in
denominations of $ of principal amount and integral multiples of $ . A Holder
may transfer or exchange Series A Securities in accordance with the Indenture.
The Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not transfer or exchange
any Securities for a period of five days before notice of redemption is given or
any Securities that are selected for redemption (except, in the case of a
Security to be redeemed in part, the portion of the Security not to be
redeemed).
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10. Persons Deemed Owners
The registered Holder of this Security may be treated as the owner of this
Security for all purposes.
11. Amendment; Waiver
Subject to certain exceptions in the Indenture which require the consent
of every Holder, (i) the Indenture or the Series A Securities may be amended
with the written consent of the Special Representative or the Holders of a
majority in aggregate principal amount of the Series A Securities at the time
outstanding, and (ii) certain defaults or noncompliance with certain provisions
may be waived with the written consent of the Special Representative or the
Holders of a majority in aggregate principal amount of the Series A Securities
at the time outstanding. Subject to certain exceptions in the Indenture, without
the consent of any Securityholder or the Special Representative, the Company and
the Trustee may amend the Indenture or the Securities to cure any ambiguity,
defect or inconsistency, to bind a successor to the obligations of the
Indenture, to provide for uncertificated Securities in addition to certificated
Securities, to comply with any requirements of the Securities and Exchange
Commission in connection with the qualification of the Indenture under the TIA,
to make any change that does not adversely affect the rights of any
Securityholder or to provide for the issuance of any other series of Securities.
Amendments bind all Holders and subsequent Holders.
12. Defaults and Remedies
Under the Indenture, Events of Default include (i) default in payment of
the principal amount, or interest (including Additional Interest, if any), in
respect of the Securities when the same becomes due and payable subject, in the
case of interest, to the grace period and any extension period provided for in
the Indenture; (ii) failure by the Company to comply with its other covenants in
the Indenture or the Securities, subject to notice and lapse of time; and (iii)
certain events of bankruptcy or insolvency of the Company. If an Event of
Default occurs and is continuing, the Trustee, the Special Representative, or
the Holders of at least a majority in aggregate principal amount of the
Securities at the time outstanding, may declare all the Securities to be due and
payable immediately. Certain events of bankruptcy or insolvency are Events of
Default which will result in the Securities becoming due and payable immediately
upon the occurrence of such Events of Default.
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Securityholders may not enforce the Indenture or the Securities except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Securities unless it receives reasonable indemnity and security. Subject to
certain limitations, Holders of a majority in aggregate principal amount of the
Securities at the time outstanding or the Special Representative may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Securityholders notice of any continuing Default (except a Default in paying
principal and/or interest) if it determines that withholding notice is in their
interests.
13. Trustee Dealings with the Company
Subject to certain limitations imposed by the TIA, the Trustee, in its
individual or any other capacity, may become the owner or pledgee of Securities
and may otherwise deal with and collect obligations owed to it by the Company or
its Affiliates and may otherwise deal with the Company or its Affiliates with
the same rights it would have if it were not Trustee.
14. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the Company
shall not have any liability for any obligations of the Company under the
Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Security, each
Securityholder waives and releases all such liability. The waiver and release
are part of the consideration for the issue of the Securities.
15. Abbreviations
Customary abbreviations may be used in the name of a Securityholder or an
assignee, such as TEN COM (tenants in common), TEN ENT (tenants by the
entireties), JT TEN (joint tenants with right of survivorship and not as tenants
in common), CUST (custodian), and U/G/M/A (Uniform Gift to Minors Act).
16. Unclaimed Money
If money for the payment of principal or interest remains unclaimed for
three years, the Trustee or Paying Agent will pay the money back to the Company
at its request. After that, Holders entitled to such money must look to the
Company for payment.
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17. Discharge Prior to Maturity
If the Company deposits with the Trustee or Paying Agent money or U.S.
Government Obligations sufficient to pay the principal of and interest on the
Securities to maturity, the Company will be discharged from the Indenture under
certain conditions and except for certain provisions thereof.
18. Successor
When a successor Person to the Company assumes all the obligations of its
predecessor under the Securities and the Indenture in accordance with the
Indenture, such predecessor shall be released from those obligations.
19. Governing Law
THE INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO ITS PRINCIPLES OF
CONFLICTS OF LAWS.
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ASSIGNMENT FORM
To assign this Security, fill in the form below: (I) or (we) assign and
transfer this Security to:
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax I.D. number)
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint agent to
----------------------------------------------
transfer this Security on the books of the Company. The agent may substitute
another to act for him.
Dated: Signature:
---------------- ------------------------
(Sign exactly as your name appears on the
other side of this Security)
Signature Guaranty:
------------------------
(New York commercial bank or trust company or member
of an accepted medallion guaranty)
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