(..continued)
Exhibit A-5(a)
AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
OF PENELEC CAPITAL II, L.P.
This AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT, dated as of
June 9, 1999, of Penelec Capital II, L.P., a Delaware limited partnership (the
"Partnership"), is made by and among Penelec Preferred Capital II, Inc., as
General Partner, X.X. Xxxxxx, as Class A Limited Partner, and the Persons (as
defined below) who become limited partners of the Partnership in accordance with
the provisions hereof.
WHEREAS, Penelec Preferred Capital II, Inc. and X.X. Xxxxxx have
heretofore formed a limited partnership pursuant to the Delaware Act (as defined
below), by filing a Certificate of Limited Partnership (as defined below) with
the Secretary of State of the State of Delaware on August 20, 1998, and entering
into a Limited Partnership Agreement of the Partnership dated as of August 20,
1998 (the "Limited Partnership Agreement"); and
WHEREAS, the parties hereto desire to continue the Partnership as a
limited partnership under the Delaware Act and to amend and restate the Limited
Partnership Agreement in its entirety.
NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, agree to amend and restate the Limited Partnership Agreement in its
entirety as follows:
ARTICLE I - Definitions
-----------------------
For purposes of this Agreement, each of the following terms shall
have the meaning set forth below (such meaning to be equally applicable to both
singular and plural forms of the terms so defined).
"Action" shall have the meaning set forth in Section 13.01(b).
"Affiliate" shall mean, with respect to the Person to which it
refers, a Person that directly or indirectly through one or more intermediaries,
controls or is controlled by, or is under common control with, such subject
Person.
"Agreement" shall mean this Amended and Restated Limited Partnership
Agreement, as amended, modified, supplemented or restated from time to time,
including, without limitation, by any Action establishing a series of Preferred
Partner Interests.
"Book Entry Interests" shall mean a beneficial interest in the
Certificates, ownership and transfers of which shall be made through book
entries by a Clearing Agency as described in Section 14.04.
"Business Day" shall mean any day other than a day on which banking
institutions in The City of New York are authorized or required by law to close.
"Capital Account" shall have the meaning set forth in Section 4.01.
For purposes of determining the Capital Accounts as set forth in Article IV,
partnership items shall be computed in the same manner as the Partnership
computes its income for Federal income tax purposes, rather than generally
accepted accounting principles, except that (1) a distribution in kind of
Partnership property shall be treated as a taxable disposition of such property
for its fair market value (taking into account Section 7701(g) of the Code) on
the date of distribution, and (2) adjustments shall be made in accordance with
Treasury Regulation Section 1.704-1(b)(2)(iv), which adjustments shall include
any income which is exempt from United States Federal income tax, all
Partnership losses and all expenses properly chargeable to the Partnership,
whether deductible or non-deductible and whether described in Section
705(a)(2)(B) of the Code, treated as so described pursuant to Treasury
Regulation Section 1.704-1(b)(2)(iv)(i), or otherwise.
"Certificate" shall mean a certificate substantially in the form
attached hereto as Exhibit A, evidencing a Preferred Partner Interest.
"Certificate of Limited Partnership" shall mean the Certificate of
Limited Partnership of the Partnership and any and all amendments thereto and
restatements thereof filed with the Secretary of State of the State of Delaware.
"Class A Limited Partner" shall mean X.X. Xxxxxx in his capacity
as a limited partner of the Partnership.
"Clearing Agency" shall mean an organization registered as a
"Clearing Agency" pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" shall mean a broker dealer, bank,
other financial institution or other Person for whom from time to time a
Clearing Agency effects book entry transfers and pledges of securities deposited
with the Clearing Agency.
"Code" shall mean the United States Internal Revenue Code of 1986
and (unless the context requires otherwise) the rules and regulations
promulgated thereunder, as amended from time to time.
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"Commission" shall mean the Securities and Exchange Commission.
"Covered Person" shall mean any Partner, any Affiliate of a Partner
or any officers, directors, shareholders, partners, members, employees,
representatives or agents of a Partner or their respective Affiliates, or any
employee or agent of the Partnership or its Affiliates.
"Definitive Certificate" shall have the meaning set forth in
Section 14.04.
"Delaware Act" shall mean the Delaware Revised Uniform Limited
Partnership Act, 6 Del. C. Section 17-101, et seq., as amended from time to
time or any successor statute thereto.
"Economic Risk of Loss" shall mean the "economic risk of loss" that
any Partner is treated as bearing under Treasury Regulation Section 1.752-2 with
respect to any Partnership liability.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Fiscal Year" shall have the meaning set forth in Section 7.01.
"General Partner" shall mean Penelec Preferred, in its capacity as
general partner of the Partnership, together with any successor thereto that
becomes a general partner of the Partnership pursuant to the terms of this
Agreement.
"Global Certificate" shall mean a Certificate issued in the form of
a typewritten Certificate or Certificates representing the Book Entry Interests
to be delivered to a Clearing Agency in accordance with Section 14.04.
"Guarantee" shall mean the Payment and Guarantee Agreement to be
dated as of June 16, 1999 of Penelec, as amended or supplemented from time to
time, and any additional Payment and Guarantee Agreements entered into by
Penelec for the benefit of the Preferred Partners.
"Indemnified Person" shall mean the General Partner, any Affiliate
of the General Partner or any officers, directors, shareholders, partners,
members, employees, representatives or agents of the General Partner, or any
employee or agent of the Partnership or its Affiliates.
"Indenture" shall mean the Indenture to be dated as of June 1, 1999,
as amended or supplemented from time to time, between Penelec and United States
Trust Company of New York as
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Trustee, and any additional Indentures entered into by Penelec pursuant to which
Subordinated Debentures of Penelec are to be issued.
"Interest" shall mean the entire partnership interest of a Partner
in the Partnership at any particular time, including the right of such Partner
to any and all benefits to which a Partner may be entitled as provided in this
Agreement, together with the obligations of such Partner to comply with all of
the terms and provisions of this Agreement.
"Investment Company Act Event" shall mean that the Partnership and
the Trust shall have received an opinion of counsel (which may be regular
counsel to Penelec or an Affiliate of Penelec, but not an employee thereof),
experienced in such matters, to the effect that a change in law or regulation or
a change in an official interpretation of law or regulation by any legislative
body, court, governmental agency or regulatory authority (a "Change in 40 Act
Law") has occurred to the effect that the Partnership or the Trust is or will be
considered an "investment company" required to be registered under the 1940 Act,
which Change in 40 Act Law becomes effective on or after the date of issuance of
any series of Preferred Partner Interests.
"Limited Partners" shall mean the Class A Limited Partner, if any,
and the Preferred Partners.
"Liquidating Distributions" shall mean distributions of Partnership
property made upon a liquidation and dissolution of the Partnership as provided
in Article XII.
"Liquidation Distribution" shall mean the liquidation preference of
each series of Preferred Partner Interests as set forth in the Action for such
series.
"Liquidating Trustee" shall have the meaning set forth in Section
12.01.
"1940 Act" shall mean the Investment Company Act of 1940, as
amended.
"Partners" or "Partner" shall mean the General Partner and the
Limited Partners.
"Partnership" shall mean Penelec Capital II, L.P., a limited
partnership formed under the laws of the State of Delaware.
"Penelec" shall mean Pennsylvania Electric Company and its
successors.
"Penelec Preferred" shall mean Penelec Preferred Capital II, Inc.
and its successors.
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"Person" shall mean any individual, general partnership, limited
partnership, corporation, limited liability company, joint venture, trust,
business trust, cooperative or association and the heirs, executors,
administrators, legal representatives, successors and assigns of such Person
where the context so admits.
"Preferred Partner" shall mean a limited partner of the Partnership
who holds one or more Preferred Partner Interests.
"Preferred Partner Distribution" shall have the meaning set forth
in Section 13.02(a)(i).
"Preferred Partner Interest Owner" shall mean, with respect to a
Book Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest, as reflected on the books of the Clearing Agency, or on the books of a
Person maintaining an account with such Clearing Agency (directly as a Clearing
Agency Participant or as an indirect participant, in each case in accordance
with the rules of such Clearing Agency).
"Preferred Partner Interests" shall mean the Interests described
in Article XIII.
"Purchase Price" shall mean the amount paid for each Preferred
Partner Interest.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Special Event" shall mean a Tax Event or an Investment Company
Act Event.
"Special Representative" shall have the meaning set forth in
Section 13.02(d).
"Subordinated Debentures" shall mean the Subordinated Debentures of
Penelec issued under the Indenture.
"Tax Event" shall mean that the Partnership and the Trust shall have
obtained an opinion of tax counsel (which may be regular tax counsel to Penelec
or an Affiliate of Penelec, but not an employee thereof), experienced in such
matters, to the effect that, as a result of any amendment to, or change
(including any announced prospective change) in, the laws (or any regulations
thereunder) of the United States or any political subdivision or taxing
authority thereof or therein affecting taxation, or as a result of any official
administrative pronouncement or judicial decision interpreting or applying any
applicable laws or regulations, which amendment or change is effective, or which
pronouncement or interpretation is announced, on or after the date of issuance
of any series of Preferred Partner Interests, there is more than an
insubstantial risk that
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(i) the Partnership or the Trust will be subject to Federal income tax with
respect to interest accrued or received on the related Subordinated Debentures,
the Partnership will otherwise not be taxed as a partnership or the Trust will
otherwise not be taxed as a grantor trust, or (ii) interest payable by Penelec
to the Partnership on the related Subordinated Debentures will not be deductible
by Penelec for Federal income tax purposes, or (iii) the Partnership or the
Trust is subject to more than a de minimis amount of other taxes, duties or
other governmental charges.
"Tax Matters Partner" shall have the meaning set forth in Section
7.05.
"Transfer" shall mean any transfer, sale, assignment, gift, pledge,
hypothecation or other disposition or encumbrance of an interest in the
Partnership.
"Treasury Regulations" shall mean the final and temporary income tax
regulations, as well as the procedural and administrative regulations,
promulgated by the United States Department of the Treasury under the Code, as
amended from time to time.
"Trust" shall mean Penelec Capital Trust, a Delaware business trust,
and any additional Trusts created by any Trust Agreements to, among other
things, acquire Preferred Partner Interests.
"Trust Agreement" shall mean the Amended and Restated Trust
Agreement of the Trust, dated June 9, 1999, as amended or supplemented from time
to time, and any additional Trust Agreements entered into by the Partnership as
grantor.
"Trust Securities" shall mean preferred beneficial interests in the
Trust, each representing a Preferred Partner Interest.
"Trustee" shall mean United States Trust Company of New York or any
other trustee under the Indenture.
"Underwriting Agreement" shall mean any Underwriting Agreement
entered into by the Trust, the Partnership and/or Penelec with regard to the
sale of Trust Securities, Preferred Partner Interests and/or other securities.
ARTICLE II - Continuation; Name; Purposes; Term; Definitions
------------------------------------------------------------
Section 2.01. Formation. The parties hereto hereby join
together to continue the heretofore formed limited partnership which shall
exist under and be governed by the Delaware Act. The Partnership shall make
any and all filings or
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disclosures required under the laws of Delaware or otherwise with respect to its
continuation as a limited partnership, its use of a fictitious name or otherwise
as may be required. The Partnership shall be a limited partnership among the
Partners solely for the purposes specified in Section 2.03 hereof, and this
Agreement shall not be deemed to create a partnership among the Partners with
respect to any activities whatsoever other than the activities within the
business purposes of the Partnership as specified in Section 2.03. No Partner
shall have any power to bind any other Partner with respect to any matter except
as specifically provided in this Agreement. No Partner shall be responsible or
liable for any indebtedness or obligation of any other Partner incurred either
before or after the execution of this Agreement. The assets of the Partnership
shall be owned by the Partnership as an entity, and no Partner individually
shall own any direct interest in the assets of the Partnership.
Section 2.02. Name and Place of Business. The name of the
Partnership is "Penelec Capital II, L.P." The Partnership may operate under the
name of "Penelec Capital II" and such name shall be used for no purposes other
than those set forth herein. The General Partner may change the name in its sole
and absolute discretion. The principal place of business of the Partnership
shall be c/o GPU Service, Inc., 000 Xxxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000
or at such other place as may be selected by the General Partner in its sole and
absolute discretion.
Section 2.03. Purposes.
(a) The sole purposes of the Partnership are to issue and sell
Interests in the Partnership, including, without limitation, Preferred Partner
Interests, and to use the proceeds of all sales of Interests in the Partnership
to purchase Subordinated Debentures issued by Penelec pursuant to the Indenture,
to act as the grantor of the Trust and to effect other similar arrangements
permitted by this Agreement, and to engage in any and all activities necessary,
convenient, advisable or incidental thereto. The Partnership shall not incur
debt for borrowed money.
(b) In furtherance of the purposes set forth in Section 2.03(a) and
without limiting the generality thereof, the Partnership may issue Preferred
Partner Interests for consideration other than cash, including Subordinated
Debentures, which consideration shall constitute payment for the Preferred
Partner Interests so issued.
Section 2.04. Term. The Partnership was formed on August 20,
1998 and shall continue without dissolution through June 30, 2063, unless
sooner dissolved as provided in Article XI hereof.
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Section 2.05. Qualification in Other Jurisdictions. The General
Partner shall cause the Partnership to be qualified or registered under assumed
or fictitious name statutes or similar laws in any jurisdiction in which the
Partnership transacts business. The General Partner shall execute, deliver and
file any certificates (and any amendments and/or restatements thereof) necessary
for the Partnership to qualify to do business in a jurisdiction in which the
Partnership may wish to conduct business.
Section 2.06. Treatment as a Partnership. The Partnership shall be
treated as a partnership for Federal income tax purposes under Treasury
Regulation Section 1.7701-3(b)(1). Neither the Tax Matters Partner, nor any
other Partner, shall file an election to treat the Partnership as a corporation
for Federal income tax purposes.
Section 2.07. Admission of Preferred Partners. Without execution of
this Agreement, upon receipt by a Person of a Certificate and giving of
consideration for the Preferred Partner Interest being acquired by such Person,
which shall be deemed to constitute a request by such Person that the books and
records of the Partnership reflect its admission as a Preferred Partner, such
Person shall be admitted to the Partnership as a Preferred Partner and shall
become bound by this Agreement. A Person may also be admitted to the Partnership
as a Preferred Partner and become bound by this Agreement by execution of this
Agreement (by counterpart or otherwise).
Section 2.08. Records. The name and mailing address of each Partner
and the amount contributed to the capital of the Partnership shall be listed on
the books and records of the Partnership. The Partnership shall keep such other
records as are required by Section 17-305 of the Delaware Act. The General
Partner shall update the books and records from time to time as necessary to
accurately reflect the information therein.
ARTICLE III - Capital Contributions
-----------------------------------
Section 3.01. Capital Contributions. As of the date of this
Agreement, the General Partner has contributed the amount of $99 to the capital
of the Partnership and shall make any further contributions required to satisfy
its obligations under Section 3.04. With respect to each Person who is issued a
Preferred Partner Interest by the Partnership in connection with the initial
issuance by the Partnership of such Preferred Partner Interest, there shall be
contributed to the capital of the Partnership an amount equal to the Purchase
Price for such Preferred Partner Interest (such amount being such Person's
capital contribution to the Partnership).
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Section 3.02. Additional Capital Contributions. No Partner
shall be required to make any additional contributions or advances to the
Partnership except as provided in Section 3.04 or by law.
Section 3.03. No Interest or Withdrawals. No interest shall accrue
on any capital contribution made by or on behalf of a Partner, and no Partner
shall have the right to withdraw or to be repaid any portions of its capital
contributions so made, except as specifically provided in this Agreement.
Section 3.04. Minimum Capital Account Balance of General Partner. At
all times throughout the term of the Partnership, the General Partner shall
maintain a Capital Account balance equal to at least 3% of the total positive
Capital Account balances for the Partnership. If necessary, the General Partner
shall immediately make additional contributions to satisfy this requirement,
which contributions shall constitute additional capital contributions made by
the General Partner.
Section 3.05. Partnership Interests. Unless otherwise
provided herein, the percentage interests of the Partners shall be determined
in proportion to the capital contributions of the Partners.
Section 3.06. Interests. Each Preferred Partner's respective
Preferred Partner Interests shall be set forth on the books and records of the
Partnership. Each Partner hereby agrees that its Interests shall for all
purposes be personal property. No Partner has an interest in specific
Partnership property. The Partnership shall not issue any additional interest in
the Partnership after the date hereof other than General Partner Interests or
Preferred Partner Interests. The immediately preceding sentence shall not be
construed to limit the effect of Section 10.04 of this Agreement.
ARTICLE IV - Capital Accounts
Section 4.01. Capital Accounts. There shall be established on the
books of the Partnership a capital account ("Capital Account") for each Partner
that shall consist of the initial capital contribution to the Partnership made
by such Partner (or such Partner's predecessor in interest), increased by: (a)
any additional capital contributions made by such Partner (or predecessor
thereof), (b) the agreed value of any property subsequently contributed to the
capital of the Partnership by such Partner (or predecessor thereof); and (c)
items of income and gain allocated to such Partner (or predecessor thereof). A
Partner's Capital Account shall be decreased by: (a) items of loss and deduction
allocated to such Partner (or predecessor thereof); and (b) any distributions
made
9
to such Partner (or predecessor thereof). In addition to and notwithstanding the
foregoing, Capital Accounts shall be maintained at all times in accordance with
the Capital Account maintenance rules set forth in Treasury Regulation Section
1.704-1(b)(2)(iv).
Section 4.02. Compliance With Treasury Regulations. The foregoing
provisions and the other provisions of this Agreement relating to the
maintenance of Capital Accounts are intended to comply with Section 704(b) of
the Code and Treasury Regulation Section 1.704-1(b) and shall be interpreted and
applied in a manner consistent with such regulations. In the event that the
General Partner shall determine that it is prudent to modify the manner in which
the Capital Accounts, or any debits or credits thereto, are determined in order
to comply with such regulations, the General Partner may make such modification.
ARTICLE V - Allocations
-----------------------
Section 5.01. Profits and Losses. Each fiscal period, items of
income, gain, loss, deduction or credit of the Partnership shall be allocated
(i) first, items of income of the Partnership to the Preferred Partners, pro
rata in proportion to the number of Preferred Partner Interests held by each
Preferred Partner and at the distribution rate specified in the Action for each
series of Preferred Partner Interests, in an amount equal to the excess of (a)
the Preferred Partner Distributions accrued on such Preferred Partner Interests
since their date of issuance through and including the close of the current
fiscal period (whether or not paid) over (b) the items of income of the
Partnership allocated to the Preferred Partners pursuant to this Section 5.01(i)
in all prior fiscal periods; and (ii) thereafter, all remaining items of income,
gain, loss, deduction or credit to the General Partner; provided however, that
the percentage of items of income, gain, loss, deduction or credit of the
Partnership allocated to the General Partner for any fiscal period shall at
least equal three percent.
Section 5.02. Allocation Rules. For purposes of determining the
profits, losses or any other items allocable to any period, profits, losses and
any such other items shall be determined on a daily, monthly or other basis, as
determined by the General Partner in its sole and absolute discretion using any
method that is permissible under Section 706 of the Code and the Treasury
Regulations thereunder. The Partners are aware of the income tax consequences of
the allocations made by this Article V and hereby agree to be bound by the
provisions of this Article V in reporting their shares of Partnership income and
loss for income tax purposes.
Section 5.03. Adjustments to Reflect Changes in Interests.
Notwithstanding the foregoing, with respect to any
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Fiscal Year during which any Partner's percentage interest in the Partnership
changes, whether by reason of the admission of a Partner, the withdrawal of a
Partner, a non-pro rata contribution of capital to the Partnership or any other
event described in Section 706(d)(1) of the Code and the Treasury Regulations
issued thereunder, allocations of the items of income, gain, loss, deduction or
credit of the Partnership shall be adjusted appropriately to take into account
the varying interests of the Partners during such Fiscal Year. The General
Partner shall consult with the Partnership's accountants and other advisors and
shall select the method of making such adjustments, which method shall be used
consistently thereafter.
Section 5.04. Tax Allocations. For purposes of this Article V and
Federal, state and local income tax purposes, Partnership income, gain, loss,
deduction or credit (or any item thereof) for each Fiscal Year shall be
determined in accordance with Federal tax accounting principles rather than
generally accepted accounting principles and shall be allocated to and among the
Partners in order to reflect the allocations made pursuant to the provisions of
this Article V for such Fiscal Year (other than allocations of items which are
not deductible or are excluded from taxable income), taking into account any
variation between the adjusted tax basis and book value of Partnership property
in accordance with the principles of Section 704(c) of the Code.
Section 5.05. Qualified Income Offset. Notwithstanding any other
provision hereof, if any Partner unexpectedly receives an adjustment, allocation
or distribution described in Treasury Regulation Section
1.704-1(b)(2)(ii)(d)(4), (5), and (6) which creates or increases a deficit in
the Capital Account of such Partner (and, for this purpose, the existence of a
deficit shall be determined by increasing the Partner's Capital Account by any
amounts that the Partner is obligated to restore to the Partnership pursuant to
Treasury Regulation Section 1.704-1(b)(2)(ii)(C) and reducing the Partner's
Capital Account by the items described in Treasury Regulation Section
1.704-1(b)(2)(ii)(d)(4), (5), and (6)), the next available gross income of the
Partnership shall be allocated to the Partners having such deficit balances, in
proportion to the deficit balances, until such deficit balances are eliminated
as quickly as possible. The provisions of this Section 5.05 are intended to
constitute a "qualified income offset" within the meaning of Treasury Regulation
Section 1.704-1(b)(2)(ii)(d) and shall be interpreted and implemented as therein
provided.
ARTICLE VI - Distributions
--------------------------
Section 6.01. Distributions. Preferred Partners shall
receive periodic distributions, if any, in accordance with the applicable
terms of the applicable Action creating the series of
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Preferred Partner Interests held by them, when, as and if declared by the
General Partner out of funds held by the Partnership to the extent that the
Partnership has cash on hand sufficient to permit such payments and funds
legally available therefor. Subject to the rights of the holders of the
Preferred Partner Interests, the General Partner shall receive such
distributions, if any, as may be declared from time to time by the General
Partner.
Section 6.02. Certain Distributions Prohibited.
Notwithstanding anything in this Agreement to the contrary, all Partnership
distributions shall be subject to the following limitations:
(a) No distribution shall be made to any Partner if, and to the
extent that, such distribution would not be permitted under Section 17-607 of
the Delaware Act or other applicable law.
(b) No distribution shall be made to any Partner to the extent that
such distribution, if made, would create or increase a deficit balance in the
Capital Account of such Partner.
(c) Notwithstanding anything in the Delaware Act or this Agreement
to the contrary, in the event of a Liquidating Distribution, a Partner may be
compelled in accordance with Section 12.01 to accept a distribution of
Subordinated Debentures, cash or any other asset in kind from the Partnership
even if the percentage of the asset distributed to it exceeds a percentage of
that asset which is equal to the percentage in which such Partner shares in
distributions from the Partnership.
Section 6.03. Withholding. The Partnership shall comply with all
withholding requirements under Federal, state and local law. To the extent that
the Partnership is required to withhold and pay over any amounts to any
authority with respect to distributions or allocations to or for the account of
any Partner, the amount withheld shall be deemed to be a distribution in the
amount of the withholding to or for the account of the Partner. In the event of
any claimed overwithholding, Partners shall be limited to an action against the
applicable jurisdiction. If the amount withheld was not withheld from actual
distributions, the Partnership may reduce subsequent distributions by the amount
of such withholding.
ARTICLE VII - Accounting Matters; Banking
-----------------------------------------
Section 7.01. Fiscal Year. The fiscal year ("Fiscal Year")
of the Partnership shall be the calendar year, or such other year as is
required by the Code.
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Section 7.02. Certain Accounting Matters.
(a) At all times during the existence of the Partnership, the
General Partner shall keep, or cause to be kept, full books of account, records
and supporting documents, which shall reflect in reasonable detail each
transaction of the Partnership. The books of account shall be maintained on the
accrual method of accounting, in accordance with generally accepted accounting
principles, consistently applied. The Partnership shall use the accrual method
of accounting for United States Federal income tax purposes. The books of
account and the records of the Partnership shall be examined by and reported
upon as of the end of each Fiscal Year by a firm of independent certified public
accountants selected by the General Partner.
(b) The General Partner shall cause to be prepared, within 90 days
after the end of each Fiscal Year of the Partnership, annual financial
statements of the Partnership, including a balance sheet of the Partnership as
of the end of such Fiscal Year and the related statements of income or loss. The
General Partner shall cause such financial statements to be delivered to each
Partner that so requests in writing, together with a statement indicating such
Partner's share of each item of Partnership income, gain, loss, deduction or
credit for such Fiscal Year for income tax purposes.
(c) Notwithstanding anything in this Agreement to the contrary, the
General Partner may, to the maximum extent permitted by applicable law, keep
confidential from the Partners for such period of time as the General Partner
deems reasonable any information which the General Partner reasonably believes
to be in the nature of trade secrets or other information the disclosure of
which the General Partner in good faith believes is not in the best interest of
the Partnership or could damage the Partnership or its business or which the
Partnership is required by law or by an agreement with a third party to keep
confidential.
(d) The General Partner may make, or revoke, in its sole and
absolute discretion, any elections for the Partnership that are permitted under
tax or other applicable laws, including elections under Section 704(c) of the
Code, provided that the General Partner shall not make any elections pursuant to
Section 754 of the Code.
Section 7.03. Banking. The Partnership shall maintain one or more
bank accounts in the name and for the sole benefit of the Partnership. The
signatories for such accounts shall be designated by the General Partner.
Reserve cash, cash held pending the expenditure of funds for the business of the
Partnership or cash held pending a distribution to one or more of the Partners
may, but need not, be invested in any manner at the sole and absolute discretion
of the General Partner.
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Section 7.04. Right to Rely on Authority of General Partner. No
Person that is not a Partner, in dealing with the General Partner, shall be
required to determine such General Partner's authority to make any commitment or
engage in any undertaking on behalf of the Partnership, or to determine any fact
or circumstance bearing upon the existence of the authority of the General
Partner.
Section 7.05. Tax Matters Partner. The "tax matters partner," as
defined in Section 6231 of the Code, of the Partnership shall be the General
Partner (the "Tax Matters Partner"). The Tax Matters Partner shall receive no
compensation from the Partnership for its services in that capacity. The Tax
Matters Partner is authorized to employ such accountants, attorneys and agents
as it, in its sole and absolute discretion, deems necessary or appropriate. Any
Person who serves as Tax Matters Partner shall not be liable to the Partnership
or to any Partner for any action it takes or fails to take as Tax Matters
Partner with respect to any administrative or judicial proceeding involving
"partnership items" (as defined in Section 6231 of the Code) of the Partnership.
Section 7.06. Taxpayer Information. Any Person who holds a Preferred
Partner Interest as a nominee for another Person is required to furnish to the
Partnership (a) the name, address and taxpayer identification number of the
beneficial owner and the nominee; (b) information as to whether the beneficial
owner is (1) a Person that is not subject to United States taxation on its
income regardless of source, (2) a foreign government, an international
organization or any wholly owned agency or instrumentality of either of the
foregoing, or (3) a tax-exempt entity; (c) the amount and description of
Preferred Partner Interest held, acquired or transferred for the beneficial
owner; and (d) certain other information, including the dates of acquisitions
and transfers, means of acquisitions and transfers and acquisition cost for
purchases, as well as the amount of net proceeds from sales.
ARTICLE VIII - Management
-------------------------
Section 8.01. Management.
(a) The General Partner shall have full and exclusive authority with
respect to all matters concerning the conduct of the business and affairs of the
Partnership, including (without limitation) the power, without the consent of
the Limited Partners, to make all decisions it deems necessary, advisable,
convenient or appropriate to accomplish the purposes of the Partnership. The
acts of the General Partner acting alone shall serve to bind the Partnership and
shall constitute the acts of the Partners.
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(b) The Limited Partners, in their capacity as such, shall not take
part in the management, operation or control of the business of the Partnership
or transact any business in the name of the Partnership. In addition, the
Limited Partners, in their capacity as such, shall not be agents of the
Partnership and shall not have the power to sign or bind the Partnership to any
agreement or document. The Limited Partners shall have the right to vote only
with respect to those matters specifically provided for in this Agreement.
Notwithstanding anything herein to the contrary, the Preferred Partners may
exercise all rights provided to them, if any, under this Agreement, the
Indenture, the Guarantee and the Delaware Act.
(c) The General Partner is authorized and directed to use its best
efforts to conduct the affairs of, and to operate, the Partnership in such a way
that the Partnership would not be deemed to be an "investment company" required
to be registered under the 1940 Act or taxed as a corporation for Federal income
tax purposes and so that the Subordinated Debentures will be treated as
indebtedness of Penelec for Federal income tax purposes. In this connection, the
General Partner is authorized, in its sole and absolute discretion, to take any
action not inconsistent with applicable law, the Certificate of Limited
Partnership or this Agreement that does not materially adversely affect the
interests of holders of Preferred Partner Interests that the General Partner
determines in its sole and absolute discretion to be necessary, advisable or
desirable for such purposes.
Section 8.02. Fiduciary Duty.
(a) To the extent that, at law or in equity, an Indemnified Person
has duties (including fiduciary duties) and liabilities relating thereto to the
Partnership or to any other Covered Person, an Indemnified Person acting under
this Agreement shall not be liable to the Partnership or to any other Covered
Person for its good faith reliance on the provisions of this Agreement or the
advice of counsel selected by the Indemnified Person in good faith. The
provisions of this Agreement, to the extent that they restrict the duties and
liabilities of an Indemnified Person otherwise existing at law or in equity, are
agreed by the parties hereto to replace such other duties and liabilities of
such Indemnified Person.
(b) Unless otherwise expressly provided herein, (i) whenever a
conflict of interest exists or arises between an Indemnified Person and any
Covered Person, or (ii) whenever this Agreement or any other agreement
contemplated herein or therein provides that an Indemnified Person shall act in
a manner that is, or provides terms that are, fair and reasonable to the
Partnership or any Partner, the Indemnified Person shall resolve such conflict
of interest, taking such action or providing such terms, considering in each
case the relative interest of each
15
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices, the advice of counsel selected by the
Indemnified Person in good faith, and any applicable generally accepted
accounting practices or principles. In the absence of bad faith by the
Indemnified Person, the resolution, action or term so made, taken or provided by
the Indemnified Person shall not constitute a breach of this Agreement or any
other agreement contemplated herein or of any duty or obligation of the
Indemnified Person at law or in equity or otherwise.
(c) Whenever in this Agreement an Indemnified Person is permitted or
required to make a decision (i) in its "discretion" or under a grant of similar
authority or latitude, the Indemnified Person shall be entitled to consider only
such interests and factors as it desires, including its own interests, and shall
have no duty or obligation to give any consideration to any interest of or
factors affecting the Partnership or any other Person, or (ii) in its "good
faith" or under another express standard, the Indemnified Person shall act under
such express standard and shall not be subject to any other or different
standard imposed by this Agreement or other applicable law.
Section 8.03. Specific Obligations of the General Partner.
The General Partner hereby undertakes:
(a) to devote to the affairs of the Partnership so much of its time
as shall be necessary to carry on properly the Partnership's business and its
responsibilities hereunder;
(b) subject to the terms of this Agreement, to cause the Partnership
to do or refrain from doing such acts as shall be required by Delaware law in
order to preserve the valid existence of the Partnership as a Delaware limited
partnership and to preserve the limited liability of the Limited Partners;
(c) to pay directly (without any obligation to first exhaust the
assets of the Partnership) (i) all of the costs and expenses of the Partnership
(including, without limitation, costs and expenses relating to the organization
of, and offering of Preferred Partner Interests in, the Partnership and costs
and expenses relating to the operation of the Partnership, including without
limitation, costs and expenses of accountants, attorneys, statistical or
bookkeeping services and computing or accounting equipment, paying agent(s),
registrar(s), transfer agent(s), duplicating, travel and telephone and costs and
expenses incurred in connection with the acquisition, financing, and disposition
of Partnership assets) and (ii) all expenses of the Trust, any trustee thereof
and of the Partnership as grantor of the Trust;
(d) to take such action as it, in good faith, deems
16
appropriate and consistent with the terms of this Agreement to enforce the
Partnership's rights under the Subordinated Debentures and the Indenture; and
(e) to provide promptly to any trustee of the Trust a copy of any
notice of Default received by the General Partner pursuant to Section 7.05 of
the Indenture.
Section 8.04. Powers of the General Partner. The General Partner
shall have the right, power and authority, in the management of the business and
affairs of the Partnership, to do or cause to be done any and all acts deemed by
the General Partner to be necessary or appropriate to effectuate the business,
purposes and objectives of the Partnership. Without limiting the generality of
the foregoing, the General Partner shall have the power and authority without
any further act, approval or vote of any Partner to:
(a) cause the Partnership to issue Interests, including
Preferred Partner Interests, and determine classes and series thereof, in
accordance with this Agreement;
(b) act as, or appoint another Person to act as, registrar and
transfer agent for the Preferred Partner Interests;
(c) establish a record date with respect to all actions to be
taken hereunder that require a record date to be established, including with
respect to allocations, distributions and voting rights and declare
distributions and make all other required payments on General Partner, Class A
Limited Partner and Preferred Partner Interests as the Partnership's paying
agent;
(d) enter into and perform one or more Underwriting Agreements
and use the proceeds from the issuance of the Interests to purchase the
Subordinated Debentures, in each case on behalf of the Partnership;
(e) bring and defend on behalf of the Partnership actions and
proceedings at law or in equity before any court or governmental, administrative
or other regulatory agency, body or commission or otherwise;
(f) employ or otherwise engage employees and agents (who may
be designated as officers with titles) and managers, contractors, advisors and
consultants and pay reasonable compensation for such services;
(g) redeem each series of Preferred Partner Interests (which
shall constitute a return of capital and not a distribution of income) in
accordance with its terms and/or to the extent that the related series of
Subordinated Debentures is redeemed or reaches maturity;
17
(h) take such action as may be necessary or appropriate to
permit the withdrawal and redeposit of Preferred Partner Interests as provided
for in the Trust Agreement;
(i) enter into and perform one or more Trust Agreements or
other organizational documents relating to the creation of one or more Preferred
Partners that will own Preferred Partner Interests, including by entering into
and performing agreements or documents referred to in such Trust Agreements or
other organizational documents, in each case on behalf of the Partnership; and
(j) execute all documents or instruments, perform all duties
and powers and do all things for and on behalf of the Partnership in all matters
necessary, convenient, advisable or incidental to the foregoing.
The expression of any power or authority of the General Partner in
this Agreement shall not in any way limit or exclude any other power or
authority which is not specifically or expressly set forth in, or precluded by,
this Agreement.
Section 8.05. Independent Affairs. Any Partner or Affiliate thereof
may engage in or possess an interest in any other business venture of whatever
nature and description, independently or with others, wherever located and
whether or not comparable to or in competition with the Partnership or the
General Partner, or any Affiliate thereof, and neither the Partnership nor any
of the Partners shall, by virtue of this Agreement, have any rights with respect
to, or interests in, such independent ventures or the income, profits or losses
derived therefrom. No Partner or Affiliate thereof shall be obligated to present
any particular investment opportunity to the Partnership even if such
opportunity is of a character that, if presented to the Partnership, could be
taken by the Partnership, and any Partner or Affiliate thereof shall have the
right to take for its own account (individually or as a partner or fiduciary) or
to recommend to others any such particular investment opportunity.
Section 8.06. Meetings of the Partners. Meetings of the Partners of
any class or series or of all classes or series of the Partnership's Interests
may be called at any time by the Partners holding 10% in liquidation preference
of such class or series of Interests, or of all classes or series of Interests,
as the case may be, or as provided in any Action establishing a series of
Preferred Partner Interests. Except to the extent otherwise provided in any such
Action, the following provisions shall apply to meetings of Partners:
(a) Notice of any meeting shall be given to all Partners not
less than ten (10) business days nor more than sixty (60) days prior to the date
of such meeting. Partners may vote in person or by proxy at such meeting.
Whenever a vote, consent
18
or approval of Partners is permitted or required under this Agreement, such
vote, consent or approval may be given at a meeting of Partners or by written
consent.
(b) Each Partner may authorize any Person to act for it by
proxy on all matters in which a Partner is entitled to participate, including
waiving notice of any meeting, or voting or participating at a meeting. Every
proxy must be signed by the Partner or its attorney-in-fact. No proxy shall be
valid after the expiration of eleven (11) months from the date thereof unless
otherwise provided in the proxy. Every proxy shall be revocable at the pleasure
of the Partner executing it.
(c) Each meeting of Partners shall be conducted by the General
Partner or by such other Person that the General Partner may designate.
(d) Subject to the provisions of this Section 8.06, the
General Partner, in its sole and absolute discretion, shall establish all other
provisions relating to meetings of Partners, including notice of the time, place
or purpose of any meeting at which any matter is to be voted on by any Partners,
waiver of any such notice, action by consent without a meeting, the
establishment of a record date, quorum requirements, voting in person or by
proxy or any other matter with respect to the exercise of any such right to
vote; provided, however, that unless the General Partner has established a lower
percentage, a majority of the Partners entitled to vote thereat shall constitute
a quorum at all meetings of the Partners.
Section 8.07. Restrictions on General Partner. So long as any series
of Subordinated Debentures are held by the Partnership, the General Partner
shall not (i) direct the time, method and place of conducting any proceeding for
any remedy available to the Trustee, or executing any trust or power conferred
on the holders of the Subordinated Debentures or the Trustee with respect to
such series, (ii) waive any past default which is waivable under the Indenture,
(iii) exercise any right to rescind or annul a declaration that the principal of
all of a series of Subordinated Debentures shall be due and payable or (iv)
consent to any amendment, modification or termination of the Indenture, where
such consent shall be required, without, in each case, obtaining the prior
approval of the holders of not less than a majority of the aggregate stated
liquidation preference of all series of Preferred Partner Interests affected
thereby, acting as a single class (or the Special Representative acting on their
behalf); provided, however, that where a consent under the Indenture would
require the consent of each holder affected thereby, no such consent shall be
given by the General Partner without the prior consent of each holder of all
series of Preferred Partner Interests affected thereby. The General Partner
shall not revoke any action previously authorized or approved by a vote of any
series of Preferred Partner Interests.
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The General Partner shall notify all holders of such Preferred Partner Interests
of any notice of default received from the Trustee with respect to such series
of Subordinated Debentures. In addition, the General Partner will not permit or
cause the Partnership to file a voluntary petition in bankruptcy without the
approval of the holders of not less than a majority of the aggregate stated
liquidation preference of the outstanding Preferred Partner Interests.
ARTICLE IX - Liability and Indemnification
------------------------------------------
Section 9.01. Partnership Expenses and Liabilities.
(a) Except as provided in the Delaware Act, the General Partner
shall have the liabilities of a partner in a partnership without limited
partners to Persons other than the Partnership and the other Partners. Except as
provided in the Delaware Act or this Agreement, the General Partner shall have
the liabilities of a partner in a partnership without limited partners to the
Partnership and to the other Partners.
(b) Except as otherwise expressly required by law, a Limited
Partner, in its capacity as such, shall have no liability in excess of (i) the
amount of its capital contributions to the Partnership, (ii) its share of any
assets and undistributed profits of the Partnership, and (iii) the amount of any
distributions wrongfully distributed to it.
Section 9.02. No Liability. Except as otherwise expressly provided
by the Delaware Act or in Section 9.01(a), no Covered Person shall be liable to
the Partnership or to any other Partner for any act or omission performed or
omitted pursuant to the authority granted to it hereunder or by law, or from a
loss resulting from any mistake or error in judgment on its part or from the
negligence, dishonesty, fraud or bad faith of any employee, independent
contractor, broker or other agent of the Partnership, provided that such act or
omission, such mistake or error in judgment or the selection of such employee,
independent contractor, broker or other agent, as the case may be, did not
result from the willful misconduct, gross negligence or fraud of such Covered
Person. Any Covered Person shall be fully protected in relying in good faith
upon the records of the Partnership and upon such information, opinions, reports
or statements presented to the Partnership by any Person as to matters the
Covered Person reasonably believes are within such other Person's professional
or expert competence and who has been selected with reasonable care by or on
behalf of the Partnership, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which distributions to Partners might properly be paid.
Section 9.03. Indemnification. To the fullest extent
20
permitted by applicable law, except as set forth in Section 8.03(c), an
Indemnified Person shall be entitled to indemnification from the Partnership for
any loss, damage or claim incurred by such Indemnified Person by reason of any
act or omission performed or omitted by such Indemnified Person in good faith on
behalf of the Partnership and in a manner reasonably believed to be within the
scope of authority conferred on such Indemnified Person by this Agreement,
except that no Indemnified Person shall be entitled to be indemnified in respect
of any loss, damage or claim incurred by such Indemnified Person by reason of
willful misconduct, gross negligence or fraud with respect to such acts or
omissions; provided, however, that any indemnity under this Section 9.03 shall
be provided out of and to the extent of Partnership assets only, and except as
otherwise expressly provided in Section 9.01(a) or by the Delaware Act, no
Covered Person shall have any personal liability on account thereof. To the
fullest extent permitted by applicable law, expenses (including legal fees)
incurred by an Indemnified Person in defending any claim, demand, action, suit
or proceeding shall, from time to time, be advanced by the Partnership prior to
the final disposition of such claim, demand, action, suit or proceeding upon
receipt by the Partnership of an undertaking by or on behalf of the Indemnified
Person to repay such amount if it shall be determined that the Indemnified
Person is not entitled to be indemnified as authorized in this Section 9.03.
ARTICLE X - Withdrawal; Transfer Restrictions
---------------------------------------------
Section 10.01. Transfer by General Partner; Admission of Substituted
General Partner. The General Partner may not Transfer its Interest (in whole or
in part) to any Person without the consent of all other Partners, provided that
the General Partner may, without the consent of any Partner, Transfer its
Interest to Penelec or any direct or indirect wholly owned subsidiary of
Penelec. Notwithstanding anything else herein, the General Partner may merge
with or into another Person, may permit another Person to merge with or into the
General Partner and may Transfer all or substantially all of its assets to
another Person if the General Partner is the survivor of such merger or the
Person into which the General Partner is merged or to which the General
Partner's assets are transferred is a Person organized under the laws of the
United States or any state thereof or the District of Columbia. The General
Partner shall have the right to admit the assignee or transferee of its Interest
which is permitted hereunder as a substituted or additional general partner of
the Partnership, with or without the consent of the Limited Partners. Any such
assignee or transferee of all or a part of the Interest of a General Partner
shall be deemed admitted to the Partnership as a general partner of the
Partnership immediately prior to the effective date of such Transfer, and such
additional or successor general partner of the
21
Partnership is hereby authorized and shall continue the business of the
Partnership without dissolution.
Section 10.02. Withdrawal of Limited Partners. A Preferred Partner
may not withdraw from the Partnership prior to the dissolution and winding up of
the Partnership except upon the assignment of its Preferred Partner Interests
(including any redemption, repurchase, exchange or other acquisition by the
Partnership), as the case may be, in accordance with the provisions of this
Agreement. Any Person who has been assigned one or more Interests shall provide
the Partnership with a completed Form W-9 or such other documents or information
as are requested by the Partnership for tax reporting purposes. A withdrawing
Preferred Partner shall not be entitled to receive any distribution and shall
not otherwise be entitled to receive the fair value of its Preferred Partner
Interest except as otherwise expressly provided in this Agreement.
Section 10.03. Withdrawal of Class A Limited Partner. Upon the
admission of at least one Preferred Partner as a Limited Partner of the
Partnership, the Class A Limited Partner shall be deemed to have withdrawn from
the Partnership as a limited partner of the Partnership, and upon such
withdrawal, the Class A Limited Partner shall have its capital contribution
returned to it without any interest or deduction and shall have no further
interest in the Partnership.
Section 10.04. Withdrawal or Redeposit of Preferred Partner
Interests. Nothing in this Article X or elsewhere in this Agreement (including,
without limitation, Article XIV) shall restrict or limit the right of any Person
to withdraw or redeposit Preferred Partner Interests represented by Trust
Securities and to be admitted to the Partnership as a limited partner of the
Partnership or to withdraw as a limited partner of the Partnership in connection
with such withdrawal or redeposit, as the case may be, as provided for in the
Trust Agreement.
ARTICLE XI - Dissolution of the Partnership
-------------------------------------------
Section 11.01. No Dissolution. The Partnership shall not be
dissolved by the admission of additional or successor Partners in accordance
with the terms of this Agreement. The death, withdrawal, incompetency,
bankruptcy, dissolution or other cessation to exist as a legal entity of a
Limited Partner, or the occurrence of any other event that terminates the
Interest of a Limited Partner in the Partnership, shall not in and of itself
cause the Partnership to be dissolved and its affairs wound up. To the fullest
extent permitted by applicable law, upon the occurrence of any such event, the
General Partner may, without any further act, vote or approval of any Partner,
subject to the terms of this Agreement, admit any Person to the Partnership as
an additional or substitute Limited Partner, which admission
22
shall be effective as of the date of the occurrence of such event, and the
business of the Partnership shall be continued without dissolution.
Section 11.02. Events Causing Dissolution. The Partnership
shall be dissolved and its affairs shall be wound up upon the occurrence of
any of the following events:
(a) The expiration of the term of the Partnership, as
provided in Section 2.04 hereof;
(b) The withdrawal, removal or bankruptcy of the General
Partner or Transfer (other than a grant of a security interest) by the General
Partner of its entire Interest in the Partnership when the assignee is not
admitted to the Partnership as an additional or successor General Partner in
accordance with Section 10.01 hereof, or the occurrence of any other event that
results in the General Partner ceasing to be a general partner of the
Partnership under the Delaware Act, provided, the Partnership shall not be
dissolved and required to be wound up in connection with any of the events
specified in this clause (b) if (i) at the time of the occurrence of such event
there is at least one remaining general partner of the Partnership who is hereby
authorized to, and agrees to, and does carry on the business of the Partnership,
or (ii) within ninety days after the occurrence of such event, a majority in
Interest of the remaining Partners (or such greater percentage in Interest as is
required by the Delaware Act) agree in writing or by vote to continue the
business of the Partnership and to the appointment, effective as of the date of
such event, if required, of one or more additional general partners of the
Partnership;
(c) The entry of a decree of judicial dissolution under the
Delaware Act;
(d) The bankruptcy, liquidation or dissolution and winding up
of Penelec;
(e) The written consent of the General Partner; or
(f) In accordance with Section 13.02(f).
Section 11.03. Notice of Dissolution. Upon the dissolution of
the Partnership, the General Partner shall promptly notify the Partners of
such dissolution.
ARTICLE XII - Liquidation of Partner Interests
----------------------------------------------
Section 12.01. Liquidation. Upon dissolution of the
Partnership, the General Partner, or, in the event that the dissolution is
caused by an event described in Section 11.02(b)
23
and there is no other General Partner, a Person or Persons who may be approved
by Preferred Partners holding not less than a majority in liquidation preference
of the Preferred Partners Interests, as liquidating trustee (the "Liquidating
Trustee"), shall immediately commence to wind up the Partnership's affairs;
provided, however, that a reasonable time shall be allowed for the orderly
winding up of the Partnership and the satisfaction of liabilities to creditors
so as to enable the Partners to minimize the normal losses attendant upon a
liquidation. The Preferred Partners shall continue to share profits and losses
during liquidation in the same proportions, as specified in Articles V and VI
hereof, as before liquidation. The proceeds of liquidation shall be distributed,
as realized, in the following order and priority:
(a) to creditors of the Partnership, including Preferred
Partners who are creditors, to the extent otherwise permitted by law, in
satisfaction of the liabilities of the Partnership (whether by payment or the
making of reasonable provision for payment thereof), other than liabilities for
which reasonable provision for payment has been made and liabilities for
distributions to Partners;
(b) to the holders of Preferred Partner Interests of each
series then outstanding in accordance with the terms of this Agreement or the
Action or Actions for such Series; and
(c) to all Partners in accordance with their respective
positive Capital Account balances, after giving effect to all contributions,
distributions and allocations for all periods.
Section 12.02. Termination. The Partnership shall terminate when all
of the assets of the Partnership have been distributed in the manner provided
for in this Article XII, and the Certificate of Limited Partnership shall have
been cancelled in the manner required by the Delaware Act.
Section 12.03. Duty of Care. The General Partner or the Liquidating
Trustee, as the case may be, shall not be liable to the Partnership or any
Partner for any loss attributable to any act or omission of the General Partner
or the Liquidating Trustee, as the case may be, taken in good faith in
connection with the liquidation of the Partnership and distribution of its
assets in belief that such course of conduct was in or not opposed to the best
interest of the Partnership. The General Partner or the Liquidating Trustee, as
the case may be, may consult with counsel and accountants with respect to
liquidating the Partnership and distributing its assets and shall be justified
in acting or omitting to act in accordance with the written opinion of such
counsel or accountants, provided they shall have been selected with reasonable
care.
24
Section 12.04. No Liability for Return of Capital. The General
Partner and its respective officers, directors, members, shareholders,
employees, representatives, agents, partners and Affiliates shall not be
personally liable for the return of the capital contributions of any Partner to
the Partnership. No Partner shall be obligated to restore to the Partnership any
amount with respect to a negative Capital Account.
ARTICLE XIII - Preferred Partner Interests
------------------------------------------
Section 13.01. Preferred Partner Interests.
(a) The aggregate number of Preferred Partner Interests which the
Partnership shall have authority to issue is unlimited. Each series of Preferred
Partner Interests shall rank equally and all Preferred Partner Interests shall
rank senior to all other Interests in respect of the right to receive
distributions and the right to receive payments out of the assets of the
Partnership upon voluntary or involuntary dissolution and winding up of the
Partnership. The issuance of any Interests ranking senior to the Preferred
Partner Interest shall be deemed to materially adversely affect the rights of
the Preferred Partner Interests under this Agreement.
(b) The General Partner on behalf of the Partnership is authorized
to issue Preferred Partner Interests, in one or more series, having such
designations, rights, privileges, restrictions and other terms and provisions,
whether in regard to distributions, return of capital or otherwise, as may from
time to time be established in a written action or actions (each, an "Action")
of the General Partner providing for the issue of such series. In connection
with the foregoing, the General Partner is expressly authorized, prior to
issuance, to set forth in an Action or Actions providing for the issue of such
series, the following:
(i) The distinctive designation of such series which
shall distinguish it from other series;
(ii) The number of Preferred Partner Interests included in
such series, which number may be increased or decreased from time to time
unless otherwise provided by the General Partner in creating the series;
(iii) The Preferred Partner Distribution rate (or method of
determining such rate) for Preferred Partner Interests of such series and
the first date upon which such Preferred Partner Distribution shall be
payable;
(iv) The amount or amounts which shall be paid out of the
assets of the Partnership to the holders of such series of Preferred
Partner Interests upon voluntary or
25
involuntary dissolution and winding up of the Partnership;
(v) The price or prices at which, the period or periods within
which and the terms and conditions upon which the Preferred Partner
Interests of such series may be redeemed or purchased, in whole or in
part, at the option of the Partnership;
(vi) The obligation of the Partnership to purchase or redeem
Preferred Partner Interests of such series pursuant to a sinking fund or
otherwise and the price or prices at which, the period or periods within
which and the terms and conditions upon which the Preferred Partner
Interests of such series shall be redeemed, in whole or in part, pursuant
to such obligation;
(vii) The period or periods within which and the terms and
conditions, if any, including the price or prices or the rate or rates of
conversion or exchange and the terms and conditions of any adjustments
thereof, upon which the Preferred Partner Interests of such series shall
be convertible or exchangeable at the option of the Preferred Partner, or
the Partnership, into any other Interests or securities or other property
or cash or into any other series of Preferred Partner Interests;
(viii) The voting rights, if any, of the Preferred Partner
Interests of such series in addition to those required by law and set
forth in this Agreement, and any requirement for the approval by the
Preferred Partner Interests, or of the Preferred Partner Interests of one
or more series, or of both, as a condition to specified Actions or
amendments to this Agreement; and
(ix) Any other relative rights, powers, preferences or
limitations of the Preferred Partner Interests of the series not
inconsistent with this Agreement or with applicable law.
In connection with the foregoing and without limiting the generality
thereof, the General Partner is hereby expressly authorized, without the vote or
approval of any other Partner or any other Person, to take any Action to create
under the provisions of this Agreement a series of Preferred Partner Interests
that was not previously outstanding. Without the vote or approval of any other
Partner or any other Person, the General Partner may execute, swear to,
acknowledge, deliver, file and record whatever documents may be required in
connection with the issue from time to time of Preferred Partner Interests in
one or more series as shall be necessary, convenient or desirable to reflect the
issue of such series. The General Partner shall do all things it deems to be
appropriate or necessary to comply with the Delaware Act and is authorized and
directed to do all things
26
it deems to be necessary or permissible in connection with any future issuance,
including compliance with any statute, rule, regulation or guideline of any
Federal, state or other governmental agency or any securities exchange.
Any Action or Actions taken by the General Partner pursuant to the
provisions of this paragraph (b) shall be deemed an amendment and supplement to
and part of this Agreement.
(c) Except as otherwise provided in this Agreement or in any Action
in respect of any series of the Preferred Partner Interests and as otherwise
required by law, all rights to the management and control of the Partnership
shall be vested exclusively in the General Partner.
(d) No holder of Interests shall be entitled as a matter of right to
subscribe for or purchase, or have any preemptive or similar right with respect
to, any part of any new or additional issue of Interests of any class or series
whatsoever, or of securities convertible into any Interests of any class or
series whatsoever, whether now or hereafter authorized and whether issued for
cash or other consideration or by way of distribution. Any Person acquiring
Preferred Partner Interests shall be admitted to the Partnership as a Preferred
Partner upon compliance with Section 2.06.
13.02. Terms of Preferred Partner Interests. Notwithstanding
anything else in any Action to the contrary, all Preferred Partner Interests of
the Partnership shall have the following voting rights, preferences,
participating, optional and other special rights and the qualifications,
limitations or restrictions of, and other matters relating to, the Preferred
Partner Interests as set forth below in this Section 13.02.
(a) Distributions.
(i) The Preferred Partners shall be entitled to receive, when,
as and if declared by the General Partner out of funds held by
the Partnership to the extent that the Partnership has cash on
hand sufficient to permit such payments and funds legally
available therefor, cumulative cash distributions ("Preferred
Partner Distributions") at a rate per annum established by the
General Partner, calculated on the basis of a 360-day year
consisting of twelve (12) months of thirty (30) days each, and
for any shorter period, Preferred Partner Distributions will
be computed on the basis of the actual number of days elapsed
in such period, and payable in United States dollars, in
arrears, with a payment frequency determined by the General
Partner at the time of issuance. In the event that any date on
which Preferred Partner
27
Distributions are payable is not a Business Day, then payment
of such Preferred Partner Distribution will be made on the
next succeeding day which is a Business Day (and without any
interest or other payment in respect of any such delay) except
that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding
Business Day, in each case with the same force and effect as
if made on such date. Such Preferred Partner Distributions
will accrue and be cumulative from the original date of issue
whether or not they have been declared and whether or not
there are profits, surplus or other funds of the Partnership
legally available for the payment of distributions, or whether
they are deferred.
(ii) If distributions have not been paid in full on any series
of Preferred Partner Interests, the Partnership may not:
(A) pay or declare and set aside for payment, any
distributions on any other series of Preferred Partner
Interests unless the amount of any distributions paid or
declared on any Preferred Partner Interests is paid or
declared on all Preferred Partner Interests then outstanding
on a pro rata basis, on the date such distributions are paid
or declared, so that
(1) (x) the aggregate amount of distributions paid or
declared on such series of Preferred Partner Interests
bears to (y) the aggregate amount of distributions paid
or declared on all such Preferred Partner Interests
outstanding the same ratio as
(2) (x) the aggregate of all accumulated arrears of
unpaid distributions in respect of such series of
Preferred Partner Interests bears to (y) the aggregate
of all accumulated arrears of unpaid distributions in
respect of all such Preferred Partner Interests
outstanding;
(B) pay or declare any distribution on any general partner
Interest; or
(C) redeem, purchase or otherwise acquire any Preferred
Partner Interests or any general partner Interests;
28
until, in each case, such time as all accumulated and unpaid distributions on
all series of Preferred Partner Interests shall have been paid in full for all
distribution periods terminating on or prior to, in the case of clauses (A) and
(B), such payment and, in the case of clause (C), the date of such redemption,
purchase or acquisition.
(b) Notice of Redemption.
(i) The Partnership may not redeem any outstanding Preferred
Partner Interests unless all accumulated and unpaid
distributions have been paid on all Preferred Partner
Interests for all distribution periods terminating on or prior
to the date of redemption.
(ii) Notice of any redemption (a "Notice of Redemption") of a
series of Preferred Partner Interests will be given by the
Partnership by mail to each record holder of such series of
Preferred Partner Interests to be redeemed not fewer than
thirty (30) nor more than ninety (90) days prior to the date
fixed for redemption thereof; provided that not fewer than
forty five (45) days' notice will be given with respect to the
redemption of any Preferred Partner Interests held by the
Trust or any trustee thereof. For purposes of the calculation
of the date of redemption and the dates on which notices are
given pursuant to this paragraph (b)(ii), a Notice of
Redemption shall be deemed to be given on the day such notice
is first mailed by first-class mail, postage prepaid, or on
the date it was delivered in person, receipt acknowledged, to
the record holders of such series of Preferred Partner
Interests. Each Notice of Redemption shall be addressed to the
record holders of such series of Preferred Partner Interests
at the address appearing in the books and records of the
Partnership. No defect in the Notice of Redemption or in the
mailing thereof or publication of its contents shall affect
the validity of the redemption proceedings.
(iii) Notwithstanding the foregoing, however, any Notice of
Redemption in connection with an optional redemption may state
that it is subject to the receipt by the Partnership of
redemption funds on or before such date fixed for redemption,
which Notice of Redemption shall be of no effect unless such
funds are so received on or before such date. If Notice of
Redemption shall have been given and, by 12:00 noon, New York
time, on the redemption date specified therein, (i) if
29
the Preferred Partner Interests are then owned by The
Depository Trust Company or its successor securities
depository, the Partnership shall have irrevocably deposited
with The Depository Trust Company or such successor securities
depository funds sufficient to pay the applicable Redemption
Price and shall have given The Depository Trust Company or its
successor securities depository irrevocable instructions and
authority to pay the Redemption Price to the holders of the
Preferred Partner Interests, or (ii) otherwise, if the
Partnership shall have made payment of the Redemption Price to
the holders of Preferred Partner Interests, then on the date
of such deposit or payment, all rights of the Preferred
Partner Interest Owners and the holders of such series of
Preferred Partner Interests so called for redemption will
cease, except the right to receive the Redemption Price, but
without interest. In the event that any date fixed for
redemption of such series of Preferred Partner Interests is
not a Business Day, then payment of the Redemption Price
payable on such date will be made on the next succeeding day
which is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such
Business Day falls in the next succeeding calendar year, such
payment will be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on
such date. In the event that payment of the Redemption Price
in respect of a series of Preferred Partner Interests is not
made either by the Partnership or by Penelec pursuant to the
Guarantee pertaining to the series of Preferred Partner
Interests, distributions on such series of Preferred Partner
Interests will continue to accrue at the then applicable rate,
from the original redemption date to the date of payment, in
which case the actual payment date will be considered the date
fixed for redemption for purposes of calculating the
Redemption Price.
(iv) In the event that less than all the outstanding series of
Preferred Partner Interests are to be redeemed, the series of
Preferred Partner Interests to be redeemed will be selected
(i) if the Preferred Partner Interests are then owned of
record by The Depository Trust Company or its successor
securities depository, according to a determination by The
Depository Trust Company or such successor securities
depository or (ii) otherwise, pro rata, by lot or by other
equitable
30
means. Subject to applicable law, Penelec or its subsidiaries
may at any time and from time to time purchase outstanding
Preferred Partner Interests by tender, in the open market or
by private agreement. If a partial redemption or a purchase of
outstanding Preferred Partner Interests by tender, in the open
market or by private agreement would result in a delisting of
a series of Preferred Partner Interests from any national
securities exchange on which the series of Preferred Partner
Interests are then listed, the Partnership may then only
redeem or purchase the series of Preferred Partner Interests
in whole.
(c) Liquidation Distribution. If, upon any liquidation, the
Liquidation Distribution on a series of Preferred Partner Interests can be paid
only in part because the Partnership has insufficient assets available to pay in
full the aggregate liquidation distributions on all Preferred Partner Interests
then outstanding, then the amounts payable directly by the Partnership on such
series of Preferred Partner Interests and on all other Preferred Partner
Interests then outstanding shall be paid on a pro rata basis, so that
(i) (A) the aggregate amount paid in respect of the
Liquidation Distribution bears to (B) the aggregate amount
paid as liquidation distributions on all other Preferred
Partnership Interests then outstanding the same ratio as
(ii) (A) the aggregate Liquidation Distribution bears to (B)
the aggregate maximum liquidation distributions on all other
Preferred Partner Interests then outstanding.
(d) Voting Rights. Notwithstanding anything in Section 8.01 hereof
or elsewhere in this Agreement to the contrary, if (i) the Partnership fails to
pay distributions in full on a series of Preferred Partner Interests for
eighteen (18) consecutive months; (ii) an event of default as defined in the
Indenture occurs and is continuing; or (iii) Penelec is in default on any of its
payment or other obligations under the Guarantee, then the holders of such
Preferred Partner Interests, together with the holders of all other series of
Preferred Partner Interests acting as a single class, will be entitled, by a
vote of the majority of the aggregate stated liquidation preference of
outstanding Preferred Partner Interests, to appoint and authorize a special
representative of the Partnership and the Preferred Partners (the "Special
Representative") to enforce the Partnership's rights under the Subordinated
Debentures and the Indenture, including, without limitation, after failure to
pay interest for twenty (20) consecutive quarterly periods, the payment of
interest on the Subordinated Debentures, and to
31
enforce the obligations of Penelec under the Guarantee. If a Special
Representative has been appointed, the Special Representative shall have the
exclusive right to enforce, or direct the enforcement of, the Partnership's
rights under the Subordinated Debentures, the Indenture and the Guarantee.
Notwithstanding anything in this Agreement to the contrary, including, without
limitation, the immediately preceding sentence, nothing in this Agreement shall
be deemed to adversely affect the right of a Preferred Partner or an assignee of
a Preferred Partner Interest to bring a derivative action in accordance with and
subject to Subchapter X of the Delaware Act.
In furtherance of the foregoing, and without limiting the powers of
any Special Representative so appointed and for the avoidance of any doubt
concerning the powers of the Special Representative, any Special Representative,
in its own name, in the name of the Partnership, in the name of the Preferred
Partners or otherwise, may, to the fullest extent permitted by law, institute or
cause to be instituted any proceedings, including, without limitation, any suit
in equity, an action at law or other judicial or administrative proceeding, to
enforce the Partnership's or the Preferred Partners' rights directly against
Penelec (including, without limitation, the Partnership's rights under the
Indenture or as a holder or beneficial owner of the Subordinated Debentures), or
any other obligor in connection with such obligations on behalf of the
Partnership or the Preferred Partners, and may prosecute such proceeding to
final judgment or decree, including any appeals thereof, and enforce the same
against Penelec or any other obligor in connection with such obligations and
collect, out of the property, wherever situated, of Penelec or any such other
obligor upon such obligations, the monies adjudged or decreed to be payable in
the manner provided by law. The Special Representative shall not by virtue of
acting in such capacity be admitted as a general partner in the Partnership or
otherwise be deemed to be a general partner in the Partnership and shall have no
liability for the debts, obligations or liabilities of the Partnership.
For purposes of determining whether the Partnership has failed to
pay distributions in full for eighteen (18) consecutive months, distributions
shall be deemed to remain in arrears, notwithstanding any payments in respect
thereof, until full cumulative distributions have been or contemporaneously are
declared and paid with respect to all distribution periods terminating on or
prior to the date of payment of such full cumulative distributions. Subject to
requirements of applicable law, not later than thirty (30) days after such right
to appoint a Special Representative arises, the General Partner will convene a
general meeting for the above purpose. If the General Partner fails to convene
such meeting within such 30-day period, the Preferred Partners who hold 10% of
the aggregate stated liquidation preference of such outstanding series of
Preferred Partner Interests will be entitled to convene such meeting. The
32
provisions of this Agreement relating to the convening and conduct of meetings
of Partners will apply with respect to any such meeting. Any Special
Representative so appointed shall vacate office immediately if the Partnership
(or Penelec pursuant to the Guarantee) shall have paid in full all accumulated
and unpaid distributions on the Preferred Partner Interests or such default or
breach by Penelec, as the case may be, shall have been cured. Notwithstanding
the appointment of any such Special Representative, Penelec shall retain all
rights under the Indenture, including the right to extend the interest payment
period on the Subordinated Debentures as provided in the Indenture.
If any proposed amendment of this Agreement provides for, or the
General Partner otherwise proposes to effect any action which would materially
adversely affect the powers, preferences or special rights of such series of
Preferred Partner Interests, then holders of the outstanding series of Preferred
Partner Interests will be entitled to vote on such amendment or action of the
General Partner (but not on any other amendment or action) and, in the case of
an amendment or action which would equally adversely affect the powers,
preferences or special rights of any other series of outstanding Preferred
Partner Interests, all holders of all such series of Preferred Partner
Interests, will be entitled to vote together as a class on such amendment or
action of the General Partner (but not on any other amendment or action), and
such amendment or action shall not be effective except with the approval of
Preferred Partners holding not less than a majority of the aggregate stated
liquidation preference of such outstanding series of Preferred Partner
Interests. Except as otherwise provided under Section 11.02 or the Delaware Act,
the Partnership will be dissolved and wound up only with the consent of the
holders of all Preferred Partner Interests outstanding as well as the General
Partner.
The powers, preferences or special rights of a series of Preferred
Partner Interests will be deemed not to be adversely affected by the creation or
issue of, and no vote will be required for the creation or issue of, any further
series of Preferred Partner Interests or any general partner Interests; provided
that the Partnership shall have utilized the proceeds of the sale of such
Interests to have purchased Subordinated Debentures of a class and with terms
that correspond in all material respects with the terms of such Interests. The
Holders of Preferred Securities have no preemptive rights.
Any required approval of a series of Preferred Partner Interests may
be given at a separate meeting of such holders convened for such purpose, at a
meeting of the holders of all series of Preferred Partner Interests or pursuant
to written consent. The Partnership will cause a notice of any meeting at which
holders of a series of Preferred Partner Interests are entitled to vote, or of
any matter upon which action by written
33
consent of such holders is to be taken, to be mailed to each holder of Preferred
Partner Interests. Each such notice will include a statement setting forth (i)
the date of such meeting, (ii) a description of any matter proposed for adoption
at such meeting on which such holders are entitled to vote or of such matter
upon which written consent is sought and (iii) instructions for the delivery of
proxies or consents.
No vote or consent of the holders of a series of Preferred Partner
Interests will be required for the Partnership to redeem and cancel such series
of Preferred Partner Interests in accordance with this Agreement and the related
Action.
Notwithstanding that holders of a series of Preferred Partner
Interests are entitled to vote or consent under any of the circumstances
described above or under any other circumstances provided for in this Agreement
or under the Delaware Act, any Preferred Partner Interests that are owned by
Penelec or Penelec's parent, GPU, Inc., or any Person owned more than 50% by
Penelec or GPU, Inc., either directly or indirectly, shall not be entitled to
vote or consent and shall, for the purposes of such vote or consent, be treated
as if they were not outstanding.
(e) Mergers. The Partnership shall not consolidate, amalgamate,
convert into, merge with or into, or be replaced by, or convey, transfer or
lease its properties and assets substantially as an entirety to any corporation,
limited liability company, limited partnership, trust (including a business
trust) or other entity, except with the prior approval of the Preferred Partners
holding not less than a majority of the aggregate stated liquidation preference
of such outstanding Preferred Partner Interests or as described below or under
Article XII. The General Partner may, without the consent of the holders of the
Preferred Securities, cause the Partnership to consolidate, amalgamate, convert
into, merge with or into, or be replaced by, or convey, transfer or lease its
properties and assets substantially as an entirety to, a corporation, a limited
liability company, a limited partnership or a trust (including a business trust)
or other entity organized as such under the laws of the United States or any
state thereof or the District of Columbia (a "Successor Entity"), provided that
(i) such Successor Entity either (A) expressly assumes all of the terms and
provisions of the Preferred Partner Interests by which the Partnership is bound
and the other obligations of the Partnership or (B) substitutes for the
Preferred Partner Interests other securities (the "Successor Securities") so
long as the Successor Securities rank, with regard to participation in the
profits or assets of the Successor Entity, at least as high as the Preferred
Partner Interests rank, with regard to participation in the profits or assets of
the Partnership, (ii) Penelec confirms its obligations under the Guarantee with
regard to the Preferred Partner Interests or Successor Securities, if any are
issued,
34
(iii) the Preferred Partner Interests or the Successor Securities will not be
delisted from, or will be listed upon notification of issuance on, any national
securities exchange on which the Preferred Partner Interests or Successor
Securities are then listed, (iv) such merger, consolidation, amalgamation,
conversion, replacement, conveyance, transfer or lease does not cause the
Preferred Partner Interests or Successor Securities to be downgraded by any
"nationally recognized statistical rating organization", as that term is defined
by the Commission for purposes of Rule 436(g)(2) under the Securities Act, (v)
such consolidation, amalgamation, conversion, merger, replacement, conveyance,
transfer or lease does not adversely affect in any material respect the powers,
preferences and special rights of the holders of the Preferred Partner Interests
or Successor Securities under the documents governing the Preferred Partner
Interests or Successor Securities, including, without limitation, the voting
rights provided for in Section 13.02(d) hereof (other than with respect to any
dilution of the holders of the Preferred Partner Interests or Successor
Securities in the Successor Entity), (vi) such Successor Entity has a purpose
substantially identical to that of the Partnership and (vii) prior to such
merger, consolidation, amalgamation, conversion, replacement, conveyance,
transfer or lease Penelec has received an opinion of counsel (which may be
regular counsel to the Partnership or an Affiliate, but not an employee thereof)
experienced in such matters to the effect that (A) holders of outstanding
Preferred Partner Interests or Successor Securities will not recognize any gain
or loss for Federal income tax proposes as a result of the merger,
consolidation, amalgamation, conversion, replacement, conveyance, transfer or
lease, (B) such Successor Entity will be treated as either a partnership or a
grantor trust for Federal income tax purposes, (C) following such merger,
consolidation, amalgamation, conversion, replacement, conveyance, transfer or
lease, Penelec and such Successor Entity will be in compliance with the 1940 Act
without registering thereunder as an "investment company," and (D) such merger,
consolidation, amalgamation, conversion, replacement, conveyance, transfer or
lease will not cause the holders of Preferred Partner Interests or Successor
Securities to be generally liable for the debts, obligations or liabilities of
the Partnership or the Successor Entity.
(f) Substitutions. Notwithstanding any other provision of this
Agreement to the contrary, the General Partner may, without the consent of any
Person, (i) form or cause to be formed a Successor Entity and contribute or
cause to be contributed the Subordinated Debentures (and any rights to receive
interest payments on such Subordinated Debentures) to the Successor Entity in
exchange for all of the equity or beneficial interests in the Successor Entity,
and (ii) dissolve the Partnership and, after satisfaction of liabilities to
creditors as required by the Delaware Act, cause the equity or beneficial
interests in the Successor Entity to be distributed to the
35
General Partner and the holders of each series of Preferred Partner Interests in
liquidation of such holders' respective Interests in the Partnership (a
"Substitution Event"), provided that a Substitution Event shall not be permitted
to occur unless the conditions set forth in the proviso in the second sentence
of Section 13.02(e) shall have been satisfied. The General Partner may, without
the consent of any Person, take any other action having similar consequences to
the foregoing.
ARTICLE XIV - Transfers
-----------------------
Section 14.01. Transfers of Preferred Partner Interests. Preferred
Partner Interests may be freely transferred by a Preferred Partner. No Interest
shall be transferred, in whole or in part, except in accordance with the terms
and conditions set forth in this Agreement. To the fullest extent permitted by
law, any transfer or purported transfer of any Interest not made in accordance
with this Agreement shall be null and void.
Section 14.02. Transfer of Certificates. The General Partner shall
provide for the registration of Certificates. Upon surrender for registration of
transfer of any Certificate, the General Partner shall cause one or more new
Certificates to be issued in the name of the designated transferee or
transferees. Every Certificate surrendered for registration of transfer shall be
accompanied by a written instrument of transfer and agreement to be bound by the
provisions of this Agreement in form satisfactory to the General Partner duly
executed by the Preferred Partner or his attorney duly authorized in writing.
Each Certificate surrendered for registration of transfer shall be cancelled by
the General Partner. A transferee of a Certificate shall provide the Partnership
with a completed Form W-9 or such other documents or information as are
requested by the Partnership for tax reporting purposes and thereafter shall be
admitted to the Partnership as a Preferred Partner and shall be entitled to the
rights and subject to the obligations of a Preferred Partner hereunder upon the
receipt by such transferee of a Certificate. The transferor of a Certificate
representing such transferor's entire Preferred Partner Interest shall cease to
be a limited partner of the Partnership at the time that the transferee of the
Certificate is admitted to the Partnership as a Preferred Partner in accordance
with this Section 14.02.
Section 14.03. Persons Deemed Preferred Partners. The Partnership
may treat the Person in whose name any Certificate shall be registered on the
books and records of the Partnership as the Preferred Partner and the sole
holder of such Certificate for purposes of receiving distributions and for all
other purposes whatsoever and, accordingly, shall not be bound to recognize any
equitable or other claims to or interest in such Certificate on the part of any
other Person, whether or not the
36
Partnership shall have actual or other notice thereof.
Section 14.04. Book Entry Interests. The Certificates, on original
issuance, may, but need not, be issued in the form of a typewritten Certificate
or Certificates representing the Book Entry Interests, to be delivered to The
Depository Trust Company, the initial Clearing Agency, by, or on behalf of, the
Partnership. Any such Certificates shall be registered on the books and records
of the Partnership in the name of Cede & Co., the nominee of the initial
Clearing Agency, and no Preferred Partner Interest Owner will receive a
definitive Certificate representing such Preferred Partner Interest Owner's
interests in such Certificate, except as provided in Section 14.06. Except to
the extent that definitive, fully registered Certificates (the "Definitive
Certificates") have been issued to the Preferred Partner Interest Owners
pursuant to Section 14.06 or other Persons pursuant to this Agreement, with
respect to Global Certificates:
(a) The provisions of this Section shall be in full force
and effect;
(b) The Partnership and the General Partner shall be entitled
to deal with the Clearing Agency for all purposes of this Agreement (including
the payment of distributions on such Global Certificates and receiving
approvals, votes or consents hereunder) as a Preferred Partner and the sole
holder of such Global Certificates and shall have no obligations to the
Preferred Partner Interest Owners;
(c) The rights of the Preferred Partner Interest Owners shall
be exercised only through the Clearing Agency and shall be limited to those
established by law and agreements between such Preferred Partner Interest Owners
and the Clearing Agency and/or the Clearing Agency Participants. With respect to
such Global Certificates, the initial Clearing Agency will make book entry
transfers among the Clearing Agency Participants and receive and transmit
payments of distributions on such Global Certificates to such Clearing Agency
Participants;
(d) Subject in all respects to Section 14.07, to the extent
that the provisions of this Section conflict with any other provisions of this
Agreement as they relate to Global Certificates, the provisions of this Section
shall control; and
(e) Whenever this Agreement requires or permits actions to be
taken based upon approvals, votes or consents of a percentage of the Preferred
Partners who hold Global Certificates, the Clearing Agency shall be deemed to
represent such percentage only to the extent that it has received instructions
to such effect from the Preferred Partner Interest Owners and/or Clearing Agency
Participants owning or
37
representing, respectively, such required percentage of the beneficial interests
in such Global Certificates and has delivered such instructions to the General
Partner.
Section 14.05. Notices to Clearing Agency. Whenever a notice or
other communication to the Preferred Partners who hold Global Certificates is
required under this Agreement, the General Partner shall give all such notices
and communications specified herein to be given to such Preferred Partners to
the Clearing Agency, and shall have no obligations to such Preferred Partner
Interest Owners.
Section 14.06. Definitive Certificates. If (a) the Clearing Agency
elects to discontinue its services as securities depository and gives reasonable
notice to the Partnership, or (b) the Partnership elects to terminate the book
entry system through the Clearing Agency, then Definitive Certificates shall be
prepared by the Partnership. Upon surrender of the typewritten Certificate or
Certificates representing the Book Entry Interests by the Clearing Agency,
accompanied by registration instructions, the General Partner shall cause the
Definitive Certificates to be delivered to the holders of Preferred Partner
Interests in accordance with the instructions of the Clearing Agency. The
General Partner shall not be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying on,
such instructions. Any Person receiving a Definitive Certificate in accordance
with this Article XIV shall be admitted to the Partnership as a Preferred
Partner upon receipt of such Definitive Certificate. The Clearing Agency or the
nominee of the Clearing Agency, as the case may be, shall cease to be a limited
partner of the Partnership, in relation to that series of Preferred Partner
Interests, under this Section 14.06 at the time that at least one additional
Person is admitted to the Partnership as a Preferred Partner in accordance with
this Section 14.06. The Definitive Certificates shall be printed, lithographed
or engraved or may be produced in any other manner as is reasonably acceptable
to the General Partner, as evidenced by its execution thereof.
Section 14.07. Definitive Certificates on Original Issuance.
Notwithstanding anything in this Agreement to the contrary, including, without
limitation, Sections 14.04, 14.05 and 14.06, on original issuance, Certificates
may, but need not, be issued to The Depository Trust Company in the form of a
Global Certificate or Global Certificates in accordance with Section 14.04, and
may, but need not, be issued to any Person in the form of a Definitive
Certificate or Definitive Certificates in accordance with this Section 14.07.
Without limiting the generality of the foregoing, in connection with the
original issuance of Certificates as Definitive Certificates in accordance with
this Section 14.07, (i) a Clearing Agency or a nominee of the Clearing Agency
that is a limited partner of the Partnership in accordance with sections 14.03
and 14.04 with respect to one
38
or more series of Preferred Partner Interests shall continue to be a limited
partner of the Partnership notwithstanding the fact that another Person holding
a Definitive Certificate issued in accordance with this Section 14.07 has been
admitted to the Partnership as a limited partner of the Partnership with respect
to one or more series of Preferred Partner Interests, and (ii) Section 14.04,
14.05 and 14.06 shall be inapplicable to a Person holding a Definitive
Certificate issued in accordance with this Section 14.07. The Definitive
Certificates shall be printed, lithographed or engraved or may be produced in
any other manner as is reasonably acceptable to the General Partner, as is
evidenced by its execution thereof. Registration of transfers of Preferred
Partner Interests will be effected without charge by or on behalf of the
Partnership, but upon payment of any tax or other governmental charges which may
be imposed in relation to it. The Partnership will not be required to register
or cause to be registered the transfer of Preferred Partner Interests after such
Preferred Partner Interests have been called for redemption. Any Person
receiving a Definitive Certificate in accordance with this Section 14.07 shall
be admitted to the Partnership as a Preferred Partner pursuant to Section 2.06.
ARTICLE XV - General
--------------------
Section 15.01. Power of Attorney.
(a) The Class A Limited Partner and each Preferred Partner
constitutes and appoints the General Partner and the Liquidating Trustee as its
true and lawful representative and attorney-in-fact, in its name, place and
stead, to make, execute, sign, acknowledge and deliver or file (i) all
instruments, documents and certificates which may from time to time be required
by any law to effectuate, implement and continue the valid and subsisting
existence of the Partnership, (ii) all instruments, documents and certificates
that may be required to effectuate the dissolution and termination of the
Partnership in accordance with the provisions hereof and Delaware law, (iii) all
other amendments of this Agreement or the Certificate of Limited Partnership and
other filings contemplated by this Agreement including, without limitation,
amendments reflecting the withdrawal of the General Partner, or the return, in
whole or in part, of the contribution of any Partner, or the addition,
substitution or increased contribution of any Partner, or any action of the
Partners duly taken pursuant to this Agreement whether or not such Partner voted
in favor of or otherwise approved such action, and (iv) any other instrument,
certificate or document required from time to time to admit a Partner, to effect
its substitution as a Partner, to effect the substitution of the Partner's
assignee as a Partner or to reflect any action of the Partners provided for in
this Agreement.
39
(b) The powers of attorney granted herein (i) shall be deemed to be
coupled with an interest, shall be irrevocable and shall survive the death,
insanity, incompetency or incapacity (or, in the case of a Partner that is a
corporation, association, partnership, limited liability company or trust, shall
survive the merger, consolidation, conversion, dissolution or other termination
of existence) of the Partner and (ii) shall survive the assignment by the
Partner of the whole or any portion of his Interest, except that where the
assignee of the whole or any portion thereof has furnished a power of attorney,
this power of attorney shall survive such assignment for the sole purpose of
enabling the General Partner and the Liquidating Trustee to execute, acknowledge
and file any instrument necessary to effect any permitted substitution of the
assignee for the assignor as a Partner and shall thereafter terminate. In the
event that the appointment conferred in this Section 15.01 would not constitute
a legal and valid appointment by any Partner under the laws of the jurisdiction
in which such Partner is incorporated, established or resident, upon the request
of the General Partner or the Liquidating Trustee, such Partner shall deliver to
the General Partner or the Liquidating Trustee a properly authenticated and duly
executed document constituting a legal and valid power of attorney under the
laws of the appropriate jurisdiction covering the matters set forth in this
Section 15.01.
(c) The General Partner may require a power of attorney to be
executed by a transferee of a Partner as a condition of its admission as a
substitute Partner.
Section 15.02. Waiver of Partition. Each Partner hereby
irrevocably waives any and all rights that it may have to maintain an action
for partition of any of the Partnership's property or assets.
Section 15.03. Notices. Any notice permitted or required to be given
hereunder shall be in writing and shall be deemed given (i) on the day the
notice is first mailed to a Partner by first class mail, postage prepaid, or
(ii) on the date it was delivered in person to a Partner, receipt acknowledged,
at its address appearing on the books and records of the Partnership. Another
address may be designated by a Partner by such Partner giving notice of its new
address as provided in this Section 15.03.
Section 15.04. Entire Agreement. This Agreement, including the
exhibits annexed hereto and incorporated by reference herein, contains the
entire agreement of the parties hereto and supersedes all prior agreements and
understandings, oral or otherwise, among the parties hereto with respect to the
matters contained herein.
Section 15.05. Waivers. Except as otherwise expressly
40
provided herein, no purported waiver by any party of any breach by another party
of any of his obligations, agreements or covenants hereunder, or any part
thereof, shall be effective unless made in a writing executed by the party or
parties sought to be bound thereby, and no failure to pursue or elect any remedy
with respect to any default under or breach of any provision of this Agreement,
or any part hereof, shall be deemed to be a waiver of any other subsequent
similar or different default or breach, or any election of remedies available in
connection therewith, nor shall the acceptance or receipt by any party of any
money or other consideration due him under this Agreement, with or without
knowledge of any breach hereunder, constitute a waiver of any provision of this
Agreement with respect to such or any other breach.
Section 15.06. Headings. The section headings herein contained have
been inserted only as a matter of convenience of reference and in no way define,
limit or describe the scope or intent of any provisions of this Agreement nor in
any way affect any such provisions.
Section 15.07. Separability. Each provision of this Agreement shall
be considered to be separable, and if, for any reason, any such provision or
provisions, or any part thereof, is determined to be invalid and contrary to any
existing or future applicable law, such invalidity shall not impair the
operation of, or affect, those portions of this Agreement which are valid, and
this Agreement shall be construed and enforced in all respects as if such
invalid or unenforceable provision or provisions had been omitted.
Section 15.08. Contract Construction. Whenever the content of this
Agreement permits, the masculine gender shall include the feminine and neuter
genders, and reference to singular or plural shall be interchangeable with the
other. References in this Agreement to particular sections of the Code or to
provisions of the Delaware Act shall be deemed to refer to such sections or
provisions as they may be amended after the date of this Agreement.
Section 15.09. Counterparts. This Agreement may be executed in one
or more counterparts and each of such counterparts for all purposes shall be
deemed to be an original, but all of such counterparts, when taken together,
shall constitute but one and the same instrument, binding upon all parties
hereto, notwithstanding that all of such parties may not have executed the same
counterpart.
Section 15.10. Benefit. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective
successors and assigns, but shall not be deemed for the benefit of creditors
or any other Persons, nor shall it
41
be deemed to permit any assignment by a Partner of any of its rights or
obligations hereunder except as expressly provided herein.
Section 15.11. Further Actions. Each of the Partners hereby agrees
that it shall hereafter execute and deliver such further instruments and do such
further acts and things as may be required or useful to carry out the intent and
purposes of this Agreement and as are not inconsistent with the terms hereof.
Section 15.12. Governing Law. This Agreement shall be
governed by and construed in accordance with the substantive laws of the
State of Delaware, without regard to conflict of laws.
Section 15.13. Amendments. Except as otherwise expressly
provided herein or as otherwise required by law, this Agreement may be
amended by a written instrument executed by only the General Partner.
42
IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the date first above written.
GENERAL PARTNER:
PENELEC PREFERRED CAPITAL II, INC.
By: /s/ X.X. Xxxxxx
---------------------
Name: X.X. Xxxxxx
Title: Vice President
CLASS A LIMITED PARTNER:
/s/ X.X. Xxxxxx
---------------------
X.X. Xxxxxx
PREFERRED LIMITED PARTNER:
PENELEC CAPITAL TRUST
By: /s/ X.X. Xxxxxx
---------------------
Name: X.X. Xxxxxx
Title: Regular Trustee
By: /s/ X.X. Xxxxxxx
---------------------
Name: X.X. Xxxxxxx
Title: Regular Trustee
By: /s/ M.E. Xxxxxxxx
---------------------
Name: M.E. Xxxxxxxx
Title: Regular Trustee
Exhibit A
Certificate Evidencing Preferred Partner Interests
of
Penelec Capital II, L.P.
7.34% Cumulative Preferred Partner
Interests, Series A (liquidation preference
$25 per Preferred Partner Interest)
Penelec Capital II, L.P., a Delaware limited partnership (the
"Partnership"), hereby certifies that Penelec Capital Trust (the "Holder") is
the registered owner of Four Million (4,000,000) fully paid Preferred Partner
Interests of the Partnership designated the 7.34% Cumulative Preferred Partner
Interests, Series A (liquidation preference $25 per Preferred Partner Interest)
(the "Series A Preferred Partner Interests") representing preferred limited
partner interests in the Partnership transferable on the books and records of
the Partnership, in person or by a duly authorized attorney, upon surrender of
this Certificate duly endorsed and in proper form for transfer. The powers,
preferences and special rights and limitations of the Series A Preferred Partner
Interests are set forth in, and this Certificate and the Series A Preferred
Partner Interests represented hereby are issued and shall in all respects be
subject to the terms and provisions of, the Amended and Restated Limited
Partnership Agreement dated as of June 9, 1999 of the Partnership as the same
may, from time to time, be amended (the "Partnership Agreement") authorizing the
issuance of the
1
Series A Preferred Partner Interests and determining, along with any Actions of
the General Partner of the Partnership as authorized under the Partnership
Agreement, the preferred, deferred and other special rights and restrictions,
regarding distributions, voting, redemption and otherwise and other matters
relating to the Series A Preferred Partner Interests. The Partnership will
furnish a copy of the Partnership Agreement to the Holder without charge upon
written request to the Partnership at its principal place of business.
Capitalized terms used herein but not defined shall have the meaning given them
in the Partnership Agreement. The Holder is entitled to the benefits of the
Payment and Guarantee Agreement of Pennsylvania Electric Company, dated as of
June 16, 1999, as the same may be amended from time to time, relating to the
Preferred Partner Interests (the "Guarantee") and of the Indenture between
Pennsylvania Electric Company and United States Trust Company of New York, dated
as of June 1, 1999, as the same may be amended from time to time (the
"Indenture"), under and pursuant to which the related series of Subordinated
Debentures are issued and outstanding, in either case to the extent provided
therein. The Partnership will furnish a copy of the Guarantee and Indenture to
the Holder without charge upon written request to the Partnership at its
principal place of business or registered office.
The Holder, by accepting this Certificate, is deemed to have (i)
agreed that the Subordinated Debentures issued pursuant to the Indenture are
subordinate and junior in right of payment
2
to all Senior Indebtedness of Pennsylvania Electric Company as and to the extent
provided in the Indenture and (ii) agreed that the Guarantee is subordinate and
junior in right of payment to all general liabilities of Pennsylvania Electric
Company (other than trade accounts payable arising in the ordinary course of
business). Upon receipt of this Certificate, the Holder is admitted to the
Partnership as a Preferred Partner, is bound by the Partnership Agreement and is
entitled to the benefits thereunder.
3
IN WITNESS WHEREOF, the Partnership has executed this Certificate
this 25th day of June, 1999.
PENELEC CAPITAL II, L.P.
By: Penelec Preferred Capital II,
Inc., its General Partner
By: /s/ X. X. Xxxxxx
-----------------------------
Name: X.X. Xxxxxx
Title: Vice President
4
