Exhibit A-6(a)
Action by the General Partner of Penelec Capital II, L.P.
Creating the 7.34% Cumulative
Preferred Partner Interests, Series A
Pursuant to Section 13.01 of the Amended and Restated Limited
Partnership Agreement of Penelec Capital II, L.P. dated as of June 9, 1999 (as
amended from time to time, the "Partnership Agreement"), Penelec Preferred
Capital II, Inc., as general partner (the "General Partner") of Penelec Capital
II, L.P. (the "Partnership"), desiring to state the designations, distribution
rights, redemption rights, preferences, privileges, limitations and other rights
of a new series of Preferred Partner Interests, hereby authorizes and
establishes such new series of Preferred Partner Interests according to the
following terms and conditions (each capitalized term used but not defined
herein shall have the meaning set forth in the Partnership Agreement):
(a) Designation. Four million (4,000,000) interests with an
aggregate liquidation preference of $100,000,000 of the Preferred Partner
Interests of the Partnership, liquidation preference $25 per Preferred Partner
Interest, are hereby designated as "7.34% Cumulative Preferred Partner
Interests, Series A" (hereinafter the "Series A Preferred Partner Interests.")
(b) Distributions.
(i) The Preferred Partners who hold the Series A Preferred
Partner Interests shall be entitled to receive, when, as and
if declared by the General Partner to the extent that the
Partnership has funds on hand legally available therefor,
cumulative cash distributions at a rate per annum of 7.34% of
the stated liquidation preference of $25 per Series A
Preferred Partner Interest per annum.
(ii) Distributions on the Series A Preferred Partner Interests
must be declared quarterly by the General Partner to be
payable on September 1, December 1, March 1 and June 1 of each
year commencing September 1, 1999 (each a "Payment Date"), and
must be paid on each such Payment Date by the Partnership to
the extent that at such Payment Date it has funds on hand
legally available therefor. Distributions on the Series A
Preferred Partner Interests will be deferred if and for so
long as Pennsylvania Electric Company ("Penelec") defers
payments to the Partnership on the Debentures (as defined
below) ("Deferral Period"). During a Deferral Period,
distributions will continue to accrue quarterly, as set forth
above (whether or not declared), on the Series A Preferred
Partner Interests at an annual rate of
7.34% of the liquidation amount of $25 per Series A Preferred
Partner Interest. Also, deferred distributions on the Series A
Preferred Partner Interests will accrue additional
distributions in respect thereof after the payment date
therefor, to the extent permitted by law, at a rate of 7.34%
per annum. Such additional distributions shall be payable at
the time the related deferred distribution is paid, but in any
event by the end of such Deferral Period. Distributions
declared on the Series A Preferred Partner Interests will be
payable to the Series A Preferred Partners as they appear on
the books and records of the Partnership on the relevant
record dates, which will be one Business Day prior to the
relevant Payment Dates, provided that if the Series A
Preferred Partner Interests are not in book-entry-only form,
the record dates will be the fifteenth day of the month
preceding the month in which the relevant Payment Date falls.
(c) Redemption.
(i) The Series A Preferred Partner Interests are redeemable,
at the option of the Partnership in whole or in part from time
to time, on or after September 1, 2004, at the Redemption
Price (as defined below).
(ii) Upon payment when due or redemption at any time of the
7.34% Subordinated Debentures, Series A due September 1, 2039
(the "Debentures") issued by Penelec pursuant to an Indenture
dated as of June 1, 1999 between Penelec and United States
Trust Company of New York, as Trustee (the "Indenture"), which
Debentures were purchased by the Partnership from Penelec with
the proceeds from the issuance and sale of the Series A
Preferred Partner Interests and the related capital
contribution of the General Partner, the proceeds from such
payment or redemption of the Debentures shall be applied to
redeem the Series A Preferred Partner Interests at the
redemption price of $25 per Preferred Partner Interest plus
accumulated and unpaid distributions (whether or not declared)
to the date fixed for redemption, together with any additional
distributions accrued thereon (the "Redemption Price").
(iii) If an Investment Company Act Event shall occur and be
continuing, the Partnership shall either: (1) redeem the
Series A Preferred Partner Interests in whole but not in part
at the Redemption Price within ninety (90) days following the
occurrence of such Investment Company Act Event; (2) cause
Debentures (and any rights to
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interest on such Debentures) with an aggregate principal
amount equal to the aggregate stated liquidation preference of
the outstanding Series A Preferred Partner Interests to be
distributed to the holders of the Series A Preferred Partner
Interests, within ninety (90) days following the occurrence of
such Investment Company Act Event, either in connection with a
dissolution of the Partnership, in which case liabilities to
creditors shall first be satisfied as required by the Delaware
Act, or otherwise, in liquidation of or exchange for such
holders' Interests in the Partnership, as the case may be; or
(3) have the Series A Preferred Partner Interests remain
outstanding; provided, however, if at the time of the
occurrence of the Investment Company Act Event, there is
available to Penelec, the Trust or the Partnership the
opportunity to eliminate, within such 90-day period, the
Investment Company Act Event by taking some ministerial
action, such as filing a form or making an election, or
pursuing some other similar reasonable measure, which would
have no adverse effect on the Partnership, the Trust, Penelec
or the holders of the Trust Securities or the Preferred
Securities, then Penelec, the Partnership or the Trust, as the
case may be, will pursue such measure in lieu of redemption or
distribution.
(iv) If a Tax Event shall occur and be continuing, the
Partnership shall either: (1) redeem the Series A Preferred
Partner Interests in whole (but not in part) at the Redemption
Price within ninety (90) days following the occurrence of such
Tax Event; (2) cause Debentures (and any rights to interest on
such Debentures) with an aggregate principal amount equal to
the aggregate stated liquidation preference of the outstanding
Series A Preferred Partner Interests to be distributed to the
holders of the Series A Preferred Partner Interests, within
ninety (90) days following the occurrence of such Tax Event,
either in connection with a dissolution of the Partnership, in
which case liabilities to creditors shall first be satisfied
as required by the Delaware Act, or otherwise, in liquidation
of or exchange for such holders' Interests in the Partnership,
as the case may be; or (3) have the Series A Preferred Partner
Interests remain outstanding; provided, however, that if at
the time of the occurrence of the Tax Event, there is
available to Penelec, the Trust or the Partnership the
opportunity to eliminate, within such 90-day period, the Tax
Event by taking some ministerial action, such as filing a form
or making an election, or pursuing some other similar
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reasonable measure, which would have no adverse effect on the
Partnership, the Trust, Penelec or the holders of the Trust
Securities or the Preferred Securities, then Penelec, the
Partnership or the Trust, as the case may be, will pursue such
measure in lieu of redemption or distribution.
(d) Liquidation Distribution. In the event of any voluntary or
involuntary dissolution and winding up of the Partnership (other than pursuant
to paragraphs (c)(iii) or (c)(iv) hereof or Section 13.02(f) of the Partnership
Agreement), holders of the Series A Preferred Partner Interests at the time
outstanding will be entitled to receive out of the assets of the Partnership
available for distribution to holders of Preferred Partner Interests, after
satisfaction of liabilities to creditors as required by the Delaware Act, before
any distribution of assets is made to holders of the general partner interests,
but together with holders of every other series of Preferred Partner Interests
outstanding, the lesser of (i) the sum of their stated liquidation preference
and all accumulated and unpaid distributions to the date of payment in respect
of the Series A Preferred Partner Interest and (ii) the amount of assets of the
Partnership legally available for distribution to the holders of the Series A
Preferred Partner Interest.
(e) Subordination. The holders of Series A Preferred Partner
Interests are deemed, by acceptance of such Interests, to have (i) agreed that
the Debentures issued pursuant to the Indenture are subordinate and junior in
right of payment to all Senior Indebtedness as and to the extent provided in the
Indenture and (ii) agreed that the Guarantee relating to the Series A Preferred
Partner Interests is subordinate and junior in right of payment to all general
liabilities of Penelec (other than trade accounts payable arising in the
ordinary course of business.)
(f) Voting Rights. The holders of the Series A Preferred Partner
Interests shall have no voting rights except as provided in the Partnership
Agreement or as required under the Delaware Act.
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IN WITNESS WHEREOF, the General Partner has executed this Action as
of June 9, 1999.
PENELEC PREFERRED CAPITAL II, INC.
By: /s/ ▇.▇. ▇▇▇▇▇▇
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Name: ▇.▇. ▇▇▇▇▇▇
Title: Vice President
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