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Exhibit 4.6
FORM OF GUARANTEE AGREEMENT
Between
THE CLEVELAND ELECTRIC ILLUMINATING COMPANY
(as Guarantor)
and
THE BANK OF NEW YORK
(as Trustee)
dated as of
[ ], 2001
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CROSS-REFERENCE TABLE*
Section of Section of
Trust Indenture Act Guarantee
of 1939, as amended Agreement
310(a)......................................................................................................4.01(a)
310(b).................................................................................................4.01(c),2.08
310(c).................................................................................................Inapplicable
311(a)......................................................................................................2.02(b)
311(b)......................................................................................................2.02(b)
311(c).................................................................................................Inapplicable
312(a)......................................................................................................2.02(a)
312(b)......................................................................................................2.02(b)
313............................................................................................................2.03
314(a).........................................................................................................2.04
314(b).................................................................................................Inapplicable
314(c).........................................................................................................2.05
314(d).................................................................................................Inapplicable
314(e)...............................................................................................1.01,2.05,3.02
314(f)....................................................................................................2.01,3.02
315(a)......................................................................................................3.01(d)
315(b).........................................................................................................2.07
315(c).........................................................................................................3.01
315(d)......................................................................................................3.01(d)
316(a).................................................................................................5.04(a),2.06
316(b).........................................................................................................5.03
316(c).........................................................................................................2.02
317(a).................................................................................................Inapplicable
317(b).................................................................................................Inapplicable
318(a)......................................................................................................2.01(b)
318(b).........................................................................................................2.01
318(c)......................................................................................................2.01(a)
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* This Cross-Reference Table does not constitute part of the Guarantee
Agreement and shall not affect the interpretation of any of its terms
or provisions.
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TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
Section 1.01 Definitions....................................................................................1
Section 1.02 Interpretation.................................................................................4
ARTICLE II
TRUST INDENTURE ACT
Section 2.01 Trust Indenture Act; Application...............................................................4
Section 2.02 Lists of Holders of Securities.................................................................5
Section 2.03 Reports by the Trustee.........................................................................5
Section 2.04 Periodic Reports to Trustee....................................................................5
Section 2.05 Evidence of Compliance with Conditions Precedent...............................................5
Section 2.06 Events of Default; Waiver......................................................................5
Section 2.07 Event of Default; Notice.......................................................................6
Section 2.08 Conflicting Interests..........................................................................6
ARTICLE III
POWERS, DUTIES AND RIGHTS OF TRUSTEE
Section 3.01 Powers and Duties of the Trustee...............................................................6
Section 3.02 Certain Rights of Trustee......................................................................7
Section 3.03 Not Responsible for Recitals or Issuance of Guarantee Agreement................................9
ARTICLE IV
TRUSTEE
Section 4.01 Trustee; Eligibility...........................................................................9
Section 4.02 Compensation and Reimbursement................................................................10
Section 4.03 Appointment, Removal and Resignation of Trustee...............................................10
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ARTICLE V
GUARANTEE
Section 5.01 Guarantee.....................................................................................11
Section 5.02 Waiver of Notice and Demand...................................................................11
Section 5.03 Obligations Not Affected......................................................................11
Section 5.04 Rights of Holders.............................................................................12
Section 5.05 Guarantee of Payment..........................................................................13
Section 5.06 Subrogation...................................................................................13
Section 5.07 Independent Obligations.......................................................................13
ARTICLE VI
SUBORDINATION
Section 6.01 Subordination.................................................................................13
ARTICLE VII
TERMINATION
Section 7.01 Termination...................................................................................13
ARTICLE VIII
MISCELLANEOUS
Section 8.01 Successors and Assigns........................................................................14
Section 8.02 Amendments....................................................................................14
Section 8.03 Notices.......................................................................................14
Section 8.04 Benefit.......................................................................................15
Section 8.05 Governing Law.................................................................................15
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GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT, dated as of [ ], 2001, is executed and
delivered by The Cleveland Electric Illuminating Company, an Ohio corporation
(the "Guarantor"), and The Bank of New York, as trustee (the "Trustee"), for the
benefit of the Holders (as defined herein) from time to time of the Preferred
Securities (as defined herein) of Cleveland Electric Financing Trust I, a
Delaware statutory business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Trust Agreement (the
"Trust Agreement"), dated as of [ ], 2001, among the Trustees of the Issuer
named therein, The Cleveland Electric Illuminating Company, as Depositor, and
the Holders from time to time of undivided beneficial interests in the assets of
the Issuer, the Issuer is issuing as of the date hereof [____________] aggregate
liquidation amount (or up to ______ aggregate liquidation amount in the event
that the underwriters exercise their over-allotment option granted pursuant to
the Underwriting Agreement) of its [ ]% Cumulative Trust Preferred Securities
Due 2031 (the "Preferred Securities") representing undivided beneficial
interests in the assets of the Issuer and having the terms set forth in the
Trust Agreement;
WHEREAS, the Preferred Securities will be issued by the Issuer and the
proceeds thereof will be used to purchase the Debentures (as defined in the
Trust Agreement) of the Guarantor as trust assets; and
WHEREAS, as incentive for the Holders to purchase the Preferred
Securities the Guarantor desires to irrevocably and unconditionally agree, to
the extent set forth herein, to pay to the Holders the Guarantee Payments (as
defined herein) and to make certain other payments on the terms and conditions
set forth herein.
NOW, THEREFORE, in consideration of the payment for the Preferred
Securities by each Holder thereof, which payment the Guarantor hereby agrees
shall benefit the Guarantor, the Guarantor executes and delivers this Guarantee
Agreement for the benefit of the Holders from time to time of the Preferred
Securities.
ARTICLE I
DEFINITIONS
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Section 1.01 DEFINITIONS. As used in this Guarantee Agreement, the
terms set forth below shall, unless the context otherwise requires, have the
following meanings. Capitalized or otherwise defined terms used but not
otherwise defined herein shall have the meanings assigned to such terms in the
Trust Agreement as in effect on the date hereof.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or
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indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Common Securities" means an undivided beneficial interest in the
assets of the Issuer, having a liquidation amount of $25 per Common Security and
having the rights provided therefor in the Trust Agreement.
"Corporate Trust Office" means the principal office of the Trustee in
New York, New York, at which at any particular time its corporate trust business
is administered, which at the date of this Guarantee is ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust Administration.
"Event of Default" means a default by the Guarantor on any of its
payment obligations under this Guarantee Agreement.
"Guarantee Agreement" means this Guarantee Agreement as originally
executed or as it may from time to time be amended pursuant to the applicable
provisions hereof, including, for all purposes of this Guarantee Agreement and
any such amendment, the provisions of the Trust Indenture Act that are deemed to
be a part of and govern this Guarantee Agreement and any such amendment.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Preferred Securities, to the extent not
paid or made by or on behalf of the Issuer: (i) any accumulated and unpaid
Distributions that are required to be paid on such Preferred Securities but if
and only to the extent the Property Trustee has available in the Payment Account
funds sufficient to make such payment, (ii) the redemption price, including all
accumulated and unpaid Distributions to the date of redemption (the "Redemption
Price"), with respect to the Preferred Securities called for redemption by the
Issuer but if and only to the extent that the Property Trustee has available in
the Payment Account funds sufficient to make such payment, (iii) upon a
voluntary or involuntary dissolution, winding-up or termination of the Issuer
(other than with a distribution of the Debentures to the Holders in connection
with a redemption of all of the Preferred Securities), the lesser of (a) the
aggregate of the liquidation amount and all accumulated and unpaid Distributions
on the Preferred Securities to the date of payment, to the extent the Issuer has
funds legally available therefor, and (b) the amount of assets of the Issuer
remaining available for distribution to Holders in liquidation of the Issuer (in
either case, the "Liquidation Distribution").
"Holder" means any holder, as registered on the books and records of
the Issuer, of any Preferred Securities; provided, however, that in determining
whether the holders of the requisite percentage of Preferred Securities have
given any request, notice, consent or waiver hereunder, "Holder" shall not
include the Guarantor or any Affiliate of the Guarantor.
"Indenture" means the Indenture, dated as of [ ], 2001, among the
Guarantor (the "Debenture Issuer") and The Bank of New York, as trustee.
"Majority in liquidation amount of the Securities" means, except as
provided by the Trust Indenture Act, a vote by Holder(s) of Preferred
Securities, voting separately as a class, of more than 50% of the liquidation
amount of all Preferred Securities.
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"Officers' Certificate" means a certificate signed by the Chairman of
the Board, a Vice Chairman of the Board, the President or a Vice President, and
by the Comptroller, the Treasurer, an Assistant Treasurer, the Secretary or an
Assistant Secretary, of the Company, and delivered to the Trustee. Each
Officers' Certificate delivered with respect to compliance with a condition or
covenant provided for in this Guarantee Agreement shall include:
(a) a statement that each Person signing such certificate has
read the covenant or condition and the definitions herein relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate are based;
(c) a statement that, in the opinion of each such Person, such
Person has made such examination or investigation as is necessary to enable such
Person to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
Person, such condition or covenant has been complied with.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Guarantor, and who shall be acceptable to the Trustee. Each
Opinion of Counsel delivered with respect to compliance with a condition or
covenant provided for in this Guarantee Agreement shall include:
(a) a statement that each Person signing such opinion has read
the covenant or condition and the definitions herein relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer upon which the
statements or opinions of each such Person contained in such opinion are based;
(c) a statement that, in the opinion of each such Person, such
Person has made such examination or investigation as is necessary to enable such
Person to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
Person, such condition or covenant has been complied with.
"Person" means any individual, corporation, company, limited liability
company, association, joint stock company, partnership, joint venture, trust,
business trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Responsible Officer", when used with respect to the Trustee, means any
Vice President or any trust officer of the Trustee, which in each case is
assigned by the Trustee to its Corporate Trust Department (or any successor
department), and also means, with respect to a particular corporate trust
matter, any other trust officer to whom such matter is referred because of his
knowledge of and familiarity with the particular subject.
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"Successor Trustee" means a successor Trustee possessing the
qualifications to act as Trustee under Section 4.01.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force
at the date as of which this instrument was executed; provided, however, that in
the event the Trust Indenture Act of 1939 is amended after such date, "Trust
Indenture Act" means, to the extent required by any such amendment, the Trust
Indenture Act of 1939 as so amended.
"Trustee" means The Bank of New York until a Successor Trustee has been
appointed and has accepted such appointment pursuant to the terms of this
Guarantee Agreement and thereafter means each such Successor Trustee.
"Underwriting Agreement" means the Underwriting Agreement, dated as of
_________, 2001, among the Issuer, the Trust and the underwriters named therein.
Section 1.02 INTERPRETATION. In this Guarantee Agreement, unless the
context otherwise requires:
(a) Capitalized terms used in this Guarantee Agreement but not
defined in the preamble hereto have the respective meanings assigned to them in
Section 1.01;
(b) a term defined anywhere in this Guarantee Agreement has
the same meaning throughout;
(c) all references to "the Guarantee Agreement" or "this
Guarantee Agreement" are to this Guarantee Agreement as modified, supplemented
or amended from time to time;
(d) all references in this Guarantee Agreement to Articles and
Sections are to Articles and Sections of this Guarantee Agreement unless
otherwise specified;
(e) a term defined in the Trust Indenture Act has the same
meaning when used in this Guarantee Agreement unless otherwise defined in this
Guarantee Agreement or unless the context otherwise requires;
(f) a reference to the singular includes the plural and vice
versa; and
(g) the masculine, feminine or neuter genders used herein
shall include the masculine, feminine and neuter genders.
ARTICLE II
TRUST INDENTURE ACT
Section 2.01 TRUST INDENTURE ACT; APPLICATION. (a) This Guarantee
Agreement is subject to the provisions of the Trust Indenture Act that are
required or deemed to be part of this Guarantee Agreement and shall, to the
extent applicable, be governed by such provisions; and
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(b) if and to the extent that any provision of this Guarantee
Agreement limits, qualifies or conflicts with the duties imposed by Section 310
to 317, inclusive, of the Trust Indenture Act, such imposed duties shall
control.
Section 2.02 LISTS OF HOLDERS OF SECURITIES. (a) The Guarantor shall
furnish or cause to be furnished to the Trustee (a) semiannually, not later than
[February 15] and [August 15] in each year, a list, in such form as the Trustee
may reasonably require, of the names and addresses of the Holders ("List of
Holders") as of a date not more than 15 days prior to the delivery thereof, and
(b) at such other times as the Trustee may request in writing, within 30 days
after the receipt by the Company of any such request, a List of Holders as of a
date not more than 15 days prior to the time such list is furnished; provided
that, the Guarantor shall not be obligated to provide such List of Holders at
any time the List of Holders does not differ from the most recent List of
Holders given to the Trustee by the Guarantor. The Trustee may destroy any List
of Holders previously given to it on receipt of a new List of Holders.
(b) The Trustee shall comply with its obligations under
Section 311(a) of the Trust Indenture Act, subject to the provisions of 311(b)
of the Trust Indenture Act, and Section 312(b) of the Trust Indenture Act.
Section 2.03 REPORTS BY THE TRUSTEE. Within 60 days after [________] of
each year, commencing with [__________], 2001, the Trustee shall provide to the
Holders such reports, if any, as are required by Section 313(a) of the Trust
Indenture Act in the form and in the manner provided by Section 313 of the Trust
Indenture Act. The Trustee shall also comply with the requirements of Section
313(b), (c) and (d) of the Trust Indenture Act.
Section 2.04 PERIODIC REPORTS TO TRUSTEE. The Guarantor shall provide
to the Trustee such documents, reports and information as required by Section
314 (if any) and the compliance certificate required by Section 314(a)(4) of the
Trust Indenture Act in the form, in the manner and at the times required by
Section 314 of the Trust Indenture Act. Delivery of such reports, information
and documents to the Trustee is for informational purposes only and the
Guarantee Trustee's receipt of such shall not constitute constructive notice of
any information contained therein or determinable from information contained
therein, including the Guarantor's compliance with any of its covenants
hereunder (as to which the Trustee is entitled to rely exclusively on Officer's
Certificates).
Section 2.05 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT. The
Guarantor shall provide to the Trustee such evidence of compliance with any
conditions precedent, if any, provided for in this Guarantee Agreement
(including any covenants compliance with which constitutes a condition
precedent) that relate to any of the matters set forth in Section 314(c) of the
Trust Indenture Act. Any certificate or opinion required to be given by an
officer pursuant to Section 314(c)(1) shall be given in the form of an Officers'
Certificate. Any opinion of counsel required to be given by counsel pursuant to
Section 314(c)(2) of the Trust Indenture Act shall be given in the form of an
Opinion of Counsel.
Section 2.06 EVENTS OF DEFAULT; WAIVER. The Holders of a Majority in
liquidation amount of Securities may, by vote, on behalf of the Holders of all
of the Preferred Securities, waive any past Event of Default and its
consequences. Upon such waiver, any such Event of
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Default shall cease to exist, and any Event of Default arising therefrom shall
be deemed to have been cured, for every purpose of this Guarantee Agreement, but
no such waiver shall extend to any subsequent or other default or Event of
Default or impair any right consequent thereon.
Section 2.07 EVENT OF DEFAULT; NOTICE.
(a) The Trustee shall, within 90 days after the occurrence of
an Event of Default, transmit by mail, first class postage prepaid, to the
Holders, notices of all Events of Default known to the Trustee, unless such
defaults have been cured or waived before the giving of such notice, provided
that the Trustee shall be protected in withholding such notice if and so long as
the board of directors, the executive committee, or a trust committee of
directors and/or Responsible Officers of the Trustee in good faith determines
that the withholding of such notice is in the interests of the Holders.
(b) The Trustee shall not be deemed to have knowledge of any
Event of Default unless a Responsible Officer of the Trustee charged with the
administration of this Trust Agreement shall have received written notice of
such Event of Default at the Corporate Trust Office of the Trustee and such
notice references this Guarantee Agreement.
Section 2.08 CONFLICTING INTERESTS. The Trust Agreement and the
Indenture shall be deemed to be specifically described in this Guarantee
Agreement for the purposes of clause (i) of the first proviso contained in
Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF TRUSTEE
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Section 3.01 POWERS AND DUTIES OF THE TRUSTEE.
(a) This Guarantee Agreement shall be held by the Trustee for
the benefit of the Holders from time to time of the Preferred Securities, and
the Trustee shall not transfer this Guarantee Agreement to any Person except a
Holder of Preferred Securities exercising his or her rights pursuant to Section
5.04(d) or to a Successor Trustee on acceptance by such Successor Trustee of its
appointment to act as Successor Trustee. The right, title and interest of the
Trustee shall automatically vest in any Successor Trustee, and such vesting and
cessation of title shall be effective whether or not conveyancing documents have
been executed and delivered pursuant to the appointment of such Successor
Trustee. If an Event of Default has occurred and is continuing, the Trustee
shall enforce this Guarantee Agreement for the benefit of the Holders subject to
the second sentence of (b) below.
(b) The Trustee, prior to the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform such duties and only such duties as are specifically
set forth in this Guarantee Agreement, and no implied covenants or obligations
shall be read into this Guarantee Agreement against the Trustee. In case an
Event of Default has occurred (that has not been cured or waived pursuant to
Section 2.06), and is actually known to a Responsible Officer of the Trustee,
the Trustee shall exercise such of the rights and powers vested in it by this
Guarantee Agreement, and use the same degree of care
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and skill in its exercise thereof, as a prudent person would exercise or use
under the circumstances in the conduct of his or her own affairs.
(c) No provision of this Guarantee Agreement shall be
construed to relieve the Trustee from liability for its own negligent action,
its own negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of any Event of Default and
after the curing or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the
Trustee shall be determined solely by the express provisions
of this Guarantee Agreement, and the Trustee shall not be
liable except for the performance of such duties and
obligations as are specifically set forth in this Guarantee
Agreement; and
(B) in the absence of bad faith on the part
of the Trustee, the Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished
to the Trustee and conforming to the requirements of this
Guarantee Agreement; but in the case of any such certificates
or opinions that by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall be
under a duty to examine the same to determine whether or not
they conform to the requirements of this Guarantee Agreement;
(ii) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Trustee,
unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts upon which such judgment was made;
(iii) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance
with the direction of the Holders of a Majority in liquidation amount
of the Preferred Securities relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee under this
Guarantee Agreement; and
(iv) no provision of this Guarantee Agreement shall
require the Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or
in the exercise of any of its rights or powers, if the Trustee shall
have reasonable grounds for believing that the repayment of such funds
or adequate indemnity against such risk or liability is not reasonably
assured to it.
(d) Whether or not therein expressly so provided, every
provision of this Guarantee Agreement relating to the conduct or affecting the
liability of or affording protection to the Trustee shall be subject to the
provisions of Sections 3.01(b) and 3.01(c).
Section 3.02 CERTAIN RIGHTS OF TRUSTEE. (a) Subject to the provisions
of Section 3.01:
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(i) the Trustee may conclusively rely and shall be fully
protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be genuine
and to have been signed, sent or presented by the proper party or
parties;
(ii) any direction or act of the Guarantor contemplated by
this Guarantee Agreement shall be sufficiently evidenced by an
Officers' Certificate;
(iii) whenever, in the administration of this Guarantee
Agreement, the Trustee shall deem it desirable that a matter be proved
or established before taking, suffering or omitting any action
hereunder, the Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part, request and
conclusively rely upon an Officers' Certificate which, upon receipt of
such request, shall be promptly delivered by the Guarantor;
(iv) the Trustee may consult with counsel of its choice,
and the written advice of such counsel with respect to legal matters or
any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in accordance with such advice or opinion;
the counsel providing such advice or Opinion of Counsel may be counsel
to the Guarantor or any of its Affiliates and may include any of its
employees; the Trustee shall have the right at any time to seek
instructions concerning the administration of this Guarantee Agreement
from any court of competent jurisdiction;
(v) the Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Guarantee Agreement at
the request or direction of any Holder, unless such Holder shall have
provided to the Trustee such adequate security and indemnity as would
satisfy a reasonable person in the position of the Trustee, against the
costs, expenses (including attorneys' fees and expenses) and
liabilities that might be incurred by it in complying with such request
or direction, including such reasonable advances as may be requested by
the Trustee;
(vi) the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Trustee, in its
discretion, may make such further inquiry or investigation into such
facts or matters as it may see fit;
(vii) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys, and the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder;
(viii) whenever in the administration of this Guarantee
Agreement the Trustee shall deem it desirable to receive instructions
with respect to enforcing any remedy or right or taking any other
action hereunder, the Trustee (A) may request instructions from
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the Holders, (B) may refrain from enforcing such remedy or right or
taking such other action until such instructions are received, and (C)
shall be protected in acting in accordance with such instructions;
(ix) the Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any
financing or continuation statement or any tax or securities form) (or
any rerecording, refiling or reregistration thereof); and
(x) the Trustee shall not be liable for any action
taken, suffered, or omitted to be taken by it in good faith and
reasonably believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Guarantee;
(b) No provision of this Guarantee Agreement shall be deemed
to impose any duty or obligation on the Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it in any
jurisdiction in which it shall be illegal, or in which the Trustee shall be
unqualified or incompetent in accordance with applicable law, to perform any
such act or acts or to exercise any such right, power, duty or obligation. No
permissive power or authority available to the Trustee shall be construed to be
a duty to act in respect of such power or authority.
Section 3.03 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF GUARANTEE
AGREEMENT. The recitals contained in this Guarantee Agreement shall be taken as
the statements of the Guarantor, and the Guarantee Trustee does not assume any
responsibility for their correctness. The Guarantee Trustee makes no
representation as to the validity or sufficiency of this Guarantee Agreement.
ARTICLE IV
TRUSTEE
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Section 4.01 TRUSTEE; ELIGIBILITY.
(a) There shall at all times be a Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under
the laws of the United States of America or any State or Territory
thereof or of the District of Columbia, or a corporation or Person
permitted by the Securities and Exchange Commission to act as an
institutional trustee under the Trust Indenture Act, authorized under
such laws to exercise corporate trust powers, having a combined capital
and surplus of at least 50 million U.S. dollars ($50,000,000), its
Corporate Trust Office in New York, New York, and subject to
supervision or examination by Federal, State, Territorial or District
of Columbia authority. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of
the supervising or examining authority referred to above, then, for the
purposes of this Section 4.01(a)(ii), the combined capital and
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surplus of such corporation shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so
published.
(b) If at any time the Trustee shall cease to be eligible to
so act under Section 4.01(a), the Trustee shall immediately resign in the manner
and with the effect set out in Section 4.03(c).
(c) If the Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Trustee and Guarantor shall in all respects comply with the provisions of
Section 310(b) of the Trust Indenture Act.
Section 4.02 COMPENSATION AND REIMBURSEMENT.
The Guarantor agrees:
(a) to pay the Trustee from time to time such reasonable
compensation as the Guarantor and the Trustee shall from time to time agree in
writing for all services rendered by it hereunder (which compensation shall not
be limited by any provision of law in regard to the compensation of a trustee of
an express trust);
(b) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
the provisions of this Guarantee (including the reasonable compensation and
expenses of its agents and counsel), except any such expense, disbursement or
advance as may be attributable to its negligence or bad faith; and
(c) to indemnify each of the Trustee and any predecessor
Trustee for, and to hold it harmless from and against, any and all loss, damage,
claim, liability or expense, including taxes (other than taxes based upon the
income of the Trustee) incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance of the administration of
this Guarantee Agreement, including the costs and expenses of defending itself
against any claim or liability in connection with the exercise or performance of
any its powers or duties hereunder.
As security for the performance of the obligations of the Guarantor
under this Section, the Trustee shall have a lien prior to the Securities upon
all the property and funds held or collected by the Trustee as such, except
funds held in trust for the payment of principal of, and premium (if any) or
interest on, particular obligations of the Guarantor under this Guarantee
Agreement. In addition to the rights provided to the Trustee herein and not by
way of prejudice, when the Guarantee Trustee incurs expenses or renders services
in connection with the enforcement of this Guarantee Agreement, the expenses
(including the reasonable charges and expenses of its counsel) and the
compensation for the services are intended to constitute expenses of
administration under any applicable Federal or State bankruptcy, insolvency or
other similar law.
The provisions of this Section shall survive the termination of this
Guarantee Agreement and the payment of any Guarantee Payment.
Section 4.03 APPOINTMENT, REMOVAL AND RESIGNATION OF TRUSTEE.
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(a) Subject to Section 4.03(b), unless an Event of Default
shall have occurred and be continuing, the Trustee may be appointed or removed
without cause at any time by the Guarantor.
(b) The Trustee shall not be removed until a Successor Trustee
has been appointed and has accepted such appointment by written instrument
executed by such Successor Trustee and delivered to the Guarantor.
(c) The Trustee appointed to office shall hold office until a
Successor Trustee shall have been appointed or until its removal or resignation.
The Trustee may resign from office (without need for prior or subsequent
accounting) by an instrument in writing executed by the Trustee and delivered to
the Guarantor, which resignation shall not take effect until a Successor Trustee
has been appointed and has accepted such appointment by instrument in writing
executed by such Successor Trustee and delivered to the Guarantor and the
resigning Trustee.
(d) If no Successor Trustee shall have been appointed and
accepted appointment as provided in this Section 4.03 within 60 days after
delivery to the Guarantor of an instrument of resignation, the resigning Trustee
may petition any court of competent jurisdiction for appointment of a Successor
Trustee. Such court may thereupon, after prescribing such notice, if any, as it
may deem proper, appoint a Successor Trustee.
(e) The Guarantor shall give notice of each resignation and
each removal of the Trustee and each appointment of a successor Trustee to all
Holders in the manner provided in Section 8.03 hereof. Each notice shall include
the name of the successor Trustee and the address of its Corporate Trust Office.
ARTICLE V
GUARANTEE
---------
Section 5.01 GUARANTEE. The Guarantor irrevocably and unconditionally
agrees to pay in full to the Holders the Guarantee Payments (without duplication
of amounts theretofore paid by the Issuer), as and when due, regardless of any
defense (other than the defense of payment), right of set-off or counterclaim
which the Issuer may have or assert. The Guarantor's obligation to make a
Guarantee Payment may be satisfied by direct payment of the required amounts by
the Guarantor to the Holders or by causing the Issuer to pay such amounts to the
Holders.
Section 5.02 WAIVER OF NOTICE AND DEMAND. The Guarantor hereby waives
notice of acceptance of this Guarantee Agreement and of any liability to which
it applies or may apply, presentment, demand for payment, any right to require a
proceeding first against the Issuer or any other Person before proceeding
against the Guarantor, protest, notice of nonpayment, notice of dishonor, notice
of redemption and all other notices and demands.
Section 5.03 OBLIGATIONS NOT AFFECTED. The obligation of the Guarantor
to make the Guarantee Payments under this Guarantee Agreement shall in no way be
affected or impaired by reason of the happening from time to time of any of the
following:
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(a) the release or waiver, by operation of law or otherwise,
of the performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to the Preferred Securities to
be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all
or any portion of the Distributions, Redemption Price, Liquidation Distribution
or any other sums payable under the terms of the Preferred Securities or the
extension of time for the performance of any other obligation under, arising out
of, or in connection with, the Preferred Securities (other than an extension of
time for payment of Distributions, Redemption Price, Liquidation Distribution or
other sum payable that results from the extension of any interest payment period
on the Debentures permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on the
part of the Holders to enforce, assert or exercise any right, privilege, power
or remedy conferred on the Holders pursuant to the terms of the Preferred
Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution,
sale of any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or readjustment
of debt of, or other similar proceedings affecting, the Issuer or any of the
assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the
Preferred Securities;
(f) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it being
the intent of this Section 5.03 that the obligations of the Guarantor hereunder
shall be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Trustee, the Property Trustee or
the Holders to give notice to, or obtain consent of, the Guarantor or any other
Person with respect to the happening of any of the foregoing.
Section 5.04 RIGHTS OF HOLDERS. The Guarantor expressly acknowledges
that: (a) this Guarantee Agreement will be deposited with the Trustee to be held
for the benefit of the Holders; (b) if an Event of Default has occurred and is
continuing, the Trustee has the right to enforce this Guarantee Agreement on
behalf of the Holders; (c) the Holders of a Majority in liquidation amount of
the Securities have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee in respect of this
Guarantee Agreement or exercising any trust or power conferred upon the Trustee
under this Guarantee Agreement; and (d) if the Trustee fails to enforce this
Guarantee Agreement as above provided, any Holder may institute a legal
proceeding directly against the Guarantor to enforce the Trustee's rights under
this Guarantee Agreement, without first instituting a legal proceeding against
the Issuer, the Trustee or any other person or entity.
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Section 5.05 GUARANTEE OF PAYMENT. This Guarantee Agreement creates a
guarantee of payment and not of collection. This Guarantee Agreement will not be
discharged except by payment of the Guarantee Payments in full (without
duplication).
Section 5.06 SUBROGATION. The Guarantor shall be subrogated to all (if
any) rights of the Holders against the Issuer in respect of any amounts paid to
the Holders by the Guarantor under this Guarantee Agreement; provided, however,
that the Guarantor shall not (except to the extent required by mandatory
provisions of law) be entitled to enforce or exercise any rights which it may
acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Guarantee Agreement,
if, at the time of any such payment, any amounts of Guarantee Payments are due
and unpaid under this Guarantee Agreement. If any amount shall be paid to the
Guarantor in violation of the preceding sentence, the Guarantor agrees to hold
such amount in trust for the Holders and to pay over such amount to the Holders.
Section 5.07 INDEPENDENT OBLIGATIONS. The Guarantor acknowledges that
its obligations hereunder are independent of the obligations of the Issuer with
respect to the Preferred Securities and that the Guarantor shall be liable as
principal and as debtor hereunder to make Guarantee Payments pursuant to the
terms of this Guarantee Agreement notwithstanding the occurrence of any event
referred to in subsections (a) through (g), inclusive, of Section 5.03 hereof.
ARTICLE VI
SUBORDINATION
-------------
Section 6.01 SUBORDINATION. This Guarantee Agreement will constitute an
unsecured obligation of the Guarantor and will rank (a) subordinate and junior
in right of payment to all other liabilities of the Guarantor, including the
Debentures, except those made pari passu or subordinate by their terms, (b) pari
passu with the most senior preferred or preference stock now or hereafter issued
by the Guarantor and with any guarantee now or hereafter entered into by the
Guarantor in respect of any preferred or preference stock of any Affiliate of
the Guarantor, and (c) senior to all common stock of the Guarantor. Nothing in
this Section 6.01 shall apply to claims of, or payments to, the Trustee under or
pursuant to Section 4.02 hereof.
ARTICLE VII
TERMINATION
-----------
Section 7.01 TERMINATION. Except with respect to certain provisions as
expressly provided herein, this Guarantee Agreement shall terminate and be of no
further force and effect upon: (a) full payment of the Redemption Price of all
Preferred Securities, (b) the distribution of Debentures to Holders in exchange
for all of the Preferred Securities or (c) upon full payment of the amounts
payable in accordance with the Trust Agreement upon liquidation of the Issuer.
Notwithstanding the foregoing, this Guarantee Agreement will continue to be
effective or will be
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reinstated, as the case may be, if at any time any Holder must restore payment
of any sums paid with respect to Preferred Securities or under this Guarantee
Agreement.
ARTICLE VIII
MISCELLANEOUS
-------------
Section 8.01 SUCCESSORS AND ASSIGNS. All guarantees and agreements
contained in this Guarantee Agreement shall bind the successors, assigns,
receivers, trustees and representatives of the Guarantor and shall inure to the
benefit of the Holders of the Preferred Securities then outstanding. Except in
connection with a consolidation, merger or sale involving the Guarantor that is
permitted under Article VIII of the Indenture, the Guarantor shall not assign
its obligations hereunder.
Section 8.02 AMENDMENTS. This Guarantee Agreement may be amended only
by an instrument in writing entered into by the Guarantor and the Trustee.
Except with respect to any changes which do not adversely affect the rights of
Holders (in which case no consent of Holders will be required), this Guarantee
Agreement may only be amended with the prior approval of the Holders of not less
than 66 2/3% in liquidation amount of all the outstanding Preferred Securities.
The provisions of Article VI of the Trust Agreement concerning meetings of
Holders shall apply to the giving of such approval.
Section 8.03 NOTICES. Any notice, request or other communication
required or permitted to be given hereunder shall be in writing, duly signed by
the party giving such notice, and delivered, telecopied or mailed by first class
mail as follows:
(a) if given to the Guarantor, to the address set forth below
or such other address as the Guarantor may give notice of to the Holders:
The Cleveland Electric Illuminating Company
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇
Attention: Treasurer
Facsimile no.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if given to the Issuer, in care of the Trustee, at the
Issuer's (and the Trustee's) address set forth below or such other address as
the Trustee on behalf of the Issuer may give notice to the Holders:
Cleveland Electric Financing Trust I
▇/▇ ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇.
Attention: Corporate Trust Department
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with copy to:
The Bank of New York
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile No: (▇▇▇) ▇▇▇-▇▇▇▇.
Attention: Corporate Trust Department
(c) if given to the Guarantee Trustee, to the address set
forth below or such other address as the Guarantee Trustee may give notice of to
the Guarantor and the Holders:
The Bank of New York
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Corporate Trust Department
(d) if given to any Holder of Preferred Securities, at the
address set forth on the books and records of the Issuer.
All notices hereunder shall be deemed to have been given when received
in person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
Section 8.04 BENEFIT. This Guarantee Agreement is solely for the
benefit of the Holders and, subject to Section 3.01(a), is not separately
transferable from the Preferred Securities.
Section 8.05 GOVERNING LAW. THIS GUARANTEE AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
THIS GUARANTEE AGREEMENT is executed as of the day and year first above
written.
THE CLEVELAND ELECTRIC
ILLUMINATING COMPANY
By:___________________________
Name:
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Title:
THE BANK OF NEW YORK,
as Trustee
By:___________________________
Name:
Title:
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