EXHIBIT H Form of Guaranty
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EXHIBIT
H
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Form
of Guaranty
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GUARANTY,
dated
as of [FirstEnergy: December 16, 2005][FES: [___________], 20[__]],
made
by [FIRSTENERGY CORP., an Ohio corporation][FIRSTENERGY SOLUTIONS
CORP.,
an Ohio corporation] (the “Guarantor”), in favor of the Banks
(as defined
in the Reimbursement Agreement referred to below), Barclays Bank
PLC
(“Barclays”),
as
Administrative Agent for the Banks (the “Administrative
Agent”)
and as
fronting bank (the “Fronting Bank”,
and together
with the Banks and the Administrative Agent, the
“Beneficiaries”).
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PRELIMINARY
STATEMENT
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FIRSTENERGY
NUCLEAR GENERATION CORP., an Ohio corporation (the “Company”)
is party
to
a Letter of
Credit and Reimbursement Agreement, dated as of December 16,
2005 (as
amended, amended and restated, supplemented or otherwise modified
from
time to time, the “Reimbursement
Agreement”;
the
capitalized terms defined therein and not otherwise defined herein
being
used herein as therein defined), with
the
Beneficiaries.
The
Guarantor will derive substantial direct and indirect benefits
from the
transactions contemplated by the Reimbursement Agreement. [FirstEnergy:
It
is a condition precedent to the effectiveness of the Reimbursement
Agreement that the Guarantor deliver this Guaranty.][FES: The
[Reference
Rating of the Company is less than BBB- by S&P or Baa3 by ▇▇▇▇▇’▇ and
the] Guarantor desires to deliver this Guaranty in order to exempt
the
Company from compliance with the debt to capitalization ratio
financial
covenant described in Section 5.03 of the Reimbursement
Agreement].
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NOW,
THEREFORE,
[FES: upon satisfaction of the conditions set forth in the definition
of
“FES Guaranty Agreement” in the Reimbursement Agreement,] and in
consideration of the premises and in order to induce the Fronting
Bank to
issue the Letter of Credit for the account of the Company and
to otherwise
satisfy its obligations under the Reimbursement Agreement, the
Guarantor
hereby agrees as follows:
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SECTION
1. Guaranty; Limitation of Liability.
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(b) The
Guarantor, and by its acceptance of this Guaranty, each Beneficiary
hereby
confirms that it is the intention of all such Persons that
this Guaranty
and the Guaranteed Obligations of the Guarantor hereunder
not constitute a
fraudulent transfer or conveyance for purposes of Bankruptcy
Law (as
hereinafter defined), the Uniform Fraudulent Conveyance Act,
the Uniform
Fraudulent Transfer Act or any similar foreign, federal or
state law to
the extent applicable to this Guaranty and the Guaranteed
Obligations. To
effectuate the foregoing intention, the Beneficiaries and
the Guarantor
hereby irrevocably agree that the Guaranteed Obligations
at any time shall
be limited to the maximum amount as will result in the Guaranteed
Obligations not constituting a fraudulent transfer or conveyance.
For
purposes hereof, “Bankruptcy Law” means any proceeding of the type
referred to in Section 6.01(f) of the Reimbursement Agreement
or Title 11,
U.S. Code, or any similar foreign, federal or state law for
the relief of
debtors.
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SECTION
2. Guaranty
Absolute.
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The
Guarantor
guarantees that the Guaranteed Obligations will be paid strictly
in
accordance with the terms of the Credit Documents, regardless
of any law,
regulation or order now or hereafter in effect in any jurisdiction
affecting any of such terms or the rights of any Beneficiary
with respect
thereto. The obligations of the Guarantor under or in respect
of this
Guaranty are independent of the Guaranteed Obligations or
any other
obligations the Company under or in respect of the Credit
Documents, and a
separate action or actions may be brought and prosecuted
against the
Guarantor to enforce this Guaranty, irrespective of whether
any action is
brought against the Company or whether the Company is joined
in any such
action or actions. The liability of the Guarantor under this
Guaranty
shall be irrevocable, absolute and unconditional irrespective
of, and the
Guarantor hereby irrevocably waives any defenses it may now
have or
hereafter acquire in any way relating to, any or all of the
following:
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(a) any
lack of validity or enforceability of any Credit Document
or any agreement
or instrument relating thereto;
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(b) any
change in the time, manner or place of payment of, or in
any other term
of, all or any of the Guaranteed Obligations or any other
obligations of
the Company under or in respect of the Credit Documents,
or any other
amendment or waiver of or any consent to departure from any
Credit
Document, including, without limitation, any increase in
the Guaranteed
Obligations resulting from the extension of additional credit
to the
Company or any of its Subsidiaries or otherwise;
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(c) any
taking, exchange, release or non-perfection of any collateral,
or any
taking, release or amendment or waiver of, or consent to
departure from,
any other guaranty, for all or any of the Guaranteed
Obligations;
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(d) any
manner of application of any collateral, or proceeds thereof,
to all or
any of the Guaranteed Obligations, or any manner of sale
or other
disposition of any collateral for all or any of the Guaranteed
Obligations
or any other assets of the Company or any of its
Subsidiaries;
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(e) any
change, restructuring or termination of the corporate structure
or
existence of the Company or any of its Subsidiaries;
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(f) any
failure of any Beneficiary to disclose to the Guarantor
any information
relating to the business, condition (financial or otherwise),
operations,
performance, properties or prospects of the Company now
or hereafter known
to such Beneficiary (the Guarantor waiving any duty on
the part of
Beneficiaries to disclose such information);
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(g) the
failure of any other Person to execute or deliver this
Guaranty or any
other guaranty or agreement or the release or reduction
of liability of
the Guarantor or other guarantor or surety with respect
to the Guaranteed
Obligations; or
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(h) any
other circumstance (including, without limitation, any
statute of
limitations) or any existence of or reliance on any representation
by any
Beneficiary that might otherwise constitute a defense available
to, or a
discharge of, the Guarantor or any other guarantor or surety.
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This
Guaranty
shall continue to be effective or be reinstated, as the
case may be, if at
any time any payment of any of the Guaranteed Obligations
is rescinded or
must otherwise be returned by any Beneficiary or any other
Person upon the
insolvency, bankruptcy or reorganization of the Guarantor,
the Company or
otherwise, all as though such payment had not been made.
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SECTION
3. Waivers
and
Acknowledgments.
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(a) The
Guarantor hereby unconditionally and irrevocably waives
promptness,
diligence, notice of acceptance, presentment, demand for
performance,
notice of nonperformance, default, acceleration, protest
or dishonor and
any other notice with respect to any of the Guaranteed
Obligations and
this Guaranty and any requirement that any Beneficiary
protect, secure,
perfect or insure any Lien or any property subject thereto
or exhaust any
right or take any action against the Company or any other
Person or any
collateral.
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(b) The
Guarantor hereby unconditionally and irrevocably waives
any right to
revoke this Guaranty and acknowledges that this Guaranty
is continuing in
nature and applies to all Guaranteed Obligations, whether
existing now or
in the future.
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(c) The
Guarantor hereby unconditionally and irrevocably waives
(i) any defense
arising by reason of any claim or defense based upon an
election of
remedies by any Beneficiary that in any manner impairs,
reduces, releases
or otherwise adversely affects the subrogation, reimbursement,
exoneration, contribution or indemnification rights of
the Guarantor or
other rights of the Guarantor to proceed against the Company,
any other
guarantor or any other Person or any collateral and (ii)
any defense based
on any right of set-off or counterclaim against or in respect
of the
Guaranteed Obligations.
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(d) The
Guarantor hereby unconditionally and irrevocably waives
any duty on the
part of any Beneficiary to disclose to the Guarantor any
matter, fact or
thing relating to the business, condition (financial or
otherwise),
operations, performance, properties or prospects of the
Company or any of
its Subsidiaries now or hereafter known by such Beneficiary.
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(e) The
Guarantor acknowledges that it will receive substantial
direct and
indirect benefits from the financing arrangements contemplated
by the
Credit Documents and that the waivers set forth in Section
2 and this
Section 3 are knowingly made in contemplation of such
benefits.
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SECTION
4. Subrogation.
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The
Guarantor
hereby unconditionally and irrevocably agrees not to exercise any
rights
that it may now have or hereafter acquire against the Company that
arise
from the existence, payment, performance or enforcement of the
Guaranteed
Obligations under or in respect of this Guaranty, including, without
limitation, any right of subrogation, reimbursement, exoneration,
contribution or indemnification and any right to participate in
any claim
or remedy of any Beneficiary against the Company, whether or not
such
claim, remedy or right arises in equity or under contract, statute
or
common law, including, without limitation, the right to take or
receive
from the Company, directly or indirectly, in cash or other property
or by
set-off or in any other manner, payment or security on account
of such
claim, remedy or right, unless and until all of the Guaranteed
Obligations
and all other amounts payable under this Guaranty shall have been
paid in
full in cash, the Letter of Credit issued for the account of the
Company
shall have expired or been terminated and the Commitments shall
have
expired or been terminated. If any amount shall be paid to the
Guarantor
in violation of the immediately preceding sentence at any time
prior to
the latest of (a) the payment in full in cash of the Guaranteed
Obligations and all other amounts payable under this Guaranty,
(b) the
Stated Expiration Date, and (c) the latest date of expiration or
termination of the Letter of Credit issued for the account of the
Company,
such amount shall be received and held in trust for the benefit
of the
Beneficiaries, shall be segregated from other property and funds
of the
Guarantor and shall forthwith be paid or delivered to the Administrative
Agent in the same form as so received (with any necessary endorsement
or
assignment) to be credited and applied to the Guaranteed Obligations
and
all other amounts payable under this Guaranty, whether matured
or
unmatured, in accordance with the terms of the Credit Documents,
or to be
held as collateral for any Guaranteed Obligations or other amounts
payable
under this Guaranty thereafter arising. If (i) the Guarantor shall
make
payment to any Beneficiary of all or any part of the Guaranteed
Obligations, (ii) all of the Guaranteed Obligations and all other
amounts
payable under this Guaranty shall have been paid in full in cash,
(iii)
the Stated Expiration Date shall have occurred and (iv) the Letter
of
Credit shall have expired or been terminated, the Beneficiaries
will, at
the Guarantor’s request and expense, execute and deliver to the Guarantor
appropriate documents, without recourse and without representation
or
warranty, necessary to evidence the transfer by subrogation to
the
Guarantor of an interest in the Guaranteed Obligations resulting
from such
payment made by the Guarantor pursuant to this Guaranty.
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SECTION
5. Payments
Free and Clear of Taxes, Etc.
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(a) Any
and
all payments made by the Guarantor under or in respect of this
Guaranty or
any other Credit Document shall be made, in accordance with Section
2.16
of the Reimbursement Agreement, free and clear of and without deduction
for any and all present or future Taxes. If the Guarantor shall
be
required by law to deduct any Taxes from or in respect of any sum
payable
under or in respect of this Guaranty or any other Credit Document
to any
Beneficiary, (i) the sum payable by the Guarantor shall be increased
as
may be necessary so that after the Guarantor and the Administrative
Agent
have made all required deductions (including deductions applicable
to
additional sums payable under this Section 5), such Beneficiary
receives
an amount equal to the sum it would have received had no such deductions
been made, (ii) the Guarantor shall make all such deductions and
(iii) the
Guarantor shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable
law.
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(b) In
addition, the Guarantor agrees to pay any present or future Other
Taxes
that arise from any payment made by or on behalf of the Guarantor
under or
in respect of this Guaranty or any other Credit Document or from
the
execution, delivery or registration of, performance under, or otherwise
with respect to, this Guaranty and the other Credit
Documents.
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(c) The
Guarantor agrees to indemnify each Beneficiary for and hold it
harmless
against the full amount of Taxes and Other Taxes, (including, without
limitation, any Taxes or Other Taxes of any kind imposed by any
jurisdiction on amounts payable under this Section 5) imposed on
or paid
by such Beneficiary and any liability (including penalties, additions
to
tax, interest and expenses) arising therefrom or with respect thereto.
This indemnification shall be made within 30 days from the date
such
Beneficiary makes written demand therefor.
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(d) From
time to time thereafter if requested by the Guarantor or the
Administrative Agent, each Beneficiary organized under the laws
of a
jurisdiction outside the United States shall provide the Administrative
Agent, the Fronting Bank and the Guarantor with the forms prescribed
by
the Internal Revenue Service of the United States certifying that
such
Beneficiary is exempt from United States withholding taxes with
respect to
all payments to be made to such Beneficiary hereunder. If for any
reason
during the term of this Guaranty, any Beneficiary becomes unable
to submit
the forms referred to above or the information or representations
contained therein are no longer accurate in any material respect,
such
Beneficiary shall promptly notify the Administrative Agent, the
Fronting
Bank and the Guarantor in writing to that effect. Unless the Guarantor,
the Fronting Bank and the Administrative Agent have received forms
or
other documents satisfactory to them indicating that payments hereunder
are not subject to United States withholding tax, the Guarantor,
the
Fronting Bank or the Administrative Agent shall withhold taxes
from such
payments at the applicable statutory rate in the case of payments
to or
for any Beneficiary organized under the laws of a jurisdiction
outside the
United States.
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(e) Any
Beneficiary claiming any additional amounts payable pursuant to
this
Section 5 shall use its best efforts (consistent with its internal
policy and legal and regulatory restrictions) to change the jurisdiction
of its Applicable Booking Office if the making of such a change
would
avoid the need for, or reduce the amount of, any such additional
amounts
that may thereafter accrue and would not, in the reasonable judgment
of
such Beneficiary, be otherwise disadvantageous to such
Beneficiary.
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(f) Without
prejudice to the survival of any other agreement of the Guarantor
hereunder, the agreements and obligations of the Guarantor contained
in
this Section 5 shall survive the payment in full or termination
of the
Guaranteed Obligations.
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SECTION
6. Representations
and
Warranties.
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As
of (i) the
date hereof, (ii) [FirstEnergy: the Date of Issuance, (iii)]
the date of
any Tender Advance, and [FirstEnergy: (iv)][FES: (iii)] the
date of any
amendment, modification or extension of the Letter of Credit,
the
Guarantor hereby makes each representation and warranty made
in the Credit
Documents by the Company with respect to the Guarantor and
the Guarantor
hereby further represents and warrants as follows:
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(a) Conditions
Precedent.
There are no
conditions precedent to the effectiveness of this Guaranty
that have not
been satisfied or waived.
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(b) Credit
Analysis.
The
Guarantor has, independently and without reliance upon any
Beneficiary and
based on such documents and information as it has deemed
appropriate, made its own
credit analysis and decision to enter into this Guaranty and
each other
Credit Document to which it is or is to be a party, and the
Guarantor has
established adequate means of obtaining from the Company on
a continuing
basis information pertaining to, and is now and on a continuing
basis will
be completely familiar with, the business, condition (financial
or
otherwise), operations, performance, properties and prospects
of the
Company.
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(c) Corporate
Existence and Power.
It is a
corporation duly incorporated, validly existing and in good
standing under
the laws of the jurisdiction of its incorporation, is duly
qualified to do
business as a foreign corporation in and is in good standing
under the
laws of each state in which the ownership of its properties
or the conduct
of its business makes such qualification necessary except where
the
failure to be so qualified would not have a material adverse
effect on its
business or financial condition or its ability to perform its
obligations
under this Guaranty, and has all corporate powers and all material
governmental licenses, authorizations, consents and approvals
required to
carry on its business as now conducted.
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(b) Corporate
Authorization.
The
execution, delivery and performance by it of this Guaranty,
or is to
become, a party, have been duly authorized by all necessary
corporate
action on its part and do not, and will not, require the consent
or
approval of its shareholders, or any trustee or holder of any
Debt or
other obligation of it, other than such consents and approvals
as have
been duly obtained, given or accomplished.
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(c) No
Violation, Etc.
Neither the execution, delivery or performance by it of this
Guaranty, nor
the consummation by it of the transactions contemplated hereby,
nor
compliance by it with the provisions hereof, conflicts or will
conflict
with, or results or will result in a breach or contravention
of any of the
provisions of its Organizational Documents, any Applicable
Law, or any
indenture, mortgage, lease or any other agreement or instrument
to which
it or any of its Affiliates is party or by which its property
or the
property of any of its Affiliates is bound, or results or will
result in
the creation or imposition of any Lien upon any of its property
or the
property of any of its Affiliates except as provided herein.
There is no
provision of its Organizational Documents, or any Applicable
Law, or any
such indenture, mortgage, lease or other agreement or instrument
that
materially adversely affects, or in the future is likely (so
far as it can
now foresee) to materially adversely affect, its business,
operations,
affairs, condition, properties or assets or its ability to
perform its
obligations under this Guaranty. The Guarantor and each of
its
Subsidiaries is in compliance with all laws (including, without
limitation, ERISA and Environmental Laws), regulations and
orders of any
Governmental Authority applicable to it or its property and
all
indentures, agreements and other instruments binding upon it
or its
property, except where the failure to do so, individually or
in the
aggregate, has not had and could not reasonably be expected
to have a
material adverse effect on (i) the business, assets, operations,
condition
(financial or otherwise) or prospects of the Guarantor and
its
Subsidiaries taken as a whole, or (ii) the legality, validity
or
enforceability of any of this Guaranty or the rights, remedies
and
benefits available to the parties thereunder or the ability
of the
Guarantor to perform its obligations under this Guaranty.
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(d) Governmental
Actions.
No
Governmental Action is or will be required in connection
with the
execution, delivery or performance by it, or the consummation
by it of the
transactions contemplated by this Guaranty [FirstEnergy:
, other than such
as have been duly obtained, given or accomplished].
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(e) Execution
and Delivery.
This
Guaranty has been duly executed and delivered by it, and
this Guaranty is
the legal, valid and binding obligation of it enforceable
against it in
accordance with its terms, subject, however, to the application
by a court
of general principles of equity and to the effect of any
applicable
bankruptcy, insolvency, reorganization, moratorium or similar
laws
affecting creditors’ rights generally.
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(f) Litigation.
Except as
disclosed in the Disclosure Documents, there is no pending
or threatened
action or proceeding (including, without limitation, any
proceeding
relating to or arising out of Environmental Laws) affecting
it or any of
its Subsidiaries before any court, governmental agency or
arbitrator that
has a reasonable possibility of having a material adverse
effect on the
business, condition (financial or otherwise), results of
operations or
prospects of it and its consolidated subsidiaries, taken
as a whole, or on
the ability of the Guarantor to perform its obligations under
this
Guaranty, and there has been no development in the matters
disclosed in
such filings that has had such a material adverse effect.
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(g) Financial
Statements; Material Adverse Change.
The
consolidated balance sheet of the Guarantor and its Subsidiaries
as at
[FirstEnergy: December 31, 2004][FES: the last day of the
most recently
completed fiscal year for which such financial statements
shall have been
certified in a manner acceptable to the Administrative Agent
and the Banks
by PricewaterhouseCoopers LLP] (the “Audited
Financials Date”),
and the
related consolidated statements of income, retained earnings
and cash
flows of the Guarantor and its Subsidiaries for the fiscal
year then
ended, certified by PricewaterhouseCoopers LLP, independent
public
accountants, and the unaudited consolidated balance sheet
of the Guarantor
and its Subsidiaries as at [FirstEnergy: September 30, 2005][FES:
the last
day of the most recently completed fiscal quarter for which
such financial
statements shall be available], and the related consolidated
statements of
income, retained earnings and cash flows of the Guarantor
and its
Subsidiaries for the [FirstEnergy: nine months][FES: partial
fiscal year]
then ended, copies of each of which have been furnished to
each Bank, in
all cases as amended and restated to the date hereof, present
fairly the
consolidated financial position of the Guarantor and its
Subsidiaries as
at such dates and the consolidated results of the operations
of the
Guarantor and its Subsidiaries for the periods ended on such
dates, all in
accordance with GAAP consistently applied. Except as disclosed
in the
Disclosure Documents, there has been no material adverse
change in the
business, condition (financial or otherwise), results of
operations or
prospects of the Guarantor and its Consolidated Subsidiaries,
taken as a
whole, since the Audited Financials Date.
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(h) ERISA.
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(i) No
Termination
Event has occurred or is reasonably expected to occur with
respect to any
Plan.
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(ii) Schedule
B
(Actuarial Information) to the most recent annual report
(Form 5500
Series) with respect to each Plan, copies of which have
been filed with
the Internal Revenue Service and furnished to the Banks,
is complete and
accurate and fairly presents the funding status of such
Plan, and since
the date of such Schedule B there has been no material
adverse change in
such funding status.
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(iii) Neither
it nor
any member of the Controlled Group has incurred nor reasonably
expects to
incur any withdrawal liability under ERISA to any Multiemployer
Plan.
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(i) Taxes.
The
Guarantor and each of its Subsidiaries has filed all tax
returns (federal,
state and local) required to be filed and paid all taxes
shown thereon to
be due, including interest and penalties, or provided adequate
reserves
for payment thereof in accordance with GAAP other than
such taxes that the
Guarantor or such Subsidiary is contesting in good faith
by appropriate
legal proceedings.
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(j) Investment
Company.
The
Guarantor is not an “investment company” or a company “controlled” by an
“investment company” within the meaning of the Investment Company Act of
1940, as amended, or an “investment advisor” within the meaning of the
Investment Advisers Act of 1940, as amended.
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(k) No
Event of
Default.
No event has
occurred and is continuing that constitutes an Event of
Default or that
would constitute an Event of Default (including, without
limitation, an
Event of Default under Section 6.01(s) of the Reimbursement
Agreement) but
for the requirement that notice be given or time elapse
or both.
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(l) Solvency.
(i) The fair
saleable value of the Guarantor’s assets will exceed the amount that will
be required to be paid on or in respect of the probable
liability on its
existing debts and other liabilities (including contingent
liabilities) as
they mature; (ii) the Guarantor’s assets do not constitute unreasonably
small capital to carry out its business as now conducted
or as proposed to
be conducted; (iii) the Guarantor does not intend to incur
debts beyond
its ability to pay such debts as they mature (taking into
account the
timing and amounts of cash to be received by it and the
amounts to be
payable on or in respect of its obligations); and (iv)
the Guarantor does
not believe that final judgments against it in actions
for money damages
presently pending will be rendered at a time when, or in
an amount such
that, it will be unable to satisfy any such judgments promptly
in
accordance with their terms (taking into account the maximum
reasonable
amount of such judgments in any such actions and the earliest
reasonable
time at which such judgments might be rendered). The Guarantor’s cash
flow, after taking into account all other anticipated uses
of its cash
(including the payments on or in respect of debt referred
to in clause
(iii) above), will at all times be sufficient to pay all
such judgments
promptly in accordance with their terms.
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(m) No
Material
Misstatements.
The reports,
financial statements and other written information furnished
by or on
behalf of the Guarantor to the Administrative Agent or
any Bank pursuant
to or in connection with the Guaranty and the transactions
contemplated
hereby do not contain and will not contain, when taken
as a whole, any
untrue statement of a material fact and do not omit and
will not omit,
when taken as a whole, to state any fact necessary to make
the statements
therein, in the light of the circumstances under which
they were or will
be made, not misleading in any material respect.
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SECTION
7. Covenants
and Guarantor Defaults.
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7.1 Covenants.
The
Guarantor covenants and agrees that, so long as any part of the
Guaranteed
Obligations shall remain unpaid, the Letter of Credit issued
for the
account of the Company shall be outstanding or any Bank shall
have any
Commitment, the Guarantor will perform and observe, and cause
each of its
Subsidiaries to perform and observe, all of the terms, covenants
and
agreements set forth in the Credit Documents on its or their
part to be
performed or observed or that the Guarantor has agreed to cause
the
Company or such Subsidiaries to perform or observe.
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7.2 Affirmative
Covenants.
So long as a
drawing is available under the Letter of Credit or any Bank shall
have any
Commitment under the Reimbursement Agreement or any Credit Party
shall
have any obligation to pay any amount to any Bank under any Credit
Document or the Guarantor shall have any obligations hereunder,
the
Guarantor will, unless the Required Banks shall otherwise consent
in
writing:
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(a) Preservation
of Corporate Existence, Etc.
Without limiting the right of the Guarantor to merge with or
into or
consolidate with or into any other corporation or entity in accordance
with the provisions of Section 7.4(c) hereof, (i) preserve and
maintain
its corporate existence in the state of its incorporation and
qualify and
remain qualified as a foreign corporation in each jurisdiction
in which
such qualification is reasonably necessary in view of its business
and
operations or the ownership of its properties and (ii) preserve,
renew and
keep in full force and effect the rights, privileges and franchises
necessary or desirable in the normal conduct of its business.
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(b) Compliance
with Laws,
Etc.
Comply, and
cause each of its Subsidiaries to comply, in all material respects
with
all applicable laws, rules, regulations, and orders of any
Governmental
Authority, the noncompliance with which would materially and
adversely
affect the business or condition of the Guarantor and its Subsidiaries,
taken as a whole, such compliance to include, without limitation,
compliance with the USA Patriot Act (Title III of Pub. L. 107-56
(signed
into law October 26, 2001)), regulations promulgated by the
U.S. Treasury
Department Office of Foreign Assets Control, Environmental
Laws and ERISA
and paying before the same become delinquent all material taxes,
assessments and governmental charges imposed upon it or upon
its property,
except to the extent compliance with any of the foregoing is
then being
contested in good faith by appropriate legal proceedings.
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(c) Maintenance
of Insurance, Etc.
Maintain
insurance with responsible and reputable insurance companies
or
associations or through its own program of self-insurance in
such amounts
and covering such risks as is usually carried by companies
engaged in
similar businesses and owning similar properties in the same
general areas
in which the Guarantor operates and furnish to the Administrative
Agent,
within a reasonable time after written request therefor, such
information
as to the insurance carried as any Bank, through the Administrative
Agent,
may reasonably request.
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(d) Inspection
Rights.
At any
reasonable time and from time to time as the Administrative
Agent or any
Bank may reasonably request, permit the Administrative Agent
or such Bank
or any agents or representatives thereof to examine and make
copies of and
abstracts from the records and books of account of, and visit
the
properties of, the Guarantor and any of its Subsidiaries, and
to discuss
the affairs, finances and accounts of the Guarantor and any
of its
Subsidiaries with any of their respective officers or directors;
provided,
however, that the Guarantor reserves the right to restrict
access to any
of its Subsidiaries’ generating facilities in accordance with reasonably
adopted procedures relating to safety and security. The Administrative
Agent and each Bank agree to use reasonable efforts to ensure
that any
information concerning the Guarantor or any of its Subsidiaries
obtained
by the Administrative Agent or such Bank pursuant to this subsection
(d)
or subsection (g) that is not contained in a report or other
document
filed with the Securities and Exchange Commission, distributed
by the
Guarantor to its security holders or otherwise generally available
to the
public, will, to the extent permitted by law and except as
may be required
by valid subpoena or in the normal course of the Administrative
Agent’s or
such Bank’s business operations be treated confidentially by the
Administrative Agent or such Bank, as the case may be, and
will not be
distributed or otherwise made available by the Administrative
Agent or
such Bank, as the case may be, to any Person, other than the
Administrative Agent’s or such Bank’s employees, authorized agents or
representatives (including, without limitation, attorneys and
accountants).
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(e) Keeping
of
Books.
Keep, and
cause each Subsidiary to keep, proper books of record and account
in which
entries shall be made of all financial transactions and the
assets and
business of the Guarantor and each of its Subsidiaries in accordance
with
GAAP.
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(f) Maintenance
of
Properties.
Maintain and
preserve, and cause each of its Subsidiaries to maintain and
preserve, all
of its properties that are used or that are useful in the conduct
of its
business in good working order and condition, ordinary wear
and tear
excepted, it being understood that this covenant relates only
to the good
working order and condition of such properties and shall not
be construed
as a covenant of the Guarantor or any of its Subsidiaries not
to dispose
of such properties by sale, lease, transfer or otherwise.
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11
H-12
|
(g) Reporting
Requirements.
Furnish, or
cause to be furnished, to the Administrative Agent, with
sufficient copies
for each Bank, the following:
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(i) as
soon
as available and in any event within 50 days after the close
of each of
the first three quarters in each fiscal year of the Guarantor,
consolidated balance sheets of the Guarantor and its Subsidiaries
as at
the end of such quarter and consolidated statements of income
of the
Guarantor and its Subsidiaries for the period commencing
at the end of the
previous fiscal year and ending with the end of such quarter,
fairly
presenting the financial condition of the Guarantor and its
Subsidiaries
as at such date and the results of operations of the Guarantor
and its
Subsidiaries for such period and setting forth in each case
in comparative
form the corresponding figures for the corresponding period
of the
preceding fiscal year, all in reasonable detail and duly
certified
(subject to year-end audit adjustments) by the chief financial
officer,
treasurer, assistant treasurer or controller of the Guarantor
as having
been prepared in accordance with GAAP consistently applied;
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(ii) as
soon
as available and in any event within 105 days after the end
of each fiscal
year of the Guarantor, a copy of the annual report for such
year for the
Guarantor and its Subsidiaries, containing consolidated and
consolidating
financial statements of the Guarantor and its Subsidiaries
for such year
certified in a manner acceptable to the Administrative Agent
and the Banks
by PricewaterhouseCoopers LLP or other independent public
accountants
acceptable to the Administrative Agent and the Banks, together
with
statements of projected financial performance prepared by
management for
the next fiscal year, in form satisfactory to the Administrative
Agent;
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(iii) concurrently
with the delivery of the financial statements specified in
clauses (i) and
(ii) above a certificate of the chief financial officer,
treasurer,
assistant treasurer or controller of the Guarantor (A) stating
whether he
has any knowledge of the occurrence at any time prior to
the date of such
certificate of an Event of Default not theretofore reported
pursuant to
the provisions of Section 5.01(g)(i) of the Reimbursement
Agreement or of
the occurrence at any time prior to such date of any such
Event of
Default, except Events of Default theretofore reported pursuant
to the
provisions of Section 5.01(g)(i) of the Reimbursement Agreement
and
remedied, and, if so, stating the facts with respect thereto,
and (B)
setting forth in a true and correct manner, the calculation
of the ratio
contemplated by Section 7.3 hereof, as of the date of the
most recent
financial statements accompanying such certificate, to show
the
Guarantor’s compliance with or the status of the financial covenant
contained in Section 7.3 hereof;
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(iv) promptly
after the sending or filing thereof, copies of any reports
that the
Guarantor sends to any of its securityholders, and copies
of all reports
on Form 10-K, Form 10-Q or Form 8-K that the Guarantor or
any of its
Subsidiaries files with the Securities and Exchange
Commission;
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12
H-13
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(v) as
soon as possible and in
any event (A) within 30 days after the Guarantor or any
member of the
Controlled Group knows or has reason to know that any Termination
Event
described in clause (i) of the definition of Termination
Event with
respect to any Plan has occurred and (B) within 10 days
after the
Guarantor or any member of the Controlled Group knows or
has reason to
know that any other Termination Event with respect to any
Plan has
occurred, a statement of the chief financial officer of
the Guarantor
describing such Termination Event and the action, if any,
that the
Guarantor or such member of the Controlled Group, as the
case may be,
proposes to take with respect thereto;
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(vi) promptly
and in any event
within two Business Days after receipt thereof by the Guarantor
or any
member of the Controlled Group from the PBGC, copies of
each notice
received by the Guarantor or any such member of the Controlled
Group of
the PBGC’s intention to terminate any Plan or to have a trustee
appointed
to administer any Plan;
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(vii)
promptly
and in any event
within 30 days after the filing thereof with the Internal
Revenue Service,
copies of each Schedule B (Actuarial Information) to the
annual report
(Form 5500 Series) with respect to each Plan;
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(viii) promptly
and in any event
within five Business Days after receipt thereof by the
Guarantor or any
member of the Controlled Group from a Multiemployer Plan
sponsor, a copy
of each notice received by the Guarantor or any member
of the Controlled
Group concerning the imposition of withdrawal liability
pursuant to
Section 4202 of ERISA;
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(ix) promptly
and in any event
within five Business Days after ▇▇▇▇▇’▇ or S&P has changed any
relevant Reference Rating, notice of such change; and
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(x) such
other
information respecting the condition or operations, financial
or
otherwise, of the Guarantor or any of its Subsidiaries,
including, without
limitation, copies of all reports and registration statements
that the
Guarantor or any Subsidiary files with the Securities and
Exchange
Commission or any national securities exchange, as the
Administrative
Agent or any Bank (through the Administrative Agent) may
from time to time
reasonably request.
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(h) Guarantor
Approvals.
Maintain all
approvals of all Governmental Authorities necessary connection
with the
execution, delivery or performance by it, or the consummation
by it of the
transactions contemplated by this Guaranty in full force
and effect and
comply with all terms and conditions thereof until all
Obligations shall
have been repaid or paid (as the case may be) and the Stated
Expiration
Date has occurred.
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7.3. Financial
Covenants of the Guarantor.
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Unless
the
Required Banks shall otherwise consent in writing, so long
as a drawing is
available under the Letter of Credit or any Bank shall
have any Commitment
under the Reimbursement Agreement or any Credit Party shall
have any
obligation to pay any amount to any Bank hereunder or the
Guarantor shall
have any obligations hereunder:
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13
H-14
|
(a) Debt
to
Capitalization Ratio.
The
Guarantor will maintain a Debt to Capitalization Ratio
of no more than
0.65 to 1.00 (determined as of the last day of each fiscal
quarter)[FirstEnergy: ; provided that the Guarantor shall
be required to
comply with this financial covenant only so long as the
Guarantor’s
Applicable Percentage shall be 100%][FES: ; provided
that the Guarantor
shall be required to comply with this financial covenant
only so long as
(i) the Guarantor’s Applicable Percentage shall be 100% and (ii) the
“Applicable Percentage” of FirstEnergy under (and as defined in) the
FirstEnergy Guaranty Agreement shall be 0%].
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7.4. Negative
Covenants of the Guarantor.
So long as a
drawing is available under the Letter of Credit or any
Bank shall have any
Commitment under the Reimbursement Agreement or any Credit
Party shall
have any obligation to pay any amount to any Bank hereunder,
the Guarantor
will not, without the written consent of the Required
Banks:
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(a) Sales,
Etc.
(i) Sell,
lease, transfer or otherwise dispose of any shares of
common stock of any
domestic Significant Subsidiary, whether now owned or
hereafter acquired
by the Guarantor, or permit any Significant Subsidiary
to do so or (ii)
permit the Guarantor or any Subsidiary to sell, lease,
transfer or
otherwise dispose of (whether in one transaction or a
series of
transactions) assets located in The United States of
America representing
in the aggregate more than 15% (determined at the time
of each such
transaction) of the value of all of the consolidated
fixed assets of the
Guarantor, as reported on the most recent consolidated
balance sheet of
the Guarantor, to any entity other than the Guarantor
or any of its wholly
owned direct or indirect Subsidiaries or, in the case
of The Toledo Edison
Company, to Centerior Funding Corporation; provided,
however, that this
provision shall not restrict the transfer of nuclear
and fossil generation
assets from Pennsylvania Power Company, Ohio Edison Company,
The Cleveland
Electric Illuminating Company and The Toledo Edison Company
to the Company
and FirstEnergy Generation Corp., respectively (the “Generation
Transfers”).
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(b) Liens,
Etc.
Create or
suffer to exist, or permit any Significant Subsidiary
to create or suffer
to exist, any Lien upon or with respect to any of its
properties
(including, without limitation, any shares of any class
of equity security
of any Significant Subsidiary), in each case to secure
or provide for the
payment of Debt, other than (i) liens consisting of (A)
pledges or
deposits in the ordinary course of business to secure
obligations under
worker’s compensation laws or similar legislation, (B) deposits
in the
ordinary course of business to secure, or in lieu of,
surety, appeal, or
customs bonds to which the Guarantor or Significant Subsidiary
is a party,
(C) pledges or deposits in the ordinary course of business
to secure
performance in connection with bids, tenders or contracts
(other than
contracts for the payment of money), or (D) materialmen’s, mechanics’,
carriers’, workers’, repairmen’s or other like Liens incurred in the
ordinary course of business for sums not yet due or currently
being
contested in good faith by appropriate proceedings diligently
conducted,
or deposits to obtain in the release of such Liens; (ii)
purchase money
liens or purchase money security interests upon or in
any property
acquired or held by the Guarantor or Significant Subsidiary
in the
ordinary course of business, which secure the purchase
price of such
property or secure indebtedness incurred solely for the
purpose of
financing the acquisition of such property; (iii) Liens
existing on the
property of any Person at the time that such Person becomes
a direct or
indirect Significant Subsidiary; provided that such Liens
were not created
to secure the acquisition of such Person; (iv) Liens
in existence on the
date of this Guaranty; (v) Liens created by any First
Mortgage Indenture,
so long as (A) under the terms thereof no “event of default” (howsoever
designated) in respect of any bonds issued thereunder
will be triggered by
reference to an Event of Default or Default and (B) no
such Liens shall
apply to assets acquired from the Guarantor or any Significant
Subsidiary
if such assets were free of Liens (other than as a result
of a release of
such Liens in contemplation of such acquisition) immediately
prior to any
such acquisition; (vi) Liens on assets of American Transmission
Systems,
Incorporated to secure Debt of American Transmission
Systems,
Incorporated, provided, however, that the aggregate principal
amount of
Debt secured by such Liens shall not at any time exceed
60% of the
depreciated book value of the property subject to such
Liens; (vii) Liens
securing Stranded Cost Securitization Bonds; (viii) Liens
on cash (in an
aggregate amount not to exceed $270,000,000) pledged
to secure
reimbursement obligations for letters of credit issued
for the account of
Ohio Edison Company; (ix) Liens on assets transferred
in the Generation
Transfers in favor of the transferor thereof; and (x)
Liens created for
the sole purpose of extending, renewing or replacing
in whole or in part
Debt secured by any Lien referred to in the foregoing
clauses (i) through
(ix); provided, however, that the principal amount of
Debt secured thereby
shall not exceed the principal amount of Debt so secured
at the time of
such extension, renewal or replacement, and that such
extension, renewal
or replacement, as the case may be, shall be limited
to all or a part of
the property or Debt that secured the Lien so extended,
renewed or
replaced (and any improvements on such property).
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14
H-15
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(c) Mergers,
Etc.
Merge with
or into or consolidate with or into any other Person,
or permit any of its
Subsidiaries to do so unless (i) immediately after
giving effect thereto,
no event shall occur and be continuing that constitutes
an Event of
Default, (ii) the consolidation or merger shall not
materially and
adversely affect the ability of the Guarantor (or its
successor by merger
or consolidation as contemplated by clause (i) of this
subsection (c)) to
perform its obligations hereunder, and (iii) in the
case of any merger or
consolidation to which the Guarantor is a party, the
corporation formed by
such consolidation or into which the Guarantor shall
be merged shall
assume the Guarantor’s obligations under this Guaranty to which it is a
party in a writing satisfactory in form and substance
to the Required
Banks.
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(d) Compliance
with ERISA.
(i) Enter
into any “prohibited transaction” (as defined in Section 4975 of the Code,
and in ERISA) involving any Plan that may result in
any liability of the
Guarantor to any Person that (in the opinion of the
Required Banks) is
material to the financial position or operations of
the Guarantor or (ii)
allow or suffer to exist any other event or condition
known to the
Guarantor that results in any liability of the Guarantor
to the PBGC that
(in the opinion of the Required Banks) is material
to the financial
position or operations of the Guarantor. For purposes
of this subsection
(d), “liability” shall not include termination insurance premiums payable
under Section 4007 of ERISA.
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7.5. Guarantor
Defaults.
The
occurrence of any of the following events (whether
voluntary or
involuntary) shall be a “Guarantor
Event of Default”
hereunder:
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(a) Representations
and Warranties.
Any
representation or warranty made or deemed made by the
Guarantor (or any of
its officers) in any Credit Document or in connection
with any Credit
Document shall prove to have been incorrect or misleading
in any material
respect when made or deemed made; or
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(b) Covenant
Performance.
(i) the
Guarantor shall fail to perform or observe any covenant
set forth in
clause (i) of Section 7.2(a), or Section 7.3 or Section
7.4 hereof on its
part to be performed or observed or (ii) the Guarantor
shall fail to
perform or observe any other term, covenant or agreement
contained in
Credit Document on its part to be performed or observed
and such failure
shall remain unremedied for 30 days after written notice
thereof shall
have been given to the Guarantor by the Administrative
Agent or any Bank;
or
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15
H-16
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(c) Credit
Documentation.
Any material
provision of any Credit Document to which the Guarantor
is a party shall
at any time and for any reason cease to be valid
and binding upon the
Guarantor, except pursuant to the terms thereof,
or shall be declared to
be null and void, or the validity or enforceability
thereof shall be
contested by the Guarantor or any Governmental Authority,
or the Guarantor
shall deny that it has any or further liability or
obligation under any
Credit Document to which it is a party; or
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(d) Cross-Default.
The
Guarantor or any Significant Subsidiary shall fail
to pay any principal of
or premium or interest on any Debt (other than Debt
owed by the Guarantor
hereunder) that is outstanding in a principal amount
in excess of
$50,000,000 in the aggregate when the same becomes
due and payable
(whether by scheduled maturity, required prepayment,
acceleration, demand
or otherwise), and such failure shall continue after
the applicable grace
period, if any, specified in the agreement or instrument
relating to such
Debt; or any other event shall occur or condition
shall exist under any
agreement or instrument relating to any such Debt
and shall continue after
the applicable grace period, if any, specified in
such agreement or
instrument, if the effect of such event or condition
is to accelerate, or
to permit the acceleration of, the maturity of such
Debt; or any such Debt
shall be declared to be due and payable, or required
to be prepaid (other
than by a regularly scheduled required prepayment),
prior to the stated
maturity thereof; or
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(e) Bankruptcy
Matters.
The
Guarantor or any Significant Subsidiary shall generally
not pay its debts
as such debts become due, or shall admit in writing
its inability to pay
its debts generally, or shall make a general assignment
for the benefit of
creditors; or any proceeding shall be instituted
by or against the
Guarantor or any Significant Subsidiary seeking to
adjudicate it a
bankrupt or insolvent, or seeking liquidation, winding
up, reorganization,
arrangement, adjustment, protection, relief, or composition
or arrangement
with creditors, a readjustment of its debts, in each
case under any law
relating to bankruptcy, insolvency or reorganization
or relief of debtors,
or seeking the entry of an order for relief or the
appointment of a
receiver, trustee, custodian or other similar official
for it or for any
substantial part of its property and, in the case
of any such proceeding
instituted against it (but not instituted or acquiesced
in by it), either
such proceeding shall remain undismissed or unstayed
for a period of 60
consecutive days, or any of the actions sought in
such proceeding
(including, without limitation, the entry of an order
for relief against,
or the appointment of a receiver, trustee, custodian
or other similar
official for, it or for any substantial part of its
property) shall occur;
or the Guarantor or any Significant Subsidiary shall
take any corporate
action to authorize or to consent to any of the actions
set forth above in
this subsection (e); or
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(f) Judgments.
Any judgment
or order for the payment of money exceeding any applicable
insurance
coverage by more than $50,000,000 shall be rendered
by a court of final
adjudication against the Guarantor or any Significant
Subsidiary and
either (i) valid enforcement proceedings shall have
been commenced by any
creditor upon such judgment or order or (ii) there
shall be any period of
10 consecutive days during which a stay of enforcement
of such judgment or
order, by reason of a pending appeal or otherwise,
shall not be in effect;
or
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H-17
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(g) Change
of
Control.
(i)
FirstEnergy shall fail to own directly or indirectly
100% of the issued
and outstanding shares of common stock of each Significant
Subsidiary,
(ii) any Person or two or more Persons acting in
concert shall have
acquired beneficial ownership (within the meaning
of Rule 13d-3 of the
Securities and Exchange Commission under the Securities
Exchange Act of
1934, as amended), directly or indirectly, of securities
of FirstEnergy
(or other securities convertible into such securities)
representing 30% or
more of the combined voting power of all securities
of FirstEnergy
entitled to vote in the election of directors; (iii)
commencing after the
date of this Agreement, individuals who as of the
date of this Agreement
were directors shall have ceased for any reason to
constitute a majority
of the Board of Directors of FirstEnergy unless the
Persons replacing such
individuals were nominated by the stockholders or
the Board of Directors
of FirstEnergy in accordance with FirstEnergy’s Organizational Documents;
or (iv) 90 days shall have elapsed after any Person
or two or more Persons
acting in concert shall have entered into a contract
or arrangement that
upon consummation will result in its or their acquisition
of, or control
over, securities of FirstEnergy (or other securities
convertible into such
securities) representing 30% or more of the combined
voting power of all
securities of FirstEnergy entitled to vote in the
election of
directors.
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SECTION
8. Amendments,
Guaranty Supplements, Etc.
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No
amendment or
waiver of any provision of this Guaranty and no consent to any
departure
by the Guarantor therefrom shall in any event be effective unless
the same
shall be in writing and signed by the Administrative Agent, the
Company,
the Guarantors and the Required Banks, and then such waiver or
consent
shall be effective only in the specific instance and for the
specific
purpose for which given; provided, however, that no amendment,
waiver or
consent shall, unless in writing and signed by all of the Beneficiaries,
(a) reduce or limit the obligations of the Guarantor hereunder,
release
the Guarantor hereunder or otherwise limit the Guarantor’s liability with
respect to the Obligations owing to the Beneficiaries under or
in respect
of the Credit Documents, (b) postpone any date fixed for payment
hereunder
or (c) change the number of Beneficiaries or the percentage of
(x) the
Commitments, (y) the aggregate unpaid principal amount of the
Tender
Advances or (z) the aggregate available amount of the Letter
of Credit
that, in each case, shall be required for the Beneficiaries or
any of them
to take any action hereunder; and
provided,
further, that no amendment, waiver or consent shall, unless in
writing and
signed by the Administrative Agent in addition to the Banks required
above
to take such action, affect the rights or duties of the Administrative
Agent under this Guaranty; and provided, further, that no amendment,
waiver or consent that would adversely affect the rights of,
or increase
the obligations of, the Fronting Bank, shall be effective unless
agreed to
in writing by the Fronting Bank; and provided, further, that
this Guaranty
may be amended and restated without the consent of any Beneficiary
if,
upon giving effect to such amendment and restatement, such Beneficiary
shall no longer be a Beneficiary of this Guaranty (as so amended
and
restated) or have any obligation hereunder and shall have been
paid in
full all amounts payable hereunder to such Beneficiary.
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SECTION
9. Notices,
Etc.
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All
notices and
other communications provided for hereunder shall be in writing
(including
telegraphic, telecopy or cable communication) and mailed, telegraphed,
telecopied, cabled or delivered to it, if to the Guarantor,
addressed to
it at the Guarantor’s addresses specified in Section 9.02 of the
Reimbursement Agreement, if to the Administrative Agent, any
Bank or the
Fronting Bank, at its address specified in Section 9.02 of
the
Reimbursement Agreement, or, as to each party, at such other
address as
shall be designated by such party in a written notice to each
other party.
All such notices and other communications shall, when mailed,
telegraphed,
telecopied or cabled, be effective when deposited in the mails,
delivered
to the telegraph company, telecopied or delivered to the cable
company,
respectively. Delivery by telecopier of an executed counterpart
of a
signature page to any amendment or waiver of any provision
of this
Guaranty or of any guaranty supplement to be executed and delivered
hereunder shall be effective as delivery of an original executed
counterpart thereof.
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SECTION
10. No Waiver,
Remedies.
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No
failure on
the part of any Beneficiary to exercise, and no delay in exercising,
any
right hereunder shall operate as a waiver thereof; nor shall
any single or
partial exercise of any right hereunder preclude any other
or further
exercise thereof or the exercise of any other right. The remedies
herein
provided are cumulative and not exclusive of any remedies provided
by
law.
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SECTION
11. Right of
Set-off.
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Upon
the
occurrence and during the continuance of any Event of Default,
each
Beneficiary and each of its Affiliates that is acting as the
Fronting Bank
under the Reimbursement Agreement is hereby authorized at any
time and
from time to time, to the fullest extent permitted by law,
to set off and
apply any and all deposits (general or special, time or demand,
provisional or final, excluding, however, any payroll accounts
maintained
by the Guarantor with such Beneficiary if and to the extent
that such
Beneficiary shall have expressly waived its set-off rights
in writing in
respect of such payroll account) at any time held and other
indebtedness
at any time owing by such Beneficiary or such Affiliate to
or for the
credit or the account of the Guarantor against any and all
of the
obligations of the Guarantor now or hereafter existing under
this
Guaranty, irrespective of whether such Beneficiary shall have
made any
demand under this Guaranty or any other Credit Document and
although such
obligations may be unmatured. Each Beneficiary agrees promptly
to notify
the Guarantor after any such set-off and application; provided,
however,
that the failure to give such notice shall not affect the validity
of such
set-off and application. The rights of each Beneficiary and
its respective
Affiliates under this Section are in addition to other rights
and remedies
(including, without limitation, other rights of set-off) that
such
Beneficiary and its respective Affiliates may have.
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SECTION
12. Indemnification.
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(a) Without
limitation on any other Guaranteed Obligations of the Guarantor
or
remedies of the Beneficiaries under this Guaranty, the Guarantor
shall, to
the fullest extent permitted by law, indemnify, defend and
save and hold
harmless each Beneficiary and each of its Affiliates and their
respective
officers, directors, employees, agents and advisors (each,
an
“Indemnified
Party”)
from and
against, and shall pay on demand, any and all claims, damages,
losses,
liabilities and expenses (including, without limitation, reasonable
fees
and expenses of counsel) that may be incurred by or asserted
or awarded
against any Indemnified Party in connection with or as a result
of any
failure of any Guaranteed Obligations to be the legal, valid
and binding
obligations of the Company enforceable against the Company
in accordance
with their terms.
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(b) The
Guarantor hereby also agrees that none of the Indemnified Parties
shall
have any liability (whether direct or indirect, in contract,
tort or
otherwise) to the Guarantor or any of its respective Affiliates
or any of
their respective officers, directors, employees, agents and
advisors, and
the Guarantor hereby agrees not to assert any claim against
any
Indemnified Party on any theory of liability, for special,
indirect,
consequential or punitive damages in connection with, arising
out of, or
otherwise relating to this Guaranty, any of the transactions
contemplated
herein or the actual or proposed use of the Letter of
Credit.
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(c) Without
prejudice to the survival of any of the other agreements of
the Guarantor
under this Guaranty or any of the other Credit Documents, the
agreements
and obligations of the Guarantor contained in Section 1(a)
(with respect
to enforcement expenses), the last sentence of Section 2, Section
5 and
this Section 12 shall survive the payment in full of the Guaranteed
Obligations and all of the other amounts payable under this
Guaranty.
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SECTION
13. Subordination.
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If
any Default
shall have occurred and be continuing, the Guarantor agrees to
subordinate
any and all debts, liabilities and other obligations owed to
the Guarantor
by the Company (the “Subordinated
Obligations”)
to the
Guaranteed Obligations to the extent and in the manner hereinafter
set
forth in this Section 13:
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(a) Prohibited
Payments, Etc.
Except during
the continuance of an Default (including the commencement and
continuation
of any proceeding under any Bankruptcy Law relating to the Company),
the
Guarantor may receive regularly scheduled payments from the Company
on
account of the Subordinated Obligations. After the occurrence
and during
the continuance of any Default (including the commencement and
continuation of any proceeding under any Bankruptcy Law relating
to the
Company), however, unless the Administrative Agent otherwise
agrees, the
Guarantor shall not demand, accept or take any action to collect
any
payment on account of the Subordinated Obligations.
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(b) Prior
Payment of Guaranteed Obligations.
In any
proceeding under any Bankruptcy Law relating to the Company,
the Guarantor
agrees that the Beneficiaries shall be entitled to receive payment
in full
in cash of all Guaranteed Obligations (including all interest
and expenses
accruing after the commencement of a proceeding under any Bankruptcy
Law,
whether or not constituting an allowed claim in such proceeding
(“Post
Petition Interest”))
before the
Guarantor receives payment of any Subordinated Obligations.
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(c) Turn-Over.
After the occurrence and during the continuance of any Default
(including
the commencement and continuation of any proceeding under any
Bankruptcy
Law relating to the Company), the Guarantor shall, if the Administrative
Agent so requests, collect, enforce and receive payments on account
of the
Subordinated Obligations as trustee for the Beneficiaries and
deliver such
payments to the Administrative Agent on account of the Guaranteed
Obligations (including all Post Petition Interest), together
with any
necessary endorsements or other instruments of transfer, but
without
reducing or affecting in any manner the liability of the Guarantor
under
the other provisions of this Guaranty.
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(d) Administrative
Agent Authorization. After the occurrence and during the continuance
of
any Default (including the commencement and continuation of any
proceeding
under any Bankruptcy Law relating to any other the Company),
the
Administrative Agent is authorized and empowered (but without
any
obligation to so do), in its discretion, (i) in the name of the
Guarantor,
to collect and enforce, and to submit claims in respect of, Subordinated
Obligations and to apply any amounts received thereon to the
Guaranteed
Obligations (including any and all Post Petition Interest), and
(ii) to
require the Guarantor (A) to collect and enforce, and to submit
claims in
respect of, Subordinated Obligations and (B) to pay any amounts
received
on such obligations to the Administrative Agent for application
to the
Guaranteed Obligations (including any and all Post Petition
Interest).
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SECTION
14. Continuing
Guaranty; Assignments under the Reimbursement
Agreement.
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This
Guaranty
is a continuing guaranty and shall (a) remain in full force and
effect
until the latest of (i) the payment in full in cash of the Guaranteed
Obligations and all other amounts payable under this Guaranty,
(ii) the
Stated Expiration Date, (iii) the latest date of expiration or
termination
of the Letter of Credit issued for the account of the Company,
(b) be
binding upon the Guarantor, its successors and assigns and (c)
inure to
the benefit of and be enforceable by the Beneficiaries and their
successors, transferees and assigns. Without limiting the generality
of
clause (c) of the immediately preceding sentence, any Beneficiary
may
assign or otherwise transfer all or any portion of its rights
and
obligations under the Reimbursement Agreement (including, without
limitation, all or any portion of its Commitments and the Obligations
owing to it) to any other Person, and such other Person shall
thereupon
become vested with all the benefits in respect thereof granted
to such
Beneficiary herein or otherwise, in each case as and to the extent
provided in Section 9.08 of the Reimbursement Agreement. The
Guarantor
shall not have the right to assign its rights hereunder or any
interest
herein without the prior written consent of the
Beneficiaries.
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SECTION
15. Execution
in Counterparts.
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This
Guaranty
and each amendment, waiver and consent with respect hereto may
be executed
in any number of counterparts and by different parties thereto
in separate
counterparts, each of which when so executed shall be deemed
to be an
original and all of which taken together shall constitute one
and the same
agreement. Delivery of an executed counterpart of a signature
page to this
Guaranty by telecopier shall be effective as delivery of an original
executed counterpart of this Guaranty.
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SECTION
16. Governing
Law; Jurisdiction; Waiver of Jury Trial, Etc.
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(a) THIS
GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS
OF THE STATE OF NEW YORK.
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(b) To
the
fullest extent permitted by law, the Guarantor hereby irrevocably
and
unconditionally (i) submits, for itself and its property, to the
nonexclusive jurisdiction of any New York State court or Federal
court of
the United States of America sitting in New York City, and any
appellate
court from any thereof, in any action or proceeding arising out
of or
relating to this Guaranty or any of the other Credit Documents
to which it
is or is to be a party, and (ii) agrees that all claims in respect
of any
such action or proceeding may be heard and determined in such New
York
State court or, in such Federal court. The Guarantor agrees, to
the
fullest extent permitted by law, that a final judgment in any such
action
or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided
by
law.
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(c) The
Guarantor hereby irrevocably and unconditionally waives, to the
fullest
extent permitted by law, any objection that it may now or hereafter
have
to the laying of venue of any suit, action or proceeding arising
out of or
relating to this Guaranty or any of the other Credit Documents
to which it
is or is to be a party in any New York State or federal court.
The
Guarantor hereby irrevocably waives, to the fullest extent permitted
by
law, the defense of an inconvenient forum to the maintenance of
such suit,
action or proceeding in any such court. The Guarantor also, irrevocably
consents, to the fullest extent permitted by law, to the service
of any
and all process in any such action or proceeding by the mailing
of
certified mail of copies of such process to the Guarantor at its
address
specified in Section 9.
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(d) THE
GUARANTOR AND EACH BENEFICIARY HEREBY WAIVES ALL RIGHT TO TRIAL
BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING
TO THIS
GUARANTY, ANY OTHER CREDIT DOCUMENT, OR ANY OTHER INSTRUMENT OR
DOCUMENT
DELIVERED HEREUNDER OR THEREUNDER.
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IN
WITNESS
WHEREOF, the Guarantor has caused this Guaranty to be duly executed
and
delivered by its officer thereunto duly authorized as of the date
first
above written.
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[FIRSTENERGY
SOLUTIONS CORP.]
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