Exhibit B-1
Draft 2/6/96
GUARANTY
GUARANTY (this "Guaranty"), dated as of the __ day of March ,
1996, made by GENERAL PUBLIC UTILITIES CORPORATION, a Pennsylvania
corporation (the "Guarantor"), in favor of each of the Banks as
parties to the Credit Agreement (as defined below).
PRELIMINARY STATEMENTS:
(1) The Banks have entered into a Credit Agreement, dated
March __, 1996 (said Agreement, as it may hereafter be amended or
otherwise modified from time to time, being the "Credit Agreement",
the terms defined therein and not otherwise defined herein being
used herein as therein defined), with GPU Service Corporation, a
corporation organized and existing under the laws of the
Commonwealth of Pennsylvania (the "Borrower").
(2) It is a condition precedent to the effectiveness of the
Credit Agreement that the Guarantor, as owner of 100% percent of
the outstanding shares of stock of the Borrower, shall have
executed and delivered this Guaranty.
NOW, THEREFORE, in consideration of the premises and in order
to induce the Banks to enter into the Credit Agreement, the
Guarantor hereby agrees as follows:
SECTION 1. Guaranty. The Guarantor hereby unconditionally
guarantees the punctual payment when due, whether at stated
maturity, by acceleration or otherwise, of all principal, interest
and other obligations of the Borrower under the Credit Agreement
(collectively, the "Obligations"), and agrees to pay any and all
reasonable expenses (including reasonable counsel fees and
expenses) incurred by the Banks in enforcing any rights under this
Guaranty.
SECTION 2. Guaranty Absolute. The Guarantor guarantees
that the Obligations will be paid strictly in accordance with the
terms of the Credit Agreement, regardless of any law, regulation or
order now or hereafter in effect in any jurisdiction affecting any
of such terms or the rights of the Banks with respect thereto. The
obligations of the Guarantor under this Guaranty are independent of
the Obligations, 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 Borrower
or whether the Borrower is joined in any such action or actions.
The liability of the Guarantor under this Guaranty shall, to the
fullest extent permitted by law, be absolute and unconditional
irrespective of:
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(i) any lack of validity or enforceability of the
Credit Agreement or any other agreement or instrument relating
thereto;
(ii) any change in the time, manner or place of payment
of, or in any other term of, all or any of the Obligations, or any
other amendment or waiver of or any consent to departure from the
Credit Agreement, including, without limitation, any increase in
the Obligations resulting from the extension of additional credit
to the Borrower or any of its subsidiaries or otherwise;
(iii) 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
Obligations;
(iv) any manner of application of collateral, or
proceeds thereof, to all or any of the Obligations, or any manner
of sale or other disposition of any collateral for all or any of
the Obligations or any other assets of the Borrower or any of its
subsidiaries;
(v) any change, restructuring or termination of the
corporate structure or existence of the Borrower or any of its
subsidiaries; or
(vi) any other circumstance which might otherwise
constitute a defense available to, or a discharge of, the Borrower
or a guarantor.
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
Obligations is rescinded or must otherwise be returned by any Bank
upon the insolvency, bankruptcy or reorganization of the Borrower
or otherwise, all as though such payment had not been made.
SECTION 3. Waiver. The Guarantor hereby waives promptness,
diligence, notice of acceptance and any other notice with respect
to any of the Obligations and this Guaranty and any requirement
that any Bank protect, secure, perfect or insure any security
interest or lien or any property subject thereto or exhaust any
right or take any action against the Borrower or any other Person
or any collateral.
SECTION 4. Subrogation. The Guarantor will not exercise any
rights which it may acquire by way of subrogation under this
Guaranty, by any payment made hereunder or otherwise, until all the
Obligations and all other amounts payable under this Guaranty shall
have been paid in full and the Commitments shall have expired or
terminated. If any amount shall be paid to the Guarantor on account
of such subrogation rights at any time prior to the later of (x)
the payment in full of the Obligations and all other amounts
payable under this Guaranty and (y) the expiration or termination
of the Commitments, such amount shall be held in trust for the
benefit of the Banks and shall forthwith be paid to the Agent to be
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credited and applied upon the Obligations, whether matured or
unmatured, in accordance with the terms of the Credit Agreement or
to be held by the Agent as collateral security for any Obligations
thereafter existing. If (i) the Guarantor shall make payment to the
Banks of all or any part of the Obligations, (ii) all the
Obligations and all other amounts payable under this Guaranty shall
be paid in full and (iii) the Commitments shall have expired or
terminated, the Banks will, at the Guarantor's request, 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
Obligations resulting from such payment by the Guarantor.
SECTION 5. Representations and Warranties. The Guarantor
hereby represents and warrants as follows:
(a) The Guarantor is a corporation duly incorporated, validly
existing and in good standing under the laws of the Commonwealth of
Pennsylvania.
(b) The execution, delivery and performance by the Guarantor
of this Guaranty are within the Guarantor's corporate powers, have
been duly authorized by all necessary corporate action, and do not
contravene (i) the Guarantor's charter or by-laws, (ii) any
applicable law or (iii) any material contractual restriction
binding on or affecting the Guarantor, and do not result in or
require the creation of any lien upon or with respect to any of its
properties.
(c) No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory
body is required for the due execution, delivery and performance by
the Guarantor of this Guaranty except for an order of the
Securities and Exchange Commission under the Public Utility Holding
Company Act of 1935, as amended, which order has been duly
obtained, is in full force and effect, is sufficient for its
purpose and is not subject to any pending or, to the knowledge of
the Guarantor, threatened appeal or other proceeding seeking
reconsideration or review thereof.
(d) This Guaranty is the legal, valid and binding obligation
of the Guarantor enforceable against the Guarantor in accordance
with its terms, except as enforcement may be limited by applicable
bankruptcy, insolvency, moratorium, fraudulent conveyance,
reorganization and other similar laws affecting creditors' rights
generally and by general principles of equity.
(e) The audited consolidated balance sheets of the Guarantor
and its Subsidiaries as at December 31, 1995, and the related
consolidated statements of income and retained earnings of the
Guarantor and its Subsidiaries for the period then ended, copies of
which have been furnished to each Bank as of the date of this
Guaranty, fairly present the financial condition of the Guarantor
and its Subsidiaries as at such date and the results of the
operations of the Guarantor and its Subsidiaries for the period
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ended on such date, all in accordance with generally accepted
accounting principles consistently applied, and since December 31,
1995, there has been no material adverse change in such financial
condition or results of operations.
(f) The Guarantor owns beneficially and of record 100% of the
common stock of the Borrower and at least 75% of the common stock
of each of Jersey Central Power & Light Company, a New Jersey
corporation, Metropolitan Edison Company, a Pennsylvania
corporation, and Pennsylvania Electric Company, a Pennsylvania
corporation (collectively, the "Operating Subsidiaries").
(g) Except as disclosed in the Guarantor's Annual Report on
Form 10-K for the year ended December 31, 1995, a copy of which has
been delivered to the Agent, there is no pending or, to the
Guarantor's knowledge, threatened action or proceeding affecting
the Guarantor or any of its Subsidiaries before any court,
governmental agency or arbitrator, which could reasonably be
expected to materially adversely affect the financial condition or
operations of the Guarantor or of the Guarantor and its
Subsidiaries, taken as a whole.
SECTION 6. Affirmative Covenants. The Guarantor covenants and
agrees that, so long as any part of the Obligations shall remain
unpaid or any Bank shall have any Commitment, the Guarantor will,
unless the Majority Banks shall otherwise consent in writing:
(a) Performance and Compliance with Other Agreements. Perform
and comply with each of the material provisions of each material
indenture, credit agreement, contract or other agreement by which
the Guarantor is bound, non-performance or non-compliance with
which would have a material adverse effect upon its business or
credit or in any way affect its ability to perform its obligations
hereunder except material contracts or other agreements being
contested in good faith.
(b) Preservation of Corporate Existence, Etc. Preserve and
maintain its corporate existence in the jurisdiction of its
incorporation, and qualify and remain qualified as a foreign
corporation in good standing in each jurisdiction in which such
qualification is necessary or desirable in view of its business and
operations or the ownership of its properties, except where the
failure to be so qualified would not materially adversely affect
its financial condition, operations, properties or business, and
preserve its material rights, franchises and privileges to conduct
its business substantially as conducted on the date hereof.
(c) Compliance with Laws, Etc. Comply with the requirements
of all applicable laws, rules, regulations and orders of any
governmental authority, non-compliance with which would have a
material adverse effect upon its business or credit or in any way
affect its ability to perform its obligations hereunder except
laws, rules, regulations and orders being contested in good faith.
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(d) Inspection Rights. At any reasonable time and from time
to time, permit any 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
to discuss the affairs, finances and accounts of the Guarantor with
any of its officers or directors.
(e) Ownership of Operating Subsidiaries. Maintain at all
times beneficial ownership of at least 75% of all outstanding
shares of common stock of each Operating Subsidiary.
SECTION 7. Negative Covenants. The Guarantor covenants and
agrees that, so long as any part of the Obligations shall remain
unpaid or any Bank shall have any Commitment, the Guarantor will
not, without the prior written consent of the Majority Banks:
(a) Sale of Assets, Etc. Sell, transfer, lease, assign or
otherwise convey or dispose of more than 25% of its assets (whether
now owned or hereafter acquired), in any single or series of
transactions, whether or not related, except for dispositions of
current assets in the ordinary course of business as presently
conducted.
(b) Pledge of Stock. Pledge, grant options on, create any
charge on or security interest in, or otherwise subject to any
charge or encumbrance, any of the common stock of its Operating
Subsidiaries unless the obligations of the Guarantor hereunder are
secured ratably and with equal priority, in form and substance
reasonably satisfactory to the Majority Banks.
(c) Net Worth. Fail to maintain its consolidated stockholders
equity, as reported from time to time in Guarantor's periodic
reports filed pursuant to Section 14 or 15(d) of the Securities
Exchange Act of 1934, of at least $1,000,000,000.
SECTION 8. Amendments, Etc. No amendment or waiver of any
provision of this Guaranty, and no consent to any departure by the
Guarantor herefrom, shall in any event be effective unless the same
shall be in writing and signed by the Agent, 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 the Banks, (a) limit the liability of the Guarantor hereunder,
(b) postpone any date fixed for payment hereunder, or (c) change
the number of Banks required to take any action hereunder.
SECTION 9. Address for Notices. All notices and other
communications provided for hereunder shall be in writing and sent
by first class mail, postage prepaid, telecopier, or hand delivery
to it, if to the Guarantor, at its address at its address at 000
Xxxxxxxxx Xxxxxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000, Attention: Vice
President and Treasurer, and if to any Bank, at its address
specified in the Credit Agreement, or, as to any party, at such
other address as shall be designated by such party in a written
notice to each other party.
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SECTION 10. No Waiver; Remedies. No failure on the part of
any Bank 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.
SECTION 11. Right of Set-Off. Upon (i) the occurrence and
during the continuance of any Event of Default and (ii) the making
by the Agent of any declaration of acceleration under the Credit
Agreement, each Bank 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) at any time held and other indebtedness at
any time owing by such Bank 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, whether or
not such Bank shall have made any demand under this Guaranty and
although such obligations may be contingent and unmatured. Each
Bank agrees promptly to notify the Guarantor after any such set-off
and application made by such Bank, provided that the failure to
give such notice shall not affect the validity of such set-off and
application. The rights of each Bank under this Section are in
addition to other rights and remedies (including, without
limitation, other rights of set-off) that such Bank may have.
SECTION 12. Continuing Guaranty; Assignment under Credit
Agreement. This Guaranty is a continuing guaranty and shall (i)
remain in full force and effect until the later of (x) the payment
in full of the Obligations and all other amounts payable under this
Guaranty and (y) the expiration or termination of the Commitments,
(ii) be binding upon the Guarantor, its successors and assigns, and
(iii) inure to the benefit of, and be enforceable by, the Banks and
their respective successors, transferees and assigns. .
SECTION 13. Governing Law. This Guaranty shall be governed by,
and construed in accordance with, the laws of the State of New York
without giving effect to conflict of law principles.
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IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to
be executed by its officer thereunto duly authorized, as of the
date first above written.
GENERAL PUBLIC UTILITIES CORPORATION
By: ________________________________
Name:
Title:
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