Exhibit 3-H
Action by the General Partner of Penelec Capital II, L.P.
Creating the % Cumulative
Preferred Partner Interests, Series A
Pursuant to Section 13.01 of the Amended and Restated Limited
Partnership Agreement of Penelec Capital II, L.P. dated as of , 1998
(as amended from time to time, the "Partnership Agreement"), Penelec Preferred
Capital II, Inc., as general partner (the "General Partner") of Penelec Capital
II, L.P. (the "Partnership"), desiring to state the designations, distribution
rights, redemption rights, preferences, privileges, limitations and other rights
of a new series of Preferred Partner Interests, hereby authorizes and
establishes such new series of Preferred Partner Interests according to the
following terms and conditions (each capitalized term used but not defined
herein shall have the meaning set forth in the Partnership Agreement):
(a) Designation. ( ) interests with
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an aggregate liquidation preference of $______________ of the Preferred Partner
Interests of the Partnership, liquidation preference $ per Preferred Partner
Interest, are hereby designated as " % Cumulative Preferred Partner
Interests, Series A" (hereinafter the "Series A Preferred Partner Interests.")
(b) Distributions.
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(i) The Preferred Partners who hold the Series A
Preferred Partner Interests shall be entitled to receive, when, as and if
declared by the General Partner to the extent that the Partnership has
funds on hand legally available therefor, cumulative cash distributions at
a rate per annum of % of the stated liquidation preference of $
perSeries A Preferred Partner Interest per annum,commencing ,199_.
Distributions on the Series A Preferred Partner Interests which accrue from
the date of original issue to , 199_ shall be payable on ,
199_.
(ii) Distributions on the Series A Preferred Partner
Interests must be declared by the General Partner in any calendar year or
portion thereof to the extent that the General Partner reasonably
anticipates that at the time of payment the Partnership will have, and
must be paid by the Partnership to the extent that at the time of proposed
payment it has funds on hand legally available therefor.
Distributions on the Series A
Preferred Partner Interests will be deferred if and
for so long as Pennsylvania Electric Company
("Penelec") defers payments to the Partnership on the
Debentures (as defined below). Accrued and unpaid
distributions on the Series A Preferred Partner
Interests will accrue additional distributions in
respect thereof after the payment date therefor, to
the extent permitted by law, at the distribution rate
per annum applicable to the Series A Preferred
Partner Interests. Such additional distributions
shall be payable at the time the related deferred
distribution is paid, but in any event by the end of
such deferral period. Distributions declared on the
Series A Preferred Partner Interests will be payable
to the Series A Preferred Partners as they appear on
the books and records of the Partnership on the
relevant record dates, which will be one Business Day
prior to the relevant payment dates, provided that if
the Series A Preferred Partner Interests are not in
book-entry-only form, the record dates will be the
fifteenth day of the month in which the relevant
payment date falls.
(c) Redemption.
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(i) The Series A Preferred Partner Interests are
redeemable, at the option of the Partnership in whole
or in part from time to time, on or after ,
, at the Redemption Price (as defined below).
(ii) Upon payment when due or redemption at any time
of the % Subordinated Debentures, Series A due
, (the "Debentures") issued by Penelec
pursuant to an Indenture dated as of , 1998
between Penelec and United States Trust Company of
New York, as Trustee (the "Indenture"), which
Debentures were purchased by the Partnership from
Penelec with the proceeds from the issuance and sale
of the Series A Preferred Partner Interests and the
related capital contribution of the General Partner,
the proceeds from such payment or redemption of the
Debentures shall be applied to redeem the Series A
Preferred Partner Interests at the redemption price
of $ per Preferred Partner Interest plus
accumulated and unpaid distributions (whether or not
declared) to the date fixed for redemption, together
with any additional distributions accrued thereon
(the "Redemption Price").
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(iii) If an Investment Company Act Event shall occur
and be continuing, the Partnership shall elect to
either: (1) redeem the Series A Preferred Partner
Interests in whole but not in part at the Redemption
Price within ninety (90) days following the
occurrence of such Investment Company Act Event,
provided that, if at the time there is available to
the General Partner the opportunity to eliminate,
within such ninety (90) day period, the Investment
Company Act Event by taking some ministerial action,
such as filing a form or making an election, or
pursuing some other similar reasonable measure which
would not involve unreasonable cost or expense, which
has no adverse effect on the Partnership or Penelec,
the General Partner will pursue such measure in lieu
of redemption; or (2) cause Debentures (and any
rights to interest on such Debentures) with an
aggregate principal amount equal to the aggregate
stated liquidation preference of the outstanding
Series A Preferred Partner Interests to be
distributed to the holders of the Series A Preferred
Partner Interests, within ninety (90) days following
the occurrence of such Investment Company Act Event,
either in connection with a dissolution of the
Partnership, in which case liabilities to creditors
shall first be satisfied as required by the Delaware
Act, or otherwise, in liquidation of or exchange for
such holders' Interests in the Partnership, as the
case may be, provided, however, that the Partnership
shall have received an opinion of tax counsel (which
may be regular tax counsel to Penelec or an
Affiliate, but not an employee thereof) to the effect
that the holders of the Series A Preferred Partner
Interests will not recognize any gain or loss for
federal income tax purposes as a result of such
dissolution and/or distribution.
(iv) If a Tax Event shall occur and be continuing,
the Partnership shall elect to: (1) redeem the Series
A Preferred Partner Interests in whole (but not in
part) at the Redemption Price within ninety (90) days
following the occurrence of such Tax Event, provided
that, if at the time there is available to the
General Partner the opportunity to eliminate, within
such ninety (90) day period, the Tax Event by taking
some ministerial action, such as filing a form or
making an election, or pursuing some other similar
reasonable measure
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which would not involve unreasonable cost or expense,
which has no adverse effect on the Partnership or
Penelec, the General Partner will pursue such measure
in lieu of redemption; (2) cause Debentures (and any
rights to interest on such Debentures) with an
aggregate principal amount equal to the aggregate
stated liquidation preference of the outstanding
Series A Preferred Partner Interests to be
distributed to the holders of the Series A Preferred
Partner Interests, within ninety (90) days following
the occurrence of such Tax Event, either in
connection with a dissolution of the Partnership, in
which case liabilities to creditors shall first be
satisfied as required by the Delaware Act, or
otherwise, in liquidation of or exchange for such
holders' Interests in the Partnership, as the case
may be, provided, however, that the Partnership shall
have received an opinion of tax counsel (which may be
regular tax counsel to Penelec or an Affiliate, but
not an employee thereof) to the effect that the
holders of the Series A Preferred Partner Interests
will not recognize any gain or loss for federal
income tax purposes as a result of such dissolution
and/or distribution; or (3) have the Series A
Preferred Partner Interests remain outstanding.
(d) Liquidation Distribution. In the event of any
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voluntary or involuntary dissolution and winding up
of the Partnership (other than pursuant to paragraphs
(c)(iii) or (c)(iv) hereof or Section 13.02(f)of the
Partnership Agreement), holders of the Series A
Preferred Partner Interests at the time outstanding
will be entitled to receive out of the assets of the
Partnership available for distribution to holders of
Preferred Partner Interests, after satisfaction of
liabilities to creditors as required by the Delaware
Act, before any distribution of assets is made to
holders of the general partner interests, but
together with holders of every other series of
Preferred Partner Interests outstanding, an amount
equal to, in the case of holders of Series A
Preferred Partner Interests, the aggregate of the
stated liquidation preference of $__ per Series A
Preferred Partner Interest plus accumulated and
unpaid distributions (whether or not declared) to the
date of payment,together with any additional
distributions accrued thereon (the "Liquidation
Distribution").
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(e) Subordination. The holders of Series A Preferred
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Partner Interests are deemed, by acceptance of such
Interests, to have (i) agreed that the Debentures
issued pursuant to the Indenture are subordinate and
junior in right of payment to all Senior Indebtedness
as and to the extent provided in the Indenture and
(ii) agreed that the Guarantee relating to the Series
A Preferred Partner Interests is subordinate and
junior in right of payment to all general liabilities
of Penelec.
(f) Voting Rights. The holders of the Series A Preferred
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Partner Interests shall have no voting rights except
as provided in the Partnership Agreement or as
required under the Delaware Act.
IN WITNESS WHEREOF, the General Partner has executed this
Action as of , 1998.
PENELEC PREFERRED CAPITAL II, INC.
By:
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Name: X.X. Xxxxxx
Title: Vice President
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