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As filed with the Securities and Exchange Commission on April 1, 2025

Registration No. 333-   

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Form S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

JERSEY CENTRAL POWER & LIGHT COMPANY

(Exact name of registrant as specified in its charter)

 

 

 

New Jersey   4911   21-0485010

(State or other jurisdiction of

incorporation or organization)

 

(Primary Standard Industrial

Classification Code Number)

 

(I.R.S. Employer

Identification Number)

300 Madison Avenue

Morristown, New Jersey 07962

(800)-736-3402

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

 

 

James A. Arcuri

Associate General Counsel

FirstEnergy Corp.

341 White Pond Drive

Akron, OH 44320

(800) 736-3402

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

 

With a copy to:

Celia A. Soehner

Erin E. Martin

Morgan, Lewis & Bockius LLP

One Oxford Centre, 32nd Floor

Pittsburgh, PA 15219-6401

(412) 560-3300

 

 

Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer      Accelerated filer  
Non-accelerated filer      Smaller reporting company  
     Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer) ☐

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer) ☐

 

 

The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

 

 


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The information in this prospectus is not complete and may be changed. We may not complete this exchange offer and issue these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

 

SUBJECT TO COMPLETION, DATED APRIL 1, 2025

PRELIMINARY PROSPECTUS

 

LOGO

Jersey Central Power & Light Company

Offer to exchange up to

700,000,000 aggregate principal amount of 5.100% Senior Notes due 2035

(CUSIP No. 476556 DF9)

registered under the Securities Act of 1933, as amended (“Securities Act”)

for

$700,000,000 aggregate principal amount of 5.100% Senior Notes due 2035

(CUSIP No. 476556 DE2 and U04536 AF2)

that have not been registered under the Securities Act

THE EXCHANGE OFFER EXPIRES AT 5:00 P.M., NEW YORK CITY TIME,

ON    , 2025, UNLESS WE EXTEND IT.

Terms of the Exchange Offer

 

 

We are offering to exchange all outstanding $700,000,000 aggregate principal amount of our 5.100% Senior Notes due 2035 (the “Outstanding Notes”) that were issued in a transaction not requiring registration under the Securities Act for an equal amount of new $700,000,000 aggregate principal amount of 5.100% Senior Notes due 2035 (the “New Notes”). We refer to this offer to exchange as the “exchange offer.”

 

   

We are conducting the exchange offer in order to provide you with an opportunity to exchange your unregistered Outstanding Notes for freely tradable New Notes that have been registered under the Securities Act.

 

   

The exchange offer expires at 5:00 p.m., New York City time, on    , 2025, unless extended. The exchange offer will remain open for at least 20 full business days calculated in accordance with the requirements of Regulation 14E under the Securities Exchange Act of 1934, as amended, which we refer to as the “Exchange Act” (or longer if required by applicable law, including Regulation 14E), after the date notice of the exchange offer is first sent to holders of the Outstanding Notes. We do not currently intend to extend the expiration date.

 

   

Upon expiration of the exchange offer, all Outstanding Notes that are validly tendered and not withdrawn will be exchanged for an equal principal amount of the New Notes.

 

   

You may withdraw tendered Outstanding Notes at any time prior to the expiration or termination of the exchange offer.

 

   

The exchange of Outstanding Notes for New Notes will not be a taxable event for U.S. federal income tax purposes.

 

   

We will not receive any proceeds from the exchange offer.


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The terms of the New Notes to be issued in the exchange offer are substantially the same as the terms of the Outstanding Notes, except that the offer of the New Notes is registered under the Securities Act, and the New Notes have no transfer restrictions, rights to additional interest or registration rights. In addition, the New Notes will bear a different CUSIP number than the Outstanding Notes.

 

   

The exchange offer is not subject to any minimum tender condition but is subject to customary conditions.

 

   

There is no existing public market for the Outstanding Notes or the New Notes. We do not intend to list the New Notes on any securities exchange or quotation system.

 

 

Investing in the New Notes to be issued in the exchange offer involves certain risks. See “Risk Factors” beginning on page 12.

We are not making an offer to exchange Outstanding Notes for New Notes in any jurisdiction where the offer is not permitted.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the New Notes to be distributed in the exchange offer or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

Each broker-dealer that receives New Notes for its own account pursuant to the exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of such New Notes. By so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act. A broker dealer who acquired Outstanding Notes as a result of market making or other trading activities may use this prospectus, as supplemented or amended from time to time, in connection with any resales of the New Notes. We have agreed that, for a period of up to 180 days after the commencement of the exchange offer, we will make this prospectus available for use in connection with any such resale. See “Plan of Distribution.”

 

 

The date of this prospectus is    , 2025.


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TABLE OF CONTENTS

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

     ii  

GLOSSARY OF TERMS

     iv  

PROSPECTUS SUMMARY

     1  

RISK FACTORS

     12  

USE OF PROCEEDS

     34  

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     35  

OUR BUSINESS

     64  

MANAGEMENT

     75  

EXECUTIVE COMPENSATION

     78  

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     87  

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     88  

THE EXCHANGE OFFER

     89  

DESCRIPTION OF THE NOTES

     99  

CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

     115  

PLAN OF DISTRIBUTION

     116  

LEGAL MATTERS

     117  

EXPERTS

     117  

INDEX TO FINANCIAL STATEMENTS

     F-1  

We have not authorized anyone to provide you with any additional information or any information that is different from that contained in this prospectus. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus may be used only for the purposes for which it has been published, and no person has been authorized to give any information not contained herein. The information contained in this prospectus is accurate only as of its respective date. Our business, financial condition, results of operations and prospects may have changed since that date. We are not making an offer of these securities in any state where the offer is not permitted.

 

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

We caution you that this prospectus contains forward-looking statements based on information currently available to us. Such statements are subject to certain risks and uncertainties and readers are cautioned not to place undue reliance on these forward-looking statements. These statements include declarations regarding management’s intents, beliefs and current expectations. These statements typically contain, but are not limited to, the terms “anticipate,” “potential,” “expect,” “could,” “target,” “will,” “intend,” “believe,” “project,” “forecast,” “estimate,” “plan” and similar words. Forward-looking statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.

The forward-looking statements contained herein are qualified in their entirety by reference to the following important factors, which are difficult to predict, contain uncertainties, are in some cases beyond our control and may cause actual results to differ materially from those contained in forward-looking statements:

 

   

The risks and uncertainties associated with government investigations and audits regarding House Bill 6, as passed by Ohio’s 133rd General Assembly (“HB 6”), and related matters, including potential adverse impacts on federal or state regulatory matters, including, but not limited to, matters relating to rates;

 

   

The risks and uncertainties associated with litigation, arbitration, mediation and similar proceedings, particularly regarding HB 6 and related matters;

 

   

Changes in national and regional economic conditions, including recession, volatile interest rates, inflationary pressure, supply chain disruptions, higher energy costs, and workforce impacts, affecting us and/or our customers and those vendors with which we do business;

 

   

Variations in weather, such as mild seasonal weather variations and severe weather conditions (including events caused, or exacerbated, by climate change, such as wildfires, hurricanes, flooding, droughts, high wind events and extreme heat events) and other natural disasters, which may result in increased storm restoration expenses and negatively affect future operating results;

 

   

The ability to comply with applicable federal reliability standards;

 

   

Legislative and regulatory developments, including, but not limited to, matters related to rates, energy regulatory policies, compliance and enforcement activity, cyber security, and climate change;

 

   

The risks associated with physical attacks, such as acts of war, terrorism, sabotage or other acts of violence, and cyber-attacks and other disruptions to our, or our vendors’, information technology system, which may compromise our operations, and data security breaches of sensitive data, intellectual property and proprietary or personally identifiable information;

 

   

Changes in assumptions regarding factors such as economic conditions within our territories, assessments of the reliability of our transmission systems, or the availability of capital or other resources supporting identified transmission investment opportunities;

 

   

The reliability of the transmission grid;

 

   

The ability to accomplish or realize anticipated benefits through establishing a culture of continuous improvement and our other strategic and financial goals, including, but not limited to, executing Energize 365, FirstEnergy’s transmission and distribution investment program (“Energize365”), our transmission and distribution investment plan, executing on our rate filing strategy, controlling costs, improving credit metrics, maintaining investment grade ratings, strengthening our balance sheet and growing earnings;

 

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Changing market conditions affecting the measurement of certain liabilities and the value of assets held in our pension trusts may negatively impact our forecasted growth rate and our results of operations, and may also cause us to make contributions to our pension sooner or in amounts that are larger than currently anticipated;

 

   

Mitigating exposure for remedial activities associated with retired and formerly owned electric generation assets, including those sites impacted by the legacy CCR rules that were finalized during 2024;

 

   

Changes to environmental laws and regulations, including, but not limited to, rules finalized by the Environmental Protection Act (the “EPA”) and the United States Securities and Exchange Commission (the “SEC”), including those currently stayed, related to climate change, and potential changes to such laws and regulations as a result of the new U.S. presidential administration;

 

   

Changes in customers’ demand for power, including, but not limited to, economic conditions, the impact of climate change, emerging technology, particularly with respect to electrification, energy storage and distributed sources of generation;

 

   

The ability to access the public securities and other capital and credit markets in accordance with our financial plans, the cost of such capital and overall condition of the capital and credit markets affecting us, including the increasing number of financial institutions evaluating the impact of climate change on their investment decisions;

 

   

Future actions taken by credit rating agencies that could negatively affect either our access to or terms of financing or our financial condition and liquidity;

 

   

The potential of non-compliance with debt covenants in our credit facility;

 

   

The ability to comply with applicable reliability standards and energy efficiency and peak demand reduction mandates;

 

   

Human capital management challenges, including among other things, attracting and retaining appropriately trained and qualified employees and labor disruptions by our unionized workforce;

 

   

Changes to significant accounting policies; and

 

   

Any changes in tax laws or regulations, including, but not limited to, the Inflation Reduction Act of 2022 (the “IRA of 2022”), or adverse tax audit results or rulings.

You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this prospectus and should be read in conjunction with the risk factors and other disclosures contained in this prospectus. The foregoing review of factors also should not be construed as exhaustive. New factors emerge from time to time, and it is not possible for management to predict all such factors or assess the impact of any such factor on our business or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statements. We expressly disclaim any obligation to update or revise, except as required by law, any forward-looking statements contained herein as a result of new information, future events or otherwise.

 

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GLOSSARY OF TERMS

The following abbreviations and acronyms are used to identify frequently used terms in this prospectus:

 

2021 Credit Facilities    Collectively, the six separate senior unsecured five-year syndicated revolving credit facilities entered into by FE, the Electric Companies and the Transmission Companies, on October 18, 2021, as amended through October 24, 2024
AEP    American Electric Power Company, Inc.
AFSI    Adjusted Financial Statement Income
AFUDC    Allowance for Funds Used During Construction
AMI    Advanced Metering Infrastructure
AMT    Alternative Minimum Tax
ASC    Accounting Standards Codification
ATSI    American Transmission Systems, Incorporated, a transmission subsidiary of FET
BGS    Basic Generation Service
CEI    The Cleveland Electric Illuminating Company, an Ohio electric utility subsidiary of FE
CERCLA    Comprehensive Environmental Response, Compensation, and Liability Act of 1980
COVID-19    Coronavirus disease
DOE    U.S. Department of Energy
DPA    Deferred Prosecution Agreement entered into on July 21, 2021 between FE and the U.S. Attorney’s Office for the Southern District of Ohio
DTC    The Depository Trust Company
EE&C    Energy Efficiency and Conservation
EGS    Electric Generation Supplier
Electric Companies    OE, CEI, TE, JCP&L, MP, PE and FE PA (as successor-in-interest to Penn, ME, PN, and WP)
Energize365    FirstEnergy’s Transmission and Distribution Infrastructure Investment Program
EnergizeNJ    JCP&L’s second Infrastructure Investment Program
EPA    United States Environmental Protection Agency
ERO    Electric Reliability Organization
Exchange Act    Securities Exchange Act of 1934, as amended
FE    FirstEnergy Corp., a public utility holding company
FE Board    FE Board of Directors

 

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FE PA    FirstEnergy Pennsylvania Electric Company, a Pennsylvania electric utility subsidiary of FirstEnergy Pennsylvania Holding Company LLC, a wholly owned subsidiary of FE
FERC    Federal Energy Regulatory Commission
FESC    FirstEnergy Service Company, which provides legal, financial and other corporate support services
FET    FirstEnergy Transmission, LLC, a consolidated VIE of FE, and the parent company of ATSI, MAIT and TrAIL, and having a joint venture in PATH
FirstEnergy    FirstEnergy Corp., together with its consolidated subsidiaries
Fitch    Fitch Ratings Service
FPA    Federal Power Act
GAAP    Generally Accepted Accounting Principles in the United States of America
GHG    Greenhouse Gas
HB 6    House Bill 6, as passed by Ohio’s 133rd General Assembly
IRA of 2022    Inflation Reduction Act of 2022
IRS    Internal Revenue Service
JCP&L    Jersey Central Power & Light Company, a New Jersey electric utility subsidiary of FE
JCP&L Board    The Board of Directors of JCP&L
KATCo    Keystone Appalachian Transmission Company, a transmission subsidiary of FE
LOC    Letter of Credit
MAIT    Mid-Atlantic Interstate Transmission, LLC, a transmission subsidiary of FET
ME    Metropolitan Edison Company, a former Pennsylvania electric utility subsidiary of FE, which merged with and into FE PA on January 1, 2024
MGP    Manufactured Gas Plants
Moody’s    Moody’s Investors Service, Inc.
MP    Monongahela Power Company, a West Virginia electric utility subsidiary of FE
MW    Megawatt
N.D. Ohio    Federal District Court, Northern District of Ohio
NERC    North American Electric Reliability Corporation
New Notes    New $700,000,000 aggregate principal amount of 5.100% Senior Notes due 2035
NJBPU    New Jersey Board of Public Utilities
NOL    Net Operating Loss

 

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OAG    Ohio Attorney General
ODSA    Ohio Development Service Agency
Ohio Companies    CEI, OE and TE
OOCIC    Ohio Organized Crime Investigations Commission, which is composed of members of the Ohio law enforcement community and is chaired by the OAG
OPEB    Other Postemployment Benefits
Outstanding Notes    $700,000,000 aggregate principal amount of our 5.100% Senior Notes due 2035
PATH    Potomac-Appalachian Transmission Highline, LLC, a joint venture between FE and a subsidiary of AEP
PEER    FirstEnergy’s Program for Enhanced Employee Retirement, as announced in 2023
PJM    PJM Interconnection, LLC, an RTO
PJM Tariff    PJM Open Access Transmission Tariff
PN    Pennsylvania Electric Company, a former Pennsylvania electric utility subsidiary of FE, which merged with and into FE PA on January 1, 2024
PUCO    Public Utilities Commission of Ohio
RFC    ReliabilityFirst Corporation
ROE    Return on Equity
RTO    Regional Transmission Organization
S.D. Ohio    Federal District Court, Southern District of Ohio
SEC    United States Securities and Exchange Commission
Securities Act    Securities Act of 1933, as amended
SLC    Special Litigation Committee of the FE Board
SOFR    Secured Overnight Financing Rate
S&P    Standard & Poor’s Ratings Service
Tax Act    Tax Cuts and Jobs Act adopted December 22, 2017
TE    The Toledo Edison Company, an Ohio electric utility subsidiary of FE
TrAIL    Trans-Allegheny Interstate Line Company, a transmission subsidiary of FET
Transmission Companies    ATSI, KATCo, MAIT and TrAIL
U.S.    United States
USAO    U.S. Attorney’s Office for the Southern District of Ohio
VIE    Variable Interest Entity

 

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PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus. This summary may not contain all of the information that is important to you, and it is qualified in its entirety by the more detailed information and financial statements, including the notes to those financial statements, appearing elsewhere in this prospectus. Before making an investment decision, we encourage you to consider the information contained in this prospectus, including the risks discussed under the heading “Risk Factors” beginning on page 10 of this prospectus.

In this prospectus, unless the context requires otherwise, references to “we,” “us,” “our,” “JCP&L” and the “Company” refer to Jersey Central Power & Light Company. Capitalized terms used in this prospectus without definition have the meanings set forth in the Glossary of Terms included herein.

The Company

JCP&L was organized as a corporation under the laws of the State of New Jersey in 1925. We, along with our electric utility affiliates, Metropolitan Edison Company (“ME”) and Pennsylvania Electric Company (“PN”), were acquired by FE on November 7, 2001, when our former parent company, GPU Inc., merged with and into FE. On January 1, 2024, ME and PN merged with and into FirstEnergy Pennsylvania Electric Company (“FE PA”).

Our Business

We are a wholly owned, electric power company subsidiary of FirstEnergy Corp. (“FE”), a public electric power holding company. We own property and do business as an electric public utility in New Jersey, providing distribution services to approximately 1.2 million customers as of December 31, 2024, as well as transmission services in northern, western, and east central New Jersey. We serve an area that has a population of approximately 2.8 million.

We plan, operate, and maintain our transmission system in accordance with North American Electric Reliability Corporation (“NERC”) reliability standards, and other applicable regulatory requirements. In addition, we comply with the regulations, orders, policies and practices prescribed by the Federal Energy Regulatory Commission (“FERC”) and the State of New Jersey Board of Public Utilities (“NJBPU”).

Our reportable operating segments are comprised of the Distribution and Transmission segments.

The Distribution segment, representing $3.3 billion in 2024 rate base, distributes electricity to approximately 1.2 million customers as of December 31, 2024 in New Jersey across its distribution footprint and procures electric supply to serve its basic generation service (“BGS”) customers through a statewide auction process approved by the NJBPU. The segment’s results reflect the costs of securing and delivering electric generation to customers, including the deferral and amortization of certain costs.

The Transmission segment includes transmission infrastructure owned and operated by us and used to transmit electricity, representing $1.4 billion in 2024 rate base. The segment’s revenues are primarily derived from forward-looking formula rates, pursuant to which the revenue requirement is updated annually based on a projected rate base and projected costs, which is subject to an annual true-up based on actual rate base and costs. The segment’s results also reflect the net transmission expenses related to the delivery of electricity on our transmission facilities.

As of December 31, 2024, our transmission and distribution system consisted of approximately 24,781 circuit miles of distribution lines and 2,609 circuit miles of transmission lines.

 

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State and Federal Regulation

Our retail distribution rates, conditions of service and other matters are subject to regulation by NJBPU. Our transmission rates, conditions of transmission service, issuance of securities and certain other matters are subject to regulation by FERC. As a transmission owner in the PJM Interconnection, LLC (“PJM”) region, we recover transmission rates through the PJM Open Access Transmission Tariff (“PJM Tariff”) on file with FERC. For a discussion of current regulatory and environmental matters affecting us, see the discussion of state and federal regulation under “Our Business-Regulation” below and in Note 10, “Regulatory Matters,” of the notes to the audited annual financial statements and Note 6, “Regulatory Matters,” of the notes to the unaudited interim financial statements included in this prospectus.

Executive Offices

Our principal executive office is located at 300 Madison Avenue, Morristown, New Jersey 07962. Our telephone number is (800) 736-3402.

Risk Factors

You should carefully consider the information set forth under the section entitled “Risk Factors” beginning on page 10 of this prospectus as well as the other information contained in this prospectus before participating in the exchange offer.

 

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Summary of the Exchange Offer

A brief description of the material terms of the exchange offer follows. We are offering to exchange the New Notes for the Outstanding Notes. The terms of the New Notes offered in the exchange offer are substantially identical to the terms of the Outstanding Notes, except that the New Notes will be registered under the Securities Act and transfer restrictions, registration rights and additional interest provisions relating to the Outstanding Notes do not apply to the New Notes. For a more complete description of the exchange offer, see “The Exchange Offer.”

 

Background

On December 5, 2024, we issued $700,000,000 aggregate principal amount of Outstanding Notes in a private offering. In connection with that offering, we entered into a Registration Rights Agreement corresponding to the Outstanding Notes (as defined in “The Exchange Offer”) in which we agreed, among other things, to deliver this prospectus to you and use our reasonable best efforts to cause this exchange offer to be completed before the 366th day after the initial issuance of the Outstanding Notes.

 

  Under the terms of the exchange offer, you are entitled to exchange the Outstanding Notes for New Notes, evidencing the same indebtedness and with substantially identical terms to the Outstanding Notes. You should read the discussion under the heading “Description of the Notes” for further information regarding the New Notes.

 

New Notes Offered

$700,000,000 aggregate principal amount of Senior Notes due 2035; and

 

Exchange Offer

We are offering to exchange the Outstanding Notes for a like principal amount of the New Notes. Outstanding Notes may be exchanged only in minimum denominations of $2,000 and in integral multiples of $1,000 in excess thereof. The exchange offer is being made pursuant to the Registration Rights Agreement, which grant the initial purchasers and any subsequent holders of the Outstanding Notes certain exchange and registration rights. This exchange offer is intended to satisfy those exchange and registration rights with respect to the Outstanding Notes. After the exchange offer is complete, you will no longer be entitled to any exchange or registration rights with respect to your Outstanding Notes.

 

Expiration Date

The exchange offer will expire 5:00 p.m., New York City time, on , 2025, or a later time if we choose to extend this exchange offer in our sole and absolute discretion. We do not currently intend to extend the expiration date for the exchange offer. The exchange offer will remain open for at least 20 full business days (or longer if required by applicable law) after the date notice of the exchange offer is first sent to holders of the Outstanding Notes.

 

Withdrawal of Tender

You may withdraw your tender of Outstanding Notes at any time prior to the expiration date. All Outstanding Notes that are validly tendered and not properly withdrawn will be accepted for exchange.

 

Conditions to the Exchange Offer

Our obligation to accept for exchange, or to issue the New Notes in exchange for, any Outstanding Notes is subject to certain customary

 

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conditions, including our determination that the exchange offer does not violate applicable law or interpretation by the Staff of the SEC, some of which may be waived by us. We currently expect that each of the conditions will be satisfied and that no waivers will be necessary. See “The Exchange Offer — Conditions to the Exchange Offer.”

 

Procedures for Tendering Outstanding Notes Held in the Form of Book-Entry Interests

The Outstanding Notes were issued as global securities and were deposited upon issuance with U.S. Bank Trust Company, National Association, which issued uncertificated depositary interests in those Outstanding Notes, which represent a 100% interest in those Outstanding Notes, to The Depository Trust Company (“DTC”).

 

  Beneficial interests in the Outstanding Notes, which are held by direct or indirect participants in DTC, are shown on, and transfers of the Outstanding Notes can only be made through, records maintained in book-entry form by DTC.

 

  You may tender your Outstanding Notes by instructing your broker or bank where you keep the Outstanding Notes to tender them for you. In some cases, you may be asked to submit the letter of transmittal that may accompany this prospectus. By tendering your Outstanding Notes, you will be deemed to have acknowledged and agreed to be bound by the terms set forth under “The Exchange Offer.” Your Outstanding Notes must be tendered in minimum denominations of $2,000 and in multiples of $1,000 in excess thereof.

 

  We are not providing for guaranteed delivery procedures, and therefore you must allow sufficient time for the necessary tender procedures to be completed during normal business hours of DTC on or prior to the expiration time. If you hold your Outstanding Notes through a broker, dealer, commercial bank, trust company or other nominee, you should consider that such entity may require you to take action with respect to the exchange offer a number of days before the expiration time in order for such entity to tender notes on your behalf on or prior to the expiration time. In order for your tender to be considered valid, the exchange agent must receive a confirmation of book-entry transfer of your Outstanding Notes into the exchange agent’s account at DTC, under the procedure described in this prospectus under the heading “The Exchange Offer,” on or before 5:00 p.m., New York City time, on the expiration date of the exchange offer.

 

  By executing the letter of transmittal or by transmitting an agent’s message in lieu thereof, you will represent to us that, among other things:

 

   

the New Notes that you receive will be acquired in the ordinary course of its business;

 

   

you are not participating in, and have no arrangement with any person or entity to participate in, the distribution of the New Notes;

 

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you are not our “affiliate” (as defined in Rule 405 under the Securities Act) or if you are such an “affiliate,” you will comply with the prospectus delivery requirements of the Securities Act to the extent applicable in connection with any resale of the New Notes; and

 

   

if you are a broker-dealer that will receive New Notes for your own account in exchange for Outstanding Notes acquired as a result of market making or other trading activities, then you will comply with the prospectus delivery requirements of the Securities Act, to the extent applicable, in connection with any resale of the New Notes.

 

United States Federal Income Tax Consequences

The exchange of Outstanding Notes for New Notes pursuant to the exchange offer generally will not be a taxable event for U.S. federal income tax purposes. See “Certain United States Federal Income Tax Consequences.”

 

Use of Proceeds

We will not receive any proceeds from the issuance of the New Notes in the exchange offer.

 

Fees and Expenses

We will pay all of our expenses incident to the exchange offer.

 

Exchange Agent

The Bank of New York Mellon Trust Company, N.A. is serving as the exchange agent for the exchange offer.

 

Resales of New Notes

Based on interpretations by the staff of the SEC, as set forth in no-action letters issued to third parties that are not related to us, we believe that the New Notes you receive in the exchange offer may be offered for resale, resold or otherwise transferred by you without compliance with the registration and prospectus delivery provisions of the Securities Act so long as:

 

   

the New Notes are being acquired in the ordinary course of business;

 

   

you are not participating, do not intend to participate, and have no arrangement or understanding with any person to participate in the distribution of the New Notes issued to you in the exchange offer;

 

   

you are not our affiliate;

 

   

you are not a broker-dealer tendering Outstanding Notes acquired directly from us for your account, or if you are such a broker-dealer, then you will comply with the prospectus delivery requirements of the Securities Act, to the extent applicable, in connection with any resale of the New Notes.

The SEC has not considered this exchange offer in the context of a no-action letter, and we cannot assure you that the SEC would make similar determinations with respect to this exchange offer. If any of these conditions are not satisfied, or if our belief is not accurate, and

 

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you transfer any New Notes issued to you in the exchange offer without delivering a resale prospectus meeting the requirements of the Securities Act or without an exemption from registration of your New Notes from those requirements, you may incur liability under the Securities Act. We will not assume, nor will we indemnify you against, any such liability. Each broker-dealer that receives New Notes for its own account in exchange for Outstanding Notes, where the Outstanding Notes were acquired by such broker-dealer as a result of market-making or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such New Notes. See “Plan of Distribution.”

 

Consequences of Not Exchanging Outstanding Notes

Outstanding Notes that are not tendered or that are tendered but not accepted will remain outstanding and continue to accrue interest but continue to be subject to the restrictions on transfer that are described in the legend on the Outstanding Notes.

In general, you may offer or sell your Outstanding Notes only if they are registered under, or offered or sold under an exemption from, or are not subject to, the Securities Act and applicable state securities laws. If you do not participate in the exchange offer, the liquidity of your Outstanding Notes could be adversely affected. See “The Exchange Offer — Consequences of Failure to Exchange.”

 

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Summary of the Terms of the New Notes

The New Notes will be substantially identical to the Outstanding Notes, except that the New Notes will be registered under the Securities Act and will not have restrictions on transfer, rights to additional interest or registration rights. The New Notes will evidence the same debt as the Outstanding Notes, and the same Indenture (as defined herein) will govern the New Notes and the Outstanding Notes. We sometimes refer to the New Notes and the Outstanding Notes collectively as the “Notes.”

The following summary contains basic information about the New Notes and is not intended to be complete. It does not contain all the information that may be important to you. For a more complete understanding of the New Notes, please read “Description of the Notes.”

 

Issuer

Jersey Central Power & Light Company.

 

Securities Offered

$700,000,000 aggregate principal amount of Senior Notes due 2035.

 

Maturity Date

January 15, 2035.

 

Interest Rates and Interest Rate Periods

Interest on the New Notes will accrue at a rate of 5.100% per annum from the date of the original issuance and will be payable semi-annually in arrears on each January 15 and July 15, beginning on July 15, 2025.

 

Security and Ranking

The New Notes will be our senior unsecured general obligations. They will rank equally with all of our other existing and future senior unsecured and unsubordinated indebtedness, senior to all of our existing and future subordinated indebtedness and junior to all of our future senior secured indebtedness. As of December 31, 2024, we had $1.650 billion of unsecured and unsubordinated long-term indebtedness outstanding and no other long-term debt outstanding. See “Description of the Notes— Ranking.”

 

  For more information, see Note 7, “Capitalization—Long-Term Debt and Other Long-Term Obligations” of the notes to the audited consolidated annual financial statements and Note 6, “Fair Value Measurements” of the notes to the unaudited consolidated interim financial statements in this prospectus.

 

Optional Redemption

The New Notes will be redeemable, in whole or in part, at our option, at any time prior to October 15, 2034 (the date that is three months prior to the scheduled maturity date of the New Notes) at a “make-whole” redemption price, as described under the heading “Description of the Notes—Optional Redemption” below, and, on or after such date, at par.

 

Form and Denomination

The New Notes will be issued in fully-registered form. The New Notes will be represented by one or more global notes, deposited with the trustee as custodian for DTC and registered in the name of Cede & Co., DTC’s nominee. Beneficial interests in the global notes will be shown on, and any transfers will be effective only through, records maintained by DTC and its participants.

 

  The New Notes will be issued in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof.

 

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Certain Covenants

The terms of the New Notes contain only very limited protections for holders of New Notes. In particular, the New Notes will not place any restrictions on our or our subsidiaries’ ability to:

 

   

issue debt securities or otherwise incur additional indebtedness or other obligations ranking equal in right of payment with the New Notes; or

 

   

conduct other transactions that may adversely affect the holders of the New Notes.

 

Events of Default and Acceleration

The only events of default with respect to the New Notes are:

 

   

failure to pay principal, any premium or required interest for 30 days after it is due;

 

   

failure to perform other covenants in the Indenture for 90 days after we are given notice from the Trustee or the Trustee receives, and provides to us, written notice from the registered holders of at least 33% in principal amount of the outstanding New Notes; provided, however, that the Trustee, or the Trustee and the holders of such principal amount of the New Notes can agree to an extension of the 90-day period and, will be deemed to have agreed to an extension of that period if corrective action has been initiated by us within that period and is being diligently pursued; and

 

   

certain events of insolvency or bankruptcy, whether voluntary or not, involving JCP&L.

 

  Only these events of default provide for a right of acceleration of the New Notes. No other events will result in acceleration.

 

  See “Risk Factors — Risks Associated with the Exchange Offer.”

 

Additional Notes

We may from time to time, without consent of the holders of the Notes, issue Notes having the same terms and conditions as the New Notes being offered hereby or the Outstanding Notes (except for the issue date, offering price and, if applicable, the first interest payment date). Additional Notes issued in this manner will form a single series with the outstanding Notes and will be treated as a single class for all purposes under the Indenture governing the Notes, including, without limitation, voting, waivers and amendments.

 

Risk Factors

See “Risk Factors” and the other information included in this prospectus for a discussion of the factors you should carefully consider before deciding to invest in the New Notes.

 

No Listing of the Notes

There is no public trading market for the New Notes, and we do not intend to list the New Notes on any national securities exchange or to arrange for quotation on any automated dealer quotation systems. There can be no assurance that an active trading market will develop for the New Notes. If an active trading market does not develop, the market price and liquidity of the New Notes may be adversely affected.

 

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No Public Market

The New Notes will be new securities for which no market currently exists, and we cannot assure you that any public market for the New Notes will develop or be sustained.

 

Governing Law

The New Notes will be governed by the laws of the State of New York.

 

Trustee

The Bank of New York Mellon Trust Company, N.A., as successor trustee.

 

Book-Entry Depository

DTC.

 

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Summary of Risk Factors

Before you decide to participate in the exchange offer, you should carefully consider all the information in this prospectus, including matters set forth under the section “Risk Factors.” These risks and uncertainties include:

 

   

Damages to our and/or FirstEnergy’s reputation may arise from numerous sources making it and its subsidiaries vulnerable to negative customer perception, adverse regulatory outcomes, or other consequences, which could materially adversely affect our business, results of operations, and financial condition.

 

 

   

HB6 related litigation could have a material adverse effect on FirstEnergy’s reputation, business, financial condition, results of operations, liquidity or cash flows and such adverse effects could extend to us.

 

 

   

The HB6 related state regulatory investigations could have material adverse effect on FirstEnergy’s reputation, business, financial condition, results of operations, liquidity or cash flows and such adverse effects could extend to us, including on an indirect basis.

 

 

   

Our ability to grow our business is subject to numerous risks and events, many of which are outside of our control.

 

 

   

Complex and changing government regulations and actions, including those associated with rates, could have a negative impact on our business, financial condition, results of operations and cash flows.

 

 

   

State rate regulation may delay or deny full recovery of costs and impose risks on our operations. Any denial of or delay in cost recovery could have an effect on our business, financial condition, results of operations, liquidity, cash flows and financial condition.

 

 

   

Federal rate regulation may delay or deny full recovery of costs and impose risks on our operations. Any denial of or delay in cost recovery could have an effect on our business, financial condition, results of operations, liquidity, cash flows and financial condition.

 

 

   

We could be subject to higher costs and/or penalties related to mandatory reliability standards set by NERC/FERC or changes in the rules of organized markets, which could have an adverse effect on our financial condition.

 

 

   

The hazardous activities associated with the operation of transmission and distribution facilities could adversely impact our results of operations and financial condition.

 

 

   

Our business is affected by variations in weather and severe weather conditions.

 

 

   

Cyber-attacks, electronic or physical data security breaches and other disruptions to our information technology systems, or those of third parties we are connected to or do business with, could compromise our business operations, critical and proprietary information and employee and customer data, which could have a material adverse effect on our business, results of operations, financial condition and reputation.

 

 

   

Our aspirations and disclosures related to climate matters expose us to risks that could adversely affect our reputation and performance.

 

 

   

Concerns about GHG emissions and the potential risks associated with climate change have led to increased regulation and other actions that could impact our business.

 

 

   

Costs of compliance with environmental laws are significant, and the cost of compliance with new environmental laws, including limitations on GHG emissions related to climate change, could adversely affect our cash flows and financial condition.

 

 

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Our results of operations and financial condition may be adversely affected by the volatility in pension and other postemployment benefit (“OPEB”) investments and obligations due to capital market performance and other changes.

 

 

   

Failure to comply with debt covenants in our credit agreement could adversely affect our ability to execute future borrowings and/or require early repayment, and could restrict our ability to obtain additional or replacement financing on acceptable terms or at all.

 

 

   

Increasing interest rates and/or a credit rating downgrade could negatively affect our or our subsidiaries’ financing costs, ability to access capital and requirement to post collateral.

 

 

   

In the event of volatility or unfavorable conditions in the capital and credit markets, our business, including the immediate availability and cost of short-term funds for liquidity requirements and our ability to meet long-term commitments, may be adversely affected, which could negatively impact our results of operations, cash flows and financial condition.

 

 

   

There are limited covenants and protections in the Indenture; consequently, we and our subsidiaries may be able to incur substantially more indebtedness, a portion of which could be secured indebtedness

 

 

   

The New Notes are not secured by any liens on our assets; consequently, any future secured creditors will be entitled to remedies that would give them priority over the holders of the New Notes to collect amounts due to them.

 

 

   

We have a significant amount of indebtedness, which could negatively impact our business and our ability to make payments on the New Notes.

 

 

   

If you fail to exchange your Outstanding Notes, the existing transfer restrictions will remain in effect and the market value of your Outstanding Notes may be adversely affected because they may be more difficult to sell.

 

 

   

The exchange offer may not be completed.

 

 

   

If you do not properly tender your Outstanding Notes, you will continue to hold unregistered notes and your ability to transfer your Outstanding Notes will be adversely affected.

 

 

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RISK FACTORS

You should carefully consider the following risk factors and all other information contained in this prospectus before participating in the exchange offer. The risks and uncertainties described below are not the only risks facing us and your investment in the exchange notes. Additional risks and uncertainties that we are unaware of, or those we currently deem immaterial, also may become important factors that affect us. The following risks could materially and adversely affect our business, financial condition, cash flows or results of operations.

Risks Associated with Damage to FirstEnergy’s Reputation and HB 6 Related Litigation and Investigations

Damage to our and/or FirstEnergy’s reputation may arise from numerous sources making it and its subsidiaries vulnerable to negative customer perception, adverse regulatory outcomes, or other consequences, which could materially adversely affect our business, results of operations, and financial condition.

Our reputation is important. Damage to FirstEnergy’s reputation, including the reputation of any of its subsidiaries, including JCP&L, could materially adversely affect our business, results of operations and financial condition. Such damage may arise from numerous sources further discussed below, negative outcomes associated with the Deferred Prosecution Agreement (the “DPA”) entered into on July 21, 2021 between FE and the U.S. Attorney’s Office for the Southern District of Ohio (the “USAO”), or other HB 6 litigation or investigations, a significant cyber-attack, data security or physical security breach, failure to provide safe and reliable service FE’s failure to achieve its greenhouse gas (“GHG”) emissions reduction goals, and negative perceptions regarding the operation of coal-fired generation. Any damage to our reputation, either generally or as a result of the foregoing, may lead to negative customer perception, which may make it difficult for us to compete successfully for new opportunities, or could adversely impact our ability to launch new sophisticated technology-driven solutions to meet our customer expectations. A damaged reputation could further result in FERC, the New Jersey Board of Public Utilities (the “NJBPU”) and other regulatory and legislative authorities being less likely to view us in a favorable light and could negatively impact the rates we charge customers or otherwise cause us to be susceptible to unfavorable legislative and regulatory outcomes, as well as increased regulatory oversight and more stringent legislative or regulatory requirements.

HB 6 related litigation could have a material adverse effect on FirstEnergy’s reputation, business, financial condition, results of operations, liquidity or cash flows and such adverse effects could extend to us.

On July 21, 2021, FE entered into a three-year DPA with the U.S. Attorney’s Office that, subject to court proceedings, resolves the previously disclosed U.S. Attorney’s Office investigation into us relating to our lobbying and governmental affairs activities concerning HB 6. Under the DPA, FE paid a $230 million monetary penalty in 2021 and agreed to the filing of a criminal information charging FirstEnergy with one count of conspiracy to commit honest services wire fraud.

As of July 22, 2024, FirstEnergy successfully completed the obligations required within the three-year term of the DPA. Under the DPA, and until the conclusion of any related investigation, criminal prosecution and civil proceeding brought by the U.S. Attorney’s Office, FirstEnergy has an obligation to continue (i) publishing quarterly a list of all payments to 501(c)(4) entities and all payments to entities known by FirstEnergy to be operating for the benefit of a public official, either directly or indirectly; (ii) not making any statements that contradict the DPA; (iii) notifying the U.S. Attorney’s Office for the Federal District Court, Southern District of Ohio (“S.D. Ohio”) of any changes in FirstEnergy’s corporate form; and (iv) cooperating with the U.S. Attorney’s Office for the S.D. Ohio. In accordance with the DPA, these obligations will continue until the completion of any related investigation, criminal prosecution, and civil proceeding brought by the U.S. Attorney’s Office related to the conduct set forth in the DPA’s statement of facts, including the federal indictment against two former FirstEnergy senior officers released on January 17, 2025. Within 30 days of those matters concluding, and FirstEnergy’s successful completion of its remaining obligations, the U. S. Attorney’s Office will dismiss the criminal information.

 

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If FE is found to have breached the terms of the DPA, the U.S. Attorney’s Office may elect to prosecute, or bring a civil action against, us for conduct alleged in the DPA or known to the government, which could result in fines or penalties and could have a material adverse impact on FE’s reputation or relationships with regulatory and legislative authorities, customers and other stakeholders. Failure to comply with the DPA, including alleged failures to comply with anti-corruption and anti-bribery laws, may also result in a breach of certain covenants contained in FE’s credit agreements and could result in an event of default under such agreements, and FE would not be able to access our credit facilities for additional borrowings and letters of credit during the existence of any such default.

The investigations and litigation related to HB 6 could divert management’s focus and have resulted in, and could continue to result in, substantial investigation expenses and the commitment of substantial corporate resources. The outcome, duration, scope, result or related costs of the related litigation, particularly the securities class action lawsuit, are inherently uncertain. Therefore, any of these risks could impact us significantly beyond expectations. Moreover, we are unable to predict the potential for any additional investigations or litigation, including the potential focus thereof on FirstEnergy’s subsidiaries, any of which could expose us to potential criminal or civil liabilities, sanctions or other remedial measures, and could have a material adverse effect on our reputation, business, financial condition, results of operations, liquidity or cash flows.

The HB 6 related state regulatory investigations could have a material adverse effect on FirstEnergy’s reputation, business, financial condition, results of operations, liquidity or cash flows and such adverse effects could extend to us, including on an indirect basis.

There are several ongoing HB 6 related state regulatory investigations relating to FirstEnergy. As a result of those proceedings, there could be adverse impacts to JCP&L, including because the rates that we are allowed to charge may be decreased as a result of regulatory action taken within the state of New Jersey. Furthermore, any failure by FirstEnergy to have complied with anti-corruption laws, contractual requirements, or other legal or regulatory requirements, could adversely impact JCP&L, including through reputational harm.

We are unable to predict the adverse impacts of such regulatory investigations, including with respect to rates we charge, and, therefore, any of these risks could impact us significantly beyond expectations. Moreover, we are unable to predict the potential for any additional regulatory actions, any of which could exacerbate these risks or expose FirstEnergy and its subsidiaries, including JCP&L, to adverse outcomes in pending or future rate cases and could have a material adverse effect on our reputation, business, financial condition, results of operations, liquidity or cash flows.

Risks Associated with Regulation of Our Business

Our ability to grow our business is subject to numerous risks and events, many of which are outside of our control.

Our ability to capitalize on investment opportunities available to our business depends, in part, on any future distribution rate cases or other filings seeking cost recovery for distribution system enhancements in New Jersey and transmission rate filings at FERC, including maintaining the affordability of the rates charged to customers. Any denial of, or delay in, the approval of any future distribution or transmission rate requests could restrict us from fully recovering our cost of service, may impose risks on the distribution and transmission operations, and could have a material adverse effect on our regulatory strategy, results of operations and financial condition.

Our efforts also could be adversely impacted by any impediments to our ability to finance the proposed expansion projects while maintaining adequate liquidity. There can be no assurance that our investment strategy in our business will deliver the desired result, which could adversely affect our results of operations and financial condition.

 

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Complex and changing government regulations and actions, including those associated with rates, could have a negative impact on our business, financial condition, results of operations and cash flows.

We are subject to comprehensive regulation by various federal, state and local regulatory agencies that significantly influence our operating environment. Changes in, or reinterpretations of, existing laws or regulations, or the imposition of new laws or regulations, have in the past and could in the future require us to incur additional costs, which could be substantial, or change the way we conduct our business, and therefore could have a material adverse impact on our results of operations and financial condition.

Particularly, we provide service at rates approved by one or more regulatory commissions. Thus, the rates that we are allowed to charge may be decreased as a result of actions taken by FERC or by the NJBPU. Also, these rates may not be set to recover our expenses at any given time. Additionally, there may also be a delay between the timing of when costs are incurred and when costs are recovered, if at all. While rate regulation is premised on providing an opportunity to earn a reasonable return on investments and recovery of operating expenses, there can be no assurance that the applicable regulatory commission will determine that all of our costs have been prudently incurred or that the regulatory process in which rates are determined will always result in rates that will produce full recovery of our costs in a timely manner.

State rate regulation may delay or deny full recovery of costs and impose risks on our operations. Any denial of or delay in cost recovery could have an adverse effect on our business, results of operations, liquidity, cash flows and financial condition.

Our retail rates are set by the NJBPU through traditional, cost-of-service-based regulated utility ratemaking. As a result, we may not be permitted to recover our costs and, even if we are able to do so, there may be a significant delay between the time we incur such costs and the time we are allowed to recover them. Factors that may affect outcomes in the distribution rate cases include, but are not limited to: (i) the value of plant in service; (ii) authorized rate of return; (iii) capital structure (including hypothetical capital structures); (iv) depreciation rates; (v) the allocation of shared costs, including consolidated deferred income taxes and income taxes payable; and (vi) regulatory approval of rate recovery mechanisms for capital investment spending programs.

We can provide no assurance that any base rate request filed will be granted in whole or in part. Any denial of, or delay in, any base rate request could restrict us from fully recovering our costs of service, may impose risks on our operations, and may negatively impact our business, results of operations, liquidity, cash flows and financial condition. In addition, to the extent that we seek an increase in rates, pressure may be exerted on the applicable legislators and regulators to take steps to control rate increases, including through some form of rate increase moderation, reduction or freeze. Any related public discourse and debate, including with respect to the HB 6 investigations or litigation, can increase uncertainty associated with the regulatory process, the level of rates and revenues that are ultimately obtained, and the ability of us to recover costs. Such uncertainty may restrict operational flexibility and resources, reduce liquidity and increase financing costs.

Federal rate regulation may delay or deny full recovery of costs and impose risks on our operations. Any denial or reduction of, or delay in cost recovery could have an adverse effect on our business, results of operations, cash flows and financial condition.

FERC policy currently permits recovery of prudently incurred costs associated with cost-of-service-based wholesale power rates and the expansion and updating of transmission infrastructure within its jurisdiction. FERC’s policies on recovery of transmission costs continue to evolve, evidenced by ongoing proceedings to determine whether FERC’s existing policies on transmission rate incentives should be revised. If FERC were to adopt a different policy regarding recovery of transmission costs or if there is any resulting delay in cost recovery, our strategy of investing in transmission could be adversely affected. If FERC were to lower the rate of return it has authorized for JCP&L’s cost-based wholesale power rates or transmission investments and facilities, our future earnings and cash flows may be reduced, and our financial condition may be adversely impacted.

 

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We could be subject to higher costs and/or penalties related to mandatory reliability standards set by NERC/FERC or changes in the rules of organized markets, which could have an adverse effect on our financial condition.

We are subject to mandatory reliability standards promulgated by NERC (which is the Electric Reliability Organization (the “ERO”) designated by FERC under Section 215 of the Federal Power Act (the “FPA”)), and approved by FERC, as well as mandatory reliability standards imposed by the State of New Jersey. The standards are based on the functions that need to be performed to ensure that the bulk electric system operates reliably. NERC, ReliabilityFirst Corporation (“RFC”), which is one of the regional reliability entities responsible for the PJM region, FERC and the NJBPU continue to refine existing reliability standards, as well as develop and adopt new reliability standards. NERC reliability standards address operation, planning and security of the bulk electric system, including requirements with respect to real-time transmission operations, emergency operations, vegetation management, critical infrastructure protection and personnel training. Compliance with modified or new reliability standards may subject us to higher operating costs and/or increased capital expenditures. If we were found not to be in compliance with one or more of the mandatory reliability standards, we could become subject to sanctions, including potentially substantial monetary penalties.

Monetary penalties for violations of reliability standards vary based on an assigned risk factor for each potential violation, the severity of the violation and various other circumstances, such as whether the violation was intentional or concealed, whether there are repeated violations, the degree of the violator’s cooperation in investigating and remediating the violation and the presence of a compliance program. FERC has authority under the FPA to impose penalties up to and including approximately $1.6 million per day per violation, adjusted for inflation, for failure to comply with these mandatory electric reliability standards. Potential non-monetary sanctions include imposing limitations on the violator’s activities or operation and placing the violator on a watch list for major violators.

In addition to direct regulation by FERC and the State of New Jersey, we are also subject to rules and terms of participation imposed and administered by PJM. Although PJM is itself ultimately regulated by FERC, it can impose rules, restrictions and terms of service that are quasi-regulatory in nature, which could have a material adverse impact on our business. Compliance with PJM’s rules may also subject us to higher operating costs.

We are also subject to certain requirements under Sections 203, 204 and 205 of the FPA, including the requirement to obtain prior FERC approval of certain transactions and authorization of the issuance of certain securities and assumptions of liabilities, the obligation to file rate tariffs and contracts related to the provision of services subject to FERC jurisdiction and certain reporting, recordkeeping and accounting requirements. Under FERC policy, failure to file a jurisdictional tariff or agreement on a timely basis may result in an entity having to refund the time value of revenues collected under the relevant tariff or agreement, but not to the point where a loss would be incurred. The failure to obtain timely approval of transactions subject to Section 203 of the FPA or of issuances of securities or assumptions of liabilities under Section 204 of the FPA, or to comply with applicable filing, reporting, recordkeeping or accounting requirements under Section 205 of the FPA could subject us to penalties. FERC has authority under the FPA to impose penalties up to and including approximately $1.6 million per day per violation, adjusted for inflation, for violations of the FPA or rules or orders issued pursuant thereto.

Despite our best efforts to comply and FirstEnergy’s implementation of a compliance program intended to ensure reliability and compliance with the FPA, and rules and orders issued by FERC, there can be no assurance that violations that could result in material penalties or sanctions will not occur. If we were to violate mandatory reliability standards or other NERC or FERC requirements, even unintentionally, in any material way, any penalties or sanctions imposed against us could have a material adverse effect on our business, financial condition, results of operations and cash flows, and our ability to pay interest on, and the principal of, the New Notes.

Any failure by us to comply with any applicable regulations or any limitations on our ability to raise capital and/or pursue acquisitions, development opportunities or other transactions imposed by any such regulations

 

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could have a material adverse effect on our business, financial condition, results of operations and cash flows, and our ability to pay interest on, and the principal of, the New Notes.

Regulatory changes in the electric industry, including potential changes in federal and state renewable energy initiatives, could affect our competitive position and result in unrecoverable costs adversely affecting our business and results of operations.

As a result of regulatory initiatives, changes in the electric utility business have occurred and are continuing to take place throughout the United States, including the states in which we do business. These changes have resulted, and are expected to continue to result, in fundamental alterations in the way utilities and competitive energy providers conduct their business. FERC and the U.S. Congress propose changes from time to time in the structure and conduct of the electric utility industry. In addition, potential changes in federal and state renewable energy initiatives may result in the cancellation or reduction in projects that we have invested in or commenced.

If any regulatory efforts result in costs, decreased margins and/or unrecoverable costs (including as a result of the cancellation or reduction in certain renewable energy projects), our business and results of operations would be adversely affected. We cannot predict the extent or timing of further regulatory efforts to modify our business or the industry.

Energy efficiency and peak demand reduction mandates and energy price increases could negatively impact our financial results.

A number of regulatory and legislative bodies, including the NJBPU and the New Jersey General Assembly, have introduced requirements and/or incentives, as well as penalties, to reduce peak demand and energy consumption. Such conservation programs could adversely impact our financial results in different ways. In our operations, reductions in electric consumption could negatively impact us depending on the regulatory treatment of the associated impacts and, in particular, whether we would be permitted to recover some or all of the resulting additional costs and/or lost revenues. Should we be required to fund conservation measures that result in reduced sales from effective conservation, regulatory lag in adjusting rates for the impact of these measures could have a negative financial impact. We could also be adversely impacted if any future energy price increases result in a decrease in customer usage. Our financial results could be adversely affected if we are unable to meet participation and/or energy reduction targets, as they may be established by the State of New Jersey, and penalties are imposed. We have not determined what impact, if any, conservation and increases in energy prices will have on our financial condition or results of operations. Additionally, failure to meet regulatory or legislative requirements to reduce energy consumption or otherwise increase energy efficiency could result in penalties that could adversely affect our financial results.

Changes in local, state or federal tax laws applicable to us or adverse audit results or tax rulings, and any resulting increases in taxes and fees, may adversely affect our results of operations, financial condition and cash flows.

We are subject to various local, state and federal taxes, including income, franchise, real estate, sales and use, and employment-related taxes. We exercise significant judgment in calculating such tax obligations, booking reserves as necessary to reflect potential adverse outcomes regarding tax positions we have taken and utilizing tax benefits, such as carryforwards and credits. Additionally, various tax rate and fee increases may be proposed or considered in connection with such changes in local, state or federal tax law.

We cannot predict whether legislation or regulation will be introduced, the form of any legislation or regulation, or whether any such legislation or regulation will be passed by legislatures or regulatory bodies. Any such changes, or any adverse tax audit results or adverse tax rulings on positions taken by us or our affiliates could have a negative impact on our results of operations, financial condition and cash flows.

 

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We cannot predict whether, when or to what extent new tax regulations, interpretations or rulings will be issued. Any future reforms of U.S. tax laws may be enacted in a manner that negatively impacts our results of operations, financial condition and business. Furthermore, we cannot predict what, if any, response state regulatory commissions or FERC may have and the potential response of such authorities regarding rates and charges.

Risks Associated with Our Business Operations.

The hazardous activities associated with the operation of transmission and distribution facilities could adversely impact our results of operations and financial condition.

Operation of transmission and distribution facilities involves risk, including the risk of potential breakdown or failure of equipment or processes due to aging infrastructure, accidents, labor disputes or work stoppages by employees, acts of terrorism or sabotage, construction delays or cost overruns, shortages of or delays in obtaining equipment, material and labor, operational restrictions resulting from environmental requirements and governmental interventions, and performance below expected levels. In addition to natural risks, such as earthquakes, floods, lightning, hurricanes and wind, hazards, such as fire, explosion, collapse and machinery failure, are inherent risks in our operations which may occur as a result of inadequate internal processes, technological flaws, human error or actions of third parties or other external events. The control and management of these risks depend upon adequate development and training of personnel and on operational procedures, preventative maintenance plans, and specific programs supported by quality control systems, which may not prevent the occurrence and impact of these risks.

The hazards described above, along with other safety hazards associated with our operations, can cause significant personal injury or loss of life, severe damage to and destruction of property, plant and equipment, contamination of, or damage to, the environment and suspension of operations. The occurrence of any one of these events may result in our being named as a defendant in lawsuits asserting claims for substantial damages, environmental cleanup costs, personal injury and fines and/or penalties.

Our business is affected by variations in weather and severe weather conditions.

Weather conditions directly influence the demand for electric power. Demand for power generally peaks during the summer and winter months, with market prices also typically peaking at that time. Overall operating results may fluctuate based on weather conditions. In addition, we have historically sold less power, and consequently received less revenue, when seasonal weather conditions are milder. See “The physical risks associated with climate change may have an adverse impact on our business operations, financial condition and cash flows.

Cyber-attacks, electronic or physical data security breaches and other disruptions to our information technology systems, or those of third parties we are connected to or do business with, could compromise our business operations, critical and proprietary information and employee and customer data, which could have a material adverse effect on our business, results of operations, financial condition and reputation.

In the ordinary course of our business, we depend on information technology systems that utilize sophisticated operational systems and network infrastructure to run all facets of our business.

Additionally, we store sensitive data, intellectual property and proprietary or personally identifiable information regarding our business, employees, shareholders, customers, suppliers, business partners and other individuals in our data centers and on our networks. We may also need to provide sensitive data to vendors and service providers who require access to this information. The secure maintenance of information and information technology systems is critical to our operations.

Over the last several years, there has been an increase in the frequency of cyber-attacks by terrorists, hackers, international activist organizations, foreign governments and individuals. These and other unauthorized

 

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parties may attempt to gain access to our network systems or facilities, or those of third parties with whom we do business in many ways, including directly through our network infrastructure or through fraud, trickery, or other forms of deception against our employees, contractors and temporary staff. Additionally, our information and information technology systems and those of our vendors and service providers may be increasingly vulnerable to data security breaches, damage and/or interruption due to viruses, ransomware, unauthorized physical access, theft of access devices, human error, malfeasance, faulty password management or other malfunctions and disruptions. Further, hardware, software, or applications we develop or procure from third parties may contain defects in design or manufacture or other problems that could unexpectedly compromise information and/or security.

As a source of critical infrastructure, the energy industry is at heightened threat of cyber-attacks, which are becoming increasingly more difficult to anticipate and prevent due to their rapidly evolving nature. We cannot anticipate, detect, or implement fully preventive measures against all cyber security threats because the techniques used are increasingly sophisticated and constantly evolving. For example, as artificial intelligence continues to evolve, cyber-attackers could use artificial intelligence to develop malicious code, denial-of-service attacks, sophisticated phishing attempts and other attacks leading to data loss, loss of operational control, or exploitation of inherent vulnerabilities.

In addition, the increased use of smartphones, tablets, and other wireless devices, as well as ongoing remote work-from-home arrangements for a substantial portion of our corporate employees, may also heighten these and other operational risks. Furthermore, economic sanctions issued by one country against another, such as those issued by the U.S. and other countries against Russia in response to its war with Ukraine, or other increasing global geopolitical tensions, such as the war between Israel and Hamas, could increase the risk of state-sponsored cyber-attacks.

Despite security measures and safeguards we have employed, including certain measures implemented pursuant to mandatory NERC Critical Infrastructure Protection standards, our infrastructure, as well as the transmission facilities of third parties with whom we are interconnected, may be increasingly vulnerable to such attacks as a result of the rapidly evolving and increasingly sophisticated means by which attempts to defeat security measures and gain access to our information technology systems may be made. Because our transmission facilities are interconnected with those of third parties, the operation of our facilities could be adversely affected by cyber-attacks or other unexpected or uncontrollable events occurring on the systems of such third parties. Given the rapidly evolving nature, sophistication and complexity of cyber-attacks, despite our reasonable efforts to mitigate and prevent such attacks, it is possible that we may not be able to anticipate, prevent, detect, or implement effective preventive measures to protect against all cyber-attack incidents.

Any actual or perceived cyber-attack, data security breach, damage, interruption and/or defect could: (i) disable our transmission and/or distribution services for a significant period of time; (ii) delay development and construction of new facilities or capital improvement projects; (iii) adversely affect our customer operations; (iv) expose us to increased risk of lawsuits; (v) expose us to increased risk of regulatory penalties; (vi) expose us to increased risk of loss of potential or existing customers; (vii) expose us to increased risk of damage relating to loss of proprietary information; (viii) corrupt data; and/or (ix) result in unauthorized access to the information stored in our data centers and on our networks and those of our vendors and service providers, including, company proprietary information, supplier information, employee data, and personal customer data, causing the information to be publicly disclosed, lost or stolen or result in incidents that could result in economic loss and liability and harmful effects on the environment and human health, including loss of life. Additionally, because our services are part of an interconnected system, disruption caused by a cyber security incident at another utility, electric generator, regional transmission organization (“RTO”), or commodity supplier could also adversely affect our operations.

Although we maintain cyber insurance and property and casualty insurance, there can be no assurance that liabilities or losses we may incur, including as a result of cyber security-related litigation, will be covered under

 

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such policies or that the amount of insurance will be adequate. Further, as cyber threats continually evolve and become more difficult to detect and successfully defend against, there can be no assurance that we can implement or maintain adequate preventive measures, accurately assess the likelihood of a cyber-incident or quantify potential liabilities or losses. Also, we may not discover any data security breach and loss of information for a significant period of time after the data security breach occurs particularly those of our vendors and service providers.

For all of these reasons, any such cyber incident could result in significant lost revenue, the inability to conduct critical business functions and serve customers for a significant period of time, the loss of confidential, sensitive, and proprietary information, including but not limited to personal information of our customers, employees, suppliers, vendors and other third parties, the use of significant management resources, legal claims or proceedings, regulatory penalties, significant remediation costs, increased regulation, increased capital costs, increased insurance costs, increased protection costs for enhanced cyber security systems or personnel, damage to our reputation and/or the rendering of our internal controls ineffective, all of which could materially adversely affect our business, results of operations, financial condition and reputation.

If our cost saving initiatives do not achieve the expected benefits, there could be negative impacts to our business, results of operations and financial condition.

We are engaged in an ongoing effort to create a culture of continuous improvement to strategically reduce our operating expenditures and continually reinvest in a more diverse capital program in support of our long-term strategy. We leverage opportunities to reduce costs—such as filling only critical positions, implementing our facility optimization plans, as well as exploring other additional, sustainable opportunities, such as reducing contractor spend. There can be no assurance that implementation of our continuous improvement culture will allow us to realize the anticipated benefits to our business, results of operations and financial condition in a timely manner, if at all.

Our ability to achieve the continued benefits from our cost saving initiatives is subject to many estimates and assumptions as well as our ability to hire recruit and retain an appropriately qualified workforce and implement a culture of continuous improvement. We could experience unexpected delays and business disruptions resulting from supporting these initiatives, decreased productivity, and higher than anticipated costs, any of which may impair our ability to reduce operating expenditures and to achieve anticipated results or otherwise harm our business, results of operations and financial condition.

Macroeconomic conditions that are beyond our control, such as government fiscal policy, tariffs, recessions, inflation and interest rate pressures, may negatively impact our financial condition, results of operations, liquidity, and cash flows.

Economic conditions, including those that may arise from government fiscal policy, tariffs, recessions, inflationary and interest rate pressures, may impact the demand for electricity and, therefore, any decline in economic conditions could lead to declines in the demand for electricity, which would reduce our revenues. Prices for equipment, materials, supplies, employee labor contractor services, together with the cost of variable-rate debt, have increased in recent years and could continue to increase in 2025 and beyond. Long-term inflationary pressures may result in such prices continuing to increase more quickly than expected. Inflation increases costs for labor, materials and services, and we may be unable to secure these resources on economically acceptable terms or offset such costs with increased revenues, operating efficiencies, or cost savings, which may adversely impact our financial condition, results of operations, liquidity, and cash flows.

Continued supply chain disruptions could have an adverse effect on our results of operations, cash flow and financial condition.

We have continued to experience supply chain challenges due to economic conditions that developed during the Coronavirus disease (“COVID-19”) pandemic, with order lead times increasing across numerous material

 

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categories, some of which remained elevated through 2024 and into 2025. The situation is fluid and a prolonged continuation or further increase in supply chain disruptions could have an adverse effect on FirstEnergy’s results of operations, cash flow and financial condition. Such disruptions could be exacerbated by unstable or uncertain macroeconomic conditions, including inflationary pressures. Any significant disruption or increased costs arising from these pressures on our suppliers may inhibit our access to, or require us to spend more money to source, certain products or that we use in our operations.

Furthermore, change or uncertainty in U.S. policies or the policies of other countries and regions in which our suppliers do business, including any changes or uncertainty with respect to U.S. or international trade policies or tariffs, could also disrupt our key suppliers’ operations. The presidential administration has taken action in 2025 to impose substantial new or increased tariffs. Any widespread imposition of new or increased tariffs could have an adverse effect on our results of operations, cash flow and financial condition. New or increased tariffs could also negatively affect U.S. national or regional economies, which also could negatively impact our business and results of operations.

We are subject to financial performance risks from regional and general economic cycles as well as industries such as chemical and steel manufacturing.

Our business follows economic cycles. Economic conditions impact the demand for electricity and declines in the demand for electricity will reduce our revenues. The regional economy in which we operate is influenced by conditions impacting industries in our service territory—e.g., the steel industry—and as these conditions change, our revenues will be impacted.

Additionally, our operations are affected by the economic conditions in our service territory and those conditions could negatively impact the rate of delinquent customer accounts and our collections of accounts receivable, which could adversely impact our financial condition, results of operations and cash flows, and our ability to pay interest on, and the principal of, the New Notes.

We are subject to risks arising from the operation of our equipment which could reduce revenues, increase expenses and have a material adverse effect on our business, financial condition and results of operations.

Operation of our facilities involves risk, including the risk of potential breakdown or failure of equipment or processes due to aging infrastructure, fuel supply or transportation disruptions, accidents, labor disputes or work stoppages by employees, human error in operations or maintenance, acts of terrorism or sabotage, cyber-attacks, construction delays or cost overruns, shortages of or delays in obtaining equipment, material and labor, operational restrictions resulting from environmental requirements and governmental interventions, and operational performance below expected levels. In addition, weather-related incidents and other natural disasters can disrupt delivery systems.

Physical acts of war, terrorism, sabotage or other attacks on any of our facilities or other infrastructure could have an adverse effect on our business, results of operations, cash flows and financial condition.

As a result of the continued threat of physical acts of war, terrorism, sabotage or other attacks in the United States, our electric transmission and distribution facilities and other infrastructure, or the facilities or other infrastructure of an interconnected company, could be direct targets of, or indirect casualties of, an act of war, terrorism, sabotage or other attack, which could result in disruption of our ability to transmit or distribute electricity for a significant period of time, otherwise disrupt our customer operations and/or result in incidents that could result in harmful effects on the environment and human health, including loss of life. Any such disruption or incident could result in a significant decrease in revenue, significant additional capital and operating costs, including costs to implement additional security systems or personnel to purchase electricity and to replace or repair our assets over and above any available insurance reimbursement, higher insurance deductibles, higher

 

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premiums and more restrictive insurance policies, legal claims or proceedings, greater regulation with higher attendant costs, generally, and significant damage to our reputation, which could have a material adverse effect on our business, results of operations, cash flows and financial condition.

Failure to provide safe and reliable service and equipment could result in serious injury or loss of life that may harm our business reputation and adversely affect our operating results.

We are committed to providing safe and reliable service and equipment in our franchised service territories. Meeting this commitment requires the expenditure of significant capital resources. However, our employees, contractors and the general public may be exposed to dangerous environments due to the nature of our operations. Failure to provide safe and reliable service and equipment due to various factors, including cyber or physical attacks, equipment failure, accidents, weather or natural disasters, could result in serious injury or loss of life that may harm our business reputation and adversely affect our operating results through reduced revenues, increased capital and operating costs, litigation or the imposition of penalties/fines or other adverse regulatory outcomes.

The outcome of litigation, arbitration, mediation, and similar proceedings involving our business is unpredictable. An adverse decision in any material proceeding could have a material adverse effect on our financial condition and results of operations.

We are involved in a number of litigation, arbitration, mediation, and similar proceedings, including with respect to asbestos claims. These and other matters may divert financial and management resources that would otherwise be used to benefit our operations. Further, no assurances can be given that the resolution of these matters will be favorable to us. If certain matters were ultimately resolved unfavorably to us, our results of operations and financial condition could be materially adversely impacted.

In addition, we are sometimes subject to investigations and inquiries by various state and federal regulators due to the heavily regulated nature of our industry. Any material inquiry or investigation could potentially result in an adverse ruling against us, which could have a material adverse impact on our financial condition and operating results.

We face certain human resource risks associated with potential labor disruptions and/or with the availability of trained and qualified labor to meet our future staffing requirements.

Our business is dependent on our ability and that of our affiliates and our contractors to recruit, retain and motivate employees and contractors. Competition for skilled workers in some areas is high. We are continually challenged to find ways to balance the retention of an aging skilled workforce while recruiting new talent to mitigate losses in critical knowledge and skills due to retirements. Workforce demographic issues challenge employers nationwide and are of particular concern to the electric utility industry. If we are unable to successfully recruit and retain an appropriately qualified workforce, our results of operations could be negatively affected. Further, a significant number of our, our affiliates’ and our contractors’ physical workforce is represented by unions. While we believe that our relations with our employees and the relations with the employees of our affiliates and contractors are generally fair, we cannot provide assurance that we will be completely free of labor disruptions, such as work stoppages, work slowdowns, union organizing campaigns, strikes or lockouts or that any labor disruption will be favorably resolved. Mitigating these risks could require additional financial commitments and the failure to prevent labor disruptions and retain and/or attract trained and qualified labor, motivate skilled personnel or mitigate the risks associated with the unionized workforce may have a material adverse effect on our business, financial condition, results of operations and cash flows, and our ability to pay interest on, and the principal of, the New Notes.

 

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Significant increases in our operation and maintenance expenses, including our health care and pension costs, could adversely affect our future earnings and liquidity.

We continually focus on limiting and reducing where possible, our operation and maintenance expenses. However, we expect to continue to face increased cost pressures related to operation and maintenance expenses, including in the areas of health care and pension costs. We have experienced health care cost inflation in recent years, and we expect our cash outlay for health care costs, including prescription drug coverage, to continue to increase despite measures that we have taken to offset the rising costs of health care benefits. The measurement of our expected future health care and pension obligations and costs is highly dependent on a variety of assumptions, many of which relate to factors beyond our control. These assumptions include investment returns, interest rates, discount rates, health care cost trends, benefit design changes, salary increases, the demographics of plan participants and regulatory requirements. While we anticipate that our operation and maintenance expenses will continue to increase, if actual results differ materially from our assumptions, our costs could be significantly higher than expected which could adversely affect our results of operations, financial condition and liquidity.

Capital improvements and construction projects may not be completed within forecasted budget, schedule or scope parameters or could be cancelled, which could adversely affect our business and results of operations.

Our business plan calls for the execution of extensive capital investments in electric transmission and distribution. We may be exposed to the risk of substantial price increases in, or the adequacy or availability of, labor and materials used in construction, nonperformance of equipment and increased costs due to delays, including delays related to the procurement of permits or approvals, adverse weather or other natural disasters. We and our affiliates engage numerous contractors and enter into a large number of construction agreements to acquire the necessary materials and/or obtain the required construction-related services. As a result, we and our affiliates are also exposed to the risk that these contractors and other counterparties could breach their obligations to us. Such risk could include our contractors’ inabilities to procure sufficient skilled labor, as well as potential work stoppages by that labor force. Should the counterparties to these arrangements fail to perform, we and our affiliates may be forced to enter into alternative arrangements at then-current market prices that may exceed our contractual prices, with resulting delays in those and other projects. Although our agreements are designed to mitigate the consequences of a potential default by the counterparty, our actual exposure may be greater than these mitigation provisions. Also, because we and our affiliates enter into construction agreements for the necessary materials and to obtain the required construction-related services, any cancellation by us or our affiliates of a construction agreement could result in significant termination payments or penalties. Any delays, increased costs or losses or cancellation of a construction project could adversely affect our business and results of operations, particularly if we are not permitted to recover any such costs through rates.

Advances and widespread adoption in distributed generation and regulatory policies may make our facilities significantly less competitive and adversely affect our results of operations.

Traditionally, electricity is generated at large, central station generation facilities and then distributed by our systems. This method results in economies of scale and lower unit costs than newer generation technologies such as fuel cells, microturbines, windmills and photovoltaic solar cells. It is possible that advances in newer generation technologies will make newer generation technologies more cost-effective, or that legislation addressing climate change at the federal or state level together with changes in regulatory policy will create incentives or benefits that otherwise make these newer generation technologies even more competitive with central station electricity production. To the extent that newer generation technologies are connected directly to load, bypassing the transmission and distribution systems, potential impacts could include decreased transmission and distribution revenues, stranded assets and increased uncertainty in load forecasting and integrated resource planning and could adversely affect our business and results of operations.

 

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Energy companies are subject to adverse publicity causing less favorable regulatory and legislative outcomes which could have an adverse impact on our business.

Energy companies, including our company, have been the subject of criticism on matters including the reliability of their distribution services and the speed with which they are able to respond to power outages, such as those caused by storm damage. Adverse publicity of this nature, as well as negative publicity associated with the operation of coal-fired generation or proceedings seeking regulatory recoveries may cause less favorable legislative and regulatory outcomes and damage our reputation, which could have an adverse impact on our business.

Our results of operations could be adversely affected by events beyond our control, such as natural disasters, public health crises, political crises, negative global climate patterns, mine subsidence, or other catastrophic events.

Our operations, or those of our vendors or suppliers, could be negatively impacted by various events beyond our control, including, but not limited to: natural disasters, such as hurricanes, tornadoes, floods, earthquakes, wildfires, extreme cold weather events and other adverse weather conditions; public health crises, such as pandemics and epidemics; prolonged government or regulator furloughs or shutdowns; trade wars; recessions; political crises, such as terrorist attacks, war, labor unrest, and other political instability; negative global climate patterns, especially in water stressed regions; surface subsidence from underground mining impacting our facilities; or other catastrophic events, such as fires or other disasters occurring at our distribution facilities or our service providers’ facilities, whether occurring in the United States or internationally. These events could disrupt the operations of our corporate offices and our supply chain and those of our vendors and service providers, as well as disrupting our infrastructure and that of third parties with whom we are connected. To the extent any of these events occur, our operations and financial results could be adversely affected.

We are a wholly owned subsidiary of FE. FE may exercise, within certain regulatory, corporate law and other limitations, substantial control over our dividend policy, business and operations and may exercise that control in a manner that may be inconsistent with the interests of the holders of the New Notes.

We are a wholly owned subsidiary of FE and certain of our officers and directors are also officers of FE. Our board of directors makes determinations with respect to a number of significant corporate events, including payment of our dividends. We have historically paid dividends to FE. From January 1, 2023 through December 31, 2024, we have paid dividends to FE of $150 million. If FE’s cash requirements increase, our board of directors may determine that we should pay increased dividends to help support FE’s cash needs, which could materially and adversely affect our liquidity.

Risks Associated with Climate Change, GHG Emissions and Other Environmental Matters

Our aspirations and disclosures related to climate matters expose us to risks that could adversely affect our reputation and performance.

FirstEnergy published statements concerning its climate-related goals and aspirations. FirstEnergy is targeting Scope 1 carbon neutrality by 2050, which includes emissions, sulfur hexafluoride leaks from transmission and distribution equipment, and its mobile fleet (i.e., vehicles). These statements reflect FirstEnergy’s aspirations and are not guarantees that FirstEnergy will be able to achieve them. FirstEnergy’s failure to adequately update, accomplish or accurately track and report on these goals on a timely basis, or at all, could adversely affect its and its subsidiaries’, including our, reputation, financial performance and growth, and expose us to increased scrutiny from the investment community, special interest groups and enforcement authorities, including at the state and local levels. Conversely, certain “anti-environmental, social and governance” sentiment among some individuals and government institutions pose the risk that we may face increasing scrutiny, reputational risk, or lawsuits from these parties.

 

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FirstEnergy’s ability to achieve its GHG reduction objective is subject to its ability to make operational changes and is conditioned upon numerous risks, many of which are outside of its control. Examples of such risks include the evolving regulatory requirements in the jurisdictions in which it and its subsidiaries, including us, operate, including the interpretation of such regulations, potential changes to such laws and regulations as a result of the new U.S. presidential administration, the prevalence of certain standards or disclosures, the evolving laws applicable to climate-related and other environmental matters, and the availability of funds to invest in initiatives in times where FirstEnergy is seeking to reduce costs.

Standards for tracking and reporting of climate and other environmental matters continue to evolve. FirstEnergy’s selection of voluntary disclosure frameworks and standards, and the interpretation or application of those frameworks and standards, may change from time to time or differ from those of others. Methodologies for reporting this data may be updated and previously reported data may be adjusted to reflect improvement in availability and quality of third-party data, changing assumptions, changes in the nature and scope of our operations and other changes in circumstances. FirstEnergy’s processes and controls for reporting these matters across its operations and supply chain are evolving along with multiple disparate standards for identifying, measuring, and reporting these metrics, including climate-related disclosures that are or may be required by the SEC, state legislatures, or other regulators, and such standards may change over time, which could result in significant revisions to FirstEnergy’s current goals, reported progress in achieving such goals, or ability to achieve such goals in the future. If FirstEnergy’s practices do not meet evolving investor or other stakeholder expectations and standards, then its and its subsidiaries’, including our, reputations or attractiveness as an investment, business partner, acquiror, service provider or employer could be negatively impacted.

Concerns about GHG emissions and the potential risks associated with climate change have led to increased regulation and other actions that could impact our business.

Federal and various regional and state authorities regulate GHG emissions, including CO2 emissions and have created financial incentives to reduce them. In 2023, FirstEnergy operated businesses that had total Scope 1 CO2 emissions of approximately 15.2 million metric tons. For existing power generation plants, CO2 emissions data are either obtained directly from plant continuous emission monitoring systems or calculated from actual fuel heat inputs and fuel type CO2 emission factors. This estimate is based on a number of projections and assumptions that may prove to be incorrect, such as the forecasted dispatch, anticipated plant efficiency, fuel type, CO2 emissions rates and our subsidiaries’ achieving completion of such construction and development projects. While actual emissions may vary substantially, the projects under construction or development when completed will increase emissions of our portfolio and therefore could increase the risks associated with regulation of GHG emissions, and although the new U.S. presidential administration issued an executive order in January 2025 withdrawing the United States from the United Nations Framework Convention on Climate Change’s Paris Agreement (“Paris Agreement”), future presidential administrations with differing energy and climate priorities could take actions that result in new or additional GHG emissions regulations in the future.

In 2010, the EPA adopted regulations pertaining to GHG emissions that require new and existing sources of GHG emissions to potentially obtain new source review permits from the EPA prior to construction or modification. In 2016, the U.S. Supreme Court ruled that such permitting would only be required if such sources also must obtain a new source review permit for increases in other regulated pollutants. In addition, the EPA previously announced plans to implement new climate change programs, including regulation of greenhouse gas emission from the utility industry. The Paris Agreement established a long-term goal of keeping the increase in global average temperature well below 2°C above pre-industrial levels. We anticipate that the Paris Agreement will continue the trend toward efforts to decarbonize the global economy and to further limit GHG emissions.

Furthermore, the SEC has finalized climate-related disclosure rules, and although these SEC climate-related disclosure rules have been stayed, certain states have begun to pass their own laws related to GHG emissions. The impact of GHG regulation on our operations will depend on a number of factors, including the degree and timing of GHG emissions reductions required under any such legislation or regulation, the cost of emissions

 

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reduction equipment and the price and availability of offsets, the extent to which market based compliance options are available, the extent to which our subsidiaries would be entitled to receive GHG emissions allowances without having to purchase them in an auction or on the open market and the impact of such legislation or regulation on the ability of our subsidiaries to recover costs incurred through rate increases or otherwise. The costs of compliance could be substantial.

Costs of compliance with environmental laws are significant, and the cost of compliance with new environmental laws, including limitations on GHG emissions related to climate change, could adversely affect our cash flows and financial condition.

Our operations are subject to extensive federal, state and local environmental statutes, rules and regulations. Compliance with these legal requirements requires us to incur costs for, among other things, installation and operation of pollution control equipment, emissions monitoring and fees, remediation and permitting at our facilities. These expenditures have been significant in the past and may increase in the future. We may be forced to shut down other facilities or change their operating status, either temporarily or permanently, if we are unable to comply with these or other existing or new environmental requirements, or if the expenditures required to comply with such requirements are not economically feasible.

Moreover, new environmental laws or regulations including, but not limited to GHG emissions, Clean Water Act effluent limitations imposing more stringent water discharge regulations, or other changes to existing environmental laws or regulations may materially increase our costs of compliance or accelerate the timing of capital expenditures or other capital-like investments. Our compliance strategy, including, but not limited to, our assumptions regarding estimated compliance costs, although reasonably based on available information, may not successfully address future relevant standards and interpretations. If we fail to comply with environmental laws and regulations or new interpretations of longstanding requirements, even if caused by factors beyond our control, that failure could result in the assessment of civil or criminal liability and fines. In addition, any alleged violation of environmental laws and regulations may require us to expend significant resources to defend against any such alleged violations. Due to the uncertainty of control technologies available to reduce GHG emissions, any legal obligation that requires substantial reductions of GHG emissions could result in substantial additional costs, adversely affecting cash flows and profitability, and raise uncertainty about the future viability of fossil fuels, particularly coal, as an energy source for new and existing electric generation facilities.

We are or may be subject to environmental liabilities, including costs of remediation of environmental contamination at current or formerly owned, leased or operated facilities, which could have a material adverse effect on our results of operations and financial condition.

We may be subject to liability under environmental laws for the costs of remediating environmental contamination of property currently or formerly owned, leased or operated by us and of property contaminated by hazardous substances that we may have generated regardless of whether the liabilities arose before, during or after the time we owned, leased or operated the facilities. We are currently involved in a number of proceedings relating to sites where hazardous substances have been released and we may be subject to additional proceedings in the future. We also have current or previous ownership interests in sites associated with the production of gas and the production and delivery of electricity for which we may be liable for additional costs related to investigation, remediation and monitoring of these sites. Citizen groups or others may bring litigation over environmental issues including claims of various types, such as property damage, personal injury, and citizen challenges to compliance decisions on the enforcement of environmental requirements, such as opacity and other air quality standards, which could subject us to penalties, injunctive relief and the cost of litigation. We cannot predict the amount and timing of all future expenditures (including the potential or magnitude of fines or penalties) related to such environmental matters, although we expect that they could be material. In addition, there can be no assurance that any liabilities, losses or expenditures we may incur related to such environmental liabilities or contamination will be covered under any applicable insurance policies or that the amount of insurance will be adequate.

 

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In some cases, a third party who has acquired assets including operating and deactivated nuclear power stations from us has assumed the liability we may otherwise have for environmental matters related to the transferred property. If the transferee fails to discharge the assumed liability or disputes its responsibility, a regulatory authority or injured person could attempt to hold us responsible, and our remedies against the transferee may be limited by the financial resources of the transferee.

We could be exposed to private rights of action relating to environmental matters seeking damages under various state and federal law theories which could have an adverse impact on our results of operations, financial condition, cash flows and business operations.

Private individuals may seek to enforce environmental laws and regulations against us and could allege personal injury, property damages or other relief. For example, claims have been made against certain energy companies alleging that CO2 emissions from power generating facilities constitute a public nuisance under federal and/or state common law. While JCP&L is not a party to this litigation, it could be named in other actions making similar allegations. An unfavorable ruling in any such case could result in the need to reduce emissions, suspend operations or pay money damages or penalties. Adverse rulings in these or other types of actions could have an adverse impact on our results of operations, cash flows and financial condition and could significantly impact our business operations.

Transition risks associated with climate change, including those related to regulatory mandates could negatively impact our financial results.

Where federal or state legislation mandates the use of renewable fuel sources, such as wind and solar and such legislation does not also provide for adequate cost recovery of our revenue requirements, it could result in significant changes in our business, including material increases in renewable energy credit purchase costs, purchased power costs and capital investments, as such costs are spread over reduced sales volumes. Such mandatory renewable portfolio requirements may have an adverse effect on our financial condition and results of operations.

A number of regulatory and legislative bodies have introduced requirements and/or incentives to reduce peak demand and energy consumption. Such conservation programs have previously resulted in and could result in further load reduction and adversely impact our financial results in different ways. We currently have energy efficiency riders in place in certain of our states to recover the cost of these programs either at or near a current recovery timeframe in the states where we operate.

In our regulated operations, energy conservation could negatively impact us depending on the regulatory treatment of the associated impacts. Should we be required to invest in conservation measures that result in reduced sales from effective conservation, regulatory lag in adjusting rates for the impact of these measures could have a negative financial impact on us. In the past, we have been adversely impacted by reduced electric usage due in part to energy conservation efforts such as the use of efficient lighting products such as compact fluorescent lights, halogens and light emitting diodes. We are unable to determine what impact, if any, future conservation activities will have on our financial condition or results of operations.

Additionally, failure to meet regulatory or legislative requirements to reduce energy consumption or otherwise increase energy efficiency could result in penalties that could adversely affect our financial results.

The physical risks associated with climate change may have an adverse impact on our business operations, financial condition and cash flows.

Physical risks of climate change such as flooding, wildfires, rising sea levels, and other related phenomena, resulting from more frequent or more extreme weather events and changes in temperature and precipitation patterns associated with climate change, could affect some, or all, of our operations. Frequent or extreme weather

 

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events could disrupt our operations and/or be destructive, which could result in increased costs, including supply chain costs. An extreme weather event within the New Jersey area can also directly affect our capital assets, such as downed wires and poles or damage to other operating equipment, resulting in service disruptions to customers and possibly creating hazardous conditions. Further, as extreme weather conditions increase system stress, we may incur costs relating to additional system backup or service interruptions, and in some instances, we may be unable to recover such costs. For all of these reasons, these physical risks could have an adverse financial impact on our business operations, financial condition and cash flows.

Climate change poses other financial risks as well. To the extent weather conditions are affected by climate change, customers’ energy use could increase or decrease depending on the duration and magnitude of the changes. Increased energy use due to weather changes may require us to invest in additional system assets and purchase additional power. Additionally, decreased energy use due to weather changes may affect our financial condition through decreased revenues, margins or earnings.

Risks Associated with Markets and Financial Matters

Our results of operations and financial condition may be adversely affected by the volatility in pension and other postemployment benefit (“OPEB”) investments and obligations due to capital market performance and other changes.

We recognize in income the change in the fair value of plan assets and net actuarial gains and losses for our pension and OPEB plans. This adjustment is recognized in the fourth quarter of each year and whenever a plan is determined to qualify for a remeasurement, resulting in greater volatility in pension and OPEB expenses and therefore may materially impact our results of operations.

Our financial statements reflect the values of the assets held in trust to satisfy our obligations under pension and OPEB plans. Certain of the assets held in these trusts do not have readily determinable market values. Changes in the estimates and assumptions inherent in the value of these assets could affect the value of the trusts. If the value of the assets held by the trusts declines by a material amount, our funding obligation to the trusts could materially increase. These assets are subject to market fluctuations and will yield uncertain returns, which may fall below our projected return rates. Forecasting investment earnings and costs to pay future pension and other obligations requires significant judgment and actual results may differ significantly from current estimates. Capital market conditions that generate investment losses or that negatively impact the discount rate and increase the present value of liabilities may increase our future pension and OPEB expenses and further may have significant impacts on the value of the pension and other trust funds, which could require significant additional funding and negatively impact our results of operations and financial position.

Failure to comply with debt covenants in our credit agreement could adversely affect our ability to execute future borrowings and/or require early repayment, and could restrict our ability to obtain additional or replacement financing on acceptable terms or at all.

Our credit agreement contains certain negative and affirmative covenants. Our ability to comply with the covenants and restrictions contained in our credit agreement has been and may, in the future, be affected by events related to the ongoing government investigations or otherwise, including a failure to comply with the terms of the DPA.

A breach of any of the covenants contained in our credit agreement, including any breach related to alleged failures to comply with anti-corruption and anti-bribery laws, could result in an event of default under such agreements, and we would not be able to access our credit facility for additional borrowings and letters of credit (each, a “LOC”) while any default exists. Upon the occurrence of such an event of default, any amounts outstanding under our credit agreement could be declared to be immediately due and payable and all applicable commitments to extend further credit could be terminated. If indebtedness under our credit agreement is

 

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accelerated, there can be no assurance that we will have sufficient assets to repay the indebtedness. In addition, certain events, including, but not limited to any covenant breach related to alleged failures to comply with anti-corruption and anti-bribery laws, an event of default under our credit agreement, and the acceleration of applicable commitments under such facility could restrict our ability to obtain additional or replacement financing on acceptable terms or at all. The operating and financial restrictions and covenants in our credit agreement and any future financing agreements may adversely affect our ability to finance future operations or capital needs or to engage in other business activities which in turn could have a material adverse impact on our business, cash flow, liquidity and results of operations.

Increasing interest rates and/or a credit rating downgrade could negatively affect our or our subsidiaries’ financing costs, ability to access capital and requirement to post collateral.

We have near-term exposure to interest rates from outstanding short-term indebtedness indexed to variable interest rates, and we have exposure to future interest rates to the extent we seek to raise long-term debt in the capital markets to meet maturing debt obligations and fund construction or other investment opportunities. Past disruptions in capital and credit markets, as well as the U.S. Federal Reserve’s interest rate policies, have resulted in volatile interest rates on new publicly issued debt securities and increased costs for variable interest rate debt securities. Disruptions in capital and credit markets, or the Federal Reserve Board’s interest rate policies, could result in volatile interest rates on new publicly issued debt securities and increase our financing costs and adversely affect our results of operations, cash flows and liquidity. Also, interest rates could change as a result of economic or other events that are beyond our risk management processes. As a result, we cannot always predict the impact that our risk management decisions may have if actual events lead to greater losses or costs than our risk management positions were intended to hedge. Although we employ risk management techniques to hedge against interest rate volatility, significant and sustained increases in market interest rates could materially increase our financing costs and negatively impact our reported results of operations, cash flows and liquidity.

We rely on access to bank and capital markets as sources of liquidity for cash requirements not satisfied by cash from operations or money pool. Any future downgrades in our credit ratings from the nationally recognized credit rating agencies, particularly to levels below investment grade, could negatively affect our ability to access the bank and capital markets, especially in a time of uncertainty in either of those markets, and may require us to post cash collateral to support outstanding commodity positions in the wholesale market, as well as available LOCs and other guarantees. Furthermore, additional downgrades could increase the cost of such capital by causing us to incur higher interest rates and fees associated with such capital. Additional rating downgrades would further increase our interest expense on certain of our long-term debt obligations and would also further increase the fees we pay on our credit agreement, thus increasing the cost of our working capital. Such additional rating downgrades could also negatively impact our ability to grow our business or execute our business strategies by substantially increasing the cost of, or limiting access to, capital.

In addition, events related to the ongoing government investigations may expose us to higher interest rates for additional indebtedness, whether as a result of ratings downgrades or otherwise, and could restrict our ability to obtain additional or replacement financing on acceptable terms or at all. See “Failure to comply with debt covenants in our credit agreement could adversely affect our ability to execute future borrowings and/or require early repayment, and could restrict our ability to obtain additional or replacement financing on acceptable terms or at all.”

The Inflation Reduction Act of 2022 (“IRA of 2022”) could change the rate of taxes imposed on us and could negatively affect our cash flows and financial condition.

The IRA of 2022 among other things, imposes a new 15% corporate alternative minimum tax (“AMT”) based on adjusted financial statement income (“AFSI”) applicable to corporations with a three-year average AFSI over $1 billion. The AMT is effective for the 2023 tax year and, if applicable, corporations must pay the greater of the regular corporate income tax or the AMT. The IRA of 2022 requires the U.S. Treasury to provide

 

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regulations and other guidance necessary to administer the AMT, including further defining allowable adjustments to determine AFSI, which directly impacts the amount of AMT to be paid.

On September 12, 2024, the U.S. Treasury issued proposed regulations for the AMT for comments. FirstEnergy and JCP&L are assessing the proposed regulations but continues to believe that it is more likely than not they will be subject to AMT, however, the completion of the U.S. Treasury’s rulemaking process and the future issuance of final regulations, as well as potential future federal tax legislation or presidential executive orders, could significantly change FirstEnergy’s and/or JCP&L’s AMT estimates or its conclusion as to whether they are AMT payer at all. The regulatory treatment of the IRA of 2022 may also be subject to regulation by FERC and/or applicable state regulatory authorities. Any adverse development in the IRA of 2022, including guidance from the U.S. Treasury and/or the Internal Revenue Service (“IRS”) or unfavorable regulatory treatment, could negatively impact FirstEnergy’s and/or JCP&L’s cash flows, results of operations and financial condition.

Risks Associated with Financing and Capital Structure

In the event of volatility or unfavorable conditions in the capital and credit markets, our business, including the immediate availability and cost of short-term funds for liquidity requirements and our ability to meet long-term commitments, may be adversely affected, which could negatively impact our results of operations, cash flows and financial condition.

We rely on the capital and credit markets and our credit agreement to meet both our long-term financial commitments and short-term liquidity needs if internal funds are not available from our operations or FirstEnergy’s regulated utility money pool. We also deposit cash in short-term investments or in the money pool, from which our regulated affiliates may borrow. In the event of volatility in the capital and credit markets, our ability to access the capital markets, draw on our credit agreement and obtain cash may be adversely affected. Our access to funds under our credit agreement is dependent on the ability of the financial institutions that are parties to our credit agreement to meet their funding commitments. Those institutions may not be able to meet their funding commitments if they experience shortages of capital and liquidity or if they experience excessive volumes of borrowing requests within a short period of time. Any delay in our ability to access those funds, even for a short period of time, could have a material adverse effect on our results of operations and financial condition.

Should there be fluctuations in the capital and credit markets as a result of uncertainty, changing or increased regulation, reduced alternatives or failures of significant foreign or domestic financial institutions or foreign governments, our access to liquidity needed for our business could be adversely affected. Unfavorable conditions could require us to take measures to conserve cash until the markets stabilize or until alternative credit arrangements or other funding for our business needs can be arranged. Such measures could include deferring capital expenditures and reducing or eliminating future dividend payments or other discretionary uses of cash.

Energy markets depend heavily on active participation by multiple counterparties, which could be adversely affected should there be disruptions in the capital and credit markets. Reduced capital and liquidity and failures of significant institutions that participate in the energy markets could diminish the liquidity and competitiveness of energy markets that are important to our business. Perceived weaknesses in the competitive strength of the energy markets could lead to pressures for greater regulation of those markets or attempts to replace those market structures with other mechanisms for the sale of power, including the requirement of long-term contracts, which could have a material adverse effect on our results of operations and cash flows.

We may recognize impairments of recorded goodwill, which would result in write-offs of the impaired amounts and could have an adverse effect on our results of operations.

We had approximately $1.8 billion of goodwill on our balance sheet as of December 31, 2024. Goodwill is tested for impairment annually, as of July 31, or whenever events or circumstances indicate impairment may

 

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have occurred. We are unable to predict the actual timing and amounts of any impairments in future years, which would depend on many factors, including interest rates, sector market performance, our capital structure, results of future rate proceedings, operating and capital expenditure requirements, the value of comparable acquisitions, environmental regulations and other factors.

Risks Associated with the New Notes.

There are limited covenants and protections in the Indenture; consequently, we and our subsidiaries may be able to incur substantially more indebtedness, a portion of which could be secured indebtedness.

While the Indenture (as defined under “Description of the Notes”) contains, and the New Notes will contain, terms intended to provide protection to holders upon the occurrence of certain events, those terms are and will be limited and may not be sufficient to protect your investment in the New Notes. For example, the Indenture does not limit the amount of unsecured indebtedness we may incur; however, the limitation on liens provision of the Indenture does limit the amount of secured indebtedness that we may incur without ratably securing the New Notes. Such secured indebtedness would be senior to the New Notes. The liens that are expressly permitted under that provision of the Indenture are summarized herein under the heading “Description of the Notes—Certain Covenants—Limitation on Liens.”

The New Notes are not secured by any liens on our assets; consequently, any future secured creditors will be entitled to remedies that would give them priority over the holders of the New Notes to collect amounts due to them.

The New Notes will not be secured by any liens on our assets. Because the New Notes are our unsecured obligations, the right of repayment of the holders of the New Notes will be effectively subordinated to any future secured creditors to the extent of the value of the collateral securing such secured debt if we enter into bankruptcy, liquidation, reorganization or other winding up proceedings or if an event of default occurs under any such future secured indebtedness.

We have a significant amount of indebtedness, which could negatively impact our business and our ability to make payments on the New Notes.

We have, and will continue to have, a significant amount of indebtedness. As of December 31, 2024, we had approximately $2.4 billion of total indebtedness, including short-term borrowings and currently payable long-term debt, outstanding.

Our indebtedness places significant demands on our cash resources, which could:

 

   

make it difficult to satisfy our financial obligations, including our obligation to make payments on the New Notes;

 

   

require us to dedicate a substantial portion of our cash flow from operations to make payments on our indebtedness, including the New Notes, reducing the amount of our cash flow available for working capital, capital expenditures and other general corporate purposes;

 

   

limit our ability to obtain additional financing to operate our business;

 

   

limit our financial flexibility in planning for and reacting to business and industry changes;

 

   

impact the evaluation of our creditworthiness by counterparties to agreements; and

 

   

increase our vulnerability to general adverse economic and industry conditions, including changes in interest rates and volatility in commodity prices.

Furthermore, we may incur or assume additional debt in the future. If new debt is added to our current debt levels, the related risks that we may face could increase significantly.

 

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Our ability to service our debt and meet our cash requirements depends on many factors, some of which are beyond our control.

Our ability to satisfy our obligations, including the Senior Notes, will depend on our future results of operations, cash flows and financial condition, which will be subject, in part, to factors beyond our control, including interest rates, commodity prices, general economic conditions, environmental regulations, financial and business conditions and regulatory actions. If we are unable to generate sufficient operating cash flows to service our debt, we may be required to:

 

   

refinance all or a portion of our debt;

 

   

obtain additional financing;

 

   

sell all of our assets or operations;

 

   

reduce or delay capital expenditures and acquisitions;

 

   

curtail or eliminate certain activities; or

 

   

revise or delay our strategic plans.

If we are required to take any of these actions, it could have a material adverse effect on us. In addition, we cannot assure you that we would be able to take any of these actions, that these actions would enable us to continue to satisfy our capital requirements and financial and other contractual obligations or that these actions will be permitted under the terms of our various debt instruments.

Our credit ratings may not reflect all risks of your investment in the Senior Notes.

A credit rating is not a recommendation to buy, sell or hold any security. Each rating agency’s credit rating should be evaluated independently of any other rating agency’s credit rating. Actual or anticipated changes in, or downgrades, suspensions or withdrawals of, our credit ratings, including any announcement that our credit ratings are under further review for a downgrade, could increase our borrowing costs.

Your ability to resell the New Notes may be limited by a number of factors; prices for the New Notes may be volatile.

There currently is no established market, and no active or liquid trading market may develop for the New Notes. We do not intend to apply for listing of the New Notes on any securities exchange or on any automated dealer quotation system. If a market for the New Notes were to develop, the New Notes could trade at prices that may be higher or lower than reflected by their initial offering price, depending on many factors, including among other things:

 

   

changes in the overall market for debt securities;

 

   

changes in our financial performance or prospects;

 

   

the prospects for companies in our industry generally;

 

   

the number of holders of the New Notes;

 

   

the interest of securities dealers in making a market for the New Notes; and

 

   

prevailing interest rates.

 

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Risks Associated with the Exchange Offer.

If you fail to exchange your Outstanding Notes, the existing transfer restrictions will remain in effect and the market value of your Outstanding Notes may be adversely affected because they may be more difficult to sell.

If you fail to exchange your Outstanding Notes for New Notes under the exchange offer, then you will continue to be subject to the existing transfer restrictions on the Outstanding Notes. In general, the Outstanding Notes may not be offered or sold unless they are registered or exempt from registration under the Securities Act and applicable state securities laws. Except in connection with this exchange offer or as required by the Registration Rights Agreement, we do not intend to register resales of the Outstanding Notes.

If you do not exchange your Outstanding Notes for New Notes in the exchange offer, you will continue to be subject to the restrictions on transfer of your Outstanding Notes described in the legend on the certificates for your Outstanding Notes. In general, you may only offer or sell the Outstanding Notes if they are registered under the Securities Act and applicable state securities laws, or offered and sold under an exemption from these requirements. Except in connection with this exchange offer or as required by the registration rights agreement, we do not intend to register resales of the Outstanding Notes under the Securities Act. For further information regarding the consequences of not tendering your Outstanding Notes in the exchange offer, please read “The Exchange Offer — Consequences of Failure to Exchange.”

The exchange offer may not be completed.

We are not obligated to complete the exchange offer under certain circumstances. See “The Exchange Offer — Conditions to the Exchange Offer.” Even if the exchange offer is completed, it may not be completed on the schedule described in this prospectus. Accordingly, holders participating in the exchange offer may have to wait longer than expected to receive their New Notes, during which time those holders of Outstanding Notes will not be able to effect transfers of their Outstanding Notes tendered in the exchange offer.

If you do not properly tender your Outstanding Notes, you will continue to hold unregistered notes and your ability to transfer your Outstanding Notes will be adversely affected.

We will only issue New Notes in exchange for Outstanding Notes that you timely and properly tender. Therefore, you should allow sufficient time to ensure timely delivery of the Outstanding Notes, and you should carefully follow the instructions on how to tender your Outstanding Notes. Neither we nor the exchange agent is required to tell you of any defects or irregularities with respect to your tender of Outstanding Notes. See “The Exchange Offer—Procedures for Tendering Outstanding Notes through Brokers and Banks” and “Description of the Notes.”

If you do not exchange your Outstanding Notes for New Notes in the exchange offer, you will continue to be subject to the restrictions on transfer of your Outstanding Notes described in the legend on the certificates for your Outstanding Notes. In general, you may only offer or sell the Outstanding Notes if they are registered under the Securities Act and applicable state securities laws, or offered and sold under an exemption from these requirements. Except in connection with this exchange offer or as required by the registration rights agreement, we do not intend to register resales of the Outstanding Notes under the Securities Act. For further information regarding the consequences of not tendering your Outstanding Notes in the exchange offer, see “The Exchange Offer—Consequences of Failure to Exchange.”

You may be required to deliver prospectuses and comply with other requirements in connection with any resale of the New Notes.

If you tender your Outstanding Notes for the purpose of participating in a distribution of the New Notes, you will be required to comply with the registration and prospectus delivery requirements of the Securities Act in

 

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connection with any resale of the New Notes. In addition, if you are a broker-dealer that receives New Notes for your own account in exchange for Outstanding Notes that you acquired as a result of market-making activities or any other trading activities, you will be required to acknowledge that you will deliver a prospectus in connection with any resale of such New Notes.

 

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USE OF PROCEEDS

The exchange offer is intended to satisfy our obligations under the Registration Rights Agreements that we entered into in connection with the private offerings of the Outstanding Notes. We will not receive any cash proceeds from the issuance of New Notes in the exchange offer. In consideration for issuing the New Notes, we will receive Outstanding Notes in like principal amount. The Outstanding Notes surrendered in exchange for the New Notes will be retired and cancelled.

 

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with the financial statements and related notes included elsewhere in this prospectus. Unless the context otherwise requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to “we,” “us,” “our,” and “the Company” are intended to mean the business and operations of Jersey Central Power & Light Company.

JCP&L Business

JCP&L is a wholly owned subsidiary of FE. JCP&L conducts business in New Jersey by providing regulated electric transmission and distribution services in northern, western and east central New Jersey. We procure electric supply to serve our BGS customers through a statewide auction process approved by the NJBPU. We are subject to regulation by the NJBPU and FERC.

JCP&L’s reportable operating segments are comprised of the Distribution and Transmission segments.

The Distribution segment, representing $3.3 billion in rate base as of December 31, 2024, distributes electricity to approximately 1.2 million customers in New Jersey across its distribution footprint and procures electric supply to serve its BGS customers through a statewide auction process approved by the NJBPU. The segment’s results reflect the costs of securing and delivering electric generation to customers, including the deferral and amortization of certain costs.

The Transmission segment includes transmission infrastructure owned and operated by JCP&L and used to transmit electricity, representing $1.4 billion in rate base as of December 31, 2024. The segment’s revenues are primarily derived from forward-looking formula rates, pursuant to which the revenue requirement is updated annually based on a projected rate base and projected costs, which is subject to an annual true-up based on actual rate base and costs. The segment’s results also reflect the net transmission expenses related to the delivery of electricity on JCP&L’s transmission facilities.

Summary of Results of Operations—2024 Compared with 2023

Financial results for JCP&L’s business segments for the years ended December 31, 2024 and 2023, were as follows:

 

For the twelve months ended December 31, 2024

(In millions)

   Distribution     Transmission     Reconciling
Adjustments
    JCP&L  

Revenues

   $ 2,225     $ 242     $ (152   $ 2,315  

Operating Expenses:

        

Purchased power

     1,155       —        —        1,155  

Other operating expenses

     747       61       (152     656  

Provision for depreciation

     203       46       —        249  

Deferral of regulatory assets, net

     (135     —        —        (135

General taxes

     20       1       —        21  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     1,990       108       (152     1,946  
  

 

 

   

 

 

   

 

 

   

 

 

 

Other Income (Expense):

        

Miscellaneous income, net

     44       (10     —        34  

Pension and OPEB mark-to-market adjustment

     22       2       —        24  

Interest expense - other

     (75     (22     —        (97

Interest expense - affiliates

     (20     —        —        (20

Capitalized financing costs

     9       19       —        28  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other expense

     (20     (11     —        (31
  

 

 

   

 

 

   

 

 

   

 

 

 

Income taxes

     55       35       —        90  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net Income

   $ 160     $ 88     $ —      $ 248  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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For the twelve months ended December 31, 2023

(In millions)

   Distribution     Transmission     Reconciling
Adjustments
    JCP&L  

Revenues

   $ 1,934     $ 204     $ (111   $ 2,027  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating Expenses:

        

Purchased power

     1,037       —        —        1,037  

Other operating expenses

     601       65       (111     555  

Provision for depreciation

     190       41       —        231  

Deferral of regulatory assets, net

     (74     —        —        (74

General taxes

     20       1       —        21  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     1,774       107       (111     1,770  
  

 

 

   

 

 

   

 

 

   

 

 

 

Other Income (Expense):

        

Miscellaneous income, net

     42       —        —        42  

Pension and OPEB mark-to-market adjustment

     (27     (2     —        (29

Interest expense - other

     (86     (24     —        (110

Interest expense - affiliates

     (14     —        —        (14

Capitalized financing costs

     6       13       —        19  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other expense

     (79     (13     —        (92
  

 

 

   

 

 

   

 

 

   

 

 

 

Income taxes

     13       22       —        35  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net Income

   $ 68     $ 62     $ —      $ 130  
  

 

 

   

 

 

   

 

 

   

 

 

 

Changes Between Twelve Months Ended

December 31, 2024 and 2023 Financial Results

(In millions)

   Distribution     Transmission     Reconciling
Adjustments
    JCP&L  

Revenues

   $ 291     $ 38     $ (41   $ 288  

Operating Expenses:

        

Purchased power

     118       —        —        118  

Other operating expenses

     146       (4     (41     101  

Provision for depreciation

     13       5       —        18  

Amortization of regulatory assets, net

     (61     —        —        (61

General taxes

     —        —        —        —   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     216       1       (41     176  
  

 

 

   

 

 

   

 

 

   

 

 

 

Other Income (Expense):

        

Miscellaneous income (expense), net

     2       (10     —        (8

Pension and OPEB mark-to-market adjustment

     49       4       —        53  

Interest expense - other

     11       2       —        13  

Interest expense - affiliates

     (6     —        —        (6

Capitalized financing costs

     3       6       —        9  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other income (expense)

     59       2       —        61  
  

 

 

   

 

 

   

 

 

   

 

 

 

Income taxes

     42       13       —        55  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net Income

   $ 92     $ 26     $ —      $ 118  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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Distribution - Results of Operations

Net income increased $92 million in 2024, as compared to 2023, as described below.

Revenues

The $291 million increase in total revenues resulted from the following sources:

 

     For the Year Ended December 31,         

Revenues by Type of Service

    2024        2023       Increase  
     (In millions)  

Distribution services(1)

   $ 1,105      $ 983      $ 122  
  

 

 

    

 

 

    

 

 

 

Generation sales:

        

Retail

     1,092        925        167  

Wholesale

     6        5        1  
  

 

 

    

 

 

    

 

 

 

Total generation sales

     1,098        930        168  

Other

     22        21        1  
  

 

 

    

 

 

    

 

 

 

Total Revenues

   $ 2,225      $ 1,934      $ 291  
  

 

 

    

 

 

    

 

 

 

 

(1) 

Includes $10 million of ARP revenues in 2024, related to lost distribution revenues associated with energy efficiency in New Jersey.

Distribution services revenue increased $122 million, primarily due to higher revenues from the implementation of the base rate case, higher customer usage as a result of the weather, higher weather-adjusted customer usage and demand and higher rider revenues associated with certain regulated investment programs.

Generation sales revenues increased $168 million, primarily due to higher retail sales volumes and non-shopping generation auction rates. Retail generation sales have no material impact to earnings.

Operating Expenses

Total operating expenses increased by $216 million in 2024, as compared to 2023, primarily due to the following:

 

   

Purchased power costs increased by $118 million primarily due to higher unit costs and sales volumes.

 

   

Other operating expenses increased $146 million primarily due to:

 

   

A $53 million charge at JCP&L in 2024 associated with certain corporate support costs recorded to capital accounts from the FERC Audit that were determined, as a result of the base rate case settlement agreement, to be disallowed from future recovery;

 

   

Higher storm restoration expenses of $72 million, of which $59 million was deferred for future recovery;

 

   

A $9 million charge from the FirstEnergy Service Company (“FESC”) in connection with its planned exit of the Akron general office building;

 

   

Higher planned vegetation management costs of $8 million;

 

   

Higher energy efficiency and other state mandated program costs of $8 million, which are deferred for future recovery; and

 

   

Higher uncollectible expenses of $5 million, which were deferred for future recovery, resulting in no impact to earnings.

 

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This increase was partially offset by:

 

   

Lower other operating and maintenance expenses of $9 million, primarily due to lower labor and benefit expenses, including those associated with FirstEnergy’s Program for Enhanced Employee Retirement, as announced in 2023 (the “PEER” program) and separation-related costs.

 

   

Deferral of regulatory assets, net increased $61 million compared to 2023, primarily due to higher deferral of storm related expenses and net increases in other deferrals, partially offset by lower generation and transmission related deferrals.

 

   

Depreciation expense increased $13 million primarily due to a higher asset base.

Other Expenses

Total other expenses decreased $59 million in 2024, as compared to 2023, primarily due to $49 million in lower pension and OPEB mark-to-market adjustment charges.

Income Taxes

The distribution segment’s effective tax rate for 2024 and 2023, was 25.6% and 16.0%, respectively. The increase in the effective tax rate was primarily due to the absence of a net discrete tax benefit resulting from the effective settlement of an uncertain tax position in 2023.

Transmission - Results of Operations

Net income decreased $26 million in 2024, as compared to the same period of 2023, as described below.

Revenues

Transmission revenue increased $38 million, primarily due to a higher rate base from regulated investments and recovery of higher transmission operating expenses.

Operating Expenses

Total operating expenses increased by $1 million in 2024, as compared to the same period of 2023, primarily due to higher operation and maintenance costs, increased property taxes and depreciation from a higher asset base. Nearly all operating expenses are recovered through formula rates, resulting in no material impact to earnings.

Other Expenses

Total other expenses decreased $2 million in 2024, as compared to the same period of 2023, primarily due to the pension OPEB mark-to-market adjustment and higher capitalized financing costs, partially offset by the impairment of a non-recoverable transmission asset project.

Income Taxes

The transmission segment’s effective tax rate for 2024 and 2023, was 28.5% and 26.2%, respectively. The increase in the effective tax rate was primarily due to the absence of a net discrete tax benefit resulting from the effective settlement of an uncertain tax position in 2023.

 

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Summary of Results of Operations—2023 Compared with 2022

Financial results for JCP&L’s business segments for the years ended December 31, 2023 and 2022, were as follows:

 

For the twelve months ended December 31, 2023

(In millions)

   Distribution     Transmission     Reconciling
Adjustments
    JCP&L  

Revenues

   $ 1,934     $ 204     $ (111   $ 2,027  

Operating Expenses:

        

Purchased power

     1,037       —        —        1,037  

Other operating expenses

     601       65       (111     555  

Provision for depreciation

     190       41       —        231  

Deferral of regulatory assets, net

     (74     —        —        (74

General taxes

     20       1       —        21  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     1,774       107       (111     1,770  
  

 

 

   

 

 

   

 

 

   

 

 

 

Other Income (Expense):

        

Miscellaneous income, net

     42       —        —        42  

Pension and OPEB mark-to-market adjustment

     (27     (2     —        (29

Interest expense - other

     (86     (24     —        (110

Interest expense - affiliates

     (14     —        —        (14

Capitalized financing costs

     6       13       —        19  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other expense

     (79     (13     —        (92
  

 

 

   

 

 

   

 

 

   

 

 

 

Income taxes

     13       22       —        35  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net Income

   $ 68     $ 62     $ —      $ 130  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

For the twelve months ended December 31, 2022

(In millions)

   Distribution     Transmission     Reconciling
Adjustments
    JCP&L  

Revenues

   $ 1,972     $ 195     $ (112   $ 2,055  

Operating Expenses:

        

Purchased power

     972       —        —        972  

Other operating expenses

     582       132       (112     602  

Provision for depreciation

     174       35       —        209  

Amortization of regulatory assets, net

     51       —        —        51  

General taxes

     17       1       —        18  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     1,796       168       (112     1,852  
  

 

 

   

 

 

   

 

 

   

 

 

 

Other Income (Expense):

        

Miscellaneous income, net

     59       —        —        59  

Pension and OPEB mark-to-market adjustment

     (24     (3     —        (27

Interest expense - other

     (82     (24     —        (106

Interest expense - affiliates

     (1     —        —        (1

Capitalized financing costs

     7       9       —        16  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other expense

     (41     (18     —        (59
  

 

 

   

 

 

   

 

 

   

 

 

 

Income taxes

     23       2       —        25  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net Income

   $ 112     $ 7     $ —      $ 119  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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Changes Between Twelve Months Ended

December 31, 2023 and 2022 Financial Results

(In millions)

   Distribution     Transmission     Reconciling
Adjustments
     JCP&L  

Revenues

   $ (38   $ 9     $ 1      $ (28

Operating Expenses:

         

Purchased power

     65       —        —         65  

Other operating expenses

     19       (67     1        (47

Provision for depreciation

     16       6       —         22  

Amortization (deferral) of regulatory assets, net

     (125     —        —         (125

General taxes

     3       —        —         3  
  

 

 

   

 

 

   

 

 

    

 

 

 

Total operating expenses

     (22     (61     1        (82
  

 

 

   

 

 

   

 

 

    

 

 

 

Other Income (Expense):

         

Miscellaneous income, net

     (17     —        —         (17

Pension and OPEB mark-to-market adjustment

     (3     1       —         (2

Interest expense - other

     (4     —        —         (4

Interest expense - affiliates

     (13     —        —         (13

Capitalized financing costs

     (1     4       —         3  
  

 

 

   

 

 

   

 

 

    

 

 

 

Total other expense

     (38     5       —         (33
  

 

 

   

 

 

   

 

 

    

 

 

 

Income taxes

     (10     20       —         10  
  

 

 

   

 

 

   

 

 

    

 

 

 

Net Income

   $ (44   $ 55     $ —       $ 11  
  

 

 

   

 

 

   

 

 

    

 

 

 

Distribution - Results of Operations

Net income decreased $44 million in 2023, as compared to the same period of 2022, as described below.

Revenues

The $38 million decrease in total revenues resulted from the following sources:

 

     For the Years Ended December 31,         

Revenues by Type of Service

    2023        2022       Increase /
(Decrease)
 
     (In millions)  

Distribution services

   $ 983      $ 1,025      $ (42
  

 

 

    

 

 

    

 

 

 

Generation sales:

        

Retail

     925        923        2  

Wholesale

     5        8        (3
  

 

 

    

 

 

    

 

 

 

Total generation sales

     930        931        (1

Other

     21        16        5  
  

 

 

    

 

 

    

 

 

 

Total Revenues

   $ 1,934      $ 1,972      $ (38
  

 

 

    

 

 

    

 

 

 

Distribution services revenue decreased $42 million, primarily due to lower customer usage as a result of the weather.

Generation sales revenues decreased $1 million, primarily due to lower wholesale and retail sales volumes, partially offset by higher retail rates.

Operating Expenses

Total operating expenses decreased by $22 million in 2023, as compared to the same period of 2022, primarily due to the following:

 

   

Purchased power costs increased by $65 million primarily due to higher non-shopping generation auction rates.

 

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Other operating expenses increased $19 million primarily due to:

 

   

Higher energy efficiency and other state mandated program costs of $23 million, which were deferred for future recovery, resulting in no material impact to earnings;

 

   

Higher other operating and maintenance expenses of $11 million, primarily associated with labor and employee benefits, including those associated with the PEER program and separation-related costs.

partially offset by:

 

   

Lower vegetation management expenses of $3 million, including accelerated work during 2022;

 

   

Lower network transmission expenses of $1 million, which were deferred for future recovery, resulting in no material impact to earnings; and

 

   

Lower uncollectible expenses of $11 million, of which $7 million were deferred for future recovery.

 

   

Deferral of regulatory assets, net, increased $125 million compared to the same period of 2022, primarily due to higher generation and transmission related deferrals.

 

   

Depreciation expense increased $16 million primarily due to a higher asset base.

Other Expenses

Total other expense increased $38 million in 2023, as compared to the same period of 2022, primarily due to lower pension and OPEB non-service credits, change in pension and OPEB mark-to-market adjustments and higher interest expense associated with higher short-term borrowings.

Income Taxes

The distribution segment’s effective tax rate for 2023 and 2022, was 16.0% and 17.0%, respectively.

Transmission - Results of Operations

Net income increased $55 million in 2023, as compared to the same period of 2022, as described below.

Revenues

Transmission revenues increased $9 million primarily due to the absence of a reserve for customer refunds associated with the FERC Audit and higher rate base from regulated investments.

Operating Expenses

Total operating expenses decreased by $61 million in 2023, as compared to the same period of 2022, primarily due to the absence of the reclassification of certain transmission capital assets to operating expenses as a result of the FERC Audit, partially offset by higher depreciation from a higher asset base. Other than the write-off of nonrecoverable transmission assets, nearly all operating expenses are recovered through formula rates, resulting in no material impact on current period earnings.

Other Expenses

Total other expenses decreased $5 million in 2023, as compared to the same period of 2022, primarily due to higher capitalized financing costs and the change in the pension and OPEB mark-to-market adjustment.

 

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Income Taxes

The transmission segment’s effective tax rate for 2023 and 2022, was 26.2% and 22.2%, respectively. The increase in the effective tax rate was primarily due to the impact of permanent tax benefits on an increase in pre-tax income.

REGULATORY ASSETS AND LIABILITIES

The following table provides information about the composition of net regulatory assets and liabilities as of December 31, 2024, 2023, and 2022 and the changes during the years ended December 31, 2024, 2023, and 2022:

 

     As of December 31,              

Net Regulatory Assets (Liabilities) by Source

   2024     2023     2022     Change
24-23
    Change
23-22
 
     (In millions)  

Asset removal costs

   $ (83   $ (97   $ (92   $ 14     $ (5

Customer payables for future income taxes

     (410     (426     (449     16       23  

Spent nuclear fuel disposal costs

     (72     (83     (83     11       —   

Deferred transmission costs

     (3     3       (11     (6     14  

Deferred distribution costs

     206       114       33       92       81  

Deferred generation costs

     (12     (7     (41     (5     34  

Storm-related costs

     310       280       310       30       (30

Energy efficiency program costs

     208       73       21       135       52  

New Jersey societal benefit costs

     87       79       94       8       (15

Vegetation management costs

     7       7       10       —        (3

Other

     27       9       14       18       (5
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Regulatory Assets (Liabilities) included on the Balance Sheets

   $ 265     $ (48   $ (194   $ 313     $ 146  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

The following is a description of the regulatory assets and liabilities described above:

Asset removal costs - Reflects amounts to be recovered or refunded through future rates to pay for the cost of activities to remove assets, including obligations for which an ARO has been recognized, that are expected to be incurred at the time of retirement.

Customer payables for future income taxes - Reflects amounts to be recovered or refunded through future rates to pay income taxes that become payable when rate revenue is provided to recover items such as Allowance for Funds Used During Construction (“AFUDC”)-equity and depreciation of property, plant and equipment for which deferred income taxes were not recognized for ratemaking purposes, including amounts attributable to federal and state tax rate changes such as the Tax Cuts and Jobs Act adopted December 22, 2017 (the “Tax Act”). These amounts are being amortized over the period in which the related deferred tax assets reverse, which is generally over the expected life of the underlying asset.

Spent nuclear fuel disposal costs - Reflects amounts collected from customers and the investment income, losses and changes in fair value of the trusts for spent nuclear fuel disposal costs related to the former nuclear generating facilities, Oyster Creek and Three Mile Island Unit 1.

Deferred transmission costs - Reflects differences between revenues earned based on actual costs for JCP&L’s formula transmission rate and the amounts billed, including amounts at December 31, 2023 expected to be refunded to, or recoverable from, wholesale transmission customers resulting from the FERC Audit, as further described below, which amounts are recorded as a regulatory asset or liability and recovered or refunded, respectively, in subsequent periods.

 

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Deferred distribution costs - Principally represents costs related to the Advanced Metering Infrastructure (“AMI”) and electric vehicle programs in New Jersey.

Deferred generation costs - Principally represents total costs, including energy and capacity, paid to third-party suppliers for their provision of BGS supply.

Storm-related costs - Relates to the recovery of storm costs, of which $41 million, $55 million and $48 million are currently being recovered through rates as of December 31, 2024, 2023 and 2022, respectively.

Energy efficiency program costs - Primarily relates to the recovery or refund of costs associated with energy efficiency and renewable energy programs in New Jersey.

New Jersey societal benefit costs - Primarily relates to regulatory assets associated with Manufactured Gas Plants (“MGP”) remediation, universal service and lifeline funds, and the New Jersey Clean Energy Program.

Vegetation management costs - Relates to regulatory assets associated with the recovery of certain distribution vegetation management costs in New Jersey, which are being amortized through 2031.

The following table provides information about the composition of net regulatory assets that do not earn a current return as of December 31, 2024, 2023, and 2022, of which approximately $45 million, $59 million, $52 million, respectively, are currently being recovered through rates over varying periods, through 2068, depending on the nature of the deferral and the jurisdiction:

 

     As of December 31,               

Regulatory Assets by Source Not Earning a Current Return

   2024      2023      2022      Change
24-23
    Change
23-22
 
     (In millions)  

Storm-related costs

   $ 310      $ 280      $ 310      $ 30     $ (30

Deferred distribution costs

     101        66        25        35       41  

Deferred generation costs

     4        7        10        (3     (3

Vegetation management costs

     7        7        10        —        (3

Other

     17        33        32        (16     1  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Regulatory Assets Not Earning a Current Return

   $ 439      $ 393      $ 387      $ 46     $ 6  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

CAPITAL RESOURCES AND LIQUIDITY

JCP&L expects existing sources of liquidity to remain sufficient to meet its anticipated obligations. JCP&L’s business is capital intensive, requiring significant resources to fund operating expenses, construction expenditures, scheduled debt maturities and interest, and dividend payments to FE. The payment of dividends is reviewed by JCP&L senior management on an ongoing basis. Earnings, cash, capital structures, restrictions, expected ongoing cash and earnings, and other factors are reviewed by JCP&L senior management prior to a dividend recommendation being made for consideration and authorization by the JCP&L Board of Directors (the “JCP&L Board”).

In addition to internal sources to fund liquidity and capital requirements for 2025 and beyond, JCP&L expects to rely on external sources of funds. Short-term cash requirements not met by cash provided from operations are generally satisfied through short-term borrowings. Long-term cash needs may be met through the issuance of long-term debt or equity contributions from FE. JCP&L expects that borrowing capacity under its facility will continue to be available to manage working capital requirements along with continued access to long-term capital markets.

 

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Table of Contents

Capital investments by business segment are included below:

 

(In millions)

   2025
Forecast
     2026
Forecast
     2027
Forecast
     2028
Forecast
     2029
Forecast
 

Distribution

   $ 640      $ 665      $ 720      $ 765      $ 775  

Transmission

   $ 430      $ 495      $ 435      $ 605      $ 665  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 1,070      $ 1,160      $ 1,155      $ 1,370      $ 1,440  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Economic conditions have stabilized across numerous material categories, but not all lead times have returned to pre-pandemic levels. Several key suppliers have seen improvements with capacity, but JCP&L continues to monitor the situation as demand increases across the industry, including due to data center usage. Inflationary pressures have moderated, which has improved the cost of materials, but certain categories have remained elevated. JCP&L continues to implement mitigation strategies to address supply constraints and does not expect any corresponding service disruptions or any material impact on its capital investment plan. However, the situation remains fluid and a prolonged continuation or further increase in demand, or the continuation of uncertain or adverse macroeconomic conditions, including inflationary pressures and new or increased existing tariffs, could lead to an increase in supply chain disruptions that could, in turn, have an adverse effect on JCP&L’s results of operations, cash flow and financial condition.

In February 2025, the new U.S. presidential administration announced the imposition of widespread and substantial tariffs on imports, with plans for additional tariffs to potentially be adopted in the future. Although certain of these tariffs were subsequently temporarily stayed, the situation is dynamic and subject to rapid change. The imposition of these or any other new or increased tariffs or resultant trade wars could have an adverse effect on JCP&L’s results of operations, cash flow and financial condition.

Any financing plans by JCP&L, including the issuance of equity and debt, and the refinancing of short-term and maturing long-term debt are subject to market conditions and other factors. No assurance can be given that any such issuances, financing or refinancing, as the case may be, will be completed as anticipated or at all. Any delay in the completion of financing plans could require JCP&L to utilize short-term borrowing capacity, which could impact available liquidity. In addition, JCP&L expects to continually evaluate any planned financings, which may result in changes from time to time.

As of December 31, 2024, JCP&L’s net surplus in working capital (current assets less current liabilities) was primarily due to accounts receivable for customers and affiliated companies and prepayments, partially offset by short-term borrowings, accounts payables, and other accrued expenses. JCP&L believes its cash from operations and available liquidity will be sufficient to meet its current working capital needs.

Short-Term Borrowings

JCP&L had $22 million and $462 million of outstanding affiliated and non-affiliated short-term borrowings as of December 31, 2024 and December 31, 2023, respectively.

Revolving Credit Facility

On October 24, 2024, JCP&L entered into amendments to its $750 million credit facility to, among other things, extend the maturity date of its credit facility for an additional one-year period, from October 18, 2027 to October 18, 2028.

Borrowings under the JCP&L credit facility may be used for working capital and other general corporate purposes. Generally, borrowings under the credit facility mature on the earlier of 364 days from the date of borrowing or the commitment termination date, as the same may be extended. The JCP&L credit facility contains financial covenants requiring JCP&L to maintain a consolidated debt-to-total-capitalization ratio (as defined under the credit facility) of no more than 65%, measured at the end of each fiscal quarter.

 

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Table of Contents

As of December 31, 2024, JCP&L had a debt-to-total-capitalization ratio of 32.4% which was in compliance with the applicable covenants under its credit facility.

The following table summarizes the limitations on short-term indebtedness applicable to JCP&L under current regulatory approvals and applicable statutory and/or charter limitations as of December 31, 2024:

 

Individual Borrower

   Regulatory Debt
Limitations
    Credit Facility
Limitations
    Debt-to-Total-
Capitalization Ratio
 
     (In millions)        

JCP&L(1)

   $ 1,000 (2)    $ 750 (3)      32.4

 

(1) 

Includes amounts which may be borrowed under the regulated companies’ money pool.

(2)

On March 21, 2025, JCP&L’s FERC regulatory short-term debt limitation was increased to $1.5 billion.

(3)

7.22 million of which was available to JCP&L as of December 31, 2024.

The JCP&L credit facility bears interest at fluctuating interest rates, primarily based on the secured overnight financing rate (“SOFR”), including term SOFR and daily simple SOFR. FirstEnergy has not hedged its interest rate exposure with respect to its floating rate debt. Accordingly, JCP&L’s interest expense for any particular period will fluctuate based on SOFR and other variable interest rates. Restricted access to capital markets and/or increased borrowing costs could have an adverse effect on JCP&L’s results of operations, cash flows, financial condition and liquidity.

Certain amounts are available for the issuance of LOCs (subject to borrowings drawn under the JCP&L credit facility) expiring up to one year from the date of issuance. The stated amount of outstanding LOCs will count against total commitments available under the credit facility.

 

Revolving Credit Facility

   LOC Availability as of
December 31, 2024
     LOC Utilized as of
December 31, 2024
 
     (In millions)  

JCP&L

   $ 100      $ 28  

The JCP&L credit facility does not contain provisions that restrict the ability to borrow or accelerate payment of outstanding advances in the event of any change in credit ratings. Pricing is defined in “pricing grids,” whereby the cost of funds borrowed under the JCP&L credit facility are related to the credit ratings of the company borrowing the funds. Additionally, borrowings under the credit facility are subject to the usual and customary provisions for acceleration upon the occurrence of events of default, including a cross-default for other indebtedness in excess of $100 million.

As of December 31, 2024, JCP&L was in compliance with the applicable debt-to-total-capitalization ratio covenants in each case as defined under its credit facility.

FirstEnergy Money Pools

As a regulated money pool participant, JCP&L has the ability to borrow from regulated affiliates and FE to meet its short-term working capital requirements. FESC administers these money pools and tracks surplus funds of FE and the respective regulated and unregulated subsidiaries, as the case may be, as well as proceeds available from bank borrowings. Companies receiving a loan under the money pool agreements must repay the principal amount of the loan, together with accrued interest, within 364 days of borrowing the funds. The rate of interest is the same for each company receiving a loan from their respective pool and is based on the average cost of funds available through the pool.

 

Average Interest Rates

   Regulated Companies’ Money
Pool
 
      2024       2023       2022   

For the Years Ended December 31,

     5.74     6.30     2.27

 

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Long-Term Debt Capacity

JCP&L’s access to capital markets and costs of financing are influenced by the credit ratings of their securities. The following table displays JCP&L’s credit ratings as of February 26, 2025:

 

Corporate Credit Rating

 

Senior Secured

 

Senior Unsecured

 

Outlook/Credit Watch(1)

S&P

 

Moody’s

 

Fitch

 

S&P

 

Moody’s

 

Fitch

 

S&P

 

Moody’s

 

Fitch

 

S&P

 

Moody’s

 

Fitch

BBB

  A3   A-   —    —    —    BBB   A3   A   P   S   S

 

(1) 

S = Stable, P = Positive

The applicable undrawn and drawn margin on the JCP&L credit facility is subject to ratings-based pricing grids. The applicable fee paid on the undrawn commitments under the JCP&L credit facility is based on each borrower’s senior unsecured non-credit enhanced debt ratings as determined by S&P and Moody’s. The fees paid on actual borrowings are determined based on each borrower’s senior unsecured non-credit enhanced debt ratings as determined by S&P and Moody’s.

Changes in Cash Position

As of December 31, 2024 and December 31, 2023, JCP&L had no cash and cash equivalents or restricted cash on the Balance Sheets.

The following table summarizes the major classes of cash flow items for the years ended December 31, 2024, 2023 and 2022:

 

     For the Years Ended December 31,  

(In millions)

     2024          2023          2022    

Net cash provided from operating activities

   $ 607      $ 264      $ 439  

Net cash used for investing activities

     (947      (690      (526

Net cash provided from (used for) financing activities

     340        426        (83
  

 

 

    

 

 

    

 

 

 

Net change in cash, cash equivalents, and restricted cash

     —         —         (170

Cash, cash equivalents, and restricted cash at beginning of period

     —         —         170  
  

 

 

    

 

 

    

 

 

 

Cash, cash equivalents, and restricted cash at end of period

   $ —       $ —       $ —   
  

 

 

    

 

 

    

 

 

 

Cash Flows From Operating Activities

Net cash provided from operating activities during the years ended December 31, 2024, 2023 and 2022 were $607 million, $264 million and $439 million, respectively.

The increase in cash provided from operating activities in 2024 compared to 2023 is primarily due to:

 

   

Higher distribution revenues from the implementation of the new base rate case in 2024;

 

   

Higher return on rate base from regulated transmission investments;

 

   

Increased customer usage and demand;

 

   

The return of cash collateral in 2024 that was previously posted with PJM, which was replaced with issuances of letters of credit;

 

 

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The absence of cash collateral returned to certain generation suppliers that serve shopping customers during 2023 that was previously received as a result of changes in power prices; and

 

   

An increase in cash receipts from the utilization of federal net operating loss (“NOL”) carryforwards by other affiliates under the intercompany income tax sharing agreement, as well as the deferral of income taxes related to activity of book regulatory assets and liabilities.

The increase in cash from provided from operating activities was partially offset by higher non-deferred storm restoration expenses.

The decrease in cash provided from operating activities in 2023 compared to 2022 is primarily due to:

 

   

Lower distribution sales and customer usage as a result of the weather;

 

   

The return of cash collateral to certain generation suppliers in 2023 that was previously received in 2022 as a result of changes in power prices; and

 

   

Lower net transmission revenue collection based on the timing of formula rate collections.

Cash Flows From Investing Activities

Net cash used for investing activities in 2024 principally represented cash used for capital investments. The following table summarizes investing activities for the years ended December 31, 2024, 2023 and 2022:

 

     For the Years Ended December 31,  

Cash From Investing Activities

     2024          2023          2022    
     (in millions)  

Capital investments

   $ (877      (633    $ (483

Sales of investment securities held in trusts

     121        38        48  

Purchases of investment securities held in trusts

     (134      (50      (59

Asset removal costs

     (57      (45      (32
  

 

 

    

 

 

    

 

 

 

Net cash used for investing activities

   $ (947    $ (690    $ (526
  

 

 

    

 

 

    

 

 

 

Cash used for investing activities during 2024 increased $257 million, as compared to 2023, primarily due to higher capital investments.

Cash used for investing activities during 2023 increased $164 million, as compared to 2022, primarily due to higher capital investments.

Cash Flows From Financing Activities

For the years ended December 31, 2024, 2023 and 2022, cash provided from (used for) financing activities was $340 million, $426 million and $(83) million, respectively. The following table summarizes the financing activities for the years ended December 31, 2024, 2023, and 2022, respectively:

 

     For the Years Ended December 31,  

Cash From Financing Activities

    2024        2023        2022   
     (in millions)  

New financing-

        

Long-term debt

   $ 700      $ —       $ —   

Short-term borrowings-

        

Affiliated companies, net

     —         197        —   

Other, net

     —         200        —   

 

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     For the Years Ended December 31,  

Cash From Financing Activities

    2024        2023        2022   
     (in millions)  

Redemptions and repayments-

        

Long-term debt

     (500      —         —   

Short-term borrowings-

        

Affiliated companies, net

     (240      —         (7

Other, net

     (200      —         —   

Equity contribution from parent

     740        30        —   

Common stock dividend payments

     (150      —         (75

Other

     (10      (1      (1
  

 

 

    

 

 

    

 

 

 

Net cash provided from (used for) financing activities

   $ 340      $ 426      $ (83
  

 

 

    

 

 

    

 

 

 

JCP&L had the following redemption and issuance during the twelve months ended December 31, 2024.

 

Company

   Type    Issuance
Date
   Interest
Rate
    Maturity      Amount
(in Millions)
    

Description

                     Redemptions       

JCP&L

   Unsecured
Notes
   April,
2024
     4.70     2024      $ 500      JCP&L redeemed unsecured notes that became due.
                     Issuances       

JCP&L

   Unsecured
Notes with
registration
rights
   December,
2024
     5.10     2035      $ 700      Proceeds were used to repay short-term borrowings, to finance capital expenditures and for other general corporate purposes.

As noted above, on December 5, 2024, JCP&L issued $700 million of unsecured senior notes due in 2035 in a private offering that included a registration rights agreement in which JCP&L agreed to conduct an exchange offer of these senior notes for like principal amounts registered under the Securities Act. JCP&L also agreed to file a shelf registration statement with the SEC to cover resales of the senior notes under certain circumstances. In the event that JCP&L’s exchange offer is not completed or the shelf registration statement, if required, is not effective by the 366th day after December 5, 2024, or the effective shelf registration stops being effective for 60 days during any 12-month period, then additional interest will accrue on the coupon. Interest will accrue at a rate of 25 basis points for the first 90 days and an additional 25 basis points in the subsequent 90-day period, but not to exceed 50 basis points per year. However, if the additional interest is triggered, the interest rate will reset to the original notes rate once the registration statement is effective, or the shelf registration, if required, becomes effective. JCP&L plans to file a registration statement for the exchange offer before the end of the first quarter of 2025.

JCP&L may from time to time, seek to retire or purchase outstanding debt through open-market purchases, privately negotiated transactions or otherwise. Such repurchases, if any, will be upon such terms and at such prices as JCP&L or its affiliates may determine, and will depend on prevailing market conditions, liquidity requirements, contractual restrictions and other factors.

Cash Requirements and Commitments

JCP&L has certain obligations and commitments to make future payments under contracts.

 

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As of December 31, 2024 (Undiscounted)

   Total      2025      2026-2027      2028-2029      Thereafter  
     (In millions)  

Long-term debt(1)

   $ 2,350      $ —       $ 650      $ —       $ 1,700  

Short-term borrowings

     22        22        —         —         —   

Interest on long-term debt

     861        109        163        161        428  

Operating leases(2)

     64        12        23        16        13  

Finance leases(2)

     7        2        5        —         —   

Committed investments

     2,075        658        920        497        —   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 5,379      $ 803      $ 1,761      $ 674      $ 2,141  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) 

Excludes unamortized discounts and premiums.

(2) 

See Note 5, “Leases,” of the Notes to the Audited Financial Statements.

The table above excludes regulatory liabilities (see “—Regulatory Assets and Liabilities” above), AROs, reserves for litigation, injuries and damages, environmental remediation, and annual insurance premiums, since the amount and timing of the cash payments are uncertain. The table also excludes accumulated deferred income taxes and investment tax credits since cash payments for income taxes are determined based primarily on taxable income for each applicable fiscal year.

GUARANTEES AND OTHER ASSURANCES

JCP&L has various financial and performance guarantees and indemnifications which are issued in the normal course of business. These contracts include performance guarantees, stand-by LOCs, debt guarantees, surety bonds and indemnifications. JCP&L enters into these arrangements to facilitate commercial transactions with third parties by enhancing the value of the transaction to the third party. The maximum potential amount of future payments JCP&L could be required to make under these guarantees as of December 31, 2024 and 2023, was $47 million and $20 million, respectively.

Collateral and Contingent-Related Features

In the normal course of business, JCP&L may enter into physical or financially settled contracts for the sale and purchase of electric capacity, energy, fuel and emission allowances. Certain agreements contain provisions that require JCP&L to post collateral. This collateral may be posted in the form of cash or credit support with thresholds contingent upon JCP&L’s credit rating from each of the major credit rating agencies. The collateral and credit support requirements vary by contract and by counterparty.

JCP&L has posted $28 million of collateral in the form of LOCs as of December 31, 2024 and $29 million of collateral, mainly in the form of cash, as of December 31, 2023. JCP&L is holding $2 million and $3 million of net cash collateral as of December 31, 2024 and December 31, 2023, respectively, from certain generation suppliers, and such amount is included in “Other current liabilities” on JCP&L’s Balance Sheets.

These credit-risk-related contingent features stipulate that if JCP&L were to be downgraded or lose its investment grade credit rating (based on its senior unsecured debt rating), it would be required to provide additional collateral. The following table discloses the potential additional credit rating contingent contractual collateral obligations as of December 31, 2024 and 2023:

 

Potential Collateral Obligations

   As of
December 31, 2024
     As of
December 31, 2023
 
     (In millions)  

Contractual obligations for additional collateral

     

Upon downgrade

   $ 46      $ 35  

 

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Potential Collateral Obligations

   As of
December 31, 2024
     As of
December 31, 2023
 
     (In millions)  

Surety bonds (collateralized amount)(1)

     19        18  
  

 

 

    

 

 

 

Total Exposure from Contractual Obligations

   $ 65      $ 53  
  

 

 

    

 

 

 

 

(1) 

Surety bonds are not tied to a credit rating, and their impact assumes maximum contractual obligations, which is ordinarily 100% of the face amount of the surety bond except with respect to $1 million as of December 31, 2024 and December 31, 2023 of surety bond obligations for which the collateral obligation is capped at 60% of the face amount, and typical obligations require 30 days to cure.

CREDIT RISK

Credit risk is the risk that JCP&L would incur a loss as a result of nonperformance by counterparties of their contractual obligations. JCP&L maintains credit policies and procedures with respect to counterparty credit (including requirements that counterparties maintain specified credit ratings) and require other assurances in the form of credit support or collateral in certain circumstance in order to limit counterparty credit risk. JCP&L has concentrations of suppliers and customers. These concentrations may impact JCP&L’s overall exposure to credit risk, positively or negatively, as counterparties may be similarly affected by changes in economic, regulatory or other conditions. In the event an energy supplier of JCP&L defaults on its obligation, JCP&L would be required to seek replacement power in the market. In general, subject to regulatory review or other processes, it is expected that appropriate incremental costs incurred by these entities would be recoverable from customers through applicable rate mechanisms, thereby mitigating the financial risk for these entities. JCP&L’s credit policies to manage credit risk include the use of an established credit approval process, daily credit mitigation provisions, such as margin, prepayment or collateral requirements. JCP&L may request additional credit assurance, in certain circumstances, in the event that the counterparties’ credit ratings fall below investment grade, their tangible net worth falls below specified percentages or their exposures exceed an established credit limit.

EQUITY PRICE RISK

FirstEnergy provides qualified benefit plans (the FirstEnergy Master Pension Plan and the FirstEnergy Welfare Plan) that cover substantially all employees and non-qualified defined benefit plans that cover certain employees, including employees of JCP&L. FirstEnergy’s pension and other postretirement benefit (OPEB) plans are neither multiemployer nor multiple-employer plans. JCP&L recognizes its allocated portion of the expected cost of providing pension and OPEB to employees and their beneficiaries and covered dependents from the time employees are hired until they become eligible to receive those benefits. JCP&L also recognizes its allocated portion of obligations to former or inactive employees after employment, but before retirement, for disability-related benefits.

As of December 31, 2024, the FirstEnergy pension plan assets were allocated approximately as follows: 25% in equity securities, 23% in fixed income securities, 4% in hedge funds, 1% in insurance-linked securities, 9% in real estate, 20% in private equity and debt funds, (1)% in derivatives and 19% in cash and short-term securities. FirstEnergy does not currently expect to have a required contribution to the pension plan until 2027, which based on various assumptions, including an expected rate of return on assets of 8.5% for 2025 is expected to be approximately $300 million, none of which is expected to be contributed by JCP&L. However, FirstEnergy and JCP&L may elect to contribute to the pension plan voluntarily.

As of December 31, 2024, FirstEnergy’s OPEB plan assets were allocated approximately as follows: 55% in equity securities, 25% in fixed income securities and 20% in cash and short-term securities. See Note 3, “Pension and Other Post-Employment Benefits,” of the Notes to Financial Statements for additional details on the pension and OPEB plans.

 

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During 2024, FirstEnergy’s pension plan assets have lost approximately 0.4% as compared to an annual expected return on plan assets of 8.0%, and FirstEnergy’s OPEB plan assets have gained approximately 13.4% as compared to an annual expected return on plan assets of 7.0%.

INTEREST RATE RISK

JCP&L’s exposure to fluctuations in market interest rates is reduced since all long-term debt has fixed interest rates, as noted in the table below. JCP&L is subject to the inherent interest rate risks related to refinancing maturing debt by issuing new debt securities.

 

Comparison of Carrying Value to Fair Value as of December 31, 2024  

Year of Maturity or Notice of Redemption

   2025     2026     2027     2028     2029     There-after     Total     Fair Value  
     (In millions)  

Assets:

                

Investments Other Than Cash and Cash Equivalents:

                

Fixed Income

   $ 24     $ 20     $ 15     $ 2     $ 6     $ 203     $ 270     $ 270  

Average interest rate

     4.9     4.5     4.8     5.1     4.9     4.9     4.5  

Liabilities:

                

Long-term Debt:

                

Fixed rate

   $ —      $ 650     $ —      $ —      $ —      $ 1,700     $ 2,350     $ 2,284  

Average interest rate

     —      4.3     —      —      —      4.8     4.6  

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

JCP&L prepares financial statements in accordance with Generally Accepted Accounting Principles (“GAAP”). Application of these principles often requires a high degree of judgment, estimates and assumptions that affect financial results. JCP&L’s accounting policies require significant judgment regarding estimates and assumptions underlying the amounts included in the financial statements. Additional information regarding the application of accounting policies is included in the Notes to Financial Statements.

Loss Contingencies

JCP&L regularly assesses its liabilities and contingencies in connection with asserted or potential matters and establishes reserves when appropriate. In the preparation of the financial statements, JCP&L makes judgments regarding the future outcome of contingent events based on currently available information and accrues liabilities when it concludes that it is probable that it has an obligation for such costs and can reasonably estimate the amount of such costs. In cases where JCP&L determines that it is not probable, but reasonably possible that it has a material obligation, it discloses such obligations and the possible loss or range of loss if such estimate can be made. Circumstances change over time and actual results may vary significantly from estimates. Please see Note 10, “Regulatory Matters,” and Note 11, “Commitments, Guarantees and Contingencies,” of the Notes to the Audited Annual Financial Statements.

Revenue Recognition

The accounting treatment for revenue recognition is based on the nature of the underlying transaction and applicable authoritative guidance. JCP&L accounts for revenues from contracts with customers under Accounting Standards Codification (“ASC”) 606, “Revenue from Contracts with Customers.” Revenue from financial instruments, derivatives, late payment charges and other contractual rights or obligations and other revenues that are not from contracts with customers are outside the scope of the standard and accounted for under other existing GAAP guidance.

 

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Contracts with Customers

JCP&L follows the accrual method of accounting for revenues, recognizing revenue for electricity that has been delivered to customers but not yet billed through the end of the accounting period. The determination of electricity sales to individual customers is based on meter readings, which occur on a systematic basis throughout the month. At the end of each month, electricity delivered to customers since the last meter reading is estimated and a corresponding accrual for unbilled sales is recognized. The determination of unbilled sales and revenues requires management to make estimates regarding electricity available for retail load, transmission and distribution line losses, demand by customer class, applicable billing demands, weather-related impacts, number of days unbilled and tariff rates in effect within each customer class.

Transmission revenues are primarily derived from forward-looking formula rates. Forward-looking formula rates recover costs that the regulatory agencies determine are permitted to be recovered and provide a return on transmission capital investment. Under forward-looking formula rates, the revenue requirement is updated annually based on a projected rate base and projected costs, which is subject to an annual true-up based on actual rate base and costs. Revenues and cash receipts for the stand-ready obligation of providing transmission service are recognized ratably over time.

JCP&L has elected the optional invoice practical expedient for most of its revenues and utilizes the optional short-term contract exemption for transmission revenues due to the annual establishment of revenue requirements, which eliminates the need to provide certain revenue disclosures regarding unsatisfied performance obligations. See Note 2, “Revenue,” of the Notes to the Audited Annual Financial Statements for additional information.

Regulatory Accounting

JCP&L is subject to regulation that sets the prices (rates) it is permitted to charge customers based on costs that the regulatory agencies determine are permitted to be recovered. At times, regulatory agencies permit the future recovery of costs that would be currently charged to expense by an unregulated company. The ratemaking process results in the recording of regulatory assets and liabilities based on anticipated future cash inflows and outflows.

JCP&L reviews the probability of recovery of regulatory assets, and settlement of regulatory liabilities, at each balance sheet date and whenever new events occur. Factors that may affect probability include changes in the regulatory environment, issuance of a regulatory commission order, or passage of new legislation. Upon material changes to these factors, where applicable, JCP&L will record new regulatory assets or liabilities and will assess whether it is probable that currently recorded regulatory assets and liabilities will be recovered or settled in future rates. If recovery of a regulatory asset is no longer probable, JCP&L will write off that regulatory asset as a charge against earnings. JCP&L considers the entire regulatory asset balance as the unit of account for the purposes of balance sheet classification rather than the next year’s recovery and as such net regulatory assets and liabilities are presented in the non-current section on the JCP&L Balance Sheets. See Note 10, “Regulatory Matters,” of the Notes to Audited Financial Statements for additional information.

Pension and OPEB Accounting

FirstEnergy provides qualified benefit plans (the FirstEnergy Master Pension Plan and the FirstEnergy Welfare Plan) that cover substantially all employees and non-qualified defined benefit plans that cover certain employees, including employees of JCP&L.

The retirement plans provide defined benefits based on years of service and compensation levels. Under the cash balance formula of the FirstEnergy Master Pension Plan (for employees hired on or after January 1, 2014), FirstEnergy makes contributions on behalf of eligible employees based on a pay credit and an interest credit. In

 

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addition, FirstEnergy provides a minimum amount of noncontributory life insurance to retired employees. Health care benefits, which include certain employee contributions, deductibles and co-payments, are also available upon retirement to certain employees, their dependents and, under certain circumstances, their survivors.

FirstEnergy’s pension and other postretirement benefit (OPEB) plans are neither multiemployer nor multiple-employer plans. JCP&L recognizes its allocated portion of the expected cost of providing pension and OPEB to employees and their beneficiaries and covered dependents from the time employees are hired until they become eligible to receive those benefits. JCP&L also recognizes its allocated portion of obligations to former or inactive employees after employment, but before retirement, for disability-related benefits.

FirstEnergy pension and OPEB obligations are based on various assumptions in calculating these amounts. These assumptions include discount rates, health care cost trend rates, expected return on plan assets, compensation increases, retirement rates, mortality rates, among others. Actual results that differ from the assumptions and changes in assumptions are recognized as a pension and OPEB mark-to-market adjustment in the fourth quarter of each fiscal year and whenever a plan is determined to qualify for remeasurement and affect obligations.

Discount Rate - The discount rate is determined using currently available rates of return on high-quality fixed income investments expected to be available during the period to maturity of the pension and OPEB obligations. FirstEnergy utilizes a spot rate approach in the estimation of the components of benefit cost by applying specific spot rates along the full yield curve to the relevant projected cash flows. FirstEnergy utilizes an analytical tool developed by its actuary to determine the discount rates.

Expected Return on Plan Assets - The expected return on pension and OPEB assets is based on input from investment consultants, including the trusts’ asset allocation targets, the historical performance of risk-based and fixed income securities and other factors. The gains or losses generated as a result of the difference between expected and actual returns on plan assets is recognized as a pension and OPEB mark-to-market adjustment in the fourth quarter of each fiscal year and whenever a plan is determined to qualify for remeasurement. The expected return on pension and OPEB assets for 2025 is 8.5% and 7.0%, respectively.

Mortality Rates - The mortality assumption is composed of a base table that represents the current expectation of life expectancy of the population adjusted by an improvement scale that attempts to anticipate future improvements in life expectancy. The Pri-2012 mortality table with projection scale MP-2021, actuarially adjusted to reflect increased mortality due to the ongoing impact of COVID-19 was utilized to determine the 2025 benefit cost and obligation as of December 31, 2024, for FirstEnergy’s pension and OPEB plans. The MP-2021 scale was published in 2021 by the Society of Actuaries.

Health Care Trend Rates - Included in determining trend rate assumptions are the specific provisions of FirstEnergy’s health care plans, the demographics and utilization rates of plan participants, actual cost increases experienced in FirstEnergy’s health care plans, and projections of future medical trend rates.

Net Periodic Benefit Costs (Credits) - In addition to service costs, interest on obligations, expected return on plan assets, and prior service costs, FirstEnergy and JCP&L recognize in net periodic benefit costs a pension and OPEB mark-to-market adjustment for the change in the fair value of plan assets and net actuarial gains and losses annually in the fourth quarter of each fiscal year and whenever a plan is determined to qualify for a remeasurement.

 

Assumption

   Pension     OPEB  

Effective rate for interest on benefit obligations

     5.41     5.28

Effective rate for service costs

     5.89     5.98

Effective rate for interest on service costs

     5.66     5.88

Expected return on plan assets

     8.50     7.00

Rate of compensation increase

     4.30     N/A  

 

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See Note 3, “Pension and Other Postemployment Benefits,” of the Notes to the Audited Financial Statements for additional information related to JCP&L’s pension and OPEB obligations.

Income Taxes

Judgment and the use of estimates are required in developing the provision for income taxes, reserve amounts for uncertain tax positions, and reporting of tax-related assets and liabilities such as the interpretation of tax laws and associated regulations. JCP&L is required to make judgments regarding the potential tax effects of various transactions and results of operations in order to estimate its obligations to taxing authorities.

Accounting for tax obligations requires judgments, including assessing whether tax benefits are more likely than not to be sustained, and estimating reserves for potential adverse outcomes regarding tax positions that have been taken. JCP&L records income taxes in accordance with the liability method of accounting. Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts recognized for tax purposes. Investment tax credits, which were deferred when utilized, are being amortized over the recovery period of the related property. Deferred income tax liabilities related to temporary tax and accounting basis differences and tax credit carryforward items are recognized at the statutory income tax rates in effect when the liabilities are expected to be paid. Deferred tax assets are recognized based on income tax rates expected to be in effect when they are settled.

JCP&L accounts for uncertainty in income taxes in its financial statements using a benefit recognition model with a two-step approach, a more-likely-than-not recognition criterion and a measurement attribute that measures the position as the largest amount of tax benefit that is greater than 50% likely of being ultimately realized upon settlement. If it is not more likely than not that the benefit will be sustained on its technical merits, no benefit will be recorded. Uncertain tax positions that relate only to timing of when an item is included on a tax return are considered to have met the recognition threshold. JCP&L recognizes interest expense or income related to uncertain tax positions by applying the applicable statutory interest rate to the difference between the tax position recognized and the amount previously taken, or expected to be taken, on the tax return.

Actual income taxes could vary from estimated amounts due to the future impacts of various items, including future changes in income tax laws, or new regulations or guidance, forecasted results of operations, failure to successfully implement tax planning strategies, as well as results of audits and examinations of filed tax returns by taxing authorities.

See Note 4, “Taxes,” of the Notes to the Audited Financial Statements for additional information on income taxes.

NEW ACCOUNTING PRONOUNCEMENTS

See Note 1, “Organization and Basis of Presentation,” of the Notes to the Audited Annual Financial Statements included in this prospectus discussion of new accounting pronouncements.

OUTLOOK

INCOME TAXES

The IRA of 2022, among other things, imposes a new 15% corporate AMT based on AFSI applicable to corporations with a three-year average AFSI over $1 billion. The AMT is effective for the 2023 tax year and, if applicable, corporations must pay the greater of the regular corporate income tax or the AMT. The IRA of 2022 requires the U.S. Treasury to provide regulations and other guidance necessary to administer the AMT, including further defining allowable adjustments to determine AFSI, which directly impacts the amount of AMT to be paid. On September 12, 2024, the U.S. Treasury issued proposed regulations for the AMT for comments. FirstEnergy

 

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and JCP&L are assessing the proposed regulations but continue to believe that it is more likely than not they will be subject to AMT, however, the completion of the U.S. Treasury’s rulemaking process and the future issuance of final regulations, as well as potential future federal tax legislation or presidential executive orders, could significantly change FirstEnergy’s and/or JCP&L’s AMT estimates or their conclusion as to whether they are AMT payers at all. Additionally, the regulatory treatment of the IRA of 2022 may also be subject to regulation by FERC and/or applicable state regulatory authorities. Any adverse development in the IRA of 2022, including guidance from the U.S. Treasury and/or the IRS or unfavorable regulatory treatment, could negatively impact JCP&L’s cash flows, results of operations, and financial condition.

STATE REGULATION

JCP&L’s retail rates, conditions of service, issuance of securities and other matters are subject to regulation in New Jersey by the NJBPU. JCP&L’s current state base rate order has been effective since June 2024 and includes a capital structure of 48.1%/51.9% debt/equity and an allowed return on equity (“ROE”) of 9.6%.

NEW JERSEY

JCP&L operates under NJBPU approved rates that took effect as of February 15, 2024, and became effective for customers as of June 1, 2024. JCP&L provides BGS for retail customers who do not choose a third-party Electric Generation Supplier (“EGS”) and for customers of third-party EGSs that fail to provide the contracted service. All New Jersey EDCs participate in this competitive BGS procurement process and recover BGS costs directly from customers as a charge separate from base rates.

The base rate increase approved by the NJBPU on February 14, 2024, took effect on February 15, 2024, and became effective for customers on June 1, 2024. Until those new rates became effective for customers, JCP&L was amortizing an existing regulatory liability totaling approximately $18 million to offset the base rate increase that otherwise would have occurred in this period. Under the base rate case settlement agreement, JCP&L also agreed to a two-phase reliability improvement plan to enhance the reliability related to 18 high-priority circuits, the first phase of which began on February 14, 2024, and represents an approximate investment of $95 million. Additionally, JCP&L recognized a $53 million pre-tax charge in the first quarter of 2024 at the Distribution segment within “Other operating expenses” on the JCP&L Statements of Income, associated with certain corporate support costs recorded to capital accounts from the FERC Audit that were determined, as a result of the settlement agreement, to be disallowed from future recovery.

JCP&L has implemented energy efficiency and peak demand reduction programs in accordance with the New Jersey Clean Energy Act as approved by the NJBPU in April 2021. The NJBPU approved plans include recovery of lost revenues resulting from the programs and a three-year plan (July 2021-June 2024) including total program costs of $203 million, of which $160 million of investment is recovered over a ten-year amortization period with a return as well as $43 million in operations and maintenance expenses and financing costs recovered on an annual basis. On May 22, 2024, the NJBPU approved JCP&L’s request for a six-month extension of the Energy Efficiency and Conservation (“EE&C”) Plan I, to December 31, 2024. The budget for the extension period adds approximately $69 million to the original program cost and JCP&L will recover the costs of the extension period and the revenue impact of sales losses resulting therefrom through two separate tariff riders. On December 1, 2023, JCP&L filed a related petition with the NJBPU requesting approval of its EE&C Plan II, which covers the January 1, 2025 through June 30, 2027 period and had a proposed budget of approximately $964 million. EE&C Plan II, as filed, consisted of a portfolio of ten energy efficiency programs, one peak demand reduction program and one building decarbonization program. Under the proposal, JCP&L would recover its EE&C Plan II revenue requirements and lost revenues from reduced electricity sales associated with EE&C Plan II. On October 30, 2024, the NJBPU approved the parties’ stipulation of settlement, wherein the parties agreed to a budget of approximately $817 million for EE&C Plan II, including $784 million of investments that will earn a return on equity of 9.6%, with an equity ratio of 52%, and be recovered over 10 years.

 

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The settlement of the distribution rate case in 2020, provided among other things, that JCP&L would be subject to a management audit, which began in May 2021. On April 12, 2023, the NJBPU accepted the final management audit report for filing purposes and ordered that interested stakeholders file comments on the report by May 22, 2023, which deadline was extended until July 31, 2023. JCP&L and one other party filed comments on July 31, 2023.

On September 17, 2021, in connection with Mid-Atlantic Offshore Development, LLC, a transmission company jointly owned by Shell New Energies US and EDF Renewables North America, JCP&L submitted a proposal to the NJBPU and PJM to build transmission infrastructure connecting offshore wind-generated electricity to the New Jersey power grid. On October 26, 2022, the JCP&L proposal was accepted, in part, in an order issued by NJBPU. The proposal, as accepted, included approximately $723 million in investments for JCP&L to both build new and upgrade existing transmission infrastructure. JCP&L’s proposal projects an investment ROE of 10.2% and includes the option for JCP&L to acquire up to a 20% equity stake in Mid-Atlantic Offshore Development, LLC. The resulting rates associated with the project are expected to be shared among the ratepayers of all New Jersey electric utilities. On April 17, 2023, JCP&L applied for the FERC “abandonment” transmission rates incentive, which would provide for recovery of 100% of the cancelled prudent project costs that are incurred after the incentive is approved, and 50% of the costs incurred prior to that date, in the event that some or all of the project is cancelled for reasons beyond JCP&L’s control. On August 21, 2023, FERC approved JCP&L’s application, effective August 22, 2023. On October 31, 2023, offshore wind developer, Orsted, announced plans to cease development of two offshore wind projects in New Jersey—Ocean Wind 1 and 2—having a combined planned capacity of 2,248 megawatts (“MWs”). On January 30, 2025 and February 25, 2025, Shell New Energies US and EDF Renewables North America respectively announced that each was exiting its Atlantic Shores partnership to construct wind energy off the shore of New Jersey. These cancellations do not directly affect JCP&L’s awarded projects, and JCP&L remains under an obligation to begin construction in 2025 based on current NJBPU direction. JCP&L continues to monitor the situation and is engaging state officials about impacts of these announcements to its transmission projects.

Consistent with the commitments made in its proposal to the NJBPU, JCP&L formally submitted in November 2023 the first part of its application to the U.S. Department of Energy (“DOE”) to finance a substantial portion of the project using low-interest rate loans available under the DOE’s Energy Infrastructure Reinvestment Program of the IRA of 2022. JCP&L submitted the second part of its two-part application on March 13, 2024, which was approved on May 17, 2024. The DOE Loan Program Office has initiated a due diligence review of the application.

On November 9, 2023, JCP&L filed a petition for approval of its second infrastructure investment program (“EnergizeNJ”) with the NJBPU that would, among other things, support grid modernization, system resiliency and substation modernization in technologies designed to provide enhanced customer benefits. JCP&L proposes EnergizeNJ will be implemented over a five-year budget period with estimated costs of approximately $935 million over the deployment period, of which, $906 million is capital investments and $29 million is operating and maintenance expenses. Under the proposal, the capital costs of EnergizeNJ would be recovered through JCP&L’s base rates via annual and semi-annual base rate adjustment filings. The 2023 base rate case stipulation that was filed on February 2, 2024, necessitated amendments to the EnergizeNJ program. On February 14, 2024, the NJBPU approved the stipulated settlement between JCP&L and various parties, resolving JCP&L’s request for a distribution base rate increase. On February 27, 2024, as part of the stipulated settlement, JCP&L amended its pending EnergizeNJ petition following receipt of NJBPU approval of the base rate case settlement, to remove the high-priority circuits that are to be addressed in the first phase of its reliability improvement plan and to include the second phase of its reliability improvement plan that is expected to further address certain high-priority circuits that require additional upgrades. EnergizeNJ, if approved as amended, will result in the investment of approximately $930.5 million of total estimated costs over five years. JCP&L and various parties are engaged in settlement discussions with respect to the pending EnergizeNJ petition.

 

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FERC REGULATORY MATTERS

Under the FPA, FERC regulates rates for interstate wholesale sales, transmission of electric power, accounting and other matters. With respect to its transmission services and rates, JCP&L is subject to regulation by FERC. FERC regulations require JCP&L to provide open access transmission service at FERC-approved rates, terms and conditions. JCP&L’s transmission facilities are subject to functional control by PJM and transmission service using their transmission facilities is provided by PJM under the PJM Tariff. JCP&L’s FERC rate order in effect for transmission customer billings has been effective since January 2020, include a capital structure of actual (13-month average) and an allowed ROE of 10.2%.

FERC regulates the sale of power for resale in interstate commerce in part by granting authority to public utilities to sell wholesale power at market-based rates upon showing that the seller cannot exert market power in generation or transmission or erect barriers to entry into markets. JCP&L has been authorized by FERC to sell wholesale power in interstate commerce at market-based rates and have a market-based rate tariff on file with FERC, although major wholesale purchases remain subject to review and regulation by the relevant state commissions.

Federally enforceable mandatory reliability standards apply to the bulk electric system and impose certain operating, record-keeping and reporting requirements on JCP&L. NERC is the ERO designated by FERC to establish and enforce these reliability standards, although NERC has delegated day-to-day implementation and enforcement of these reliability standards to six regional entities, including RFC. All of the facilities that FirstEnergy operates, including those of JCP&L, are located within the RFC region. FirstEnergy actively participates in the NERC and RFC stakeholder processes, and otherwise monitors and manages its companies in response to the ongoing development, implementation and enforcement of the reliability standards implemented and enforced by RFC.

JCP&L believes that it is in material compliance with all currently effective and enforceable reliability standards. Nevertheless, in the course of operating its extensive electric utility systems and facilities, JCP&L occasionally learns of isolated facts or circumstances that could be interpreted as excursions from the reliability standards. If and when such occurrences are found, JCP&L develops information about the occurrence and develops a remedial response to the specific circumstances, including in appropriate cases “self-reporting” an occurrence to RFC. Moreover, it is clear that NERC, RFC and FERC will continue to refine existing reliability standards as well as to develop and adopt new reliability standards. Any inability on JCP&L’s part to comply with the reliability standards for its bulk electric system could result in the imposition of financial penalties, or obligations to upgrade or build transmission facilities, that could have a material adverse effect on its financial condition, results of operations, and cash flows.

FERC Audit

FERC’s Division of Audits and Accounting initiated a nonpublic audit of FESC in February 2019. Among other matters, the audit is evaluating FirstEnergy’s compliance with certain accounting and reporting requirements under various FERC regulations. On February 4, 2022, FERC filed the final audit report for the period of January 1, 2015 through September 30, 2021, which included several findings and recommendations that FirstEnergy has accepted. The audit report included a finding and related recommendation on FirstEnergy’s methodology for allocation of certain corporate support costs to regulatory capital accounts under certain FERC regulations and reporting. Effective in the first quarter of 2022 and in response to the finding, FirstEnergy had implemented a new methodology for the allocation of these corporate support costs to regulatory capital accounts for its regulated distribution and transmission companies on a prospective basis. With the assistance of an independent outside firm, FirstEnergy completed an analysis during the third quarter of 2022 of these costs and how it impacted certain FERC-jurisdictional wholesale transmission customer rates for the audit period of 2015 through 2021. As a result of this analysis, JCP&L recorded in the third quarter of 2022 approximately $8 million (pre-tax) in expected customer refunds, plus interest, due to its wholesale transmission customers and reclassified

 

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approximately $76 million of certain transmission capital assets to operating expenses for the audit period, of which $63 million (pre-tax) are not expected to be recoverable and impacted JCP&L’s earnings since they relate to costs capitalized during stated transmission rate time periods. JCP&L has recovered approximately $13 million of costs reclassified to operating expenses in its transmission formula rate revenue requirements as of December 31, 2024. These reclassifications also resulted in a reduction to JCP&L’s rate base by approximately $56 million, which is not expected to materially impact JCP&L’s future earnings. The expected wholesale transmission customer refunds were recognized as a reduction to revenue, and the amount of reclassified transmission capital assets that are not expected to be recoverable were recognized at the Transmission segment within “Other operating expenses” on JCP&L’s Statements of Income.

On December 8, 2023, FERC audit staff issued a letter advising that two unresolved audit matters, primarily related to FirstEnergy’s plan to recover the reclassified operating expenses in formula transmission rates, were being referred to other offices within FERC for further review. On July 5, 2024 and September 26, 2024, the FERC Office of Enforcement issued additional data requests related to the 2022 reclassification of operating expenses, to which FirstEnergy replied. On September 10, 2024 and January 13, 2025, the FERC Office of Enforcement issued a set of further data requests related to the classification and recovery of a since terminated fuel consulting contract, to which another FirstEnergy responded. The FERC Office of Enforcement issued another set of data requests related to the same fuel consulting contract on January 13, 2025, to which FirstEnergy responded. If the FERC Office of Energy Market Regulation and the FERC Office of Enforcement were to successfully challenge the recovery of the 2022 reclassified operating expenses and formula transmission rates it could have a material adverse effect on JCP&L’s financial conditions, result of operations, and cash flows.

Transmission ROE

A proposed rulemaking proceeding concerning transmission rate incentives provisions of Section 219 of the 2005 Energy Policy Act was initiated in March of 2020 and remains pending before FERC. Among other things, the rulemaking explored whether utilities should collect an “RTO membership” ROE incentive adder for more than three years. FirstEnergy is a member of PJM, and its transmission subsidiaries could be affected by the proposed rulemaking. FirstEnergy participated in comments on the supplemental rulemaking that were submitted by a group of PJM transmission owners and by various industry trade groups. If there were to be any changes to FirstEnergy’s transmission incentive ROE, such changes will be applied on a prospective basis.

Transmission Planning Supplemental Projects: Ohio Consumers Counsel v American Transmission Systems, Incorporated (“ATSI”), et al.

On September 27, 2023, the OCC filed a complaint against ATSI, PJM and other transmission utilities in Ohio alleging that the PJM Tariff and operating agreement are unjust, unreasonable, and unduly discriminatory because they include no provisions to ensure PJM’s review and approval for the planning, need, prudence and cost-effectiveness of the PJM Tariff Attachment M-3 “Supplemental Projects.” Supplemental Projects are projects that are planned and constructed to address local needs on the transmission system. The OCC demands that FERC: (i) require PJM to review supplemental projects for need, prudence and cost-effectiveness; (ii) appoint an independent transmission monitor to assist PJM in such review; and (iii) require that Supplemental Projects go into rate base only through a “stated rate” procedure whereby prior FERC approval would be needed for projects with costs that exceed an established threshold. Subsequently, intervenors expanded the scope of this proceeding to all of the transmission utilities in PJM. ATSI and the other transmission utilities in Ohio and PJM filed comments and the complaint is pending before FERC.

Local Transmission Planning Complaint: Industrial Energy Consumers of America, et al. v. Avista Corporation, et al.

On December 19, 2024, the Industrial Energy Consumers of America, a group representing large industrial customers, and state consumer advocates filed a complaint at FERC that asserts that transmission owners are overbuilding “local transmission facilities” with corresponding unjustified increases in transmission rates. The

 

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complaint demands that FERC: (i) prohibit transmission owners from planning “local transmission facilities” that are rated at 100kV or higher, (ii) appoint “independent transmission monitors” to conduct such planning, and (iii) condition construction of local transmission facilities on the facility having been planned by the “independent transmission monitor.” FirstEnergy expects to participate in this matter through a consortium of PJM transmission owners and through certain trade groups, including EEI. FirstEnergy is unable to predict the outcome or estimate the impact that this complaint may have on JCP&L or its transmission capital investment strategy.

ENVIRONMENTAL MATTERS

Various federal, state and local authorities regulate JCP&L with regard to air and water quality, hazardous and solid waste disposal, and other environmental matters. While JCP&L’s environmental policies and procedures are designed to achieve compliance with applicable environmental laws and regulations, such laws and regulations are subject to periodic review and potential revision by the implementing agencies. JCP&L cannot predict the timing or ultimate outcome of any of these reviews or how any future actions taken as a result thereof may materially impact its business, results of operations, cash flows and financial condition.

Regulation of Waste Disposal

JCP&L has been named as a potentially responsible party at waste disposal sites, which may require cleanup under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (“CERCLA”). Allegations of disposal of hazardous substances at historical sites and the liability involved are often unsubstantiated and subject to dispute; however, federal law provides that all potentially responsible parties for a particular site may be liable on a joint and several basis. Environmental liabilities that are considered probable have been recognized on JCP&L’s Balance Sheets as of December 31, 2024, based on estimates of the total costs of cleanup, JCP&L’s proportionate responsibility for such costs and the financial ability of other unaffiliated entities to pay. Total liabilities of approximately $76 million have been accrued through December 31, 2024, of which, approximately $69 million are for environmental remediation of former MGP and gas holder facilities in New Jersey, which are being recovered by JCP&L through a non-bypassable societal benefits charge. JCP&L could be found potentially responsible for additional amounts or additional sites, but the loss or range of losses cannot be determined or reasonably estimated at this time.

OTHER LEGAL PROCEEDINGS

United States v. Larry Householder, et al.

On July 21, 2020, a complaint and supporting affidavit containing federal criminal allegations were unsealed against the now former Ohio House Speaker Larry Householder and other individuals and entities allegedly affiliated with Mr. Householder. In March 2023, a jury found Mr. Householder and his co-defendant, Matthew Borges, guilty and in June 2023, the two were sentenced to prison for 20 and five years, respectively. Messrs. Householder and Borges have appealed their sentences. Also, on July 21, 2020, and in connection with the U.S. Attorney’s Office’s investigation, FirstEnergy received subpoenas for records from the U.S. Attorney’s Office for the Southern District of Ohio. FirstEnergy was not aware of the criminal allegations, affidavit or subpoenas before July 21, 2020. On January 17, 2025, the U.S. Attorney’s Office announced that a federal grand jury charged two former FirstEnergy senior officers with one count of participating in a Racketeer Influenced and Corrupt Organizations Act conspiracy. The allegations in the indictment are largely based on the conduct described in the DPA.

On July 21, 2021, FE entered into a three-year DPA with the U.S. Attorney’s Office that, subject to court proceedings, resolves this matter as to FE. Under the DPA, FE agreed to the filing of a criminal information charging FE with one count of conspiracy to commit honest services wire fraud. The DPA required that FirstEnergy, among other obligations: (i) continue to cooperate with the U.S. Attorney’s Office in all matters relating to the conduct described in the DPA and other conduct under investigation by the U.S. government; (ii) pay a criminal monetary penalty totaling $230 million within sixty days, consisting of (x) $115 million paid

 

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by FE to the United States Treasury and (y) $115 million paid by FE to the Ohio Development Service Agency (the “ODSA”) to fund certain assistance programs, as determined by the ODSA, for the benefit of low-income Ohio electric utility customers; (iii) publish a list of all payments made in 2021 to either 501(c)(4) entities or to entities known by FirstEnergy to be operating for the benefit of a public official, either directly or indirectly, and update the same on a quarterly basis during the term of the DPA; (iv) issue a public statement, as dictated in the DPA, regarding FE’s use of 501(c)(4) entities; and (v) continue to implement and review its compliance and ethics program, internal controls, policies and procedures designed, implemented and enforced to prevent and detect violations of the U.S. laws throughout its operations, and to take certain related remedial measures. The $230 million payment will neither be recovered in rates or charged to FirstEnergy customers, nor will FirstEnergy seek any tax deduction related to such payment. The entire amount of the monetary penalty was recognized as expense in the second quarter of 2021 and paid in the third quarter of 2021. As of July 22, 2024, FirstEnergy had successfully completed the obligations required within the three-year term of the DPA. Under the DPA, FirstEnergy has an obligation to continue (i) publishing quarterly a list of all payments to 501(c)(4) entities and all payments to entities known by FirstEnergy operating for the benefit of a public official, either directly or indirectly; (ii) not making any statements that contradict the DPA; (iii) notifying the U.S. Attorney’s Office of any changes in FirstEnergy’s corporate form; and (iv) cooperating with the U.S. Attorney’s Office until the conclusion of any related investigation, criminal prosecution, and civil proceeding brought by the U.S. Attorney’s Office, including the aforementioned federal indictment against two former FirstEnergy senior officers. Within 30 days of those matters concluding, and FirstEnergy’s successful completion of its remaining obligations, the U.S. Attorney’s Office will dismiss the criminal information.

Legal Proceedings Relating to United States v. Larry Householder, et al.

On August 10, 2020, the SEC, through its Division of Enforcement, issued an order directing an investigation of possible securities laws violations by FE, and on September 1, 2020, issued subpoenas to FE and certain FE officers relating to the conduct described in the DPA. On April 28, 2021, July 11, 2022, and May 25, 2023, the SEC issued additional subpoenas to FE, with which FE has complied. FirstEnergy cooperated fully with the SEC investigation, and on September 12, 2024, the SEC issued a settlement order that concluded and resolved the investigation in its entirety. Under the terms of the settlement, FE agreed to pay a civil penalty of $100 million and to cease and desist from committing or causing any violations and any future violations of specified provisions of the federal securities laws and rules promulgated thereunder, which was recognized as a loss contingency of $100 million in the second quarter of 2024 and paid on September 25, 2024.

On June 29, 2023, the Ohio Organized Crime Investigations Commission (the “OOCIC”) served FE a subpoena, seeking information relating to the conduct described in the DPA. FirstEnergy was not aware of the OOCIC’s investigation prior to receiving the subpoena and understood that the OOCIC’s investigation was also focused on the conduct described in the DPA, other than with respect to the March 25, 2024, felony indictment of Mr. Householder brought in Cuyahoga County, Ohio. FirstEnergy is cooperating with the OOCIC in its investigation. On February 12, 2024, and in connection with the OOCIC’s ongoing investigation, an indictment by a grand jury of Summit County, Ohio was unsealed against the now-deceased, former chairman of the Public Utilities Commission of Ohio (“PUCO”), and two former FirstEnergy senior officers, charging each of them with several felony counts, including bribery, telecommunications fraud, money laundering and aggravated theft, related to payments described in the DPA. On August 12, 2024, FirstEnergy entered into a settlement with the Ohio Attorney General’s (the “OAG”) Office and the Summit County Prosecutor’s Office to resolve both the OOCIC investigation and State of Ohio ex rel. Dave Yost, Ohio Attorney General v. FirstEnergy Corp., et al. and City of Cincinnati and City of Columbus v. FirstEnergy Corp., noted below. The settlement includes, among other things, a non-prosecution agreement and a payment of $19.5 million, which was recorded as a loss contingency in the second quarter of 2024 in FirstEnergy’s Consolidated Statements of Income and was paid on August 16, 2024.

In addition to the subpoenas referenced above under “United States v. Larry Householder, et. al.” and the SEC investigation, certain FE stockholders and FirstEnergy customers filed several lawsuits against FirstEnergy

 

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and certain current and former directors, officers and other employees, and the complaints in each of these suits is related to allegations in the complaint and supporting affidavit relating to HB 6 and the now former Ohio House Speaker Larry Householder and other individuals and entities allegedly affiliated with Mr. Householder. The plaintiffs in each of the below cases seek, among other things, to recover an unspecified amount of damages (unless otherwise noted). Unless otherwise indicated, no contingency has been reflected in FirstEnergy’s consolidated financial statements with respect to these lawsuits as a loss is neither probable, nor is a loss or range of a loss reasonably estimable.

 

   

In re FirstEnergy Corp. Securities Litigation (S.D. Ohio): on July 28, 2020 and August 21, 2020, purported stockholders of FE filed putative class action lawsuits alleging violations of the federal securities laws. Those actions have been consolidated and a lead plaintiff, the Los Angeles County Employees Retirement Association, has been appointed by the court. A consolidated complaint was filed on February 26, 2021. The consolidated complaint alleges, on behalf of a proposed class of persons who purchased FE securities between February 21, 2017 and July 21, 2020, that FE and certain current or former FE officers violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (“Exchange Act”) by issuing alleged misrepresentations or omissions concerning FE’s business and results of operations. The consolidated complaint also alleges that FE, certain current or former FE officers and directors, and a group of underwriters violated Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 as a result of alleged misrepresentations or omissions in connection with offerings of senior notes by FE in February and June 2020. On March 30, 2023, the court granted plaintiffs’ motion for class certification. On April 14, 2023, FE filed a petition in the U.S. Court of Appeals for the Sixth Circuit seeking to appeal that order; the Sixth Circuit granted FE’s petition on November 16, 2023, and heard oral argument on July 17, 2024. On November 30, 2023, FE filed a motion with the S.D. Ohio to stay all proceedings pending that circuit court appeal. Discovery was stayed during the pendency of that motion to stay all proceedings and on August 20, 2024, the S.D. Ohio denied FE’s motion and lifted the stay as to fact discovery. On July 29, 2024, FE filed in the U.S. Court of Appeals for the Sixth Circuit a Petition for Writ of Mandamus asking the Sixth Circuit to direct the district court to deny plaintiffs’ motion to compel disclosure of FE’s privileged internal investigation materials. On September 11, 2024, FE filed in the U.S. Court of Appeals for the Sixth Circuit a motion to stay discovery of the privileged internal investigation materials pending resolution of the Petition for Writ of Mandamus. FE believes that it is probable that it will incur a loss in connection with the resolution of this lawsuit. Given the ongoing nature and complexity of such litigation, FE cannot yet reasonably estimate a loss or range of loss.

 

   

MFS Series Trust I, et al. v. FirstEnergy Corp., et al. and Brighthouse Funds II – MFS Value Portfolio, et al. v. FirstEnergy Corp., et al. (S.D. Ohio): on December 17, 2021 and February 21, 2022, purported stockholders of FE filed complaints against FE, certain current and former officers, and certain current and former officers of EH. The complaints allege that the defendants violated Sections 10(b) and 20(a) of the Exchange Act by issuing alleged misrepresentations or omissions regarding FE’s business and its results of operations, and seek the same relief as the In re FirstEnergy Corp. Securities Litigation described above. FE believes that it is probable that it will incur losses in connection with the resolution of these lawsuits. Given the ongoing nature and complexity of such litigation, FE cannot yet reasonably estimate a loss or range of loss.

 

   

State of Ohio ex rel. Dave Yost, Ohio Attorney General v. FirstEnergy Corp., et al. and City of Cincinnati and City of Columbus v. FirstEnergy Corp. (Common Pleas Court, Franklin County, OH, all actions have been consolidated): on September 23, 2020 and October 27, 2020, the OAG and the cities of Cincinnati and Columbus, respectively, filed complaints against several parties including FE, each alleging civil violations of the Ohio Corrupt Activity Act and related claims in connection with the passage of HB 6. On January 13, 2021, the OAG filed a motion for a temporary restraining order and preliminary injunction against FirstEnergy seeking to enjoin FirstEnergy from collecting the Ohio Companies’ decoupling rider. On January 31, 2021, FE reached a partial settlement with the OAG and the cities of Cincinnati and Columbus with respect to the temporary restraining order and preliminary

 

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injunction request and related issues. In connection with the partial settlement, the Ohio Companies filed an application on February 1, 2021, with the PUCO to set their respective decoupling riders (Conservation Support Rider) to zero. On February 2, 2021, the PUCO approved the application of the Ohio Companies setting the rider to zero, and no additional customer bills included new decoupling rider charges after February 8, 2021. On August 13, 2021, new defendants were added to the complaint, including two former officers of FirstEnergy. On December 2, 2021, the cities and FE entered a stipulated dismissal with prejudice of the cities’ suit. This matter was stayed through a criminal trial in United States v. Larry Householder, et al. described above, but resumed pursuant to an order, dated March 15, 2023. On July 31, 2023, FE and other defendants filed motions to dismiss in part the OAG’s amended complaint, which the OAG opposed. On February 16, 2024, the OAG moved to stay discovery in the case in light of the February 9, 2024, indictments against defendants in this action, which the court granted on March 14, 2024. As described above, FE reached a settlement with the OAG of this civil action and the OOCIC investigation, which resolves this civil action. FE recognized a loss contingency of $19.5 million in the second quarter of 2024, which was paid on August 16, 2024.

On February 9, 2022, FE, acting through the Special Litigation Committee of the FE Board (the “SLC”), agreed to a settlement term sheet to resolve the following shareholder derivative lawsuits relating to HB 6 and the now former Ohio House Speaker Larry Householder and other individuals and entities allegedly affiliated with Mr. Householder that were filed in the S.D. Ohio, the Federal District Court, Northern District of Ohio (“N.D. Ohio”), and the Ohio Court of Common Pleas, Summit County:

 

   

Gendrich v. Anderson, et al. and Sloan v. Anderson, et al. (Common Pleas Court, Summit County, Ohio, all actions have been consolidated): on July 26, 2020 and July 31, 2020, respectively, purported stockholders of FE filed shareholder derivative action lawsuits against certain current and former FE directors and officers, alleging, among other things, breaches of fiduciary duty. On August 30, 2022, the parties filed a joint motion to dismiss the state court action, which the court granted on September 2, 2022.

 

   

Miller v. Anderson, et al. (N.D. Ohio): on August 7, 2020, purported stockholders of FE filed shareholder derivative actions alleging the then FE Board and officers breached their fiduciary duties and committed violations of Section 14(a) of the Exchange Act. On August 24, 2022, the parties filed a joint motion to dismiss the action pending in the N.D. Ohio based upon the approval of the settlement by the S.D. Ohio, which was granted on May 17, 2024.

 

   

Bloom, et al. v. Anderson, et al.; Employees Retirement System of the City of St. Louis v. Jones, et al.; Electrical Workers Pension Fund, Local 103, I.B.E.W. v. Anderson et al.; Massachusetts Laborers Pension Fund v. Anderson et al.; The City of Philadelphia Board of Pensions and Retirement v. Anderson et al.; Atherton v. Dowling et al.; Behar v. Anderson, et al. (S.D. Ohio, all actions have been consolidated): on September 1, 2020, purported stockholders of FE filed shareholder derivative actions alleging the then FE Board and officers breached their fiduciary duties and committed violations of Section 14(a) of the Exchange Act. On March 11, 2022, the parties executed a stipulation and agreement of settlement, and filed a motion the same day requesting preliminary settlement approval in the S.D. Ohio, which the S.D. Ohio granted on May 9, 2022. Subsequently, following a hearing on August 4, 2022, the S.D. Ohio granted final approval of the settlement on August 23, 2022, which was appealed by a purported FE stockholder on June 15, 2023. The U.S. Court of Appeals for the Sixth Circuit affirmed the district court’s final settlement approval. All appeal options were exhausted on May 16, 2024.

The above settlement included a series of corporate governance enhancements and a payment to FE of $180 million, less approximately $36 million in court-ordered attorney’s fees awarded to plaintiffs, and a $7 million net return on deposited funds, which was received in the second quarter of 2024. The judgment and settlement are final and, therefore, the derivative lawsuits are now fully resolved.

 

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The outcome of any of these lawsuits, governmental investigations and audit is uncertain and could have a material adverse effect on FE’s or its subsidiaries’ reputation, business, financial condition, results of operations, liquidity, and cash flows.

Other Legal Matters

There are various lawsuits, claims (including claims for asbestos exposure) and proceedings related to JCP&L’s normal business operations pending against JCP&L. The loss or range of loss in these matters is not expected to be material to JCP&L. The other potentially material items not otherwise discussed above are described under Note 10, “Regulatory Matters.”

JCP&L accrues legal liabilities only when it concludes that it is probable that it has an obligation for such costs and can reasonably estimate the amount of such costs. In cases where JCP&L determines that it is not probable, but reasonably possible that it has a material obligation, it discloses such obligations and the possible loss or range of loss if such estimate can be made. If it were ultimately determined that JCP&L has legal liability or are otherwise made subject to liability based on any of the matters referenced above, it could have a material adverse effect on JCP&L’s financial condition, results of operations, and cash flows.

 

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OUR BUSINESS

Overview

We are a wholly owned, electric power company subsidiary of FE, a public electric power holding company. We own property and do business as an electric public utility in New Jersey, providing distribution services to approximately 1.2 million customers as of December 31, 2024, as well as transmission services in northern, western, and east central New Jersey. We serve an area that has a population of approximately 2.8 million.

We plan, operate, and maintain our transmission system in accordance with NERC reliability standards, and other applicable regulatory requirements. In addition, we comply with the regulations, orders, policies and practices prescribed by FERC and the NJBPU.

Our reportable operating segments are comprised of the Distribution and Transmission segments.

The Distribution segment, representing $3.3 billion in rate base as of December 31, 2024, distributes electricity to approximately 1.2 million customers as of December 31, 2024 in New Jersey across its distribution footprint and procures electric supply to serve its BGS customers through a statewide auction process approved by the NJBPU. The segment’s results reflect the costs of securing and delivering electric generation to customers, including the deferral and amortization of certain costs.

The Transmission segment includes transmission infrastructure owned and operated by us and used to transmit electricity, representing $1.4 billion in rate base as of December 31, 2024. The segment’s revenues are primarily derived from forward-looking formula rates, pursuant to which the revenue requirement is updated annually based on a projected rate base and projected costs, which is subject to an annual true-up based on actual rate base and costs. The segment’s results also reflect the net transmission expenses related to the delivery of electricity on our transmission facilities.

We were organized as a corporation under the laws of the State of New Jersey in 1925. We, along with our electric utility affiliates, ME and PN, were acquired by FE on November 7, 2001 when our former parent company, GPU Inc., merged with and into FE. On January 1, 2024, ME and PN merged with and into FE PA.

Our principal executive office is located at 300 Madison Avenue, Morristown, New Jersey 07962. Our telephone number is (800) 736-3402.

Facilities

Our transmission and distribution system includes overhead pole line and underground conduit carrying primary, secondary and street lighting circuits. As of December 31, 2024, our transmission and distribution system consisted of approximately 24,781 circuit miles of distribution lines and 2,609 circuit miles of transmission lines. All of our transmission and distribution facilities are located within the PJM region and operate under the reliability oversight of RFC. All of our transmission and distribution facilities are located in New Jersey and operate in public streets and highways pursuant to franchises and rights-of-way secured from property owners. We plan to annually invest approximately $1.1 billion to $1.4 billion in capital investments from 2025 through 2029 to upgrade our distribution and transmission systems.

System Demand

Our maximum hourly demand was 6,184 MWs, for the year ended December 31, 2024.

 

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Franchises

We have the necessary franchise rights to furnish electric service in the various municipalities or territories in which we now supply such services. These electric franchise rights, which are generally nonexclusive rights, consist generally of (i) charter rights, (ii) certificates of public convenience issued by the NJBPU and/or (iii) “grandfather rights.”

Regional Reliability

We are located within the PJM region and operate under the reliability oversight of a regional entity known as RFC. This regional entity operates under the oversight of NERC in accordance with a delegation agreement approved by FERC.

Regulation

Our retail distribution rates, conditions of service, issuance of securities and other matters are subject to regulation by the NJBPU. Regulation of our retail distribution rates is generally premised on providing an opportunity to earn a reasonable return on prudently incurred invested capital used in, and to recover prudently incurred costs of, providing service to our customers through the use of both base rate proceedings and other forward-looking, cost-based rate mechanisms, like recovery riders. Our residential customers currently have the lowest distribution rates in the State of New Jersey among the investor-owned utilities.

Our transmission rates, conditions of transmission service, issuance of securities and certain other matters are subject to regulation by FERC. As a transmission owner in the PJM region, we recover transmission rates through the PJM Tariff on file with FERC.

State Regulation

Our retail rates, conditions of service, issuance of securities and other matters are subject to regulation in New Jersey by the NJBPU. JCP&L’s current state base rate order has been effective since June 1, 2024 and includes a capital structure of 48.1%/51.9% debt/equity ratio of 48%/52% and an allowed ROE of 9.6%.

We operate under NJBPU approved rates that took effect as of February 15, 2024, and became effective for customers as of June 1, 2024. We provide BGS for retail customers who do not choose a third-party EGS and for customers of third- party EGSs that fail to provide the contracted service. All New Jersey EDCs participate in this competitive BGS procurement process and recover BGS costs directly from customers as a charge separate from base rates.

The base rate increase approved by the NJBPU on February 14, 2024, took effect on February 15, 2024, and became effective for customers on June 1, 2024. Until those new rates became effective for customers, we were amortizing an existing regulatory liability totaling approximately $18 million to offset the base rate increase that otherwise would have occurred in this period. Under the base rate case settlement agreement, we also agreed to a two-phase reliability improvement plan to enhance the reliability related to 18 high-priority circuits, the first phase of which began on February 14, 2024, and represents an approximate investment of $95 million. Additionally, JCP&L recognized a $53 million pre-tax charge in the first quarter of 2024 at the Distribution segment within “Other operating expenses” on the JCP&L Statements of Income, associated with certain corporate support costs recorded to capital accounts from the FERC Audit that were determined, as a result of the settlement agreement, to be disallowed from future recovery.

JCP&L has implemented energy efficiency and peak demand reduction programs in accordance with the New Jersey Clean Energy Act as approved by the NJBPU in April 2021. The NJBPU approved plans include recovery of lost revenues resulting from the programs and a three-year plan (July 2021-June 2024) including total

 

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program costs of $203 million, of which $160 million of investment is recovered over a ten-year amortization period with a return as well as $43 million in operations and maintenance expenses and financing costs recovered on an annual basis. On May 22, 2024, the NJBPU approved our request for a six-month extension of the EE&C Plan I, to December 31, 2024. The budget for the extension period adds approximately $69 million to the original program cost and JCP&L will recover the costs of the extension period and the revenue impact of sales losses resulting therefrom through two separate tariff riders. On December 1, 2023, we filed a related petition with the NJBPU requesting approval of its EE&C Plan II, which covers the January 1, 2025 through June 30, 2027 period and had a proposed budget of approximately $964 million. EE&C Plan II, as filed, consisted of a portfolio of ten energy efficiency programs, one peak demand reduction program and one building decarbonization program. Under the proposal, JCP&L would recover its EE&C Plan II revenue requirements and lost revenues from reduced electricity sales associated with EE&C Plan II. On October 30, 2024, the NJBPU approved the parties’ stipulation of settlement, wherein the parties agreed to a budget of approximately $817 million for EE&C Plan II, including $784 million of investments that will earn a return on equity of 9.6%, with an equity ratio of 52%, and be recovered over 10 years.

The settlement of the distribution rate case in 2020, provided among other things, that JCP&L would be subject to a management audit, which began in May 2021. On April 12, 2023, the NJBPU accepted the final management audit report for filing purposes and ordered that interested stakeholders file comments on the report by May 22, 2023, which deadline was extended until July 31, 2023. JCP&L and one other party filed comments on July 31, 2023.

On September 17, 2021, in connection with Mid-Atlantic Offshore Development, LLC, a transmission company jointly owned by Shell New Energies US and EDF Renewables North America, we submitted a proposal to the NJBPU and PJM to build transmission infrastructure connecting offshore wind-generated electricity to the New Jersey power grid. On October 26, 2022, our proposal was accepted, in part, in an order issued by NJBPU. The proposal, as accepted, included approximately $723 million in investments for us to both build new and upgrade existing transmission infrastructure. Our proposal projects an investment ROE of 10.2% and includes the option for us to acquire up to a 20% equity stake in Mid-Atlantic Offshore Development, LLC. The resulting rates associated with the project are expected to be shared among the ratepayers of all New Jersey electric utilities. On April 17, 2023, we applied for the FERC “abandonment” transmission rates incentive, which would provide for recovery of 100% of the cancelled prudent project costs that are incurred after the incentive is approved, and 50% of the costs incurred prior to that date, in the event that some or all of the project is cancelled for reasons beyond our control. On August 21, 2023, FERC approved our application, effective August 22, 2023. On October 31, 2023, offshore wind developer, Orsted, announced plans to cease development of two offshore wind projects in New Jersey-Ocean Wind 1 and 2 - having a combined planned capacity of 2,248 MWs. On January 30, 2025 and February 25, 2025, Shell New Energies US and EDF Renewables North America respectively announced that each was exiting its Atlantic Shores partnership to construct wind energy off the shore of New Jersey. These cancellations do not directly affect JCP&L’s awarded projects, and JCP&L remains under an obligation to begin construction in 2025 based on current NJBPU direction. JCP&L continues to monitor the situation and is engaging state officials about impacts of these announcements to its transmission projects.

Consistent with the commitments made in our proposal to the NJBPU, we formally submitted in November 2023 the first part of our application to the DOE to finance a substantial portion of the project using low-interest rate loans available under the DOE’s Energy Infrastructure Reinvestment Program of the IRA of 2022. We submitted the second part of our two-part application on March 13, 2024, which was approved on May 17, 2024. The DOE Loan Program Office has initiated a due diligence review of the application.

On November 9, 2023, we filed a petition for approval of our EnergizeNJ with the NJBPU that would, among other things, support grid modernization, system resiliency and substation modernization in technologies designed to provide enhanced customer benefits. We propose EnergizeNJ will be implemented over a five-year budget period with estimated costs of approximately $935 million over the deployment period, of which, $906 million is capital investments and $29 million is operating and maintenance expenses. Under the proposal, the capital costs of EnergizeNJ would be recovered through our base rates via annual and semi-annual base rate

 

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adjustment filings. The 2023 base rate case stipulation that was filed on February 2, 2024, necessitated amendments to the EnergizeNJ program. On February 14, 2024, the NJBPU approved the stipulated settlement between us and various parties, resolving our request for a distribution base rate increase. On February 27, 2024, as part of the stipulated settlement, we amended our pending EnergizeNJ petition following receipt of NJBPU approval of the base rate case settlement, to remove the high-priority circuits that are to be addressed in the first phase of our reliability improvement plan and to include the second phase of our reliability improvement plan that is expected to further address certain high-priority circuits that require additional upgrades. EnergizeNJ, if approved as amended, will result in the investment of approximately $930.5 million of total estimated costs over five years. JCP&L and various parties are engaged in settlement discussions with respect to the pending EnergizeNJ petition.

Federal Regulation

Under the FPA, FERC regulates rates for interstate wholesale sales, transmission of electric power, accounting and other matters. With respect to our transmission services and rates, we are subject to regulation by FERC. FERC regulations require us to provide open access transmission service at FERC-approved rates, terms and conditions. Our transmission facilities are subject to functional control by PJM and transmission service using our transmission facilities is provided by PJM under the PJM Tariff. JCP&L’s rate order in effect for transmission customer billings has been effective since January 2020, include a capital structure of actual (13- month average) and an allowed ROE of 10.2%. Our transmission rate is provided as an attachment to the PJM Tariff that is on file with FERC.

FERC regulates the sale of power for resale in interstate commerce in part by granting authority to public utilities to sell wholesale power at market-based rates upon showing that the seller cannot exert market power in generation or transmission or erect barriers to entry into markets. We have been authorized by FERC to sell wholesale power in interstate commerce at market-based rates and has a market-based rate tariff on file with FERC, although major wholesale purchases remain subject to review and regulation by the relevant state commissions.

Federally enforceable mandatory reliability standards apply to the bulk electric system and impose certain operating, record-keeping and reporting requirements on us. NERC is the ERO designated by FERC to establish and enforce these reliability standards, although NERC has delegated day-to-day implementation and enforcement of these reliability standards to six regional entities, including RFC. All of the facilities that FirstEnergy operates, including those of JCP&L are located within the RFC region. FirstEnergy actively participates in the NERC and RFC stakeholder processes, and otherwise monitors and manages its companies in response to the ongoing development, implementation and enforcement of the reliability standards implemented and enforced by RFC.

We believe that we are in material compliance with all currently effective and enforceable reliability standards. Nevertheless, in the course of operating our extensive electric utility systems and facilities, we occasionally learn of isolated facts or circumstances that could be interpreted as excursions from the reliability standards. If and when such occurrences are found, we develop information about the occurrence and develop a remedial response to the specific circumstances, including in appropriate cases “self-reporting” an occurrence to RFC. Moreover, it is clear that NERC, RFC and FERC will continue to refine existing reliability standards as well as to develop and adopt new reliability standards. Any inability on our part to comply with the reliability standards for our bulk electric system could result in the imposition of financial penalties, or obligations to upgrade or build transmission facilities, that could have a material adverse effect on our financial condition, results of operations, and cash flows.

FERC Audit

FERC’s Division of Audits and Accounting initiated a nonpublic audit of FESC in February 2019. Among other matters, the audit is evaluating FirstEnergy’s compliance with certain accounting and reporting requirements under

 

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various FERC regulations. On February 4, 2022, FERC filed the final audit report for the period of January 1, 2015 through September 30, 2021, which included several findings and recommendations that FirstEnergy has accepted. The audit report included a finding and related recommendation on FirstEnergy’s methodology for allocation of certain corporate support costs to regulatory capital accounts under certain FERC regulations and reporting. Effective in the first quarter of 2022 and in response to the finding, FirstEnergy had implemented a new methodology for the allocation of these corporate support costs to regulatory capital accounts for its regulated distribution and transmission companies on a prospective basis.

With the assistance of an independent outside firm, FirstEnergy completed an analysis during the third quarter of 2022 of these costs and how it impacted certain FERC-jurisdictional wholesale transmission customer rates for the audit period of 2015 through 2021. As a result of this analysis, JCP&L recorded in the third quarter of 2022 approximately $8 million (pre-tax) in expected customer refunds, plus interest, due to its wholesale transmission customers and reclassified approximately $76 million of certain transmission capital assets to operating expenses for the audit period, of which $63 million (pre-tax) are not expected to be recoverable and impacted JCP&L’s earnings since they relate to costs capitalized during stated transmission rate time periods. JCP&L has recovered approximately $13 million of costs reclassified to operating expenses in its transmission formula rate revenue requirements as of December 31, 2024. These reclassifications also resulted in a reduction to JCP&L’s rate base by approximately $56 million, which is not expected to materially impact JCP&L’s future earnings. The expected wholesale transmission customer refunds were recognized as a reduction to revenue, and the amount of reclassified transmission capital assets that are not expected to be recoverable were recognized at the Transmission segment within “Other operating expenses” on JCP&L’s Statements of Income.

On December 8, 2023, FERC audit staff issued a letter advising that two unresolved audit matters, primarily related to FirstEnergy’s plan to recover the reclassified operating expenses in formula transmission rates, were being referred to other offices within FERC for further review. On July 5, 2024 and September 26, 2024, the FERC Office of Enforcement issued additional data requests related to the 2022 reclassification of operating expenses, to which FirstEnergy replied. On September 10, 2024 and January 13, 2025, the FERC Office of Enforcement issued a set of further data requests related to the classification and recovery of a since terminated fuel consulting contract, to which another FirstEnergy responded. The FERC Office of Enforcement issued another set of data requests related to the same fuel consulting contract on January 13, 2025, to which FirstEnergy responded. If the FERC Office of Energy Market Regulation and the FERC Office of Enforcement were to successfully challenge the recovery of the 2022 reclassified operating expenses and formula transmission rates it could have a material adverse effect on JCP&L’s financial conditions, result of operations, and cash flows.

Transmission ROE

A proposed rulemaking proceeding concerning transmission rate incentives provisions of Section 219 of the 2005 Energy Policy Act was initiated in March of 2020 and remains pending before FERC. Among other things, the rulemaking explored whether utilities should collect an “RTO membership” ROE incentive adder for more than three years. FirstEnergy is a member of PJM, and its transmission subsidiaries could be affected by the proposed rulemaking. FirstEnergy participated in comments on the supplemental rulemaking that were submitted by a group of PJM transmission owners and by various industry trade groups. If there were to be any changes to FirstEnergy’s transmission incentive ROE, such changes will be applied on a prospective basis.

Transmission Planning Supplemental Projects: Ohio Consumers Counsel v ATSI, et al.

On September 27, 2023, the OCC filed a complaint against ATSI, PJM and other transmission utilities in Ohio alleging that the PJM Tariff and operating agreement are unjust, unreasonable, and unduly discriminatory because they include no provisions to ensure PJM’s review and approval for the planning, need, prudence and cost-effectiveness of the PJM Tariff Attachment M-3 “Supplemental Projects.” Supplemental Projects are projects that are planned and constructed to address local needs on the transmission system. The OCC demands that FERC: (i) require PJM to review supplemental projects for need, prudence and cost-effectiveness; (ii) appoint an independent transmission monitor to assist PJM in such review; and (iii) require that Supplemental

 

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Projects go into rate base only through a “stated rate” procedure whereby prior FERC approval would be needed for projects with costs that exceed an established threshold. Subsequently, intervenors expanded the scope of this proceeding to all the transmission utilities in PJM. ATSI and the other transmission utilities in Ohio and PJM filed comments and the complaint is pending before FERC.

Local Transmission Planning Complaint: Industrial Energy Consumers of America, et al. v. Avista Corporation, et al.

On December 19, 2024, the Industrial Energy Consumers of America, a group representing large industrial customers, and state consumer advocates filed a complaint at FERC that asserts that transmission owners are overbuilding “local transmission facilities” with corresponding unjustified increases in transmission rates. The complaint demands that FERC: (i) prohibit transmission owners from planning “local transmission facilities” that are rated at 100kV or higher, (ii) appoint “independent transmission monitors” to conduct such planning, and (iii) condition construction of local transmission facilities on the facility having been planned by the “independent transmission monitor.” FirstEnergy expects to participate in this matter through a consortium of PJM transmission owners and through certain trade groups, including EEI. FirstEnergy is unable to predict the outcome or estimate the impact that this complaint may have on JCP&L or its transmission capital investment strategy.

Environmental Matters

Various federal, state and local authorities regulate JCP&L with regard to air and water quality, hazardous and solid waste disposal, and other environmental matters. While JCP&L’s environmental policies and procedures are designed to achieve compliance with applicable environmental laws and regulations, such laws and regulations are subject to periodic review and potential revision by the implementing agencies. JCP&L cannot predict the timing or ultimate outcome of any of these reviews or how any future actions taken as a result thereof may materially impact its business, results of operations, cash flows and financial condition.

Competition

Generally, there has been limited competition for electric distribution service in JCP&L’s service territory. Additionally, there has traditionally been no competition for transmission service in the PJM region. However, pursuant to FERC’s Order No. 1000 and subject to state and local siting and permitting approvals, non-incumbent developers now can compete for certain PJM transmission projects in the service territories of FirstEnergy’s Integrated and Stand-Alone Transmission segments. This could result in additional competition to build transmission facilities in FirstEnergy’s Integrated and Stand-Alone Transmission segments’ service territories, including our service territory, while also allowing us the opportunity to seek to build facilities in non-incumbent service territories.

Furthermore, our business may be affected by third parties’ use of economic substitutes for transmission over their systems, physical constraints which restrict their systems’ use and the possibility of “merchant transmission.” Economic substitutes may include geographic distribution of generation capability through the use of local generation facilities, such as small-scale generation plants or fuel cells that deliver electric power directly to end users without transmission. We may also be affected by the physical constraints of the systems to which we are connected. Such constraints could limit the ability of potential users to transmit power over our transmission systems.

Merchant transmission facilities represent electric transmission infrastructure that is constructed, owned and operated by merchant transmission entities within the transmission zone of an incumbent transmission owner. The services provided by merchant transmission facilities may be subscribed to by specific users at prices not subject to cost-of-service regulation by FERC; although merchant transmission owners also may seek FERC-regulated cost-of-service rates.

 

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Non-incumbent transmission developers and merchant transmission providers may compete with us to build transmission infrastructure in the transmission zones where we operate. If significant non-incumbent and merchant transmission development occurs in our transmission zones, our financial condition could be adversely affected.

Seasonality

The sale of electric power is generally a seasonal business, and weather patterns can have a material impact on our operating results. Demand for electricity in our service territory historically peaks during the summer and winter months. Accordingly, our annual results of operations and liquidity position may depend disproportionately on our operating performance during the summer and winter. Mild weather conditions may result in lower power sales and, consequently, lower revenue, earnings and cash flow.

Employees

JCP&L has approximately 1,300 employees as of December 31, 2024.

Litigation

United States v. Larry Householder, et al.

On July 21, 2020, a complaint and supporting affidavit containing federal criminal allegations were unsealed against the now former Ohio House Speaker Larry Householder and other individuals and entities allegedly affiliated with Mr. Householder. In March 2023, a jury found Mr. Householder and his co-defendant, Matthew Borges, guilty and in June 2023, the two were sentenced to prison for 20 and five years, respectively. Messrs. Householder and Borges have appealed their sentences. Also, on July 21, 2020, and in connection with the U.S. Attorney’s Office’s investigation, FirstEnergy received subpoenas for records from the U.S. Attorney’s Office for the Southern District of Ohio. FirstEnergy was not aware of the criminal allegations, affidavit or subpoenas before July 21, 2020. On January 17, 2025, the U.S. Attorney’s Office announced that a federal grand jury charged two former FirstEnergy senior officers with one count of participating in a Racketeer Influenced and Corrupt Organizations Act conspiracy. The allegations in the indictment are largely based on the conduct described in the DPA.

On July 21, 2021, FE entered into a three-year DPA with the U.S. Attorney’s Office that, subject to court proceedings, resolves this matter as to FE. Under the DPA, FE agreed to the filing of a criminal information charging FE with one count of conspiracy to commit honest services wire fraud. The DPA required that FirstEnergy, among other obligations: (i) continue to cooperate with the U.S. Attorney’s Office in all matters relating to the conduct described in the DPA and other conduct under investigation by the U.S. government; (ii) pay a criminal monetary penalty totaling $230 million within sixty days, consisting of (x) $115 million paid by FE to the United States Treasury and (y) $115 million paid by FE to the ODSA to fund certain assistance programs, as determined by the ODSA, for the benefit of low-income Ohio electric utility customers; (iii) publish a list of all payments made in 2021 to either 501(c)(4) entities or to entities known by FirstEnergy to be operating for the benefit of a public official, either directly or indirectly, and update the same on a quarterly basis during the term of the DPA; (iv) issue a public statement, as dictated in the DPA, regarding FE’s use of 501(c)(4) entities; and (v) continue to implement and review its compliance and ethics program, internal controls, policies and procedures designed, implemented and enforced to prevent and detect violations of the U.S. laws throughout its operations, and to take certain related remedial measures. The $230 million payment will neither be recovered in rates or charged to FirstEnergy customers, nor will FirstEnergy seek any tax deduction related to such payment. The entire amount of the monetary penalty was recognized as expense in the second quarter of 2021 and paid in the third quarter of 2021. As of July 22, 2024, FirstEnergy had successfully completed the obligations required within the three-year term of the DPA. Under the DPA, FirstEnergy has an obligation to continue (i) publishing quarterly a list of all payments to 501(c)(4) entities and all payments to entities known by

 

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FirstEnergy operating for the benefit of a public official, either directly or indirectly; (ii) not making any statements that contradict the DPA; (iii) notifying the U.S. Attorney’s Office of any changes in FirstEnergy’s corporate form; and (iv) cooperating with the U.S. Attorney’s Office until the conclusion of any related investigation, criminal prosecution, and civil proceeding brought by the U.S. Attorney’s Office, including the aforementioned federal indictment against two former FirstEnergy senior officers. Within 30 days of those matters concluding, and FirstEnergy’s successful completion of its remaining obligations, the U.S. Attorney’s Office will dismiss the criminal information.

Legal Proceedings Relating to United States v. Larry Householder, et al.

On August 10, 2020, the SEC, through its Division of Enforcement, issued an order directing an investigation of possible securities laws violations by FE, and on September 1, 2020, issued subpoenas to FE and certain FE officers relating to the conduct described in the DPA. On April 28, 2021, July 11, 2022, and May 25, 2023, the SEC issued additional subpoenas to FE, with which FE has complied. FirstEnergy cooperated fully with the SEC investigation, and on September 12, 2024, the SEC issued a settlement order that concluded and resolved the investigation in its entirety. Under the terms of the settlement, FE agreed to pay a civil penalty of $100 million and to cease and desist from committing or causing any violations and any future violations of specified provisions of the federal securities laws and rules promulgated thereunder, which was recognized as a loss contingency of $100 million in the second quarter of 2024 and paid on September 25, 2024.

On June 29, 2023, the OOCIC served FE a subpoena, seeking information relating to the conduct described in the DPA. FirstEnergy was not aware of the OOCIC’s investigation prior to receiving the subpoena and understood that the OOCIC’s investigation was also focused on the conduct described in the DPA, other than with respect to the March 25, 2024, felony indictment of Mr. Householder brought in Cuyahoga County, Ohio. FirstEnergy is cooperating with the OOCIC in its investigation. On February 12, 2024, and in connection with the OOCIC’s ongoing investigation, an indictment by a grand jury of Summit County, Ohio was unsealed against the, now-deceased, former chairman of the PUCO, and two former FirstEnergy senior officers, charging each of them with several felony counts, including bribery, telecommunications fraud, money laundering and aggravated theft, related to payments described in the DPA. On August 12, 2024, FirstEnergy entered into a settlement with the OAG’s Office and the Summit County Prosecutor’s Office to resolve both the OOCIC investigation and State of Ohio ex rel. Dave Yost, Ohio Attorney General v. FirstEnergy Corp., et al. and City of Cincinnati and City of Columbus v. FirstEnergy Corp., noted below. The settlement includes, among other things, a non-prosecution agreement and a payment of $19.5 million by FE, which was recorded as a loss contingency in the second quarter of 2024 in FirstEnergy’s Consolidated Statements of Income and was paid on August 16, 2024.

In addition to the subpoenas referenced above under “United States v. Larry Householder, et. al.” and the SEC investigation, certain FE stockholders and FirstEnergy customers filed several lawsuits against FirstEnergy and certain current and former directors, officers and other employees, and the complaints in each of these suits is related to allegations in the complaint and supporting affidavit relating to HB 6 and the now former Ohio House Speaker Larry Householder and other individuals and entities allegedly affiliated with Mr. Householder. The plaintiffs in each of the below cases seek, among other things, to recover an unspecified amount of damages (unless otherwise noted). Unless otherwise indicated, no contingency has been reflected in FirstEnergy’s consolidated financial statements with respect to these lawsuits as a loss is neither probable, nor is a loss or range of a loss reasonably estimable.

 

   

In re FirstEnergy Corp. Securities Litigation (S.D. Ohio); on July 28, 2020 and August 21, 2020, purported stockholders of FE filed putative class action lawsuits alleging violations of the federal securities laws. Those actions have been consolidated and a lead plaintiff, the Los Angeles County Employees Retirement Association, has been appointed by the court. A consolidated complaint was filed on February 26, 2021. The consolidated complaint alleges, on behalf of a proposed class of persons who purchased FE securities between February 21, 2017 and July 21, 2020, that FE and certain current or former FE officers violated Sections 10(b) and 20(a) of the Exchange Act by issuing alleged

 

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misrepresentations or omissions concerning FE’s business and results of operations. The consolidated complaint also alleges that FE, certain current or former FE officers and directors and a group of underwriters violated Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 as a result of alleged misrepresentations or omissions in connection with offerings of senior notes by FE in February and June 2020. On March 30, 2023, the court granted plaintiffs’ motion for class certification. On April 14, 2023, FE filed a petition in the U.S. Court of Appeals for the Sixth Circuit seeking to appeal that order; the Sixth Circuit granted FE’s petition on November 16, 2023, and heard oral argument on July 17, 2024. On November 30, 2023, FE filed a motion with the S.D. Ohio to stay all proceedings pending that circuit court appeal. Discovery was stayed during the pendency of that motion to stay all proceedings and on August 20, 2024, the S.D. Ohio denied FE’s motion and lifted the stay as to fact discovery. On July 29, 2024, FE filed in the U.S. Court of Appeals for the Sixth Circuit a Petition for Writ of Mandamus asking the Sixth Circuit to direct the district court to deny plaintiffs’ motion to compel disclosure of FE’s privileged internal investigation materials. On September 11, 2024, FE filed in the U.S. Court of Appeals for the Sixth Circuit a motion to stay discovery of the privileged internal investigation materials pending resolution of the Petition for Writ of Mandamus. FE believes that it is probable that it will incur a loss in connection with the resolution of this lawsuit. Given the ongoing nature and complexity of such litigation, FE cannot yet reasonably estimate a loss or range of loss.

 

   

MFS Series Trust I, et al. v. FirstEnergy Corp., et al. and Brighthouse Funds II—MFS Value Portfolio, et al. v. FirstEnergy Corp., et al. (S.D. Ohio): on December 17, 2021 and February 21, 2022, purported stockholders of FE filed complaints against FE, certain current and former officers and certain current and former officers of EH. The complaints allege that the defendants violated Sections 10(b) and 20(a) of the Exchange Act by issuing alleged misrepresentations or omissions regarding FE’s business and its results of operations and seek the same relief as the In re FirstEnergy Corp. Securities Litigation described above. FE believes that it is probable that it will incur losses in connection with the resolution of these lawsuits. Given the ongoing nature and complexity of such litigation, FE cannot yet reasonably estimate a loss or range of loss.

 

   

State of Ohio ex rel. Dave Yost, Ohio Attorney General v. FirstEnergy Corp., et al. and City of Cincinnati and City of Columbus v. FirstEnergy Corp. (Common Pleas Court, Franklin County, OH, all actions have been consolidated): on September 23, 2020 and October 27, 2020, the OAG and the cities of Cincinnati and Columbus, respectively, filed complaints against several parties including FE, each alleging civil violations of the Ohio Corrupt Activity Act and related claims in connection with the passage of HB 6. On January 13, 2021, the OAG filed a motion for a temporary restraining order and preliminary injunction against FirstEnergy seeking to enjoin FirstEnergy from collecting the Ohio Companies’ decoupling rider. On January 31, 2021, FE reached a partial settlement with the OAG and the cities of Cincinnati and Columbus with respect to the temporary restraining order and preliminary injunction request and related issues. In connection with the partial settlement, the Ohio Companies filed an application on February 1, 2021, with the PUCO to set their respective decoupling riders (Conservation Support Rider) to zero. On February 2, 2021, the PUCO approved the application of the Ohio Companies setting the rider to zero, and no additional customer bills included new decoupling rider charges after February 8, 2021. On August 13, 2021, new defendants were added to the complaint, including two former officers of FirstEnergy. On December 2, 2021, the cities and FE entered a stipulated dismissal with prejudice of the cities’ suit. This matter was stayed through a criminal trial in United States v. Larry Householder, et al. described above, but resumed pursuant to an order, dated March 15, 2023. On July 31, 2023, FE and other defendants filed motions to dismiss in part the OAG’s amended complaint, which the OAG opposed. On February 16, 2024, the OAG moved to stay discovery in the case in light of the February 9, 2024, indictments against defendants in this action, which the court granted on March 14, 2024. As described above, FE reached a settlement with the OAG of this civil action and the OOCIC investigation which resolves this civil action. FE recognized a loss contingency of $19.5 million in the second quarter of 2024, which was paid on August 16, 2024.

 

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On February 9, 2022, FE, acting through the SLC, agreed to a settlement term sheet to resolve the following shareholder derivative lawsuits relating to HB 6 and the now former Ohio House Speaker Larry Householder and other individuals and entities allegedly affiliated with Mr. Householder that were filed in the S.D. Ohio, the N.D. Ohio and the Ohio Court of Common Pleas, Summit County:

 

   

Gendrich v. Anderson, et al. and Sloan v. Anderson, et al. (Common Pleas Court, Summit County, Ohio, all actions have been consolidated); on July 26, 2020 and July 31, 2020, respectively, purported stockholders of FE filed shareholder derivative action lawsuits against certain current and former FE directors and officers, alleging, among other things, breaches of fiduciary duty. On August 30, 2022, the parties filed a joint motion to dismiss the state court action, which the court granted on September 2, 2022.

 

   

Miller v. Anderson, et al. (N.D. Ohio); on August 7, 2020, purported stockholders of FE filed shareholder derivative actions alleging the then FE Board and officers breached their fiduciary duties and committed violations of Section 14(a) of the Exchange Act. On August 24, 2022, the parties filed a joint motion to dismiss the action pending in the N.D. Ohio based upon the approval of the settlement by the S.D. Ohio, which was granted on May 17, 2024.

 

   

Bloom, et al. v. Anderson, et al.; Employees Retirement System of the City of St. Louis v. Jones, et al.; Electrical Workers Pension Fund, Local 103, I.B.E.W. v. Anderson et al.; Massachusetts Laborers Pension Fund v. Anderson et al.; The City of Philadelphia Board of Pensions and Retirement v. Anderson et al.; Atherton v. Dowling et al.; Behar v. Anderson, et al. (S.D. Ohio, all actions have been consolidated): on September 1, 2020, purported stockholders of FE filed shareholder derivative actions alleging the then FE Board and officers breached their fiduciary duties and committed violations of Section 14(a) of the Exchange Act. On March 11, 2022, the parties executed a stipulation and agreement of settlement, and filed a motion the same day requesting preliminary settlement approval in the S.D. Ohio, which the S.D. Ohio granted on May 9, 2022. Subsequently, following a hearing on August 4, 2022, the S.D. Ohio granted final approval of the settlement on August 23, 2022, which was appealed by a purported FE stockholder on June 15, 2023. The U.S. Court of Appeals for the Sixth Circuit affirmed the district court’s final settlement approval. All appeal options were exhausted on May 16, 2024.

The above settlement included a series of corporate governance enhancements and a payment to FE of $180 million, less approximately $36 million in court-ordered attorney’s fees awarded to plaintiffs, and a $7 million net return on deposited funds, which was received in the second quarter of 2024. The judgment and settlement are final and, therefore, the derivative lawsuits are now fully resolved.

The outcome of any of these lawsuits, governmental investigations and audit is uncertain and could have a material adverse effect on FE’s or its subsidiaries’ reputation, business, financial condition, results of operations, liquidity and cash flows.

Other Legal Matters

There are various lawsuits, claims (including claims for asbestos exposure) and proceedings related to FirstEnergy’s normal business operations pending against FE or its subsidiaries, including JCP&L. The loss or range of loss in these matters is not expected to be material to FE or its subsidiaries. The other potentially material items not otherwise discussed above are described under Note 6, “Regulatory Matters.”

JCP&L accrues legal liabilities only when it concludes that it is probable that it has an obligation for such costs and can reasonably estimate the amount of such costs. In cases where JCP&L determines that it is not probable, but reasonably possible that it has a material obligation, it discloses such obligations and the possible loss or range of loss if such estimate can be made. If it were ultimately determined that JCP&L has legal liability or are otherwise made subject to liability based on any of the matters referenced above, it could have a material adverse effect on JCP&L’s financial condition, results of operations, and cash flows.

 

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Economic Conditions

Post-pandemic economic conditions have stabilized across numerous material categories, but lead times have not returned to pre-pandemic levels. Several key suppliers have seen improvements with labor shortages and raw material availability and we continue to monitor the situation as capacity can be constrained with increased demand. Inflationary pressures have moderated, which has positively impacted the cost of materials, but certain categories have remained elevated. JCP&L continues to implement mitigation strategies to address supply constraints and does not expect service disruptions or any material impact on its capital investment plan. However, the situation remains fluid and a prolonged continuation or further increase in supply chain disruptions could have an adverse effect on our results of operations, cash flow and financial condition.

Default Service

We have default service obligations to provide power to non-shopping customers who have elected to continue to receive service under regulated retail tariffs. The volume of these sales varies depending on the level of shopping that occurs. Default service for JCP&L is provided through a competitive procurement process approved by the NJBPU. Retail generation revenues are recognized over time as electricity is delivered and consumed immediately by the customer.

Safety

Safety is a core value of JCP&L. Our employees have the power and responsibility to keep each other safe and eliminate life-changing events, which are injuries that have life-changing impacts or fatal results. Safety metrics, such as injuries that result in days away or restricted time and life-changing events, are regularly monitored, internally reported, and are included in the annual incentive compensation program to reinforce that a safe work environment is crucial to our success.

We continue to focus on mitigating life-changing event exposure to strengthen our safety-first culture and drive safer decisions from an engaged workforce who puts safety first. We continue to embed FirstEnergy’s “Leading with Safety” learnings and experiences, as well as to enhance and reinforce leader and employee safety training and exposure control concepts to improve job site exposure identification, communication and mitigation to prevent life changing events. Further, FirstEnergy continues to expand its “Leading with Safety” experiences with its employees, including our employees, to achieve excellence in personal, contractor and public safety.

 

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MANAGEMENT

Overview

We are a New Jersey corporation managed by our board of directors (the “Directors”). The following sets forth information as of March 1, 2025 regarding our Directors and executive officers.

 

Name

 

Age

  

Position(s)

W. Douglas Mokoid

  43    Director and President (Principal Executive Officer)

Linda Bowden

  73    Director

John E. Harmon

  64    Director

A. Wade Smith

  60    Director

Toby L. Thomas

  53    Director

Teresa Reed

  53    Vice President, State Finance and Regulatory (Principal Financial Officer)

Tracy M. Ashton

  43    Controller (Principal Accounting Officer)

Executive Officers

Set forth below is certain information regarding each of our executive officers as of March 1, 2025, other than for Mr. Mokoid, whose information appears under “Directors” below.

Teresa Reed has served as our Vice President, State Finance and Regulatory since December 2024. Prior to joining FirstEnergy, Ms. Reed served as Director, Rates & Regulatory Planning, Rate Design & Pricing Solutions for Duke Energy, where she led rate design, customer renewable offers, pricing strategy and execution for the company’s service territory in the Carolinas. Ms. Reed joined Duke Energy in 2008 as a Senior Auditor and held diverse positions in supply chain, compliance and customer solutions and strategy. She began her career at Railinc Corporation, where she progressed through a series of financial roles, ultimately becoming the company’s Controller.

Tracy M. Ashton has served as our Controller since 2023. She also serves as Assistant Controller, Corporate of FE. Ms. Ashton is a Certified Public Accountant. She joined FirstEnergy in 2008 as an advanced accountant in the Accounting Research group. In 2011, she was promoted to manager, FES/FEG Reporting & Technical Accounting, and was soon promoted to manager, Financial Reporting & Technical Accounting before being moved to manager, Reporting Strategy & Process Management in 2014. Tracy was then promoted to director, FEU/FET Long-Term Planning and became director, Business Planning & Performance in 2018 and promoted to Assistant Controller – Corporate in 2019.

Directors

Set forth below is certain information regarding each Director as of March 1, 2025. Directors are appointed annually to serve until his or her resignation, death, permanent disability, removal, or until their successors are duly appointed.

W. Douglas Mokoid has served as one of our Directors and our President since June 2024. Mr. Mokoid previously served as Vice President & Region President of Atlantic City Electric and Director of Operations for Atlantic City Electric. Mr. Mokoid’s electric utility experience in the New Jersey region provides the JCP&L Board with valuable insight relevant to its business.

Linda Bowden has served as one of our Directors since 2019. She also served as PNC Bank New Jersey Regional President from 2009 to 2021. Ms. Bowden’s extensive career in the banking sector and leadership throughout the state of New Jersey make her a valuable member of the of JCP&L Board.

 

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John E. Harmon has served as one of our Directors since 2021. He has also served as President and CEO of the African American Chamber of Commerce of New Jersey. Mr. Harmon’s lifelong advocacy in the state of New Jersey coupled with his business acumen qualifies him to serve on the JCP&L Board.

A. Wade Smith has served as one of our Directors since August 2024. He joined FirstEnergy in December 2023 as president of FirstEnergy Utilities. In that role he is responsible for overseeing FirstEnergy’s state businesses and the stand-alone transmission companies, as well as the Rates & Regulatory Affairs and External Affairs groups. Prior to joining FirstEnergy, Mr. Smith served as chief operating officer of Puget Sound Energy (“PSE”) from 2022 to 2023, where he was responsible for all of PSE’s operational areas, including natural gas and electric operations, safety and health, and energy supply. From 2021 to 2022, Mr. Smith served as senior vice president of Electric Operations for Pacific Gas & Electric Company (“PG&E”), leading electric transmission and distribution system operations and maintenance, generation, and project management and construction teams for PG&E’s electric operations. Prior to PG&E, he spent 32 years at American Electric Power (“AEP”), where he held increasingly responsible leadership roles, including being named senior vice president, Grid Development for AEP Transmission in 2015, where was responsible for planning, engineering, project and construction management, and real-time operation. Mr. Smith’s more than three decades of experience leading utilities provide valuable industry insight to the JCP&L Board.

Toby L. Thomas has served as one of our Directors since August 2024. He joined FirstEnergy as chief operating officer in November 2023 and is responsible for a broad range of transmission and distribution business functions, including planning and protection, transmission and substation engineering, project and construction management, system operations and support operations. He also has responsibility for the Customer Experience group. Prior to joining FirstEnergy, Mr. Thomas served with AEP for over 20 years, most recently serving as senior vice president – AEP Energy Delivery from 2021 to 2023, where he helped achieve efficiencies in transmission, distribution and telecommunications operations, project management, construction, engineering and standards. Mr. Thomas joined AEP in 2001 as a project engineer in Industrial Marketing and Origination, progressing through various roles of increasing responsibility in asset optimization and generation, including being named president and chief operating officer of Indiana Michigan Power in 2017 to oversee business performance, operations and a wide range of customer, policy and regulatory relationships. Mr. Thomas’s deep expertise with transmission and the customer experience make him a valuable member of the JCP&L Board.

Director Independence

JCP&L does not have securities listed on a national securities exchange. Under the New Jersey Administrative Code, JCP&L is required to have at least 40% of its board of directors be independent pursuant to the New York Stock Exchange listing requirements pertaining to the independence of directors, as set forth in Section 303A.02(b) of the NYSE Listed Company Man Manual. We have determined that Ms. Bowden and Mr. Harmon are independent for purposes of this requirement.

Non-Employee Director Compensation in Fiscal Year 2024

 

Name(1)

   Fees Earned
or Paid
in Cash
($)
     Total
($)
 

Linda Bowden

   $ 132,000      $ 132,000  

John E. Harmon

   $ 132,000      $ 132,000  

 

(1) 

Our President, W. Douglas Mokoid, is excluded from this table because he does not receive additional compensation for his service as a director. Compensation received by Mr. Mokoid for 2024 is disclosed in “Executive Compensation.” In addition, as employees of FirstEnergy, Messrs. Smith and Thomas do not receive additional compensation for their service as directors of the Company.

 

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Compensation of Directors

Our non-employee directors are compensated in the amount of $33,000 per quarter. Our directors who are also employees of FirstEnergy, namely Messrs. Smith and Thomas, do not receive additional compensation for their service to us as directors. In addition, our president, Mr. Mokoid, does not receive additional compensation for his service as a director. In setting director compensation, we take into consideration the significant amount of time that directors spend in fulfilling their duties to us as well as the skill level required of members of our Board. A review is performed periodically to help ensure the competitiveness of non-employee director compensation.

 

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EXECUTIVE COMPENSATION

Overview

This compensation discussion describes the material elements of compensation of the Company’s executive officers identified under the heading “Management” who served as an executive officer during the fiscal year ended December 31, 2024. We are a wholly owned subsidiary of FE and certain executive officers are also employees of FESC, a direct, wholly owned subsidiary of our parent. In addition to providing services to us, our controller, Ms. Ashton, devotes a significant portion of her time to work for FE and other FE subsidiaries. We have not paid any compensation to Ms. Ashton and she is compensated by FESC for the performance of her duties as an employee of FESC and its affiliates. FESC does not allocate this compensation between services for us and services for FESC and its affiliates. Our vice president and principal financial officer, Ms. Reed, devotes 100% of her time to us, however, she is employed by FESC and her compensation is paid by FESC. Our president and principal executive officer, Mr. Mokoid, is the only executive officer who is employed by us.

As a wholly owned subsidiary of FE, the compensation philosophy and decisions regarding the compensation of our executive officers is set by FESC and the JCP&L Board does not review any of the compensation decisions made by FESC with regard to the compensation of our executive officers. Our executive officers may also participate in employee benefit plans and arrangements sponsored by FE, including plans that may be established by FE in the future, as well as its health and welfare plans, including medical, prescription, dental and vision. The Compensation Discussion and Analysis and Executive Compensation sections of FE’s 2025 Proxy Statement will include a full discussion of FE’s compensation policies and programs and will be available upon its filing on the SEC’s website at http://www.sec.gov and on FE’s website at https://www.firstenergycorp.com/.

Summary Compensation Table for Fiscal Year 2024

The following table sets forth information for the year ended December 31, 2024, regarding compensation awarded to or earned by Mr. Mokoid and Ms. Reed.

 

Name and Principal Position

  Year     Salary
($)
    Bonus
($)
    Stock
Awards
($)(1)
    Non-Equity
Incentive Plan
Compensation
($)(2)
  Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)(3)
    All Other
Compensation
($)(4)
    Total
($)
 

W. Douglas Mokoid

President (Principal Executive Officer)

    2024     $ 221,192       $—     $ 1,063,457     $—    $ 10,125     $ 16,556     $ 1,311,330  

Teresa Reed

Vice President, State Finances and Regulatory (Principal Financial Officer)

    2024       $2,115       $77,500       $130,929     $—      $—        $393       $210,937  

 

(1) 

The amounts set forth in the “Stock Awards” column for 2024 represent grants of performance-adjusted RSUs made under the 2020 Incentive Compensation Plan at the aggregate grant date fair value calculated in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718 “Stock Compensation” and are based on target amounts. The assumptions used in determining values for 2024 are reflected in Note 6 to the Notes to the Consolidated Financial Statements of FE’s Annual Report on Form 10-K filed with the SEC on February 27, 2025. The grant date fair value at the maximum payout level for each of the executive officers for the 2024 LTIP awards are: Mr. Mokoid: $1,126,182; and Ms. Reed: $108,014.

 

The amounts shown in the table above for Mr. Mokoid and Ms. Reed include values from prorated LTIP awards for the 2024-2026, 2023-2025 and 2022-2024 (for Mr. Mokoid only since Ms. Reed was hired near year-end) performance periods, which were granted upon their hires, and based on their annual salaries and total LTIP target opportunity. The prorated LTIP awards were granted as stock-based performance-adjusted RSUs, except for Mr. Mokoid’s 2024-2026 cycle

 

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  which was in the form of approximately 33% cash-based performance-adjusted RSUs and approximately 67% stock-based performance-adjusted RSUs. The grant date fair value at the maximum payout level for these awards are: Mr. Mokoid: $283,692 for the 2022-2024 cycle, $717,040 for the 2023-2025 cycle; and Ms. Reed: $53,804 for the 2023-2025 cycle.

 

The value of these awards are not payable to the executive, if at all, until the vesting date or other qualifying event shown in the Outstanding Equity Awards at Fiscal Year-End 2024 table or the 2024 Post-Termination Compensation and Benefits table described later in this proxy statement.

(2) 

In February 2025, based on actual 2024 STIP results, the FE Compensation Committee recommended, and the independent members of the FE Board approved, zero payouts under the 2024 STIP. Ms. Reed was not eligible for a 2024 STIP due to her hire date effective December 30, 2024.

(3) 

The amounts set forth in the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column for 2024 reflect the aggregate increase in actuarial value to the executive officers of all defined benefit and actuarial plans (including supplemental plans) accrued during the year and above-market earnings on nonqualified deferred compensation. The disclosure assumes 5.72% (qualified pension), 5.66% (nonqualified supplemental pension) and 5.37% (nonqualified cash balance restoration plan) are the discount rates for the present value obligation calculations. The change in values for the pension plans for 2024 are as follows: Mr. Mokoid: $10,125; and Ms. Reed: $0. The change in pension value is heavily dependent on the discount rate and mortality assumptions and does not represent the actual value of the change in pension benefit accrued by the executive officer during the year. The formula used to determine the above market earnings equals 2024 total interest multiplied by the difference between 120% of the Long-Term Applicable Federal Rate (AFR) and the plan rate and divided by the plan rate.

(4) 

The following table sets forth detail about the amounts for 2024 in the “All Other Compensation” column and includes compensation not required to be included in any other column:

 

Name

   401(k)
Employer
Contributions
($)(a)
     Life
Insurance
($)(b)
     Relocation
($)(c)
     Total ($)  

W. Douglas Mokoid

   $ 6,078      $ 578      $ 9,900      $ 16,556  

Teresa Reed

   $ —       $ 393      $ —       $ 393  

 

  (a) 

The value of matching contributions under the FirstEnergy Corp. Savings Plan, which were subject to a maximum of $11,500.

  (b) 

Employer cost for basic life insurance premiums in 2024.

  (c) 

Given their recent hires in 2024, the value represents the benefits provided in 2024 for Mr. Mokoid under the Executive Relocation Package. FirstEnergy’s executive relocation program provides reimbursement or payment for certain relocation-related expenses including, but not limited to travel, temporary living expenses, new home closing costs, home sale assistance, and tax gross-ups on certain relocation expenses.

Grants of Plan-Based Awards in Fiscal Year 2024

The following table summarizes the stock awards granted to our executive officers during 2024:

 

Name   Grant/Payout4        Grant Date(1)  

FE Board
Action

Date(2)

 

Estimated Possible Payouts

Under

Non-Equity Incentive Plan

Awards(3)

   

Estimated Future Payouts Under

Equity Incentive Plan Awards(4)

 

All Other

Stock

Awards:

Number

of Shares

of Stock or

Unit

   

Grant

Date Fair

Value of

Stock

and

Option

Awards(5)

      
                    Threshold     Target     Stretch     Threshold   Target   Stretch                

W. Douglas Mokoid

President (Principal

Executive Officer)

  STIP         $ 64,855     $ 129,711     $ 259,422               —     
  2024 Performance-Adjusted RSUs – Cash-Based     6/17/24   2/7/24    
— 
 
  1,171   4,683   9,366           $187,690    
  2024 Performance-Adjusted RSUs – Stock-Based     6/17/24   2/7/24     —      2,342   9,367   18,734           $375,401    
  2023 Performance-Adjusted RSUs – Stock-Based     6/17/24   2/9/23     —      2,196   8,782   17,564           $358,520    

 

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Name   Grant/Payout4        Grant Date(1)  

FE Board
Action

Date(2)

 

Estimated Possible
Payouts

Under

Non-Equity Incentive
Plan

Awards(3)

 

Estimated Future Payouts Under

Equity Incentive Plan Awards(4)

 

All Other

Stock

Awards:

Number

of Shares

of Stock or

Unit

 

Grant

Date Fair

Value of

Stock

and

Option

Awards(5)

    
                    Threshold   Target   Stretch   Threshold   Target   Stretch            
  2022 Performance-Adjusted RSUs – Stock-Based     6/17/24   2/4/22   —    878   3,513   7,026     $141,846  

Teresa Reed

Vice President, State

Finances and

Regulatory (Principal

Financial Officer)

  STIP     —    —    —    —      —   
  2024 Performance-Adjusted RSUs – Stock-Based     12/30/24   2/7/24     377   1,509   3,018     $54,007  
  2023 Performance-Adjusted RSUs – Stock-Based     12/30/24   2/9/23     203   813   1,626   —    $26,902  
  Restricted Stock     12/30/24      

  1,266   $50,020  

 

(1) 

In accordance with FASB ASC Topic 718, the effective grant date for the prorated 2024 performance-adjusted RSUs (cash-based), the prorated 2024, 2023, and 2022 performance-adjusted RSUs (stock-based) granted to Mr. Mokoid is June 17, 2024. The effective grant date for the prorated 2024 and 2023 performance-adjusted RSUs (stock-based), and the restricted stock award granted to Ms. Reed is December 30, 2024.

(2) 

In accordance with SEC rules, the dates set forth in the “FE Board Action Date” column for these awards represent the date the FE Board took action to grant the awards to all eligible employees.

(3) 

The amounts set forth in the “Estimated Possible Payouts Under Non-Equity Incentive Plan Awards” columns reflect the potential payouts for each executive officer under the 2024 STIP based upon (i) the Operating (non-GAAP) earnings hurdle required to fund the STIP pool of funds and (ii) the achievement of KPIs described in the FE’s 2025 Proxy Statement. No payout may be made under the STIP if the funding hurdle or the threshold level of performance are not achieved. The amounts reported in this column were calculated using annualized STIP target opportunity levels as a percent of base salary, prorated for Mr. Mokoid’s hire effective June 17, 2024. Ms. Reed was not eligible for a 2024 STIP due to her hire date effective December 30, 2024.

(4) 

The amounts set forth in the “Estimated Future Payouts Under Equity Incentive Plan Awards” columns reflect the threshold, target, and maximum potential payouts for each executive officer under the 2024 LTIP, based upon the achievement of the performance measures described in the CD&A. The target amounts are reported in the Stock Awards column of the Summary Compensation Table. The Performance-Adjusted RSUs-Cash-Based amounts have been rounded in this table. If the threshold level of performance is not achieved, no payout will be made.

(5) 

The grant date fair value was computed in accordance with FASB ASC Topic 718 and is also reported in the “Stock Awards” column of the Summary Compensation Table. The Performance-Adjusted RSUs components are valued based on a Monte-Carlo simulation of $39.474 for the Operating EPS portion of the 2024 Performance- Adjusted RSUs and $41.197 for the Relative TSR portion of the 2024 Performance-Adjusted RSUs (for Mr. Mokoid); $39.955 for the Operating EPS portion of the 2023 Performance- Adjusted RSUs and $42.439 for the Relative TSR portion of the 2023 Performance- Adjusted RSUs (for Mr. Mokoid); $39.634 for the Operating EPS portion of the 2022 Performance- Adjusted RSUs and $41.758 for the Relative TSR portion of the 2022 Performance-Adjusted RSUs (for Mr. Mokoid); $39.399 for the Operating EPS portion of the 2024 Performance- Adjusted RSUs and $29.087 for the Relative TSR portion of the 2024 Performance-Adjusted RSUs (for Ms. Reed); $39.411 for the Operating EPS portion of the 2023 Performance-Adjusted RSUs and $21.351 for the Relative TSR portion of the 2023 Performance-Adjusted RSUs (for Ms. Reed). The Restricted Stock award for Ms. Reed is valued at $39.510 based on the average high and low stock price on the grant date.

Narrative to Summary Compensation Table and Grants of Plan-Based Awards Table

Employment Arrangements

W. Douglas Mokoid

In May 2024, Mr. Mokoid accepted employment with JCP&L pursuant to which he agreed to serve as President commencing on June 17, 2024. Mr. Mokoid’s employment arrangement entitles him to an annual base salary of $405,000 and the opportunity to participate in FirstEnergy’s 2020 Incentive Compensation Plan (“ICP”), Short-Term Incentive Program (“STIP”) and Long-Term Incentive Program (“LTIP”) as well as its Executive Deferred Compensation Plan, Savings Plan, Cash Balance Pension Plan and the Cash Balance Restoration Plan. In addition, Mr. Mokoid is also eligible for prorated LTIP awards based on his annual salary and total LTIP target opportunity for LTIP cycles already in progress on June 17, 2024. Mr. Mokoid was also eligible for relocation benefits associated his relocation.

Teresa Reed

In December 2024, Ms. Reed accepted employment with FESC, pursuant to which she agreed to serve as Vice President, State Finance & Regulatory, for JCP&L commencing on December 30, 2024. Ms. Reed’s

 

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employment arrangement entitles her to an annual base salary of $275,000 and the opportunity to participate in FirstEnergy’s 2020 ICP, STIP and LTIP as well as its Executive Deferred Compensation Plan, Savings Plan, Cash Balance Pension Plan and the Cash Balance Restoration Plan (if eligible earnings exceed the annual compensation limit). Ms. Reed is also eligible for prorated LTIP awards based on her annual salary and total LTIP target opportunity for the LTIP cycles already in progress on December 30, 2024. Ms. Reed received a hiring bonus of $77,500 and a one-time restricted stock award under FirstEnergy’s 2020 ICP in the amount of $50,000, which vests on the second anniversary of her date of hire, subject to her continued service. Ms. Reed is also eligible for relocation benefits associated her relocation.

Outstanding Equity Awards at Fiscal Year-End 2024

The following table summarizes the outstanding equity award holdings of our executive officers as of December 31, 2024:

 

Name7

  Grant Type(1)   Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)(2)(3)
  Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)(4)
  Grant Type(1)   Equity
Incentive
Plan Awards:
Number of
Unearned
Shares,
Units or
Other Rights
That Have Not
Vested
(#)(3)(5)
  Equity
Incentive
Plan Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other Rights
That Have Not
Vested
($)(4)

 

W. Douglas Mokoid

President (Principal

Executive Officer)

 

 

2022
Performance-
Adjusted
RSUs – Stock-
Based

  2,866   $114,009   2023
Performance-
Adjusted
RSUs – Stock-
Based
  8,956   $356,270
      2024
Performance-
Adjusted
RSUs – Stock-
Based
  9,552   $379,979
        2024
Performance-
Adjusted
RSUs – Cash-
Based
  4,776   $189,989

Teresa Reed

Vice President, State Finances

and Regulatory (Principal

Financial Officer)

  Restricted Stock(6)

 

  1,266

 

  $50,361

 

  2023
Performance-
Adjusted
RSUs –Stock-
Based
  813

 

  $32,341

 

        2024
Performance-
Adjusted
RSUs – Stock-
Based
  1,509   $60,028

 

(1) 

The awards set forth in the “Grant Type” columns of this table include time-based restricted stock awards and performance-adjusted RSUs. Performance-adjusted RSUs generally will vest, in whole or in part, or be forfeited at the end of a three-year performance period to the extent certified by the FE Compensation Committee and independent members of the FE Board, as further described in FE’s 2025 Proxy Statement. Assuming that the underlying performance conditions are met, the vesting dates for the performance-adjusted RSUs are as follows: 2022 performance-adjusted RSUs – stock-based (March 1, 2025); 2023 performance-adjusted RSUs – stock-based (March 1, 2026); and 2024 performance-adjusted RSUs – stock-based and cash- based (March 1, 2027).

(2) 

The 2022 performance-adjusted RSUs (stock-based) included in this column are deemed to be earned because the performance condition has been achieved, but such performance-based RSUs had not vested as of December 31, 2024. The number of shares set forth in this column is based on actual performance for the 2022 performance-adjusted RSUs (stock-based).

 

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(3) 

The number of shares set forth in both the “Number of Shares or Units of Stock That Have Not Vested” and the “Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested” columns include all dividends or dividend equivalents earned and reinvested through December 31, 2024, rounded up to the nearest whole unit or share.

(4) 

The values set forth in both the “Market Value of Shares or Units of Stock That Have Not Vested” and the “Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested” columns are determined by multiplying the number of shares or units by our common stock closing price of $39.78 on December 31, 2024.

(5) 

Stock awards in this column include unearned performance-adjusted RSUs (at the target amount) for which the performance period has not ended.

(6) 

Ms. Reed’s restricted stock award was granted on December 30, 2024 and vests in full on the second anniversary from the date of grant.

Post-Employment Compensation

Pension Benefits as of December 31, 2024

The following table provides information regarding the pension benefits of our executive officers as of December 31, 2024:

 

Name

 

Plan Name

  Number of
Years
Credited
Service
(#)
    Present
Value of
Accumulated
Benefit
($)(1)
    Payments
During Last
Fiscal Year
($)
 

W. Douglas Mokoid(2)

President (Principal Executive

Officer)

  Qualified Plan     0       $10,125       —   
  Nonqualified (Cash Balance Restoration Plan)       $0       —   
  Total       $10,125       —   

Teresa Reed(2)

Vice President, State Finances and

Regulatory (Principal Financial

Officer)

  Qualified Plan     0       $—        —   
  Nonqualified (Cash Balance Restoration Plan)         —   
  Total       $—        —   

 

(1) 

The amounts set forth in the “Present Value of Accumulated Benefit” column are determined as of December 31, 2024, using the assumptions used for financial reporting purposes set forth in Note 5 of the Notes to Consolidated Financial Statements contained in FE’s Form 10-K for the fiscal year ended December 31, 2024.

(2) 

As of December 31, 2024, Mr. Mokoid, and Ms. Reed are not vested in their pension benefits.

Potential Post-Employment Payments

2024 Post-Termination Compensation and Benefits

The following table summarizes the compensation and benefits that would be payable to our executive officers in the event of a separation of service as of December 31, 2024.

 

   

Retirement(1)

 

Involuntary

Separation

(Without Cause)

  Termination
Without
Cause

Following a
CIC
  Voluntary
Termination
(Pre-retirement
Eligible)(1)
  Involuntary
Termination
(For
Cause)(1)
  Death(1)   Disability(1)
Base Salary   Accrued through date of retirement   Accrued through date of termination   Accrued
through
date of
CIC
termination
  Accrued
through
date of
termination
  Accrued
through
date of
termination
  Accrued
through date
of
qualifying
event
  Accrued
through date
of
qualifying
event
Severance Pay   N/A   3 weeks of pay for every full year of service (minimum of 52 weeks and capped at a maximum of 104 weeks), including   2 times the
sum of
base salary
plus target
annual
STIP
award
  N/A   N/A   N/A   N/A

 

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Retirement(1)

 

Involuntary

Separation

(Without Cause)

  Termination
Without
Cause

Following a
CIC
  Voluntary
Termination
(Pre-retirement
Eligible)(1)
  Involuntary
Termination
(For
Cause)(1)
  Death(1)   Disability(1)
    the current year, calculated using base salary at the time of severance   multiplier
for cash
severance
       

Health and Wellness

Benefits

  May continue unsubsidized coverage   Provided at active employee rates for severance period(2)   Provided at
active
employee
rates for
two years
  Forfeited   Forfeited   Survivor
health and
wellness
provided as
eligible
  Health and
wellness
provided as
eligible
STIP Award   Issued a prorated award based on elapsed days of service and actual performance   Issued a prorated award based on elapsed days of service and actual performance   Issued a
prorated
award at
target
based on
elapsed
days of
service
  Forfeited   Forfeited   Issued a
prorated
award based
on elapsed
days of
service and
actual
performance
  Issued a
prorated
award based
on elapsed
days of
service and
actual
performance
Performance- Adjusted RSUs (Stock-Based and Cash-Based)   Issued a prorated award based on full months of service and actual performance   Issued a prorated award based on full months of service and actual performance   Issued
prorated
award
based on
full months
of service
at target
value
  Forfeited   Forfeited   Issued a
prorated
award based
on full
months of
service at
target value
  Issued a
prorated
award based
on full
months of
service and
actual
performance
Restricted Stock   Forfeited   Prorated portion of shares and all dividends accrued   Issued
100% of
shares and
all
dividends
accrued
  Forfeited   Forfeited   Issued
100% of
shares and
all
dividends
accrued
  Issued
100% of
shares and
all
dividends
accrued
EDCP (Elective Deferrals)   Payable as elected   Payable as elected if retirement eligible; otherwise payable in a lump sum upon termination   Payable as
elected if
retirement
eligible;
otherwise
payable in
a lump
sum upon
termination
  Payable in
a lump
sum upon
termination
  Payable as
elected
upon
termination
if
retirement
eligible;
otherwise
payable in
a lump
sum upon
termination
  Payable to
survivor as
elected
  Payable as
elected
Excise Tax Gross Up under Section 280G   No   No   N/A   No   No   No   No

 

(1) 

Benefits provided in these scenarios are provided to all employees on the same terms, if applicable.

(2) 

Active employee health and wellness benefits are provided under the Executive Severance Plan for the severance period, which is equal to three weeks for every year of service, including the current year (52 week minimum and 104 week maximum).

The potential post-employment payments discussed in each termination section below disclose the estimated payments and benefits payable to the executive officers upon certain triggering events representing the enhanced or accelerated value of payments and benefits and do not include previously earned and vested amounts payable

 

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to such executive officer regardless of the applicable triggering event that have been accrued but not yet paid. The post-termination benefit calculations are based on the following assumptions:

 

   

The amounts disclosed are estimates of the amounts that would be paid out to the executive officers based on the triggering event. The actual amounts can be determined only at the time of payment

 

   

The amounts disclosed do not include benefits provided under the qualified plan and nonqualified cash balance restoration plan as described in the Pension Benefits section and shown in the Pension Benefits table (at the earliest commencement date without reduction) earlier in this proxy statement, unless expressly noted

 

   

December 31, 2024, is the last day of employment.

 

   

All employees, including the executive officers, are eligible for a full year payout based on actual performance under the STIP if they are employed on December 31, 2024. The 2024 STIP amounts are provided in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table.

 

   

The LTIP and Other Awards Payments Under Termination table below includes performance-adjusted RSUs and restricted stock.

 

   

The closing common stock price on December 31, 2024, the last trading day of the year ($39.78), is applied to value performance- adjusted RSUs and restricted stock

 

   

Actual performance is utilized for the 2022 performance-adjusted RSUs. Target payout is assumed for the 2023 and 2024 performance-adjusted RSUs

 

   

Health care amounts are not disclosed since they are available to all employees under the same circumstances

Retirement/Voluntary Termination

The executive officers are not yet retirement eligible as of December 31, 2024, and their outstanding equity awards would be forfeited in the event of a voluntary termination.

Involuntary Separation

In the event of an involuntary separation, the executive officers are covered under the FirstEnergy Executive Severance Benefits Plan as Amended and Restated as of December 20, 2016 (the “Executive Severance Plan”). Under the Executive Severance Plan, executives are offered severance benefits if involuntarily separated when business conditions require the closing or sale of a facility, corporate restructuring, merger, acquisition, a reduction in workforce, or job elimination. Severance is also offered if an executive turns down a job assignment that: would result in a reduction of at least 15% in current base salary; contains a requirement that the executive must relocate from his or her current residence for reasons related to the new job; or would result in the distance from the executive’s current residence to his or her new reporting location being at least 50 miles farther than his or her current residence to his or her previous reporting location.

The Executive Severance Plan provides three weeks of base pay for each full year of service with a minimum of 52 weeks and a maximum severance benefit of 104 weeks of base pay. In the event of a December 31, 2024, involuntary separation, lump sum severance pay would be provided as follows: Mr. Mokoid – $405,000; and Ms. Reed – $275,000. Each of the executive officers would certain outstanding equity as described in the 2024 Post-Termination Compensation and Benefits table and quantified in the LTIP and Other Awards Payments Under Termination table below.

On February 9, 2023, upon the recommendation of the Compensation Committee of the FE Board, the Board approved a new policy effective immediately that cash severance payable under the Company’s Executive

 

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Severance Plan or pursuant to any individual contract with an executive officer will not exceed 2.99 times the sum of the executive officer’s base salary plus target annual incentive opportunity under the Short-Term Incentive Program, unless the Company seeks shareholder approval.

Termination Following a Change in Control

The executive officers are not participants in the FirstEnergy Change in Control Severance Plan. However, under the FirstEnergy 2020 ICP, if the LTIP is not replaced by a buyer, LTIP awards will be paid at target, prorated for the number of full months worked in the cycle. Time-based restricted stock awards vest in full upon a CIC. There are no excise tax “gross-up” provisions.

Death & Disability

In the event of an executive officer’s death or Disability (as defined in the applicable plan documents) as of December 31, 2024, each of the executive officers would also be provided additional accelerated vesting for certain outstanding equity as described in the 2024 Post-Termination Compensation and Benefits table above and quantified in the LTIP and Other Award Payments Under Termination table below.

LTIP and Other Award Payments Under Termination

In the event of an executive officer’s separation of service as of December 31, 2024, the executive officer would be provided vested outstanding equity or cash awards as quantified in the LTIP and Other Award Payments Under Termination table below. Since 2010, awards of performance-adjusted RSUs require a termination without cause following a CIC for accelerated vesting. For purposes of the calculations in the table below, we have assumed the equity awards would be replaced by the successor prior to a termination without cause.

 

     Retirement/
Voluntary
Termination(1)
     Involuntary
Separation(2)
     Death(3)      Disability(4)      Termination
Without
Cause Following a
CIC(5)
 

W. Douglas Mokoid

President (Principal

Executive Officer)

     N/A      $ 320,620      $ 320,620      $ 320,620      $ 320,620  

Teresa Reed

Vice President, State

Finances and

Regulatory (Principal

Financial Officer)

     N/A        $0        $0        $0        $0  

 

(1) 

Mr. Mokoid and Ms. Reed do not meet the retirement eligibility requirements for age and service under the LTIP as of December 31, 2024.

(2) 

The amounts set forth in the “Involuntary Separation” column represent the estimated amounts that would be payable to the executive officer as a result of a December 31, 2024 involuntary severance without cause. LTIP awards are prorated based on full months of service. At the time of payment, the LTIP awards will be adjusted for actual performance. If we applied the actual performance results of 80% of target for the 2022-2024 cycle, the values would be as follows: Mr. Mokoid – $299,244; and Ms. Reed – N/A. Since the restricted stock award for Ms. Reed was granted on December 30, 2024, she is not eligible for a prorated portion of the award upon involuntary separation (no full months of service).

(3) 

The amounts set forth in the “Death” column represent the estimated amounts that would be payable to the executive officer as a result of a death on December 31, 2024. In the event of a death, the LTIP awards are prorated and payable at target based on the fair market value on the date of death. All restricted stock awards fully vest. LTIP amounts represented in the table are prorated based on full months of service at target.

 

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(4) 

The amounts set forth in the “Disability” column represent the estimated amounts that would be payable to the executive officer as a result of termination due to Disability on December 31, 2024. LTIP awards are prorated and payable at the end of the performance period and based on actual performance. If we applied the actual performance results of 80% of target for the 2022-2024 cycle, the values would be as follows: Mr. Mokoid – $299,244; and Ms. Reed – $50,361. All restricted stock awards fully vest. LTIP amounts represented in the table are prorated based on full months of service at target.

(5) 

The amounts set forth in the “Termination Without Cause following a CIC” column represent the estimated amounts that would be payable to the executive officer as a result of the double trigger vesting of awards effective as of December 31, 2024. Unvested restricted stock would fully vest at target in the event of a termination without cause following a CIC. LTIP awards are prorated at target in the event of a termination without cause following a CIC.

 

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

As of March 1, 2025, FE held 100% of our issued and outstanding shares of common stock.

The following table sets forth information regarding the beneficial ownership (as beneficial ownership is defined in Rule 13d-3 under the Exchange Act) of JCP&L’s common stock as of March 31, 2025 by:

 

   

Each person who beneficially owns more than 5% of our membership interests;

 

   

Each member of the JCP&L Board;

 

   

Each of our executive officers; and

 

   

All of our directors and executive officers as a group.

Except as otherwise indicated in the footnotes below, each of the beneficial owners has, to the best of our knowledge, sole voting and investment power with respect to the indicated membership interests. According to the rules adopted by the SEC, a person “beneficially owns” securities if the person has or shares the power to vote them or to direct their investment or has the right to acquire beneficial ownership of such securities within 60 days through the exercise of an option, warrant, right of conversion of a security or otherwise.

 

Name and Address of Beneficial Holder(1)

   Number of
Shares of
Common Stock
Beneficially
Owned
     Percentage of
Common Stock
Beneficially
Owned
 

FirstEnergy Corp.(2)

     13,682,447        100

Teresa Reed

     

Tracy M. Ashton

     —         —   

Linda Bowman

     —         —   

John E. Harmon

     —         —   

W. Douglas Mokoid

     —         —   

A. Wade Smith

     —         —   

Toby L. Thomas

     —         —   

All executive officers and members of the JCP&L Board as a group (seven persons)

     —         —   

 

(1) 

Except as otherwise indicated, the address for the beneficial owners listed is 300 Madison Avenue, Morristown, New Jersey 07962.

(2) 

The FE Board has voting and dispositive power over the units. The FE Board is composed of more than three individuals who have authority over the voting and disposition of the units. The business address is FirstEnergy Corp., 341 White Pond Drive, Akron, Ohio 44320.

 

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Agreements with FirstEnergy

We are party to several agreements with FirstEnergy, which held 100% of our outstanding common stock as of March 1, 2025.

Money Pool Agreement

We, as well as other FE regulated subsidiaries, have entered into a money pool agreement which provides for the ability to borrow from each other and FE to meet short-term working capital requirements. FESC administers this money pool and tracks surplus funds of FE and the respective regulated subsidiaries, as well as proceeds available from bank borrowings. Companies receiving a loan under the money pool agreement must repay the principal amount of the loan, together with accrued interest, within 364 days of borrowing the funds. The rate of interest is the same for each company receiving a loan from the regulated pool and is based on the average cost of funds available through the money pool.

Service Agreement

We, as well as other subsidiaries of FE, are party to a Service Agreement with FESC, pursuant to which FESC provides services to us and other subsidiaries of FE. Among other things, FESC provides us with basic operating services including, but not limited to, executive services, accounting and finance, internal auditing, risk management, human resources, corporate affairs, corporate communications, information technology, policy and compliance, records management, and legal services. We may also request additional services from FESC, such as operations management, construction, maintenance, asset oversight, customer service, rates and regulatory affairs, environmental, corporate real estate, strategic planning and operations, business development, and investment management. For the years ended December 31, 2024, 2023 and 2022, we compensated FESC an aggregate amount of approximately $173.6 million and, $182 million, and $151.5 million, respectively, for services provided under the Service Agreement.

Mutual Assistance Agreement

We entered into a Mutual Assistance Agreement with other subsidiaries of FE, pursuant to which we and the other subsidiaries of FE are able to request and receive non-power goods and services from one another consistent with the terms and conditions of the agreement. For the years ended December 31, 2024, 2023 and 2022, we compensated subsidiaries of FE an aggregate amount of approximately $14.0 million, $31.0 million, and $14.0 million, respectively, for goods and services provided under the Mutual Assistance Agreement.

Income Tax Allocation Agreement

We have entered into an income tax allocation agreement with our subsidiaries that sets forth the terms for allocating the consolidated tax liability of JCP&L, reimbursing JCP&L for payment of such tax liability, and compensating JCP&L for use of its tax losses or credits.

 

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THE EXCHANGE OFFER

Purpose of the Exchange Offer

The exchange offer is designed to provide holders of Outstanding Notes with an opportunity to acquire New Notes which, unlike the Outstanding Notes, will be freely transferable at all times, subject to any restrictions on transfer imposed by state “blue sky” laws and provided that the holder is not our affiliate within the meaning of the Securities Act and represents that the New Notes are being acquired in the ordinary course of the holder’s business and the holder is not engaged in, and does not intend to engage in, a distribution of the New Notes.

The Outstanding Notes were originally issued and sold on December 5, 2024 to the initial purchasers, pursuant to the purchase agreement dated December 2, 2024. The Outstanding Notes were issued and sold in transactions not registered under the Securities Act in reliance upon the exemption provided by Section 4(a)(2) of the Securities Act. The concurrent resale of the Outstanding Notes by the initial purchasers to investors was done in reliance upon the exemptions provided by Rule 144A and Regulation S promulgated under the Securities Act. The Outstanding Notes may not be reoffered, resold or transferred other than (i) to us or our subsidiaries, (ii) to a qualified institutional buyer in compliance with Rule 144A promulgated under the Securities Act (“Rule 144A”), (iii) outside the United States to a non-U.S. person within the meaning of Regulation S under the Securities Act, (iv) pursuant to the exemption from registration provided by Rule 144 promulgated under the Securities Act (if available) or (v) pursuant to an effective registration statement under the Securities Act.

In connection with the original issuances and sales of the Outstanding Notes, we entered into a registration rights agreement in respect of the Outstanding Notes on December 5, 2024, among JCP&L and the initial purchasers (the “Registration Rights Agreement”), pursuant to which we agreed to use our reasonable best efforts to cause to be filed with the SEC a registration statement covering the exchange by us of the New Notes for the Outstanding Notes, pursuant to the exchange offer. The Registration Rights Agreements provide that we will use our reasonable best efforts to cause to be filed with the SEC an exchange offer registration statement on an appropriate form under the Securities Act and cause the exchange offer to be commenced promptly after the exchange offer registration statement is declared effective by the SEC to holders of Outstanding Notes who are able to make certain representations the opportunity to exchange their Outstanding Notes for New Notes.

Under existing interpretations by the Staff of the SEC as set forth in no-action letters issued to third parties in other transactions, the New Notes would, in general, be freely transferable after the exchange offer without further registration under the Securities Act; provided, however, that in the case of broker-dealers participating in the exchange offer, a prospectus meeting the requirements of the Securities Act must be delivered by such broker-dealers in connection with resales of the New Notes. We have agreed to furnish a prospectus meeting the requirements of the Securities Act to any such broker-dealer for use in connection with any resale of any New Notes acquired in the exchange offer. A broker-dealer that delivers such a prospectus to purchasers in connection with such resales will be subject to certain of the civil liability provisions under the Securities Act and will be bound by the provisions of the applicable Registration Rights Agreement (including certain indemnification rights and obligations).

We do not intend to seek our own interpretation regarding the exchange offer, and we cannot assure you that the Staff of the SEC would make a similar determination with respect to the New Notes as it has in other interpretations to third parties.

Each holder of Outstanding Notes that exchanges such Outstanding Notes for New Notes in the exchange offer will be deemed to have made certain representations, including representations that (i) any New Notes to be received by it will be acquired in the ordinary course of its business, (ii) it has no arrangement or understanding with any person to participate in the distribution (within the meaning of the Securities Act) of New Notes, and (iii) it is not our affiliate as defined in Rule 405 under the Securities Act, or if it is an affiliate, it will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable.

 

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If the holder is not a broker-dealer, it will be required to represent that it is not engaged in, and does not intend to engage in, the distribution of Outstanding Notes or New Notes. If the holder is a broker-dealer that will receive New Notes for its own account in exchange for Outstanding Notes that were acquired as a result of market-making activities or other trading activities, it will be required to acknowledge that it will deliver a prospectus in connection with any resale of such New Notes.

Terms of the Exchange Offer; Period for Tendering Outstanding Notes

Upon the terms and subject to the conditions set forth in this prospectus, we will cause any and all Outstanding Notes to be accepted that were acquired pursuant to Rule 144A or Regulation S validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on the expiration date of the exchange offer. We will issue $1,000 principal amount of New Notes in exchange for each $1,000 principal amount of Outstanding Notes accepted in the exchange offer. Holders may tender some or all of their Outstanding Notes pursuant to the exchange offer; provided that, Outstanding Notes may be tendered only in denominations of $2,000 and any integral multiple of $1,000 in excess thereof.

The form and terms of the New Notes are the same as the form and terms of the Outstanding Notes except that:

 

  (1)

the New Notes will be registered under the Securities Act and will not have legends restricting their transfer;

 

  (2)

the New Notes will not contain the registration rights and increased interest provisions contained in the Outstanding Notes; and

 

  (3)

interest on the New Notes will accrue from the last interest date on which interest was paid on your Outstanding Notes.

The New Notes will evidence the same debt as the Outstanding Notes and will be entitled to the benefits of the Indenture.

We intend to conduct the exchange offer in accordance with the applicable requirements of the Exchange Act and the rules and regulations of the SEC.

The exchange agent will act as agent for the tendering holders for the purpose of receiving the New Notes from us.

If any tendered Outstanding Notes are not accepted for exchange because of an invalid tender or the occurrence of specified other events set forth in this prospectus, the certificates for any unaccepted Outstanding Notes will be promptly returned, without expense, to the tendering holder.

Holders who tender Outstanding Notes in the exchange offer will not be required to pay brokerage commissions or fees or transfer taxes with respect to the exchange of Outstanding Notes pursuant to the exchange offer. We will pay all charges and expenses, other than transfer taxes in certain circumstances, in connection with the exchange offer. See “Fees and Expenses” and “Transfer Taxes” below.

The exchange offer will remain open for at least 20 full business days. The term “expiration date” will mean 5:00 p.m., New York City time, on      , 2025, unless we, in our sole discretion, extend the exchange offer, in which case the term “expiration date” will mean the latest date and time to which the exchange offer is extended.

To extend the exchange offer, prior to 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date, we will:

 

  (1)

notify the exchange agent of any extension by oral notice (promptly confirmed in writing) or written notice, and

 

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  (2)

provide to the registered holders an announcement of any extension and issue a notice by press release or other public announcement before such expiration date.

We reserve the right, in our sole discretion:

 

  (1)

if any of the conditions below under the heading “Conditions to the Exchange Offer” shall have not been satisfied,

 

  a.

to delay accepting any Outstanding Notes,

 

  b.

to extend the exchange offer, or

 

  c.

to terminate the exchange offer, or

 

  (2)

to amend the terms of the exchange offer in any manner, provided however, that if we amend the exchange offer to make a material change, including the waiver of a material condition, we will extend the exchange offer, if necessary, to keep the exchange offer open for at least five business days after such amendment or waiver; provided further, that if we amend the exchange offer to change the percentage of Outstanding Notes being exchanged or the consideration being offered, we will extend the exchange offer, if necessary, to keep the exchange offer open for at least ten business days after such amendment or waiver.

Any delay in acceptance, extension, termination or amendment will be followed as promptly as practicable by oral or written notice to the registered holders.

Procedures for Tendering Outstanding Notes through Brokers and Banks

Since the Outstanding Notes are represented by global book-entry notes, DTC, as depositary, or its nominee is treated as the registered holder of the Outstanding Notes and will be the only entity that can tender your Outstanding Notes for New Notes. Therefore, to tender Outstanding Notes subject to this exchange offer and to obtain New Notes, you must instruct the institution where you keep your Outstanding Notes to tender your Outstanding Notes on your behalf so that they are received on or prior to the expiration of this exchange offer.

The letter of transmittal that may accompany this prospectus may be used by you to give such instructions.

YOU SHOULD CONSULT YOUR ACCOUNT REPRESENTATIVE AT THE BROKER OR BANK WHERE YOU KEEP YOUR OUTSTANDING NOTES TO DETERMINE THE PREFERRED PROCEDURE.

IF YOU WISH TO ACCEPT THIS EXCHANGE OFFER, PLEASE INSTRUCT YOUR BROKER OR ACCOUNT REPRESENTATIVE IN TIME FOR YOUR OUTSTANDING NOTES TO BE TENDERED BEFORE THE 5:00 PM (NEW YORK CITY TIME) DEADLINE ON     , 2025.

Deemed Representations

To participate in the exchange offer, we require that you represent to us that:

 

  (1)

you or any other person acquiring New Notes in exchange for your Outstanding Notes in the exchange offer is acquiring them in the ordinary course of business;

 

  (2)

neither you nor any other person acquiring New Notes in exchange for your Outstanding Notes in the exchange offer is engaging in or intends to engage in a distribution of the New Notes within the meaning of the federal securities laws;

 

  (3)

neither you nor any other person acquiring New Notes in exchange for your Outstanding Notes in the exchange offer has an arrangement or understanding with any person to participate in the distribution of New Notes issued in the exchange offer;

 

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  (4)

neither you nor any other person acquiring New Notes in exchange for your Outstanding Notes in the exchange offer is an “affiliate” as defined under Rule 405 of the Securities Act; and

 

  (5)

if you or another person acquiring New Notes in exchange for your Outstanding Notes in the exchange offer is a broker-dealer and you acquired the Outstanding Notes as a result of market-making activities or other trading activities, you acknowledge that you will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of the New Notes.

BY TENDERING YOUR OUTSTANDING NOTES YOU ARE DEEMED TO HAVE MADE THESE REPRESENTATIONS.

Broker-dealers who cannot make the representations in item (5) of the paragraph above cannot use this exchange offer prospectus in connection with resales of the New Notes issued in the exchange offer.

If you are our “affiliate,” as defined under Rule 405 of the Securities Act, if you are a broker-dealer who acquired your Outstanding Notes in the initial offering and not as a result of market-making or trading activities, or if you are engaged in or intend to engage in or have an arrangement or understanding with any person to participate in a distribution of New Notes acquired in the exchange offer, you or that person:

 

  (1)

may not rely on the applicable interpretations of the Staff of the SEC and therefore may not participate in the exchange offer; and

 

  (2)

must comply with the registration and prospectus delivery requirements of the Securities Act or an exemption therefrom when reselling the Outstanding Notes.

You may tender some or all of your Outstanding Notes in this exchange offer. However, your Outstanding Notes may be tendered only in denominations of $2,000 and any integral multiples of $1,000 in excess thereof.

When you tender your Outstanding Notes and we accept them, the tender will be a binding agreement between you and us as described in this prospectus.

The method of delivery of Outstanding Notes and all other required documents to the exchange agent is at your election and risk.

We will decide all questions about the validity, form, eligibility, acceptance and withdrawal of tendered Outstanding Notes, and our reasonable determination will be final and binding on you. We reserve the absolute right to:

 

  (1)

reject any and all tenders of any particular Outstanding Note not properly tendered;

 

  (2)

refuse to accept any Outstanding Note if, in our reasonable judgment or the judgment of our counsel, the acceptance would be unlawful; and

 

  (3)

waive any defects or irregularities or conditions of the exchange offer as to any particular Outstanding Notes before the expiration of the offer.

Our interpretation of the terms and conditions of the exchange offer will be final and binding on all parties. You must cure any defects or irregularities in connection with tenders of Outstanding Notes as we will reasonably determine. Neither we, the exchange agent nor any other person will incur any liability for failure to notify you of any defect or irregularity with respect to your tender of Outstanding Notes. If we waive any terms or conditions pursuant to (3) above with respect to a noteholder, we will extend the same waiver to all noteholders with respect to that term or condition being waived.

Procedures for Brokers and Custodian Banks; DTC ATOP Account

In order to accept this exchange offer on behalf of a holder of Outstanding Notes you must submit or cause your DTC participant to submit an Agent’s Message as described below.

 

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The exchange agent, on our behalf will seek to establish an Automated Tender Offer Program (“ATOP”) account with respect to the Outstanding Notes at DTC promptly after the delivery of this prospectus. Any financial institution that is a DTC participant, including your broker or bank, may make book-entry tender of Outstanding Notes by causing the book-entry transfer of such Outstanding Notes into our ATOP account in accordance with DTC’s procedures for such transfers. Concurrently with the delivery of Outstanding Notes, an Agent’s Message in connection with such book-entry transfer must be transmitted by DTC to, and received by, the exchange agent on or prior to 5:00 pm, New York City Time on the expiration date. The confirmation of a book entry transfer into the ATOP account as described above is referred to herein as a “Book-Entry Confirmation.”

The term “Agent’s Message” means a message transmitted by the DTC participants to DTC, and thereafter transmitted by DTC to the exchange agent, forming a part of the Book-Entry Confirmation which states that DTC has received an express acknowledgment from the participant in DTC described in such Agent’s Message stating that such participant and beneficial holder agree to be bound by the terms of this exchange offer.

Each Agent’s Message must include the following information:

 

  (1)

Name of the beneficial owner tendering such Outstanding Notes;

 

  (2)

Account number of the beneficial owner tendering such Outstanding Notes;

 

  (3)

Principal amount of Outstanding Notes tendered by such beneficial owner; and

 

  (4)

A confirmation that the beneficial holder of the Outstanding Notes tendered has made the representations for our benefit set forth under “Deemed Representations” above.

BY SENDING AN AGENT’S MESSAGE THE DTC PARTICIPANT IS DEEMED TO HAVE CERTIFIED THAT THE BENEFICIAL HOLDER FOR WHOM NOTES ARE BEING TENDERED HAS BEEN PROVIDED WITH A COPY OF THIS PROSPECTUS.

The delivery of Outstanding Notes through DTC, and any transmission of an Agent’s Message through ATOP, is at the election and risk of the person tendering Outstanding Notes. We will ask the exchange agent to instruct DTC to promptly return those Outstanding Notes, if any, that were tendered through ATOP but were not accepted by us, to the DTC participant that tendered such Outstanding Notes on behalf of holders of the Outstanding Notes.

Acceptance of Outstanding Notes for Exchange; Delivery of New Notes

We will accept validly tendered Outstanding Notes when the conditions to the exchange offer have been satisfied or we have waived them. We will have accepted your validly tendered Outstanding Notes when we have given oral or written notice to the exchange agent. The exchange agent will act as agent for the tendering holders for the purpose of receiving the New Notes from us. If we do not accept any tendered Outstanding Notes for exchange by book-entry transfer because of an invalid tender or other valid reason, we will credit the notes to an account maintained with DTC promptly after the exchange offer terminates or expires.

THE AGENT’S MESSAGE MUST BE TRANSMITTED TO THE EXCHANGE AGENT ON OR BEFORE 5:00 PM, NEW YORK CITY TIME, ON THE EXPIRATION DATE.

No Guaranteed Delivery Procedures

Guaranteed delivery procedures are not available in connection with the exchange offer.

Withdrawal Rights

You may withdraw your tender of Outstanding Notes at any time before 5:00 p.m., New York City time, on the expiration date.

 

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For a withdrawal to be effective, you should contact your bank or broker where your Outstanding Notes are held and have them send an ATOP notice of withdrawal so that it is received by the exchange agent before 5:00 p.m., New York City time, on the expiration date. Such notice of withdrawal must:

 

  (1)

specify the name of the person that tendered the Outstanding Notes to be withdrawn; and

 

  (2)

identify the Outstanding Notes to be withdrawn, including the CUSIP number and principal amount at maturity of the Outstanding Notes; specify the name and number of an account at the DTC to which your withdrawn Outstanding Notes can be credited.

We will decide all questions as to the validity, form and eligibility of the notices and our determination will be final and binding on all parties. Any tendered Outstanding Notes that you withdraw will not be considered to have been validly tendered. We will promptly return any Outstanding Notes that have been tendered but not exchanged, or credit them to the DTC account. You may re-tender properly withdrawn Outstanding Notes by following one of the procedures described above before the expiration date.

Conditions to the Exchange Offer

Notwithstanding any other provision of the exchange offer, or any extension of the exchange offer, we will not be required to accept for exchange, or to issue New Notes in exchange for, any Outstanding Notes and may terminate the exchange offer (whether or not any Outstanding Notes have been accepted for exchange) or amend the exchange offer, if any of the following conditions has occurred or exists or has not been satisfied, or has not been waived by us in our sole reasonable discretion, prior to the expiration date:

 

   

there is threatened, instituted or pending any action or proceeding before, or any injunction, order or decree issued by, any court or governmental agency or other governmental regulatory or administrative agency or commission:

 

  (1)

seeking to restrain or prohibit the making or completion of the exchange offer or any other transaction contemplated by the exchange offer, or assessing or seeking any damages as a result of this transaction; or

 

  (2)

resulting in a material delay in our ability to accept for exchange or exchange some or all of the Outstanding Notes in the exchange offer; or

 

  (3)

any statute, rule, regulation, order or injunction has been sought, proposed, introduced, enacted, promulgated or deemed applicable to the exchange offer or any of the transactions contemplated by the exchange offer by any governmental authority, domestic or foreign; or

 

   

any action has been taken, proposed or threatened, by any governmental authority, domestic or foreign, that, in our sole reasonable judgment, would directly or indirectly result in any of the consequences referred to in clauses (1), (2) or (3) above or, in our sole reasonable judgment, would result in the holders of New Notes having obligations with respect to resales and transfers of New Notes which are greater than those described in the interpretation of the SEC referred to above, or would otherwise make it inadvisable to proceed with the exchange offer; or the following has occurred:

 

  (1)

any general suspension of or general limitation on prices for, or trading in, securities on any national securities exchange or in the over-the-counter market; or

 

  (2)

any limitation by a governmental authority which adversely affects our ability to complete the transactions contemplated by the exchange offer; or

 

  (3)

a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States or any limitation by any governmental agency or authority which adversely affects the extension of credit; or

 

  (4)

a commencement of a war, armed hostilities or other similar international calamity directly or indirectly involving the United States, or, in the case of any of the preceding events existing at

 

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  the time of the commencement of the exchange offer, a material acceleration or worsening of these calamities; or

 

   

any change, or any development involving a prospective change, has occurred or been threatened in our business, financial condition, operations or prospects and those of our subsidiaries taken as a whole that is or may be adverse to us, or we have become aware of facts that have or may have an adverse impact on the value of the Outstanding Notes or the New Notes, which in our sole reasonable judgment in any case makes it inadvisable to proceed with the exchange offer and/or with such acceptance for exchange or with such exchange; or

 

   

there shall occur a change in the current interpretation by the Staff of the SEC which permits the New Notes issued pursuant to the exchange offer in exchange for Outstanding Notes to be offered for resale, resold and otherwise transferred by holders thereof (other than broker-dealers and any such holder which is our affiliate within the meaning of Rule 405 promulgated under the Securities Act) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such New Notes are acquired in the ordinary course of such holders’ business and such holders have no arrangement or understanding with any person to participate in the distribution of such New Notes; or

 

   

any law, statute, rule or regulation shall have been adopted or enacted which, in our reasonable judgment, would impair our ability to proceed with the exchange offer; or

 

   

a stop order shall have been issued by the SEC or any state securities authority suspending the effectiveness of the registration statement, or proceedings shall have been initiated or, to our knowledge, threatened for that purpose, or any governmental approval has not been obtained, which approval we shall, in our sole reasonable discretion, deem necessary for the consummation of the exchange offer as contemplated hereby; or

 

   

we have received an opinion of counsel experienced in such matters to the effect that there exists any actual or threatened legal impediment (including a default or prospective default under an agreement, indenture or other instrument or obligation to which we are a party or by which we are bound) to the consummation of the transactions contemplated by the exchange offer.

If we determine in our sole reasonable discretion that any of the foregoing events or conditions has occurred or exists or has not been satisfied, we may, subject to applicable law, terminate the exchange offer (whether or not any Outstanding Notes have been accepted for exchange) or may waive any such condition or otherwise amend the terms of the exchange offer in any respect. If such waiver or amendment constitutes a material change to the exchange offer, we will promptly disclose such waiver or amendment by means of a prospectus supplement that will be distributed to the registered holders of the Outstanding Notes and will extend the exchange offer to the extent required by Rule 14e-1 promulgated under the Exchange Act.

These conditions are for our sole benefit and we may assert them regardless of the circumstances giving rise to any of these conditions, or we may waive them, in whole or in part, in our sole reasonable discretion, provided that we will not waive any condition with respect to an individual holder of Outstanding Notes unless we waive that condition for all such holders. Any reasonable determination made by us concerning an event, development or circumstance described or referred to above will be final and binding on all parties. Our failure at any time to exercise any of the foregoing rights will not be a waiver of our rights and each such right will be deemed an ongoing right which may be asserted at any time before the expiration of the exchange offer.

 

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Exchange Agent

We have appointed The Bank of New York Mellon Trust Company, N.A. as the exchange agent for the exchange offer. You should direct questions, requests for assistance, and requests for additional copies of this prospectus and the letter of transmittal that may accompany this prospectus to the exchange agent addressed as follows:

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Exchange Agent

By Mail or in Person

The Bank of New York Mellon Trust Company, N.A.

c/o The Bank of New York Mellon

Corporate Trust Reorg Unit

500 Ross Street

Suite 625

Pittsburgh, PA, 15262

Attn: Meera Thillai

For Email (for Eligible Institutions Only)

Email: ct_reorg_unit_inquiries@bnymellon.com

For Information and to Confirm by Telephone

615-381-1655

Delivery to an address other than set forth above will not constitute a valid delivery.

Fees and Expenses

The principal solicitation is being made through DTC by U The Bank of New York Mellon Trust Company, N.A., as exchange agent. We will pay the exchange agent customary fees for its services, reimburse the exchange agent for its reasonable out-of-pocket expenses incurred in connection with the provisions of these services and pay other registration expenses, including registration and filing fees, fees and expenses of compliance with federal securities and state blue sky securities laws, printing expenses, messenger and delivery services and telephone, fees and disbursements to our counsel, application and filing fees and any fees and disbursements to our independent registered public accountants. We will not make any payment to brokers, dealers, or others soliciting acceptances of the exchange offer except for reimbursement of mailing expenses.

Additional solicitations may be made by telephone or in person by our and our affiliates’ officers, employees and by persons so engaged by the exchange agent.

Accounting Treatment

The New Notes will be recorded at the same carrying value as the existing Outstanding Notes, as reflected in our accounting records on the date of exchange. Accordingly, we will recognize no gain or loss for accounting purposes.

Transfer Taxes

If you tender Outstanding Notes for exchange, you will not be obligated to pay any transfer taxes. However, if you instruct us to register New Notes in the name of, or request that your Outstanding Notes not tendered or not accepted in the exchange offer be returned to, a person other than the registered tendering holder, you will be responsible for paying any transfer tax owed.

 

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YOU MAY SUFFER ADVERSE CONSEQUENCES IF YOU FAIL TO EXCHANGE OUTSTANDING NOTES

If you do not tender your Outstanding Notes, you will not have any further registration rights, except for the rights described in the applicable Registration Rights Agreement and described above, and your Outstanding Notes will continue to be subject to the provisions of the Indenture governing the Outstanding Notes regarding transfer and exchange of the Outstanding Notes and the restrictions on transfer of the Outstanding Notes imposed by the Securities Act and states securities law when we complete the exchange offer. These transfer restrictions are required because the Outstanding Notes were issued under an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. Accordingly, if you do not tender your Outstanding Notes in the exchange offer, your ability to sell your Outstanding Notes could be adversely affected. Once we have completed the exchange offer, holders who have not tendered notes will not continue to be entitled to any increase in interest rate that the Indenture governing the Outstanding Notes provides for if we do not complete the exchange offer.

Consequences of Failure to Exchange

The Outstanding Notes that are not exchanged for New Notes pursuant to the exchange offer will remain restricted securities. Accordingly, the Outstanding Notes may be resold only:

 

  (1)

to us upon redemption thereof or otherwise;

 

  (2)

so long as the outstanding securities are eligible for resale pursuant to Rule 144A, to a person inside the United States who is a qualified institutional buyer within the meaning of Rule 144A under the Securities Act in a transaction meeting the requirements of Rule 144A, in accordance with Rule 144 under the Securities Act, or pursuant to another exemption from the registration requirements of the Securities Act, which other exemption is based upon an opinion of counsel reasonably acceptable to us;

 

  (3)

outside the United States to a foreign person in a transaction meeting the requirements of Rule 904 under the Securities Act; or

 

  (4)

pursuant to an effective registration statement under the Securities Act, in each case in accordance with any applicable securities laws of any state of the United States.

Shelf Registration

The Registration Rights Agreements also require that we cause to be filed a shelf registration statement if:

 

  (1)

the Issuer determines that the registration of the New Notes is not available or may not be completed as soon as practicable after the last exchange date because it would violate any applicable law or applicable interpretations of the SEC;

 

  (2)

a holder participating in the exchange offer does not receive New Notes on the date of the exchange that may be sold without restriction under state and federal securities laws (other than due solely to the status of such holder as an affiliate of the Issuer within the meaning of the Securities Act) and notifies the Issuer within 30 days after such holder first becomes aware of such restrictions;

 

  (3)

the exchange offer is not for any reason completed by the 366th day after the initial issuance of the Outstanding Notes; or

 

  (4)

the Issuer receives a written request from any Initial Purchaser representing that it holds Outstanding Notes that are or were ineligible to be exchanged in the exchange offer.

We will also register the New Notes under the securities laws of jurisdictions that holders may request before offering or selling notes in a public offering. We do not intend to register New Notes in any jurisdiction unless a holder requests that we do so.

 

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Outstanding Notes may be subject to restrictions on transfer until:

 

  (1)

a person other than a broker-dealer has exchanged the Outstanding Notes in the exchange offer;

 

  (2)

a broker-dealer has exchanged the Outstanding Notes in the exchange offer and sells them to a purchaser that receives a prospectus from the broker, dealer on or before the sale;

 

  (3)

the Outstanding Notes are sold under an effective shelf registration statement that we have caused to be filed; or

 

  (4)

the Outstanding Notes are sold to the public under Rule 144 of the Securities Act.

 

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DESCRIPTION OF THE NOTES

The Outstanding Notes were issued on December 5, 2024 in private offerings in the United States only to qualified institutional buyers under Rule 144A under the Securities Act and outside the United States to non-U.S. persons in compliance with Regulation S under the Securities Act.

In the exchange offer, we will issue up to $700,000,000 aggregate principal amount of New Notes. The New Notes will be issued under indenture, dated as of July 1, 1999, between us and The Bank of New York Mellon Trust Company, N.A., as successor trustee (the “Trustee”), as amended and supplemented by the First Supplemental Indenture, dated as of October 31, 2007, between us and the Trustee (the “Indenture”), under which the Outstanding Notes were also issued. The following statements relating to the Notes, and the Indenture are summaries of certain provisions thereof and are subject to the detailed provisions of the forms of Notes and the Indenture, to which reference is hereby made, including the definitions of certain terms therein and those terms made part thereof by the Trust Indenture Act of 1939, as amended (the “TIA”). The Indenture does not limit the aggregate principal amount of senior notes that we may issue under the Indenture.

The New Notes will be treated as a single class with any Outstanding Notes that remain outstanding after the completion of the exchange offer. If the exchange offer is consummated, holders of Outstanding Notes who do not exchange their Outstanding Notes for New Notes will vote together with the holders of the New Notes for all relevant purposes under the Indenture. In that regard, the Indenture requires that certain actions by the holders under the Indenture (including acceleration after an Event of Default) must be taken, and certain rights must be exercised, by holders of specified minimum percentages of the aggregate principal amount of all outstanding Notes issued under the Indenture. In determining whether holders of the requisite percentage of aggregate principal amount of Notes have given any notice, consent or waiver or taken any other action permitted under the Indenture, any Outstanding Notes that remain outstanding after the exchange offer will be aggregated with the New Notes, and the holders of these Outstanding Notes and New Notes will vote together as a single series for all such purposes. Accordingly, all references in this Description of the Notes to specified percentages in aggregate principal amount of the outstanding Notes mean, at any time after the exchange offer for the Outstanding Notes is consummated, such percentage in aggregate principal amount of such Outstanding Notes and the New Notes then outstanding. As used in this Description of the Notes, the term “Notes” refers to both the Outstanding Notes and the New Notes.

General

The Notes will mature on January 15, 2035, unless earlier redeemed as described under “—Optional Redemption” below.

We will not pay any additional amounts on the Notes to compensate any beneficial owner for any United States tax withheld from payments of principal or interest on the Notes. There is no sinking fund for the Notes. The Notes are not convertible into, or exchangeable for, equity securities of FirstEnergy.

Ranking

The Notes will rank equally with all of our other existing and future senior unsecured and unsubordinated indebtedness, senior to all of our existing and future subordinated indebtedness and effectively junior to all of our future senior secured indebtedness to the extent of the value of the collateral securing such secured indebtedness. As of December 31, 2024, we had approximately $2.350 billion of senior unsecured and unsubordinated indebtedness and included (i) $650 million aggregate principal amount of outstanding 4.30% Senior Notes due 2026; (ii) $500 million aggregate principal amount of outstanding 2.75% Senior Notes due 2032; (iii) $200 million aggregate principal amount of outstanding 6.40% Senior Notes due 2036; and (iv) $300 million aggregate principal amount of outstanding 6.15% Senior Notes due 2037.

 

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Interest

Interest on the Notes will:

 

   

be payable in U.S. dollars and accrue at a rate of 5.100% per annum;

 

   

be computed for each interest period on the basis of a 360-day year consisting of twelve 30-day months and, for any period shorter than a full month, on the basis of the actual number of days elapsed in such period;

 

   

be payable on a semi-annual basis in arrears on each January 15 and July 15, beginning on July 15, 2025;

 

   

initially accrue from December 5, 2024, and including, the date of original issuance; and

 

   

be paid to the persons in whose names the Notes are registered at the close of business on the regular record date, which is the Business Day immediately preceding each interest payment date (other than an interest payment date that is a maturity date or redemption date), so long as the Notes are issued in the form of global securities deposited with or on behalf of DTC or a successor depositary (see “—Book-Entry”). Otherwise, the record date will be the fifteenth calendar day next preceding each interest payment date (whether or not a Business Day); provided, however, that, if and to the extent we shall default in the payment of interest due on such interest payment date, such defaulted interest shall be paid to the respective persons in whose names such outstanding Notes are registered at the close of business on a date (the “Special Record Date”) not less than 10 days nor more than 15 days next preceding the date of payment of such defaulted interest, such Special Record Date to be established by the Trustee when moneys become available for the payment of interest by notice given by mail by or on behalf of us to the registered owners of Senior Notes not less than 10 days next preceding such Special Record Date. Notwithstanding the foregoing, interest payable at maturity or upon earlier redemption will be payable to the person to whom principal shall be payable. If any interest payment date should fall on a day that is not a Business Day, then the interest payment shall be made on the next succeeding Business Day and no interest shall accrue for the intervening period with respect to the payment so deferred. We are not required to make any transfers or exchanges of Notes for a period of 15 calendar days next preceding an interest payment date.

Additional interest is payable with respect to the Notes in certain circumstances if we do not consummate the Exchange Offer (or shelf registration, if applicable) as described in this prospectus under the heading “Exchange Offer; Registration Rights.” We shall pay all additional interest, if any, on the interest payment date for the period for which additional interest has accrued in the same manner as interest is paid on the Notes. References herein to “interest” are deemed to include additional interest unless the context expressly requires otherwise.

Optional Redemption

Prior to October 15, 2034 (three months prior to the maturity date of the Senior Notes) (the “Par Call Date”), we may redeem the Senior Notes at our option, in whole or in part, at any time and from time to time, at a redemption price (expressed as a percentage of principal amount and rounded to three decimal places) equal to the greater of:

 

   

(a) the sum of the present values of the remaining scheduled payments of principal of the Senior Notes to be redeemed and interest thereon discounted to the redemption date (assuming the Senior Notes matured on the Par Call Date) on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined below) plus 15 basis points less (b) interest accrued to the redemption date, and

 

   

100% of the principal amount of the Senior Notes to be redeemed,

plus, in either case, accrued and unpaid interest thereon to, but not including, the redemption date.

 

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On or after the Par Call Date, we may redeem the Senior Notes, in whole or in part, at any time and from time to time, at a redemption price equal to 100% of the principal amount of the Senior Notes to be redeemed plus accrued and unpaid interest thereon to, but not including, the redemption date.

The term “Treasury Rate,” as used above means, with respect to any redemption date, the yield determined by us in accordance with the following two paragraphs:

The Treasury Rate shall be determined by us after 4:15 p.m., New York City time (or after such time as yields on U.S. government securities are posted daily by the Board of Governors of the Federal Reserve System), on the third Business Day preceding the redemption date based upon the yield or yields for the most recent day that appear after such time on such day in the most recent statistical release published by the Board of Governors of the Federal Reserve System designated as “Selected Interest Rates (Daily)—H.15” (or any successor designation or publication) (“H.15”) under the caption “U.S. government securities—Treasury constant maturities—Nominal” (or any successor caption or heading) (“H.15 TCM”). In determining the Treasury Rate, we shall select, as applicable:

 

  (1)

the yield for the Treasury constant maturity on H.15 exactly equal to the period from the redemption date to the Par Call Date (the “Remaining Life”); or

 

  (2)

if there is no such Treasury constant maturity on H.15 exactly equal to the Remaining Life, the two yields—one yield corresponding to the Treasury constant maturity on H.15 immediately shorter than and one yield corresponding to the Treasury constant maturity on H.15 immediately longer than the Remaining Life—and shall interpolate to the Par Call Date on a straight-line basis (using the actual number of days) using such yields and rounding the result to three decimal places; or

 

  (3)

if there is no such Treasury constant maturity on H.15 shorter than or longer than the Remaining Life, the yield for the single Treasury constant maturity on H.15 closest to the Remaining Life. For purposes of this paragraph, the applicable Treasury constant maturity or maturities on H.15 shall be deemed to have a maturity date equal to the relevant number of months or years, as applicable, of such Treasury constant maturity from the redemption date.

If on the third Business Day preceding the redemption date H.15 TCM is no longer published, or, if published, no longer contains the yields for nominal Treasury constant maturities, we shall calculate the Treasury Rate based on the rate per annum equal to the semi-annual equivalent yield to maturity at 11:00 a.m., New York City time, on the second Business Day preceding such redemption date as follows:

 

  (1)

we shall select (a) the United States Treasury security maturing on the Par Call Date, subject to clause (3) below, or (b) if there is no United States Treasury security maturing on the Par Call Date, then the United States Treasury security with the maturity date that is closest to the Par Call Date, subject to clauses (2) and (3) below, as applicable; or

 

  (2)

if there is no United States Treasury security described in clause (1), but there are two or more United States Treasury securities with maturity dates equally distant from the Par Call Date, one or more with maturity dates preceding the Par Call Date and one or more with maturity dates following the Par Call Date, we shall select the United States Treasury security with a maturity date preceding and closest to the Par Call Date, subject to clause (3) below; or

 

  (3)

if there are two or more United States Treasury securities meeting the criteria of the preceding clauses (1) or (2), we shall select from among these two or more United States Treasury securities the United States Treasury security that is trading closest to par based upon the average of the bid and asked prices for such United States Treasury securities at 11:00 a.m., New York City time. In determining the Treasury Rate in accordance with the terms of this paragraph, the semi-annual yield to maturity of the applicable United States Treasury security shall be based upon the average of the bid and asked prices of such United States Treasury security (expressed as a percentage of principal amount and rounded to three decimal places) at 11:00 a.m., New York City time.

 

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Our actions and determinations in determining the redemption price shall be conclusive and binding for all purposes, absent manifest error.

We will send notice of any redemption between 30 days and 60 days before the redemption date to each holder of the Notes to be redeemed.

Unless we default in payment of the redemption price and accrued interest, on and after the redemption date, interest will cease to accrue on the Notes or any portion of the Notes called for redemption.

We will not be required to make any mandatory redemption or sinking fund payments with respect to the Notes.

Consolidation, Merger and Sale of Assets

We may not consolidate with or merge into any other corporation or entity or sell or otherwise dispose of our properties as or substantially as an entirety to any person unless, among other things:

 

   

the successor or transferee is a corporation or other entity organized and existing under the laws of the United States or any state of the United States or the District of Columbia; and

 

   

the successor or transferee expressly assumes by supplemental indenture the due and punctual payment of the principal of and premium, if any, and interest on all of the senior notes and the performance of every covenant of the Indenture and the Registration Rights Agreement to be performed or observed by us.

Upon any consolidation, merger, sale, transfer or other disposition of our properties substantially as an entirety, permissible under the provision described in the immediately preceding paragraph, the successor corporation formed by the consolidation or into which we are merged or to which the transfer is made will succeed to us, and be substituted for us, and may exercise every right and power of ours, under the Indenture with the same effect as if the successor corporation had been named as Jersey Central Power & Light Company in the Indenture, and we will be released from all obligations under the Indenture. For purposes of the Indenture, the conveyance or other transfer by us of (i) all or any portion of our facilities for the generation of electric energy or (ii) all of our facilities for the transmission of electric energy, in each case considered alone or in any combination with properties described in any other clause of the Indenture, will in no event be deemed to constitute a conveyance or other transfer of all our properties, as or substantially as an entirety.

Events of Default

The following constitute events of default under the Indenture with respect to the Notes:

 

   

default in the payment of principal of, and premium, if any, on, any senior note when due and payable;

 

   

default in the payment of interest on any senior note when due, including additional interest payable pursuant to the Registration Rights Agreement, which default continues for 60 days;

 

   

default in the performance or breach of any of our other covenants or agreements in the senior notes or in the Indenture and the continuation of the default for 90 days after we have received written notice of the default either from the Trustee or from the holders of at least 33% in aggregate principal amount of the outstanding senior notes; and

 

   

certain events of bankruptcy, insolvency, reorganization, assignment or receivership relating to us.

If an event of default occurs and is continuing, either the Trustee or the holders of a majority in aggregate principal amount of the outstanding senior notes may declare the principal amount of, and interest on, all of the senior notes to be due and payable immediately. At any time after an acceleration of the senior notes has been declared, and before any judgment or decree for the payment of the monies due has been obtained or entered, if

 

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we pay or deposit with the Trustee a sum sufficient to pay all matured installments of interest and the principal and any premium which has become due on the senior notes otherwise than by acceleration and all amounts due to the Trustee and all defaults, other than the non-payment of principal of, and accrued interest on, senior notes that have become due solely by acceleration of maturity, have been cured or waived, then our payment or deposit will cause an automatic waiver of the event of default and its consequences and will cause an automatic rescission and annulment of the acceleration of the senior notes.

The Indenture provides that the Trustee generally will be under no obligation to exercise any of its rights or powers under the Indenture at the request or direction of any of the holders of the senior notes unless those holders have offered to the Trustee security or indemnity reasonably satisfactory to it. Subject to the provisions for indemnity and certain other limitations contained in the Indenture, the holders of a majority in aggregate principal amount of the outstanding senior notes generally will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or of exercising any trust or power conferred on the Trustee. The holders of a majority in aggregate principal amount of the outstanding senior notes generally will have the right to waive any past default or event of default (other than a default in the payment of principal or any premium or interest on the senior notes) on behalf of all holders of the senior notes. The Indenture provides that no holder of the senior notes may institute any action against us under the Indenture unless it has previously given to the Trustee written notice of the occurrence and continuance of an event of default and unless the holders of a majority in aggregate principal amount of the senior notes then outstanding affected by the event of default have requested the Trustee to institute the action and have offered the Trustee reasonable indemnity, and the Trustee has not instituted the action within 60 days of the request. Furthermore, no holder of the senior notes will be entitled to institute any action if and to the extent that the action would affect, disturb or prejudice the rights of other holders of the senior notes. Notwithstanding that the right of a holder of the senior notes to institute a proceeding with respect to the Indenture is subject to certain conditions precedent, each holder of a senior note has the right, which is absolute and unconditional, to receive payment of the principal of, and premium, if any, and interest on such senior note when due and to institute suit for the enforcement of such payment, and those rights may not be impaired without the consent of such holders.

The Indenture provides that the Trustee, within 90 days after the occurrence of a default with respect to the senior notes, is required to give holders of the senior notes notice of any default known to the Trustee, unless cured or waived. However, except in the case of default in the payment of principal of, or premium, if any, or interest on, any senior notes, the Trustee may withhold notice if it determines in good faith that it is in the interest of holders of those senior notes to do so. We are required to deliver to the Trustee each year an officer’s certificate as to whether or not we are in compliance with the conditions and covenants under the Indenture.

Modification with Consent of Holders

Modification and amendment of the Indenture by an indenture or indentures supplemental thereto may be effected by us and the Trustee with the consent of the holders of a majority in aggregate principal amount of the outstanding senior notes, provided that no modification or amendment may, without the consent of the holder of each outstanding senior note affected by such modification or amendment:

 

   

change the maturity date of such senior notes;

 

   

reduce the rate or extend the time of payment of interest on such senior notes;

 

   

reduce the principal amount of, or premium payable on, such senior notes;

 

   

change the coin or currency of any payment of principal of, or premium, if any, or interest on, such senior notes;

 

   

change the date on which such senior notes may be redeemed or repaid at the option of their holders or adversely affect the rights of a holder to institute suit for the enforcement of any payment on or with respect to such senior notes; or

 

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modify the foregoing requirements or reduce the percentage of outstanding senior notes necessary to modify or amend the Indenture or to waive any past default.

Modification without Consent of Holders

Modification and amendment of the Indenture by an indenture or indentures supplemental thereto may be effected by us and the Trustee without the consent of the holders of any senior notes:

 

   

to change or eliminate any provisions of the Indenture, provided that any such change or elimination shall become effective only when there is no senior note outstanding created prior to the execution of such supplemental indenture effecting the change or elimination which such senior note is entitled to the benefit of the applicable provision, or such change or elimination is applicable only to senior notes issued after the effective date of the change or elimination;

 

   

to establish the form of senior notes as permitted by the Indenture or to establish or reflect any terms of any senior note determined pursuant to a company order;

 

   

to evidence the succession of another corporation to us as permitted by the Indenture, and the assumption by any successor of our covenants in the Indenture and the senior notes;

 

   

to specify further the duties and responsibilities of, and to define further the relationship among the Trustee, any Authenticating Agent and any paying agent;

 

   

to grant to or confer upon the Trustee for the benefit of the holders of senior notes any additional rights, remedies, powers or authority;

 

   

to permit the Trustee to comply with any duties imposed upon it by law;

 

   

to add to our covenants for the benefit of the holders of senior notes, to add to the security for the senior notes, to surrender a right or power conferred on us in the Indenture or to add any event of default;

 

   

to comply with our obligations related to the limitations on liens covenant;

 

   

to make such provisions as may be necessary to issue any exchange notes issued in exchange for the Senior Notes pursuant to the Registration Rights Agreement or similar agreement;

 

   

to supply omissions, cure ambiguities or cure, correct or supplement any defective or inconsistent provision, which actions, in each case, are not inconsistent with the Indenture or prejudicial to the interest of the holders of senior notes in any material respect; or

 

   

to make any other change that is not prejudicial to the holders of the senior notes in any material respect.

A supplemental indenture which changes or eliminates any covenant or other provision of the Indenture (or any supplemental indenture) which has expressly been included solely for the benefit of one or more series of the senior notes, or which modifies the rights of the holders of the senior notes of one or more series with respect to that covenant or provision, will be deemed not to affect the rights under the Indenture of the holders of the senior notes of any other series.

Defeasance and Discharge

The Indenture provides that we will be discharged from any and all obligations in respect to the senior notes and the Indenture (except for certain obligations such as obligations to register the transfer or exchange of the senior notes, replace stolen, lost or mutilated senior notes and maintain paying agencies) if, among other things, we have paid or caused to be paid the principal of, and premium, if any, and interest on, all outstanding senior notes, as and when the same shall have become due and payable, we have delivered to the Trustee for

 

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cancellation the outstanding senior notes, or we have irrevocably deposited with the Trustee, in trust for the benefit of the holders of senior notes, money or certain United States government obligations, or any combination of money and certain United States government obligations, which will provide money in an amount sufficient, without reinvestment, to make all payments of principal of, premium, if any, and interest on, the senior notes on the dates payments are due in accordance with the terms of the Indenture and the senior notes; provided, that unless all of the senior notes mature within 90 days of the deposit by redemption or otherwise, we will also have delivered to the Trustee an opinion of counsel to the effect that, as a result of a change in law or a ruling of the United States Internal Revenue Service, the holders of the senior notes will not recognize income, gain or loss for federal income tax purposes as a result of the defeasance or discharge of the Indenture. After we have been discharged from our obligations under the Indenture, the holders of the senior notes may look only to the deposit for payment of the principal of, and interest and any premium on, the senior notes.

In the event that all of the conditions set forth above have been satisfied for the Notes, except that the opinion of counsel referred to in the proviso to the first sentence of the immediately preceding paragraph need not be based on a change in law or a ruling of the United States Internal Revenue Service, then the provisions of the Indenture will remain in full force and effect and the indebtedness represented by, and our obligations under, such Notes will be deemed satisfied and we will be released with respect to the Notes from certain of our covenants under the Indenture, including the covenants described below in “—Consolidation, Merger and Sale or Disposition of Assets,” “—Certain Covenants—Limitation on Liens” and “—Certain Covenants—Limitation on Sale and Lease-Back Transactions”.

Certain Covenants

Limitation on Liens

The Indenture provides that, so long as any senior notes are outstanding, we may not issue, assume, guarantee or permit to exist any Debt (as defined below) that is secured by any Lien (as defined below) on any of our Operating Property (as defined below), whether owned at the date of the Indenture or subsequently acquired, without effectively securing such senior notes (together with, if we so determine, any of our other indebtedness ranking equally with such senior notes) equally and ratably with that Debt (but only so long as that Debt is so secured).

The foregoing restriction will not apply to:

 

  (1)

Liens on any Operating Property existing at the time of its acquisition (which Liens may also extend to subsequent repairs, alterations and improvements to that Operating Property);

 

  (2)

Liens on operating property of a corporation existing at the time the corporation is merged into or consolidated with, or at the time the corporation disposes of its properties (or those of a division) as or substantially as an entirety to, us;

 

  (3)

Liens on Operating Property to secure all or part of the costs of acquisition, construction, development or substantial repair, alteration or improvement of such property or to secure any Debt incurred to provide funds for any of those purposes or for reimbursement of funds previously expended for any of those purposes, provided the Liens are created or assumed contemporaneously with, or within 18 months after, the acquisition or the completion of the substantial repair or alteration, construction, development or substantial improvement of such property;

 

  (4)

Liens in favor of any state or any department, agency or instrumentality or political subdivision of any state, or for the benefit of holders of securities issued by any such entity (or providers of credit enhancement with respect to those securities), to secure any Debt (including, without limitation, our obligations with respect to industrial development, pollution control or similar revenue bonds) incurred for the purpose of financing all or any part of the purchase price or the cost of constructing, developing or substantially repairing, altering or improving our Operating Property;

 

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  (5)

Liens to compensate the Trustee as provided in the Indenture; or

 

  (6)

any extension, renewal or replacement (or successive extensions, renewals or replacements), in whole or in part, of any Lien referred to in clauses (1) through (5); provided, however, that the principal amount of Debt secured thereby and not otherwise authorized by clauses (1) through (5), must not exceed the principal amount of Debt, plus any premium or fee payable in connection with the extension, renewal or replacement, so secured at the time of the extension, renewal or replacement.

However, the foregoing restriction will not apply to our issuance, assumption or guarantee, or permission to exist, of Debt secured by a Lien which would otherwise be subject to the foregoing restrictions up to an aggregate amount which, together with the principal amount of all of our other secured Debt then outstanding (not including secured Debt permitted under any of the foregoing exceptions) and the Value (as defined below) of all Sale and Lease-Back Transactions (as defined below) existing at that time (other than any Sale and Lease-Back Transactions the proceeds of which have been applied to the retirement of certain indebtedness, Sale and Lease-Back Transactions in which the property involved would have been permitted to be subjected to a Lien under any of the foregoing exceptions in clauses (1) to (6) and Sale and Lease-Back Transactions that are permitted by the first sentence of “—Limitation on Sale and Lease-Back Transactions” below), does not exceed the greater of 15% of Tangible Assets and 15% of Capitalization (as those terms are defined below).

Limitation on Sale and Lease-Back Transactions

The Indenture provides that so long as any senior notes are outstanding, we may not enter into or permit to exist any Sale and Lease-Back Transaction with respect to any Operating Property, if the purchasers’ commitment is obtained more than 18 months after the later of the completion of the acquisition, construction or development of that Operating Property or the placing in operation of that Operating Property or of that Operating Property as constructed or developed or substantially repaired, altered or improved.

This restriction will not apply if:

 

   

we would be entitled pursuant to any of the provisions described in clauses (1) to (6) of the second paragraph under “—Limitation on Liens” above to issue, assume, guarantee or permit to exist Debt secured by a Lien on that Operating Property without equally and ratably securing the senior notes;

 

   

after giving effect to a Sale and Lease-Back Transaction, we could incur pursuant to the provisions described in the third paragraph under “—Limitation on Liens,” at least $1.00 of additional Debt secured by Liens (other than Liens permitted by the provisions described in clauses (1) to (6) of the second paragraph under “—Limitation on Liens”); or

 

   

we apply within 180 days after the effective date of the Sale and Lease-Back Transaction an amount equal to, in the case of a sale or transfer for cash, the net proceeds (not exceeding the net book value), and, otherwise, an amount equal to the fair value (as determined by our board of directors) of the Operating Property so leased, to the retirement of senior notes or other Debt of ours ranking senior to, or equally with, the senior notes, subject to reduction by an amount equal to the principal amount, plus premium or fee, if any, paid in connection or with any redemption in accordance with the terms of Debt voluntarily retired during the 180-day period excluding retirement pursuant to mandatory sinking fund or prepayment provisions and payments at maturity.

Availability of Financial Statements

So long as any of the Notes are outstanding:

 

  (1)

at any time the Company is not subject to Section 13 or 15(d) of the Exchange Act, we will make available to the holders of the Notes our audited annual and unaudited quarterly financial statements within 105 days after the end of the period covered by such financial statements either by posting such

 

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  financial statements on a website (which may be a private website or any website maintained by the SEC, including EDGAR) or by delivering such financial statements through any other method as may be permitted by the procedures of DTC. For the avoidance of doubt, “financial statements,” as used in the Indenture, will include only a balance sheet, a statement of operations and a statement of cash flows, each prepared in accordance with generally accepted accounting principles (United States or, as may become applicable in the future, international), and such financial statements need not satisfy the requirements of Regulation S-X under the Securities Act, and, in the case of such statements that are unaudited, may be subject to year-end adjustments and may exclude detailed footnotes; and

 

  (2)

at any time the Company is subject to Section 13 or 15(d) of the Exchange Act, any annual or quarterly reports (on Form 10-K or Form 10-Q or any respective successor form) that we are required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act (excluding any such information, documents or reports, or portions thereof, subject to confidential treatment and any correspondence with the SEC) must be filed by us with the Trustee within 15 days after the same are required to be filed with the SEC (giving effect to any grace period provided by Rule 12b-25 under the Exchange Act (or any successor rule)). Documents filed by us with the SEC via the EDGAR system (or any successor system) will be deemed to be filed with the Trustee as of the time such documents are filed via EDGAR (or any successor thereto), it being understood that the Trustee shall not be responsible for determining whether such filings have been made.

Delivery of reports, information and documents to the Trustee is for informational purposes only and the Trustee’s receipt of such shall not constitute actual or constructive notice or knowledge of any information contained therein or determinable from information contained therein, including the Company’s compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on an officer’s certificate).

Certain Definitions

Set forth below is a summary of certain defined terms used in the Indenture. Reference is made to the Indenture for the full description of all such terms, as well as any other terms used herein for which no definition is provided.

“Business Day” means each day that is not a day on which banking institutions or trust companies in the Borough of Manhattan, the City and State of New York, or in the city where the corporate trust office of the Trustee is located, are obligated or authorized by law or executive order to close.

“Capitalization” means the total of all the following items appearing on, or included in, our consolidated balance sheet: (i) liabilities for Debt maturing more than 12 months from the date of determination; and (ii) common stock, preferred stock, Hybrid Preferred Securities, premium on capital stock, capital surplus, capital in excess of par value and retained earnings (however the foregoing may be designated), less, to the extent not otherwise deducted, the cost of shares of our capital stock held in our treasury. Capitalization will be determined in accordance with GAAP and practices applicable to the type of business in which we are engaged and that are approved by independent accountants regularly retained by us, and may be determined as of a date not more than 60 days prior to the happening of the event for which such determination is being made.

“Consolidated Subsidiary” means any subsidiary whose accounts are or are required to be consolidated with our accounts in accordance with GAAP.

“Debt” means any outstanding debt for money borrowed evidenced by notes, debentures, bonds, or other securities or any guarantees thereof.

“EDGAR” means the SEC’s Electronic Data Gathering, Analysis, and Retrieval system.

“GAAP” means generally accepted accounting principles in the United States of America, applied on a basis consistent with those used in the preparation of our financial statements.

 

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“Hybrid Preferred Securities” means any preferred securities issued by a Hybrid Preferred Securities Subsidiary, where such preferred securities have the following characteristics:

 

  (i)

such Hybrid Preferred Securities Subsidiary lends substantially all of the proceeds from the issuance of such preferred securities to us, or a wholly owned subsidiary of us, in exchange for Subordinated Indebtedness issued by us;

 

  (ii)

such preferred securities contain terms providing for the deferral of interest payments corresponding to provisions providing for the deferral of interest payments on the related Subordinated Indebtedness; and

 

  (iii)

we make periodic interest payments on the related Subordinated Indebtedness, which interest payments are in turn used by the Hybrid Preferred Securities Subsidiary to make corresponding payments to the holders of the preferred securities.

“Hybrid Preferred Securities Subsidiary” means any limited partnership or business trust (or similar entity) (i) all of the general partnership or common equity interest of which is owned (either directly or indirectly through one or more wholly-owned subsidiaries of us or any Consolidated Subsidiary of us) at all times by us, (ii) that has been formed for the purpose of issuing Hybrid Preferred Securities and (iii) substantially all of the assets of which consist at all times solely of Subordinated Indebtedness issued by us and payments made from time to time on such Subordinated Indebtedness.

“Lien” means any mortgage, security interest, pledge or lien.

“Operating Property” means: (i) any interest in real property owned by us; and (ii) any asset owned by us that is depreciable in accordance with GAAP, excluding, in either case, any interest of ours as lessee under any lease (except for a lease that results from a Sale and Lease-Back Transaction).

“Sale and Lease-Back Transaction” means any arrangement with any person or entity providing for the leasing to us of any Operating Property (except for leases for a term, including any renewals, of not more than 48 months), which Operating Property has been or is to be sold or transferred by us to such person; provided, however, Sale and Lease-Back Transaction does not include any arrangement first entered into prior to the date of the Indenture.

“Subordinated Indebtedness” means any of our unsecured Debt (i) issued in exchange for the proceeds of Hybrid Preferred Securities and (ii) subordinated to the rights of holders of senior notes under the Indenture.

“Tangible Assets” means the amount shown as total assets on our consolidated balance sheet, less the following: (i) intangible assets including, but without limitation, goodwill, trademarks, trade names, patents, and unamortized debt discount and expense; and (ii) appropriate adjustments, if any, on account of minority interests. Tangible Assets will be determined in accordance with GAAP and practices applicable to the type of business in which we are engaged and that are approved by the independent accountants regularly retained by us and may be determined as of a date not more than 60 days prior to the happening of the event for which the determination is being made.

“Value” means, with respect to a Sale and Lease-Back Transaction, as of any particular time, the amount equal to the greater of (i) the net proceeds to us from the sale or transfer of the property leased pursuant to the Sale and Lease-Back Transaction; and (ii) the net book value of the property leased, as determined by us in accordance with GAAP, in either case multiplied by a fraction, the numerator of which will be equal to the number of full years of the term of the lease that is part of the Sale and Lease-Back Transaction remaining at the time of determination and the denominator of which will be equal to the number of full years of the term of the lease, without regard, in any case, to any renewal or extension options contained in the lease.

 

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Resignation or Removal of the Trustee

The Trustee may resign at any time upon at least 30 days’ prior written notice to us specifying the day upon which the resignation is to take effect and that resignation will take effect immediately upon the later of the appointment of a successor trustee and the day specified by the Trustee.

The Trustee may be removed at any time by an instrument or concurrent instruments in writing delivered to the Trustee and signed by the holders, or their attorneys-in-fact, of a majority in aggregate principal amount of the then outstanding senior notes. In addition, so long as no event of default under the Indenture or event which, with the giving of notice or lapse of time or both, would become an event of default has occurred and is continuing, we may remove the Trustee upon written notice to the Trustee and the holder of each senior note outstanding and appoint a successor trustee meeting the requirements of the Indenture.

Concerning the Trustee

The Bank of New York Mellon Trust Company, N.A. is the successor trustee under the Indenture. The Indenture provides that our obligations to compensate the Trustee and reimburse the Trustee for expenses, disbursements and advances will constitute indebtedness which will be secured by a lien generally prior to that of the senior notes upon all property and funds held or collected by the Trustee as such.

The Trustee is also a depositary of ours and certain of our affiliates and has in the past made, and may in the future make, periodic loans to us and certain of our affiliates. An affiliate of the Trustee is a lender under our and our affiliates’ credit facilities.

Book-Entry

Global Notes

The Notes will initially be represented by one or more Global Notes, which will be issued in definitive, fully registered, book-entry form. The Global Notes will be deposited with or on behalf of DTC and registered in the name of Cede & Co., as nominee of DTC.

Notes that are purchased pursuant to Regulation S under the Securities Act (“Regulation S”) will initially be represented by a temporary Global Note (the “Temporary Regulation S Global Note”). After the expiration of the period ending 40 days after the later of the commencement of the offering and the date the Notes were initially issued (the “Regulation S Distribution Compliance Period”), holders of beneficial interests in the Temporary Regulation S Global Note may exchange their beneficial interests for beneficial interests in a permanent Global Note representing Notes purchased pursuant to Regulation S, upon certification that such beneficial owner is not a “U.S. person” as such term is used in Regulation S or upon certification that such beneficial owner is a U.S. person who purchased its interest in the Notes in a transaction that did not require registration of the Senior Notes under the Securities Act. Prior to the expiration of the Regulation S Distribution Compliance Period, any sale or transfer of interests in Senior Notes purchased pursuant to Regulation S to, or for the account or benefit of, U.S. persons will not be permitted. See “Transfer Restrictions.”

DTC, Clearstream and Euroclear

Beneficial interests in the Global Notes will be represented through book-entry accounts of financial institutions acting on behalf of beneficial owners as Direct Participants and Indirect Participants (each, as defined below) in DTC. Investors may hold interests in the Global Notes through either DTC (in the United States), Clearstream Banking, S.A. (“Clearstream”) or Euroclear Bank S.A./N.V. (the “Euroclear Operator”), as operator of the Euroclear System (“Euroclear”), either directly if they are participants in such systems or indirectly through organizations that are participants in such systems. Clearstream and Euroclear will hold interests in the Global Notes on behalf of their participants, through customer securities accounts in Clearstream’s or Euroclear’s names on the books of their respective U.S. depositaries, which in turn will hold those positions in customers’ securities accounts in the U.S. depositaries’ names on the books of DTC.

 

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We have provided the descriptions of the operations and procedures of DTC, Clearstream and Euroclear in this prospectus solely as a matter of convenience. These operations and procedures are solely within the control of those organizations and are subject to change by them from time to time. None of the Company, the initial purchasers or the Trustee take any responsibility for these operations or procedures, and you are urged to contact DTC, Clearstream and Euroclear or their participants directly to discuss these matters.

We understand that:

 

   

DTC is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Exchange Act.

 

   

DTC holds and provides asset servicing for U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations.

 

   

DTC is a wholly owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others, such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”).

 

   

The DTC rules applicable to its participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. The information on such website is not incorporated by reference into this prospectus.

 

   

Purchases of Notes under the DTC system must be made by or through Direct Participants, which will receive a credit for the Notes on DTC’s records. The ownership interest of each actual purchaser of each Note (a “Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct Participants or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Notes are to be accomplished by entries made on the books of Direct Participants and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Notes, except in the event that use of the book-entry system for the Notes is discontinued.

 

   

To facilitate subsequent transfers, all Notes deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Notes with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not affect any change in beneficial ownership. DTC will have no knowledge of the actual Beneficial Owners of the Notes; DTC’s records will reflect only the identity of the Direct Participants to whose accounts such Notes are credited, which may or may not be the Beneficial Owners. The Direct Participants and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

 

   

Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will

 

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be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.

 

   

Beneficial Owners of Notes may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Notes, such as redemptions, tenders, defaults, and proposed amendments to the Indenture. For example, Beneficial Owners of Notes may wish to ascertain that the nominee holding the Notes for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.

 

   

Redemption notices shall be sent to DTC. If less than all of the Notes within an issue are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.

 

   

Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Notes unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC will mail an omnibus proxy to the Company as soon as possible after the record date. The omnibus proxy will assign Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Notes are credited on the record date (identified in a listing attached to the omnibus proxy).

 

   

Redemption proceeds and distributions on the Notes will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from us or the Trustee, on the date such amounts are payable in accordance with their respective holdings shown on DTC’s records. Payments by Direct Participants or Indirect Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Direct Participants or Indirect Participant and not of DTC, the Trustee or us, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds and distributions to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is our or the Trustee’s responsibility, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct Participants and Indirect Participants.

 

   

DTC may discontinue providing its services as depository with respect to the Notes at any time by giving reasonable notice to us or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, certificated Notes are required to be printed and delivered.

 

   

We may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, certificated Notes will be printed and delivered to DTC.

We understand that Clearstream is incorporated under the laws of Luxembourg as a professional depositary. Clearstream holds securities for its participating organizations and facilitates the clearance and settlement of securities transactions between its participating organizations through electronic book-entry changes in accounts of its participating organizations, thereby eliminating the need for physical movement of certificates. Clearstream provides to its participating organizations, among other things, services for safekeeping, administration, clearance and settlement of internationally traded securities and securities lending and borrowing. Clearstream interfaces with domestic markets in several countries. As a registered bank in Luxembourg, Clearstream is subject to regulation by the Luxembourg Commission for the Supervision of the Financial Sector. Clearstream participating organizations are recognized financial institutions around the world, including securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations and may include the initial purchasers. Indirect access to Clearstream is also available to others, such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Clearstream participating organization either directly or indirectly.

 

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We understand that Euroclear was created in 1968 to hold securities for participants of Euroclear and to clear and settle transactions between Euroclear participants through simultaneous electronic book-entry delivery against payment, thereby eliminating the need for physical movement of certificates and any risk from lack of simultaneous transfers of securities and cash. Euroclear provides various other services, including securities lending and borrowing and interfaces with domestic markets in several countries. Euroclear is operated by the Euroclear Operator. All operations are conducted by the Euroclear Operator, and all Euroclear securities clearance accounts and Euroclear cash accounts are accounts with the Euroclear Operator. Euroclear participants include banks (including central banks), securities brokers and dealers, and other professional financial intermediaries and may include the initial purchasers. Indirect access to Euroclear is also available to other firms that clear through or maintain a custodial relationship with a Euroclear participant, either directly or indirectly.

We expect that under procedures established by DTC:

 

   

upon deposit of the Global Notes with DTC or its custodian, DTC will credit on its internal system the accounts of Direct Participants designated by the initial purchasers with portions of the principal amounts of the Notes; and

 

   

ownership of the Notes will be shown on, and the transfer of ownership thereof will be effected only through, records maintained by DTC or its nominee, with respect to interests of Direct Participants, and the records of Direct Participants and Indirect Participants, with respect to interests of persons other than participants.

The laws of some jurisdictions may require that purchasers of securities take physical delivery of those securities in definitive form. Accordingly, the ability to transfer interests in the Notes represented by a Global Note to those persons may be limited. In addition, because DTC can act only on behalf of its participants, who in turn act on behalf of persons who hold interests through participants, the ability of a person having an interest in Notes represented by a Global Note to pledge or transfer those interests to persons or entities that do not participate in DTC’s system, or otherwise to take actions in respect of such interest, may be affected by the lack of a physical definitive security in respect of such interest.

So long as DTC or its nominee is the registered owner of a Global Note, DTC or that nominee will be considered the sole owner or holder of the Notes represented by that Global Note for all purposes under the Indenture and under the Notes. Except as provided below under “—Certificated Notes,” owners of beneficial interests in a Global Note will not be entitled to have Notes represented by that Global Note registered in their names, will not receive or be entitled to receive physical delivery of certificated Notes and will not be considered the owners or holders thereof under the Indenture or under the Notes for any purpose, including with respect to the giving of any direction, instruction or approval to the Trustee. Accordingly, each holder owning a beneficial interest in a Global Note must rely on the procedures of DTC and, if that holder is not a Direct Participants or Indirect Participant, on the procedures of the participant through which that holder owns its interest, to exercise any rights of a holder of Notes under the Indenture or the Notes.

Neither we nor the Trustee will have any responsibility or liability for any aspect of the records relating to or payments made on account of Notes by DTC, Clearstream or Euroclear, or for maintaining, supervising or reviewing any records of those organizations relating to the Notes.

Payments on the Notes represented by the Global Notes will be made to DTC or its nominee, as the case may be, as the registered owner thereof. We expect that DTC or its nominee, upon receipt of any payment on the Notes represented by a Global Notes, will credit participants’ accounts with payments in amounts proportionate to their respective beneficial interests in the Global Notes as shown in the records of DTC or its nominee. We also expect that payments by participants to owners of beneficial interests in the Global Notes held through such participants will be governed by standing instructions and customary practice as is now the case with securities held for the accounts of customers registered in the names of nominees for such customers. The participants will be responsible for those payments.

 

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Payments on the Notes held beneficially through Clearstream will be credited to cash accounts of its participating organizations in accordance with its rules and procedures, to the extent received by the U.S. depositary for Clearstream.

Securities clearance accounts and cash accounts with the Euroclear Operator are governed by the Terms and Conditions Governing Use of Euroclear and the related Operating Procedures of the Euroclear System, and applicable Belgian law (collectively, the “Terms and Conditions”). The Terms and Conditions govern transfers of securities and cash within Euroclear, withdrawals of securities and cash from Euroclear, and receipts of payments with respect to securities in Euroclear. All securities in Euroclear are held on a fungible basis without attribution of specific certificates to specific securities clearance accounts. The Euroclear Operator acts under the Terms and Conditions only on behalf of Euroclear participants and has no record of or relationship with persons holding through Euroclear participants.

Payments on the Senior Notes held beneficially through Euroclear will be credited to the cash accounts of its participants in accordance with the Terms and Conditions, to the extent received by the U.S. depositary for Euroclear.

Clearance and Settlement Procedures

Initial settlement for the Notes will be made in immediately available funds. Secondary market trading between DTC participants will occur in the ordinary way in accordance with DTC rules and will be settled in immediately available funds. Secondary market trading between Clearstream customers and/or Euroclear participants will occur in the ordinary way in accordance with the applicable rules and operating procedures of Clearstream and Euroclear, as applicable, and will be settled using the procedures applicable to conventional Eurobonds in immediately available funds.

Cross-market transfers between persons holding directly or indirectly through DTC, on the one hand, and directly or indirectly through Clearstream customers or Euroclear participants, on the other, will be effected through DTC in accordance with DTC rules on behalf of the relevant European international clearing system by the U.S. depositary; however, such cross-market transactions will require delivery of instructions to the relevant European international clearing system by the counterparty in such system in accordance with its rules and procedures and within its established deadlines (European time). The relevant European international clearing system will, if the transaction meets its settlement requirements, deliver instructions to the U.S. depositary to take action to effect final settlement on its behalf by delivering or receiving the Notes in DTC, and making or receiving payment in accordance with normal procedures for same-day funds settlement applicable to DTC. Clearstream customers and Euroclear participants may not deliver instructions directly to their U.S. depositaries.

Because of time-zone differences, credits of the Notes received in Clearstream or Euroclear as a result of a transaction with a DTC participant will be made during subsequent securities settlement processing and dated the Business Day following the DTC settlement date. Such credits or any transactions in the Notes settled during such processing will be reported to the relevant Clearstream customers or Euroclear participants on such Business Day. Cash received in Clearstream or Euroclear as a result of sales of the Notes by or through a Clearstream customer or a Euroclear participant to a DTC participant will be received with value on the DTC settlement date but will be available in the relevant Clearstream or Euroclear cash account only as of the Business Day following settlement in DTC.

Although DTC, Clearstream and Euroclear have agreed to the foregoing procedures to facilitate transfers of the Notes among participants of DTC, Clearstream and Euroclear, they are under no obligation to perform or continue to perform such procedures and such procedures may be changed or discontinued at any time.

 

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Certificated Notes

We will issue certificated Notes to each person that DTC identifies as the beneficial owner of the Notes represented by a Global Note upon surrender by DTC of the Global Note if:

 

   

DTC notifies us that it is no longer willing or able to act as a depositary for such Global Note or ceases to be a clearing agency registered under the Exchange Act, and we have not appointed a successor depositary within 90 days of that notice or becoming aware that DTC is no longer so registered;

 

   

an event of default under the Indenture has occurred and is continuing; or

 

   

we determine (subject to DTC’s procedures) not to have the Notes represented by such Global Notes.

Neither we nor the Trustee will be liable for any delay by DTC, its nominee or any Direct Participants or Indirect Participant in identifying the Beneficial Owners of the Notes. We and the Trustee may conclusively rely on, and will be protected in relying on, instructions from DTC or its nominee for all purposes, including with respect to the registration and delivery, and the respective principal amounts, of the certificated Notes to be issued.

Governing Law

The Indenture is, and the New Notes will be, governed by and construed in accordance with, the laws of the State of New York.

 

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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

The following is a summary of certain U.S. federal income tax considerations related to the exchange of Outstanding Notes for New Notes in the exchange offer. This summary is based upon provisions of the Internal Revenue Code of 1986, as amended, or the Code, U.S. Treasury Regulations, administrative rulings and judicial decisions in effect as of the date of this prospectus, any of which may subsequently be changed, possibly retroactively, or interpreted differently by the Internal Revenue Service, or the IRS, so as to result in U.S. federal income tax consequences different from those discussed below. Except where noted, this summary is limited to holders who hold their Outstanding Notes as capital assets within the meaning of Section 1221 of the Code (generally for investment purposes). This summary does not address all aspects of U.S. federal income taxes related to the exchange of Outstanding Notes for New Notes in the exchange offer and does not address all tax consequences that may be relevant to holders in light of their personal circumstances or particular situations, such as:

 

   

tax consequences to holders who may be subject to special tax treatment, including investors subject to the rules of Section 451(b) by reason of their use of certain financial statements, dealers or traders in securities or currencies, banks and other financial institutions, regulated investment companies, real estate investment trusts, tax-exempt entities, insurance companies, pension plans, individual retirement accounts or other tax-deferred accounts, investors subject to the alternative minimum tax, and traders in securities that elect to use a mark-to-market method of accounting for their securities;

 

   

tax consequences to persons holding Outstanding Notes as a part of a hedging, integrated, conversion or constructive sale transaction or a straddle or other risk reduction transaction;

 

   

tax consequences to holders of Outstanding Notes whose “functional currency” is not the U.S. dollar;

 

   

tax consequences to entities or arrangements treated as partnerships or other pass-through entities for U.S. federal income tax purposes and their members; and

 

   

tax consequences to certain former citizens or residents of the United States.

If a partnership (including any entity or arrangement treated as a partnership or other pass-through entity for U.S. federal income tax purposes) holds Outstanding Notes, the tax treatment of the exchange offer to a partner will generally depend upon the status of the partner and the activities of the partnership. A beneficial owner that is a partnership and partners in such a partnership should consult their tax advisors regarding the tax consequences of the exchange offer.

This summary of U.S. federal income tax considerations is for general information only and is not tax advice for any particular investor. This summary does not address the tax considerations arising under the laws of any non-U.S., state, or local jurisdiction. This summary also does not address any U.S. federal tax consequences other than income tax, such as U.S. federal alternative minimum tax consequences, the potential application of the Medicare tax on net investment income, and any U.S. federal estate or gift tax consequences. If you are considering the purchase of Notes, you should consult your tax advisors concerning the U.S. federal income tax consequences to you in light of your own specific situation, as well as consequences arising under the laws of any other taxing jurisdiction.

Exchange Offer

The exchange of Outstanding Notes for New Notes will not constitute a taxable exchange. As a result, (1) a holder of Outstanding Notes should not recognize a taxable gain or loss as a result of exchanging such holder’s Outstanding Notes for New Notes, (2) the holding period of the New Notes received should include the holding period of the Outstanding Notes exchanged therefor, and (3) the adjusted tax basis of the New Notes received should be the same as the adjusted tax basis of the Outstanding Notes exchanged therefor immediately before such exchange. The United States federal income tax consequences of holding and disposing of your New Notes generally will be the same as those applicable to your Outstanding Notes.

 

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PLAN OF DISTRIBUTION

Each broker-dealer that receives New Notes for its own account pursuant to the exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of such New Notes. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of New Notes received in exchange for Outstanding Notes, where such Outstanding Notes were acquired as a result of market-making activities or other trading activities. Starting on the expiration date and ending on the close of business 180 days after the commencement of the exchange offer, we have agreed to cause this prospectus, as amended or supplemented, to be made available to any broker-dealer for use in connection with any such resale. In addition, all dealers effecting transactions in the New Notes may be required to deliver a prospectus.

We will not receive any proceeds from any sale of New Notes by broker-dealers. New Notes received by broker-dealers for their own account pursuant to the exchange offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the New Notes or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer and/or the purchasers of any such New Notes. Any broker-dealer that resells New Notes that were received by it for its own account pursuant to the exchange offer and any broker or dealer that participates in a distribution of such New Notes may be deemed to be an “underwriter” within the meaning of the Securities Act and any profit on any such resale of New Notes and any commissions or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The letter of transmittal states that by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.

For a period of 180 days after the commencement of the exchange offer, we will promptly send additional copies of this prospectus and any amendment or supplement to this prospectus to any broker-dealer that requests such documents in the letter of transmittal. We have agreed to pay the expenses incident to the exchange offer (including the expenses of one counsel for the holders of the Notes) other than underwriting discounts and commissions and any brokerage commissions and transfer taxes and will indemnify the holders of the Notes (including any broker-dealers) against certain liabilities, including liabilities under the Securities Act.

 

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LEGAL MATTERS

Certain legal matters will be passed upon for us by James A. Arcuri, Esq., Associate General Counsel of FirstEnergy Service Company, an affiliate, and Morgan, Lewis & Bockius LLP, and for the initial purchasers by Cravath, Swaine  & Moore LLP.

EXPERTS

The financial statements as of December 31, 2024 and 2023 and for each of the three years in the period ended December 31, 2024 included in this Prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.

 

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INDEX TO FINANCIAL STATEMENTS

 

     Page  

JERSEY CENTRAL POWER AND LIGHT COMPANY AUDITED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2024, 2023, AND 2022

  

Glossary of Terms

     F-2  

Report of Independent Registered Public Accounting Firm for the financial statements as of December 31, 2024, 2023 and 2022, which comprise the Balance Sheets as of December 31, 2024 and 2023 and the Statements of Income, of Members’ Equity, and of Cash Flows for the Years Ended December 31, 2024, 2023 and 2022

     F-5  

Statements of Income for the Years Ended December  31, 2024, 2023 and 2022

     F-7  

Balance Sheets as of December 31, 2024 and 2023

     F-8  

Statements of Members’ Equity for the Years Ended December  31, 2024, 2023 and 2022

     F-9  

Statements of Cash Flows for the Years Ended December  31, 2024, 2023 and 2022

     F-10  

Notes to Financial Statements

     F-11  

 

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GLOSSARY OF TERMS

The following abbreviations and acronyms may be used in these financial statements to identify Jersey Central Power & Light Company and its affiliated companies:

 

ATSI   

American Transmission Systems, Incorporated, a transmission subsidiary of FET

CEI   

The Cleveland Electric Illuminating Company, an Ohio electric utility subsidiary of FE

Electric Companies   

OE, CEI, TE, JCP&L, MP, PE and FE PA (as successor-in-interest to Penn, MN and WP)

FE   

FirstEnergy Corp., a public utility holding company

FE PA   

FirstEnergy Pennsylvania Electric Company, a Pennsylvania electric utility subsidiary of FirstEnergy Pennsylvania Holding Company LLC, a wholly owned subsidiary of FE

FESC   

FirstEnergy Service Company, which provides legal, financial and other corporate support services

FET   

FirstEnergy Transmission, LLC a consolidated VIE of FE, and the parent company of ATSI, MAIT and TrAIL, and having a joint venture in PATH

FirstEnergy   

FirstEnergy Corp., together with its consolidated subsidiaries

JCP&L   

Jersey Central Power & Light Company, a New Jersey electric utility subsidiary of FE

KATCo   

Keystone Appalachian Transmission Company, a transmission subsidiary of FE

MAIT   

Mid-Atlantic Interstate Transmission, LLC, a transmission subsidiary of FET

ME   

Metropolitan Edison Company, a former Pennsylvania electric utility subsidiary of FE, which merged with and into FE PA on January 1, 2024

MP   

Monongahela Power Company, a West Virginia electric utility subsidiary of FE

OE   

Ohio Edison Company, an Ohio electric utility subsidiary of FE

Ohio Companies   

CEI, OE and TE

PATH   

Potomac-Appalachian Transmission Highline, LLC, a joint venture between FE and a subsidiary of AEP

PE   

The Potomac Edison Company, a Maryland and West Virginia electric utility subsidiary of FE

Penn   

Pennsylvania Power Company, a former Pennsylvania electric utility subsidiary of OE, which merged with and into FE PA on January 1, 2024

Pennsylvania Companies   

ME, PN, Penn and WP, each of which merged with and into FE PA on January 1, 2024

PN   

Pennsylvania Electric Company, a former Pennsylvania electric utility subsidiary of FE, which merged with and into FE PA on January 1, 2024

TE   

The Toledo Edison Company, an Ohio electric utility subsidiary of FE

TrAIL   

Trans-Allegheny Interstate Line Company, a transmission subsidiary of FET

Transmission Companies   

ATSI, KATCo, MAIT and TrAIL

TrAIL   

Trans-Allegheny Interstate Line Company, a transmission subsidiary of FET

WP   

West Penn Power Company, a former Pennsylvania electric utility subsidiary of FE, which merged with and into FE PA on January 1, 2024

 

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The following abbreviations and acronyms may be used to identify frequently used terms in these financial statements:

 

AFS    Available-for-sale
AFSI    Adjusted Financial Statement Income
AFUDC    Allowance for Funds Used During Construction
AMI    Advanced Metering Infrastructure
AMT    Alternative Minimum Tax
AOCI    Accumulated Other Comprehensive Income (Loss)
ARO    Asset Retirement Obligation
ARP    Alternative Revenue Program
ASC    Accounting Standards Codification
ASU    Accounting Standards Update
BGS    Basic Generation Service
CERCLA    Comprehensive Environmental Response, Compensation, and Liability Act of 1980
CODM    Chief Operating Decision Maker
COVID-19    Coronavirus disease
DPA    Deferred Prosecution Agreement entered into on July 21, 2021 between FE and the U.S. Attorney’s Office for the S.D. Ohio
EDC   

Electric Distribution Company

EE&C   

Energy Efficiency and Conservation

EGS   

Electric Generation Supplier

EH   

Energy Harbor Corp.

EnergizeNJ   

JCP&L’s second Infrastructure Investment Program

Exchange Act   

Securities and Exchange Act of 1934, as amended

FASB   

Financial Accounting Standards Board

FE Board   

FE Board of Directors

FERC   

Federal Energy Regulatory Commission

Fitch   

Fitch Ratings Service

FPA   

Federal Power Act

GAAP   

Generally Accepted Accounting Principles in the United States of America

HB 6   

House Bill 6, as passed by Ohio’s 133rd General Assembly

IRA of 2022   

Inflation Reduction Act of 2022

IRS   

Internal Revenue Service

LOC   

Letter of Credit

MGP   

Manufactured Gas Plants

Moody’s   

Moody’s Investors Service, Inc.

MW   

Megawatt

N.D. Ohio   

Federal District Court, Northern District of Ohio

NERC   

North American Electric Reliability Corporation

NJBPU   

New Jersey Board of Public Utilities

NOL   

Net Operating Loss

OAG   

Ohio Attorney General

ODSA   

Ohio Development Service Agency

OOCIC   

Ohio Organized Crime Investigations Commission, which is composed of members of the Ohio law enforcement community and is chaired by the OAG

OPEB   

Other Postemployment Benefits

PEER   

FirstEnergy’s Program for Enhanced Employee Retirement, as announced in 2023

PJM   

PJM Interconnection, LLC, an RTO

PJM Tariff   

PJM Open Access Transmission Tariff

PUCO   

Public Utilities Commission of Ohio

 

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RFC   

ReliabilityFirst Corporation

ROE   

Return on Equity

RTO   

Regional Transmission Organization

S.D. Ohio   

Federal District Court, Southern District of Ohio

SEC   

United States Securities and Exchange Commission

SLC   

Special Litigation Committee of the FE Board

SOFR   

Secured Overnight Financing Rate

S&P   

Standard & Poor’s Ratings Service

Tax Act   

Tax Cuts and Jobs Act adopted December 22, 2017

 

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Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholder of Jersey Central Power & Light Company

Opinion on the Financial Statements

We have audited the accompanying balance sheets of Jersey Central Power & Light Company (the “Company”) as of December 31, 2024 and 2023, and the related statements of income, of comprehensive income, of common stockholder’s equity and of cash flows for each of the three years in the period ended December 31, 2024, including the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Accounting for the Effects of Rate Regulation

As described in Note 1 to the financial statements, the Company is subject to regulation that sets the prices (rates) the Company is permitted to charge customers based on costs that the regulatory agencies determine are permitted to be recovered. At times, regulatory agencies permit the future recovery of costs that would be currently charged to expense by an unregulated company. The ratemaking process results in the recording of regulatory assets and liabilities based on anticipated future cash inflows and outflows. Management reviews the probability of recovery of regulatory assets, and settlement of regulatory liabilities, at each balance sheet date and whenever new events occur. Factors that may affect probability include changes in the regulatory environment, issuance of a regulatory commission order, or passage of new legislation. Upon material changes to these factors,

 

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where applicable, management will record new regulatory assets or liabilities and will assess whether it is probable that currently recorded regulatory assets and liabilities will be recovered or settled in future rates. As of December 31, 2024, there were $265 million of regulatory assets, net.

The principal considerations for our determination that performing procedures relating to accounting for the effects of rate regulation is a critical audit matter are a high degree of auditor effort in performing procedures and evaluating audit evidence related to the recovery of regulatory assets and the settlement of regulatory liabilities.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements. These procedures included, among others, (i) obtaining the Company’s correspondence with regulators, (ii) evaluating the reasonableness of management’s assessment regarding regulatory guidance, proceedings, and legislation and the related accounting implications, and (iii) testing, on a sample basis, the regulatory assets and liabilities by considering the provisions outlined in rate orders and other correspondence with regulators.

/s/ PricewaterhouseCoopers LLP

Cleveland, Ohio

April 1, 2025

We have served as the Company’s auditor since 2002.

 

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JERSEY CENTRAL POWER & LIGHT COMPANY

STATEMENTS OF INCOME

 

      For the Years Ended December 31,   

(In millions)

    2024       2023       2022   

REVENUES(1)

   $ 2,315     $ 2,027     $ 2,055  
  

 

 

   

 

 

   

 

 

 

OPERATING EXPENSES:

      

Purchased power

     1,155       1,037       972  

Other operating expenses(2)

     656       555       602  

Provision for depreciation

     249       231       209  

Amortization (deferral) of regulatory assets, net

     (135     (74     51  

General taxes

     21       21       18  
  

 

 

   

 

 

   

 

 

 

Total operating expenses

     1,946       1,770       1,852  
  

 

 

   

 

 

   

 

 

 

OPERATING INCOME

     369       257       203  
  

 

 

   

 

 

   

 

 

 

OTHER INCOME (EXPENSE):

      

Miscellaneous income, net(3)

     34       42       59  

Pension and OPEB mark-to-market adjustment (See Note 3)

     24       (29     (27

Interest expense - other

     (97     (110     (106

Interest expense - affiliates

     (20     (14     (1

Capitalized financing costs

     28       19       16  
  

 

 

   

 

 

   

 

 

 

Total other expense

     (31     (92     (59
  

 

 

   

 

 

   

 

 

 

INCOME BEFORE INCOME TAXES

     338       165       144  

INCOME TAXES

     90       35       25  
  

 

 

   

 

 

   

 

 

 

NET INCOME

   $ 248     $ 130     $ 119  
  

 

 

   

 

 

   

 

 

 

STATEMENTS OF COMPREHENSIVE INCOME

      

NET INCOME

   $ 248     $ 130     $ 119  
  

 

 

   

 

 

   

 

 

 

OTHER COMPREHENSIVE INCOME:

      

Pension and OPEB prior service costs

     1       —        —   

Other comprehensive income

     1       —        —   

Income taxes on other comprehensive income

     —        —        —   

Other comprehensive income, net of tax

     1       —        —   
  

 

 

   

 

 

   

 

 

 

COMPREHENSIVE INCOME

   $ 249     $ 130     $ 119  
  

 

 

   

 

 

   

 

 

 

 

(1)

Includes $1 million for the years ended December 31, 2024, 2023 and 2022 of revenue from affiliates.

(2)

Includes $192 million, $183 million and $158 million for the year ended December 31, 2024, 2023 and 2022, respectively, of affiliated costs, certain of which are subject to capitalization.

(3)

Includes $1 million for the year ended December 31, 2022 of interest income from affiliates.

The accompanying Notes to Financial Statements are an integral part of these financial statements.

 

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JERSEY CENTRAL POWER & LIGHT COMPANY

BALANCE SHEETS

 

(In millions, except share amounts)

   December 31,
2024
    December 31,
2023
 
ASSETS     

CURRENT ASSETS:

    

Receivables -

    

Customers

   $ 284     $ 225  

Less — Allowance for uncollectible customer receivables

     6       9  
  

 

 

   

 

 

 
     278       216  

Affiliated companies

     44       71  

Other, net of allowance for uncollectible accounts of $6 million in 2023

     28       31  

Prepaid taxes and other

     29       64  
  

 

 

   

 

 

 
     379       382  
  

 

 

   

 

 

 

PROPERTY, PLANT AND EQUIPMENT:

    

In service

     8,697       8,278  

Less — Accumulated provision for depreciation

     2,409       2,365  
  

 

 

   

 

 

 
     6,288       5,913  
  

 

 

   

 

 

 

Construction work in progress

     620       475  
  

 

 

   

 

 

 
     6,908       6,388  
  

 

 

   

 

 

 

INVESTMENTS AND OTHER NONCURRENT ASSETS:

    

Goodwill

     1,811       1,811  

Investments

     282       281  

Regulatory assets

     265       —   

Prepaid OPEB costs

     215       180  

Other

     67       58  
  

 

 

   

 

 

 
     2,640       2,330  
  

 

 

   

 

 

 

TOTAL ASSETS

   $ 9,927     $ 9,100  
  

 

 

   

 

 

 
LIABILITIES AND EQUITY     

CURRENT LIABILITIES:

    

Currently payable long-term debt

   $ 1     $ 501  

Short-term borrowings -

    

Affiliated companies

     22       262  

Other

     —        200  

Accounts payable -

    

Affiliated companies

     1       2  

Other

     176       153  

Accrued compensation and benefits

     33       34  

Customer deposits

     34       36  

Accrued taxes

     21       4  

Accrued interest

     23       27  

Other

     34       32  
  

 

 

   

 

 

 
     345       1,251  
  

 

 

   

 

 

 

NONCURRENT LIABILITIES:

    

Long-term debt and other long-term obligations

     2,339       1,648  

Accumulated deferred income taxes, net

     1,196       957  

Nuclear fuel disposal costs

     235       223  

Retirement benefits

     71       83  

Regulatory liabilities

     —        48  

Other

     764       758  
  

 

 

   

 

 

 
     4,605       3,717  
  

 

 

   

 

 

 

TOTAL LIABILITIES

     4,950       4,968  
  

 

 

   

 

 

 

STOCKHOLDER’S EQUITY:

    

Common stock, $10 par value, authorized 16,000,000 shares - 13,628,447 shares outstanding

     136       136  

Other paid-in capital

     3,523       2,777  

Accumulated other comprehensive loss

     (4     (5

Retained earnings

     1,322       1,224  
  

 

 

   

 

 

 

TOTAL EQUITY

     4,977       4,132  
  

 

 

   

 

 

 

COMMITMENTS, GUARANTEES AND CONTINGENCIES (NOTE 11)

    
  

 

 

   

 

 

 

TOTAL LIABILITIES AND EQUITY

   $ 9,927     $ 9,100  
  

 

 

   

 

 

 

The accompanying Notes to Financial Statements are an integral part of these financial statements.

 

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JERSEY CENTRAL POWER & LIGHT COMPANY

STATEMENTS OF COMMON STOCKHOLDER’S EQUITY

 

     Common Stock                            

(In millions, except share amounts)

   Number of
Shares
     Carrying
Value
     Other
Paid-In
Capital
     AOCI     Retained
Earnings
    Total
Stockholder’s
Equity
 

Balance, January 1, 2022

     13,628,447      $ 136      $ 2,727      $ (5   $ 1,050     $ 3,908  

Net income

                119       119  

Stock-based compensation(1)

           6            6  

Consolidated tax benefit allocation

           9            9  

Common stock dividends declared

                (75     (75
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Balance, December 31, 2022

     13,628,447      $ 136      $ 2,742      $ (5   $ 1,094     $ 3,967  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Net income

                130       130  

Stock-based compensation(1)

           5            5  

Equity contribution from parent

           30            30  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Balance, December 31, 2023

     13,628,447      $ 136      $ 2,777      $ (5   $ 1,224     $ 4,132  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Net income

                248       248  

Comprehensive income

              1         1  

Stock-based compensation(1)

           6            6  

Equity contribution from parent

           740            740  

Common stock dividend declared

                (150     (150
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Balance, December 31, 2024

     13,628,447      $ 136      $ 3,523      $ (4   $ 1,322     $ 4,977  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

 

(1)

In the form of FE common equity granted to JCP&L employees.

 

 

 

The accompanying Notes to Financial Statements are an integral part of these financial statements.

 

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JERSEY CENTRAL POWER & LIGHT COMPANY

STATEMENTS OF CASH FLOWS

 

     For the Years Ended December 31,  

(In millions)

    2024       2023       2022   

CASH FLOWS FROM OPERATING ACTIVITIES:

      

Net income

   $ 248     $ 130     $ 119  

Adjustments to reconcile net income to net cash from operating activities-

      

Depreciation, amortization and impairments

     161       145       319  

Transmission revenue collections, net

     6       (14     15  

Deferred income taxes and investment tax credits, net

     233       50       (1

Spent nuclear fuel disposal trust income

     12       12       11  

Employee benefit costs, net

     (22     (27     (44

Pension and OPEB mark-to-market adjustment

     (24     29       27  

Changes in current assets and liabilities-

      

Receivables

     (32     (6     3  

Prepaid taxes and other current assets

     6       (9     —   

Accounts payable

     (7     (6     14  

Accrued taxes

     17       1       (23

Accrued interest

     (4     1       (1

Accrued compensation and benefits

     —        (5     (4

Other current liabilities

     —        2       3  

Collateral, net

     29       (57     (8

Employee benefit plan funding and related payments

     (7     (7     (7

Other

     (9     25       16  
  

 

 

   

 

 

   

 

 

 

Net cash provided from operating activities

     607       264       439  
  

 

 

   

 

 

   

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

      

Capital investments

     (877     (633     (483

Sales of investment securities held in trusts

     121       38       48  

Purchases of investment securities held in trusts

     (134     (50     (59

Asset removal costs

     (57     (45     (32
  

 

 

   

 

 

   

 

 

 

Net cash used for investing activities

     (947     (690     (526
  

 

 

   

 

 

   

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

      

New financing-

      

Long-term debt

     700       —        —   

Short-term borrowings-

      

Affiliated companies, net

     —        197       —   

Other, net

     —        200       —   

Redemptions and repayments-

      

Long-term debt

     (500     —        —   

Short-term borrowings-

      

Affiliated companies, net

     (240     —        (7

Other, net

     (200     —        —   

Equity contribution from parent

     740       30       —   

Common stock dividend payments

     (150     —        (75

Other

     (10     (1     (1
  

 

 

   

 

 

   

 

 

 

Net cash provided from (used for) financing activities

     340       426       (83
  

 

 

   

 

 

   

 

 

 

Net change in cash, cash equivalents, and restricted cash

     —        —        (170

Cash, cash equivalents, and restricted cash at beginning of period

     —        —        170  
  

 

 

   

 

 

   

 

 

 

Cash, cash equivalents, and restricted cash at end of period

   $ —      $ —      $ —   
  

 

 

   

 

 

   

 

 

 

SUPPLEMENTAL CASH FLOW INFORMATION:

      

Cash paid (received) during the year:

      

Interest (net of amounts capitalized)

   $ 96     $ 108     $ 99  

Income taxes, net of refunds

   $ (101   $ (11   $ 45  

Significant non-cash transactions: Accrued capital investments

   $ 82     $ 59     $ 39  

The accompanying Notes to Financial Statements are an integral part of these financial statements.

 

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JERSEY CENTRAL POWER & LIGHT COMPANY

NOTES TO FINANCIAL STATEMENTS

 

Note

Number

        Page
Number
 
1    Organization and Basis of Presentation      F-12  
2    Revenue      F-18  
3    Pension and Other Postemployment Benefits      F-19  
4    Taxes      F-21  
5    Leases      F-23  
6    Fair Value Measurements      F-26  
7    Capitalization      F-27  
8    Short-Term Borrowings and Bank Lines of Credit      F-29  
9    Asset Retirement Obligations      F-30  
10    Regulatory Matters      F-31  
11    Commitments, Guarantees and Contingencies      F-35  
12    Transactions with Affiliated Companies      F-40  
13    Segment Information      F-41  

 

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1. ORGANIZATION AND BASIS OF PRESENTATION

Unless otherwise indicated, defined terms and abbreviations used herein have the meanings set forth in the accompanying Glossary of Terms.

JCP&L is a wholly owned subsidiary of FE. JCP&L owns property and does business as an electric public utility in New Jersey, providing distribution services to approximately 1.2 million customers, as well as transmission services in northern, western, and east central New Jersey. JCP&L has 1,296 employees and serves an area that has a population of approximately 2.8 million. JCP&L plans, operates, and maintains its transmission system in accordance with NERC reliability standards, and other applicable regulatory requirements. In addition, JCP&L complies with the regulations, orders, policies and practices prescribed by FERC and the NJBPU.

Certain prior year amounts have been reclassified to conform to the current year presentation.

The preparation of financial statements in conformity with GAAP requires management to make periodic estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and disclosure of contingent assets and liabilities. Actual results could differ from these estimates. The reported results of operations are not necessarily indicative of results of operations for any future period. JCP&L has evaluated events and transactions for potential recognition or disclosure through the date these financial statements were issued.

Economic Conditions

Economic conditions have stabilized across numerous material categories, but not all lead times have returned to pre-pandemic levels. Several key suppliers have seen improvements with capacity, but JCP&L continues to monitor the situation as demand increases across the industry, including due to data center usage. Inflationary pressures have moderated, which has improved the cost of materials, but certain categories have remained elevated. JCP&L continues to implement mitigation strategies to address supply constraints and does not expect any corresponding service disruptions or any material impact on its capital investment plan. However, the situation remains fluid and a prolonged continuation or further increase in demand, or the continuation of uncertain or adverse macroeconomic conditions, including inflationary pressures and new or increased existing tariffs, could lead to an increase in supply chain disruptions that could, in turn, have an adverse effect on JCP&L’s results of operations, cash flow and financial condition.

In February 2025, the new U.S. presidential administration announced the imposition of widespread and substantial tariffs on imports, with plans for additional tariffs to potentially be adopted in the future. Although certain of these tariffs were subsequently temporarily stayed, the situation is dynamic and subject to rapid change. The imposition of these or any other new or increased tariffs or resultant trade wars could have an adverse effect on JCP&L’s results of operations, cash flow and financial condition.

ACCOUNTING FOR THE EFFECTS OF REGULATION

JCP&L is subject to regulation that sets the prices (rates) that JCP&L is permitted to charge customers based on costs that the regulatory agencies determine are permitted to be recovered. At times, regulatory agencies permit the future recovery of costs that would be currently charged to expense by an unregulated company. The ratemaking process results in the recording of regulatory assets and liabilities based on anticipated future cash inflows and outflows.

JCP&L reviews the probability of recovery of regulatory assets, and settlement of regulatory liabilities, at each balance sheet date and whenever new events occur. Factors that may affect probability include changes in the regulatory environment, issuance of a regulatory commission order, or passage of new legislation. Upon material changes to these factors, where applicable, JCP&L will record new regulatory assets or liabilities and will assess

 

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whether it is probable that currently recorded regulatory assets and liabilities will be recovered or settled in future rates. If recovery of a regulatory asset is no longer probable, JCP&L will write off that regulatory asset as a charge against earnings. JCP&L considers the entire regulatory asset balance as the unit of account for the purposes of balance sheet classification rather than the next years recovery and as such net regulatory assets and liabilities are presented in the noncurrent section on JCP&L’s Balance Sheets. See Note 10, “Regulatory Matters,” of the Notes to Financial Statements for additional information.

The following table provides information about the composition of net regulatory assets and liabilities as of December 31, 2024 and December 31, 2023, and the changes during the year ended December 31, 2024:

 

     As of December 31,         

Net Regulatory Assets (Liabilities) by Source

    2024        2023       Change  
     (In millions)  

Asset removal costs

   $ (83    $ (97    $ 14  

Customer payables for future income taxes

     (410      (426      16  

Spent nuclear fuel disposal costs

     (72      (83      11  

Deferred transmission costs

     (3      3        (6

Deferred distribution costs

     206        114        92  

Deferred generation costs

     (12      (7      (5

Storm-related costs

     310        280        30  

Energy efficiency program costs

     208        73        135  

New Jersey societal benefit costs

     87        79        8  

Vegetation management costs

     7        7        —   

Other

     27        9        18  
  

 

 

    

 

 

    

 

 

 

Net Regulatory Assets (Liabilities) included on the Balance Sheets

   $ 265      $ (48    $ 313  
  

 

 

    

 

 

    

 

 

 

The following is a description of the regulatory assets and liabilities described above:

Asset removal costs - Reflects amounts to be recovered or refunded through future rates to pay for the cost of activities to remove assets, including obligations for which an ARO has been recognized, that are expected to be incurred at the time of retirement.

Customer payables for future income taxes - Reflects amounts to be recovered or refunded through future rates to pay income taxes that become payable when rate revenue is provided to recover items such as AFUDC-equity and depreciation of property, plant and equipment for which deferred income taxes were not recognized for ratemaking purposes, including amounts attributable to federal and state tax rate changes such as the Tax Act. These amounts are being amortized over the period in which the related deferred tax assets reverse, which is generally over the expected life of the underlying asset.

Spent nuclear fuel disposal costs - Reflects amounts collected from customers and the investment income, losses and changes in fair value of the trusts for spent nuclear fuel disposal costs related to the former nuclear generating facilities, Oyster Creek and Three Mile Island Unit 1.

Deferred transmission costs - Reflects differences between revenues earned based on actual costs for JCP&L’s formula transmission rate and the amounts billed, including amounts at December 31, 2023 expected to be refunded to, or recoverable from, wholesale transmission customers resulting from the FERC Audit, as further described below, which amounts are recorded as a regulatory asset or liability and recovered or refunded, respectively, in subsequent periods.

Deferred distribution costs - Principally represents costs related to the AMI and electric vehicle programs in New Jersey.

 

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Deferred generation costs - Principally represents total costs, including energy and capacity, paid to third-party suppliers for their provision of BGS supply.

Storm-related costs - Relates to the recovery of storm costs, of which $41 million and $55 million are currently being recovered through rates as of December 31, 2024, and 2023, respectively.

Energy efficiency program costs - Primarily relates to the recovery or refund of costs associated with energy efficiency and renewable energy programs in New Jersey.

New Jersey societal benefit costs - Primarily relates to regulatory assets associated with MGP remediation, universal service and lifeline funds, and the New Jersey Clean Energy Program.

Vegetation management costs - Relates to regulatory assets associated with the recovery of certain distribution vegetation management costs in New Jersey, which are being amortized through 2031.

The following table provides information about the composition of net regulatory assets that do not earn a current return as of December 31, 2024 and 2023, of which approximately $45 million and $59 million, respectively, are currently being recovered through rates over varying periods, through 2068, depending on the nature of the deferral and the jurisdiction:

 

Regulatory Assets by Source Not Earning a Current Return

   December 31,

2024
     December 31,

2023
     Change  
     (In millions)  

Storm-related costs

   $ 310      $ 280      $ 30  

Deferred distribution costs

     101        66        35  

Deferred generation costs

     4        7        (3

Vegetation management costs

     7        7        —   

Other

     17        33        (16
  

 

 

    

 

 

    

 

 

 

Regulatory Assets Not Earning a Current Return

   $ 439      $ 393      $ 46  
  

 

 

    

 

 

    

 

 

 

RECEIVABLES

JCP&L’s principal business is providing electric service to customers in New Jersey. JCP&L’s retail customers are metered on a cycle basis. Electric revenues are recorded based on energy delivered through the end of the calendar month. An estimate of unbilled revenues is calculated to recognize electric service provided from the last meter reading through the end of the month. This estimate includes many factors, among which are historical customer usage, load profiles, estimated weather impacts, customer shopping activity and prices in effect for each class of customer. In each accounting period, JCP&L accrues the estimated unbilled amount as revenue and reverses the related prior period estimate. Customer payments are generally due within 15 days. Retail generation sales relate to generation sales in New Jersey that are regulated by the NJBPU.

Receivables from customers include distribution and retail electric sales to residential, commercial and industrial customers. Other receivables include PJM receivables resulting from transmission sales. Management believes JCP&L’s uncollectible risk on PJM receivables is minimal due to the nature of PJM’s settlement process whereby members of PJM legally agree to share the cost of defaults and as a result there is no allowance for doubtful accounts.

 

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Billed and unbilled customer receivables as of December 31, 2024 and 2023, are included below:

 

Customer Receivables

   December 31,
2024
     December 31,
2023
 
     (In millions)  

Billed

   $ 166      $ 126  

Unbilled

     118        99  
  

 

 

    

 

 

 
     284        225  

Less: Uncollectible Reserve

     6        9  
  

 

 

    

 

 

 

Total Customer Receivables

   $ 278      $ 216  
  

 

 

    

 

 

 

The allowance for uncollectible customer receivables is based on historical loss information comprised of a rolling 36-month average net write-off percentage of revenues, in conjunction with a qualitative assessment of elements that impact the collectability of receivables to determine if allowances for uncollectible customer receivables should be further adjusted in accordance with the accounting guidance for credit losses. The allowance for uncollectible customer receivables is reviewed utilizing a quantitative and qualitative assessment. Management contemplates available current information such as changes in economic factors, regulatory matters, industry trends, customer credit factors, amount of receivable balances that are past-due, payment options and programs available to customers, and the methods that JCP&L is able to utilize to ensure payment. This analysis includes consideration of the outbreak of the pandemic and the impact on customer receivable balances outstanding and write-offs since the pandemic began and subsequent economic slowdown.

Activity in the allowance for uncollectible accounts on receivables for the years ended December 31, 2024, 2023 and 2022 are as follows:

 

(In millions)

   2024      2023      2022  

Customer Receivables:

        

Beginning of year balance

   $ 9      $ 21      $ 20  

Charged to income(1)

     5        (1      11  

Charged to other accounts(2)

     4        3        3  

Write-offs

     (12      (14      (13
  

 

 

    

 

 

    

 

 

 

End of year balance

   $ 6      $ 9      $ 21  
  

 

 

    

 

 

    

 

 

 

 

(1)

Customer receivable amounts charged (credited) to income include approximately $5 million, $(1) million and $11 million deferred for future recovery (refund) for the years ended December 31, 2024, 2023 and 2022, respectively.

(2)

Represents recoveries and reinstatements of accounts previously written off for uncollectible accounts.

 

(In millions)

   2024      2023      2022  

Other Receivables:

        

Beginning of year balance

   $ 6      $ 6      $ 6  

Charged to income

     —         —         —   

Charged to other accounts

     (6      —         —   

Write-offs

     —         —         —   
  

 

 

    

 

 

    

 

 

 

End of year balance

   $ —       $ 6      $ 6  
  

 

 

    

 

 

    

 

 

 

GOODWILL

In a business combination, the excess of the purchase price over the estimated fair value of the assets acquired and liabilities assumed is recognized as goodwill. Goodwill is evaluated for impairment annually on

 

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July 31 and more frequently if indicators of impairment arise. In evaluating goodwill for impairment, qualitative factors are assessed to determine whether it is more likely than not (that is, likelihood of more than 50%) that the fair value of the reporting unit is less than its carrying value (including goodwill). If it is concluded that it is not more likely than not that the fair value of the reporting unit is less than its carrying value, then no further testing is required. However, if management concludes that it is more likely than not that the fair value of the reporting unit is less than its carrying value or bypasses the qualitative assessment, then the quantitative goodwill impairment test is performed to identify a potential goodwill impairment and measure the amount of impairment to be recognized, if any.

No impairment of goodwill was indicated in 2024 or 2023. In 2024 and 2023, a qualitative assessment was performed, assessing economic, industry and market considerations in addition to JCP&L’s overall performance. Key factors used in the assessment included: growth rates, interest rates, expected investments, utility sector market performance, regulatory and legal developments, and other market considerations. It was determined that the fair values of the reporting unit was, more likely than not, greater than their carrying values and a quantitative analysis was not necessary.

JCP&L’s reporting units are consistent with its reportable segments and consist of Distribution and Transmission. The following table presents goodwill by reporting unit as of December 31, 2024 and 2023:

 

(In millions)

   Distribution      Transmission      JCP&L  

Goodwill

   $ 1,213      $ 598      $ 1,811  

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment reflects original cost (net of any impairments recognized), including payroll and related costs such as taxes, employee benefits, administrative and general costs, and financing costs incurred to place the assets in service. The costs of normal maintenance, repairs and minor replacements are expensed as incurred. Liabilities for planned major maintenance projects are recognized as they are incurred.

Property, plant and equipment balances by segment as of December 31, 2024 and 2023, were as follows:

 

     December 31, 2024  

Property, Plant and Equipment

   In Service(1)      Accum. Depr.(2)     Net Plant      CWIP      Total (3)  
     (In millions)  

Distribution

   $ 6,404      $ (1,908   $ 4,496      $ 187      $ 4,683  

Transmission

     2,293        (501     1,792        433        2,225  

Total

   $ 8,697      $ (2,409   $ 6,288      $ 620      $ 6,908  
     December 31, 2023  

Property, Plant and Equipment

   In Service(1)      Accum. Depr.(2)     Net Plant      CWIP      Total (3)  
     (In millions)  

Distribution

   $ 6,152      $ (1,874   $ 4,278      $ 181      $ 4,459  

Transmission

     2,126        (491     1,635        294        1,929  
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total

   $ 8,278      $ (2,365   $ 5,913      $ 475      $ 6,388  
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

 

(1)

Includes finance leases of $11 million and $10 million as of December 31, 2024 and 2023, respectively.

(2)

Includes finance lease accumulated amortization of $5 million and $3 million as of December 31, 2024 and 2023, respectively.

(3) 

Average service lives for the Distribution segment range from 10 to 75 years for 2024 and 2023. Average service lives for the Transmission segment range from 55 to 80 years for 2024 and 2023.

 

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JCP&L provides for depreciation on a straight-line basis at various rates over the estimated lives of property included in plant in service. Depreciation expense was approximately 2.9%, 2.8% and 2.7% of average depreciable property in 2024, 2023 and 2022, respectively.

For the years ended December 31, 2024, 2023 and 2022, capitalized financing costs on JCP&L’s Statements of Income include $5 million, $5 million and $11 million, respectively, of allowance for equity funds used during construction and $23 million, $14 million and $5 million, respectively, of capitalized interest.

Long-lived assets classified as held and used are evaluated for impairment when events or changes in circumstances indicate that the carrying value of the long-lived assets may not be recoverable. First, the estimated undiscounted future cash flows attributable to the assets is compared with the carrying value of the assets. If the carrying value is greater than the undiscounted future cash flows, an impairment charge is recognized equal to the amount the carrying value of the assets exceeds its estimated fair value.

NEW ACCOUNTING PRONOUNCEMENTS

Recently Adopted Pronouncements

ASU 2023-07,Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (Issued in November 2023): ASU 2023-07 enhances interim disclosure requirements, clarifies circumstances in which an entity can disclose multiple segment measures of profit or loss, provides new segment disclosure requirements for entities with a single reportable segment, and contains other disclosure requirements. Disclosure requirements within ASU 2023-07 include disclosing significant segment expenses by reportable segment if they are regularly provided to the CODM and included in each reported measure of segment profit or loss. A public entity is also required to disclose the title and position of the individual(s) identified as the CODM as well as an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. Disclosures are required on both an annual and an interim basis. The segment disclosures within have been updated to reflect the requirements of ASU 2023-07.

Recently Issued Pronouncements - The following new authoritative accounting guidance issued by the FASB has not yet been adopted. Unless otherwise indicated, such guidance is currently being assessed for the impact it may have on the financial statements and disclosures, as well as the potential to early adopt where applicable. New accounting standards not described below have been assessed and based upon current expectations will not significantly impact the financial statements.

ASU 2023-09,Income taxes (Topic 280): Improvements to Income Tax Disclosures” (Issued in December 2023): ASU 2023-09 enhances disclosures primarily related to existing rate reconciliation and income taxes paid information to help investors better assess how a company’s operations and related tax risks and tax planning and operational opportunities affect the tax rate and prospects for future cash flows. Disclosure requirements include a tabular reconciliation using both percentages and amounts, separated out into specific categories with certain reconciling items at or above 5% of the statutory tax as well as by nature and/or jurisdiction. In addition, entities will be required to disclose income taxes paid (net of refunds received), broken out between federal, state/local and foreign, and amounts paid to an individual jurisdiction when 5% or more of the total income taxes are paid to such jurisdiction. For public companies, the guidance will be effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments within ASU 2023-09 are to be applied on a prospective basis, with retrospective application permitted.

ASU 2024-03,Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40)” (Issued in November 2024 and subsequently updated within ASU 2025-01): ASU 2024-03 requires disaggregated disclosure of income statement expenses for public business entities. The ASU does not change the expense captions an entity presents on the face of the income statement; rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to

 

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the financial statements. ASU 2024-03 is effective for public companies for the first annual reporting period beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted.

2. REVENUE

JCP&L accounts for revenues from contracts with customers under ASC 606, Revenue from Contracts with Customers. Revenue from leases, financial instruments, other contractual rights or obligations and other revenues that are not from contracts with customers are outside the scope of the standard and accounted for under other existing GAAP.

JCP&L has elected to exclude sales taxes and other similar taxes collected on behalf of third parties from revenue as prescribed in the new standard. As a result, tax collections and remittances within the scope of this election are excluded from recognition in the income statement and instead recorded through the balance sheet. Gross receipts taxes that are assessed on JCP&L are not subject to the election and are included in revenue. JCP&L has elected the optional invoice practical expedient for most of its revenues and utilizes the optional short-term contract exemption for transmission revenues due to the annual establishment of revenue requirements, which eliminates the need to provide certain revenue disclosures regarding unsatisfied performance obligations.

ASC 606 excludes industry-specific accounting guidance for recognizing revenue from Alternative Revenue Programs as these programs represent contracts between the utility and its regulators, as opposed to customers. Therefore, revenues from these programs are not within the scope of ASC 606 and regulated utilities are permitted to continue to recognize such revenues in accordance with existing practice but are presented separately from revenue arising from contracts with customers.

The following table represents a disaggregation of revenue from contracts with customers for the years ended December 31, 2024, 2023 and 2022, by type of service:

 

     For the Years Ended December 31,  

(In millions)

   2024      2023      2022  

Distribution

        

Retail generation and distribution services

        

Residential

   $ 1,470      $ 1,240      $ 1,255  

Commercial

     627        579        599  

Industrial

     70        68        77  

Street lighting

     20        21        17  

Wholesale

     6        5        8  

Other revenue from contracts with customers

     18        18        14  

Total revenues from contracts with customers

     2,211        1,931        1,970  

ARP(1)

     10        —         —   

Other revenue unrelated to contracts with customers

     4        3        2  

Total Distribution Segment Revenue

   $ 2,225      $ 1,934      $ 1,972  

Transmission

        

Total Transmission Segment Revenue

   $ 242      $ 204      $ 195  

Reconciling Adjustments(2)

        

Retail generation and distribution services

   $ (152    $ (111    $ (112

JCP&L Total Revenues

   $ 2,315      $ 2,027      $ 2,055  

 

(1) 

Related to lost distribution revenues associated with energy efficiency in New Jersey.

(2)

Includes eliminations and reconciling adjustments of inter-segment revenues.

 

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Other revenue is primarily related to pole attachments of $11 million, $10 million and $10 million for the years ended December 31, 2024, 2023 and 2022, respectively.

JCP&L earns revenue from state-regulated rate tariffs under which it provides distribution services to residential, commercial and industrial customers in its service territory. JCP&L is obligated under the regulated construct to deliver power to customers reliably, as it is needed, which creates an implied monthly contract with the end-use customer. See Note 10, “Regulatory Matters,” for additional information on rate recovery mechanisms. Distribution and electric revenues are recognized over time as electricity is distributed and delivered to the customer and the customers consume the electricity immediately as delivery occurs.

Retail generation sales relate to BGS in New Jersey. JCP&L has default service obligations to provide power to non-shopping customers who have elected to continue to receive service under regulated retail tariffs. The volume of these sales varies depending on the level of shopping that occurs. Default service for JCP&L is provided through a competitive procurement process approved by the NJBPU. Retail generation revenues are recognized over time as electricity is delivered and consumed immediately by the customer.

JCP&L provides transmission infrastructure owned and operated by JCP&L to transmit electricity from generation sources to distribution facilities. JCP&L’s revenues are derived from forward-looking formula rates. Revenue requirements under forward-looking formula rates are updated annually based on a projected rate base and projected costs, which is subject to an annual true-up based on actual costs. Revenues and cash receipts for the stand-ready obligation of providing transmission service are recognized ratably over time.

3. PENSION AND OTHER POSTEMPLOYMENT BENEFITS

FirstEnergy provides qualified benefit plans (the FirstEnergy Master Pension Plan and the FirstEnergy Welfare Plan) that cover substantially all employees and non-qualified defined benefit plans that cover certain employees, including employees of JCP&L. FirstEnergy’s pension and other postretirement benefit (OPEB) plans are neither multiemployer nor multiple-employer plans.

The retirement plans provide defined benefits based on years of service and compensation levels. Under the cash balance formula of the FirstEnergy Master Pension Plan (for employees hired on or after January 1, 2014), FirstEnergy makes contributions on behalf of eligible employees based on a pay credit and an interest credit. In addition, FirstEnergy provides a minimum amount of noncontributory life insurance to retired employees. Health care benefits, which include certain employee contributions, deductibles and co-payments, are also available upon retirement to certain employees, their dependents and, under certain circumstances, their survivors.

JCP&L recognizes its allocated portion of the expected cost of providing pension and OPEB to employees and their beneficiaries and covered dependents from the time employees are hired until they become eligible to receive those benefits. JCP&L also recognizes its allocated portion of obligations to former or inactive employees after employment, but before retirement, for disability-related benefits.

FirstEnergy’s pension funding policy is based on actuarial computations using the projected unit credit method. FirstEnergy and JCP&L do not currently expect to have a required contribution to the pension plan until 2027, which based on various assumptions, including an expected rate of return on assets of 8.5% for 2025, is expected to be approximately $300 million, none of which is expected to be contributed by JCP&L. However, FirstEnergy or JCP&L may elect to contribute to the pension plan voluntarily.

 

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The following is a summary of the plan status:

 

     Pension      OPEB  

As of December 31,

   2024      2023      2024      2023  
     (In millions)  

FirstEnergy benefit obligation

   $ 7,824      $ 8,363      $ 407      $ 441  

FirstEnergy fair value of plan assets

     6,296        6,879        567        516  
  

 

 

    

 

 

    

 

 

    

 

 

 

FirstEnergy funded status (1)

   $ (1,528    $ (1,484    $ 160      $ 75  
  

 

 

    

 

 

    

 

 

    

 

 

 

JCP&L’s share of FirstEnergy funded status(2)

   $ (67    $ (79    $ 215      $ 180  

 

(1)

OPEB amounts include a $7 million contribution from JCP&L in 2024 and 2023.

(2) 

Excludes $502 million and $504 million as of December 31, 2024 and 2023, respectively, of affiliated noncurrent liabilities included within “Other” noncurrent liabilities on JCP&L’s Balance Sheets related to pension and OPEB mark-to-market costs allocated to JCP&L and amounts associated with a reallocation of OPEB assets among certain FirstEnergy companies in 2022.

 

     Pension     OPEB  

As of December 31,

   2024     2023      2022     2024     2023     2022  
     (In millions)        

FirstEnergy net periodic costs (credits)(1)

   $ 76     $ 128      $ (296   $ (57   $ (38   $ (10

JCP&L’s share of net periodic benefit costs (credits)(1)(2)

   $ (12   $ 10      $ (2   $ (27   $ (29   $ (11

 

(1) 

Includes pension and OPEB mark-to-market adjustment, amounts capitalized, and in 2023, special terminations benefits associated with PEER. JCP&L’s pension and OPEB mark-to-market adjustment gain (loss) for the years ended December 31, 2024, 2023 and 2022, were $22 million, $2 million and $(17) million, respectively.

(2)

Pension amounts previously disclosed have been revised to exclude $16 million and $(6) million of costs (credits) for the years ended December 31, 2023 and 2022, respectively, that were allocated to JCP&L from affiliates. These amounts are included with the allocated pension costs from affiliates disclosed below. The revision was not material to any of the periods impacts.

In addition to the net periodic benefit costs for its current and former employees and retirees, JCP&L is also allocated pension and OPEB net periodic benefit costs/(credits) from its affiliates, primarily FESC. JCP&L was allocated from affiliates $6 million, $40 million and $1 million of net periodic pension costs/(credits) for the years ended December 31, 2024, 2023, and 2022, respectively, immaterial amounts, $1 million and $2 million of net periodic OPEB costs/(credits) for the years ended December 31, 2024 and 2023, and 2022, respectively. Included in these net periodic benefit costs/(credits) from its affiliates are $2 million, $(31) million and $(10) million of mark-to-market adjustment gain/(loss), for the years ended December 31, 2024, 2023, and 2022, respectively.

Pension and OPEB costs are affected by employee demographics (including age, compensation levels and employment periods), the level of contributions made to the plans and earnings on plan assets. Pension and OPEB costs may also be affected by changes in key assumptions, including anticipated rates of return on plan assets, the discount rates and health care trend rates used in determining the projected benefit obligations for pension and OPEB costs. FirstEnergy uses a December 31 measurement date for its pension and OPEB plans or whenever a plan is determined to qualify for a remeasurement. The fair value of the plan assets represents the actual market value as of the measurement date.

Net Periodic Benefit Costs (Credits) - In addition to service costs, interest on obligations, expected return on plan assets, and prior service costs, FirstEnergy recognizes in net periodic benefit costs a pension and OPEB mark-to-market adjustment for the change in the fair value of plan assets and net actuarial gains and losses annually in the fourth quarter of each fiscal year and whenever a plan is determined to qualify for a

 

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remeasurement. Service costs, net of capitalization, are reported within Other operating expenses. Non-service costs, other than the pension and OPEB mark-to-market adjustment, which is separately shown, are reported within Miscellaneous income, net, within Other Income (Expense).

Discount Rate - In selecting an assumed discount rate, FirstEnergy considers currently available rates of return on high-quality fixed income investments expected to be available during the period to maturity of the pension and OPEB obligations. The assumed rates of return on plan assets consider historical market returns and economic forecasts for the types of investments held by FirstEnergy’s pension trusts. The long-term rate of return is developed considering the portfolio’s asset allocation strategy. FirstEnergy utilizes a spot rate approach in the estimation of the components of benefit cost by applying specific spot rates along the full yield curve to the relevant projected cash flows. The discount rate for pension obligations was 5.72% and 5.05% as of December 31, 2024 and 2023, respectively. The discount rate for OPEB obligations was 5.60% and 4.97% as of December 31, 2024 and 2023, respectively.

Expected Return on Plan Assets - The expected return on pension and OPEB assets is based on input from investment consultants, including the trusts’ asset allocation targets, the historical performance of risk-based and fixed income securities and other factors. The gains or losses generated as a result of the difference between expected and actual returns on plan assets is recognized as a pension and OPEB mark-to-market adjustment in the fourth quarter of each fiscal year and whenever a plan is determined to qualify for remeasurement. The expected return on pension plan assets was 8.00% for 2024 and 2023. The expected return on OPEB assets was 7.00% in 2024 and 2023.

4. TAXES

JCP&L records income taxes in accordance with the liability method of accounting. Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts recognized for tax purposes. Investment tax credits, which were deferred when utilized, are being amortized over the recovery period of the related property. Deferred income tax liabilities related to temporary tax and accounting basis differences and tax credit carryforward items are recognized at the statutory income tax rates in effect when the liabilities are expected to be paid. Deferred tax assets are recognized based on income tax rates expected to be in effect when they are settled.

For federal income tax purposes, JCP&L files as a member of the FirstEnergy consolidated group. JCP&L is party to an intercompany income tax allocation agreement with FirstEnergy that provides for the allocation of consolidated tax liabilities.

The IRA of 2022, among other things, imposes a new 15% corporate AMT based on AFSI applicable to corporations with a three-year average AFSI over $1 billion. The AMT is effective for the 2023 tax year and, if applicable, corporations must pay the greater of the regular corporate income tax or the AMT. The IRA of 2022 requires the U.S. Treasury to provide regulations and other guidance necessary to administer the AMT, including further defining allowable adjustments to determine AFSI, which directly impacts the amount of AMT to be paid. On September 12, 2024, the U.S. Treasury issued proposed regulations for the AMT for comments. FirstEnergy and JCP&L are assessing the proposed regulations but continue to believe that it is more likely than not they will be subject to AMT, however, the completion of the U.S. Treasury’s rulemaking process and the future issuance of final regulations, as well as potential future federal tax legislation or presidential executive orders, could significantly change FirstEnergy’s and/or JCP&L’s AMT estimates or their conclusion as to whether they are

 

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AMT payers at all. Additionally, the regulatory treatment of the IRA of 2022 may also be subject to regulation by FERC and/or applicable state regulatory authorities. Any adverse development in the IRA of 2022, including guidance from the U.S. Treasury and/or the IRS or unfavorable regulatory treatment, could negatively impact JCP&L’s cash flows, results of operations, and financial condition.

 

     For the Years Ended December 31,  
INCOME TAXES:     2024        2023        2022   
     (In millions)  

Currently payable (receivable) -

        

Federal

   $ (143    $ (7    $ 26  

State

     —         (8      —   
  

 

 

    

 

 

    

 

 

 
     (143      (15      26  
  

 

 

    

 

 

    

 

 

 

Deferred, net -

        

Federal

     203        36        (13

State

     30        14        12  
  

 

 

    

 

 

    

 

 

 
     233        50        (1
  

 

 

    

 

 

    

 

 

 

Total income taxes

   $ 90      $ 35      $ 25  
  

 

 

    

 

 

    

 

 

 

JCP&L’s tax rates are affected by permanent items, such as AFUDC equity and other flow-through items, as well as discrete items that may occur in any given period but are not consistent from period to period. The following table provides a reconciliation of federal income tax expense at the federal statutory rate to the total income taxes for the years ended December 31, 2024, 2023 and 2022:

 

     For the Years Ended December 31,  

(In millions)

   2024     2023     2022  

Book income before income taxes

   $ 338     $ 165     $ 144  
  

 

 

   

 

 

   

 

 

 

Federal income tax expense at statutory rate (21%)

   $ 71     $ 35     $ 30  

Increases (reductions) in taxes resulting from-

      

State income taxes, net of federal tax benefit

     24       34       10  

Excess deferred tax amortization due to the Tax Act

     (4     (4     (14

AFUDC equity and other flow-through

     (1     (1     (3

Uncertain tax positions

     —        (28     —   

Other, net

     —        (1     2  
  

 

 

   

 

 

   

 

 

 

Total income taxes

   $ 90     $ 35     $ 25  
  

 

 

   

 

 

   

 

 

 

Effective income tax rate

     26.6     21.2     17.4

Accumulated deferred income taxes as of December 31, 2024 and 2023 are as follows:

 

     As of December 31,  

(In millions)

    2024       2023   

Deferred compensation

   $   (10)    $   (7) 

Loss and credit carryforwards

     (116     (198

Pension and OPEB

     (99     (113

Property basis differences

     1,172       1,117  

Regulatory asset/liability

     296       212  

Decommissioning

     (59     (59

Other

     12       5  
  

 

 

   

 

 

 

Accumulated deferred income tax liabilities, net

   $ 1,196     $ 957  
  

 

 

   

 

 

 

 

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JCP&L has recorded as deferred income tax assets the effect of NOLs and tax credits that will more likely than not be realized through future operations and through the reversal of existing temporary differences. As of December 31, 2024, JCP&L’s loss carryforwards consisted primarily of approximately $88 million ($18 million, net of tax) of federal NOL carryforwards, all of which have no expiration, and approximately $1.4 billion ($97 million, net of tax) of state NOL carryforwards that are expected to be utilized based on current estimates and assumptions prior to expiration, which will begin in 2032.

JCP&L accounts for uncertainty in income taxes recognized in its financial statements. A recognition threshold and measurement attribute is utilized for financial statement recognition and measurement of tax positions taken or expected to be taken on a company’s tax return. If ultimately recognized in future years, all of the unrecognized income tax benefits would impact the effective tax rate.

The following table summarizes the changes (gross) in uncertain tax positions for the years ended December 31, 2024, 2023 and 2022:

 

     (In millions)  

Balance, January 1, 2022

   $ 25  

Prior years increases

     —   
  

 

 

 

Balance, December 31, 2022

     25  

Effectively settled with taxing authorities

     (24
  

 

 

 

Balance, December 31, 2023

     1  

Prior years increases

     —   
  

 

 

 

Balance, December 31, 2024

   $ 1  
  

 

 

 

As of December 31, 2024, JCP&L does not anticipate any of the unrecognized income tax benefits will be resolved during 2025.

JCP&L recognizes interest expense or income and penalties related to uncertain tax positions in income taxes by applying the applicable statutory interest rate to the difference between the tax position recognized and the amount previously taken or expected to be taken on the tax return. Due to uncertain tax positions that were effectively settled with tax authorities during 2023, approximately $9 million in net interest was reversed. During 2024, JCP&L did not record any interest related to uncertain tax positions, nor does JCP&L have a cumulative net interest payable recorded on its Balance Sheets.

JCP&L has tax returns under review by state taxing authorities at the audit or appeals level for tax years 2015-2023.

General Taxes

Details of general taxes for the years ended December 31, 2024, 2023 and 2022 are shown below:

 

(In millions)

   2024      2023      2022  

Real and personal property

   $ 6      $ 7      $ 6  

Social security and unemployment

     15        14        12  
  

 

 

    

 

 

    

 

 

 

Total general taxes

   $ 21      $ 21      $ 18  
  

 

 

    

 

 

    

 

 

 

5. LEASES

JCP&L primarily leases vehicles, building space, and other property and equipment under cancelable and noncancelable leases.

 

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JCP&L accounts for leases under, “Leases (Topic 842)”. Leases with an initial term of 12 months or less are recognized as lease expense on a straight-line basis over the lease term and not recorded on the balance sheet. Most leases include one or more, options to renew, with renewal terms that can extend the lease term from 1 to 40 years, and certain leases include options to terminate. The exercise of lease renewal options is at JCP&L’s sole discretion. Renewal options are included within the lease liability if they are reasonably certain based on various factors relative to the contract. Certain leases also include options to purchase the leased property. The depreciable life of leased assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. JCP&L has elected a policy to not separate lease components from non-lease components for all asset classes.

Finance leases for assets used in regulated operations are recognized in JCP&L’s Statement of Income such that amortization of the right-of-use asset and interest on lease liabilities equals the expense recorded for ratemaking purposes. All operating lease expenses are recognized in Other operating expense on JCP&L’s Statement of Income. The components of lease expense were as follows:

 

     For the Years Ended December 31,  

(In millions)

    2024        2023        2022   

Operating lease costs(1)

   $ 11      $ 11      $ 11  

Finance lease costs:

        

Amortization of right-of-use assets

     1        1        1  

Interest on lease liabilities

     1        1        1  
  

 

 

    

 

 

    

 

 

 

Total finance lease cost

     2        2        2  
  

 

 

    

 

 

    

 

 

 

Total lease cost

   $ 13      $ 13      $ 13  
  

 

 

    

 

 

    

 

 

 

 

(1) 

Includes $2 million of short-term lease costs for the years ended December 31, 2024, 2023 and 2022.

Supplemental balance sheet information related to leases was as follows:

 

        As of December 31,  

(In millions)

 

Financial Statement Line Item

  2024     2023  

Assets

     

Operating lease assets(1)

  Investments and other noncurrent assets   $ 43     $ 40  

Finance lease assets(2)

  Property, plant and equipment     6       7  
   

 

 

   

 

 

 

Total leased assets

    $ 49     $ 47  
   

 

 

   

 

 

 

Liabilities

     

Current:

     

Operating

  Other current liabilities   $ 11     $ 10  

Finance

  Currently payable long-term debt     1       1  

Noncurrent:

     

Operating

  Other noncurrent liabilities     43       43  

Finance

 

Long-term debt and other long-term

obligations

    4       5  
   

 

 

   

 

 

 

Total leased liabilities

    $ 59     $ 59  
   

 

 

   

 

 

 

 

(1)

Operating lease assets are recorded net of accumulated amortization of $30 million and $24 million as of December 31, 2024 and 2023, respectively.

(2)

Finance lease assets are recorded net of accumulated amortization of $5 million and $3 million as of December 31, 2024 and 2023, respectively.

 

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Lease terms and discount rates were as follows:

 

     As of December 31,  
     2024     2023     2022  

Weighted-average remaining lease terms (years)

      

Operating leases

     6.0       6.6       7.3  

Finance leases

     9.6       10.3       10.2  

Weighted-average discount rate(1)

      

Operating leases

     5.76     5.68     5.54

Finance leases

     16.07     16.15     16.20

 

(1)

When an implicit rate is not readily determinable, an incremental borrowing rate is utilized, determining the present value of lease payments. The rate is determined based on expected term and information available at the commencement date.

Supplemental cash flow information related to leases was as follows:

 

     For the Years Ended December 31,  

(In millions)

    2024        2023        2022   

Cash paid for amounts included in the measurement of lease liabilities:

        

Operating cash flows from operating leases

   $ 12      $ 11      $ 11  

Operating cash flows from finance leases

     1        1        1  

Finance cash flows from finance leases

     1        1        1  

Right-of-use assets obtained in exchange for lease obligations:

        

Operating leases

   $ 10      $ 3      $ 4  

Finance leases

     —         —         —   

Maturities of lease liabilities as of December 31, 2024, were as follows:

 

(In millions)

   Operating Leases      Finance Leases      Total  

2025

   $ 12      $ 2      $ 14  

2026

     12        2        14  

2027

     11        3        14  

2028

     10        —         10  

2029

     6        —         6  

Thereafter

     13        —         13  
  

 

 

    

 

 

    

 

 

 

Total lease payments(1)

     64        7        71  

Less imputed interest

     10        2        12  
  

 

 

    

 

 

    

 

 

 

Total net present value

   $ 54      $ 5      $ 59  
  

 

 

    

 

 

    

 

 

 

 

(1) 

Operating lease payments for certain leases are offset by sublease receipts of $5 million over 8 years.

As of December 31, 2024, leases agreements for vehicles that have not yet commenced are $2 million in estimated right-of-use obligation, which are expected to commence in the next 18 months with lease terms of 5 to 8 years. Additionally, a building lease agreement is expected to commence in 2025 with a lease term of 22 years with annual rents of approximately $2 million.

 

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6. FAIR VALUE MEASUREMENTS

RECURRING AND NONRECURRING FAIR VALUE MEASUREMENTS

Authoritative accounting guidance establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy gives the highest priority to Level 1 measurements and the lowest priority to Level 3 measurements. The three levels of the fair value hierarchy and a description of the valuation techniques are as follows:

 

Level

1  -  Quoted prices for identical instruments in active market

 

Level

2  - Quoted prices for similar instruments in active market

 

     -  Quoted prices for identical or similar instruments in markets that are not active

 

     -  Model-derived valuations for which all significant inputs are observable market data

Models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors and current market and contractual prices for the underlying instruments, as well as other relevant economic measures.

 

Level

3  -  Valuation inputs are unobservable and significant to the fair value measurement.

JCP&L primarily applies the market approach for recurring fair value measurements using the best information available. Accordingly, JCP&L maximizes the use of observable inputs and minimizes the use of unobservable inputs. There were no changes in valuation methodologies used as of December 31, 2024, from those used as of December 31, 2023. The determination of the fair value measurements takes into consideration various factors, including but not limited to, nonperformance risk, counterparty credit risk and the impact of credit enhancements (such as cash deposits, LOCs and priority interests). The impact of these forms of risk was not significant to the fair value measurements. JCP&L does not have any Level 3 recurring fair value measurements. Transfers between levels are recognized at the end of the reporting period. There were no transfers between levels during the years ended December 31, 2024, and 2023.

The following tables set forth the recurring assets and liabilities that are accounted for at fair value by level within the fair value hierarchy.

 

Recurring Fair Value Measurements:

(in millions)

   December 31, 2024      December 31, 2023  
Assets    Level 1      Level 2      Level 3      Total      Level 1      Level 2      Level 3      Total  

Debt securities

   $ —       $ 276      $ —       $ 276      $ —       $ 275      $ —       $ 275  

Other(1)

     —         6        —         6        —         6        —         6  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total assets

     —         282        —         282        —         281        —         281  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net assets

   $ —       $ 282      $ —       $ 282      $ —       $ 281      $ —       $ 281  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) 

Primarily consists of short-term cash investments.

INVESTMENTS

All temporary cash investments purchased with an initial maturity of three months or less are reported as cash equivalents on the Balance Sheets at cost, which approximates their fair market value. Investments other than cash and cash equivalents include AFS debt securities and other investments. JCP&L has no debt securities held for trading purposes.

 

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Generally, unrealized gains and losses on equity securities are recognized in income whereas unrealized gains and losses on AFS debt securities are recognized in AOCI. However, the JCP&L nuclear fuel disposal trusts are subject to regulatory accounting with all gains and losses on equity and AFS debt securities offset against regulatory assets.

Nuclear Fuel Disposal Trusts

JCP&L holds debt securities within the nuclear fuel disposal trust, which are classified as AFS securities, recognized at fair market value.

The following table summarizes the amortized cost basis, unrealized gains, unrealized losses and fair values of investments held in nuclear fuel disposal trusts as of December 31, 2024 and 2023.

 

     December 31, 2024      December 31, 2023  
     Cost
Basis
     Unrealized
Gains
     Unrealized
Losses
    Fair
Value
     Cost
Basis
     Unrealized
Gains
     Unrealized
Losses
    Fair
Value
 
     (In millions)  

Debt securities

   $ 299      $      $ (23   $ 276      $ 301      $ 1      $ (27   $ 275  

Proceeds from the sale of investments in AFS securities, realized gains and losses on those sales and interest and dividend income for the years ended December 31, 2024, 2023, and 2022 were as follows:

 

     Sale
Proceeds
     Realized
Gains
     Realized
Losses
     Interest
and
Dividend
Income
 
     (In millions)  

2024

   $ 121      $      $ (15    $ 13  

2023

   $ 38      $      $ (3    $ 12  

2022

   $ 48      $ 8      $ (13    $ 12  

LONG-TERM DEBT

All borrowings with initial maturities of less than one year are defined as short-term financial instruments under GAAP and are reported as Short-term borrowings on the Balance Sheets at cost. Since these borrowings are short-term in nature, JCP&L believes that their costs approximate their fair market value. The following table provides the approximate fair value and related carrying amounts of long-term debt, which excludes finance lease obligations and net unamortized debt issuance costs:

 

     December 31, 2024      December 31, 2023  

(In millions)

   Carrying
Amount
     Fair
Value
     Carrying
Amount
     Fair
Value
 

Long-term debt

   $ 2,350      $ 2,284      $ 2,150      $ 2,095  

The fair value of long-term debt reflects the present value of the cash outflows relating to those securities based on the current call price, the yield to maturity or the yield to call, as deemed appropriate at the end of each respective period. The yields assumed were based on securities with similar characteristics offered by corporations with credit ratings similar to those of JCP&L. JCP&L classified long-term debt as Level 2 in the fair value hierarchy as of December  31, 2024 and 2023.

7. CAPITALIZATION

DIVIDENDS

Earnings, cash, capital structures, restrictions, and expected ongoing cash and earnings are reviewed by JCP&L senior management prior to a dividend recommendation being made for consideration and authorization by the

 

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JCP&L board of directors. Furthermore, the organizational documents, indentures, regulatory limitations, and various other agreements, including those relating to long-term debt contain provisions that could further restrict the declaration and payment of dividends or distributions by JCP&L.

JCP&L has regulatory limitations including requirements to maintain a debt-to-total-capitalization ratio (as defined JCP&L’s credit facility) of no more than 65% measured at the end of each fiscal quarter. In addition to paying dividends from retained earnings, JCP&L has authorization from the FERC to declare cash dividends to FE from paid-in capital accounts, as long as its FERC-defined equity-to-total-capitalization ratio remains above 35%.

PREFERRED STOCK

JCP&L is authorized to issue 15,600,000 shares of preferred stock, no par value, as of December 31, 2024. As of December 31, 2024, and 2023, there were no preferred shares outstanding.

LONG-TERM DEBT AND OTHER LONG-TERM OBLIGATIONS

The following table presents outstanding long-term debt and finance lease obligations for JCP&L as of December 31, 2024 and 2023:

 

     As of December 31, 2024      As of December 31,  
     Maturity
Date
     Interest Rate      2024      2023  
     (In millions)  

Unsecured notes - fixed rate

     2026 -2037        2.75% - 6.40%      $ 2,350      $ 2,150  

Finance lease obligations

           5        6  

Unamortized debt premiums/discounts

           (4      (1

Unamortized debt issuance costs

           (11      (6

Currently payable long-term debt

           (1      (501
        

 

 

    

 

 

 

Total long-term debt and other long-term obligations

         $ 2,339      $ 1,648  
        

 

 

    

 

 

 

JCP&L had the following redemption and issuance during the twelve months ended December 31, 2024.

 

Company

   Type    Issuance Date    Interest
Rate
  Maturity    Amount
(in
Millions)
  

Description

Redemptions

JCP&L

   Unsecured
Notes
   April, 2024    4.70%   2024    $500    JCP&L redeemed unsecured notes that became due.
Issuances

JCP&L

   Unsecured
Notes with
registration
rights
   December, 2024    5.10%   2035    $700    Proceeds were used to repay short-term borrowings, to finance capital expenditures and for other general corporate purposes.

As noted above, on December 5, 2024, JCP&L issued $700 million of unsecured senior notes due in 2035 in a private offering that included a registration rights agreement in which JCP&L agreed to conduct an exchange offer of these senior notes for like principal amounts registered under the Securities Act. JCP&L also agreed to file a shelf registration statement with the SEC to cover resales of the senior notes under certain circumstances.

 

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In the event that JCP&L’s exchange offer is not completed or the shelf registration statement, if required, is not effective by the 366th day after December 5, 2024, or the effective shelf registration stops being effective for 60 days during any 12-month period, then additional interest will accrue on the coupon. Interest will accrue at a rate of 25 basis points for the first 90 days and an additional 25 basis points in the subsequent 90-day period, but not to exceed 50 basis points per year. However, if the additional interest is triggered, the interest rate will reset to the original notes rate once the registration statement is effective, or the shelf registration, if required, becomes effective. JCP&L plans to file a registration statement for the exchange offer before the end of the first quarter of 2025.

The following table presents scheduled debt repayments for outstanding long-term debt, excluding finance leases and unamortized debt discounts and premiums, for the next five years as of December 31, 2024.

 

(In millions)

   2025     2026      2027      2028      2029  

Scheduled debt repayments

   $   —    $ 650      $      $      $  

Debt Covenant Default Provisions

JCP&L has various debt covenants under certain financing arrangements, including its revolving credit facility and term loans. The most restrictive of the debt covenants relate to the nonpayment of interest and/or principal on such debt and the maintenance of certain financial ratios. The failure by JCP&L to comply with the covenants contained in its financing arrangements could result in an event of default, which may have an adverse effect on JCP&L’s financial condition.

Additionally, there are cross-default provisions in certain financing arrangements of FE and its subsidiaries, including JCP&L. These provisions generally trigger a default in the applicable financing arrangement of an entity if it or any of its significant subsidiaries default under another financing arrangement in excess of a certain principal amount, typically $100 million. Although such defaults by JCP&L would cross-default FE financing arrangements containing these provisions, defaults by FE would generally not cross-default applicable JCP&L financing arrangements.

As of December 31, 2024, JCP&L was in compliance with all debt covenant default provisions.

8. SHORT-TERM BORROWINGS AND BANK LINES OF CREDIT

JCP&L had $22 million and $462 million of outstanding affiliated and non-affiliated short-term borrowings as of December 31, 2024 and 2023, respectively.

Revolving Credit Facility

On October 24, 2024, JCP&L entered into amendments to its $750 million credit facility to, among other things, extend the maturity date of its credit facility for an additional one-year period, from October 18, 2027 to October 18, 2028.

Borrowings under the JCP&L credit facility may be used for working capital and other general corporate purposes. Generally, borrowings under the credit facility mature on the earlier of 364 days from the date of borrowing or the commitment termination date, as the same may be extended. The JCP&L credit facility contains financial covenants requiring JCP&L to maintain a consolidated debt-to-total-capitalization ratio (as defined under the credit facility) of no more than 65%, measured at the end of each fiscal quarter.

Certain amounts are available for the issuance of LOCs (subject to borrowings drawn under the JCP&L credit facility) expiring up to one year from the date of issuance. The stated amount of outstanding LOCs will count against total commitments available under the credit facility. As of December 31, 2024, JCP&L had $28 million in outstanding LOCs, all of which are issued under the credit facility.

 

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The JCP&L credit facility does not contain provisions that restrict the ability to borrow or accelerate payment of outstanding advances in the event of any change in credit ratings. Pricing is defined in “pricing grids,” whereby the cost of funds borrowed under the JCP&L credit facility are related to the credit ratings of the company borrowing the funds. Additionally, borrowings under the credit facility are subject to the usual and customary provisions for acceleration upon the occurrence of events of default, including a cross-default for other indebtedness in excess of $100 million.

Under its facility, JCP&L may borrow up to $750 million, $722 million of which was available to JCP&L as of December 31, 2024. This short-term debt limitation is subject to the regulatory short-term debt authorization of $1 billion, which also includes amounts that may be borrowed under the regulated companies’ money pool. Within the facility, there is also a financial covenant requiring JCP&L to maintain a debt-to-total-capitalization ratio of no more than 65%, measured at the end of each fiscal quarter.

As of December 31, 2024, JCP&L had a debt-to-total-capitalization ratio of 32.4% which was in compliance with the applicable covenants under its credit facility.

FirstEnergy Money Pool

As a regulated money pool participant, JCP&L has the ability to borrow from regulated affiliates and FE to meet its short-term working capital requirements. FESC administers these money pools and tracks surplus funds of FE and the respective regulated and unregulated subsidiaries, as the case may be, as well as proceeds available from bank borrowings. Companies receiving a loan under the money pool agreements must repay the principal amount of the loan, together with accrued interest, within 364 days of borrowing the funds. The rate of interest is the same for each company receiving a loan from their respective pool and is based on the average cost of funds available through the pool.

 

Average Interest Rates

   Regulated Companies’
Money Pool
 
     2024     2023     2022  

For the Years Ended December 31,

     5.74     6.30     2.27

9. ASSET RETIREMENT OBLIGATIONS

JCP&L has recognized retirement obligations, primarily conditional retirement obligations for asbestos remediation. JCP&L uses an expected cash flow approach to measure the fair value of its AROs.

JCP&L recognizes an ARO for its legal obligation to perform asset retirement activities associated with its long-lived assets. The ARO liability represents an estimate of the fair value of JCP&L’s current obligation such that the ARO is accreted monthly to reflect the time value of money.

A fair value measurement inherently involves uncertainty in the amount and timing of settlement of the liability. JCP&L uses an expected cash flow approach to measure the fair value of the remediation AROs, taking into account the expected timing of settlement of the ARO based on the expected economic useful life of associated asset and/or regulatory requirements. The fair value of an ARO is recognized in the period in which it is incurred. The associated asset retirement costs are capitalized as part of the carrying value of the long-lived asset and are depreciated over the life of the related asset. For instances where asset retirement costs relate to assets that have no future cash flows, the costs are recorded as an operating expense.

Conditional retirement obligations associated with tangible long-lived assets are recognized at fair value in the period in which they are incurred if a reasonable estimate can be made, even though there may be uncertainty about timing or method of settlement. When settlement is conditional on a future event occurring, it is reflected in the measurement of the liability, not the timing of the liability recognition.

 

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The following table summarizes the changes to JCP&L’s ARO balances during 2024 and 2023:

 

ARO Reconciliation

  

(In millions)

 

Balance, January 1, 2023

   $ 7  

Accretion

     —   

Balance, December 31, 2023

     7  
  

 

 

 

Accretion

     1  
  

 

 

 

Balance, December 31, 2024

   $ 8  
  

 

 

 

10. REGULATORY MATTERS

STATE REGULATION

JCP&L’s retail rates, conditions of service, issuance of securities and other matters are subject to regulation in New Jersey by the NJBPU. JCP&L’s current state base rate order has been effective since June 2024, includes a capital structure of 48.1%/51.9% debt/equity and an allowed ROE of 9.6%.

NEW JERSEY

JCP&L operates under NJBPU approved rates that took effect as of February 15, 2024, and became effective for customers as of June 1, 2024. JCP&L provides BGS for retail customers who do not choose a third-party EGS and for customers of third- party EGSs that fail to provide the contracted service. All New Jersey EDCs participate in this competitive BGS procurement process and recover BGS costs directly from customers as a charge separate from base rates.

The base rate increase approved by the NJBPU on February 14, 2024, took effect on February 15, 2024, and became effective for customers on June 1, 2024. Until those new rates became effective for customers, JCP&L was amortizing an existing regulatory liability totaling approximately $18 million to offset the base rate increase that otherwise would have occurred in this period. Under the base rate case settlement agreement, JCP&L also agreed to a two-phase reliability improvement plan to enhance the reliability related to 18 high-priority circuits, the first phase of which began on February 14, 2024, and represents an approximate investment of $95 million. Additionally, JCP&L recognized a $53 million pre-tax charge in 2024 at the Distribution segment within “Other operating expenses” on the JCP&L Statements of Income, associated with certain corporate support costs recorded to capital accounts from the FERC Audit that were determined, as a result of the settlement agreement, to be disallowed from future recovery.

JCP&L has implemented energy efficiency and peak demand reduction programs in accordance with the New Jersey Clean Energy Act as approved by the NJBPU in April 2021. The NJBPU approved plans include recovery of lost revenues resulting from the programs and a three-year plan (July 2021-June 2024) including total program costs of $203 million, of which $160 million of investment is recovered over a ten-year amortization period with a return as well as $43 million in operations and maintenance expenses and financing costs recovered on an annual basis. On May 22, 2024, the NJBPU approved JCP&L’s request for a six-month extension of the EE&C Plan I, to December 31, 2024. The budget for the extension period adds approximately $69 million to the original program cost and JCP&L will recover the costs of the extension period and the revenue impact of sales losses resulting therefrom through two separate tariff riders. On December 1, 2023, JCP&L filed a related petition with the NJBPU requesting approval of its EE&C Plan II, which covers the January 1, 2025 through June 30, 2027 period and had a proposed budget of approximately $964 million. EE&C Plan II, as filed, consisted of a portfolio of ten energy efficiency programs, one peak demand reduction program and one building decarbonization program. Under the proposal, JCP&L would recover its EE&C Plan II revenue requirements and lost revenues from reduced electricity sales associated with EE&C Plan II. On October 30, 2024, the NJBPU approved the parties’ stipulation of settlement, wherein the parties agreed to a budget of approximately $817 million for EE&C Plan II, including $784 million of investments that will earn a return on equity of 9.6%, with an equity ratio of 52%, and be recovered over 10 years.

 

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The settlement of the distribution rate case in 2020, provided among other things, that JCP&L would be subject to a management audit, which began in May 2021. On April 12, 2023, the NJBPU accepted the final management audit report for filing purposes and ordered that interested stakeholders file comments on the report by May 22, 2023, which deadline was extended until July 31, 2023. JCP&L and one other party filed comments on July 31, 2023.

On September 17, 2021, in connection with Mid-Atlantic Offshore Development, LLC, a transmission company jointly owned by Shell New Energies US and EDF Renewables North America, JCP&L submitted a proposal to the NJBPU and PJM to build transmission infrastructure connecting offshore wind-generated electricity to the New Jersey power grid. On October 26, 2022, the JCP&L proposal was accepted, in part, in an order issued by NJBPU. The proposal, as accepted, included approximately $723 million in investments for JCP&L to both build new and upgrade existing transmission infrastructure. JCP&L’s proposal projects an investment ROE of 10.2% and includes the option for JCP&L to acquire up to a 20% equity stake in Mid-Atlantic Offshore Development, LLC. The resulting rates associated with the project are expected to be shared among the ratepayers of all New Jersey electric utilities. On April 17, 2023, JCP&L applied for the FERC “abandonment” transmission rates incentive, which would provide for recovery of 100% of the cancelled prudent project costs that are incurred after the incentive is approved, and 50% of the costs incurred prior to that date, in the event that some or all of the project is cancelled for reasons beyond JCP&L’s control. On August 21, 2023, FERC approved JCP&L’s application, effective August 22, 2023. On October 31, 2023, offshore wind developer, Orsted, announced plans to cease development of two offshore wind projects in New Jersey—Ocean Wind 1 and 2—having a combined planned capacity of 2,248 MWs. On January 30, 2025 and February 25, 2025, Shell New Energies US and EDF Renewables North America respectively announced that each was exiting its Atlantic Shores partnership to construct wind energy off the shore of New Jersey. These cancellations do not directly affect JCP&L’s awarded projects, and JCP&L remains under an obligation to begin construction in 2025 based on current NJBPU direction. JCP&L continues to monitor the situation and is engaging state officials about impacts of these announcements to its transmission projects.

Consistent with the commitments made in its proposal to the NJBPU, JCP&L formally submitted in November 2023 the first part of its application to the DOE to finance a substantial portion of the project using low-interest rate loans available under the DOE’s Energy Infrastructure Reinvestment Program of the IRA of 2022. JCP&L submitted the second part of its two-part application on March 13, 2024, which was approved on May 17, 2024. The DOE Loan Program Office has initiated a due diligence review of the application.

On November 9, 2023, JCP&L filed a petition for approval of its EnergizeNJ with the NJBPU that would, among other things, support grid modernization, system resiliency and substation modernization in technologies designed to provide enhanced customer benefits. JCP&L proposes EnergizeNJ will be implemented over a five-year budget period with estimated costs of approximately $935 million over the deployment period, of which, $906 million is capital investments and $29 million is operating and maintenance expenses. Under the proposal, the capital costs of EnergizeNJ would be recovered through JCP&L’s base rates via annual and semi-annual base rate adjustment filings. The 2023 base rate case stipulation that was filed on February 2, 2024, necessitated amendments to the EnergizeNJ program. On February 14, 2024, the NJBPU approved the stipulated settlement between JCP&L and various parties, resolving JCP&L’s request for a distribution base rate increase. On February 27, 2024, as part of the stipulated settlement, JCP&L amended its pending EnergizeNJ petition following receipt of NJBPU approval of the base rate case settlement, to remove the high-priority circuits that are to be addressed in the first phase of its reliability improvement plan and to include the second phase of its reliability improvement plan that is expected to further address certain high-priority circuits that require additional upgrades. EnergizeNJ, if approved as amended, will result in the investment of approximately $930.5 million of total estimated costs over five years. JCP&L and various parties are engaged in settlement discussions with respect to the pending EnergizeNJ petition.

 

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FERC REGULATORY MATTERS

Under the FPA, FERC regulates rates for interstate wholesale sales, transmission of electric power, accounting and other matters. With respect to its transmission services and rates, JCP&L is subject to regulation by FERC. FERC regulations require JCP&L to provide open access transmission service at FERC-approved rates, terms and conditions. JCP&L’s transmission facilities are subject to functional control by PJM and transmission service using their transmission facilities is provided by PJM under the PJM Tariff. JCP&L’s FERC rate order in effect for transmission customer billings has been effective since January 2020, include a capital structure of actual (13 month average) and an allowed and ROE of 10.2%.

FERC regulates the sale of power for resale in interstate commerce in part by granting authority to public utilities to sell wholesale power at market-based rates upon showing that the seller cannot exert market power in generation or transmission or erect barriers to entry into markets. JCP&L has been authorized by FERC to sell wholesale power in interstate commerce at market-based rates and have a market-based rate tariff on file with FERC, although major wholesale purchases remain subject to review and regulation by the relevant state commissions.

Federally enforceable mandatory reliability standards apply to the bulk electric system and impose certain operating, record-keeping and reporting requirements on JCP&L. NERC is the ERO designated by FERC to establish and enforce these reliability standards, although NERC has delegated day-to-day implementation and enforcement of these reliability standards to six regional entities, including RFC. All of the facilities that FirstEnergy operates, including those of JCP&L, are located within the RFC region. FirstEnergy actively participates in the NERC and RFC stakeholder processes, and otherwise monitors and manages its companies in response to the ongoing development, implementation and enforcement of the reliability standards implemented and enforced by RFC.

JCP&L believes that it is in material compliance with all currently effective and enforceable reliability standards. Nevertheless, in the course of operating its extensive electric utility systems and facilities, JCP&L occasionally learns of isolated facts or circumstances that could be interpreted as excursions from the reliability standards. If and when such occurrences are found, JCP&L develops information about the occurrence and develops a remedial response to the specific circumstances, including in appropriate cases “self-reporting” an occurrence to RFC. Moreover, it is clear that NERC, RFC and FERC will continue to refine existing reliability standards as well as to develop and adopt new reliability standards. Any inability on JCP&L’s part to comply with the reliability standards for its bulk electric system could result in the imposition of financial penalties, or obligations to upgrade or build transmission facilities, that could have a material adverse effect on its financial condition, results of operations, and cash flows.

FERC Audit

FERC’s Division of Audits and Accounting initiated a nonpublic audit of FESC in February 2019. Among other matters, the audit is evaluating FirstEnergy’s compliance with certain accounting and reporting requirements under various FERC regulations. On February 4, 2022, FERC filed the final audit report for the period of January 1, 2015 through September 30, 2021, which included several findings and recommendations that FirstEnergy has accepted. The audit report included a finding and related recommendation on FirstEnergy’s methodology for allocation of certain corporate support costs to regulatory capital accounts under certain FERC regulations and reporting. Effective in the first quarter of 2022 and in response to the finding, FirstEnergy had implemented a new methodology for the allocation of these corporate support costs to regulatory capital accounts for its regulated distribution and transmission companies on a prospective basis. With the assistance of an independent outside firm, FirstEnergy completed an analysis during the third quarter of 2022 of these costs and how it impacted certain FERC-jurisdictional wholesale transmission customer rates for the audit period of 2015 through 2021. As a result of this analysis, JCP&L recorded in the third quarter of 2022 approximately $8 million (pre-tax) in expected customer refunds, plus interest, due to its wholesale transmission customers and reclassified

 

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approximately $76 million of certain transmission capital assets to operating expenses for the audit period, of which $63 million (pre-tax) are not expected to be recoverable and impacted JCP&L’s earnings since they relate to costs capitalized during stated transmission rate time periods. JCP&L has recovered approximately $13 million of costs reclassified to operating expenses in its transmission formula rate revenue requirements as of December 31, 2024. These reclassifications also resulted in a reduction to JCP&L’s rate base by approximately $56 million, which is not expected to materially impact JCP&L’s future earnings. The expected wholesale transmission customer refunds were recognized as a reduction to revenue, and the amount of reclassified transmission capital assets that are not expected to be recoverable were recognized at the Transmission segment within “Other operating expenses” on JCP&L’s Statements of Income.

On December 8, 2023, FERC audit staff issued a letter advising that two unresolved audit matters, primarily related to FirstEnergy’s plan to recover the reclassified operating expenses in formula transmission rates, were being referred to other offices within FERC for further review. On July 5, 2024 and September 26, 2024, the FERC Office of Enforcement issued additional data requests related to the 2022 reclassification of operating expenses, to which FirstEnergy replied. On September 10, 2024 and January 13, 2025, the FERC Office of Enforcement issued a set of further data requests related to the classification and recovery of a since terminated fuel consulting contract, to which another FirstEnergy responded. The FERC Office of Enforcement issued another set of data requests related to the same fuel consulting contract on January 13, 2025, to which FirstEnergy responded. If the FERC Office of Energy Market Regulation and the FERC Office of Enforcement were to successfully challenge the recovery of the 2022 reclassified operating expenses and formula transmission rates it could have a material adverse effect on JCP&L’s financial conditions, result of operations, and cash flows.

Transmission ROE

A proposed rulemaking proceeding concerning transmission rate incentives provisions of Section 219 of the 2005 Energy Policy Act was initiated in March of 2020 and remains pending before FERC. Among other things, the rulemaking explored whether utilities should collect an “RTO membership” ROE incentive adder for more than three years. FirstEnergy is a member of PJM, and its transmission subsidiaries could be affected by the proposed rulemaking. FirstEnergy participated in comments on the supplemental rulemaking that were submitted by a group of PJM transmission owners and by various industry trade groups. If there were to be any changes to FirstEnergy’s transmission incentive ROE, such changes will be applied on a prospective basis.

Transmission Planning Supplemental Projects: Ohio Consumers Counsel v ATSI, et al.

On September 27, 2023, the OCC filed a complaint against ATSI, PJM and other transmission utilities in Ohio alleging that the PJM Tariff and operating agreement are unjust, unreasonable, and unduly discriminatory because they include no provisions to ensure PJM’s review and approval for the planning, need, prudence and cost-effectiveness of the PJM Tariff Attachment M-3 “Supplemental Projects.” Supplemental Projects are projects that are planned and constructed to address local needs on the transmission system. The OCC demands that FERC: (i) require PJM to review supplemental projects for need, prudence and cost-effectiveness; (ii) appoint an independent transmission monitor to assist PJM in such review; and (iii) require that Supplemental Projects go into rate base only through a “stated rate” procedure whereby prior FERC approval would be needed for projects with costs that exceed an established threshold. Subsequently, intervenors expanded the scope of this proceeding to all of the transmission utilities in PJM. ATSI and the other transmission utilities in Ohio and PJM filed comments and the complaint is pending before FERC.

Local Transmission Planning Complaint: Industrial Energy Consumers of America, et al. v. Avista Corporation, et al.

On December 19, 2024, the Industrial Energy Consumers of America, a group representing large industrial customers, and state consumer advocates filed a complaint at FERC that asserts that transmission owners are overbuilding “local transmission facilities” with corresponding unjustified increases in transmission rates. The

 

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complaint demands that FERC: (i) prohibit transmission owners from planning “local transmission facilities” that are rated at 100kV or higher, (ii) appoint “independent transmission monitors” to conduct such planning, and (iii) condition construction of local transmission facilities on the facility having been planned by the “independent transmission monitor.” FirstEnergy expects to participate in this matter through a consortium of PJM transmission owners and through certain trade groups, including EEI. FirstEnergy is unable to predict the outcome or estimate the impact that this complaint may have on JCP&L or its transmission capital investment strategy.

11. COMMITMENTS, GUARANTEES AND CONTINGENCIES

GUARANTEES AND OTHER ASSURANCES

JCP&L has various financial and performance guarantees and indemnifications which are issued in the normal course of business. These contracts include performance guarantees, stand-by LOCs, debt guarantees, surety bonds and indemnifications. JCP&L enters into these arrangements to facilitate commercial transactions with third parties by enhancing the value of the transaction to the third party. The maximum potential amount of future payments JCP&L could be required to make under these guarantees as of December 31, 2024 and 2023 was $47 million and $20 million, respectively, as summarized below:

 

Guarantees and Other Assurances

  

    Maximum Exposure    

 
     As of December 31,
2024
     As of December 31,
2023
 
     (In millions)  

Surety Bonds(1)

   $  19      $  19  

LOCs

     28        1  
  

 

 

    

 

 

 

Total Guarantees and Other Assurances

   $ 47      $ 20  
  

 

 

    

 

 

 

 

(1) 

Surety bonds are not tied to a credit rating, and their impact assumes maximum contractual obligations, which is ordinarily 100% of the face amount of the surety bond except with respect to $1 million as of December 31, 2024 and December 31, 2023 of surety bond obligations for which the collateral obligation is capped at 60% of the face amount, and typical obligations require 30 days to cure.

Collateral and Contingent-Related Features

In the normal course of business, JCP&L may enter into physical or financially settled contracts for the sale and purchase of electric capacity, energy, fuel and emission allowances. Certain agreements contain provisions that require JCP&L to post collateral. This collateral may be posted in the form of cash or credit support with thresholds contingent upon JCP&L’s credit rating from each of the major credit rating agencies. The collateral and credit support requirements vary by contract and by counterparty.

JCP&L has posted $28 million of collateral in the form of LOCs as of December 31, 2024 and $29 million of collateral, mainly in the form of cash, as of December 31, 2023. JCP&L is holding $2 million and $3 million of net cash collateral as of December 31, 2024 and 2023, respectively, from certain generation suppliers, and such amount is included in “Other current liabilities” on JCP&L’s Balance Sheets.

 

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These credit-risk-related contingent features stipulate that if JCP&L were to be downgraded or lose its investment grade credit rating (based on its senior unsecured debt rating), it would be required to provide additional collateral. The following table discloses the potential additional credit rating contingent contractual collateral obligations as of December 31, 2024 and 2023:

 

Potential Collateral Obligations

   As of
December 31, 2024
     As of
December 31, 2023
 
     (In millions)  

Contractual obligations for additional collateral

     

Upon downgrade

   $  46      $  35  

Surety bonds (collateralized amount)(1)

     19        18  
  

 

 

    

 

 

 

Total Exposure from Contractual Obligations

   $ 65      $ 53  
  

 

 

    

 

 

 

 

(1) 

Surety bonds are not tied to a credit rating, and their impact assumes maximum contractual obligations, which is ordinarily 100% of the face amount of the surety bond except with respect to $1 million as of December 31, 2024 and December 31, 2023 of surety bond obligations for which the collateral obligation is capped at 60% of the face amount, and typical obligations require 30 days to cure.

ENVIRONMENTAL MATTERS

Various federal, state and local authorities regulate JCP&L with regard to air and water quality, hazardous and solid waste disposal, and other environmental matters. While JCP&L’s environmental policies and procedures are designed to achieve compliance with applicable environmental laws and regulations, such laws and regulations are subject to periodic review and potential revision by the implementing agencies. JCP&L cannot predict the timing or ultimate outcome of any of these reviews or how any future actions taken as a result thereof may materially impact its business, results of operations, cash flows and financial condition.

Regulation of Waste Disposal

JCP&L has been named as a potentially responsible party at waste disposal sites, which may require cleanup under the CERCLA. Allegations of disposal of hazardous substances at historical sites and the liability involved are often unsubstantiated and subject to dispute; however, federal law provides that all potentially responsible parties for a particular site may be liable on a joint and several basis. Environmental liabilities that are considered probable have been recognized on JCP&L’s Balance Sheets as of December 31, 2024, based on estimates of the total costs of cleanup, JCP&L’s proportionate responsibility for such costs and the financial ability of other unaffiliated entities to pay. Total liabilities of approximately $76 million have been accrued through December 31, 2024, of which, approximately $69 million are for environmental remediation of former MGP and gas holder facilities in New Jersey, which are being recovered by JCP&L through a non-bypassable societal benefits charge. JCP&L could be found potentially responsible for additional amounts or additional sites, but the loss or range of losses cannot be determined or reasonably estimated at this time.

OTHER LEGAL PROCEEDINGS

United States v. Larry Householder, et al.

On July 21, 2020, a complaint and supporting affidavit containing federal criminal allegations were unsealed against the now former Ohio House Speaker Larry Householder and other individuals and entities allegedly affiliated with Mr. Householder. In March 2023, a jury found Mr. Householder and his co-defendant, Matthew Borges, guilty and in June 2023, the two were sentenced to prison for 20 and five years, respectively. Messrs. Householder and Borges have appealed their sentences. Also, on July 21, 2020, and in connection with the U.S. Attorney’s Office’s investigation, FirstEnergy received subpoenas for records from the U.S. Attorney’s Office for the Southern District of Ohio. FirstEnergy was not aware of the criminal allegations, affidavit or

 

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subpoenas before July 21, 2020. On January 17, 2025, the U.S. Attorney’s Office announced that a federal grand jury charged two former FirstEnergy senior officers with one count of participating in a Racketeer Influenced and Corrupt Organizations Act conspiracy. The allegations in the indictment are largely based on the conduct described in the DPA.

On July 21, 2021, FE entered into a three-year DPA with the U.S. Attorney’s Office that, subject to court proceedings, resolves this matter as to FE. Under the DPA, FE agreed to the filing of a criminal information charging FE with one count of conspiracy to commit honest services wire fraud. The DPA required that FirstEnergy, among other obligations: (i) continue to cooperate with the U.S. Attorney’s Office in all matters relating to the conduct described in the DPA and other conduct under investigation by the U.S. government; (ii) pay a criminal monetary penalty totaling $230 million within sixty days, consisting of (x) $115 million paid by FE to the United States Treasury and (y) $115 million paid by FE to the ODSA to fund certain assistance programs, as determined by the ODSA, for the benefit of low-income Ohio electric utility customers; (iii) publish a list of all payments made in 2021 to either 501(c)(4) entities or to entities known by FirstEnergy to be operating for the benefit of a public official, either directly or indirectly, and update the same on a quarterly basis during the term of the DPA; (iv) issue a public statement, as dictated in the DPA, regarding FE’s use of 501(c)(4) entities; and (v) continue to implement and review its compliance and ethics program, internal controls, policies and procedures designed, implemented and enforced to prevent and detect violations of the U.S. laws throughout its operations, and to take certain related remedial measures. The $230 million payment will neither be recovered in rates or charged to FirstEnergy customers, nor will FirstEnergy seek any tax deduction related to such payment. The entire amount of the monetary penalty was recognized as expense in the second quarter of 2021 and paid in the third quarter of 2021. As of July 22, 2024, FirstEnergy had successfully completed the obligations required within the three-year term of the DPA. Under the DPA, FirstEnergy has an obligation to continue (i) publishing quarterly a list of all payments to 501(c)(4) entities and all payments to entities known by FirstEnergy operating for the benefit of a public official, either directly or indirectly; (ii) not making any statements that contradict the DPA; (iii) notifying the U.S. Attorney’s Office of any changes in FirstEnergy’s corporate form; and (iv) cooperating with the U.S. Attorney’s Office until the conclusion of any related investigation, criminal prosecution, and civil proceeding brought by the U.S. Attorney’s Office, including the aforementioned federal indictment against two former FirstEnergy senior officers. Within 30 days of those matters concluding, and FirstEnergy’s successful completion of its remaining obligations, the U.S. Attorney’s Office will dismiss the criminal information.

Legal Proceedings Relating to United States v. Larry Householder, et al.

On August 10, 2020, the SEC, through its Division of Enforcement, issued an order directing an investigation of possible securities laws violations by FE, and on September 1, 2020, issued subpoenas to FE and certain FE officers relating to the conduct described in the DPA. On April 28, 2021, July 11, 2022, and May 25, 2023, the SEC issued additional subpoenas to FE, with which FE has complied. FirstEnergy cooperated fully with the SEC investigation, and on September 12, 2024, the SEC issued a settlement order that concluded and resolved the investigation in its entirety. Under the terms of the settlement, FE agreed to pay a civil penalty of $100 million and to cease and desist from committing or causing any violations and any future violations of specified provisions of the federal securities laws and rules promulgated thereunder, which was recognized as a loss contingency of $100 million in the second quarter of 2024 and paid on September 25, 2024.

On June 29, 2023, the OOCIC served FE a subpoena, seeking information relating to the conduct described in the DPA. FirstEnergy was not aware of the OOCIC’s investigation prior to receiving the subpoena and understood that the OOCIC’s investigation was also focused on the conduct described in the DPA, other than with respect to the March 25, 2024, felony indictment of Mr. Householder brought in Cuyahoga County, Ohio. FirstEnergy is cooperating with the OOCIC in its investigation. On February 12, 2024, and in connection with the OOCIC’s ongoing investigation, an indictment by a grand jury of Summit County, Ohio was unsealed against the now-deceased, former chairman of the PUCO, and two former FirstEnergy senior officers, charging each of them with several felony counts, including bribery, telecommunications fraud, money laundering and aggravated

 

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theft, related to payments described in the DPA. On August 12, 2024, FirstEnergy entered into a settlement with the OAG’s Office and the Summit County Prosecutor’s Office to resolve both the OOCIC investigation and State of Ohio ex rel. Dave Yost, Ohio Attorney General v. FirstEnergy Corp., et al. and City of Cincinnati and City of Columbus v. FirstEnergy Corp., noted below. The settlement includes, among other things, a non-prosecution agreement and a payment of $19.5 million, which was recorded as a loss contingency in the second quarter of 2024 in FirstEnergy’s Consolidated Statements of Income and was paid on August 16, 2024.

In addition to the subpoenas referenced above under “United States v. Larry Householder, et. al.” and the SEC investigation, certain FE stockholders and FirstEnergy customers filed several lawsuits against FirstEnergy and certain current and former directors, officers and other employees, and the complaints in each of these suits is related to allegations in the complaint and supporting affidavit relating to HB 6 and the now former Ohio House Speaker Larry Householder and other individuals and entities allegedly affiliated with Mr. Householder. The plaintiffs in each of the below cases seek, among other things, to recover an unspecified amount of damages (unless otherwise noted). Unless otherwise indicated, no contingency has been reflected in FirstEnergy’s consolidated financial statements with respect to these lawsuits as a loss is neither probable, nor is a loss or range of a loss reasonably estimable.

 

   

In re FirstEnergy Corp. Securities Litigation (S.D. Ohio); on July 28, 2020 and August 21, 2020, purported stockholders of FE filed putative class action lawsuits alleging violations of the federal securities laws. Those actions have been consolidated and a lead plaintiff, the Los Angeles County Employees Retirement Association, has been appointed by the court. A consolidated complaint was filed on February 26, 2021. The consolidated complaint alleges, on behalf of a proposed class of persons who purchased FE securities between February 21, 2017 and July 21, 2020, that FE and certain current or former FE officers violated Sections 10(b) and 20(a) of the Exchange Act by issuing alleged misrepresentations or omissions concerning FE’s business and results of operations. The consolidated complaint also alleges that FE, certain current or former FE officers and directors, and a group of underwriters violated Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 as a result of alleged misrepresentations or omissions in connection with offerings of senior notes by FE in February and June 2020. On March 30, 2023, the court granted plaintiffs’ motion for class certification. On April 14, 2023, FE filed a petition in the U.S. Court of Appeals for the Sixth Circuit seeking to appeal that order; the Sixth Circuit granted FE’s petition on November 16, 2023, and heard oral argument on July 17, 2024. On November 30, 2023, FE filed a motion with the S.D. Ohio to stay all proceedings pending that circuit court appeal. Discovery was stayed during the pendency of that motion to stay all proceedings and on August 20, 2024, the S.D. Ohio denied FE’s motion and lifted the stay as to fact discovery. On July 29, 2024, FE filed in the U.S. Court of Appeals for the Sixth Circuit a Petition for Writ of Mandamus asking the Sixth Circuit to direct the district court to deny plaintiffs’ motion to compel disclosure of FE’s privileged internal investigation materials. On September 11, 2024, FE filed in the U.S. Court of Appeals for the Sixth Circuit a motion to stay discovery of the privileged internal investigation materials pending resolution of the Petition for Writ of Mandamus. FE believes that it is probable that it will incur a loss in connection with the resolution of this lawsuit. Given the ongoing nature and complexity of such litigation, FE cannot yet reasonably estimate a loss or range of loss.

 

   

MFS Series Trust I, et al. v. FirstEnergy Corp., et al. and Brighthouse Funds II – MFS Value Portfolio, et al. v. FirstEnergy Corp., et al. (S.D. Ohio); on December 17, 2021 and February 21, 2022, purported stockholders of FE filed complaints against FE, certain current and former officers, and certain current and former officers of EH. The complaints allege that the defendants violated Sections 10(b) and 20(a) of the Exchange Act by issuing alleged misrepresentations or omissions regarding FE’s business and its results of operations, and seek the same relief as the In re FirstEnergy Corp. Securities Litigation described above. FE believes that it is probable that it will incur losses in connection with the resolution of these lawsuits. Given the ongoing nature and complexity of such litigation, FE cannot yet reasonably estimate a loss or range of loss.

 

   

State of Ohio ex rel. Dave Yost, Ohio Attorney General v. FirstEnergy Corp., et al. and City of Cincinnati and City of Columbus v. FirstEnergy Corp. (Common Pleas Court, Franklin County, OH, all

 

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actions have been consolidated); on September 23, 2020 and October 27, 2020, the OAG and the cities of Cincinnati and Columbus, respectively, filed complaints against several parties including FE, each alleging civil violations of the Ohio Corrupt Activity Act and related claims in connection with the passage of HB 6. On January 13, 2021, the OAG filed a motion for a temporary restraining order and preliminary injunction against FirstEnergy seeking to enjoin FirstEnergy from collecting the Ohio Companies’ decoupling rider. On January 31, 2021, FE reached a partial settlement with the OAG and the cities of Cincinnati and Columbus with respect to the temporary restraining order and preliminary injunction request and related issues. In connection with the partial settlement, the Ohio Companies filed an application on February 1, 2021, with the PUCO to set their respective decoupling riders (Conservation Support Rider) to zero. On February 2, 2021, the PUCO approved the application of the Ohio Companies setting the rider to zero, and no additional customer bills included new decoupling rider charges after February 8, 2021. On August 13, 2021, new defendants were added to the complaint, including two former officers of FirstEnergy. On December 2, 2021, the cities and FE entered a stipulated dismissal with prejudice of the cities’ suit. This matter was stayed through a criminal trial in United States v. Larry Householder, et al. described above, but resumed pursuant to an order, dated March 15, 2023. On July 31, 2023, FE and other defendants filed motions to dismiss in part the OAG’s amended complaint, which the OAG opposed. On February 16, 2024, the OAG moved to stay discovery in the case in light of the February 9, 2024, indictments against defendants in this action, which the court granted on March 14, 2024. As described above, FE reached a settlement with the OAG of this civil action and the OOCIC investigation, which resolves this civil action. FE recognized a loss contingency of $19.5 million in the second quarter of 2024, which was paid on August 16, 2024.

On February 9, 2022, FE, acting through the SLC, agreed to a settlement term sheet to resolve the following shareholder derivative lawsuits relating to HB 6 and the now former Ohio House Speaker Larry Householder and other individuals and entities allegedly affiliated with Mr. Householder that were filed in the S.D. Ohio, the N.D. Ohio, and the Ohio Court of Common Pleas, Summit County:

 

   

Gendrich v. Anderson, et al. and Sloan v. Anderson, et al. (Common Pleas Court, Summit County, Ohio, all actions have been consolidated); on July 26, 2020 and July 31, 2020, respectively, purported stockholders of FE filed shareholder derivative action lawsuits against certain current and former FE directors and officers, alleging, among other things, breaches of fiduciary duty. On August 30, 2022, the parties filed a joint motion to dismiss the state court action, which the court granted on September 2, 2022.

 

   

Miller v. Anderson, et al. (N.D. Ohio); on August 7, 2020, purported stockholders of FE filed shareholder derivative actions alleging the then FE Board and officers breached their fiduciary duties and committed violations of Section 14(a) of the Exchange Act. On August 24, 2022, the parties filed a joint motion to dismiss the action pending in the N.D. Ohio based upon the approval of the settlement by the S.D. Ohio, which was granted on May 17, 2024.

 

   

Bloom, et al. v. Anderson, et al.; Employees Retirement System of the City of St. Louis v. Jones, et al.; Electrical Workers Pension Fund, Local 103, I.B.E.W. v. Anderson et al.; Massachusetts Laborers Pension Fund v. Anderson et al.; The City of Philadelphia Board of Pensions and Retirement v. Anderson et al.; Atherton v. Dowling et al.; Behar v. Anderson, et al. (S.D. Ohio, all actions have been consolidated); on September 1, 2020, purported stockholders of FE filed shareholder derivative actions alleging the then FE Board and officers breached their fiduciary duties and committed violations of Section 14(a) of the Exchange Act. On March 11, 2022, the parties executed a stipulation and agreement of settlement, and filed a motion the same day requesting preliminary settlement approval in the S.D. Ohio, which the S.D. Ohio granted on May 9, 2022. Subsequently, following a hearing on August 4, 2022, the S.D. Ohio granted final approval of the settlement on August 23, 2022, which was appealed by a purported FE stockholder on June 15, 2023. The U.S. Court of Appeals for the Sixth Circuit affirmed the district court’s final settlement approval. All appeal options were exhausted on May 16, 2024.

 

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The above settlement included a series of corporate governance enhancements and a payment to FE of $180 million, less approximately $36 million in court-ordered attorney’s fees awarded to plaintiffs, and a $7 million net return on deposited funds, which was received in the second quarter of 2024. The judgment and settlement are final and, therefore, the derivative lawsuits are now fully resolved.

The outcome of any of these lawsuits, governmental investigations and audit is uncertain and could have a material adverse effect on FE’s or its subsidiaries’ reputation, business, financial condition, results of operations, liquidity, and cash flows.

Other Legal Matters

There are various lawsuits, claims (including claims for asbestos exposure) and proceedings related to JCP&L’s normal business operations pending against JCP&L. The loss or range of loss in these matters is not expected to be material to JCP&L. The other potentially material items not otherwise discussed above are described under Note 10, “Regulatory Matters.”

JCP&L accrues legal liabilities only when it concludes that it is probable that it has an obligation for such costs and can reasonably estimate the amount of such costs. In cases where JCP&L determines that it is not probable, but reasonably possible that it has a material obligation, it discloses such obligations and the possible loss or range of loss if such estimate can be made. If it were ultimately determined that JCP&L has legal liability or are otherwise made subject to liability based on any of the matters referenced above, it could have a material adverse effect on JCP&L’s financial condition, results of operations, and cash flows.

12. TRANSACTIONS WITH AFFILIATED COMPANIES

The affiliated company transactions for JCP&L during the years ended December 31, 2024, 2023 and 2022 are as follows:

 

     For the Years Ended December 31,  
      2024        2023        2022   
     (In millions)  

Revenues

   $ 1      $ 1      $ 1  

Expenses:

        

FESC support services (1)

     166        174        147  

Other affiliate support services (1)

     26        9        11  

Interest income

      —         —        1  

Interest expense

     20        14        1  

 

(1) 

Includes amounts capitalized.

FE does not bill directly or allocate any of its costs to any subsidiary company. FESC provides corporate support and other services, including executive administration, accounting and finance, risk management, human resources, corporate affairs, communications, information technology, legal services and other similar services at cost, in accordance with its cost allocation manual, to affiliated FirstEnergy companies under FESC agreements. Allocated costs are for services that are provided on behalf of more than one company, or costs that cannot be precisely identified and are allocated using formulas developed by FESC. Intercompany transactions are generally settled under commercial terms within thirty days. JCP&L can also receive charges from and charge affiliates other than FESC at cost for items such as mutual assistance for storms.

JCP&L recognizes an allocation of the net periodic pension and OPEB costs/credits from its affiliates, primarily FESC. See Note 3, “Pension and Other Postemployment Benefits” for additional information.

 

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Under the FirstEnergy regulated money pool, JCP&L has the ability to borrow from its regulated affiliates and FE to meet its short-term working capital requirements. Affiliated company notes receivables and payables related to the money pool are reported as Notes receivable from affiliated companies or Short-term borrowings - affiliated companies on the Balance Sheets. Affiliate accounts receivable and accounts payable balances relate to intercompany transactions that have not yet settled through the FirstEnergy money pool (see Note 8, “Short-Term Borrowings and Bank Lines of Credit”).

JCP&L is party to an intercompany income tax allocation agreement with FirstEnergy that provides for the allocation of consolidated tax liabilities. Prior to tax returns for years before 2022, net tax benefits attributable to FE, excluding any tax benefits derived from certain interest expense, were generally reallocated to the subsidiaries of FE that have taxable income. Effective January 1, 2022, the intercompany income tax allocation agreement was amended and revised such that FE no longer reallocates such tax benefits to the FE subsidiaries. See Note 4, “Taxes” for additional information.

13. SEGMENT INFORMATION

JCP&L is principally involved in the transmission and distribution of electricity through its reportable segments: Distribution and Transmission. The external segment reporting is consistent with the internal financial reports used by JCP&L’s President, its CODM. JCP&L’s CODM uses net income to assess performance and considers budget versus actual results on a monthly basis when making decisions about allocating resources to the segments.

The Distribution segment distributes electricity to approximately 1.2 million customers in New Jersey across its distribution footprint and procures electric supply to serve its BGS customers through a statewide auction process approved by the NJBPU. The segment’s results reflect the costs of securing and delivering electric generation to customers, including the deferral and amortization of certain costs.

The Transmission segment includes transmission infrastructure owned and operated by JCP&L and used to transmit electricity. The segment’s revenues are primarily derived from forward-looking formula rates, pursuant to which the revenue requirement is updated annually based on a projected rate base and projected costs, which is subject to an annual true-up based on actual rate base and costs. The segment’s results also reflect the net transmission expenses related to the delivery of electricity on JCP&L’s transmission facilities.

Financial information for JCP&L’s reportable segments and reconciliations to consolidated amounts is presented below:

 

(In millions)

For the Year Ended,

   Distribution     Transmission     Total
Reportable

Segments
    Reconciling
Adjustments
    JCP&L  

December 31, 2024

                              

External revenues

   $  2,073     $ 242     $  2,315     $  —     $  2,315  

Internal revenues

     152        —       152       (152      —  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

   $ 2,225     $ 242     $ 2,467     $ (152   $ 2,315  

Other operating expenses(1)

     747       61       808       (152     656  

Depreciation(1)

     203       46       249        —       249  

Deferral of regulatory assets, net

     (135      —       (135      —       (135

Interest expense - other(1)

     75       22       97        —       97  

Interest expense - affiliates(1)

     20        —       20        —       20  

Income taxes

     55       35       90        —       90  

Other expense (income) items(2)

     1,100       (10     1,090        —       1,090  

Net Income

     160       88       248        —       248  

Cash Flows from Investing Activities:

          

Capital investments

   $ 358     $ 519     $ 877     $  —     $ 877  

As of December 31, 2024

                              

Total assets

   $ 7,212     $ 2,715     $ 9,927     $  —     $ 9,927  

Total goodwill

   $ 1,213     $ 598     $ 1,811     $  —     $ 1,811  

 

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(In millions)

For the Year Ended,

   Distribution     Transmission     Total
Reportable

Segments
    Reconciling
Adjustments
    JCP&L  

December 31, 2023

                              

External revenues

   $ 1,823     $ 204     $ 2,027     $  —     $ 2,027  

Internal revenues

     111        —       111       (111      —  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

   $ 1,934     $ 204     $ 2,138     $ (111   $ 2,027  

Other operating expenses(1)

     601       65       666       (111     555  

Depreciation(1)

     190       41       231        —       231  

Deferral of regulatory assets, net

     (74      —       (74      —       (74

Interest expense - other(1)

     86       24       110        —       110  

Interest expense - affiliates(1)

     14        —       14        —       14  

Income taxes

     13       22       35        —       35  

Other expense (income) items(2)

     1,036       (10     1,026        —       1,026  

Net Income

     68       62       130        —       130  

Cash Flows from Investing Activities:

          

Capital investments

   $ 232     $ 401     $ 633     $  —     $ 633  

As of December 31, 2023

                              

Total assets

   $ 6,543     $ 2,557     $ 9,100     $  —     $ 9,100  

Total goodwill

   $ 1,213     $ 598     $ 1,811     $  —     $ 1,811  

 

(In millions)

For the Year Ended,

   Distribution      Transmission     Total
Reportable

Segments
     Reconciling
Adjustments
    JCP&L  

December 31, 2022

                                

External revenues

   $ 1,860      $ 195     $ 2,055      $  —     $ 2,055  

Internal revenues

     112         —       112        (112      —  

Total revenues

   $ 1,972      $ 195     $ 2,167      $ (112   $ 2,055  

Other operating expenses(1)

     582        132       714        (112     602  

Depreciation(1)

     174        35       209         —       209  

Amortization of regulatory assets, net

     51         —       51         —       51  

Interest expense - other(1)

     82        24       106         —       106  

Interest expense - affiliates(1)

     1         —       1         —       1  

Income taxes

     23        2       25         —       25  

Other expense (income) items(2)

     947        (5     942         —       942  

Net Income

     112        7       119         —       119  

Cash Flows from Investing Activities:

            

Capital investments

   $ 260      $ 223     $ 483      $  —     $ 483  

As of December 31, 2022

                                

Total assets

   $ 6,335      $ 2,297     $ 8,632      $  —     $ 8,632  

Total goodwill

   $ 1,213      $ 598     $ 1,811      $  —     $ 1,811  

 

(1) 

JCP&L considers this line to be a significant expense.

 

(2) 

Consists of Purchased power, General taxes, Miscellaneous income, net, Interest income from affiliates, Capitalized financing costs, and Pension and OPEB mark-to-market adjustments.

 

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LOGO

Jersey Central Power & Light Company

Offer to Exchange

$700,000,000 aggregate principal amount of 5.100% Senior Notes due 2035

registered under the Securities Act

for

$700,000,000 aggregate principal amount of 5.100% Senior Notes due 2035

 

 

PROSPECTUS

 

 

The exchange offer will expire at 5:00 P.M., New York City time,

on    , 2025, unless extended.

 

 

 


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PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

 

Item 20.

Indemnification of Directors and Officers.

JCP&L is a corporation organized under the laws of New Jersey. Section 14A: 3-5 of the New Jersey Business Corporations Act (the “NJBCA”) empowers a corporation to, subject to such standards and restrictions, if any, as are set forth in its bylaws, indemnify and hold harmless any member or manager or other person from and against any and all claims and demands whatsoever.

The bylaws of JCP&L, dated January 9, 2008 (the “JCP&L Bylaws”) contain indemnification provisions that provide that, to the fullest extent permitted under the NJBCA, subject to certain restrictions described below, the Company will indemnify defend and hold harmless any person who was or is a party or is threatened to be made a party to any threatened, pending or completed actions, suits or proceedings by reason of the fact that such person is or was a director or officer of the Company, or is or was a director or officer of the Company serving at the request of the Company as a director, officer or agent of another corporation, limited liability company, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, settlements, penalties and fines actually and reasonably incurred by him or her in connection with the defense or settlement of such, action, suit or proceeding if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Company; and, with respect to any criminal action or proceeding, either he or she had reasonable cause to believe such conduct was lawful or no reasonable cause to believe such conduct was unlawful. The JCP&L Bylaws provide that JCP&L shall pay, to the full extent then permitted by law, expenses, including attorney’s fees, incurred by a member of the JCP&L Board in defending any such action, suit or proceeding as they are incurred, in advance of the final disposition thereof, and may pay, in the same manner and to the full extent then permitted by law, such expenses incurred by any other person.

In addition, FirstEnergy maintains directors’ and officers’ liability insurance policies that cover the members of the JCP&L board of directors and officers of FirstEnergy and its subsidiaries, including the managers and officers of JCP&L.

 

Item 21.

Exhibits and Financial Statement Schedules.

 

Exhibit
No.
  

Description

  3.1    Amended and Restated Certificate of Incorporation of Jersey Central Power & Light Company.
  3.2    Amended and Restated Bylaws of Jersey Central Power & Light Company.
  4.1    Indenture, dated as of July 1,1999, by and between Jersey Central Power  & Light Company and The Bank of New York Mellon Trust Company as eventual successor to U.S. Trust Company of New York, which was the original trustee.
  4.2    Registration Rights Agreement, dated as of December 5, 2024, by and among Jersey Central Power  & Light Company and Barclays Capital Inc., MUFG Securities Americas Inc., PNC Capital Markets LLC and Wells Fargo Securities, LLC, as representatives of the initial purchasers of the Senior Notes due 2035 (unregistered).
  4.3    Company Order, dated as of December 5, 2024.*
  4.4    Form of 5.100% Senior Note due 2035.
  4.5    First Supplemental Indenture, dated as of October 31, 2007, by and among Jersey Central Power  & Light Company and The Bank of New York, as resigning trustee, and The Bank of New York Trust Company, N.A., as successor trustee.

 

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Exhibit
No.
  

Description

  5.1    Opinion of Morgan, Lewis & Bockius LLP, counsel to Jersey Central Power & Light Company.
 10.1    Credit Agreement, dated as of October 18, 2021, by and among Jersey Central Power  & Light Company, the banks and other financial institutions party thereto on the date hereof, as lenders, and Mizuho Bank, Ltd., as administrative agent.
 10.2    Amendment No. 1 to Credit Agreement, dated as of April 27, 2023, by and among Jersey Central Power  & Light Company, the banks and other financial institutions party thereto on the date hereof, as lenders, and Mizuho Bank, Ltd., as administrative agent.
 10.3    Amendment No. 2 to Credit Agreement, dated as of October 20, 2023, by and among Jersey Central Power  & Light Company, the banks and other financial institutions party thereto on the date hereof, as lenders, and Mizuho Bank, Ltd., as administrative agent.
 10.4    Amendment No. 3 to Credit Agreement, dated as of October 24, 2024, by and among Jersey Central Power  & Light Company, the banks and other financial institutions party thereto on the date hereof, as lenders, and Mizuho Bank, Ltd., as administrative agent.
 10.5    Service Agreement, dated as of January 1, 2024, by and between FirstEnergy Transmission, LLC, each of the associate companies listed on the signature pages thereto, and FirstEnergy Service Company.
 10.6    Second Revised, Amended and Restated Mutual Assistance Agreement, dated as of January 1, 2024, by and among certain subsidiaries of FirstEnergy Corp. listed on the signature pages thereto.
 23.1    Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm.
 23.2    Consent of Morgan, Lewis & Bockius LLP (included in Exhibit 5.1).
 24.1    Power of Attorney.
 25.1    Form T-1 Statement of Eligibility of The Bank of New York Trust Company, N.A. to act as trustee under the Indenture, dated as of July 1, 1999.
 99.1    Form of Letter of Transmittal.
 99.2    Form of Letter to Clients.
 99.3    Form of Letter to Registered Holders and The Depository Trust Company Participants.
107    Filing Fee Table.

 

* 

Certain schedules and similar attachments have been omitted in reliance on Item 601(a)(5) of Regulation S-K. The Company agrees to furnish supplementally a copy of any omitted schedule or exhibit to the SEC upon request.

 

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Item 22.

Undertakings

 

(a)

The undersigned registrant hereby undertakes:

 

  (1)

To file, during any period in which offers or sales are being made, a post-effective amendment to the registration statement:

 

  (i)

To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, as amended (the “Securities Act”);

 

  (ii)

To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the U.S. Securities and Exchange Commission (the “SEC”) pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table, as applicable, in the effective registration statement; and

 

  (iii)

To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

 

  (2)

That, for purposes of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

 

  (3)

To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

 

  (4)

That, for purposes of determining liability under the Securities Act to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness; provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

 

  (5)

That, for the purpose of determining liability of the registrant under the Securities Act to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to the registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

 

  (i)

Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;

 

  (ii)

Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

 

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  (iii)

The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

 

  (iv)

Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

(b) The undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request.

(c) The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.

(d) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

 

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Morristown, State of New Jersey, on April 1, 2025.

 

JERSEY CENTRAL POWER & LIGHT COMPANY

By:

 

/s/ Teresa Reed

  Name: Teresa Reed
  Title: Vice President, State Finance and Regulatory

Statement has been signed by the following persons in the capacities and on the dates indicated.

 

Signature

  

Title

  

Date

*

W. Douglas Mokoid

  

President and Director

(Principal Executive Officer)

   April 1, 2025

*

Tracy M. Ashton

  

Controller

(Principal Accounting Officer)

   April 1, 2025

*

Teresa Reed

  

Vice President, State Finance and Regulatory

(Principal Financial Officer)

   April 1, 2025

*

Linda Bowden

   Director    April 1, 2025

*

John E. Harmon

   Director    April 1, 2025

*

A. Wade Smith

   Director    April 1, 2025

*

Toby L. Thomas

   Director    April 1, 2025

 

*

The undersigned by signing his name hereto does sign and execute this registration statement on Form S-4 pursuant to the Power of Attorney executed by the above-named directors and officers of the registrant, which is being filed herewith on behalf of such directors and officers.

 

By:  

/s/ James A. Arcuri

  James A. Arcuri
  Attorney-in-Fact

 

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Exhibit 3.1

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

OF

JERSEY CENTRAL POWER & LIGHT COMPANY

Charter Number 0002020200

Filed: February 14, 2008

Pursuant to Section 14A:9-5 of the New Jersey Business Corporation Act, Jersey Central Power & Light Company (hereinafter referred to as the “Corporation”) amends, restates, and integrates its Certificate of Incorporation, as heretofore amended and restated, to read as follows:

ARTICLE I

The name of the Corporation is JERSEY CENTRAL POWER & LIGHT COMPANY.

ARTICLE II

The address of the Corporation’s current registered office is:

Jersey Central Power & Light Company

c/o The Corporation Trust Company

820 Bear Tavern Road

West Trenton, New Jersey 08628

The name of the Corporation’s current registered agent at such address is: The Corporation Trust Company.

ARTICLE III

The purpose or purposes for which the Corporation is organized is as follows:

A. To generate, produce, acquire, transmit, distribute, furnish, sell, and supply electricity to public and private consumers; and

B. To engage in any other activity within the purposes for which corporations may be organized under the New Jersey Business Corporation Act, Title 14A New Jersey Statutes.

ARTICLE IV

The aggregate number of shares which the Corporation is authorized to issue shall be thirty-one million six hundred thousand (31,600,000) shares, classified as follows:

A. Common Stock, sixteen million (16,000,000) shares, with a par value of ten dollars ($10) each; and


B. Cumulative Preferred Stock, fifteen million six hundred thousand (15,600,000) shares, with no par value, and with such stated value as may be determined by the Board of Directors.

ARTICLE V

The Board of Directors may adopt an amendment to this Certificate of Incorporation determining, in whole or in part, the express terms, within the limits set forth in this Certificate of Incorporation or the New Jersey Business Corporation Act, of any class of shares before the issuance of any shares of that class, or of one or more series within a class before the issuance of shares of that series; including, without limitation, division of shares into classes or into series within any class or classes, determination of the designation and the number of shares of any class or series, and the determination of the relative voting rights, preferences, limitations, rights to dividends, conversion rights, redemption rights, stated value, and other special rights of the shares of any class or series.

ARTICLE VI

A director or officer of the Corporation shall not be personally liable to the Corporation or its shareholders for damages for breach of any duty owed to the Corporation or its shareholders; except that this Article shall not relieve a director or officer from liability for any breach of duty based upon an act or omission (a) in breach of such person’s duty of loyalty to the Corporation or its shareholders, (b) not in good faith or involving a knowing violation of law or (c) resulting in receipt by such person of an improper personal benefit. As used herein, an act or omission in breach of a person’s duty of loyalty means an act or omission which that person knows or believes to be contrary to the best interests of the Corporation or its shareholders in connection with a matter in which he has a material conflict of interest. [NJ Stat. 14A:2-7(3)]

ARTICLE VII

The Corporation may wind up its affairs and dissolve pursuant to a resolution adopted, at a meeting of shareholders called for such purpose, by the affirmative vote of the holders of record of shares entitling them to exercise the majority of the voting power of the Corporation.

ARTICLE VIII

The Corporation may purchase its shares, regardless of class, from time to time, to such extent, in such manner, and upon such terms as its Board of Directors shall determine; provided, however, that the Corporation shall not purchase any of its shares if, after such purchase, either (a) the Corporation would be unable to pay its debts as they become due or (b) the Corporation’s total assets would be less than its total liabilities.

ARTICLE IX

The shareholders shall have no right to vote cumulatively in the election of Directors.

 

2


ARTICLE X

The shareholders shall have no preemptive rights to subscribe for or to purchase from the Corporation any of the shares of any class of the Corporation hereafter issued or sold.

ARTICLE XI

The number of Directors constituting the current Board of Directors is six, and their names and addresses are as follows:

 

     Bradley S. Ewing
300 Madison Avenue
Morristown, NJ 07962-1911
   Mark A. Julian
300 Madison Avenue
Morristown, NJ 07962-1911
  Stephen E. Morgan
300 Madison Avenue
Morristown, NJ 07962-1911
   Gelorma E. Persson
300 Madison Avenue
Morristown, NJ 07962-1911
  Donald R. Schneider
300 Madison Avenue
Morristown, NJ 07962-1911
   Jesse T. Williams, Sr.
300 Madison Avenue
Morristown, NJ 07962-1911

IN WITNESS WHEREOF, the undersigned has executed this Amended and Restated Certificate of Incorporation.

 

Jersey Central Power & Light Company
By:   /s/ Stephen E. Morgan
  Stephen E. Morgan, President

 

Attest:
/s/ Edward J. Udovich
Edward J. Udovich, Assistant Secretary

 

3

Exhibit 3.2

AMENDED AND RESTATED

BYLAWS

OF

JERSEY CENTRAL POWER & LIGHT COMPANY

January 9, 2008

MEETINGS OF SHAREHOLDERS

Section 1. Annual Meetings.

The annual meeting of shareholders shall be held on such date and at such time as the Board of Directors may determine each year. Such meetings may be held within or without the State of New Jersey at such time and place as the Directors may determine. The Directors may determine that the meeting shall not be held at any physical place, but instead may be held solely by means of communications equipment as authorized by Section 9 below.

Section 2. Special Meetings.

Special meetings of the shareholders may be called at any time by (i) the Chairman of the Board, (ii) the President, (iii) the Directors, by action at a meeting or a majority of the Directors acting without a meeting, or (iv) the holders of 25% or more of the outstanding shares entitled to vote thereat. Such meetings may be held within or without the State of New Jersey at such time and place as may be specified in the notice thereof.

Section 3. Notice of Meetings.

Written notice stating the time, place, if any, and purposes of a meeting of the shareholders, and the means, if any, by which shareholders can be present and vote at the meeting through the use of communications equipment shall be given by personal delivery, or by mail, facsimile transmission, overnight delivery service, or any other means of communication authorized by the shareholder to whom the notice is given, not less than ten nor more than sixty days before the date of the meeting. Such notice may be given by or at the direction of the Chairman of the Board, the President or the Corporate Secretary. Notices sent by mail shall be sent postage prepaid and shall be addressed to each shareholder at his address as it appears upon the records of the Corporation. Notice by mail shall be deemed to be given at the time when the notice is deposited in the mail, notice by personal delivery or by overnight delivery service shall be deemed to be given when received, and notice by facsimile, or other electronic communications shall be deemed to be given at the time when confirmation of successful transmission is received.


Any shareholder may waive in writing notice of any meeting, either before or after the holding of such meeting, and by attending any meeting without protesting the lack of proper notice, shall be deemed to have waived notice thereof.

Section 4. Business Transacted at Meetings.

Business transacted at any meeting of shareholders shall be for the purposes stated in the notice.

Section 5. Quorum and Adjournments.

The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the shareholders for the transaction of business except as otherwise provided by statute or by the Certificate of Incorporation. If, however, such quorum shall not be present or represented at any meeting of the shareholders, the shareholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified.

Section 6. Required Vote; Inspectors.

(a) When a quorum is present or represented at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the Certificate of Incorporation a different vote is required in which case such express provision shall govern and control the decision of such question.

(b) Inspectors of election may be appointed to act at any meeting of shareholders in accordance with New Jersey law.

Section 7. Voting Power of Shareholders.

Every shareholder of record of the Corporation shall be entitled at each meeting of shareholders to one vote for each share of stock held by such shareholder according to the books of the Corporation as of the date of such vote or, if a record date is set by the Board of Directors, as of such record date.

Section 8. Voting by Proxy.

At any meeting of the shareholders, any shareholder may be represented and vote by a proxy or proxies appointed by an instrument in writing or by any other form of verifiable communication, including any form of electronic or other communications, to the full extent legally permitted (now or hereafter). In the event that any such instrument shall designate two or more persons to act as proxies, a majority of such persons present at the meeting, or, if only one shall be present, then that one shall have and may exercise all of the powers conferred by such instrument upon all of the persons so designated unless the instrument shall otherwise provide. No such proxy shall be

 

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valid after the expiration of eleven (11) months from the date of its execution, unless coupled with an interest, or unless the person executing it specifies therein the length of time for which it is to continue in force. Subject to the above, any proxy duly executed is not revoked and continues in full force and effect until an instrument or verifiable communication revoking it or a duly executed proxy bearing a later date is filed with the Corporate Secretary of the Corporation.

Section 9. Participation by Shareholders Through Communications Equipment.

If authorized by the Directors, the shareholders and proxyholders who are not physically present at a meeting of shareholders may attend a meeting of shareholders by use of communications equipment that enables the shareholder or proxyholder an opportunity to participate in the meeting and to vote on matters submitted to the shareholders, including an opportunity to read or hear the proceedings of the meeting and to speak or otherwise participate in the proceedings contemporaneously with those physically present.

Section 10. Action by Shareholders Without a Meeting.

Any action which may be taken by the vote of the shareholders at a meeting may be taken without a meeting if authorized by a writing or writings signed by all of the holders of shares who would be entitled to notice of a meeting for such purpose. Such written consent shall be filed with or entered upon the records of the Corporation.

DIRECTORS

Section 11. Authority of Directors.

The business of the Corporation shall be managed by its Board of Directors, which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute, the Certificate of Incorporation, or these By-laws directed or required to be exercised or done by the shareholders.

Section 12. Number; Qualifications.

The number of Directors shall be not less than five (5) and not more than eleven (11) (plus any Directors separately elected by the holders of any class of stock other than the Common Stock as provided in the Certificate of Incorporation as amended from time to time). The number of Directors may be determined (a) by the vote of the holders of a majority of the shares entitled to vote thereon at any annual meeting or special meeting called for the purpose of electing Directors or (b) by action of the Board of Directors at a meeting by the vote of a majority of the Directors in office at the time or in a writing signed by all the Directors in office at the time. When so fixed, such number shall continue to be the authorized number of Directors until changed by the shareholders or Directors in the manner described above. Any increase in the number of Directors shall be deemed to create a vacancy or vacancies which may be filled as provided in Section 15. A reduction in the number of Directors shall not be applied to remove any Director from office prior to the expiration of his term. Directors need not be shareholders of the Corporation.

Section 13. Election of Directors.

 

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At each meeting of the shareholders for the election of Directors, the persons receiving the greatest number of votes shall be the Directors. Such elections shall be by ballot whenever requested by any person entitled to vote at such meeting; but unless so requested, such election may be conducted in any way approved at such meeting.

Section 14. Term of Office; Removal; Resignations.

(a) Directors shall hold office until the annual meeting of the shareholders next following their election and until their respective successors are elected, or until their earlier resignation, death or removal from office.

(b) Any Director or the entire Board of Directors may be removed upon the affirmative vote of the holders of a majority of the voting power of the Corporation.

(c) Any Director may resign at any time by giving written notice of his resignation to the President or Corporate Secretary. Any resignation will be effective upon actual receipt by such person or, if later, as of the date and time specified in such written notice.

Section 15. Vacancies.

Vacancies, including those caused by an increase in the number of Directors, may be filled by a majority of the remaining Directors though less than a quorum. When one or more Directors shall give notice of his or their resignation to the Board, effective at a future date, the Board shall have the power to fill such vacancy or vacancies to take effect when such resignation or resignations shall become effective, each Director so appointed to hold office during the remainder of the term of office of the resigning Director or Directors. Whenever any vacancy shall occur among the Directors, the remaining Directors shall constitute the Directors of the Corporation until such vacancy is filled or until the number of Directors is changed as in Section 12 hereof.

MEETINGS OF THE BOARD OF DIRECTORS

Section 16. Organizational Meeting.

Immediately after each annual meeting of the shareholders at which Directors are elected, or each special meeting held in lieu thereof, the newly elected Directors, if a quorum thereof is present, shall hold an organizational meeting at the same place or at such other time and place as may be fixed by the shareholders at such meeting, for the purpose of electing officers and transacting any other business. Notice of such meeting need not be given. If for any reason such organizational meeting is not held at such time, a special meeting of the Directors for such purpose shall be held as soon thereafter as practicable.

Section 17. Special Meetings.

Special meetings of the Directors may be held at any time within or without the State of New Jersey upon call by the Chairman of the Board, the President, or the Corporate Secretary upon the written request of two Directors.

 

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Notice of the place, if any, and time of each meeting of the Directors shall be given to each Director either by personal delivery or by mail, facsimile transmission, overnight delivery service, or any other means of communication authorized by the Director, at least twenty-four hours before the meeting. The notice need not specify the purposes of the meeting. Notices sent by mail shall be sent postage prepaid and shall be addressed to each Director at his address as it appears upon the records of the Corporation. Notice by mail shall be deemed to be given at the time when the notice is deposited in the mail, notice by personal delivery or by overnight delivery service shall be deemed to be given when received, and notice by facsimile, or other electronic communications shall be deemed to be given at the time when confirmation of successful transmission is received. Such notice may be waived in writing by Directors either before or after the meeting, and such written waivers shall be filed with or entered upon the records of the meeting. The attendance of any Director at any such meeting without protesting the lack of proper notice, prior to or at the commencement of the meeting, shall be deemed to be a waiver by the Director of notice of the meeting. Unless otherwise limited in the notice thereof, any business may be transacted at any organizational, regular or special meeting.

Section 18. Quorum and Adjournments; Participation by Communications Equipment.

(a)   A majority of the Directors, at a meeting duly called and held, shall be necessary to constitute a quorum for the transaction of business and the act of a majority of the Directors present at any meeting at which a quorum is present shall be the act of the Board of Directors, except as may be otherwise specifically provided by statute or by the Certificate of Incorporation. Any action required or permitted to be taken at a meeting of the Directors may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the Directors entitled to vote with respect to the subject matter thereof. Any meeting duly called, whether or not a quorum is present, may, by vote of a majority of the Directors present, be adjourned from time to time and place to place within or without the State of New Jersey, in which case no further notice of the adjourned meeting need be given.

(b)   Meetings of the Board of Directors or of any committee of the Board of Directors may be held through any means of communications equipment if all persons participating can hear each other, and such participation will constitute presence in person at such meeting.

Section 19. Committees.

The Board of Directors may, by resolution passed by a majority of the Directors, designate one or more committees, each committee to consist of one or more of the Directors of the Corporation, which, to the extent provided in the resolution, shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the Corporation except that no such committee shall a) make, alter or repeal any by-law of the corporation; b) elect or appoint any Director, or remove any officer or Director; c) submit to shareholders any action that requires shareholders’ approval; or d) amend or repeal any resolution theretofore adopted by the board which by its terms is amendable or repealable only by the board. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors. The committees shall keep regular minutes of their proceedings and report the same to the Board when required.

 

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Section 20. Compensation.

The Directors may be paid their expenses, if any, for attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors. The sums may be different for different Directors, and the sum shall be established by resolution of the Board of Directors and may be changed from time to time by resolution. No such payment shall preclude any Director from serving the Corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings.

Section 21. Action by Directors Without a Meeting.

Any action required or permitted to be taken at a meeting of the Board of Directors or any committee of the Board of Directors may be taken without a meeting if, prior or subsequent to such action, all members of the Board of Directors or of such committee, as the case may be, consent thereto in writing and such written consents are filed with the Corporate Secretary of the Corporation.

EXECUTIVE COMMITTEE

Section 22. Executive Committee.

The Board of Directors at any time may elect from its members an Executive Committee which shall consist of not less than three (3) members. Each member of such Committee shall hold office during the pleasure of the Board and may be removed by a majority vote of the whole Board at any time with or without cause. Vacancies occurring in the Committee may be filled by the Board. The Committee shall prescribe its own rules for calling and holding meetings, and for transacting business, subject, however, to any rules prescribed by the Board of Directors, and the Committee shall keep minutes of its actions. Action by the Committee may be taken at meetings thereof attended by not less than a majority thereof, or without a meeting by instrument in writing signed by not less than a majority of the members. Except as the Committee’s powers and duties may be limited or otherwise prescribed by the Board of Directors, the Committee, during the intervals between the meetings of the Board, shall possess and may exercise all of the powers and authority of the Board of Directors, however conferred, provided, however, that the Committee shall not be empowered to elect the officers (other than Assistant Secretaries and Assistant Treasurers) or to fill vacancies in the Board of Directors or in the Executive Committee. Subject to such exceptions, persons dealing with the Corporation shall be entitled to rely upon any action of the Committee with the same force and effect as though such action had been taken by the Board of Directors.

OFFICERS

Section 23. Generally.

The Corporation may have a Chairman, elected by the Directors from among their number, and shall have a President, a Corporate Secretary and a Treasurer. The Corporation may also have

 

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one or more Vice Chairmen, Vice Presidents, Senior Vice Presidents and such other officers and assistant officers as the Board of Directors may deem appropriate. If the Board of Directors so desires, it may elect a Chief Executive Officer to manage the affairs of the Corporation, subject to the direction and control of the Board of Directors. All of the officers shall be elected by the Board of Directors. Notwithstanding the foregoing, by specific action, the Board of Directors may authorize the Chairman or the President to appoint any person to any office other than Chairman, President, Corporate Secretary, or Treasurer. Any number of offices may be held by the same person, and no two offices must be held by the same person. Any of the offices may be left vacant from time to time as the Board of Directors may determine. In case of the absence or disability of any officer of the Corporation or for any other reason deemed sufficient by a majority of the Board of Directors, the Board of Directors may delegate the absent or disabled officer’s powers or duties to any other officer or to any Director.

Section 24. Authority and Duties of Officers.

The officers of the Corporation shall have such authority and shall perform such duties as are customarily incident to their respective offices, or as may be specified from time to time by the Board of Directors, the Chairman or the President regardless of whether such authority and duties are customarily incident to such office.

Section 25. Compensation.

The compensation of all officers and agents of the Corporation who are also members of the Board of Directors of the Corporation will be fixed by the Board of Directors or by a committee of the Board of Directors. The Board of Directors may fix, or delegate the power to fix, the compensation of the other officers and agents of the Corporation to the Chief Executive Officer or any other officer of the Corporation.

Section 26. Succession.

The officers of the Corporation will hold office until their successors are elected. Any officer may be removed at any time by the affirmative vote of a majority of the whole Board. Any vacancy occurring in any office of the Corporation may be filled by the Board of Directors or by the Chairman or President as provided in Section 23.

Section 27. Delegation of Duties.

The Directors are authorized to delegate the duties of any officers to any other officer and generally to control the action of the officers and to require the performance of duties in addition to those mentioned herein.

SHARES CERTIFICATES

Section 28. Transfer and Registration of Certificates

The Board of Directors shall have authority to make such rules and regulations, not inconsistent with law, the Certificate of Incorporation, or these By-laws, as it deems expedient

 

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concerning the issuance, transfer, and registration of certificates for shares and the shares represented thereby and may appoint transfer agents and registrars thereof. The Directors may provide by resolution that some or all of any or all classes and series of shares shall be uncertificated shares, subject to any disclosure obligations therefor under section 14A:7-11 of the New Jersey Statutes, and provided that any then-outstanding shares of that class or series represented by a certificate shall not become uncertificated shares until the certificate is surrendered to the Corporation.

Section 29. Substituted Certificates

Any person claiming that a certificate for shares has been lost, stolen, or destroyed shall make an affidavit or affirmation of that fact and, if required, shall give the Corporation (and its registrar or registrars and its transfer agent or agents, if any) a bond of indemnity, in such form and with one (1) or more sureties satisfactory to the Board, and, if required by the Board of Directors, shall advertise the same in such manner as the Board of Directors may require, whereupon a new certificate may be executed and delivered of the same tenor and for the same number of shares as the one alleged to have been lost, stolen, or destroyed.

RECORD DATES AND CLOSING OF TRANSFER BOOKS

Section 30. Record Dates and Closing of Transfer Books.

The Board of Directors may fix a time not less than ten (10) and not exceeding sixty (60) days preceding the date of any meeting of shareholders or the date fixed for the payment of any dividend or distribution or the date for the allotment of rights as the record date for the determination of the shareholders entitled to notice of or to vote at any such meeting or entitled to receive payment of any such dividend, distribution or allotment of rights, and in such case only shareholders of record on the date so fixed shall be entitled to notice of or to vote at such meeting or to receive payment of such dividend, distribution or allotment of rights, as the case may be, notwithstanding any transfer of any shares on the books of the Corporation after any record date so fixed. The Board of Directors may close the books of the Corporation against transfers of shares during the whole or any part of the period between such record date and the date of the event in respect for which such record date was fixed.

REGISTERED SHAREHOLDERS

Section 31. Recognition of Record Ownership.

The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of New Jersey.

 

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GENERAL PROVISIONS

DIVIDENDS

Section 32. Payment of Dividends.

The Board of Directors may declare dividends upon the capital stock of the Corporation, subject to the provisions of the Certificate of Incorporation, if any, at any regular or special meeting pursuant to law. Dividends may be paid in cash, in property or in shares of the capital stock, subject to the provisions of the Certificate of Incorporation. Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for such other purpose as the Directors shall think conducive to the interest of the Corporation and the Directors may modify or abolish any such reserves in the manner in which it was created.

FISCAL YEAR

Section 33. Fiscal Year.

The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors.

SEAL

Section 34. Corporate Seal.

The Directors may adopt a corporate seal of the Corporation which shall be of such design, and shall contain such words, as may be prescribed by the Directors. Failure to affix any such corporate seal shall not affect the validity of any instrument.

TRANSFER AGENT AND REGISTRAR

Section 35. Transfer Agent; Registrar.

The Corporation may open transfer books in any state of the United States or in any foreign country for the purpose of transferring securities issued by it, and it may employ an agent or agents to keep the records of its securities to transfer or to register securities or both, in New Jersey or in other states or in a foreign country, or both, and the acts of such agents shall be binding on the Corporation. The duties and liabilities of such agent or agents shall be such as may be agreed to by the Corporation. If no such transfer agent is appointed to act in New Jersey in respect to its shares, the Corporation shall keep an office in New Jersey at which shares shall be transferable, and at which it shall keep books in which shall be recorded the names and addresses of all shareholders and all transfers of shares.

 

- 9 -


PROVISIONS IN CERTIFICATE OF INCORPORATION

Section 36. Governance By Certificate of Incorporation.

These By-laws are at all times subject to the provisions of the Certificate of Incorporation of the Corporation (including in such term whenever used in these By-laws, amendments thereto), and in case of any conflict between any provision herein and in the Certificate of Incorporation, the provisions in the Certificate of Incorporation shall be deemed to govern.

AMENDMENTS

Section 37. Procedure for Amendments.

These By-laws may be altered, amended, or repealed in any respect or superseded by new By-laws in whole or in part, (a) by the affirmative vote of the holders of record of shares entitling them to exercise a majority of the voting power of the Corporation at an annual or special meeting called for such purpose, or by their unanimous written consent; or (b) by the Board of Directors at an annual or special meeting called for such purpose, or by their unanimous written consent.

INDEMNIFICATION AND INSURANCE

Section 38. Indemnification.

The Corporation shall indemnify any person who was or is a party, or is threatened to be made a party, to any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or she is or was a director, officer, employee, or agent of the Corporation, or is or was serving at the request of the Corporation as a director, trustee, officer, employee, member, manager, or agent of another corporation, limited liability company, partnership, joint venture, trust or other enterprise, against expenses, including attorney’s fees, judgments, fines and amounts paid in settlement, actually and reasonably incurred by him or her in connection with such action, suit, or proceeding, if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, if he or she had no reasonable cause to believe his or her conduct was unlawful, to the full extent and according to the procedures and requirements set forth in the New Jersey General Corporation Law as now in effect or as amended from time to time. The Corporation shall pay, to the full extent then permitted by law, expenses, including attorney’s fees, incurred by a member of the Board of Directors in defending any such action, suit or proceeding as they are incurred, in advance of the final disposition thereof, and may pay, in the same manner and to the full extent then permitted by law, such expenses incurred by any other person.

The indemnification and payment of expenses provided hereby shall not be exclusive of, and shall be in addition to, any other rights granted to those seeking indemnification under any law, the Certificate of Incorporation, any agreement, vote of shareholders or disinterested members of the Board of Directors, or otherwise, both as to action in official capacities and as to action in

 

- 10 -


another capacity while he or she is a member of the Board of Directors, or an officer, employee or agent of the Corporation, and shall continue as to a person who has ceased to be a member of the Board of Directors, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.

Section 39. Insurance.

The Corporation may, to the full extent then permitted by law and authorized by the Board of Directors, purchase and maintain insurance or furnish similar protection, including but not limited to trust funds, letters of credit or self-insurance, on behalf of or for any persons described in Section 38 against any liability asserted against and incurred by any such person in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify such person against such liability. Insurance may be purchased from or maintained with a person in which the Corporation has a financial interest.

EMERGENCY BY-LAWS

Section 40. Emergency By-laws.

The Board of Directors may adopt, at any meeting, emergency by-laws to be operative during, but only during, an emergency. The emergency by-laws may contain any provisions which may be made by emergency by-laws as provided in Section 14A:2-10 of the New Jersey Statutes.

 

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Exhibit 4.1

JERSEY CENTRAL POWER & LIGHT COMPANY

AND

UNITED STATES TRUST COMPANY OF NEW YORK

TRUSTEE

 

 

INDENTURE

DATED AS OF JULY 1, 1999


CROSS REFERENCE SHEET SHOWING THE LOCATION IN THE INDENTURE OF THE PROVISIONS INSERTED PURSUANT TO SECTIONS 310 THROUGH 318(a), INCLUSIVE, OF THE TRUST INDENTURE ACT OF 1939

 

Trust Indenture Act

Section

  

Indenture

Section

310(a)(1)    9.09
(a) (2)    9.09
(a) (3)    Not Applicable
(a) (4)    Not Applicable
(a) (5)    9.09
(b)    9.08
(c)    Not Applicable
311 (a)    9.14
(b)    9.14
(c)    Not Applicable
312(a)    7.01 and 7.02(a)
(b)    7.02(b)
(c)    7.02(c)
313(a)    7.04(a)
(b)    7.04(b)
(c)    7.04(d)
(d)    7.04(c)
314(a)    7.03 and 6.06
(b)    6.05
(c)(1)    1.03 and 15.05
(c)(2)    1.03 and 15.05
(c)(3)    Not Applicable
(d)    1.03 and 4.04
(e)    15.05(b)
(f)    Not Applicable
315(a)    9.01
(b)    8.08
(c)    9.01(a)
(d)    9.01(b)
(e)    8.09
316(a)    8.07 and 10.04
(b)    8.04(b) and 13.02
(c)    10.06

 

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317(a)(1)    8.02(b)
(a)(2)    8.02(c)
(b)    5.02 and 6.04
318(a)    15.07

 

NOTE: This cross-reference sheet shall not, for any purpose, be deemed to be a part of the Indenture.

 

ii


TABLE OF CONTENTS

 

             Page  

ARTICLE I DEFINITIONS

     1  

  

 

Section 1.01

  General      1  
 

Section 1.02

  Trust Indenture Act      1  
 

Section 1.03

  Definitions      2  

ARTICLE II FORM, ISSUE, EXECUTION, REGISTRATION AND EXCHANGE OF NOTES

     8  
 

Section 2.01

  Form Generally      8  
 

Section 2.02

  Form Of Trustee’s Certificate Of Authentication      8  
 

Section 2.03

  Amount Unlimited      8  
 

Section 2.04

  Denominations, Dates, Interest Payment And Record Dates      8  
 

Section 2.05

  Execution, Authentication, Delivery And Dating      10  
 

Section 2.06

  Exchange And Registration Of Transfer Of Notes      14  
 

Section 2.07

  Mutilated, Destroyed, Lost Or Stolen Notes      14  
 

Section 2.08

  Temporary Notes      15  
 

Section 2.09

  Cancellation Of Notes Paid, Etc.      16  
 

Section 2.10

  Interest Rights Preserved      16  
 

Section 2.11

  Special Record Date      16  
 

Section 2.12

  Payment Of Notes      16  
 

Section 2.13

  Notes Issuable In The Form Of A Global Note      17  
 

Section 2.14

  CUSIP Numbers      19  

ARTICLE III REDEMPTION OF NOTES

     20  
 

Section 3.01

  Applicability Of Article      20  
 

Section 3.02

  Notice Of Redemption; Selection Of Notes      20  
 

Section 3.03

  Payment Of Notes On Redemption: Deposit Of Redemption Price      21  

ARTICLE IV SENIOR NOTE FIRST MORTGAGE BONDS

     22  
 

Section 4.01

  Senior Note First Mortgage Bonds Held By The Trustee      22  
 

Section 4.02

  No Transfer Of Senior Note First Mortgage Bonds: Exceptions      22  
 

Section 4.03

  Delivery To The Company Of All Senior Note First Mortgage Bonds      22  
 

Section 4.04

  Fair Value Certificate      22  
 

Section 4.05

  Further Assurances      23  
 

Section 4.06

  Exchange And Surrender Of Senior Note First Mortgage Bonds      24  
 

Section 4.07

  Acceptance Of Senior Note First Mortgage Bonds      24  
 

Section 4.08

  Terms Of Senior Note First Mortgage Bonds      24  
 

Section 4.09

  Senior Note First Mortgage Bonds As Security For Notes      24  

ARTICLE V SATISFACTION AND DISCHARGE; UNCLAIMED MONEYS

     25  
 

Section 5.01

  Satisfaction And Discharge      25  
 

Section 5.02

  Deposited Moneys To Be Held In Trust By Trustee      27  
 

Section 5.03

  Paying Agent To Repay Moneys Held      27  
 

Section 5.04

  Return Of Unclaimed Moneys      28  

ARTICLE VI PARTICULAR COVENANTS OF THE COMPANY

     28  
 

Section 6.01

  Payment Of Principal And Interest      28  

 

-iii-


TABLE OF CONTENTS

(continued)

 

             Page  
 

Section 6.02

  Offices For Payments, Etc.      28  

  

 

Section 6.03

  Appointment To Fill A Vacancy In Office Of Trustee      29  
 

Section 6.04

  Provision As To Paying Agent      29  
 

Section 6.05

  Opinions Of Counsel      30  
 

Section 6.06

  Certificates And Notice To Trustee      30  
 

Section 6.07

  Restrictions On Liens      30  
 

Section 6.08

  Restrictions On Sale And Lease-Back Transactions      32  
 

Section 6.09

  Corporate Existence      33  

ARTICLE VII NOTEHOLDER LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE

     33  
 

Section 7.01

  Company To Furnish Noteholder Lists      33  
 

Section 7.02

  Preservation And Disclosure Of Noteholder Lists      33  
 

Section 7.03

  Reports By The Company      35  
 

Section 7.04

  Reports By The Trustee      35  

ARTICLE VIII REMEDIES OF THE TRUSTEE AND NOTEHOLDERS ON EVENTS OF DEFAULT

     36  
 

Section 8.01

  Events Of Default      36  
 

Section 8.02

  Collection Of Indebtedness By Trustee: Trustee May Prove Debt      38  
 

Section 8.03

  Application Of Proceeds      40  
 

Section 8.04

  Limitations On Suits By Noteholders      40  
 

Section 8.05

  Suits For Enforcement      41  
 

Section 8.06

  Powers And Remedies Cumulative: Delay Or Omission Not Waiver Of Default      41  
 

Section 8.07

  Direction Of Proceedings And Waiver Of Defaults By Majority Of Noteholders      42  
 

Section 8.08

  Notice Of Default      42  
 

Section 8.09

  Undertaking To Pay Costs      42  
 

Section 8.10

  Restoration Of Rights On Abandonment Of Proceedings      43  
 

Section 8.11

  Defaults Under The First Mortgage      43  
 

Section 8.12

  Waiver Of Usury      43  

ARTICLE IX CONCERNING THE TRUSTEE

     43  
 

Section 9.01

  Duties And Responsibilities Of Trustee      43  
 

Section 9.02

  Reliance On Documents, Opinions, Etc.      44  
 

Section 9.03

  No Responsibility For Recitals, Etc.      45  
 

Section 9.04

  Trustee, Authenticating Agent, Paying Agent Or Registrar May Own Notes      45  
 

Section 9.05

  Moneys To Be Held In Trust      46  
 

Section 9.06

  Compensation And Expenses Of Trustee      46  
 

Section 9.07

  Officers’ Certificate As Evidence      46  
 

Section 9.08

  Conflicting Interest Of Trustee      46  
 

Section 9.09

  Existence And Eligibility Of Trustee      46  
 

Section 9.10

  Resignation Or Removal Of Trustee      47  

 

-iv-


TABLE OF CONTENTS

(continued)

 

             Page  
 

Section 9.11

  Appointment Of Successor Trustee      48  

  

 

Section 9.12

  Acceptance By Successor Trustee      48  
 

Section 9.13

  Succession By Merger, Etc.      48  
 

Section 9.14

  Limitations On Rights Of Trustee As A Creditor      49  
 

Section 9.15

  Authenticating Agent      49  

ARTICLE X CONCERNING THE NOTEHOLDERS

     50  
 

Section 10.01

  Action By Noteholders      50  
 

Section 10.02

  Proof Of Execution By Noteholders      50  
 

Section 10.03

  Persons Deemed Absolute Owners      50  
 

Section 10.04

  Company-Owned Notes Disregarded      51  
 

Section 10.05

  Revocation Of Consents: Future Holders Bound      51  
 

Section 10.06

  Record Date For Noteholder Acts      51  

ARTICLE XI NOTEHOLDERS’ MEETING

     52  
 

Section 11.01

  Purposes Of Meetings      52  
 

Section 11.02

  Call Of Meetings By Trustee      52  
 

Section 11.03

  Call Of Meetings By Company Or Noteholders      52  
 

Section 11.04

  Qualifications For Voting      52  
 

Section 11.05

  Regulations      52  
 

Section 11.06

  Voting      53  
 

Section 11.07

  Rights Of Trustee Or Noteholders Not Delayed      54  

ARTICLE XII CONSOLIDATION, MERGER, SALE, TRANSFER OR CONVEYANCE

     54  
 

Section 12.01

  Company May Consolidate, Etc.      54  
 

Section 12.02

  Successor Corporation Substituted      54  

ARTICLE XIII SUPPLEMENTAL INDENTURES

     55  
 

Section 13.01

  Supplemental Indentures Without Consent Of Noteholders      55  
 

Section 13.02

  Supplemental Indentures With Consent Of Noteholders      56  
 

Section 13.03

  Compliance With Trust Indenture Act Effect Of Supplemental Indentures      57  
 

Section 13.04

  Notation On Notes      57  
 

Section 13.05

  Evidence Of Compliance Of Supplemental Indenture To Be Furnished Trustee      58  

ARTICLE XIV IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS

     58  
 

Section 14.01

  Indenture And Notes Solely Corporate Obligations      58  

ARTICLE XV MISCELLANEOUS PROVISIONS

     58  
 

Section 15.01

  Provisions Binding On Company’s Successors      58  
 

Section 15.02

  Official Acts By Successor Corporation      58  
 

Section 15.03

  Notices      58  
 

Section 15.04

  GOVERNING LAW      59  

 

-v-


TABLE OF CONTENTS

(continued)

 

             Page  
 

Section 15.05

  Evidence Of Compliance With Conditions Precedent      59  
 

Section 15.06

  Business Days      60  
 

Section 15.07

  Trust Indenture Act To Control      60  

  

 

Section 15.08

  Table Of Contents, Headings, Etc.      60  
 

Section 15.09

  Execution In Counterparts      60  
 

Section 15.10

  Manner Of Mailing Notice To Noteholders      60  
 

Section 15.11

  Approval By Trustee Of Expert Or Counsel      61  

 

-vi-


THIS INDENTURE, dated as of July 1, 1999, between JERSEY CENTRAL POWER & LIGHT COMPANY, a corporation duly organized and existing under the laws of the State of New Jersey (the “COMPANY”), and UNITED STATES TRUST COMPANY OF NEW YORK, as trustee (the “TRUSTEE”).

WITNESSETH

WHEREAS, for its lawful corporate purposes, the Company has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of its Notes (as hereinafter defined), to be issued as in this Indenture provided;

WHEREAS, subject to the terms and provisions hereof (including Section 4.09), the Company may issue and deliver Senior Note First Mortgage Bonds (as hereinafter defined) from time to time to the Trustee to hold in trust for the benefit of the respective Holders (as hereinafter defined) from time to time of the Notes, or require the Trustee to deliver to the Company, for cancellation, any and all Senior Note First Mortgage Bonds held by the Trustee;

AND WHEREAS, all acts and things necessary to make this Indenture a valid agreement according to its terms have been done and performed, and the execution of this Indenture has in all respects been duly authorized;

NOW THEREFORE, THIS INDENTURE WITNESSETH:

That in order to declare the terms and conditions upon which the Notes are, and are to be authenticated, issued and delivered, and in consideration of the premises, of the purchase and acceptance of the Notes by the Holders thereof and of the sum of one dollar duly paid to it by the Trustee at the execution of this Indenture, the receipt whereof is hereby acknowledged, the Company, intending to be legally bound hereby, covenants and agrees with the Trustee for the equal and proportionate benefit of the respective Holders from time to time of the Notes, as follows:

ARTICLE I

DEFINITIONS

Section 1.01  General.  The terms defined in this Article I (whether or not capitalized and except as herein otherwise expressly provided or unless the context otherwise requires) for all purposes of this Indenture and of any indenture supplemental hereto shall have the respective meanings specified in this Article I.

Section 1.02  Trust Indenture Act.  Whenever this Indenture refers to a provision of the Trust Indenture Act of 1939, as amended (the “TIA”), such provision is incorporated by reference in and made a part of this Indenture.

(a)   Unless otherwise indicated, all terms used in this Indenture that are defined by the TIA, defined by the TIA by reference to another statute or defined by a rule of the Commission under the TIA shall have the meanings assigned to them in the TIA or such statute or rule as in force on the date of execution of this Indenture.


Section 1.03  Definitions.  For purposes of this Indenture, the following terms shall have the following meanings.

“Authenticating Agent” shall mean any agent of the Trustee which shall be appointed and acting pursuant to Section 9.15 hereof.

Authorized Agent” shall mean any agent of the Company designated as such by an Officers’ Certificate delivered to the Trustee.

“Board Of Directors” shall mean the Board of Directors of the Company or the Executive Committee of such Board or any other duly authorized committee of such Board.

Board Resolution” shall mean a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification.

Business Day” shall mean each day that is not a day on which banking institutions or trust companies in the Borough of Manhattan, the City and State of New York, or in the city where the corporate trust office of the Trustee is located, are obligated or authorized by law or executive order to close.

Capital Lease” shall mean any lease which has been or would be capitalized on the books of the lessee in accordance with GAAP.

Capitalization” shall mean the total of all the following items appearing on, or included in, the consolidated balance sheet of the Company: (i) liabilities for Debt maturing more than twelve (12) months from the date of determination; and (ii) common stock, preferred stock, Hybrid Preferred Securities, premium on capital stock, capital surplus, capital in excess of par value, and retained earnings (however the foregoing may be designated), less, to the extent not otherwise deducted, the cost of shares of capital stock of the Company held in its treasury. Subject to the foregoing, Capitalization shall be determined in accordance with GAAP and practices applicable to the type of business in which the Company is engaged and that are approved by independent accountants regularly retained by the Company, and may be determined as of a date not more than sixty (60) days prior to the happening of an event for which such determination is being made.

Commission” shall mean the United States Securities and Exchange Commission, or if at any time hereafter the Commission is not existing or performing the duties now assigned to it under the TIA, then the body performing such duties.

Company” shall mean the corporation named as the “Company” in the first paragraph of this Indenture, and its successors and assigns permitted hereunder.

Company Order” shall mean a written order signed in the name of the Company by one of the Chairman, the President, any Vice President (whether or not designated by a number or numbers or a word or words added before or after the title “Vice President”), the Treasurer or an Assistant Treasurer, of the Company, and delivered to the Trustee. At the Company’s option, a Company Order may take the form of a supplemental indenture to this Indenture.

 

2


Consolidated Subsidiary” shall mean any Subsidiary whose accounts are or are required to be consolidated with the accounts of the Company in accordance with GAAP.

Corporate Trust Office of The Trustee”, or other similar term, shall mean the corporate trust office of the Trustee, at which at any particular time its corporate trust business shall be principally administered, which office is at the date of the execution of this Indenture located at 114 West 47th Street, 25th Floor, New York, New York, 10036-1532.

Debt” shall mean any outstanding debt of the Company for money borrowed evidenced by notes, debentures, bonds, or other securities, or guarantees of any thereof.

Depositary” shall mean, unless otherwise specified in a Company Order pursuant to Section 2.05 hereof, The Depository Trust Company, New York, New York, or any successor thereto registered and qualified as a clearing agency under the Exchange Act, or other applicable statute or regulation.

Event Of Default” shall mean any event specified in Section 8.01 hereof, continued for the period of time, if any, and after the giving of the notice, if any, therein designated.

Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

Expert” shall mean any officer of the Company familiar with the terms of the First Mortgage and this Indenture, any law firm, any investment banking firm, or any other Person, satisfactory in the reasonable judgment of the Trustee.

First Mortgage” shall mean the Indenture, dated as of March 1, 1946, from the Company to United States Trust Company of New York, as successor trustee, as supplemented and amended from time to time.

First Mortgage Bonds” shall mean all first mortgage bonds issued by the Company and outstanding under the First Mortgage, including Senior Note First Mortgage Bonds.

GAAP” shall mean generally accepted accounting principles in the United States of America, applied on a basis consistent with those used in the preparation of any financial statements referred to herein, unless otherwise stated herein.

Global Note” shall mean a Note that, pursuant to Section 2.05 hereof, is issued to evidence Notes, that is delivered to the Depositary or pursuant to the instructions of the Depositary and that shall be registered in the name of the Depositary or its nominee.

Hybrid Preferred Securities” shall mean any preferred securities issued by a Hybrid Preferred Securities Subsidiary, where such preferred securities have the following characteristics:

(i)   such Hybrid Preferred Securities Subsidiary lends substantially all of the proceeds from the issuance of such preferred securities to the Company, or a wholly owned subsidiary of the Company, in exchange for Subordinated Indebtedness issued by the Company;

 

3


(ii)   such preferred securities contain terms providing for the deferral of interest payments corresponding to provisions providing for the deferral of interest payments on the related Subordinated Indebtedness; and

(iii)   the Company makes periodic interest payments on the related Subordinated Indebtedness, which interest payments are in turn used by the Hybrid Preferred Securities Subsidiary to make corresponding payments to the holders of the preferred securities.

Hybrid Preferred Securities Subsidiary” shall mean any limited partnership or business trust (or similar entity) (i) all of the general partnership or common equity interest of which is owned (either directly or indirectly through one or more wholly-owned Subsidiaries of the Company or any Consolidated Subsidiary of the Company) at all times by the Company, (ii) that has been formed for the purpose of issuing Hybrid Preferred Securities and (iii) substantially all of the assets of which consist at all times solely of Subordinated Indebtedness issued by the Company and payments made from time to time on such Subordinated Indebtedness.

Indenture” shall mean this instrument as originally executed or, if amended or supplemented as herein provided, as so amended or supplemented.

“Interest Payment Date” shall mean (a) each date designated as such for the payment of interest on a Note specified in a Company Order pursuant to Section 2.05 hereof (provided that the first Interest Payment Date for any Note, the Original Issue Date of which is after a Regular Record Date but prior to the respective Interest Payment Date, shall be the Interest Payment Date following the next succeeding Regular Record Date), (b) a date of Maturity of such Note and (c) only with respect to defaulted interest on such Note, the date established by the Trustee for the payment of such defaulted interest pursuant to Section 2.11 hereof.

Lien” shall mean any mortgage, security interest, pledge or lien.

Maturity” or “Maturity Date”, when used with respect to any Note, shall mean the date on which the principal of such Note (together with all accrued interest thereon) becomes due and payable as therein or herein provided, whether at the Stated Maturity thereof or by declaration of acceleration, redemption or otherwise.

Mortgage Trustee” shall mean the Person serving as trustee at the time under the First Mortgage.

Note” or “Notes” shall mean any Note or Notes, as the case may be, authenticated and delivered under this Indenture, including any Global Note.

Noteholder”, “Holder of Notes” or “Holder” shall mean any Person in whose name at the time a particular Note is registered on the books of the Trustee kept for that purpose in accordance with the terms hereof.

Officers’ Certificate” when used with respect to the Company, shall mean a certificate signed by one of the Chairman, the President, any Vice President (whether or not designated by a number or numbers or a word or words added before or after the title “Vice President”), and by one of the Chief Financial Officer, Treasurer, any Assistant Treasurer, the Secretary or an Assistant

 

4


Secretary of the Company; provided, that no individual shall be entitled to sign in more than one capacity.

Operating Property” shall mean (i) any interest in real property owned by the Company and (ii) any asset owned by the Company that is depreciable in accordance with GAAP, excluding, in either case, any interest of the Company as lessee under a Capital Lease (except for a lease that results from a Sale and Lease-Back Transaction).

Opinion Of Counsel” shall mean an opinion in writing signed by legal counsel, who may be an employee of the Company, meeting the applicable requirements of Section 15.05 hereof. If the Indenture requires the delivery of an Opinion of Counsel to the Trustee, the text and substance of which has been previously delivered to the Trustee, the Company may satisfy such requirement by the delivery by the legal counsel that delivered such previous Opinion of Counsel of a letter to the Trustee to the effect that the Trustee may rely on such previous Opinion of Counsel as if such Opinion of Counsel was dated and delivered the date delivery of such Opinion of Counsel is required. Any Opinion of Counsel may contain reasonable conditions and qualifications satisfactory to the Trustee.

Original Issue Date” shall mean for a Note, or portion thereof, the date upon which it, or such portion, was issued by the Company pursuant to this Indenture and authenticated by the Trustee (other than in connection with a transfer, exchange or substitution).

Outstanding”, when used with reference to Notes, shall, subject to Section 10.04 hereof, mean, as of any particular time, all Notes authenticated and delivered by the Trustee under this Indenture, except

(a)   Notes theretofore canceled by the Trustee or delivered to the Trustee for cancellation;

(b)   Notes, or portions thereof, for the payment or redemption of which moneys in the necessary amount shall have been deposited in trust with the Trustee or with any paying agent (other than the Company), provided that if such Notes are to be redeemed prior to the Maturity thereof, notice of such redemption shall have been given as provided in Article III, or provisions satisfactory to the Trustee shall have been made for giving such notice;

(c)   Notes, or portions thereof, that have been paid and discharged or are deemed to have been paid and discharged pursuant to the provisions of this Indenture; and

(d)   Notes in lieu of or in substitution for which other Notes shall have been authenticated and delivered, or which have been paid, pursuant to Section 2.07 hereof.

Person” shall mean any individual, corporation, partnership, joint venture, limited liability company, association, joint-stock company, trust, unincorporated organization or government or any agent or political subdivision thereof.

Principal Executive Offices Of The Company” shall mean 2800 Pottsville Pike, Reading, Pennsylvania 19605, or such other place where the main corporate offices of the Company are located as designated in writing to the Trustee by an Authorized Agent.

 

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Regular Record Date” shall mean, unless otherwise specified in a Company Order pursuant to Section 2.05, for an Interest Payment Date for a particular Note (except for an Interest Payment Date with respect to defaulted interest on such Note) (a) the fifteenth day of the calendar month next preceding each Interest Payment Date (unless the Interest Payment Date is the date of Maturity of such Note, in which event, the Regular Record Date shall be as described in clause (b) hereof) and (b) the date of Maturity of such Note.

Related Notes”, when used in reference to any Senior Note First Mortgage Bonds, shall mean the Notes in respect of which such Senior Note First Mortgage Bonds were delivered to the Trustee pursuant to Section 4.07 hereof upon the initial authentication and issuance of such Notes pursuant to Section 2.05 hereof.

Related Senior Note First Mortgage Bonds”, when used in reference to any Notes, shall mean the Senior Note First Mortgage Bonds delivered to the Trustee pursuant to Section 4.07 hereof in connection with the initial authentication and issuance of such Notes pursuant to Section 2.05 hereof.

Release Date” shall mean the earlier of (i) the date that all First Mortgage Bonds, other than the Senior Note First Mortgage Bonds, have been retired (whether at, before or after the maturity thereof) through payment, redemption, purchase, defeasance or otherwise, and (ii) the date upon which the Trustee holds Senior Note First Mortgage Bonds constituting not less than 80% in aggregate principal amount of all outstanding First Mortgage Bonds; provided that the Company shall have delivered to the Trustee (A) an Officers’ Certificate stating the existence of the facts in either clause (i) or (ii) above and that, upon giving effect to the Release Date, no Event of Default or event or condition the occurrence or existence of which would, with the lapse of time or the giving of notice or both, become an Event of Default will have occurred and be continuing, (B) the certificate of an Expert required pursuant to Section 4.04(b) hereof and (C) the Officers’ Certificate and Opinion of Counsel required pursuant to Section 15.05 hereof.

Responsible Officer” or “Responsible Officers” when used with respect to the Trustee shall mean one or more of the following: the chairman of the board of directors, the vice chairman of the board of directors, the chairman of the executive committee, the president, any vice president (whether or not designated by a number or a word or words added before or after the title “Vice President”), the secretary, the treasurer, any trust officer, any assistant trust officer, any second or assistant vice president, any assistant secretary, any assistant treasurer, or any other officer or assistant officer of the Trustee customarily performing functions similar to those performed by the Persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of his or her knowledge of and familiarity with the particular subject.

Sale and Lease-Back Transaction” shall mean any arrangement with any Person providing for the leasing to the Company of any Operating Property (except for leases for a term, including any renewal thereof, of not more than forty-eight (48) months), which Operating Property has been or is to be sold or transferred by the Company to such Person; provided, however, Sale and Lease-Back Transaction shall not include any arrangement first entered into prior to the date of this Indenture.

 

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Senior Note First Mortgage Bonds” shall mean any first mortgage bonds issued by the Company under the First Mortgage pursuant to supplemental indentures to the First Mortgage and delivered to the Trustee pursuant to Section 4.07 hereof.

Special Record Date” shall mean, with respect to any Note, the date established by the Trustee in connection with the payment of defaulted interest on such Note pursuant to Section 2.11 hereof.

Stated Maturity” shall mean with respect to any Note, the last date on which principal on such Note becomes due and payable as therein or herein provided, other than by declaration of acceleration or by redemption.

Subordinated Indebtedness” shall mean any unsecured Debt of the Company (i) issued in exchange for the proceeds of Hybrid Preferred Securities and (ii) subordinated to the rights of the Holders hereunder.

Subsidiary” shall mean, as to any Person, any corporation or other entity of which at least a majority of the securities or other ownership interest having ordinary voting power (absolutely or contingently) for the election of directors or other Persons performing similar functions are at the time owned directly or indirectly by such Person.

“Tangible Assets” shall mean the amount shown as total assets on the consolidated balance sheet of the Company, less the following: (i) intangible assets including, but without limitation, such items as goodwill, trademarks, trade names, patents, and unamortized debt discount and expense and (ii) appropriate adjustments, if any, on account of minority interests. Tangible Assets shall be determined in accordance with GAAP and practices applicable to the type of business in which the Company is engaged and that are approved by the independent accountants regularly retained by the Company, and may be determined as of a date not more than sixty (60) days prior to the happening of the event for which such determination is being made.

Trustee” shall mean United States Trust Company of New York and, subject to Article IX, shall also include any successor Trustee.

U.S. Government Obligations” shall mean (i) direct non-callable obligations of, or non-callable obligations guaranteed as to timely payment of principal and interest by, the United States of America or obligations of a Person controlled or supervised by and acting as an agency or instrumentality thereof for the payment of which obligations or guarantee the full faith and credit of the United States is pledged, or (ii) certificates or receipts representing direct ownership interests in obligations or specified portions (such as principal or interest) of obligations described in clause (i) above, which obligations are held by a custodian in safekeeping in a manner satisfactory to the Trustee.

Value” shall mean, with respect to a Sale and Lease-Back Transaction, as of any particular time, the amount equal to the greater of (i) the net proceeds to the Company from the sale or transfer of the property leased pursuant to such Sale and Lease-Back Transaction and (ii) the net book value of such property, as determined in accordance with GAAP by the Company, in either case multiplied by a fraction, the numerator of which shall be equal to the number of full years of the term of the lease that is part of such Sale and Lease-Back Transaction remaining at the time of

 

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determination and the denominator of which shall be equal to the number of full years of such term, without regard, in any case, to any renewal or extension options contained in such lease.

ARTICLE II

FORM, ISSUE, EXECUTION, REGISTRATION AND

EXCHANGE OF NOTES

Section 2.01  Form Generally.

(a)   If the Notes are in the form of a Global Note they shall be in substantially the form set forth in Exhibit A (or, following the Release Date, Exhibit C) to this Indenture, and, if the Notes are not in the form of a Global Note, they shall be in substantially the form set forth in Exhibit B (or, following the Release Date, Exhibit D) to this Indenture, or, in any case, in such other form as shall be established by a Board Resolution, or a Company Order pursuant to a Board Resolution, or in one or more indentures supplemental hereto, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, or any indentures supplemental hereto, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with applicable rules of any securities exchange or of the Depositary or with applicable law or as may, consistently herewith, be determined by the officers executing such Notes, as evidenced by their execution of such Notes.

(b)   The definitive Notes shall be typed, printed, lithographed or engraved on steel engraved borders or may be produced in any other manner, all as determined by the officers executing such Notes, as evidenced by their execution of such Notes.

Section 2.02  Form Of Trustees Certificate Of Authentication.  The Trustee’s certificate of authentication on all Notes shall be in substantially the following form:

Trustee’s Certificate of Authentication

This Note is one of the Notes of the series herein designated, described or provided for in the within-mentioned Indenture.

 

United States Trust Company of New York
By:    
  Authorized Officer

Section 2.03  Amount Unlimited.  The aggregate principal amount of Notes that may be authenticated and delivered under this Indenture is unlimited, subject to compliance with the provisions of this Indenture.

Section 2.04  Denominations, Dates, Interest Payment And Record Dates

 

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(a)   The Notes shall be issuable in registered form without coupons in denominations of $1,000 and integral multiples thereof or such other amount or amounts as may be authorized by the Board of Directors or a Company Order pursuant to a Board Resolution or in one or more indentures supplemental hereto; provided, that the principal amount of a Global Note shall not exceed $200,000,000 unless otherwise permitted by the Depositary.

(b)   Each Note shall be dated and issued as of the date of its authentication by the Trustee, and shall bear an Original Issue Date; each Note issued upon transfer, exchange or substitution of a Note shall bear the Original Issue Date or Dates of such transferred, exchanged or substituted Note, subject to the provisions of Section 2.13(e) hereof.

(c)   Each Note shall bear interest from the later of (1) its Original Issue Date or the date specified in such Note or (2) the most recent date to which interest has been paid or duly provided for with respect to such Note, in each case, until the principal of such Note is paid or made available for payment, and interest on each Note shall be payable on each Interest Payment Date after the Original Issue Date; provided that unless otherwise specified in a Company Order pursuant to Section 2.05 hereof, the first payment of interest on any Note with an Original Issue Date between a Regular Record Date and an Interest Payment Date will be made on the next succeeding Interest Payment Date.

(d)   Each Note shall mature on a Stated Maturity specified in the Note. The principal amount of each Outstanding Note shall be payable on the Maturity Date or Dates specified therein.

(e)   Unless otherwise specified in a Company Order pursuant to Section 2.05 hereof, interest on each of the Notes shall be calculated on the basis of a 360-day year of twelve 30-day months (and for any partial periods shall be calculated on the basis of the number of days elapsed in a 360-day year of twelve 30 day months) and shall be computed at a fixed rate until the Maturity of such Notes. The method of computing interest on any Notes not bearing a fixed rate of interest shall be set forth in a Company Order pursuant to Section 2.05 hereof. Unless otherwise specified in a Company Order pursuant to Section 2.05 hereof, principal, interest and premium, if any, on the Notes shall be payable in the currency of the United States.

(f)   Except as provided in the following sentence, the Person in whose name any Note is registered at the close of business on any Regular Record Date or Special Record Date with respect to an Interest Payment Date for such Note shall be entitled to receive the interest payable on such Interest Payment Date notwithstanding the cancellation of such Note upon any registration of transfer, exchange or substitution of such Note subsequent to such Regular Record Date or Special Record Date and prior to such Interest Payment Date. Any interest payable at Maturity shall be paid to the Person to whom the principal of such Note is payable.

(g)   So long as the Trustee is the registrar and paying agent, the Trustee shall, as soon as practicable but no later than the Regular Record Date preceding each applicable Interest Payment Date, provide to the Company a list of the principal, interest and premium, if any, to be paid on Notes on such Interest Payment Date. The Trustee shall assume responsibility for withholding taxes on interest paid as required by law except with respect to any Global Note.

 

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Section 2.05  Execution, Authentication, Delivery And Dating.

(a)   The Notes shall be executed on behalf of the Company by one of its Chairman, President, any Vice President (whether or not designated by a number or numbers or a word or words added before or after the title “Vice President”), its Treasurer or an Assistant Treasurer of the Company and attested by the Secretary or an Assistant Secretary of the Company. The signature of any of these officers on the Notes may be manual or facsimile. Typographical and other minor errors or defects in any such signature shall not affect the validity or enforceability of any Note that has been duly authenticated and delivered by the Trustee.

(b)   Notes bearing the manual or facsimile signatures of individuals who were at the time of execution the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Notes or did not hold such offices at the date of such Notes.

(c)   At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Notes executed by the Company to the Trustee for authentication, together with or preceded by one or more Company Orders for the authentication and delivery of such Notes, and the Trustee in accordance with any such Company Order shall authenticate and deliver such Notes. The Notes shall be issued in series or in tranches of series. Such Company Order shall specify the following with respect to each series or tranche of Notes: (i) any limitations on the aggregate principal amount of the Notes to be issued as part of such series or tranche, (ii) the Original Issue Date for such series or tranche, (iii) the Stated Maturity or Maturities of Notes of such series or tranche, (iv) the interest rate or rates, or method of calculation of such rate or rates, for such series, or tranche, the date from which such interest will accrue and the Interest Payment Dates and Regular Record Dates for such series or tranche, (v) the terms, if any, regarding the optional or mandatory redemption of such series or tranche, including pursuant to any sinking fund or analogous provisions, including redemption date or dates of such series or tranche, if any, the period or periods within which such series or tranche will be redeemed, the price or prices applicable to such redemption and the terms and conditions upon which such series or tranche may or will be redeemed, in whole or in part, (vi) the terms, if any, regarding the purchase of such series or tranche at the option of the Holder, including purchase date or dates of such series or tranche, if any, the price or prices applicable to such purchases and the terms and conditions upon which such series or tranche may be purchased, in whole or in part, (vii) whether or not the Notes of such series or tranche shall be issued in whole or in part in the form of a Global Note and, if so, the Depositary for such Global Note, (viii) the designation of such series or tranche, (ix) if the form of the Notes of such series or tranche is not as described in Exhibit A, Exhibit B, Exhibit C or Exhibit D hereto, the form of the Notes of such series or tranche, (x) the maximum annual interest rate, if any, of the Notes permitted for such series or tranche, (xi) if prior to the Release Date, the designation of the Related Senior Note First Mortgage Bonds being delivered to the Trustee in connection with the issuance of such series or tranche of Notes, (xii) the establishment of any office or agency pursuant to Section 6.02 hereof, and (xiii) any other terms of such series or tranche not inconsistent with this Indenture. Prior to authenticating Notes of any series or tranche, and in accepting the additional responsibilities under this Indenture in relation to such Notes, the Trustee shall receive from the Company the following at or before the issuance of the initial Note of such series or tranche of Notes, and (subject to Section 9.01 hereof) shall be

 

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fully protected in relying upon, unless and until such documents have been superseded or revoked prior to such issuance:

 

  (1)

A Board Resolution authorizing such Company Order or Orders and, if the form of Notes is established by a Board Resolution or a Company Order pursuant to a Board Resolution, a copy of such Board Resolution;

 

  (2)

At the option of the Company, either an Opinion of Counsel or a letter addressed to the Trustee permitting it to rely on an Opinion of Counsel, stating substantially the following subject to customary qualifications and exceptions:

 

  (A)

if the form of Notes has been established by or pursuant to a Board Resolution, a Company Order pursuant to a Board Resolution, or in a supplemental indenture as permitted by Section 2.01 hereof, that such form has been established in conformity with this Indenture;

 

  (B)

that the Indenture has been duly authorized, executed and delivered by the Company and constitutes a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or similar laws of general application relating to or affecting the enforcement of creditors’ rights, the application of general principles of equity (regardless of whether such application is made in a proceeding at law or in equity) and by an implied covenant of good faith and fair dealing and except as enforcement of provisions of the Indenture may be limited by state laws affecting the remedies for the enforcement of the security provided for in the Indenture;

 

  (C)

if prior to the Release Date, that the Related Senior Note First Mortgage Bonds being delivered to the Trustee in connection with the issuance of such series or tranche of Notes have been duly authorized, executed and delivered, and that such Senior Note First Mortgage Bonds are valid and binding obligations of the Company, enforceable in accordance with their terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or similar laws of general application relating to or affecting the enforcement of creditors’ rights and the application of general principles of equity (regardless of whether such application is made in a proceeding at law or in equity) and by an implied covenant

 

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  of good faith and fair dealing and except as enforcement of provisions thereof may be limited by state laws affecting the remedies for the enforcement of the security provided for in the First Mortgage; and that such Senior Note First Mortgage Bonds are entitled to the benefit of the First Mortgage, equally and ratably, with all First Mortgage Bonds outstanding thereunder, except as to sinking fund provisions;

 

  (D)

that the Indenture and, if prior to the Release Date, the First Mortgage are qualified to the extent necessary under the TIA;

 

  (E)

that such Notes have been duly authorized and executed by the Company, and when authenticated by the Trustee and issued by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute valid and binding obligations of the Company, enforceable in accordance with their terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or similar laws of general application relating to or affecting the enforcement of creditors’ rights, the application of general principles of equity (regardless of whether such application is made in a proceeding at law or in equity) and by an implied covenant of good faith and fair dealing and except as enforcement of provisions of this Indenture may be limited by state laws affecting the remedies for the enforcement of the security provided for in this Indenture;

 

  (F)

that all consents or approvals of any federal or state regulatory agency required in connection with the Company’s execution and delivery of this Indenture, such series or tranche of Notes and any Senior Note First Mortgage Bonds have been obtained and are in full force and effect (except that no statement need be made with respect to state securities laws);

 

  (G)

that the issuance of the Notes and, if prior to the Release Date, the delivery by the Company of the Related Senior Note First Mortgage Bonds in connection therewith, will not result in any default under any of the terms or covenants contained in this Indenture or, if applicable, the First Mortgage;

 

  (H)

if prior to the Release Date, that the First Mortgage (except the supplemental indenture establishing the Related Senior Note First Mortgage Bonds being delivered to the Trustee in

 

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  connection with the issuance of such series or tranche of Notes) and all financing statements have been duly filed and recorded in all places where such filing or recording is necessary for the perfection or preservation of the lien of the First Mortgage, and the First Mortgage constitutes a valid and perfected first lien upon the property purported to be covered thereby, subject only to excepted encumbrances (as defined in the First Mortgage) and to liens upon the property, if any, specifically identified in such supplemental indenture prior to its recordation; and

 

  (I)

that all conditions that must be met by the Company to issue Notes under this Indenture have been met.

 

  (3)

If prior to the Release Date, the certificate of an Expert meeting the requirements of Section 4.04(a) hereof and Senior Note First Mortgage Bonds meeting the requirements of Section 4.08 hereof.

 

  (4)

An Officers’ Certificate stating that (i) the Company is not, and upon the authentication by the Trustee of the Notes, will not be in default under any of the terms or covenants contained in this Indenture, (ii) all conditions that must be met by the Company to issue Notes under this Indenture have been met, and (iii) if prior to the Release Date, the Related Senior Note First Mortgage Bonds being delivered to the Trustee meet the requirements of Section 4.08 hereof.

(d)   No Note shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Note a certificate of authentication substantially in the form provided for herein executed by the Trustee by the manual or facsimile signature of an authorized officer, and such certificate upon any Note shall be conclusive evidence, and the only evidence, that such Note has been duly authenticated and delivered hereunder and is entitled to the benefits of this Indenture.

(e)   If all Notes of a series or tranche are not to be authenticated and issued at one time, the Company shall not be required to deliver the Company Order, Board Resolution, certificate of an Expert, Senior Note First Mortgage Bonds, Officers’ Certificate and Opinion of Counsel (including any of the foregoing that would be otherwise required pursuant to Section 15.05 hereof) described in Section 2.05(c) hereof at or prior to the authentication of each Note of such series or tranche, if such items are delivered at or prior to the time of authentication of the first Note of such series or tranche to be authenticated and issued. If all of the Notes of a series or tranche are not authenticated and issued at one time, for each issuance of Notes after the initial issuance of Notes, the Company shall be required only to deliver to the Trustee the Note and a written request (executed by one of the Chairman, the President, any Vice President, the Treasurer, or an Assistant Treasurer) to the Trustee to authenticate such Note and to deliver such Note in accordance with the instructions specified by such request. Any such request shall constitute a representation and warranty by the Company that the statements made in the Officers’

 

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Certificate delivered to the Trustee prior to the authentication and issuance of the first Note of such series or tranche are true and correct on the date thereof as if made on and as of the date thereof.

Section 2.06  Exchange And Registration Of Transfer Of Notes.

(a)   Subject to Section 2.13 hereof, Notes of any series or tranche may be exchanged for one or more new Notes of the same series or tranche of any authorized denominations and of a like aggregate principal amount, series or tranche and Stated Maturity and having the same terms and Original Issue Date. Notes to be exchanged shall be surrendered at any of the offices or agencies to be maintained pursuant to Section 6.02 hereof, and the Trustee shall authenticate and deliver in exchange therefor the Note or Notes of such series or tranche which the Noteholder making the exchange shall be entitled to receive.

(b)   The Trustee shall keep, at one of said offices or agencies, a register or registers in which, subject to such reasonable regulations as it may prescribe, the Trustee shall register or cause to be registered Notes and shall register or cause to be registered the transfer of Notes as in this Article II provided. Such register shall be in written form or in any other form capable of being converted into written form within a reasonable time. At all reasonable times, such register shall be open for inspection by the Company. Upon due presentment for registration of transfer of any Note at any such office or agency, the Company shall execute and the Trustee shall register, authenticate and deliver in the name of the transferee or transferees one or more new Notes of any authorized denominations and of a like aggregate principal amount, series or tranche and Stated Maturity and having the same terms and Original Issue Date.

(c)   All Notes presented for registration of transfer or for exchange, redemption or payment shall be duly endorsed by, or be accompanied by a written instrument or instruments of transfer in form satisfactory to the Company and the Trustee and duly executed by, the Holder or the attorney in fact of such Holder duly authorized in writing.

(d)   No service charge shall be made for any exchange or registration of transfer of Notes, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith.

(e)   The Trustee shall not be required to exchange or register the transfer of any Notes selected, called or being called for redemption (including Notes, if any, redeemable at the option of the Holder provided such Notes are then redeemable at such Holder’s option) except, in the case of any Note to be redeemed in part, the portion thereof not to be so redeemed.

(f)   If the principal amount, and any applicable premium, of part, but not all, of a Note is paid, then upon surrender to the Trustee of such Note, the Company shall execute, and the Trustee shall authenticate, deliver and register, a Note in an authorized denomination in aggregate principal amount equal to, and having the same terms, Original Issue Date, Stated Maturity and series or tranche as, the unpaid portion of such Note.

Section 2.07  Mutilated, Destroyed, Lost Or Stolen Notes.  (a) If any Note shall become mutilated or be destroyed, lost or stolen, the Company shall execute, and upon its written request the Trustee shall authenticate and deliver, a new Note of like form and principal amount, series or tranche and Stated Maturity and having the same terms and Original Issue Date and bearing a

 

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number not contemporaneously Outstanding, in exchange and substitution for the mutilated Note, or in lieu of and in substitution for the Note so destroyed, lost or stolen. In every case the applicant for a substituted Note shall furnish to the Company, the Trustee and any paying agent or Authenticating Agent such security or indemnity as may be required by them to save each of them harmless, and, in every case of destruction, loss or theft of a Note, the applicant shall also furnish to the Company and to the Trustee evidence to their satisfaction of the destruction, loss or theft of such Note and of the ownership thereof.

(a)   The Trustee shall authenticate any such substituted Note and deliver the same upon the written request or authorization of any officer of the Company. Upon the issuance of any substituted Note, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses connected therewith. If any Note which has matured, is about to mature, has been redeemed or called for redemption shall become mutilated or be destroyed, lost or stolen, the Company may, instead of issuing a substituted Note, pay or authorize the payment of the same (without surrender thereof except in the case of a mutilated Note) if the applicant for such payment shall furnish to the Company, the Trustee and any paying agent or Authenticating Agent such security or indemnity as may be required by them to save each of them harmless and, in case of destruction, loss or theft, evidence satisfactory to the Company and the Trustee of the destruction, loss or theft of such Note and of the ownership thereof.

(b)   Every substituted Note issued pursuant to this Section 2.07 by virtue of the fact that any Note is mutilated, destroyed, lost or stolen shall constitute an additional contractual obligation of the Company, whether or not such lost or stolen Note shall be found at any time, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Notes duly issued hereunder. All Notes shall be held and owned upon the express condition that, to the extent permitted by law, the foregoing provisions are exclusive with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes and shall preclude to the full extent permitted by applicable law any and all other rights or remedies with respect to the replacement or payment of negotiable instruments or other securities without their surrender.

Section 2.08  Temporary Notes.  Pending the preparation of definitive Notes, the Company may execute and the Trustee shall authenticate and deliver temporary Notes (printed, lithographed or otherwise reproduced). Temporary Notes shall be issuable in any authorized denomination and substantially in the form of the definitive Notes but with such omissions, insertions and variations as may be appropriate for temporary Notes, all as may be determined by the Company. Every such temporary Note shall be authenticated by the Trustee upon the same conditions and in substantially the same manner, and with the same effect, as the definitive Notes. Without unreasonable delay the Company shall execute and shall deliver to the Trustee definitive Notes and thereupon any or all temporary Notes shall be surrendered in exchange therefor at the Corporate Trust Office of the Trustee, and the Trustee shall authenticate, deliver and register in exchange for such temporary Notes an equal aggregate principal amount of definitive Notes. Such exchange shall be made by the Company at its own expense and without any charge therefor to the Noteholders. Until so exchanged, the temporary Notes shall in all respects be entitled to the same benefits under this Indenture as definitive Notes authenticated and delivered hereunder.

 

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Section 2.09  Cancellation Of Notes Paid, Etc.  All Notes surrendered for the purpose of payment, redemption, exchange or registration of transfer shall be surrendered to the Trustee for cancellation and promptly canceled by it and no Notes shall be issued in lieu thereof except as expressly permitted by this Indenture. The Company shall surrender to the Trustee any Notes so acquired by it and such Notes shall be canceled by the Trustee. No Notes shall be authenticated in lieu of or in exchange for any Notes so canceled.

Section 2.10  Interest Rights Preserved.  Each Note delivered under this Indenture upon transfer of or in exchange for or in lieu of any other Note shall carry all the rights to interest accrued and unpaid, and to accrue, which were carried by such other Note, and each such Note shall be so dated that neither gain nor loss of interest shall result from such transfer, exchange or substitution.

Section 2.11  Special Record Date.  If and to the extent that the Company fails to make timely payment or provision for timely payment of interest on any series or tranche of Notes on an Interest Payment Date (other than on an Interest Payment Date that is a Maturity Date), that interest shall cease to be payable to the Persons who were the Noteholders of such series or tranche at the applicable Regular Record Date. In that event, when moneys become available for payment of the interest, the Trustee shall (a) establish a date of payment of such interest and a Special Record Date for the payment of that interest, which Special Record Date shall be not more than 15 or fewer than 10 days prior to the date of the proposed payment and (b) mail notice of the date of payment and of the Special Record Date not fewer than 10 days preceding the Special Record Date to each Noteholder of such series or tranche at the close of business on the 15th day preceding the mailing at the address of such Noteholder, as it appeared on the register for the Notes. On the day so established by the Trustee the interest shall be payable to the Holders of the applicable Notes at the close of business on the Special Record Date.

Section 2.12  Payment Of Notes.  Payment of the principal, interest and premium, if any, on all Notes shall be payable as follows:

(a)   On or before 9:30 a.m., New York City time, or such other time as shall be agreed upon between the Trustee and the Company, of the day on which payment of principal, interest and premium, if any, is due on any Global Note pursuant to the terms thereof, the Company shall deliver to the Trustee funds available on such date sufficient to make such payment, by wire transfer of immediately available funds or by instructing the Trustee to withdraw sufficient funds from an account maintained by the Company with the Trustee or such other method as is acceptable to the Trustee. On or before 12:00 noon, New York City time, or such other time as shall be agreed upon between the Trustee and the Depositary, of the day on which any payment of interest is due on any Global Note (other than at Maturity), the Trustee shall pay to the Depositary such interest in same day funds. On or before 1:00 p.m., New York City time, or such other time as shall be agreed upon between the Trustee and the Depositary, of the day on which principal, interest payable at Maturity and premium, if any, is due on any Global Note, the Trustee shall deposit with the Depositary the amount equal to the principal, interest payable at Maturity and premium, if any, by wire transfer into the account specified by the Depositary. As a condition to the payment, at Maturity or upon redemption, of any part of the principal of, interest on and any applicable premium of any Global Note, the Depositary shall surrender, or cause to be surrendered, such Global Note to the Trustee, whereupon a new Global Note shall be issued to the Depositary pursuant to Section 2.06(f) hereof.

 

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(b)   With respect to any Note that is not a Global Note, principal, any applicable premium and interest due at the Maturity of the Note shall be payable in immediately available funds when due upon presentation and surrender of such Note at the Corporate Trust Office of the Trustee or at the authorized office of any paying agent. Interest on any Note that is not a Global Note (other than interest payable at Maturity) shall be paid by check mailed to the Holder thereof at such Holder’s address as it appears on the register by check payable in clearinghouse funds; provided that if the Trustee receives a written request from any Holder of Notes, the aggregate principal amount of which having the same Interest Payment Date equals or exceeds $10,000,000, on or before the applicable Regular Record Date for such Interest Payment Date, interest on such Note shall be paid by wire transfer of immediately available funds to a bank within the continental United States designated by such Holder in its request or by direct deposit into the account of such Holder designated by such Holder in its request if such account is maintained with the Trustee or any paying agent.

(c)   The Trustee shall receive the Senior Note First Mortgage Bonds from the Company as provided in this Indenture and shall hold the Senior Note First Mortgage Bonds, and any and all sums payable thereon or with respect thereto or realized therefrom, in trust for the benefit of the holders of the Notes, as herein provided. Subject to Article XIII hereof, all payments made by or on behalf of the Company to the Trustee on any Senior Note First Mortgage Bonds shall be deemed to be a payment by the Company pursuant to this Section 2.12 and shall be applied by the Trustee to pay, when due, principal of, premium, if any, and/or interest on the Related Notes and, to the extent so applied, shall satisfy the Company’s obligations on such Notes.

Section 2.13  Notes Issuable In The Form Of A Global Note.

(a)   If the Company shall establish pursuant to Section 2.05 hereof that the Notes of a particular series or tranche are to be issued in whole or in part in the form of one or more Global Notes, then the Company shall execute and the Trustee shall, in accordance with Section 2.05 hereof and the Company Order delivered to the Trustee thereunder, authenticate and deliver such Global Note or Notes, which (i) shall represent, shall be denominated in an amount equal to the aggregate principal amount of, and shall have the same terms as, the Outstanding Notes of such series or tranche to be represented by such Global Note or Notes, (ii) shall be registered in the name of the Depositary or its nominee, (iii) shall be delivered by the Trustee to the Depositary or pursuant to the Depositary’s instruction and (iv) shall bear a legend substantially to the following effect: “This Note is a Global Note registered in the name of the Depositary (referred to herein) or a nominee thereof and, unless and until it is exchanged in whole or in part for the individual Notes represented hereby, this Global Note may not be transferred except as a whole by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. Unless this Global Note is presented by an authorized representative of The Depository Trust Company (55 Water Street, New York, New York), to the Trustee for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or such other name as requested by an authorized representative of The Depository Trust Company and any payment is made to Cede & Co., any transfer, pledge or other use hereof for value or otherwise by or to any Person is wrongful since the registered owner hereof, Cede & Co., has an interest herein” or such other legend as may be required by the rules and regulations of the Depositary.

 

17


(b)   Notwithstanding any other provision of Section 2.06 hereof or of this Section 2.13, unless the terms of a Global Note expressly permit such Global Note to be exchanged in whole or in part for individual Notes, a Global Note may be transferred, in whole but not in part, only as described in the legend thereto.

(c)   If at any time the Depositary for a Global Note notifies the Company that it is unwilling or unable to continue as Depositary for such Global Note or if at any time the Depositary for the Global Note shall no longer be eligible or in good standing under the Exchange Act or other applicable statute or regulation, the Company shall appoint a successor Depositary with respect to such Global Note. If a successor Depositary for such Global Note is not appointed by the Company within 90 days after the Company receives such notice or becomes aware of such ineligibility, the Company’s election pursuant to Section 2.05(c)(vi) hereof shall no longer be effective with respect to the series or tranche of Notes evidenced by such Global Note and the Company shall execute, and the Trustee, upon receipt of a Company Order for the authentication and delivery of individual Notes of such series or tranche in exchange for such Global Note, shall authenticate and deliver, individual Notes of such series or tranche of like tenor and terms in definitive form in an aggregate principal amount equal to the principal amount of the Global Note in exchange for such Global Note. The Trustee shall not be charged with knowledge or notice of the ineligibility of a Depositary unless a Responsible Officer assigned to and working in its corporate trustee administration department shall have actual knowledge thereof.

 

  (i)

The Company may at any time and in its sole discretion determine that all Outstanding (but not less than all) Notes of a series or tranche issued or issuable in the form of one or more Global Notes shall no longer be represented by such Global Note or Notes. In such event the Company shall execute, and the Trustee, upon receipt of a Company Order for the authentication and delivery of individual Notes in exchange for such Global Note or Notes, shall authenticate and deliver individual Notes of like tenor and terms in definitive form in an aggregate principal amount equal to the principal amount of such Global Note or Notes in exchange for such Global Note or Notes.

 

  (B)

Within seven days after the occurrence of an Event of Default, the Company shall execute, and the Trustee shall authenticate and deliver, Notes of such series or tranche in definitive registered form in any authorized denominations and in aggregate principal amount equal to the principal amount of the Global Notes in exchange for such Global Notes.

 

  (ii)

In any exchange provided for in any of the preceding two paragraphs, the Company will execute and the Trustee will authenticate and deliver individual Notes in definitive registered form in authorized denominations. Upon the exchange of a Global Note for individual Notes, such Global Note shall be canceled by the Trustee. Notes issued in exchange for a Global Note pursuant to

 

18


  this Section shall be registered in such names and in such authorized denominations as the Depositary for such Global Note, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee. The Trustee shall deliver such Notes to the Depositary for delivery to the Persons in whose names such Notes are so registered, or if the Depositary shall refuse or be unable to deliver such Notes, the Trustee shall deliver such Notes to the Persons in whose names such Notes are registered, unless otherwise agreed upon between the Trustee and the Company, in which event the Company shall cause the Notes to be delivered to the Persons in whose names such Notes are registered.

(d)   Neither the Company, the Trustee, any Authenticating Agent nor any paying agent shall have any responsibility or liability for any aspect of the records relating to, or payments made on account of, beneficial ownership interests of a Global Note or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests.

(e)   Pursuant to the provisions of this subsection, at the option of the Trustee and upon 30 days’ written notice to the Depositary but not prior to the first Interest Payment Date of the respective Global Notes, the Depositary shall be required to surrender any two or more Global Notes which have identical terms, including, without limitation, identical maturities, interest rates and redemption provisions (but which may have differing Original Issue Dates) to the Trustee, and the Company shall execute and the Trustee shall authenticate and deliver to, or at the direction of, the Depositary a Global Note in principal amount equal to the aggregate principal amount of, and with all terms identical to, the Global Notes surrendered thereto and that shall indicate each applicable Original Issue Date and the principal amount applicable to each such Original Issue Date. The exchange contemplated in this subsection shall be consummated at least 30 days prior to any Interest Payment Date applicable to any of the Global Notes surrendered to the Trustee. Upon any exchange of any Global Note with two or more Original Issue Dates, whether pursuant to this Section or pursuant to Section 2.06 or Section 3.03 hereof, the aggregate principal amount of the Notes with a particular Original Issue Date shall be the same before and after such exchange, after giving effect to any retirement of Notes and the Original Issue Dates applicable to such Notes occurring in connection with such exchange.

Section 2.14  CUSIP Numbers.

The Company in issuing Notes may use “CUSIP” numbers (if then generally in use) and, if so used, the Trustee shall use “CUSIP” numbers in notices of redemption as a convenience to holders of Notes; provided, that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or contained in any notice of redemption and that reliance may be placed only on the other identification numbers printed on the Notes, and any such redemption shall not be affected by any defect in or omission of such numbers. The Company shall promptly notify the Trustee of any change in the “CUSIP” numbers.

 

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ARTICLE III

REDEMPTION OF NOTES

Section 3.01  Applicability Of Article.  Such of the Notes as are, by their terms, redeemable prior to their Stated Maturity at the option of the Company, may be redeemed by the Company at such times, in such amounts and at such prices as may be specified therein and in accordance with the provisions of this Article III.

Section 3.02  Notice Of Redemption; Selection Of Notes.

(a)   The election of the Company to redeem any Notes shall be evidenced by an Officer’s Certificate which shall be given with notice of redemption to the Trustee at least 45 days (or such shorter period acceptable to the Trustee in its sole discretion) prior to the redemption date specified in such notice.

(b)   Notice of redemption to each Holder of Notes to be redeemed as a whole or in part shall be given by the Trustee, in the manner provided in Section 15.10 hereof, no less than 30 or more than 60 days prior to the date fixed for redemption. Any notice which is given in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the Noteholder receives such notice. In any case, failure duly to give such notice, or any defect in such notice, to the Holder of any Note designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Note.

(c)   Each such notice shall identify the Notes to be redeemed (including CUSIP numbers) and shall specify the date fixed for redemption, the places of redemption and the redemption price (or the method for calculation thereof) at which such Notes are to be redeemed, and shall state that (subject to subsection (e) of this Section) payment of the redemption price of such Notes or portion thereof to be redeemed will be made upon surrender of such Notes at such places of redemption, that interest accrued to the date fixed for redemption will be paid as specified in such notice, and that from and after such date interest thereon shall cease to accrue. If less than all of a series or tranche of Notes having the same terms are to be redeemed, the notice shall specify the Notes or portions thereof to be redeemed. If any Note is to be redeemed in part only, the notice which relates to such Note shall state the portion of the principal amount thereof to be redeemed, and shall state that, upon surrender of such Note, a new Note or Notes having the same terms in aggregate principal amount equal to the unredeemed portion thereof will be issued.

(d)   Unless otherwise provided by a supplemental indenture or Company Order under Section 2.05 hereof, if less than all of a series or tranche of Notes is to be redeemed, the Trustee shall select in such manner as it shall deem appropriate and fair in its discretion the particular Notes to be redeemed in whole or in part and shall thereafter promptly notify the Company in writing of the Notes so to be redeemed. If less than all of a series or tranche of Notes represented by a Global Note is to be redeemed, the particular Notes or portions thereof of such series or tranche to be redeemed shall be selected by the Depositary for such series or tranche of Notes in such manner as the Depositary shall determine. Notes shall be redeemed only in denominations of $1,000, provided that any remaining principal amount of a Note redeemed in part shall be a denomination authorized under this Indenture.

 

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(e)   If at the time of the mailing of any notice of redemption at the option of the Company, the Company shall not have irrevocably directed the Trustee to apply funds then on deposit with the Trustee or held by it and available to be used for the redemption of Notes to redeem all the Notes called for redemption, such notice shall state that it is conditional and subject to the receipt of the redemption moneys by the Trustee on or before the date fixed for redemption and that such notice shall be of no effect unless such moneys are so received on or before such date.

Section 3.03  Payment Of Notes On Redemption: Deposit Of Redemption Price.

(a)   If notice of redemption for any Notes shall have been given as provided in Section 3.02 hereof and such notice shall not contain the language permitted at the Company’s option under Section 3.02(e) hereof, such Notes or portions of Notes called for redemption shall become due and payable on the date and at the places stated in such notice at the applicable redemption price, together with interest accrued to the date fixed for redemption of such Notes. Interest on the Notes or portions thereof so called for redemption shall cease to accrue and such Notes or portions thereof shall be deemed not to be entitled to any benefit under this Indenture except to receive payment of the redemption price together with interest accrued thereon to the date fixed for redemption. Upon presentation and surrender of such Notes at the place of payment specified in such notice, such Notes or the specified portions thereof shall be paid and redeemed at the applicable redemption price, together with interest accrued thereon to the date fixed for redemption.

(b)   If notice of redemption shall have been given as provided in Section 3.02 hereof and such notice shall contain the language permitted at the Company’s option under Section 3.02(e) hereof, such Notes or portions of Notes called for redemption shall become due and payable on the date and at the places stated in such notice at the applicable redemption price, together with interest accrued to the date fixed for redemption of such Notes, and interest on the Notes or portions thereof so called for redemption shall cease to accrue and such Notes or portions thereof shall be deemed not to be entitled to any benefit under this Indenture except to receive payment of the redemption price together with interest accrued thereon to the date fixed for redemption; provided that, in each case, the Company shall have deposited with the Trustee or a paying agent on or prior to 11:00 a.m. New York City time on such redemption date an amount sufficient to pay the redemption price together with interest accrued to the date fixed for redemption. Upon the Company making such deposit and, upon presentation and surrender of such Notes at such a place of payment in such notice specified, such Notes or the specified portions thereof shall be paid and redeemed at the applicable redemption price, together with interest accrued thereon to the date fixed for redemption. If the Company shall not make such deposit on or prior to the redemption date, the notice of redemption shall be of no force and effect and the principal on such Notes or specified portions thereof shall continue to bear interest as if the notice of redemption had not been given.

(c)   No notice of redemption of Notes shall be mailed during the continuance of any Event of Default, except (1) that, when notice of redemption of any Notes has been mailed, the Company shall redeem such Notes but only if funds sufficient for that purpose have prior to the occurrence of such Event of Default been deposited with the Trustee or a paying agent for such

 

21


purpose, and (2) that notices of redemption of all Outstanding Notes may be given during the continuance of an Event of Default.

(d)   Upon surrender of any Note redeemed in part only, the Company shall execute, and the Trustee shall authenticate, deliver and register, a new Note or Notes of authorized denominations in aggregate principal amount equal to, and having the same terms, Original Issue Date or Dates and series or tranche as, the unredeemed portion of the Note so surrendered.

ARTICLE IV

SENIOR NOTE FIRST MORTGAGE BONDS

Section 4.01  Senior Note First Mortgage Bonds Held By The Trustee.  The Trustee shall, as the holder of Senior Note First Mortgage Bonds, attend such meeting or meetings of bondholders under the First Mortgage or, at its option, deliver its proxy in connection therewith, as relate to matters with respect to which it is entitled to vote or consent. The Trustee shall vote all Senior Note First Mortgage Bonds then held by it, or consent with respect thereto, proportionally with the vote or consent of the holders of all other First Mortgage Bonds which are outstanding under the First Mortgage, the holders of which are eligible to vote or consent; provided, however, that the Trustee shall not so vote in favor of, or so consent to, any amendment or modification of the First Mortgage which, if it were an amendment or modification of this Indenture, would require the consent of the Holders, without the prior consent, obtained in the manner prescribed in Section 13.02 hereof, of the Holders of Outstanding Notes which would be required under said Section 13.02 for such an amendment or modification of this Indenture.

Section 4.02  No Transfer Of Senior Note First Mortgage Bonds: Exceptions.  Except (i) as required to effect an assignment to a successor trustee under this Indenture, (ii) pursuant to Section 4.03 or Section 4.06 hereof, or (iii) in compliance with a final order of a court of competent jurisdiction in connection with any bankruptcy or reorganization proceeding of the Company, the Trustee shall not sell, assign or transfer the Senior Note First Mortgage Bonds and the Company shall issue stop transfer instructions to the Mortgage Trustee and any transfer agent under the First Mortgage to effect compliance with this Section 4.02.

Section 4.03  Delivery To The Company Of All Senior Note First Mortgage Bonds.  When the obligation of the Company to make payment with respect to the principal of and premium, if any, and interest on all Senior Note First Mortgage Bonds shall be satisfied or deemed satisfied pursuant to Section 4.09 or Section 5.01(b) hereof, the Trustee shall, upon written request of the Company and receipt of the certificate of the Expert described in Section 4.04(b) hereof (if such certificate is then required by Section 4.04(b) hereof), deliver to the Company without charge therefor all of the Senior Note First Mortgage Bonds, together with such appropriate instruments of transfer or release as may be reasonably requested by the Company. All Senior Note First Mortgage Bonds delivered to the Company in accordance with this Section 4.03 shall be delivered by the Company to the Mortgage Trustee for cancellation.

Section 4.04  Fair Value Certificate.  If required by applicable law, upon the delivery by the Company to the Trustee of the Senior Note First Mortgage Bonds pursuant to Section 4.07 hereof, the Company shall simultaneously therewith deliver to the Trustee a certificate of an Expert

 

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(1) stating that he, she or it is familiar with the provisions of such Senior Note First Mortgage Bonds and of this Indenture; (2) stating the principal amount of such Senior Note First Mortgage Bonds so delivered, the stated interest rate (or method of calculation of interest) of such Senior Note First Mortgage Bonds (if any) and the Stated Maturity of such Senior Note First Mortgage Bonds; (3) identifying the Notes being issued contemporaneously therewith, and (4) stating the fair value to the Company of such Senior Note First Mortgage Bonds. If the fair value to the Company of the Senior Note First Mortgage Bonds so delivered, as described in the certificate to be delivered pursuant to this Section 4.04(a), both (1) is equal to or exceeds (A) $25,000 and (B) 1% of the principal amount of the Notes Outstanding at the date of delivery of such Senior Note First Mortgage Bonds and (2) together with the fair value to the Company, as described in the certificates to be delivered pursuant to this Section 4.04(a), of all other Senior Note First Mortgage Bonds delivered to the Trustee since the commencement of the then current calendar year, is equal to or exceeds 10% of the principal amount of the Notes Outstanding at the date of delivery of such Senior Note First Mortgage Bonds, then the certificate required by this Section 4.04(a) shall (1) be delivered by an Expert who shall be independent of the Company and (2) in addition to the certifications described above, state the fair value to the Company of all Senior Note First Mortgage Bonds delivered to the Trustee pursuant to Section 4.07 hereof since the commencement of the then current year as to which a certificate was not delivered by an Expert independent of the Company.

(a)   If Senior Note First Mortgage Bonds are delivered or surrendered to the Company pursuant to Section 4.03 or 4.06 hereof, the Company shall simultaneously therewith deliver to the Trustee a certificate of an Expert (1) stating that it is familiar with the provisions of such Senior Note First Mortgage Bonds and of this Indenture, (2) stating the principal amount of such Senior Note First Mortgage Bonds so delivered, the stated interest rate (or method of calculation of interest) of such Senior Note First Mortgage Bonds (if any) and the Stated Maturity of such Senior Note First Mortgage Bonds, (3) if applicable, identifying the Notes, the payment of the interest on and principal of which has been discharged hereunder, and (4) stating that such delivery and release will not impair the lien of this Indenture in contravention of the provisions of this Indenture. If, prior to the Release Date, the fair value of the Senior Note First Mortgage Bonds so delivered and released, as described in the certificate to be delivered pursuant to this Section 4.04(b), both (1) is equal to or exceeds (A) $25,000 and (B) 1% of the principal amount of the Outstanding Notes at the date of release of such Senior Note First Mortgage Bonds and (2) together with the fair value, as described in the certificates to be delivered pursuant to this Section 4.04(b), of all other Senior Note First Mortgage Bonds released from the lien of this Indenture since the commencement of the then current calendar year, is equal to or exceeds 10% of the principal amount of the Notes Outstanding at the date of release of such Senior Note First Mortgage Bonds, then the certificate required by this Section 4.04(b) shall be delivered by an Expert who shall be independent of the Company.

If, in connection with a delivery or release of outstanding Senior Note First Mortgage Bonds, the Company provides to the Trustee an Opinion of Counsel stating that the certificate described by this Section 4.04 is not required by law, such certificate shall not be required to be delivered thereunder in connection with such delivery or release.

Section 4.05  Further Assurances.  The Company, at its own expense, shall do such further lawful acts and things, and execute and deliver such additional conveyances, assignments,

 

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assurances, agreements, financing statements and instruments, as may be necessary in order to better assign, assure and confirm to the Trustee its interest in the Senior Note First Mortgage Bonds and for maintaining, protecting and preserving such interest.

Section 4.06  Exchange And Surrender Of Senior Note First Mortgage Bonds.  At any time a Note shall cease to be entitled to any lien, benefit or security under this Indenture pursuant to Section 5.01(b) hereof and the Company shall have provided the Trustee with notice thereof, the Trustee shall surrender an equal principal amount of the Related Senior Note First Mortgage Bonds, subject to the limitations of this Section 4.06, to the Company for cancellation. The Trustee shall, together with such Senior Note First Mortgage Bonds, deliver to the Company such appropriate instruments of transfer or release as the Company may reasonably request. Prior to the surrender required by this paragraph, the Trustee shall receive from the Company the following, and (subject to Section 9.01 hereof) shall be fully protected in relying upon, (1) an Officers’ Certificate stating (i) the aggregate outstanding principal amount of the Senior Note First Mortgage Bonds of the series or tranche surrendered by the Trustee, after giving effect to such surrender, (ii) the aggregate Outstanding principal amount of the Related Notes and (iii) that the surrender of the Senior Note First Mortgage Bonds will not result in any default under this Indenture; and (2) the Officers’ Certificate and Opinion of Counsel required pursuant to Section 15.05 hereof.

The Company shall not be permitted to cause the surrender or exchange of all or any part of a series or tranche of Senior Note First Mortgage Bonds contemplated in this Section, if, after such surrender or exchange, the aggregate Outstanding principal amount of the Related Notes would exceed the aggregate outstanding principal amount of such series or tranche of Senior Note First Mortgage Bonds held by the Trustee. Any Senior Note First Mortgage Bonds received by the Company pursuant to this Section 4.06 shall be delivered to the Mortgage Trustee for cancellation. Notwithstanding anything herein to the contrary, until the Release Date, the Company shall preserve and maintain the Lien of this Indenture, and shall not permit, at any time prior to the Release Date, the aggregate principal amount of Senior Note First Mortgage Bonds held by the Trustee to be less than the aggregate amount of Notes Outstanding.

Section 4.07  Acceptance Of Senior Note First Mortgage Bonds.  Upon the issuance of Notes hereunder at any time prior to the Release Date, the Company shall deliver to the Trustee in trust for the benefit of the Holders of the Notes as described in Section 4.09 hereof, and the Trustee shall accept therefor, and acknowledge receipt of, Related Senior Note First Mortgage Bonds registered in the name of the Trustee conforming to the requirements of Section 4.08 hereof.

Section 4.08  Terms Of Senior Note First Mortgage Bonds.  Senior Note First Mortgage Bonds delivered to the Trustee pursuant to Section 4.07 hereof shall have the same Stated Maturity and shall be in the same aggregate principal amount as the Related Notes being issued, and shall not be redeemable at the option of the Company; it being expressly understood that such Senior Note First Mortgage Bonds may, but need not, bear interest, any such interest to be payable on the same Interest Payment Dates as the Related Notes being issued.

Section 4.09  Senior Note First Mortgage Bonds As Security For Notes.  Until the Release Date and subject to Article V hereof, Senior Note First Mortgage Bonds delivered to the Trustee, for the benefit of the Holders of the Notes, shall constitute part of the trust estate and security for

 

24


any and all obligations of the Company under the Notes, including, but not limited to (1) the full and prompt payment of the principal of and premium, if any, on such Notes when and as the same shall become due and payable in accordance with the terms and provisions of this Indenture or the Notes, either at the Stated Maturity thereof, upon acceleration of the Maturity thereof or upon redemption, and (2) the full and prompt payment of any interest on such Notes when and as the same shall become due and payable in accordance with the terms and provisions of this Indenture or the Notes.

Notwithstanding anything in this Indenture to the contrary, from and after the Release Date, the obligation of the Company to make payment with respect to the principal of and premium, if any, and interest on the Senior Note First Mortgage Bonds shall be deemed satisfied and discharged as provided in the supplemental trust indenture or indentures to the First Mortgage creating such Senior Note First Mortgage Bonds and the Senior Note First Mortgage Bonds shall cease to secure in any manner Notes theretofore or subsequently issued. From and after the Release Date, any conditions to the issuance of Notes that refer or relate to Senior Note First Mortgage Bonds or the First Mortgage shall be inapplicable.

After the issuance of the first series or tranche of Notes hereunder, the Company shall not issue any additional First Mortgage Bonds under the First Mortgage other than Senior Note First Mortgage Bonds. The Company shall notify the Trustee promptly of the occurrence of the Release Date. Notice of the occurrence of the Release Date shall be given by the Trustee to the Holders of the Notes in the manner provided in Section 15.10 hereof not later than 30 days after the Release Date.

ARTICLE V

SATISFACTION AND DISCHARGE; UNCLAIMED MONEYS

Section 5.01  Satisfaction And Discharge.

(a)   If at any time:

 

  (1)

the Company shall have paid or caused to be paid the principal of and premium, if any, and interest on all the Outstanding Notes, as and when the same shall have become due and payable,

 

  (2)

the Company shall have delivered to the Trustee for cancellation all Outstanding Notes, or

 

  (3)

the Company shall have irrevocably deposited or caused to be irrevocably deposited with the Trustee as trust funds the entire amount in (A) cash, (B) U.S. Government Obligations maturing as to principal and interest in such amounts and at such times as will insure the availability of cash, or (C) a combination of cash and U.S. Government Obligations, in any case sufficient, without reinvestment, as certified by an independent public accounting firm of national reputation in a written certification delivered to the Trustee, to pay at Maturity or the applicable redemption date

 

25


  (provided that notice of redemption shall have been duly given or irrevocable provision satisfactory to the Trustee shall have been duly made for the giving of any notice of redemption) all Outstanding Notes, including principal and any premium on, and interest due or to become due to such date of Maturity, as the case may be, and, unless all Outstanding Notes are to be due within 90 days of such deposit by redemption or otherwise, shall also deliver to the Trustee an Opinion of Counsel expert in federal income tax matters to the effect that the Company has received from, or there has been published by, the Internal Revenue Service a ruling or similar pronouncement by the Internal Revenue Service or that there has been a change of law (collectively, an “External Tax Pronouncement”), in either case to the effect that the Holders of the Notes will not recognize income, gain or loss for federal income tax purposes as a result of such defeasance or discharge of this Indenture),

and if, in any such case, (x) the Company shall also pay or cause to be paid all other sums payable hereunder by the Company and (y) the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with, then this Indenture shall cease to be of further effect (except as to (i) rights of registration of transfer and exchange of Notes, (ii) substitution of mutilated, defaced, destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive payments of principal thereof, and premium, if any, and interest thereon, upon the original stated due dates therefor or upon the applicable redemption date (but not upon acceleration of Maturity) from the moneys and U.S. Government Obligations held by the Trustee pursuant to Section 5.02 hereof, (iv) the rights and immunities of the Trustee hereunder, (v) the rights of the Holders of the Notes as beneficiaries hereof with respect to the property so deposited with the Trustee payable to all or any of them, (vi) the obligations of the Company under Sections 6.02 and 6.03 hereof, (vii) the obligations and rights of the Trustee and the Company under Section 5.04 hereof, and (viii) the duties of the Trustee with respect to any of the foregoing), and the Company shall be deemed to have paid and discharged the entire indebtedness represented by, and its obligations under, the Notes, and the Trustee, on demand of the Company and at the cost and expense of the Company, shall execute proper instruments acknowledging such satisfaction and discharge of this Indenture, and the Trustee shall, at the request of the Company, release the lien of this Indenture and return to the Company all Senior Note First Mortgage Bonds and all other property and money held by it under this Indenture and determined by it from time to time in accordance with the certification pursuant to this Section 5.01(a)(3) to be in excess of the amount required to be held under this Section.

If the Notes are deemed to be paid and discharged pursuant to Section 5.01(a)(3) hereof, within 60 days after those Notes are so deemed to be paid and discharged, the Trustee shall cause a written notice to be given to each Holder in the manner provided by Section 15.10 hereof. The notice shall:

(i)   state that the Notes are deemed to be paid and discharged;

 

26


(ii)  set forth a description of any U.S. Government Obligations and cash held by the Trustee as described above; and

(iii)   if any Notes will be called for redemption, specify the date or dates on which those Notes are to be called for redemption.

Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 9.06 hereof shall survive.

If the Notes are deemed paid and discharged pursuant to this Section 5.01, the obligation of the Company to make payment with respect to the principal of, premium, if any, and interest on the Senior Note First Mortgage Bonds shall be satisfied and discharged and the Senior Note First Mortgage Bonds shall cease to secure the Notes in any manner.

(b)   If the Company shall have paid or caused to be paid the principal of and premium, if any, and interest on any Note, as and when the same shall have become due and payable or the Company shall have delivered to the Trustee for cancellation any Outstanding Note, such Note shall cease to be entitled to any lien, benefit or security under this Indenture. Upon any Note ceasing to be entitled to any lien, benefit or security under this Indenture, the obligation of the Company to make payment with respect to principal of and premium, if any, and interest on a principal amount of Related Senior Note First Mortgage Bonds equal to the principal amount of such Note shall be satisfied and discharged and such portion of the principal amount of such Senior Note First Mortgage Bonds shall cease to secure the Notes in any manner.

(c)   If the Company makes the deposit of cash and/or U.S. Government Obligations with respect to one or more series or tranche of Notes described in Section 5.01(a) hereof and otherwise complies with the requirements of such Section for the satisfaction and discharge of this Indenture (except that the opinion of counsel referred to in Section 5.01(a)(3) need not be based on an External Tax Pronouncement and shall be to the effect that the Holders of the Notes will not recognize income gain or loss for federal income tax purposes as a result of such deposit and the release of the Company from its obligations referred to in this Section 5.01(c) under this Indenture), then the provisions of this Indenture shall remain in full force and effect and the indebtedness represented by, and the Company’s obligations under, such Notes shall be deemed satisfied and the Company shall be released with respect to such series or tranche of Notes from its obligations under Sections 4.09, 6.07, 6.08, 6.09 and Article XII hereof.

Section 5.02  Deposited Moneys To Be Held In Trust By Trustee.  Subject to Section 5.04, all moneys and U.S. Government Obligations deposited with the Trustee pursuant to Section 5.01 hereof, shall be held in trust and applied by it to the payment, either directly or through any paying agent (including the Company if acting as its own paying agent), to the Holders of the particular Notes for the payment or redemption of which such moneys and U.S. Government Obligations have been deposited with the Trustee of all sums due and to become due thereon for principal and premium, if any, and interest.

Section 5.03  Paying Agent To Repay Moneys Held.  Upon the satisfaction and discharge of this Indenture all moneys then held by any paying agent for the Notes (other than the Trustee) shall, upon written demand by the Company, be repaid to the Company or paid to the Trustee, and

 

27


thereupon such paying agent shall be released from all further obligations with respect to such moneys.

Section 5.04  Return Of Unclaimed Moneys.  Any moneys deposited with or paid to the Trustee for payment of the principal of or premium, if any, or interest on any Notes and not applied but remaining unclaimed by the Holders of such Notes for two years after the date upon which the principal of or premium, if any, or interest on such Notes, as the case may be, shall have become due and payable, shall be repaid to the Company, subject to applicable abandoned property laws, by the Trustee on written demand by the Company; and any Holder of any of such Notes shall thereafter look only to the Company for any payment which such Holder may be entitled to collect.

ARTICLE VI

PARTICULAR COVENANTS OF THE COMPANY

Section 6.01  Payment Of Principal And Interest.  The Company covenants and agrees for the benefit of the Holders of the Notes that it will duly and punctually pay or cause to be paid the principal of and premium, if any, and interest on, each of the Notes at the places, at the respective times and in the manner provided in such Notes or in this Indenture.

Section 6.02  Offices For Payments, Etc.  So long as any Notes are Outstanding hereunder, the Company will maintain in the Borough of Manhattan, The City of New York, State of New York an office or agency where the Notes may be presented for payment, for exchange as in this Indenture provided and for registration of transfer as in this Indenture provided. The Corporate Trust Office of the Trustee shall serve as the initial location of such office.

The Company will maintain in the Borough of Manhattan, The City of New York, State of New York an office or agency where notices and demands to or upon the Company in respect of the Notes or this Indenture may be served. The Corporate Trust Office of the Trustee shall serve as the initial location of such office.

In case the Company shall fail to maintain any office or agency required by this Section to be located in the Borough of Manhattan, The City of New York, State of New York or shall fail to give such notice of the location or of any change in the location of any of the above offices or agencies, presentations and demands may be made and notices may be served at the Corporate Trust Office of the Trustee, and, in such event, the Trustee shall act as the Company’s agent to receive all such presentations, surrenders, notices and demands.

The Company may from time to time designate one or more additional offices or agencies where the Notes may be presented for payment, for exchange as in this Indenture provided and for registration of transfer as in this Indenture provided, and the Company may from time to time rescind any such designation; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain any office or agency provided for in this Section. The Company will give to the Trustee prompt written notice of any such designation or rescission thereof and of any change in the location of any such other office or agency.

 

28


Section 6.03  Appointment To Fill A Vacancy In Office Of Trustee.  The Company, whenever necessary to avoid or fill a vacancy in the office of Trustee, will appoint, in the manner provided in Section 9.11, a Trustee, so that there shall at all times be a Trustee hereunder.

Section 6.04  Provision As To Paying Agent.  The Trustee shall be the paying agent for the Notes and, at the option of the Company, the Company may appoint additional paying agents (including without limitation itself). Whenever the Company shall appoint a paying agent other than the Trustee with respect to the Notes, it will cause such paying agent to execute and deliver to the Trustee an instrument in which such agent shall agree with the Trustee, subject to the provisions of this Section:

 

  (1)

that such paying agent will hold all sums received by it as such agent for the payment of the principal of, premium, if any, or interest, on the Notes (whether such sums have been paid to it by the Company or by any other obligor on the Notes) in trust for the benefit of the Holders of the Notes, or of the Trustee until such sums shall be paid to such Holders or otherwise disposed of as herein provided;

 

  (2)

that such paying agent will give the Trustee notice of any failure by the Company (or by any other obligor on Notes) to make any payment of the principal of, premium, if any, or interest on the Notes when the same shall be due and payable; and

 

  (3)

that such paying agent will at any time during the continuance of any such failure, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such paying agent.

The Company will, on or prior to each due date of the principal of and premium, if any, or interest on the Notes, deposit with the paying agent a sum sufficient to pay such principal and premium, if any, or interest so becoming due, such sum to be held in trust for the benefit of the Holders of the Notes entitled to such principal of and premium, if any, or interest, and (unless such paying agent is the Trustee) the Company will promptly notify the Trustee of any failure to take such action.

If the Company shall act as its own paying agent with respect to the Notes, it will, on or before each due date of the principal of (and premium, if any,) or interest on the Notes, set aside, segregate and hold in trust for the benefit of the Holders of the Notes, a sum sufficient to pay such principal (and premium, if any,) or interest, so becoming due until such sums shall be paid to such Holders or otherwise disposed of as herein provided. The Company will promptly notify the Trustee of any failure to take such action.

The Company may at any time pay or cause to be paid to the Trustee all sums held in trust by it or any paying agent hereunder, as required by this Section, such sums to be held by the Trustee upon the trusts herein contained, and, upon such payment by any paying agent to the Trustee, such paying agent shall be released from all further liability with respect to such money.

Anything in this Section to the contrary notwithstanding, the agreement to hold sums in trust as provided in this Section is subject to the provisions of Sections 5.03 and 5.04.

 

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Section 6.05  Opinions Of Counsel.  The Company will cause this Indenture, any indentures supplemental to this Indenture, and any financing or continuation statements to be promptly recorded and filed and rerecorded and refiled in such a manner and in such places, as may be required by law in order fully to preserve, protect and perfect the security interest of the Noteholders and all rights of the Trustee, and shall deliver to the Trustee:

(a)   promptly after the execution and delivery of this Indenture and of any indentures supplemental to this Indenture but prior to the Release Date, an Opinion of Counsel either stating that, in the opinion of such counsel, this Indenture or such supplemental indentures and any financing or continuation statements have been properly recorded and filed so as to make effective and to perfect the security interest of the Trustee intended to be created by this Indenture for the benefit of the Holders from time to time of the Notes in the Senior Note First Mortgage Bonds, and reciting the details of such action, or stating that, in the opinion of such counsel, no such action is necessary to perfect or make such security interest effective and stating what, if any, action of the foregoing character may reasonably be expected to become necessary prior to the next succeeding April 30 to perfect, maintain and make such security interest effective; and

(b)   on or before April 30, of each year, commencing April 30, 2000, and prior to the Release Date, an Opinion of Counsel either stating that in the opinion of such counsel such action has been taken, since the date of the most recent Opinion of Counsel furnished pursuant to this Section 6.05(b) or the first Opinion of Counsel furnished pursuant to Section 6.05(a) hereof, with respect to the recording, filing, rerecording, or refiling of this Indenture, each supplemental indenture and any financing or continuation statements, as is necessary to maintain and perfect the security interest of the Trustee intended to be created by this Indenture for the benefit of the Holders from time to time of the Notes in the Senior Note First Mortgage Bonds, and reciting the details of such action, or stating that in the opinion of such counsel no such action is necessary to maintain and perfect such security interest and stating what, if any, action of the foregoing character may reasonably be expected to become necessary prior to the next succeeding April 30 to maintain, perfect and make such security interest effective.

Section 6.06  Certificates And Notice To Trustee.  The Company shall, on or before April 30 of each year, commencing April 30, 2000, deliver to the Trustee a certificate from its principal executive officer, principal financial officer or principal accounting officer covering the preceding calendar year and stating whether or not, to the knowledge of such Person, the Company has complied with all conditions and covenants under this Indenture, and, if not, describing in reasonable detail any failure by the Company to comply with any such conditions or covenants. For purposes of this Section, compliance shall be determined without regard to any period of grace or requirement of notice provided under this Indenture. Upon the occurrence of a default (as defined in the First Mortgage) prior to the Release Date, the Company shall promptly notify the Trustee of such event.

Section 6.07  Restrictions On Liens.  (a) So long as any Notes are Outstanding, the Company will not issue, assume, guarantee or permit to exist after the Release Date any Debt secured by any Lien on any Operating Property of the Company, whether owned at the date of this Indenture or thereafter acquired, without in any such case effectively securing the Outstanding Notes (together with, if the Company shall so determine, any other Debt of or guaranteed by the Company ranking equally with, the Notes) equally and ratably with such Debt (but only so long

 

30


as such Debt is so secured); provided, however, that the foregoing restriction shall not apply to Debt secured by any of the following:

 

  (i)

Liens on any Operating Property existing at the time of acquisition thereof (which Liens may also extend to subsequent repairs, alterations and improvements to such Operating Property);

 

  (ii)

Liens on operating property of a corporation existing at the time such corporation is merged into or consolidated with the Company, or at the time of a sale, lease, or other disposition of the properties of such corporation or a division thereof as an entirety or substantially as an entirety to the Company;

 

  (iii)

Liens on Operating Property to secure all or part of the cost of acquiring, constructing, developing, or substantially repairing, altering, or improving such property, or to secure any Debt incurred to provide funds for any such purpose or for reimbursement of funds previously expended for any such purpose, provided such Liens are created or assumed contemporaneously with, or within eighteen (18) months after, such acquisition or the completion of construction, development, or substantial repair, alteration or improvement;

 

  (iv)

Liens in favor of any State, or any department, agency, or instrumentality or political subdivision of any State, or for the benefit of holders of securities issued by any such entity (or providers of credit enhancement with respect to such securities), to secure any Debt (including, without limitation, obligations of the Company with respect to industrial development, pollution control or similar revenue bonds) incurred for the purpose of financing all or any part of the purchase price or the cost of constructing, developing, or substantially repairing, altering, or improving Operating Property of the Company;

 

  (v)

Liens under the First Mortgage, subject to Section 4.09 hereof;

 

  (vi)

Liens under Section 9.06 hereof; or

 

  (vii)

Any extension, renewal or replacement (or successive extensions, renewals, or replacements), in whole or in part, of any Lien referred to in the foregoing clauses (i) to (vi), inclusive; provided, however, that the principal amount of Debt secured thereby and not otherwise authorized by said clauses (i) to (vi), inclusive, shall not exceed the principal amount of Debt, plus any premium or fee payable in connection with any such extension, renewal, or replacement, so secured at the time of such extension, renewal, or replacement.

(b)   Notwithstanding the provisions of Section 6.07(a), the Company may issue, assume, or guarantee Debt, or permit to exist after the Release Date any Debt, in each case, secured

 

31


by Liens which would otherwise be subject to the restrictions of Section 6.07(a) up to an aggregate principal amount that, together with the principal amount of all other Debt of the Company secured by Liens (other than Liens permitted by Section 6.07(a) that would otherwise be subject to any of the foregoing restrictions) and the Value of all Sale and Lease-Back Transactions in existence at such time (other than any Sale and Lease-Back Transaction that, if such Sale and Lease-Back Transaction had been a Lien, would have been permitted by Section 6.07(a), other than Sale and Lease-Back Transactions permitted by Section 6.08 because the commitment by or on behalf of the purchaser was obtained no later than eighteen (18) months after the later of events described in (i) or (ii) of Section 6.08, and other than Sale and Lease-Back Transactions as to which application of amounts have been made in accordance with clause (z) of Section 6.08), does not at the time exceed the greater of fifteen percent (15%) of Tangible Assets and fifteen percent (15%) of Capitalization.

(c)   If the Company shall issue, assume, or guarantee any Debt secured by any Lien and if Section 6.07(a) requires that the Outstanding Notes be secured equally and ratably with such Debt, the Company will promptly execute, at its expense, any instruments necessary to so equally and ratably secure the Outstanding Notes and deliver the same to the Trustee along with:

(i)   An Officers’ Certificate stating that the covenant of the Company contained in Section 6.07(a) has been complied with; and

(ii)   An Opinion of Counsel to the effect that the Company has complied with the covenant contained in Section 6.07(a), and that any instruments executed by the Company in the performance of such covenant comply with the requirements of such covenant.

In the event that the Company shall hereafter secure Outstanding Notes equally and ratably with any other obligation or indebtedness pursuant to the provisions of this Section 6.07, the Company will, upon the request of the Trustee, enter into an indenture or agreement supplemental hereto and take such other action, if any, as the Trustee may reasonably request to enable it to enforce effectively the rights of the Holders of Outstanding Notes so secured, equally and ratably with such other obligation or indebtedness.

Section 6.08  Restrictions On Sale And Lease-Back Transactions.  So long as any Notes are Outstanding, the Company will not enter into or permit to exist after the Release Date any Sale and Lease-Back Transaction with respect to any Operating Property if, in any case, the commitment by or on behalf of the purchaser is obtained more than eighteen (18) months after the later of (i) the completion of the acquisition, construction, or development of such Operating Property or (ii) the placing in operation of such Operating Property or of such Operating Property as constructed, developed, or substantially repaired, altered, or improved, unless (x) the Company would be entitled pursuant to Section 6.07(a) to issue, assume, guarantee or permit to exist Debt secured by a Lien on such Operating Property without equally and ratably securing the Notes or (y) the Company would be entitled pursuant to Section 6.07(b), after giving effect to such Sale and Lease-Back Transaction, to incur $1.00 of additional Debt secured by Liens (other than Liens permitted by Section 6.07(a)) or (z) the Company shall apply or cause to be applied, in the case of a sale or transfer for cash, an amount equal to the net proceeds thereof (but not in excess of the net book value of such Operating Property at the date of such sale or transfer) and, in the case of a sale or transfer otherwise than for cash, an amount equal to the fair value (as determined by the Board

 

32


of Directors) of the Operating Property so leased, to the retirement, within one hundred eighty (180) days after the effective date of such Sale and Lease-Back Transaction, of Notes (in accordance with their terms) or other Debt of the Company ranking senior to, or equally with, the Notes; provided, however, that the amount to be applied to such retirement of Debt shall be reduced by an amount equal to the principal amount, plus any premium or fee paid in connection with any redemption in accordance with the terms of Debt voluntarily retired by the Company within such one hundred eighty (180) day period, excluding retirement pursuant to mandatory sinking fund or prepayment provisions and payments at Maturity.

Section 6.09  Corporate Existence.  Subject to the rights of the Company under Article XII, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence; provided, however, that the Company shall not be required to preserve any such right or franchise if, in the judgment of the Company, the preservation thereof is no longer desirable in the conduct of the business of the Company.

ARTICLE VII

NOTEHOLDER LISTS AND REPORTS BY

THE COMPANY AND THE TRUSTEE

Section 7.01  Company To Furnish Noteholder Lists.  The Company and any other obligor on the Notes shall furnish or cause to be furnished to the Trustee a list in such form as the Trustee may reasonably require of the names and addresses of the Holders of the Notes:

(a)   semi-annually and not more than 15 days after each Regular Record Date for each Interest Payment Date that is not a Maturity Date, as of such Regular Record Date, and such list need not include information received after such date; and

(b)   at such other times as the Trustee may request in writing, within 30 days after receipt by the Company of any such request, as of a date not more than 15 days prior to the time such information is furnished, and such list need not include information received after such date;

provided that if and so long as the Trustee shall be the registrar for the Notes, such list shall not be required to be furnished.

Section 7.02  Preservation And Disclosure Of Noteholder Lists.

(a)   The Trustee shall preserve, in as current a form as is reasonably practicable, all information as to the names and addresses of the Holders of the Notes (i) contained in the most recent lists furnished to it as provided in Section 7.01, (ii) received by it in the capacity of registrar for the Notes, if so acting, and (iii) filed with it within the two preceding years pursuant to Section 7.04(d)(2). The Trustee may destroy any list furnished to it as provided in Section 7.01 upon receipt of a new list so furnished.

(b)   In case three or more Holders of Notes (hereinafter referred to as “applicants”) apply in writing to the Trustee and furnish to the Trustee reasonable proof that each such applicant has owned a Note for a period of at least six months preceding the date of such

 

33


application, and such application states that the applicants desire to communicate with other Holders of Notes with respect to their rights under this Indenture or under the Notes and such application is accompanied by a copy of the form of proxy or other communication which such applicants propose to transmit, then the Trustee shall, within five Business Days after the receipt of such application, at its election, either

 

  (i)

afford to such applicants access to the information preserved at the time by the Trustee in accordance with the provisions of subsection (a) of this Section; or

 

  (ii)

inform such applicants as to the approximate number of Holders whose names and addresses appear in the information preserved at the time by the Trustee in accordance with the provisions of such subsection (a) and as to the approximate cost of mailing to such Holders the form of proxy or other communication, if any, specified in such application.

If the Trustee shall elect not to afford to such applicants access to such information, the Trustee shall, upon the written request of such applicants, mail to each Holder of Notes, whose name and address appears in the information preserved at the time by the Trustee in accordance with the provisions of such subsection (a) a copy of the form of proxy or other communication which is specified in such request, with reasonable promptness after a tender to the Trustee of the material to be mailed and of payment, or provision for the payment, of the reasonable expenses of mailing, unless within five days after such tender the Trustee shall mail to such applicants and file with the Commission, together with a copy of the material to be mailed, a written statement to the effect that, in the opinion of the Trustee, such mailing would be contrary to the best interests of the Holders or would be in violation of applicable law. Such written statement shall specify the basis of such opinion. If the Commission, after opportunity for a hearing upon the objections specified in the written statement so filed, shall enter an order refusing to sustain any of such objections or if, after the entry of an order sustaining one or more of such objections, the Commission shall find, after notice and opportunity for hearing, that all the objections so sustained have been met, and shall enter an order so declaring, the Trustee shall mail copies of such material to all such Holders with reasonable promptness after the entry of such order and the renewal of such tender; otherwise the Trustee shall be relieved of any obligation or duty to such applicants respecting their application.

(c)   Each and every Holder of a Note, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of the Company or the Trustee shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the Holders of Notes in accordance with the provisions of subsection (b) of this Section, regardless of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under such subsection (b).

 

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Section 7.03  Reports By The Company. The Company shall:

(a)   file with the Trustee, within 15 days after the Company is required to file the same with the Commission, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) which the Company may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if the Company is not required to file information, documents or reports pursuant to either of said Sections, then it will file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such of the supplementary and periodic information, documents and reports which may be required pursuant to Section 13 of the Exchange Act in respect of a security listed and registered on a national securities exchange as may be prescribed from time to time in such rules and regulations;

(b)   file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such additional information, documents and reports with respect to compliance by the Company with the conditions and covenants of this Indenture as may be required from time to time by such rules and regulations; and

(c)   transmit by mail to all Holders of Notes, within 30 days after the filing thereof with the Trustee in the manner and to the extent provided in Section 7.04(d), such summaries of any information, documents and reports required to be filed by the Company pursuant to paragraphs (a) and (b) of this Section as may be required by rules and regulations prescribed from time to time by the Commission.

Section 7.04  Reports By The Trustee.

(a)   Annually, not later than August 15 of each year, the Trustee shall transmit by mail a brief report dated as of such date that complies with Section 313(a) of the TIA (to the extent required by such Section).

(b)   The Trustee shall from time to time transmit by mail brief reports that comply, both in content and date of delivery, with Section 313(b) of the TIA (to the extent required by such Section).

(c)   A copy of each such report filed pursuant to this section shall, at the time of such transmission to such Holders, be filed by the Trustee with each stock exchange upon which any Notes are listed and also with the Commission. The Company will notify the Trustee promptly in writing upon the listing of such Notes on any stock exchange.

(d)   Reports pursuant to this Section shall be transmitted

 

  (1)

by mail to all Holders of Notes, as their names and addresses appear in the register for the Notes;

 

35


  (2)

by mail to such Holders of Notes as have, within the two years preceding such transmission, filed their names and addresses with the Trustee for such purpose;

 

  (3)

by mail, except in the case of reports pursuant to Section 7.04(b) and (c) hereof, to all Holders of Notes whose names and addresses have been furnished to or received by the Trustee pursuant to Section 7.01 and 7.02(a)(ii) hereof; and

 

  (4)

at the time such report is transmitted to the Holders of the Notes, to each exchange on which Notes are listed and also with the Commission.

ARTICLE VIII

REMEDIES OF THE TRUSTEE AND NOTEHOLDERS

ON EVENTS OF DEFAULT

Section 8.01  Events Of Default.

(a)  If one or more of the following Events of Default shall have occurred and be continuing:

 

  (1)

default in the payment of any installment of interest upon any of the Notes as and when the same shall become due and payable, and continuance of such default for a period of sixty (60) days;

 

  (2)

default in the payment of the principal of or any premium on any of the Notes as and when the same shall become due and payable;

 

  (3)

failure on the part of the Company duly to observe or perform any other of the covenants or agreements on the part of the Company contained in the Notes or in this Indenture for a period of ninety (90) days after the date on which written notice specifying such failure, stating that such notice is a “Notice of Default” hereunder and demanding that the Company remedy the same, shall have been given to the Company by the Trustee by registered mail, or to the Company and the Trustee by the Holders of not less than 33% in aggregate principal amount of the Notes at the time Outstanding;

 

  (4)

prior to the Release Date, a completed default (as defined in the First Mortgage) has occurred and is continuing; provided, however, that anything in this Indenture to the contrary notwithstanding, the waiver or cure of such default under the First Mortgage and the rescission and annulment of the consequences thereof under the First Mortgage shall constitute a waiver of the corresponding Event of Default hereunder and a rescission and annulment of the consequences thereof hereunder;

 

36


  (5)

a court having jurisdiction in the premises shall enter a decree or order for relief in respect of the Company in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, adjudging the Company a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company under any applicable law, or appointing a receiver, liquidator, assignee, custodian, trustee or sequestrator (or similar official) of the Company or for any substantial part of the property of the Company, or ordering the winding up or liquidation of the affairs of the Company, and such decree or order shall remain stayed and in effect for a period of 90 consecutive days; or

 

  (6)

the Company shall commence a voluntary case or proceeding under any applicable bankruptcy, insolvency, reorganization or other similar law now or hereafter in effect or any other case or proceeding to be adjudicated a bankrupt or insolvent, or consent to the entry of a decree or order for relief in an involuntary case under any such law, or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under any applicable law, or consent to the filing of such petition or to the appointment or taking possession by a receiver, liquidator, assignee, custodian, trustee or sequestrator (or similar official) of the Company or for any substantial part of the property of the Company, or make any general assignment for the benefit of creditors, or the notice by it in writing of its inability to pay its debts generally as they become due, or the taking of any corporate action by the Company in furtherance of any such action;

then, unless the principal of all of the Notes shall have already become due and payable, either the Trustee or the Holders of a majority in aggregate principal amount of the Notes then Outstanding, by notice in writing to the Company (and to the Trustee if given by such Holders), may declare the principal of and interest on all the Notes to be due and payable immediately and upon any such declaration the same shall become immediately due and payable, anything in this Indenture or in the Notes contained to the contrary notwithstanding and, upon the Notes being declared to be due and payable, the Trustee shall immediately file with the Mortgage Trustee a written demand for redemption of all Senior Note First Mortgage Bonds to the extent provided in the applicable provisions of the supplemental indentures to the First Mortgage.

The foregoing paragraph, however, is subject to the condition that if, at any time after the principal of the Notes shall have been so declared due and payable, and before any judgment or decree for the payment of the moneys due shall have been obtained or entered as hereinafter provided, and prior to the acceleration of all of the first mortgage bonds issued and outstanding under the First Mortgage the Company shall pay or shall deposit with the Trustee a sum sufficient to pay all matured installments of interest upon all of the Notes and the principal of and any premium on any and all Notes which shall have become due otherwise than by acceleration (with

 

37


interest on overdue installments of interest, to the extent that payment of such interest is enforceable under applicable law, and on such principal and any applicable premium at the rate borne by the Notes to the date of such payment or deposit) and all sums paid or advanced by the Trustee hereunder, the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 9.06 hereof, and any and all defaults under this Indenture, other than the nonpayment of principal of and accrued interest on Notes which shall have become due solely by acceleration of Maturity, shall have been cured or waived (including any defaults under the First Mortgage, as evidenced by notice thereof from the Mortgage Trustee to the Trustee), then and in every such case such payment or deposit shall cause an automatic waiver of the Event of Default and its consequences (including, if given, the written demand for redemption of all Senior Note First Mortgage Bonds) and shall cause an automatic rescission and annulment of the acceleration of the Notes; but no such waiver or rescission and annulment shall extend to or shall affect any subsequent default, or shall impair any right consequent thereon.

(b)   If the Trustee shall have proceeded to enforce any right under this Indenture and such proceedings shall have been discontinued or abandoned because of such rescission or annulment or for any other reason or shall have been determined adversely to the Trustee, then and in every such case the Company and the Trustee shall be restored respectively to their several positions and rights hereunder, and all rights, remedies and powers of the Company and the Trustee shall continue as though no such proceeding had been taken.

Section 8.02  Collection Of Indebtedness By Trustee: Trustee May Prove Debt.

(a)   The Company covenants that if an Event of Default described in clause (a)(1) or (a)(2) of Section 8.01 shall have occurred and be continuing, then, upon demand of the Trustee, the Company shall pay to the Trustee, for the benefit of the Holders of the Notes, the whole amount that then shall have so become due and payable on all such Notes for principal or interest, as the case may be, with interest upon the overdue principal and any premium and (to the extent that payment of such interest is enforceable under applicable law) upon the overdue installments of interest at the rate borne by the Notes; and, in addition thereto, such further amounts as shall be sufficient to cover the costs and expenses of collection, including reasonable compensation to the Trustee, its agents, attorneys and counsel, any expenses or liabilities incurred by the Trustee hereunder other than through its negligence or bad faith. Until such demand is made by the Trustee, the Company may pay the principal of and interest on the Notes to the Holders, whether or not the Notes be overdue.

(b)   In case the Company shall fail forthwith to pay such amounts upon such demand, the Trustee, in its own name and as trustee of an express trust, shall be entitled and empowered to institute any actions or proceedings at law or in equity for the collection of the sums so due and unpaid, including, prior to the Release Date, to exercise any rights to that end it may have as a holder of Senior Note First Mortgage Bonds, and may enforce any such judgment or final decree against the Company or any other obligor on the Notes and collect in the manner provided by law out of the property of the Company or any other obligor on such Notes wherever situated, the moneys adjudged or decreed to be payable.

 

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(c)   In case there shall be pending proceedings relative to the Company or any other obligor upon the Notes under Title 11 of the United States Code or any other applicable Federal or state bankruptcy, insolvency or other similar law, or in case a receiver, assignee or trustee in bankruptcy or reorganization, liquidator, sequestrator or similar official shall have been appointed for or taken possession of the Company or its property or such other obligor, or in case of any other comparable judicial proceedings relative to the Company or such other obligor, or to the creditors or property of the Company or such other obligor, the Trustee, irrespective of whether the principal of the Notes shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand pursuant to the provisions of this Section, shall be entitled and empowered, by intervention in such proceedings or otherwise:

 

  (1)

to file and prove a claim or claims for the whole amount of the principal and interest owing and unpaid in respect of the Notes, and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including, prior to the Release Date, any claims of the Trustee as holder of Senior Note First Mortgage Bonds and including any amounts due to the Trustee under Section 9.06 hereof) and of the Noteholders allowed in any judicial proceedings relative to the Company or such other obligor, or to the creditors or property of the Company or such other obligor; and

 

  (2)

to collect and receive any moneys or other property payable or deliverable on any such claims, and to distribute all amounts received with respect to the claims of the Noteholders and of the Trustee on their behalf; and any trustee, receiver, liquidator, custodian or other similar official is hereby authorized by each of the Noteholders to make payments to the Trustee, and, in the event that the Trustee shall consent to the making of the payments directly to the Noteholders, to pay to the Trustee such amounts due pursuant to Section 9.06 hereof.

(d)   Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or vote for or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes of any series or tranche or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding except to vote for the election of a trustee in bankruptcy or similar Person.

(e)   All rights of action and of asserting claims under this Indenture, or under any of the Notes may be prosecuted and enforced by the Trustee without the possession of any of the Notes or the production thereof at any trial or other proceedings relative thereto, and any such action or proceedings instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment, subject to the payment of the expenses, disbursements and compensation of the Trustee and its agents, attorneys and counsel, shall be for the ratable benefit of the Holders of the Notes in respect of which such action was taken.

 

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(f)   In any proceedings brought by the Trustee (and also any proceedings involving the interpretation of any provision of this Indenture to which the Trustee shall be a party), the Trustee shall be held to represent all the Holders of the Notes in respect to which action as taken, and it shall not be necessary to make any Holders of such Notes parties to any such proceedings.

Section 8.03  Application Of Proceeds.  Any moneys collected by the Trustee with respect to any of the Notes pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee for the distribution of such moneys, upon presentation of the several Notes, and stamping thereon the payment, if only partially paid, and upon surrender thereof if fully paid.

FIRST: To the payment of all amounts due to the Trustee pursuant to Section 9.06 hereof;

SECOND: In case the principal of the Outstanding Notes in respect of which such moneys have been collected shall not have become due and be unpaid, to the payment of interest on the Notes, in the order of the Maturity of the installments of such interest, with interest (to the extent allowed by law) upon the overdue installments of interest at the rate borne by the Notes, such payments to be made ratably to the Persons entitled thereto, and then to the payment to the Holders entitled thereto of the unpaid principal of and any applicable premium on any of the Notes which shall have become due (other than Notes previously called for redemption for the payment of which moneys are held pursuant to the provisions of this Indenture), whether at Stated Maturity or by redemption, in the order of their due dates, beginning with the earliest due date, and if the amount available is not sufficient to pay in full all Notes due on any particular date, then to the payment thereof ratably, according to the amounts of principal and any applicable premium due on that date, to the Holders entitled thereto, without any discrimination or privilege;

THIRD: In case the principal of the Outstanding Notes in respect of which such moneys have been collected shall have become due, by declaration or otherwise, to the payment of the whole amount then owing and unpaid upon the Notes for principal and premium, if any, and interest thereon, with interest on the overdue principal and any premium and (to the extent allowed by law) upon overdue installments of interest at the rate borne by the Notes; and in case such moneys shall be insufficient to pay in full the whole amount so due and unpaid upon the Notes, then to the payment of such principal and premium, if any, and interest without preference or priority of principal and any premium over interest, or of interest over principal and any premium or of any installment of interest over any other installment of interest, or of any Note over any other Note, ratably to the aggregate of such principal and premium, if any, and accrued and unpaid interest; and

FOURTH: To the payment of the remainder, if any, to the Company or its successors or assigns, or to whomsoever may lawfully be entitled to the same, or as a court of competent jurisdiction may determine.

Section 8.04  Limitations On Suits By Noteholders.

(a)   No Holder of any Note shall have any right by virtue of or by availing of any provision of this Indenture to institute any suit, action or proceeding in equity or at law upon

 

40


or under or with respect to this Indenture or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless such Holder previously shall have given to the Trustee written notice of an Event of Default with respect to such Note and of the continuance thereof, as hereinabove provided, and unless also Noteholders of a majority in aggregate principal amount of the Notes then Outstanding affected by such Event of Default shall have made written request upon the Trustee to institute such action, suit or proceeding in its own name as Trustee hereunder and shall have offered to the Trustee such reasonable indemnity as it may require against the costs, expenses and liabilities to be incurred therein or thereby, and the Trustee for 60 days after its receipt of such notice, request and offer of indemnity, shall have neglected or refused to institute any such action, suit or proceeding; it being understood and intended, and being expressly covenanted by the taker and Holder of every Note with every other taker and Holder and the Trustee, that no one or more Holders of Notes shall have any right in any manner whatever by virtue of or by availing of any provision of this Indenture to affect, disturb or prejudice the rights of any other Holder of Notes, or to obtain or seek to obtain priority over or preference to any other such Holder or to enforce any right under this Indenture, except in the manner herein provided and for the equal, ratable and common benefit of all Holders of Notes. For the protection and enforcement of the provisions of this Section, each and every Noteholder and the Trustee shall be entitled to such relief as can be given either at law or in equity.

(b)   Notwithstanding any other provision in this Indenture, however, the rights of any Holder of any Note to receive payment of the principal of and premium, if any, and interest on such Note, on or after the respective due dates expressed in such Note or on the applicable redemption date, or to institute suit for the enforcement of any such payment on or after such respective dates are absolute and unconditional, and shall not be impaired or affected without the consent of such Holder.

Section 8.05  Suits For Enforcement.  In case an Event of Default has occurred, has not been waived and is continuing hereunder, the Trustee may in its discretion proceed to protect and enforce the rights vested in it by this Indenture, including, prior to the Release Date, its rights as holder of the Senior Note First Mortgage Bonds, by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any of such rights, either by suit in equity or by action at law or by proceeding in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement contained in this Indenture or in aid of the exercise of any power granted to it under this Indenture, or to enforce any other legal or equitable right vested in the Trustee by this Indenture or by law.

Section 8.06  Powers And Remedies Cumulative: Delay Or Omission Not Waiver Of Default.  No right or remedy herein conferred upon or reserved to the Trustee or to the Holders of Notes is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

No delay or omission of the Trustee or of any Holder of Notes to exercise any right or power accruing upon any Event of Default occurring and continuing as aforesaid shall impair any such right or power or shall be construed to be a waiver of any such Event of Default or an

 

41


acquiescence therein; and, subject to Section 8.04, every right and power given by this Indenture or by law to the Trustee or to the Holders of Notes may be exercised from time to time, and as often as shall be deemed expedient, by the Trustee or by the Holders of Notes, as the case may be.

Section 8.07  Direction Of Proceedings And Waiver Of Defaults By Majority Of Noteholders.

(a)  The Holders of a majority in aggregate principal amount of the Notes at the time Outstanding shall have the right to direct the time, method, and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee; provided that such direction shall not be otherwise than in accordance with law and the provisions of this Indenture; and provided further that (subject to Section 9.01 hereof) the Trustee shall have the right to decline to follow any such direction if the Trustee being advised by counsel determines that the action or proceeding so directed may not lawfully be taken or if the Trustee in good faith by its board of directors or trustees, executive committee, or a trust committee of directors or trustees or Responsible Officers shall determine that the action or proceeding so directed would involve the Trustee in Personal liability. Nothing in this Indenture shall impair the right of the Trustee in its discretion to take any action deemed proper by the Trustee and which is not inconsistent with such direction or directions by Noteholders.

(b)   The Holders of a majority in aggregate principal amount of the Notes at the time Outstanding may on behalf of all of the Holders of the Notes waive any past default or Event of Default hereunder and its consequences except a default in the payment of principal of or premium, if any, or interest on the Notes. Upon any such waiver the Company, the Trustee and the Holders of the Notes shall be restored to their former positions and rights hereunder, respectively, but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon. Upon any such waiver, such default shall cease to exist and be deemed to have been cured and not to be continuing, and any Event of Default arising therefrom shall be deemed to have been cured and not to be continuing, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon.

Section 8.08  Notice Of Default.  The Trustee shall, within 90 days after the occurrence of a default with respect to the Notes, give to all Holders of the Notes, in the manner provided in Section 15.10, notice of such default known to the Trustee, unless such default shall have been cured or waived before the giving of such notice, the term “default” for the purpose of this Section 8.08 being hereby defined to be any event which is or after notice or lapse of time or both would become an Event of Default; provided that, except in the case of default in the payment of the principal of or premium, if any, or interest on any of the Notes, the Trustee shall be protected in withholding such notice if and so long as its board of directors or trustees, executive committee, or a trust committee of directors or trustees or Responsible Officers in good faith determines that the withholding of such notice is in the interests of the Holders of the Notes.

Section 8.09  Undertaking To Pay Costs.  All parties to this Indenture agree, and each Holder of any Note by acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, the

 

42


filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but this Section 8.09 shall not apply to any suit instituted by the Trustee, or to any suit instituted by any Noteholder, or group of Noteholders, holding in the aggregate more than 10% in principal amount of the Notes Outstanding, or to any suit instituted by any Noteholder for the enforcement of the payment of the principal of or premium, if any, or interest on any Note on or after the due date expressed in such Note or the applicable redemption date.

Section 8.10  Restoration Of Rights On Abandonment Of Proceedings.  In case the Trustee or any Holder shall have proceeded to enforce any right under this Indenture and such proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Trustee or to such Holder, then, and in every such case, the Company, the Trustee and the Holders shall be restored respectively to their former positions and rights hereunder, and all rights, remedies and powers of the Company, the Trustee and the Holders shall continue as though no such proceedings had been taken.

Section 8.11  Defaults Under The First Mortgage.  In addition to every other right and remedy provided herein, the Trustee may exercise any right or remedy available to the Trustee in its capacity as owner and holder of Senior Note First Mortgage Bonds which arises as a result of a completed default under the First Mortgage whether or not an Event of Default under this Indenture shall then have occurred and be continuing.

Section 8.12  Waiver Of Usury. Stay Or Extension Laws.  The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.

ARTICLE IX

CONCERNING THE TRUSTEE

Section 9.01  Duties And Responsibilities Of Trustee.

(a)   The Trustee, prior to the occurrence of an Event of Default and after the curing of all Events of Default which may have occurred, undertakes to perform such duties and only such duties as are specifically set forth in this Indenture. If an Event of Default has occurred (which has not been cured or waived), the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs.

 

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(b)   No provisions of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that:

 

  (1)

prior to the occurrence of any Event of Default and after the curing or waiving of all Events of Default which may have occurred

 

  (A)

the duties and obligations of the Trustee shall be determined solely by the express provisions of this Indenture, and the Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and

 

  (B)

in the absence of bad faith or actual knowledge on the part of the Trustee, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but, in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture;

 

  (2)

the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer or Officers of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; and

 

  (3)

the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction, pursuant to this Indenture, of the Holders of a majority in principal amount of the Notes, including, but not limited to, Section 8.07 hereof relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee under this Indenture.

Section 9.02  Reliance On Documents, Opinions, Etc.  Except as otherwise provided in Section 9.01 hereof:

(a)   the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, note or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties;

 

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(b)   any request, direction, order or demand of the Company mentioned herein shall be sufficiently evidenced by an Officers’ Certificate (unless other evidence in respect thereof is herein specifically prescribed); and any Board Resolution may be evidenced to the Trustee by a copy thereof certified by the Secretary or an Assistant Secretary of the Company;

(c)   the Trustee may consult with counsel and any advice or Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in accordance with such advice or Opinion of Counsel;

(d)   the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request, order or direction of any of the Noteholders, pursuant to this Indenture, unless such Noteholders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which may be incurred by such exercise;

(e)   the Trustee shall not be liable for any action taken, suffered or omitted by it in good faith and believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture;

(f)   prior to the occurrence of an Event of Default hereunder and after the curing or waiving of all Events of Default, the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, note or other paper or document, unless requested in writing to do so by the Holders of at least a majority in principal amount of the then Outstanding Notes; provided that if the payment within a reasonable time to the Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Trustee, not reasonably assured to the Trustee by the security afforded to it by this Indenture, the Trustee may require reasonable indemnity against such expense or liability as a condition to so proceeding; and

(g)   the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or through agents or attorneys; provided that the Trustee shall not be liable for the conduct or acts of any such agent or attorney that shall have been appointed in accordance herewith with due care.

Section 9.03  No Responsibility For Recitals, Etc.  The recitals contained herein and in the Notes (except in the certificate of authentication) shall be taken as the statements of the Company, and the Trustee assumes no responsibility for the correctness of the same. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Notes. The Trustee shall not be accountable for the use or application by the Company of any Notes or the proceeds of any Notes authenticated and delivered by the Trustee in conformity with this Indenture.

Section 9.04  Trustee, Authenticating Agent, Paying Agent Or Registrar May Own Notes.  The Trustee and any Authenticating Agent, paying agent or registrar, in its individual or other capacity, may become the owner or pledgee of Notes with the same rights it would have if it were not Trustee, Authenticating Agent or paying agent.

 

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Section 9.05  Moneys To Be Held In Trust.  Subject to Section 5.04 hereof, all moneys received by the Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated from other funds except to the extent required by law. The Trustee may allow and credit to the Company interest on any money received hereunder at such rate, if any, as may be agreed upon by the Company and the Trustee from time to time as may be permitted by law.

Section 9.06  Compensation And Expenses Of Trustee.  The Company covenants and agrees to pay to the Trustee from time to time, and the Trustee shall be entitled to, reasonable compensation (which shall not be limited by any law in regard to the compensation of a trustee of an express trust), and the Company shall pay or reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with this Indenture (including the reasonable compensation and the reasonable expenses and disbursements of its counsel and agents, including any Authenticating Agents, and of all Persons not regularly in its employ) except any such expense, disbursement or advance as may arise from its negligence or bad faith. The Company also covenants to indemnify the Trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on the part of the Trustee and arising out of or in connection with the acceptance or administration of this trust, including the costs and expenses of defending itself against any claim or liability. The obligations of the Company under this Section 9.06 to compensate the Trustee and to pay or reimburse the Trustee for expenses, disbursements and advances shall constitute additional indebtedness hereunder. Such additional indebtedness shall be secured by a lien prior to that of the Notes upon all property and funds held or collected by the Trustee as such, except funds held in trust for the benefit of the Holders of any particular Notes.

Section 9.07  Officers Certificate As Evidence.  Whenever in the administration of this Indenture, the Trustee shall deem it necessary or desirable that a matter be proved or established prior to the taking, suffering or omitting of any action hereunder, such matter (unless other evidence in respect thereof is herein specifically prescribed) may, in the absence of negligence or bad faith on the part of the Trustee, be deemed to be conclusively proved and established by an Officers’ Certificate delivered to the Trustee, and such Officers’ Certificate, in the absence of negligence or bad faith on the part of the Trustee, shall be full warrant to the Trustee for any action taken, suffered or omitted by it under this Indenture in reliance thereon.

Section 9.08  Conflicting Interest Of Trustee.  The Trustee shall be subject to and shall comply with the provisions of Section 310(b) of the TIA. Nothing in this Indenture shall be deemed to prohibit the Trustee or the Company from making any application permitted pursuant to such section.

Section 9.09  Existence And Eligibility Of Trustee.  There shall at all times be a Trustee hereunder which Trustee shall at all times be a corporation organized and doing business under the laws of the United States or any State thereof or of the District of Columbia having a combined capital and surplus of at least $50,000,000 and which is authorized under such laws to exercise corporate trust powers and is subject to supervision or examination by Federal or State authorities. Such corporation shall have its principal place of business in the Borough of Manhattan, The City of New York, State of New York, if there be such a corporation in such location willing to act upon reasonable and customary terms and conditions. If such corporation publishes reports of

 

46


condition at least annually, pursuant to law or to the requirements of the aforesaid authority, then for the purposes of this Section 9.09, the combined capital and surplus shall be deemed to be as set forth in its most recent report of condition so published. No obligor upon the Notes or Person directly or indirectly controlling, controlled by, or under common control with such obligor shall serve as Trustee. If at any time the Trustee shall cease to be eligible in accordance with this Section 9.09, the Trustee shall resign immediately in the manner and with the effect specified in Section 9.10 hereof.

Section 9.10  Resignation Or Removal Of Trustee.

(a)   Pursuant to the provisions of this Article, the Trustee may at any time resign and be discharged of the trusts created by this Indenture by giving at least 30 days prior written notice to the Company specifying the day upon which such resignation shall take effect, and such resignation shall take effect immediately upon the later of the appointment of a successor trustee and such day.

(b)   Any Trustee may be removed at any time by an instrument or concurrent instruments in writing filed with such Trustee and signed and acknowledged by the Holders of a majority in principal amount of the then Outstanding Notes or by their attorneys in fact duly authorized.

(c)   So long as no Event of Default has occurred and is continuing, and no event has occurred and is continuing that, with the giving of notice or the lapse of time or both, would become an Event of Default, the Company may remove any Trustee upon written notice to the Holder of each Note Outstanding and the Trustee and appoint a successor Trustee meeting the requirements of Section 9.09. The Company or the successor Trustee shall give notice to the Holders, in the manner provided in Section 15.10, of such removal and appointment within 30 days of such removal and appointment.

(d)   If at any time (i) the Trustee shall cease to be eligible in accordance with Section 9.09 hereof and shall fail to resign after written request therefor by the Company or by any Holder who has been a bona fide Holder for at least six months, (ii) the Trustee shall fail to comply with Section 9.08 hereof after written request therefor by the Company or any such Holder, or (iii) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then the Trustee may be removed forthwith by an instrument or concurrent instruments in writing filed with the Trustee and either:

 

  (1)

signed by the Chairman, President or any Vice President of the Company and attested by the Secretary or an Assistant Secretary of the Company; or

 

  (2)

signed and acknowledged by the Holders of a majority in principal amount of Outstanding Notes or by their attorneys in fact duly authorized.

 

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(e)   Any resignation or removal of the Trustee shall not become effective until acceptance of appointment by the successor Trustee as provided in Section 9.12 hereof.

Section 9.11  Appointment Of Successor Trustee.

(a)   If at any time the Trustee shall resign or be removed, the Company, by a Board Resolution, shall promptly appoint a successor Trustee.

(b)   The Company shall provide written notice of its appointment of a successor Trustee to the Holder of each Note Outstanding following any such appointment.

(c)   If no appointment of a successor Trustee shall be made pursuant to Section 9.11(a) hereof within 60 days after appointment shall be required, any Noteholder or the resigning Trustee may apply to any court of competent jurisdiction to appoint a successor Trustee. Said court may thereupon after such notice, if any, as such court may deem proper and prescribe, appoint a successor Trustee.

(d)   Any Trustee appointed under this Section 9.11 as a successor Trustee shall be a bank or trust company eligible under Section 9.09 hereof and qualified under Section 9.08 hereof.

Section 9.12  Acceptance By Successor Trustee.

(a)   Any successor Trustee appointed as provided in Section 9.11 hereof shall execute, acknowledge and deliver to the Company and to its predecessor Trustee an instrument accepting such appointment hereunder, and thereupon the resignation or removal of the predecessor Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, duties and obligations of its predecessor hereunder, with like effect as if originally named as Trustee herein; but nevertheless, on the written request of the Company or of the successor Trustee, the Trustee ceasing to act shall, upon payment of any amounts then due it pursuant to Section 9.06 hereof, execute and deliver an instrument transferring to such successor Trustee all the rights and powers of the Trustee so ceasing to act, including all right, title, and interest in the Senior Note First Mortgage Bonds. Upon request of any such successor Trustee, the Company shall execute any and all instruments in writing in order more fully and certainly to vest in and confirm to such successor Trustee all such rights and powers. Any Trustee ceasing to act shall, nevertheless, retain a lien upon all property or funds held or collected by such Trustee to secure any amounts then due it pursuant to Section 9.06 hereof.

(b)   No successor Trustee shall accept appointment as provided in this Section 9.12 unless at the time of such acceptance such successor Trustee shall be qualified under Section 9.08 hereof and eligible under Section 9.09 hereof.

(c)   Upon acceptance of appointment by a successor Trustee as provided in this Section 9.12, the successor Trustee shall mail notice of its succession hereunder to all Holders of Notes as the names and addresses of such Holders appear on the registry books.

Section 9.13  Succession By Merger, Etc.

 

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(a)   Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder without the execution or filing of any paper or any further act on the part of any of the parties hereto, provided such corporation shall be otherwise qualified and eligible under this Article.

(b)   If at the time such successor to the Trustee shall succeed to the trusts created by this Indenture any of the Notes shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor Trustee, and deliver such Notes so authenticated; and in case at that time any of the Notes shall not have been authenticated, any successor to the Trustee may authenticate such Notes either in the name of any predecessor hereunder or in the name of the successor Trustee; and in all such cases such certificates shall have the full force which it is anywhere in the Notes or in this Indenture provided that the certificates of the Trustee shall have; provided that the right to adopt the certificate of authentication of any predecessor Trustee or authenticate Notes in the name of any predecessor Trustee shall apply only to its successor or successors by merger, conversion or consolidation.

Section 9.14  Limitations On Rights Of Trustee As A Creditor.  The Trustee shall be subject to, and shall comply with, the provisions of Section 311 of the TIA.

Section 9.15  Authenticating Agent.

(a)   There may be one or more Authenticating Agents appointed by the Trustee with the written consent of the Company, with power to act on its behalf and subject to the direction of the Trustee in the authentication and delivery of Notes in connection with transfers and exchanges under Sections 2.06, 2.07, 2.08, 2.13, 3.03, and 13.04 hereof, as fully to all intents and purposes as though such Authenticating Agents had been expressly authorized by those Sections to authenticate and deliver Notes. For all purposes of this Indenture, the authentication and delivery of Notes by any Authenticating Agent pursuant to this Section 9.15 shall be deemed to be the authentication and delivery of such Notes “by the Trustee.” Any such Authenticating Agent shall be a bank or trust company or other Person of the character and qualifications set forth in Section 9.09 hereof.

(b)   Any corporation into which any Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which any Authenticating Agent shall be a party, or any corporation succeeding to the corporate trust business of any Authenticating Agent, shall be the successor of such Authenticating Agent hereunder, if such successor corporation is otherwise eligible under this Section 9.15, without the execution or filing of any paper or any further act on the part of the parties hereto or such Authenticating Agent or such successor corporation.

(c)   Any Authenticating Agent may at any time resign by giving written notice of resignation to the Trustee and to the Company. The Trustee may at any time terminate the agency of any Authenticating Agent by giving written notice of termination to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon such a

 

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termination, or in case at any time any Authenticating Agent shall cease to be eligible under this Section 9.15, the Trustee may, with the written consent of the Company, appoint a successor Authenticating Agent, and upon so doing shall give written notice of such appointment to the Company and shall mail, in the manner provided in Section 15.10, notice of such appointment to the Holders of Notes.

(d)   The Trustee agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services, and the Trustee shall be entitled to be reimbursed for such payments, in accordance with Section 9.06 hereof.

(e)   Sections 9.02, 9.03, 9.06, 9.07 and 9.09 hereof shall be applicable to any Authenticating Agent.

ARTICLE X

CONCERNING THE NOTEHOLDERS

Section 10.01  Action By Noteholders.  Whenever in this Indenture it is provided that the Holders of a specified percentage in aggregate principal amount of the Notes may take any action, the fact that at the time of taking any such action the Holders of such specified percentage have joined therein may be evidenced (a) by any instrument or any number of instruments of similar tenor executed by such Noteholders in Person or by agent or proxy appointed in writing, (b) by the record of such Noteholders voting in favor thereof at any meeting of Noteholders duly called and held in accordance with Article XI hereof, or (c) by a combination of such instrument or instruments and any such record of such a meeting of Noteholders.

Section 10.02  Proof Of Execution By Noteholders.

(a)   Subject to Sections 9.01, 9.02 and 11.05 hereof, proof of the execution of any instruments by a Noteholder or the agent or proxy for such Noteholder shall be sufficient if made in accordance with such reasonable rules and regulations as may be prescribed by the Trustee or in such manner as shall be satisfactory to the Trustee. The ownership of Notes shall be proved by the register for the Notes maintained by the Trustee.

(b)   The record of any Noteholders’ meeting shall be proven in the manner provided in Section 11.06 hereof.

Section 10.03  Persons Deemed Absolute Owners.  Subject to Sections 2.04(f) and 10.01 hereof, the Company, the Trustee, any paying agent and any Authenticating Agent shall deem the Person in whose name any Note shall be registered upon the register for the Notes to be, and shall treat such Person as, the absolute owner of such Note (whether or not such Note shall be overdue) for the purpose of receiving payment of or on account of the principal and premium, if any, and interest on such Note, and for all other purposes; and neither the Company nor the Trustee nor any paying agent nor any Authenticating Agent shall be affected by any notice to the contrary. All such payments shall be valid and effectual to satisfy and discharge the liability upon any such Note to the extent of the sum or sums so paid.

 

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Section 10.04  Company-Owned Notes Disregarded.  In determining whether the Holders of the requisite aggregate principal amount of Outstanding Notes have concurred in any direction, consent or waiver under this Indenture, Notes which are owned by the Company or any other obligor on the Notes or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company or any other obligor on the Notes shall be disregarded and deemed not to be Outstanding for the purpose of any such determination; provided that, for the purposes of determining whether the Trustee shall be protected in relying on any such direction, consent or waiver, only Notes which the Trustee knows are so owned shall be so disregarded. Notes so owned which have been pledged in good faith to third parties may be regarded as Outstanding for the purposes of this Section 10.04 if the pledgee shall establish the pledgee’s right to take action with respect to such Notes and that the pledgee is not a Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company or any such other obligor. In the case of a dispute as to such right, the Trustee may rely upon an Opinion of Counsel and an Officers’ Certificate to establish the foregoing.

Section 10.05  Revocation Of Consents:  Future Holders Bound. Except as may be otherwise required in the case of a Global Note by the applicable rules and regulations of the Depositary, at any time prior to the taking of any action by the Holders of the percentage in aggregate principal amount of the Notes specified in this Indenture in connection with such action, any Holder of a Note, which has been included in the Notes the Holders of which have consented to such action may, by filing written notice with the Trustee at the Corporate Trust Office of the Trustee and upon proof of ownership as provided in Section 10.02(a) hereof, revoke such action so far as it concerns such Note. Except as aforesaid, any such action taken by the Holder of any Note shall be conclusive and binding upon such Holder and upon all future Holders and owners of such Note and of any Notes issued in exchange, substitution or upon registration of transfer therefor, irrespective of whether or not any notation thereof is made upon such Note or such other Notes.

Section 10.06  Record Date For Noteholder Acts.  If the Company shall solicit from the Noteholders any request, demand, authorization, direction, notice, consent, waiver or other act, the Company may, at its option, by Board Resolution, fix in advance a record date for the determination of Noteholders entitled to give such request, demand, authorization, direction, notice, consent, waiver or other act, but the Company shall have no obligation to do so. If such a record date is fixed, such request, demand, authorization, direction, notice, consent, waiver or other act may be given before or after the record date, but only the Noteholders of record at the close of business on the record date shall be deemed to be Noteholders for the purpose of determining whether Holders of the requisite aggregate principal amount of Outstanding Notes have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other act, and for that purpose the Outstanding Notes shall be computed as of the record date; provided that no such request, demand, authorization, direction, notice, consent, waiver or other act by the Noteholders on the record date shall be deemed effective unless it shall become effective pursuant to this Indenture not later than six months after the record date. Any such record date shall be at least 30 days prior to the date of the solicitation to the Noteholders by the Company.

 

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ARTICLE XI

NOTEHOLDERS’ MEETING

Section 11.01  Purposes Of Meetings.  A meeting of Noteholders may be called at any time and from time to time pursuant to this Article XI for any of the following purposes:

(a)   to give any notice to the Company or to the Trustee, or to give any directions to the Trustee, or to consent to the waiving of any Event of Default hereunder and its consequences, or to take any other action authorized to be taken by Noteholders pursuant to Article XIII;

(b)   to remove the Trustee pursuant to Article IX;

(c)   to consent to the execution of an indenture or indentures supplemental hereto pursuant to Section 13.02 hereof; or

(d)   to take any other action authorized to be taken by or on behalf of the Holders of any specified aggregate principal amount of the Notes, as the case may be, under any other provision of this Indenture or under applicable law.

Section 11.02  Call Of Meetings By Trustee.  The Trustee may at any time call a meeting of Holders of Notes to take any action specified in Section 11.01 hereof, to be held at such time and at such place as the Trustee shall determine. Notice of every such meeting of Noteholders, setting forth the time and the place of such meeting and in general terms the action proposed to be taken at such meeting, shall be given to Holders of the Notes that may be affected by the action proposed to be taken at such meeting in the manner provided in Section 15.10 hereof. Such notice shall be given not less than 20 nor more than 90 days prior to the date fixed for such meeting.

Section 11.03  Call Of Meetings By Company Or Noteholders.  If at any time the Company, pursuant to a Board Resolution, or the Holders of at least 10% in aggregate principal amount of the Notes then Outstanding, shall have requested the Trustee to call a meeting of Noteholders, by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the Trustee shall not have mailed the notice of such meeting within 20 days after receipt of such request, then the Company or such Noteholders may determine the time and the place for such meeting and may call such meeting to take any action authorized in Section 11.01 hereof, by giving notice thereof as provided in Section 11.02 hereof.

Section 11.04  Qualifications For Voting.  To be entitled to vote at any meetings of Noteholders a Person shall (a) be a Holder of one or more Notes affected by the action proposed to be taken or (b) be a Person appointed by an instrument in writing as proxy by a Holder of one or more such Notes. The only Persons who shall be entitled to be present or to speak at any meeting of Noteholders shall be the Persons entitled to vote at such meeting and their counsel and any representatives (including employees) of the Trustee and its counsel and any representatives (including employees) of the Company and its counsel.

Section 11.05  Regulations.

 

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(a)   Notwithstanding any other provisions of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any meeting of Noteholders in regard to proof of the holding of Notes and of the appointment of proxies, and in regard to the appointment and duties of inspectors of votes, the submission and examination of proxies, certificates and other evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall think fit.

(b)   The Trustee shall, by an instrument in writing, appoint a temporary chairman of the meeting, unless the meeting shall have been called by the Company or by the Noteholders as provided in Section 11.03 hereof, in which case the Company or Noteholders calling the meeting, as the case may be, shall in like manner appoint a temporary chairman. A permanent chairman and a permanent secretary of the meeting shall be elected by the Holders of a majority in aggregate principal amount of the Notes present in Person or by proxy at the meeting.

(c)   Subject to Section 10.04 hereof, at any meeting each Noteholder or proxy shall be entitled to one vote for each $1,000 principal amount of Notes held or represented by such Noteholder; provided that no vote shall be cast or counted at any meeting in respect of any Note determined to be not Outstanding. The chairman of the meeting shall have no right to vote other than by virtue of Notes held by such chairman or instruments in writing as aforesaid duly designating such chairman as the Person to vote on behalf of other Noteholders. At any meeting of Noteholders duly called pursuant to Section 11.02 or 11.03 hereof, the presence of Persons holding or representing Notes in an aggregate principal amount sufficient to take action on any business for the transaction for which such meeting was called shall constitute a quorum. Any meeting of Noteholders duly called pursuant to Section 11.02 or 11.03 hereof may be adjourned from time to time by the Holders of a majority in aggregate principal amount of the Notes present in Person or by proxy at the meeting, whether or not constituting a quorum, and the meeting may be held as so adjourned without further notice.

Section 11.06  Voting.  The vote upon any resolution submitted to any meeting of Noteholders shall be by written ballots on which shall be subscribed the signatures of the Holders of Notes or of their representatives by proxy and the principal amount of Notes held or represented by them. The permanent chairman of the meeting shall appoint two inspectors of votes who shall count all votes cast at the meeting for or against any resolution and who shall make and file with the secretary of the meeting their verified written reports in duplicate of all votes cast at the meeting. A record in duplicate of the proceedings of such meeting of Noteholders shall be prepared by the secretary of the meeting and there shall be attached to said record the original reports of the inspectors of votes on any vote by ballot taken thereat and affidavits by one or more Persons having knowledge of the facts setting forth a copy of the notice of the meeting and showing that said notice was given as provided in Section 11.02 hereof. The record shall show the aggregate principal amount of the Notes voting in favor of or against any resolution. The record shall be signed and verified by the affidavits of the permanent chairman and secretary of the meeting and one of the duplicates shall be delivered to the Company and the other to the Trustee to be preserved by the Trustee and the Trustee shall have the ballots taken at the meeting attached to such duplicate. Any record so signed and verified shall be conclusive evidence of the matters therein stated.

 

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Section 11.07  Rights Of Trustee Or Noteholders Not Delayed.  Nothing in this Article XI shall be deemed or construed to authorize or permit, by reason of any call of a meeting of Noteholders or any rights expressly or impliedly conferred hereunder to make such call, any hindrance or delay in the exercise of any right or rights conferred upon or reserved to the Trustee or to the Holders of Notes under any of the provisions of this Indenture or of the Notes.

ARTICLE XII

CONSOLIDATION, MERGER, SALE, TRANSFER OR CONVEYANCE

Section 12.01  Company May Consolidate, Etc. Only On Certain Terms.  The Company shall not consolidate with or merge into any other corporation or entity or sell, or otherwise dispose of its properties as or substantially as an entirety to any Person unless the Company has delivered to the Trustee the supplemental indenture referred to in (b) below and an Officers’ Certificate and an Opinion of Counsel each stating that such consolidation, merger, conveyance or transfer and such supplemental indenture comply with this Article XII and that all conditions precedent herein provided for have been complied with, and the corporation formed by such consolidation or into which the Company is merged or the Person which receives such properties pursuant to such sale, transfer or other disposition (a) shall be a corporation or other entity organized and existing under the laws of the United States of America, any state thereof or the District of Columbia; (b) shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, the due and punctual payment of the principal of and premium, if any, and interest on all of the Notes and the performance of every covenant of this Indenture on the part of the Company to be performed or observed and (c) if such consolidation, merger, sale, transfer or other disposition occurs prior to the Release Date, shall expressly assume, by an indenture supplemental to the First Mortgage, executed and delivered to the Mortgage Trustee, the due and punctual payment of the principal of and premium, if any, and interest on all of the Senior Note First Mortgage Bonds and the performance of every covenant of the First Mortgage on the part of the Company to be performed or observed.

Anything in this Indenture to the contrary notwithstanding, the conveyance or other transfer by the Company of (a) all or any portion of its facilities for the generation of electric energy, or (b) all of its facilities for the transmission of electric energy, in each case considered alone or in any combination with properties described in any other clause, shall in no event be deemed to constitute a conveyance or other transfer of all the properties of the Company, as or substantially as an entirety. The character of particular facilities shall be determined in accordance with the Uniform System of Accounts prescribed for public utilities and licensees subject to the Federal Power Act, as amended, to the extent applicable.

Section 12.02  Successor Corporation Substituted.  Upon any consolidation or merger, or any sale, transfer or other disposition of the properties of the Company substantially as an entirety in accordance with Section 12.01 hereof, the successor corporation formed by such consolidation or into which the Company is merged or to which such sale, transfer or other disposition is made shall succeed to, and be substituted for and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor corporation had been named as the Company herein and the Company shall be released from all obligations hereunder.

 

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ARTICLE XIII

SUPPLEMENTAL INDENTURES

Section 13.01  Supplemental Indentures Without Consent Of Noteholders.

(a)   The Company, when authorized by Board Resolution, and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto for one or more of the following purposes:

 

  (1)

to make such provision in regard to matters or questions arising under this Indenture as may be necessary or desirable, and not inconsistent with this Indenture or prejudicial to the interests of the Holders in any material respect, for the purpose of supplying any omission, curing any ambiguity, or curing, correcting or supplementing any defective or inconsistent provision;

 

  (2)

to change or eliminate any of the provisions of this Indenture, provided that any such change or elimination shall become effective only when there is no Note Outstanding created prior to the execution of such supplemental indenture which is entitled to the benefit of such provision or such change or elimination is applicable only to Notes issued after the effective date of such change or elimination;

 

  (3)

to establish the form of Notes as permitted by Section 2.01 hereof or to establish or reflect any terms of any Note determined pursuant to Section 2.05 hereof;

 

  (4)

to evidence the succession of another corporation to the Company as permitted hereunder, and the assumption by any such successor of the covenants of the Company herein and in the Notes;

 

  (5)

to grant to or confer upon the Trustee for the benefit of the Holders any additional rights, remedies, powers or authority;

 

  (6)

to permit the Trustee to comply with any duties imposed upon it by law;

 

  (7)

to specify further the duties and responsibilities of, and to define further the relationships among the Trustee, any Authenticating Agent and any paying agent;

 

  (8)

to add to the covenants of the Company for the benefit of the Holders of one or more series or tranches of Notes, to add to the security for the Notes, to surrender a right or power conferred on the Company herein or to add any Event of Default with respect to one or more series or tranches of Notes;

 

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  (9)

to comply with the Company’s obligations under Section 6.07; and

 

  (10)

to make any other change that is not prejudicial to the Holders in any material respect.

(b)   The Trustee is hereby authorized to join with the Company in the execution of any such supplemental indenture, to make any further appropriate agreements and stipulations which may be therein contained and to accept the conveyance, transfer and assignment of any property thereunder, but the Trustee shall not be obligated to enter into any such supplemental indenture which affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise.

(c)   Any supplemental indenture authorized by this Section 13.01 may be executed by the Company and the Trustee without the consent of the Holders of any of the Notes at the time Outstanding, notwithstanding any of the provisions of Section 13.02 hereof.

Section 13.02  Supplemental Indentures With Consent Of Noteholders.

(a)   With the consent (evidenced as provided in Section 10.01 hereof) of the Holders of a majority in aggregate principal amount of the Notes at the time Outstanding, the Company, when authorized by Board Resolution, and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of any supplemental indenture or of modifying in any manner the rights of the Noteholders; provided that no such supplemental indenture shall:

 

  (1)

change the Stated Maturity of any Note, or reduce the rate (or change the method of calculation thereof) or extend the time of payment of interest thereon, or reduce the principal amount thereof or any premium thereon, or change the coin or currency in which the principal of any Note or premium, if any, or interest thereon is payable, or change the date on which any Note may be redeemed or adversely affect the rights of the Noteholders to institute suit for the enforcement of any payment of principal of or premium, if any, or interest on any Note, or impair the interest hereunder of the Trustee in the Senior Note First Mortgage Bonds, or prior to the Release Date, reduce the principal amount of any series or tranche of Senior Note First Mortgage Bonds to an amount less than the principal amount of the Related Notes or alter the payment provisions of such Senior Note First Mortgage Bonds in a manner adverse to the Holders of the Notes, in each case without the consent of the Holder of each Note so affected; or

 

  (2)

modify this Section 13.02(a) or reduce the aforesaid percentage of Notes, the Holders of which are required to consent to any such supplemental indenture or to reduce the percentage of Notes, the Holders of which are required to waive Events of Default, in each

 

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  case, without the consent of the Holders of all of the Notes then Outstanding.

(b)   Upon the request of the Company, accompanied by a copy of the Board Resolution authorizing the execution of any such supplemental indenture, and upon the filing with the Trustee of evidence of the consent of Noteholders as aforesaid, the Trustee shall join with the Company in the execution of such supplemental indenture unless such supplemental indenture affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such supplemental indenture.

(c)   A supplemental indenture which changes or eliminates any covenant or other provision of this Indenture (or any supplemental indenture) which has expressly been included solely for the benefit of one or more series or tranches of Notes, or which modifies the rights of the Holders of Notes of such series or tranche with respect to such covenant or provision, shall be deemed not to affect the rights under this Indenture of the Holders of Notes of any other series or tranche.

(d)   It shall not be necessary for the consent of the Holders of Notes under this Section 13.02 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such consent shall approve the substance thereof.

(e)   Promptly after the execution by the Company and the Trustee of any supplemental indenture pursuant to this Section 13.02, the Trustee shall give notice in the manner provided in Section 15.10 hereof, setting forth in general terms the substance of such supplemental indenture, to all Noteholders. Any failure of the Trustee to give such notice or any defect therein shall not, however, in any way impair or affect the validity of any such supplemental indenture.

Section 13.03  Compliance With Trust Indenture Act Effect Of Supplemental Indentures.  Any supplemental indenture executed pursuant to this Article XIII shall comply with the TIA. Upon the execution of any supplemental indenture pursuant to this Article XIII, the Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective rights, limitations of rights, obligations, duties and immunities under this Indenture of the Trustee, the Company and the Noteholders shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes.

Section 13.04  Notation On Notes.  Notes authenticated and delivered after the execution of any supplemental indenture pursuant to this Article XIII may bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Notes so modified as approved by the Trustee and the Board of Directors with respect to any modification of this Indenture contained in any such supplemental indenture may be prepared and executed by the Company, authenticated by the Trustee and delivered in exchange for the Notes then Outstanding.

 

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Section 13.05  Evidence Of Compliance Of Supplemental Indenture To Be Furnished Trustee.  The Trustee, subject to Sections 9.01 and 9.02 hereof, may receive an Officers’ Certificate and an Opinion of Counsel as conclusive evidence that any supplemental indenture executed pursuant hereto complies with the requirements of this Article XIII.

ARTICLE XIV

IMMUNITY OF INCORPORATORS,

STOCKHOLDERS, OFFICERS AND DIRECTORS

Section 14.01  Indenture And Notes Solely Corporate Obligations.  No recourse for the payment of the principal of or premium, if any, or interest on any Note, or for any claim based thereon or otherwise in respect thereof, and no recourse under or upon any obligation, covenant or agreement of the Company, contained in this Indenture, the First Mortgage or in any supplemental indenture, or in any Note or in any Senior Note First Mortgage Bond, or because of the creation of any indebtedness represented thereby, shall be had against any incorporator, stockholder, officer or director, as such, past, present or future, of the Company or of any successor corporation, either directly or through the Company or any successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that all such liability is hereby expressly waived and released as a condition of, and as a consideration for, the execution of this Indenture and the issuance of the Notes.

ARTICLE XV

MISCELLANEOUS PROVISIONS

Section 15.01  Provisions Binding On Companys Successors.  All the covenants, stipulations, promises and agreements made by the Company in this Indenture shall bind its successors and assigns whether so expressed or not.

Section 15.02  Official Acts By Successor Corporation.  Any act or proceeding by any provision of this Indenture authorized or required to be done or performed by any board, committee or officer of the Company shall and may be done and performed with like force and effect by the like board, committee or officer of any corporation that shall at the time be the lawful successor of the Company.

Section 15.03  Notices.  Any notice or demand which by any provision of this Indenture is required or permitted to be given or served by the Trustee or by the Noteholders on the Company may be given or served by being deposited postage prepaid in a post office letter box addressed (until another address is filed by the Company with the Trustee) at the principal executive offices of the Company, to the attention of the Secretary. Any notice, direction, request or demand by any Noteholder, the Company or the Mortgage Trustee to or upon the Trustee shall be deemed to have been sufficiently given or made, for all purposes, if given or made in writing at the Corporate Trust Office of the Trustee, Attention: Corporate Trust Department.

 

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Section 15.04  GOVERNING LAW.  THIS INDENTURE AND EACH NOTE SHALL BE GOVERNED BY AND DEEMED TO BE A CONTRACT UNDER, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF SAID STATE WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THEREOF, EXCEPT AS MAY OTHERWISE BE REQUIRED BY MANDATORY PROVISIONS OF LAW.

Section 15.05  Evidence Of Compliance With Conditions Precedent.

(a)   Upon any application or demand by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee an Officers’ Certificate stating that all conditions precedent, if any, provided for in this Indenture (including any covenants compliance with which constitutes a condition precedent) relating to the proposed action have been complied with and an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent have been complied with.

(b)   Each certificate or opinion provided for in this Indenture and delivered to the Trustee with respect to compliance with a condition or covenant provided for in this Indenture (other than the certificates delivered pursuant to Section 6.06 hereof) shall include (1) a statement that each Person making such certificate or opinion has read such covenant or condition and the definitions relating thereto; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of each such Person, such Person has made such examination or investigation as is necessary to enable such Person to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether or not, in the opinion of each such Person, such condition or covenant has been complied with.

(c)   In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.

(d)   Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which such certificate or opinion is based are erroneous. Any such certificate or Opinion of Counsel delivered under the Indenture may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such Person knows, or in the exercise of reasonable care should know, that the certificate or opinion of representations with respect to such matters are erroneous. Any Opinion of Counsel delivered hereunder may contain standard exceptions and qualifications reasonably satisfactory to the Trustee.

 

59


(e)   Any certificate, statement or opinion of any officer of the Company, or of counsel, may be based, insofar as it relates to accounting matters, upon a certificate or opinion of or representations by an independent public accountant or firm of accountants, unless such officer or counsel, as the case may be, knows that the certificate or opinion or representations with respect to the accounting matters upon which the certificate, statement or opinion of such officer or counsel may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate or opinion of any firm of independent public accountants filed with the Trustee shall contain a statement that such firm is independent.

(f)   Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.

Section 15.06  Business Days.  Unless otherwise provided pursuant to Section 2.05(c) hereof, in any case where the date of Maturity of the principal of or premium, if any, or interest on any Note or the date fixed for redemption of any Note is not a Business Day, then payment of such principal or premium, if any, or interest need not be made on such date but may be made on the next succeeding Business Day with the same force and effect as if made on the date of Maturity or the date fixed for redemption, and, in the case of timely payment thereof, no interest shall accrue for the period from and after such Interest Payment Date or the date on which the principal or premium, if any, of the Note is required to be paid.

Section 15.07  Trust Indenture Act To Control.  If and to the extent that any provision of this Indenture limits, qualifies or conflicts with the duties imposed by the TIA, such required provision of the TIA shall govern.

Section 15.08  Table Of Contents, Headings, Etc.  The table of contents and the titles and headings of the articles and sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part hereof, and shall in no way modify or restrict any of the terms or provisions hereof.

Section 15.09  Execution In Counterparts.  This Indenture may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument.

Section 15.10  Manner Of Mailing Notice To Noteholders.

(a)   Any notice or demand which by any provision of this Indenture is required or permitted to be given or served by the Trustee or the Company to or on the Holders of Notes, as the case may be, shall be given or served by first-class mail, postage prepaid, addressed to the Holders of such Notes at their last addresses as the same appear on the register for the Notes referred to in Section 2.06, and any such notice shall be deemed to be given or served by being deposited in a post office letter box in the form and manner provided in this Section 15.10. In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give notice to any Holder by mail, then such notification to such Holder as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder.

 

60


(b)   The Company shall also provide any notices required under this Indenture by publication, but only to the extent that such publication is required by the TIA, the rules and regulations of the Commission or any securities exchange upon which any Notes are listed.

Section 15.11  Approval By Trustee Of Expert Or Counsel.  Wherever the Trustee is required to approve an Expert or counsel who is to furnish evidence of compliance with conditions precedent in this Indenture, such approval by the Trustee shall be deemed to have been given upon the taking of any action by the Trustee pursuant to and in accordance with the certificate or opinion so furnished by such Expert or counsel.

IN WITNESS WHEREOF, the undersigned, being duly authorized, have executed this Indenture on behalf of the respective parties hereto as of the date first above written.

 

JERSEY CENTRAL POWER & LIGHT
COMPANY
By:    

 

61


IN WITNESS WHEREOF, the undersigned, being duly authorized, have executed this Indenture on behalf of the respective parties hereto as of the date first above written.

 

JERSEY CENTRAL POWER & LIGHT
COMPANY
By:   /s/ T.G. Howson
  Name: T.G. Howson
  Title: Vice President and Treasurer
UNITED STATES TRUST COMPANY
OF NEW YORK
  AS TRUSTEE
By:   /s/ Louis P. Young
  Name: Louis P. Young
  Title: Vice President

 

62


EXHIBIT A

FORM OF GLOBAL NOTE

PRIOR TO RELEASE DATE

 

REGISTERED

         REGISTERED

THIS NOTE IS A GLOBAL NOTE REGISTERED IN THE NAME OF THE DEPOSITARY (REFERRED TO HEREIN) OR A NOMINEE THEREOF AND, UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE INDIVIDUAL NOTES REPRESENTED HEREBY, THIS GLOBAL NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS GLOBAL NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE TRUSTEE FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO. , ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO. , HAS AN INTEREST HEREIN.

JERSEY CENTRAL POWER & LIGHT COMPANY

SENIOR NOTE, ___% DUE ____ SERIES____

 

CUSIP:    NUMBER:
ORIGINAL ISSUE DATE:    PRINCIPAL AMOUNT:
INTEREST RATE:    MATURITY DATE:

JERSEY CENTRAL POWER & LIGHT COMPANY, a corporation duly organized and existing under the laws of the State of New Jersey (the “COMPANY”), for value received hereby promises to pay to Cede & Co. or registered assigns, the principal sum of             

 

               DOLLARS

on the Maturity Date set forth above, and to pay interest thereon from ______________ or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semiannually in arrears on the ________ and ________ in each year, commencing on the first such Interest Payment Date succeeding ____________, at the per annum Interest Rate set forth above, until the principal hereof is paid or made available for payment. No interest shall accrue on the Maturity Date, so long as the principal amount of this Global Note is paid on the Maturity Date. The interest so payable and punctually paid or duly provided for on any such Interest Payment

 

A-1


Date (except for interest payable on the Maturity Date set forth above or, if applicable, upon redemption or acceleration) will, as provided in the Indenture, be paid to the Person in whose name this Note is registered at the close of business on the Regular Record Date for such interest, which shall be the ________________ or ____________, as the case may be, next preceding such Interest Payment Date; provided that the first Interest Payment Date for any part of this Note, the Original Issue Date of which is after a Regular Record Date but prior to the applicable Interest Payment Date, shall be the Interest Payment Date following the next succeeding Regular Record Date; and provided that interest payable on the Maturity Date set forth above or, if applicable, upon redemption or acceleration, shall be payable to the Person to whom principal shall be payable. Except as otherwise provided in the Indenture (as defined below), any such interest not so punctually paid or duly provided for shall forthwith cease to be payable to the Holder on such Regular Record Date and shall be paid to the Person in whose name this Note is registered at the close of business on a Special Record Date for the payment of such defaulted interest to be fixed by the Trustee, notice whereof shall be given to Noteholders not more than fifteen days or fewer than ten days prior to such Special Record Date. Payment of the principal of, interest and premium, if any, on this Note shall be payable pursuant to Section 2.12(a) of the Indenture.

This Global Note is a global security in respect of a duly authorized issue of Senior Notes, ____% Due ___________, Series __ (the “NOTES OF THIS SERIES”, which term includes any Global Notes representing such Notes) of the Company issued and to be issued under an Indenture dated as of July 1, 1999, between the Company and United States Trust Company of New York, as trustee (the “TRUSTEE”, which term includes any successor Trustee under the Indenture) and indentures supplemental thereto (collectively, the “INDENTURE”). Under the Indenture, one or more series of notes may be issued and, as used herein, the term “Notes” refers to the Notes of this Series and any other outstanding series of Notes. Reference is hereby made to the Indenture for a more complete statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Noteholders and of the terms upon which the Notes are and are to be authenticated and delivered. This Global Note has been issued in respect of the series designated on the first page hereof, limited in aggregate principal amount to $_______.

Prior to the Release Date (as hereinafter defined), the Notes will be secured by first mortgage bonds (the “SENIOR NOTE FIRST MORTGAGE BONDS”) delivered by the Company to the Trustee for the benefit of the Holders of the Notes, issued under the Indenture, dated as of March 1, 1946, from the Company to United States Trust Company of New York, as successor trustee (the “MORTGAGE TRUSTEE”), as supplemented and modified (collectively, the “FIRST MORTGAGE”). Reference is made to the First Mortgage and the Indenture for a description of the rights of the Trustee as holder of the Senior Note First Mortgage Bonds, the property mortgaged and pledged, the nature and extent of the security and the rights of the holders of first mortgage bonds under the First Mortgage and the rights of the Company and of the Mortgage Trustee in respect thereof, the duties and immunities of the Mortgage Trustee and the terms and conditions upon which the Senior Note First Mortgage Bonds are secured and the circumstances under which additional first mortgage bonds may be issued.

From and after such time as the earlier of (i) the date that all First Mortgage Bonds, other than the Senior Note First Mortgage Bonds, have been retired (at, before or after the maturity thereof) through payment, redemption, purchase, defeasance or otherwise, and (ii) the date upon

 

A-2


which the Trustee holds Senior Note First Mortgage Bonds constituting not less than 80% in aggregate principal amount of all outstanding First Mortgage Bonds (the “Release Date”), the Senior Note First Mortgage Bonds shall cease to secure the Notes in any manner. In certain circumstances prior to the Release Date as provided in the Indenture, the Company is permitted to reduce the aggregate principal amount of a series of Senior Note First Mortgage Bonds held by the Trustee, but in no event prior to the Release Date to an amount less than the aggregate outstanding principal amount of the series of Notes initially issued contemporaneously with such Senior Note First Mortgage Bonds.

Each Note of this Series shall be dated and issued as of the date of its authentication by the Trustee and shall bear an Original Issue Date. Each Note or Global Note issued upon transfer, exchange or substitution of such Note or Global Note shall bear the Original Issue Date of such transferred, exchanged or substituted Note or Global Note, as the case may be.

[Insert redemption and notice provisions, if any]

Interest payments for this Global Note shall be computed and paid on the basis of a 360-day year of twelve 30-day months (and for any partial period shall be calculated on the basis of the number of days elapsed in a 360-day year of twelve 30-day months). If any Interest Payment Date or date on which the principal of this Global Note is required to be paid is not a Business Day, then payment of principal, premium, if any, or interest need not be made on such date but may be made on the next succeeding Business Day with the same force and effect as if made on such Interest Payment Date or date on which the principal of this Global Note is required to be paid and, in the case of timely payment thereof, no interest shall accrue for the period from and after such Interest Payment Date or the date on which the principal of this Global Note is required to be paid.

The Company, at its option, and subject to the terms and conditions provided in the Indenture, will be discharged from any and all obligations in respect of the Notes (except for certain obligations including obligations to register the transfer or exchange of Notes, replace stolen, lost or mutilated Notes, maintain paying agencies and hold monies for payment in trust, all as set forth in the Indenture) if the Company deposits with the Trustee cash, U.S. Government Obligations which through the payment of interest thereon and principal thereof in accordance with their terms will provide cash, or a combination of cash and U.S. Government Obligations, in any event in an amount sufficient, without reinvestment, to pay all the principal of and premium, if any, and interest on the Notes on the dates such payments are due in accordance with the terms of the Notes.

If an Event of Default shall occur and be continuing, the principal of and interest on the Notes may be declared due and payable in the manner and with the effect provided in the Indenture and, upon such declaration, the Trustee shall demand the redemption of the Senior Note First Mortgage Bonds to the extent provided in the Indenture.

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modifications of the rights and obligations of the Company and the rights of the Noteholders under the Indenture at any time by the Company and the Trustee with the consent of the Holders of not less than a majority in principal amount of the outstanding Notes. Any such

 

A-3


consent or waiver by the Holder of this Global Note shall be conclusive and binding upon such Holder and upon all future Holders of this Global Note and of any Note issued upon the registration of transfer hereof or in exchange therefor or in lieu thereof whether or not notation of such consent or waiver is made upon this Global Note.

As set forth in and subject to the provisions of the Indenture, no Holder of any Notes will have any right to institute any proceeding with respect to the Indenture or for any remedy thereunder unless such Holder shall have previously given to the Trustee written notice of a continuing Event of Default with respect to such Notes, the Holders of not less than a majority in principal amount of the outstanding Notes affected by such Event of Default shall have made written request and offered reasonable indemnity to the Trustee to institute such proceeding as Trustee and the Trustee shall have failed to institute such proceeding within 60 days; provided, however, that such limitations do not apply to a suit instituted by the Holder hereof for the enforcement of payment of the principal of and premium, if any, or interest on this Note on or after the respective due dates expressed here.

No reference herein to the Indenture and to provisions of this Global Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and premium, if any, and interest on this Global Note at the times, places and rates and the coin or currency prescribed in the Indenture.

As provided in the Indenture and subject to certain limitations therein set forth, this Global Note may be transferred only as permitted by the legend hereto.

Unless the certificate of authentication hereon has been executed by the Trustee, directly or through an Authenticating Agent by manual or facsimile signature of an authorized officer, this Global Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

All terms used in this Global Note which are defined in the Indenture shall have the meanings assigned to them in the Indenture unless otherwise indicated herein.

 

A-4


IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.

 

    JERSEY CENTRAL POWER & LIGHT COMPANY
Dated:     By:    
        Title:     
        Attest:     
        Title:     

 

TRUSTEE’S CERTIFICATE
OF AUTHENTICATION
This Note is one of the Notes of the series herein designated, described or provided for in the within-mentioned Indenture.
UNITED STATES TRUST COMPANY OF
NEW YORK, As Trustee
By:    
  Authorized Officer

 

A-5


ABBREVIATIONS

The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations:

 

TEN COM — as tenants in common   

UNIF GIFT

 

MIN ACT - ______  Custodian________

 (Cust)      (Minor)

TEN ENT — as tenants by the entireties    Under Uniform Gifts to Minors

JT TEN — as joint tenants with right of

survivorship and not as tenants in common

  
  

______________________

  

 State

 

Additional abbreviations may also be used

though not in the above list.

_____________________________

FOR VALUE RECEIVED the undersigned hereby sell(s),

assign(s) and transfer(s) unto

PLEASE INSERT SOCIAL SECURITY OR OTHER

IDENTIFYING NUMBER OF ASSIGNEE

 

 

 

        

 

 

 

 

 

Please print or typewrite name and address

including postal zip code of assignee

_____________________________________________

the within note and all rights thereunder, hereby

irrevocably constituting and appointing

________________________ attorney to transfer

said note on the books of the Company, with

full power of substitution in the premises.

 

A-6


Dated:_________________________________    
    NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within instrument in every particular, without alteration or enlargement or any change whatever.

 

A-7


EXHIBIT B

FORM OF NOTE

PRIOR TO RELEASE DATE

 

REGISTERED

         REGISTERED

JERSEY CENTRAL POWER & LIGHT COMPANY

SENIOR NOTE, ____% DUE _____, SERIES ___

 

CUSIP:    PRINCIPAL AMOUNT:
ORIGINAL ISSUE DATE:    MATURITY DATE:
INTEREST RATE:    NUMBER:

JERSEY CENTRAL. POWER & LIGHT COMPANY, a corporation of the State of New Jersey (the “COMPANY”), for value received hereby promises to pay to

or registered assigns, the principal sum of __________________

 

  DOLLARS

on the Maturity Date set forth above, and to pay interest thereon from ________________ or from the most recent date to which interest has been paid or duly provided for, semiannually in arrears on ________________ and ___________________ in each year, commencing on the first such Interest Payment Date succeeding _____________________, at the per annum Interest Rate set forth above, until the principal hereof is paid or made available for payment. No interest shall accrue on the Maturity Date, so long as the principal amount of this Note is paid in full on the Maturity Date. The interest so payable and punctually paid or duly provided for on any such Interest Payment Date (except for interest payable on the Maturity Date set forth above or, if applicable, upon redemption or acceleration) will, as provided in the Indenture (as defined below), be paid to the Person in whose name this Note is registered at the close of business on the Regular Record Date for such interest, which shall be the __________________or ____________, as the case may be, next preceding such Interest Payment Date; provided that the first Interest Payment Date for any Note of this Series, the Original Issue Date of which is after a Regular Record Date but prior to the applicable Interest Payment Date, shall be the Interest Payment Date following the next succeeding Regular Record Date; and provided, further, that interest payable on the Maturity Date set forth above or, if applicable, upon redemption or acceleration, shall be payable to the Person to whom principal shall be payable. Except as otherwise provided in the Indenture (referred to on the reverse hereof), any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and shall be paid to the Person in whose name this Note is registered at the close of business on a Special Record Date for the payment of such defaulted interest to be fixed by the Trustee, notice whereof shall be given to Noteholders not more than fifteen days nor fewer than ten days prior to such Special Record Date. Principal, applicable premium, if any, and interest due at the maturity of this Note shall be payable in immediately available funds when due upon presentation and surrender of this Note at the Corporate Trust Office of the Trustee or at the authorized office of any paying agent in the Borough

 

B-1


of Manhattan, the City and State of New York. Interest on this Note (other than interest payable at maturity) shall be paid by check in clearinghouse funds to the Holder as its name appears on the register; provided that if the Trustee receives a written request from any Holder of Notes (as defined below), the aggregate principal amount of all of which having the same Interest Payment Date as this Note equals or exceeds $10,000,000, on or prior to the applicable Regular Record Date, interest on this Note shall be paid by wire transfer of immediately available funds to a bank within the continental United States designated by such Holder in its request or by direct deposit into the account of such Holder designated by such Holder in its request if such account is maintained with the Trustee or any paying agent.

REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET FORTH IN FULL ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH IN FULL AT THIS PLACE.

Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof, directly or through an Authenticating Agent by manual or facsimile signature of an authorized officer, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.

 

    JERSEY CENTRAL POWER & LIGHT
COMPANY
Dated:   By:    
    Title:     
    Attest:     
    Title:     

 

TRUSTEE’S CERTIFICATE

OF AUTHENTICATION

 

This Note is one of the Notes of the series

herein designated, described or provided for

in the within-mentioned Indenture.

 

UNITED STATES TRUST COMPANY OF

NEW YORK, As Trustee

By:    
  Authorized Officer

 

B-2


[FORM OF REVERSE OF NOTE]

JERSEY CENTRAL POWER & LIGHT COMPANY SENIOR NOTE, ____% DUE ______,

SERIES __

This Note is one of a duly authorized issue of Senior Notes, ____% Due _______, Series ___ (the “NOTES OF THIS SERIES”) of the Company issued and to be issued under an Indenture dated as of July 1, 1999 between the Company and United States Trust Company of New York, as trustee (the “TRUSTEE”, which term includes any successor Trustee under the Indenture) and indentures supplemental thereto (collectively, the “INDENTURE”). Under the Indenture, one or more series of notes may be issued and, as used herein, the term “Notes” refers to the Notes of this Series and any other outstanding series of Notes. Reference is hereby made to the Indenture for a more complete statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Noteholders and of the terms upon which the Notes are and are to be authenticated and delivered. This Note is one of the series designated on the face hereof, limited in aggregate principal amount to $ _______.

Prior to the Release Date (as hereinafter defined), the Notes will be secured by first mortgage bonds (the “SENIOR NOTE FIRST MORTGAGE BONDS”) delivered by the Company to the Trustee for the benefit of the Holders of the Notes, issued under the Indenture, dated as of March 1, 1946, from the Company to United States Trust Company of New York, as successor trustee (the “MORTGAGE TRUSTEE”), as supplemented and modified (collectively, the “FIRST MORTGAGE”). Reference is made to the First Mortgage and the Indenture for a description of the rights of the Trustee as holder of the Senior Note First Mortgage Bonds, the property mortgaged and pledged, the nature and extent of the security and the rights of the holders of first mortgage bonds under the First Mortgage and the rights of the Company and of the Mortgage Trustee in respect thereof, the duties and immunities of the Mortgage Trustee and the terms and conditions upon which the Senior Note First Mortgage Bonds are secured and the circumstances under which additional first mortgage bonds may be issued.

From and after such time as the earlier of (i) the date that all First Mortgage Bonds, other than the Senior Note First Mortgage Bonds, have been retired (at, before or after the maturity thereof) through payment, redemption, purchase defeasance or otherwise, and (ii) the date upon which the Trustee holds Senior Note First Mortgage Bonds constituting not less than 80% in aggregate principal amount of all outstanding First Mortgage Bonds (the “Release Date”), the Senior Note First Mortgage Bonds shall cease to secure the notes in any manner. In certain circumstances prior to the Release Date as provided in the Indenture, the Company is permitted to reduce the aggregate principal amount of a series of Senior Note First Mortgage Bonds held by the Trustee, but in no event prior to the Release Date to an amount less than the aggregate outstanding principal amount of the series of Notes initially issued contemporaneously with such Senior Note First Mortgage Bonds.

[Insert redemption and notice provisions, if any]

Interest payments for this Note shall be computed and paid on the basis of a 360-day year of twelve 30-day months (and for any partial period shall be calculated on the basis of the number of days elapsed in a 360-day year of twelve 30-day months). If any Interest Payment Date or the date on which the principal of this Note is required to paid is not a Business Day, then payment of

 

B-3


principal, premium, if any, or interest need not be made on such date but may be made on the next succeeding Business Day with the same force and effect as if made on such Interest Payment Date or the date on which the principal of this Note is required to be paid, and, in the case of timely payment thereof, no interest shall accrue for the period from and after such Interest Payment Date or the date on which the principal of this Note is required to be paid.

The Company, at its option, and subject to the terms and conditions provided in the Indenture, will be discharged from any and all obligations in respect of the Notes (except for certain obligations including obligations to register the transfer or exchange of Notes, replace stolen, lost or mutilated Notes, maintain paying agencies and hold monies for payment in trust, all as set forth in the Indenture) if the Company deposits with the Trustee cash, U.S. Government Obligations which through the payment of interest thereon and principal thereof in accordance with their terms will provide cash, or a combination of cash and U.S. Government Obligations, in any event in an amount sufficient, without reinvestment, to pay all the principal of and premium, if any, and interest on the Notes on the dates such payments are due in accordance with the terms of the Notes.

If an Event of Default shall occur and be continuing, the principal of and interest on the Notes may be declared due and payable in the manner and with the effect provided in the Indenture and, upon such declaration, the Trustee shall demand the redemption of the Senior Note First Mortgage Bonds to the extent provided in the Indenture.

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modifications of the rights and obligations of the Company and the rights of the Noteholders under the Indenture at any time by the Company and the Trustee with the consent of the Holders of not less than a majority in principal amount of the outstanding Notes. Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange therefor in lieu thereof whether or not notation of such consent or waiver is made upon the Note.

As set forth in and subject to the provisions of the Indenture, no Holder of any Notes will have any right to institute any proceeding with respect to the Indenture or for any remedy thereunder unless such Holder shall have previously given to the Trustee written notice of a continuing Event of Default with respect to such Notes, the Holders of not less than a majority in principal amount of the outstanding Notes affected by such Event of Default shall have made written request and offered reasonable indemnity to the Trustee to institute such proceeding as Trustee and the Trustee shall have failed to institute such proceeding within 60 days; provided, however, that such limitations do not apply to a suit instituted by the Holder hereof for the enforcement of payment of the principal of and premium, if any, or interest on this Note on or after the respective due dates expressed here.

No reference herein to the Indenture and to provisions of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and premium, if any, and interest on this Note at the times, places and rates and the coin or currency prescribed in the Indenture.

 

B-4


As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Note is registrable in the Note register. Upon surrender of this Note for registration or transfer at the Corporate Trust Office of the Trustee or such other office or agency as may be designated by the Company in the Borough of Manhattan, the City and State of New York, endorsed by or accompanied by a written instrument of transfer in form satisfactory to the Company and the Note registrar, duly executed by the Holder hereof or the attorney in fact of such Holder duly authorized in writing, one or more new Notes of this Series of like tenor and of authorized denominations and for the same aggregate principal amount will be issued to the designated transferee or transferees.

The Notes of this Series are issuable only in registered form, without coupons, in denominations of $1,000 and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, Notes of this Series are exchangeable for a like aggregate principal amount of Notes of this Series of like tenor and of a different authorized denomination, as requested by the Holder surrendering the same.

No service charge shall be made for any such registration of transfer or exchange but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

Prior to due presentment of this Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Note is registered as the owner thereof for all purposes, whether or not this Note is overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.

All terms used in this Note which are defined in the Indenture shall have the meanings assigned to them in the Indenture.

 

B-5


ABBREVIATIONS

The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations:

 

TEN COM — as tenants in common   

UNIF GIFT

 

MIN ACT - ______  Custodian________

 (Cust)      (Minor)

TEN ENT — as tenants by the entireties    Under Uniform Gifts to Minors

JT TEN — as joint tenants with right of

survivorship and not as tenants in common

  
  

______________________

  

 State

 

Additional abbreviations may also be used

though not in the above list.

_____________________________

FOR VALUE RECEIVED the undersigned hereby sell(s),

assign(s) and transfer(s) unto

PLEASE INSERT SOCIAL SECURITY OR OTHER

IDENTIFYING NUMBER OF ASSIGNEE

 

 

 

        

 

 

 

 

 

Please print or typewrite name and address

including postal zip code of assignee

_____________________________________________

the within note and all rights thereunder, hereby

irrevocably constituting and appointing

________________________ attorney to transfer

said note on the books of the Company, with

full power of substitution in the premises.

 

B-6


Dated:_________________________________    
    NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within instrument in every particular, without alteration or enlargement or any change whatever.

 

B-7


EXHIBIT C

FORM OF GLOBAL NOTE FOLLOWING RELEASE DATE

 

REGISTERED

         REGISTERED

THIS NOTE IS A GLOBAL NOTE REGISTERED IN THE NAME OF THE DEPOSITARY (REFERRED TO HEREIN) OR A NOMINEE THEREOF AND, UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE INDIVIDUAL NOTES REPRESENTED HEREBY, THIS GLOBAL NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS GLOBAL NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK), TO THE TRUSTEE FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO. , ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO. , HAS AN INTEREST HEREIN.

JERSEY CENTRAL POWER & LIGHT COMPANY

SENIOR NOTE, ___% DUE ____, SERIES ___

 

CUSIP:    NUMBER:
ORIGINAL ISSUE DATE:    PRINCIPAL AMOUNT:
INTEREST RATE:    MATURITY DATE:

JERSEY CENTRAL POWER & LIGHT COMPANY, a corporation duly organized and existing under the laws of the State of New Jersey (the “COMPANY”), for value received hereby promises to pay to Cede & Co. or registered assigns, the principal sum of ________________

 

             DOLLARS

on the Maturity Date set forth above, and to pay interest thereon from _________________ or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semiannually in arrears on the ___________ and __________in each year, commencing on the first such Interest Payment Date succeeding _______________________, at the per annum Interest Rate set forth above, until the principal hereof is paid or made available for payment. No interest shall accrue on the Maturity Date, so long as the principal amount of this Global Note is paid on the Maturity Date. The interest so payable and punctually paid or duly provided for on any such Interest Payment Date (except for interest payable on the Maturity Date set forth above or, if applicable, upon redemption or acceleration) will, as provided in the Indenture, be paid to

 

C-1


the Person in whose name this Note is registered at the close of business on the Regular Record Date for such interest, which shall be the _______________or ______________, as the case may be, next preceding such Interest Payment Date; provided, that the first Interest Payment Date for any part of this Note, the Original Issue Date of which is after a Regular Record Date but prior to the applicable Interest Payment Date, shall be the Interest Payment Date following the next succeeding Regular Record Date; and provided, that interest payable on the Maturity Date set forth above or, if applicable, upon redemption or acceleration, shall be payable to the Person to whom principal shall be payable. Except as otherwise provided in the Indenture (as defined below), any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and shall be paid to the Person in whose name this Note is registered at the close of business on a Special Record Date for the payment of such defaulted interest to be fixed by the Trustee, notice whereof shall be given to Noteholders not more than fifteen days or fewer than ten days prior to such Special Record Date. Payment of principal of, interest and premium, if any, on this Global Note shall be payable pursuant to Section 2.12(a) of the Indenture.

This Global Note is a global security in respect of a duly authorized issue of Senior Notes, _____% Due _______, Series ___ (the “NOTES OF THIS SERIES”, which term includes any Global Notes representing such Notes) of the Company issued and to be issued under an Indenture dated as of __________, 1999 between the Company and United States Trust Company of New York, as trustee (herein called the “TRUSTEE”, which term includes any successor Trustee under the Indenture) and indentures supplemental thereto (collectively, the “INDENTURE”). Under the Indenture, one or more series of notes may be issued and, as used herein, the term “Notes” refers to the Notes of this Series and any other outstanding series of Notes. Reference is hereby made to the Indenture for a more complete statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Noteholders and of the terms upon which the Notes are and are to be authenticated and delivered. This Global Note has been issued in respect of the series designated on the first page hereof, limited in aggregate principal amount to $__________.

Each Note of this Series shall be dated and issued as of the date of its authentication by the Trustee and shall bear an Original Issue Date. Each Note or Global Note issued upon transfer, exchange or substitution of such Note or Global Note shall bear the Original Issue Date of such transferred, exchanged or substituted Note or Global Note, as the case may be.

[Insert redemption and notice provisions, if any]

Interest payments for this Global Note shall be computed and paid on the basis of a 360-day year of twelve 30-day months (and for any partial period shall be calculated on the basis of the number of days elapsed in a 360-day year of twelve 30-day months). If where any Interest Payment Date or date on which the principal of this Global Note is required to be paid is not a Business Day, then payment of principal, premium, if any, or interest need not be made on such date but may be made on the next succeeding Business Day with the same force and effect as if made on such Interest Payment Date or date on which the principal of this Global Note is required to be paid and, in the case of timely payment thereof, no interest shall accrue for the period from and after such Interest Payment Date or the date on which the principal of this Global Note is required to be paid.

 

C-2


The Company, at its option, and subject to the terms and conditions provided in the Indenture, will be discharged from any and all obligations in respect of the Notes (except for certain obligations including obligations to register the transfer or exchange of Notes, replace stolen, lost or mutilated Notes, maintain paying agencies and hold monies for payment in trust, all as set forth in the Indenture) if the Company deposits with the Trustee cash, U.S. Government Obligations which through the payment of interest thereon and principal thereof in accordance with their terms will provide cash, or a combination of cash and U.S. Government Obligations, in any event in an amount sufficient, without reinvestment, to pay all the principal of and premium, if any, and interest on the Notes on the dates such payments are due in accordance with the terms of the Notes.

If an Event of Default shall occur and be continuing, the principal of the Notes may be declared due and payable in the manner and with the effect provided in the Indenture.

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modifications of the rights and obligations of the Company and the rights of the Noteholders under the Indenture at any time by the Company and the Trustee with the consent of the Holders of not less than a majority in principal amount of the outstanding Notes. Any such consent or waiver by the Holder of this Global Note shall be conclusive and binding upon such Holder and upon all future Holders of this Global Note and of any Note issued upon the registration of transfer hereof or in exchange therefor or in lieu thereof whether or not notation of such consent or waiver is made upon this Global Note.

As set forth in and subject to the provisions of the Indenture, no Holder of any Notes will have any right to institute any proceeding with respect to the Indenture or for any remedy thereunder unless such Holder shall have previously given to the Trustee written notice of a continuing Event of Default with respect to such Notes, the Holders of not less than a majority in principal amount of the outstanding Notes affected by such Event of Default shall have made written request and offered reasonable indemnity to the Trustee to institute such proceeding as Trustee and the Trustee shall have failed to institute such proceeding within 60 days; provided, however, that such limitations do not apply to a suit instituted by the Holder hereof for the enforcement of payment of the principal of and premium, if any, or interest on this Note on or after the respective due dates expressed here.

No reference herein to the Indenture and to provisions of this Global Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and premium, if any, and interest on this Global Note at the times, places and rates and the coin or currency prescribed in the Indenture.

As provided in the Indenture and subject to certain limitations therein set forth, this Global Note may be transferred only as permitted by the legend hereto.

Unless the certificate of authentication hereon has been executed by the Trustee, directly or through an Authenticating Agent by manual or facsimile signature of an authorized officer, this Global Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

 

C-3


All terms used in this Global Note which are defined in the Indenture shall have the meanings assigned to them in the Indenture unless otherwise indicated herein.

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.

 

        JERSEY CENTRAL POWER & LIGHT
COMPANY
   
Dated:         By:      
        Title:         
        Attest:         
        Title:         

 

TRUSTEE’S CERTIFICATE

OF AUTHENTICATION

 

This Note is one of the Notes of the series

herein designated, described or provided for

in the within-mentioned Indenture.

 

UNITED STATES TRUST COMPANY OF

NEW YORK, As Trustee

By:    
  Authorized Officer

 

C-4


ABBREVIATIONS

The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations:

 

TEN COM — as tenants in common   

UNIF GIFT

 

MIN ACT - ______  Custodian________

 (Cust)      (Minor)

TEN ENT — as tenants by the entireties    Under Uniform Gifts to Minors

JT TEN — as joint tenants with right of

survivorship and not as tenants in common

  
  

______________________

  

 State

 

Additional abbreviations may also be used

though not in the above list.

_____________________________

FOR VALUE RECEIVED the undersigned hereby sell(s),

assign(s) and transfer(s) unto

PLEASE INSERT SOCIAL SECURITY OR OTHER

IDENTIFYING NUMBER OF ASSIGNEE

 

 

 

        

 

 

 

 

 

Please print or typewrite name and address

including postal zip code of assignee

_____________________________________________

the within note and all rights thereunder, hereby

irrevocably constituting and appointing

________________________ attorney to transfer

said note on the books of the Company, with

full power of substitution in the premises.

 

C-5


Dated:_________________________________    
    NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within instrument in every particular, without alteration or enlargement or any change whatever.

 

C-6


EXHIBIT D

FORM OF NOTE FOLLOWING RELEASE DATE

 

REGISTERED          REGISTERED

JERSEY CENTRAL POWER & LIGHT COMPANY

SENIOR NOTE, _% DUE SERIES

 

CUSIP:    PRINCIPAL AMOUNT:
ORIGINAL ISSUE DATE:    MATURITY DATE:
INTEREST RATE:    NUMBER:

JERSEY CENTRAL POWER & LIGHT COMPANY, a corporation duly organized and existing under the laws of the State of New Jersey (the “COMPANY”), for value received hereby promises to pay to

or registered assigns, the principal sum of _____________________

DOLLARS

on the Maturity Date set forth above, and to pay interest thereon from ______________ or from the most recent date to which interest has been paid or duly provided for, semiannually in arrears on ____________ and _______________ in each year, commencing on the first such Interest Payment Date succeeding _________________, at the per annum Interest Rate set forth above, until the principal hereof is paid or made available for payment. No interest shall accrue on the Maturity Date, so long as the principal amount of this Note is paid in full on the Maturity Date. The interest so payable and punctually paid or duly provided for on any such Interest Payment Date (except for interest payable on the Maturity Date set forth above or, if applicable, upon redemption or acceleration) will, as provided in the Indenture (as defined below), be paid to the Person in whose name this Note is registered at the close of business on the Regular Record Date for such interest, which shall be the _________________ or _____________, as the case may be, next preceding such Interest Payment Date; provided that the first Interest Payment Date for any Note, the Original Issue Date of which is after a Regular Record Date but prior to the applicable Interest Payment Date, shall be the Interest Payment Date following the next succeeding Regular Record Date; and provided, further that interest payable on the Maturity Date set forth above or, if applicable, upon redemption or acceleration, shall be payable to the Person to whom principal shall be payable. Except as otherwise provided in the Indenture (referred to on the reverse hereof), any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and shall be paid to the Person in whose name this Note is registered at the close of business on a Special Record Date for the payment of such defaulted interest to be fixed by the Trustee, notice whereof shall be given to Noteholders not more than fifteen days nor fewer than ten days prior to such Special Record Date. Principal, applicable premium, if any, and interest due at the maturity of this Note shall be payable in immediately available funds when due upon presentation and surrender of this Note at the Corporate Trust


Office of the Trustee or at the authorized office of any paying agent in the Borough of Manhattan, the City and State of New York. Interest on this Note (other than interest payable at Maturity) shall be paid by check in clearinghouse funds to the Holder as its name appears on the register; provided that if the Trustee receives a written request from any Holder of Notes (as defined below), the aggregate principal amount of all of which having the same Interest Payment Date as this Note equals or exceeds $10,000,000, on or prior to the applicable Regular Record Date for such Interest Payment Date, interest on the Note shall be paid by wire transfer of immediately available funds to a bank within the continental United States designated by such Holder in its request or by direct deposit into the account of such Holder designated by such Holder in its request if such account is maintained with the Trustee or any paying agent.

REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET FORTH IN FULL ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH IN FULL AT THIS PLACE.

Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof, directly or through an Authenticating Agent by manual signature of an authorized officer, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.

 

        JERSEY CENTRAL POWER & LIGHT
COMPANY
   
Dated:         By:      
        Title:         
        Attest:         
        Title:         

 

TRUSTEE’S CERTIFICATE

OF AUTHENTICATION

 

This Note is one of the Notes of the series

herein designated, described or provided for

in the within-mentioned Indenture.

 

UNITED STATES TRUST COMPANY OF

NEW YORK, As Trustee

By:    
  Authorized Officer

 

D-2


[FORM OF REVERSE OF NOTE]

JERSEY CENTRAL POWER & LIGHT COMPANY

SENIOR NOTE, ___% DUE ____, SERIES ___

This Note is one of a duly authorized issue of Senior Notes, ____,% Due __________, Series ___ (the “NOTES OF THIS SERIES”) of the Company issued and to be issued under an Indenture dated as of _______________, 1999, between the Company and United States Trust Company of New York, as trustee (herein called the “TRUSTEE”, which term includes any successor Trustee under the Indenture) and indentures supplemental thereto (collectively, the “INDENTURE”). Under the Indenture, one or more series of notes may be issued and, as used herein, the term “Notes” refers to the Notes of this Series and any other outstanding series of Notes. Reference is hereby made to the Indenture for a more complete statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Noteholders and of the terms upon which the Notes are and are to be authenticated and delivered. This Note is one of the series designated on the face hereof, limited in aggregate principal amount to $_____.

Each Note of this Series shall be dated and issued as of the date of its authentication by the Trustee and shall bear an Original Issue Date. Each Note issued upon transfer, exchange or substitution of such Note shall bear the Original Issue Date of such transferred, exchanged or substituted Note, as the case may be.

[Insert redemption and notice provisions, if any]

Interest payments for this Note shall be computed and paid on the basis of a 360-day year of twelve 30-day months (and for any partial period shall be calculated on the basis of the number of days elapsed in a 360-day year of twelve 30-day months). In any case where any Interest Payment Date or the date on which the principal of this Note is required to paid is not a Business Day, then payment of principal, premium, if any, or interest need not be made on such date but may be made on the next succeeding Business Day with the same force and effect as if made on such Interest Payment Date or the date on which the principal of this Note is required to be paid, and, in the case of timely payment thereof, no interest shall accrue for the period from and after such Interest Payment Date or the date on which the principal of this Note is required to be paid.

The Company, at its option, and subject to the terms and conditions provided in the Indenture, will be discharged from any and all obligations in respect of the Notes (except for certain obligations including obligations to register the transfer or exchange of Notes, replace stolen, lost or mutilated Notes, maintain paying agencies and hold monies for payment in trust, all as set forth in the Indenture) if the Company deposits with the Trustee cash, U.S. Government Obligations which through the payment of interest thereon and principal thereof in accordance with their terms will provide cash, or a combination of cash and U.S. Government Obligations, in any event in an amount sufficient, without reinvestment, to pay all the principal of and premium, if any, and interest on the Notes on the dates such payments are due in accordance with the terms of the Notes.

 

D-3


If an Event of Default shall occur and be continuing, the principal of the Notes may be declared due and payable in the manner and with the effect provided in the Indenture.

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modifications of the rights and obligations of the Company and the rights of the Noteholders under the Indenture at any time by the Company and the Trustee with the consent of the Holders of not less than a majority in principal amount of the outstanding Notes. Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange therefor in lieu thereof whether or not notation of such consent or waiver is made upon the Note.

As set forth in and subject to the provisions of the Indenture, no Holder of any Notes will have any right to institute any proceeding with respect to the Indenture or for any remedy thereunder unless such Holder shall have previously given to the Trustee written notice of a continuing Event of Default with respect to such Notes, the Holders of not less than a majority in principal amount of the outstanding Notes affected by such Event of Default shall have made written request and offered reasonable indemnity to the Trustee to institute such proceeding as Trustee and the Trustee shall have failed to institute such proceeding within 60 days; provided, however, that such limitations do not apply to a suit instituted by the Holder hereof for the enforcement of payment of the principal of and premium, if any, or interest on this Note on or after the respective due dates expressed here.

No reference herein to the Indenture and to provisions of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and premium, if any, and interest on this Note at the times, places and rates and the coin or currency prescribed in the Indenture.

As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Note is registrable in the Note register. Upon surrender of this Note for registration or transfer at the corporate trust office of the Trustee or such other office or agency as may be designated by the Company in the Borough of Manhattan, the City and State of New York, endorsed by or accompanied by a written instrument of transfer in form satisfactory to the Company and the Note registrar, duly executed by the Holder hereof or the attorney in fact of such Holder duly authorized in writing, one or more new Notes of this Series of like tenor and of authorized denominations and for the same aggregate principal amount will be issued to the designated transferee or transferees.

The Notes of this Series are issuable only in registered form, without coupons, in denominations of $1,000 and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, Notes of this Series are exchangeable for a like aggregate principal amount of Notes of this Series of like tenor and of a different authorized denomination, as requested by the Holder surrendering the same.

No service charge shall be made for any such registration of transfer or exchange but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

 

D-4


Prior to due presentment of this Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Note is registered as the owner thereof for all purposes, whether or not this Note is overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.

All terms used in this Note which are defined in the Indenture shall have the meanings assigned to them in the Indenture.

 

D-5


ABBREVIATIONS

The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations:

The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations:

 

TEN COM — as tenants in common   

UNIF GIFT

 

MIN ACT- ______  Custodian________

 (Cust)      (Minor)

TEN ENT — as tenants by the entireties    Under Uniform Gifts to Minors

JT TEN — as joint tenants with right of

survivorship and not as tenants in common

  
  

______________________

  

 State

 

Additional abbreviations may also be used

though not in the above list.

_____________________________

FOR VALUE RECEIVED the undersigned hereby sell(s),

assign(s) and transfer(s) unto

PLEASE INSERT SOCIAL SECURITY OR OTHER

IDENTIFYING NUMBER OF ASSIGNEE

 

 

 

        

 

 

 

 

 

Please print or typewrite name and address

including postal zip code of assignee

_____________________________________________

the within note and all rights thereunder, hereby

irrevocably constituting and appointing

________________________ attorney to transfer

said note on the books of the Company, with

full power of substitution in the premises.

 

D-6


Dated:_________________________________    
    NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within instrument in every particular, without alteration or enlargement or any change whatever.

 

D-7

Exhibit 4.2

EXECUTION VERSION

REGISTRATION RIGHTS AGREEMENT

This REGISTRATION RIGHTS AGREEMENT, dated as of December 5, 2024 (this “Agreement”), is entered into by and among Jersey Central Power & Light Company, a New Jersey corporation (the “Company”), and Barclays Capital Inc., MUFG Securities Americas Inc., PNC Capital Markets LLC and Wells Fargo Securities, LLC, as representatives (the “Representatives”) of the initial purchasers set forth on Schedule 1 to the Purchase Agreement (as defined herein) (the “Initial Purchasers”).

The Company and the Representatives are parties to the Purchase Agreement dated December 2, 2024 (the “Purchase Agreement”), which provides for the sale by the Company to the Initial Purchasers of $700,000,000 in principal amount of the Company’s 5.100% Senior Notes due 2035 (the “Securities”). The Securities will be issued under the Company’s Indenture, dated as of July 1, 1999, between the Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (the “Trustee”), as amended and supplemented by the First Supplemental Indenture, dated as of October 31, 2007, between the Company and the Trustee (as so amended and supplemented, the “Indenture”). The Securities will be established pursuant to a company order in accordance with Section 2.05(c) of the Indenture.

As an inducement to the Initial Purchasers to enter into the Purchase Agreement, the Company has agreed to provide for the Initial Purchasers and their direct and indirect transferees to receive the registration rights set forth in this Agreement. The execution and delivery of this Agreement is a condition to the obligations of the Initial Purchasers set forth in Section 5(j) of the Purchase Agreement.

In consideration of the foregoing, the parties hereto agree as follows:

1. Definitions. As used in this Agreement, the following capitalized defined terms shall have the following meanings:

Agreement” shall have the meaning set forth in the preamble.

Business Day” shall mean each day that is not a day on which banking institutions or trust companies in the Borough of Manhattan, the City and State of New York, or in the city where the Corporate Trust Office of the Trustee is located, are obligated or authorized by law or executive order to close. For purposes of this Agreement, if the day on which any deadline specified in this Agreement expires is not a Business Day, such deadline shall be deemed to expire on the next succeeding Business Day.

Closing Time” shall have the meaning set forth in the Purchase Agreement.

Company” shall have the meaning set forth in the preamble.

Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time.


Exchange Dates” shall have the meaning set forth in Section 2(a)(ii) hereof.

Exchange Offer” shall mean the exchange offer of Exchange Securities for Registrable Securities pursuant to Section 2(a) hereof.

Exchange Offer Registration” shall mean a registration under the Securities Act effected pursuant to Section 2(a) hereof.

Exchange Offer Registration Statement” shall mean an exchange offer registration statement on Form S-4 (or, if applicable, on another appropriate form) and all amendments and supplements to such registration statement, in each case including the Prospectus contained therein or deemed a part thereof, all exhibits thereto and any document incorporated by reference therein.

Exchange Securities” shall mean senior unsecured notes issued by the Company under the Indenture containing terms identical to the Registrable Securities (except that such notes will be registered under the Securities Act and the transfer restrictions, registration rights and additional annual interest rate for failure to comply with this Agreement applicable to the Registrable Securities will not apply to such notes) and to be offered to Holders of Registrable Securities in exchange for Securities pursuant to the Exchange Offer.

FINRA” shall mean the Financial Industry Regulatory Authority, Inc.

Free Writing Prospectus” shall mean each free writing prospectus (as defined in Rule 405 under the Securities Act) prepared by or on behalf of the Company or used or referred to by the Company in connection with the offer and sale of the Securities or the Exchange Securities.

Holder Notice” shall have the meaning set forth in Section 2(b) hereof.

Holders” shall mean the Initial Purchasers, for so long as they own any Registrable Securities, and each of their successors, assigns and direct and indirect transferees who become owners of Registrable Securities under the Indenture; provided that for purposes of Sections 4 and 6 hereof, the term “Holders” shall include Participating Broker-Dealers.

Indemnified Person” shall have the meaning set forth in Section 5(c) hereof.

Indemnifying Person” shall have the meaning set forth in Section 5(c) hereof.

Indenture” shall have the meaning set forth in the preamble.

Initial Purchasers” shall have the meaning set forth in the preamble.

Inspector” shall have the meaning set forth in Section 3(a)(xiv) hereof.

 

-2-


Issuer Information” shall have the meaning set forth in Section 5(a) hereof.

Majority Holders” shall mean the Holders of a majority of the aggregate principal amount of the outstanding Registrable Securities; provided that whenever the consent or approval of Holders of a specified percentage of Registrable Securities is required hereunder, any Registrable Securities owned directly or indirectly by the Company or any of its affiliates shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage or amount; and provided, further, that if the Company shall issue any additional Securities under the Indenture prior to consummation of the Exchange Offer or, if applicable, the effectiveness of any Shelf Registration Statement, such additional Securities and the Registrable Securities to which this Agreement relates shall be treated together as one class for purposes of determining whether the consent or approval of Holders of a specified percentage of Registrable Securities has been obtained.

Participating Broker-Dealers” shall have the meaning set forth in Section 4(a) hereof.

Person” shall mean an individual, partnership, limited liability company, corporation, trust or unincorporated organization, or a government or agency or political subdivision thereof.

Prospectus” shall mean the prospectus included in, or, pursuant to the rules and regulations of the Securities Act, deemed a part of, a Registration Statement, including (i) any preliminary prospectus and (ii) any such prospectus as amended or supplemented by any prospectus supplement, including a prospectus supplement with respect to the terms of the offering of any portion of the Registrable Securities covered by a Shelf Registration Statement, and by all other amendments and supplements to such prospectus, and in each case including any document incorporated by reference therein.

Purchase Agreement” shall have the meaning set forth in the preamble.

Registrable Securities” shall mean the Securities; provided that any Securities shall cease to be Registrable Securities (i) when a Registration Statement with respect to such Securities has become effective under the Securities Act and the Securities have been exchanged, disposed of or distributed pursuant to such Registration Statement, (ii) when such Securities cease to be outstanding or (iii) when the Exchange Offer is consummated, except in the case of Securities that otherwise remain Registrable Securities that are held by a Holder that was ineligible to participate in the Exchange Offer or participated in the Exchange Offer and did not receive freely transferable Exchange Securities pursuant to the Exchange Offer.

Registration Expenses” shall mean any and all expenses incident to performance of or compliance by the Company with this Agreement, including without limitation: (i) all SEC, stock exchange or FINRA registration and filing fees, (ii) all fees and expenses incurred by the Company in connection with compliance with state securities or

 

-3-


blue sky laws (including reasonable fees and disbursements of one firm of counsel for any Underwriters or Holders in connection with blue sky qualification of any Exchange Securities or Registrable Securities, which firm shall be selected by the Underwriters or the Majority Holders), (iii) the costs incident to the preparing, word processing, printing and distributing any Registration Statement, any Prospectus, any Free Writing Prospectus and any amendments or supplements thereto, any underwriting agreements, securities sales agreements or other similar agreements, and any other documents relating to the performance of and compliance with this Agreement, (iv) all rating agency fees, (v) all fees and disbursements relating to the qualification of the Indenture under applicable securities laws, (vi) the reasonable fees and disbursements of the Trustee, (vii) the reasonable fees and disbursements of counsel for the Company and, in the case of a Shelf Registration Statement, the reasonable fees (not to exceed $125,000) and disbursements of one counsel for the Holders (which counsel shall be Cravath, Swaine & Moore LLP) and (viii) the fees and disbursements of the independent public accountants of the Company, including the expenses of any “comfort” letters required by or incident to the performance of and compliance with this Agreement, but excluding any or all fees and expenses of advisors or counsel to any Underwriters (other than fees and expenses set forth in clause (ii) above) or the Holders, any underwriting discounts and commissions, and any brokerage commissions and transfer taxes, if any, relating to the sale or disposition of Registrable Securities by a Holder.

Registration Statement” shall mean any registration statement that covers any of the Exchange Securities or Registrable Securities pursuant to the provisions of this Agreement and all amendments and supplements to any such registration statement, including post-effective amendments, in each case including the Prospectus contained therein or deemed a part thereof, all exhibits thereto and any document incorporated by reference therein.

Representatives” shall have the meaning set forth in the preamble.

SEC” shall mean the United States Securities and Exchange Commission.

Securities” shall have the meaning set forth in the preamble.

Securities Act” shall mean the Securities Act of 1933, as amended from time to time.

Shelf Additional Interest Date” shall have the meaning set forth in Section 2(d) hereof.

Shelf Effectiveness Period” shall have the meaning set forth in Section 2(b) hereof.

Shelf Registration” shall mean a registration effected pursuant to Section 2(b) hereof.

 

-4-


Shelf Registration Statement” shall mean a “shelf” registration statement that covers all or a portion of the Registrable Securities (but no other securities unless approved by a majority of the Holders whose Registrable Securities are to be covered by such Shelf Registration Statement) on an appropriate form under Rule 415 under the Securities Act, or any similar rule that may be adopted by the SEC, and all amendments and supplements to such registration statement, including post-effective amendments, in each case including the Prospectus contained therein or deemed a part thereof, all exhibits thereto and any document incorporated by reference therein.

Shelf Request” shall have the meaning set forth in Section 2(b) hereof.

Staff” shall mean the staff of the SEC.

Target Registration Date” shall mean the date which is 366 days from the Closing Time.

Trigger Date” shall have the meaning set forth in Section 2(d) hereof.

Trust Indenture Act” shall mean the Trust Indenture Act of 1939, as amended from time to time.

Trustee” shall have the meaning set forth in the Preamble.

Underwriter” shall have the meaning set forth in Section 3(e) hereof.

Underwritten Offering” shall mean an offering in which Registrable Securities are sold to an Underwriter for reoffering to the public.

2. Registration under the Securities Act.

(a) To the extent not prohibited by any applicable law or applicable interpretations of the Staff, the Company shall use its reasonable best efforts to (x) file an Exchange Offer Registration Statement covering an offer to the Holders to exchange all outstanding Registrable Securities for Exchange Securities and (y) cause such Registration Statement to remain effective until 180 days after the date the Exchange Offer Registration Statement became effective for use by one or more Participating Broker-Dealers. The Company shall commence the Exchange Offer promptly after the Exchange Offer Registration Statement is declared effective by the SEC and use its reasonable best efforts to complete the Exchange Offer no later than the Target Registration Date.

The Company shall commence the Exchange Offer by mailing or making available the related Prospectus, appropriate letters of transmittal and other accompanying documents to each Holder stating, in addition to such other disclosures as are required by applicable law, substantially the following:

 

-5-


(i) that the Exchange Offer is being made pursuant to this Agreement and that all Registrable Securities validly tendered and not properly withdrawn will be accepted for exchange, except to the extent not permitted by law, applicable interpretations of the Staff or as otherwise contemplated in this Agreement;

(ii) the dates of acceptance for exchange (which shall be a period of at least 20 Business Days (in accordance with the Exchange Act) from the date such notice is mailed or made available) (the “Exchange Dates”);

(iii) that any Registrable Security not tendered will remain outstanding and continue to accrue interest but will not retain any rights under this Agreement, except as otherwise specified herein;

(iv) that any Holder electing to have a Registrable Security exchanged pursuant to the Exchange Offer will be required to (A) surrender such Registrable Security, together with the appropriate letters of transmittal, to the institution and at the address and in the manner specified in the notice or (B) effect such exchange otherwise in compliance with the applicable procedures of the depositary for such Registrable Security, in each case prior to the close of business on the last Exchange Date; and

(v) that any Holder will be entitled to withdraw its election, not later than the close of business on the last Exchange Date, by effecting such withdrawal in compliance with the applicable procedures of the institution as shall be set forth in the letter(s) of transmittal and in compliance with the applicable procedures of the depositary for the Registrable Securities.

As a condition to participating in the Exchange Offer, a Holder will be required to represent to the Company that (I) any Exchange Securities to be received by it will be acquired in the ordinary course of its business, (II) at the time of the commencement of the Exchange Offer it is not engaged in, and does not intend to engage in, and it has no arrangement or understanding with any Person to participate in, the distribution (within the meaning of the Securities Act) of the Exchange Securities in violation of the Securities Act, (III) it is not an “affiliate” (as defined in Rule 405 under the Securities Act) of the Company or, if it is such an “affiliate,” such Holder will comply with the prospectus delivery requirements of the Securities Act to the extent applicable in connection with any resale of the Exchange Securities and (IV) if such Holder is a broker-dealer that will receive Exchange Securities for its own account in exchange for Registrable Securities that were acquired as a result of market making or other trading activities, then such Holder will comply with the prospectus delivery requirements of the Securities Act, to the extent applicable, in connection with any resale of the Exchange Securities. Each Holder participating in the Exchange Offer shall be deemed to acknowledge and agree that any broker-dealer and any such Holder using the Exchange Offer to participate in a distribution of the securities to be acquired in the Exchange Offer (1) could not under SEC policy as in effect on the date of this Agreement rely on the position of the SEC enunciated in Morgan Stanley and Co., Inc. (available June 5, 1991)

 

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and Exxon Capital Holdings Corporation (available May 13, 1988), as interpreted in the SEC’s letter to Shearman & Sterling dated July 2, 1993, and similar no-action letters and (2) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction and that such a secondary resale transaction should be covered by an effective registration statement containing the selling security holder information required by Item 507 or 508, as applicable, of Regulation S-K under the Securities Act if the resales are of Exchange Securities obtained by such Holder in exchange for Registrable Securities acquired by such Holder directly from the Company.

As soon as practicable after the last Exchange Date, the Company shall:

(i) cause the Registrable Securities or portions thereof validly tendered and not properly withdrawn pursuant to the Exchange Offer to be accepted for exchange;

(ii) cause all Registrable Securities or portions thereof so accepted for exchange to be delivered to the Trustee for cancellation;

(iii) issue Exchange Securities equal in principal amount to the principal amount of the Registrable Securities validly tendered by such Holder; and

(iv) cause the Trustee to promptly authenticate and deliver to each Holder such Exchange Securities.

The Company shall use its reasonable best efforts to complete the Exchange Offer as provided above and shall comply with the applicable requirements of the Securities Act, the Exchange Act and other applicable laws and regulations in connection with the Exchange Offer. The Exchange Offer shall not be subject to any conditions, other than that the Exchange Offer does not violate any applicable law or applicable interpretations of the Staff and customary conditions relating to the delivery of Securities or other actions customarily taken by Holders participating in the Exchange Offer or the execution and delivery of customary documentation relating to the Exchange Offer.

(b) In the event that (i) the Company determines that the Exchange Offer Registration provided for in Section 2(a) hereof is not available or may not be completed as soon as practicable after the last Exchange Date because it would violate any applicable law or applicable interpretations of the Staff, (ii) a Holder participating in the Exchange Offer does not receive Exchange Securities on the date of the exchange that may be sold without restriction under state and federal securities laws (other than due solely to the status of such Holder as an affiliate of the Company within the meaning of the Securities Act) and notifies (a “Holder Notice”) the Company within 30 days after such Holder first becomes aware of such restrictions, (iii) the Exchange Offer, for any other reason, is not completed by the Target Registration Date or (iv) the Company receives a written request (a “Shelf Request”) from any Initial Purchaser representing that it holds Registrable Securities that are or were ineligible to be exchanged in the Exchange

 

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Offer, the Company shall use its reasonable best efforts to file, as soon as practicable after the date of such determination, Holder Notice or Shelf Request, as the case may be, a Shelf Registration Statement providing for the sale of all the Registrable Securities by the Holders thereof and to have such Shelf Registration Statement become effective.

In the event that the Company is required to file a Shelf Registration Statement pursuant to clause (iii) or (iv) of the preceding sentence, the Company shall use its reasonable best efforts to file and cause to become effective both an Exchange Offer Registration Statement pursuant to Section 2(a) hereof with respect to all Registrable Securities and a Shelf Registration Statement (which may be a combined Registration Statement with the Exchange Offer Registration Statement) with respect to offers and sales of Registrable Securities held by the Initial Purchasers, if any, after completion of the Exchange Offer.

The Company agrees to use its reasonable best efforts to keep the Shelf Registration Statement continuously effective for a period of one year from the effective date of such Shelf Registration Statement or such shorter period that will terminate when all of the Securities covered by the Shelf Registration Statement cease to be Registrable Securities (the “Shelf Effectiveness Period”). The Company further agrees to supplement or amend the Shelf Registration Statement, the related Prospectus and any Free Writing Prospectus if required by the rules, regulations or instructions applicable to the registration form used by the Company for such Shelf Registration Statement or by the Securities Act or by any other rules and regulations thereunder or if reasonably requested by a Holder of Registrable Securities with respect to information relating to such Holder, and to use its reasonable best efforts to cause any such amendment to become effective, if required, and such Shelf Registration Statement, Prospectus or Free Writing Prospectus, as the case may be, to become usable as soon as thereafter practicable. The Company agrees to furnish to the Holders of Registrable Securities registered on such Shelf Registration Statement copies of any such supplement or amendment promptly after its being used or filed with the SEC.

(c) The Company shall pay all Registration Expenses in connection with any registration pursuant to Section 2(a) or Section 2(b) hereof. Each Holder shall pay all underwriting discounts and commissions, brokerage commissions and transfer taxes, if any, relating to the sale or disposition of such Holder’s Registrable Securities pursuant to any Shelf Registration Statement.

(d) An Exchange Offer Registration Statement pursuant to Section 2(a) hereof will not be deemed to have become effective unless it has been declared effective by the SEC. A Shelf Registration Statement pursuant to Section 2(b) hereof will not be deemed to have become effective unless it has been declared effective by the SEC or is automatically effective upon filing with the SEC as provided by Rule 462 under the Securities Act.

In the event that either the Exchange Offer is not completed by the Target Registration Date or the Shelf Registration Statement, if required pursuant to

 

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Sections 2(b)(i) or 2(b)(iii) hereof, is not effective by the Target Registration Date, the interest rate on the Registrable Securities will be increased by (i) 0.25% per annum for the first 90-day period immediately following such date and (ii) an additional 0.25% per annum with respect to each subsequent 90-day period, in each case until the Exchange Offer is completed or the Shelf Registration Statement, if required hereby, becomes effective, up to a maximum total increase of 0.50% per annum. In the event that the Company receives a Holder Notice or Shelf Request pursuant to Sections 2(b)(ii) or 2(b)(iv) hereof, and the Shelf Registration Statement required to be filed thereby has not become effective by the later of (x) the Target Registration Date or (y) 90 days after delivery of such Holder Notice or Shelf Request (such later date, the “Shelf Additional Interest Date”), then the interest rate on the Registrable Securities will be increased by (i) 0.25% per annum for the first 90-day period payable commencing from one day after the Shelf Additional Interest Date and (ii) an additional 0.25% per annum with respect to each subsequent 90-day period, in each case until the Shelf Registration Statement becomes effective, up to a maximum total increase of 0.50% per annum.

If the Shelf Registration Statement, if required hereby, is effective and thereafter either ceases to be effective or the Prospectus contained therein ceases to be usable, in each case whether or not permitted by this Agreement, at any time during the Shelf Effectiveness Period, and such failure to remain effective or usable exists for more than 60 days (whether or not consecutive) in any 12-month period (the 60th such date, the “Trigger Date”), then the interest rate on the Registrable Securities will be increased by (i) 0.25% per annum for the first 90-day period immediately following the Trigger Date and (ii) an additional 0.25% per annum with respect to each subsequent 90-day period, up to a maximum increase of 0.50% per annum, and ending on such date that the Shelf Registration Statement is again effective or the Prospectus again becomes usable.

Any additional interest payable by the Company due to the increases in annual interest rate described in this Agreement will be paid in accordance with and pursuant to the terms of the Indenture. The additional interest referenced in this Section 2(d) shall be the sole remedy of any Holder (other than a Participating Broker-Dealer) with respect to any Exchange Offer Registration and Shelf Registration and related matters provided for in this Agreement.

3. Registration Procedures.

(a) In connection with its obligations pursuant to Section 2(a) and Section 2(b) hereof, the Company shall as soon as reasonably practicable:

(i) prepare and file with the SEC a Registration Statement on the appropriate form under the Securities Act, which form (x) shall be selected by the Company, (y) shall, in the case of a Shelf Registration, be available for the sale of the Registrable Securities by the Holders thereof and (z) shall comply as to form in all material respects with the requirements of the applicable form and include all financial statements required by the SEC to be filed therewith; and use its reasonable best efforts to cause such Registration Statement to become effective

 

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and remain effective for the applicable period in accordance with Section 2 hereof;

(ii) prepare and file with the SEC such amendments and post-effective amendments to each Registration Statement as may be necessary to keep such Registration Statement effective for the applicable period in accordance with Section 2 hereof and cause each Prospectus to be supplemented by any required prospectus supplement and, as so supplemented, to be filed pursuant to Rule 424 under the Securities Act; and cause each Prospectus to be kept current during the period described in Section 4(a)(3) of and Rule 174 under the Securities Act that is applicable to transactions by brokers or dealers with respect to the Registrable Securities or Exchange Securities;

(iii) to the extent any Free Writing Prospectus is used, file with the SEC any Free Writing Prospectus that is required to be filed by the Company with the SEC in accordance with the Securities Act and retain any Free Writing Prospectus not required to be filed to the extent required by SEC rules;

(iv) in the case of a Shelf Registration, use its reasonable best efforts upon written request, to furnish to each Holder of Registrable Securities included on such Shelf Registration Statement, to counsel for the Initial Purchasers, to counsel for such Holders and to each Underwriter of an Underwritten Offering of Registrable Securities, if any, without charge, as many copies of each Prospectus, preliminary prospectus or Free Writing Prospectus, and any amendment or supplement thereto, as such Holder, counsel or Underwriter may reasonably request in writing in order to facilitate the sale or other disposition of the Registrable Securities thereunder; and the Company consents to the use of such Prospectus, preliminary prospectus or such Free Writing Prospectus and any amendment or supplement thereto in accordance with applicable law by each of the Holders of Registrable Securities and any such Underwriters in connection with the offering and sale of the Registrable Securities covered by and in the manner described in such Prospectus, preliminary prospectus or such Free Writing Prospectus or any amendment or supplement thereto in accordance with applicable law;

(v) in the case of an Exchange Offer Registration Statement, use its reasonable best efforts to register and qualify the Registrable Securities under all applicable state securities or blue sky laws, if and to the extent legally required in order to effect the Exchange Offer, and, in the case of a Shelf Registration Statement and if necessary to permit sales under the Shelf Registration Statement, cooperate with the selling Holders and their counsel to register or qualify the Registrable Securities under the applicable state securities or blue sky laws of such jurisdictions as any Holder of Registrable Securities covered by such Shelf Registration Statement shall reasonably request in writing by the time the applicable Shelf Registration Statement becomes effective; cooperate with such Holders in connection with any filings required to be made with FINRA; and use

 

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its reasonable best efforts to do any and all other acts and things that may be reasonably necessary or advisable to enable each Holder to complete the disposition in each such jurisdiction of the Registrable Securities owned by such Holder; provided that the Company shall not be required to (1) qualify as a foreign corporation or other entity or as a dealer in securities in any such jurisdiction where it would not otherwise be required to so qualify, (2) file any general consent to subject itself to service of process in any such jurisdiction or (3) subject itself to taxation in any such jurisdiction if it is not so subject;

(vi) notify counsel for the Initial Purchasers and, in the case of a Shelf Registration, notify each Holder of Registrable Securities included on such Shelf Registration Statement and counsel for such Holders promptly and, if requested by any such Holder or counsel, confirm such advice in writing (1) when a Registration Statement has become effective, when any post-effective amendment thereto has been filed and becomes effective, when any Free Writing Prospectus has been filed or when any amendment or supplement to the Prospectus or any Free Writing Prospectus has been filed, (2) of any request by the SEC or any state securities authority for amendments and supplements to a Registration Statement, Prospectus or any Free Writing Prospectus or for additional information after the Registration Statement has become effective, (3) of the issuance by the SEC or any state securities authority of any stop order suspending the effectiveness of a Registration Statement or the initiation of any proceedings for that purpose, including the receipt by the Company of any notice of objection of the SEC to the use of a Shelf Registration Statement or any post-effective amendment thereto pursuant to Rule 401(g)(2) under the Securities Act, (4) if, between the applicable effective date of a Shelf Registration Statement and the closing of any sale of Registrable Securities covered thereby, the Company receives any notification with respect to the suspension of the qualification of the Registrable Securities for sale in any jurisdiction or the initiation of any proceeding for such purpose, (5) of the happening of any event during the period a Registration Statement is effective that makes any statement made in such Registration Statement or the related Prospectus or any Free Writing Prospectus or any amendment or supplement thereto untrue in any material respect or that requires the making of any changes in such Registration Statement or Prospectus or any Free Writing Prospectus in order to make the statements therein not misleading (in the case of the Prospectus, in light of the circumstances under which they were made) and (6) of any determination by the Company that a post-effective amendment to a Registration Statement or any amendment or supplement to the Prospectus or any Free Writing Prospectus would be required;

(vii) use its reasonable best efforts to obtain the withdrawal of any order suspending the effectiveness of a Registration Statement, or, in the case of a Shelf Registration, the resolution of any objection of the SEC pursuant to Rule 401(g)(2) under the Securities Act, including by filing an amendment to such Shelf Registration Statement on the proper form, as promptly as reasonably

 

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practicable and provide prompt notice to each Holder of the withdrawal of any such order or such resolution;

(viii) in the case of a Shelf Registration, furnish to each Holder of Registrable Securities included on such Shelf Registration Statement, without charge, upon written request, at least one conformed copy of each Registration Statement and any post-effective amendment thereto (without any documents incorporated therein by reference or exhibits thereto, unless requested in writing), if such documents are not available via EDGAR;

(ix) in the case of a Shelf Registration, cooperate with the Holders of Registrable Securities included on such Shelf Registration Statement to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold and not bearing any restrictive legends and enable such Registrable Securities to be issued in such denominations and, in the case of certificated securities, registered in such names (consistent with the provisions of the Indenture) as such Holders may reasonably request at least one Business Day prior to the closing of any sale of Registrable Securities;

(x) upon the occurrence of any event contemplated by Section 3(a)(vi)(5) hereof, use its reasonable best efforts to prepare and file with the SEC a supplement or post-effective amendment to such Registration Statement or the related Prospectus or any Free Writing Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered (or, to the extent permitted by law, made available) to purchasers of the Registrable Securities, such Prospectus or Free Writing Prospectus, as the case may be, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and the Company shall notify the Holders of Registrable Securities and the Initial Purchasers, as applicable, to suspend use of the Prospectus or any Free Writing Prospectus as promptly as reasonably practicable after the occurrence of such an event, and such Holders and Initial Purchasers, as applicable, hereby agree to suspend use of the Prospectus or any Free Writing Prospectus, as the case may be, until the Company has amended or supplemented the Prospectus or the Free Writing Prospectus, as the case may be, to correct such misstatement or omission;

(xi) within a reasonable time prior to the filing of any Registration Statement, any Prospectus, any Free Writing Prospectus, or any amendment of or supplement to a Registration Statement, a Prospectus or a Free Writing Prospectus, in each case, excluding any document that is to be incorporated by reference into such Registration Statement, Prospectus, Free Writing Prospectus or any amendment or supplement thereto after the initial filing of a Registration Statement, provide copies of such document to the Initial Purchasers and their counsel (and, in the case of a Shelf Registration Statement, to the Holders of Registrable Securities included on such Shelf Registration Statement and their

 

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counsel) and make representatives of the Company, as shall be reasonably requested by the Initial Purchasers or their counsel (and, in the case of a Shelf Registration Statement, the Holders of Registrable Securities included on such Shelf Registration Statement or their counsel), available for discussion of such document; and the Company shall not, at any time after the initial filing of a Registration Statement, use or file any Prospectus, any Free Writing Prospectus, any amendment of or supplement to a Registration Statement, a Prospectus or a Free Writing Prospectus, or any document that is to be incorporated by reference into a Registration Statement, a Prospectus or a Free Writing Prospectus, of which the Initial Purchasers and their counsel (and, in the case of a Shelf Registration Statement, the Holders of Registrable Securities and their counsel) shall not have previously been advised and furnished a copy or to which the Initial Purchasers or their counsel (and, in the case of a Shelf Registration Statement, the Holders of Registrable Securities or their counsel) shall have previously reasonably objected in writing within five Business Days after receipt thereof, unless the Company in good faith reasonably believes such Prospectus, amendment or supplement to a Prospectus is required by applicable law;

(xii) use reasonable best efforts to obtain a CUSIP number for all Exchange Securities or Registrable Securities, as the case may be, not later than the initial effective date of a Registration Statement;

(xiii) cause the Indenture to be qualified under the Trust Indenture Act in connection with the registration of the Exchange Securities or Registrable Securities, as the case may be; cooperate with the Trustee and the Holders to effect such changes to the Indenture as may be required for the Indenture to be so qualified in accordance with the terms of the Trust Indenture Act; and execute, and use its reasonable best efforts to cause the Trustee to execute, all documents as may be required to effect such changes and all other forms and documents required to be filed with the SEC to enable the Indenture to be so qualified in a timely manner;

(xiv) in the case of a Shelf Registration, make available for inspection, solely for due diligence purposes to the extent appropriate, by a representative of the Holders of the Registrable Securities (an “Inspector”), any Underwriter participating in any disposition pursuant to such Shelf Registration Statement, one firm of counsel and one firm of accountants designated by a majority of the Holders of Registrable Securities to be included in such Shelf Registration and any attorneys and accountants designated by such Underwriter, at reasonable times and in a reasonable manner, such financial and other records, pertinent documents and access to properties of the Company and its subsidiaries as such persons may reasonably request, and cause the officers, directors and employees of the Company to supply all such information and access reasonably requested by any such Inspector, Underwriter, attorney or accountant in connection with a Shelf Registration Statement; provided that each Person receiving such information shall take such actions as are reasonably necessary to protect the

 

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confidentiality of such information (including, without limitation, entering into a confidentiality agreement in customary form if requested by the Company which confidentiality obligations, for the avoidance of doubt, shall permit such disclosures as are necessary to comply with the Securities Act);

(xv) if reasonably requested by any Holder of Registrable Securities covered by a Shelf Registration Statement, promptly include in a prospectus supplement or post-effective amendment such information with respect to such Holder as such Holder reasonably concludes is required to be included therein and make all required filings of such prospectus supplement or such post-effective amendment as soon as reasonably practicable after the Company has received notification of the matters to be so included in such filing; and

(xvi) in the case of a Shelf Registration, enter into such customary agreements and take all such other actions in connection therewith (including those reasonably requested by the Holders of a majority in principal amount of the Registrable Securities covered by the Shelf Registration Statement) in order to expedite or facilitate the disposition of such Registrable Securities including, but not limited to, in an Underwritten Offering and in such connection, (1) to the extent possible, make such representations and warranties to the Holders and any Underwriters of such Registrable Securities with respect to the business of the Company and its subsidiaries and the Registration Statement, Prospectus, any Free Writing Prospectus and documents incorporated by reference or deemed incorporated by reference, if any, in each case, in form, substance and scope as are customarily made by issuers to underwriters in underwritten offerings and confirm the same if and when required by the applicable underwriting agreement or requested by the Holder, as applicable, (2) solely with respect to an Underwritten Offering, obtain opinions of counsel to the Company (which counsel and opinions, in form, scope and substance, shall be reasonably satisfactory to the Holders of a majority in principal amount of the Registrable Securities being sold and such Underwriters and their respective counsel) addressed to each selling Holder and Underwriter of such Registrable Securities, covering the matters customarily covered in opinions requested in underwritten offerings, (3) solely with respect to an Underwritten Offering, obtain “comfort” letters from the independent certified public accountants of the Company (and, if necessary, any other certified public accountant of any subsidiary of the Company, or of any business acquired by the Company for which financial statements and financial data are or are required to be included in the Registration Statement) addressed to each selling Holder (to the extent permitted by applicable professional standards) and Underwriter of such Registrable Securities, such letters to be in customary form and covering matters of the type customarily covered in “comfort” letters in connection with underwritten offerings, including but not limited to financial information contained in any preliminary prospectus, Prospectus or Free Writing Prospectus and (4) deliver such documents and certificates as may be reasonably requested by the Holders of a majority in principal amount of the Registrable Securities being sold or the Underwriters, and

 

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which are customarily delivered in underwritten offerings, to evidence the continued validity of the representations and warranties of the Company made pursuant to clause (1) above and to evidence compliance with any customary conditions contained in an underwriting agreement.

(b) In the case of a Shelf Registration Statement, the Company may require each Holder of Registrable Securities to furnish to the Company such information regarding such Holder and the proposed disposition by such Holder of such Registrable Securities as the Company may from time to time reasonably request in writing; provided that if such Holder fails to provide the requested information within 15 Business Days, the Company may exclude such Holder’s Registrable Securities from such Shelf Registration Statement until such time as the information is provided.

(c) In the case of a Shelf Registration Statement, each Holder of Registrable Securities covered in such Shelf Registration Statement agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Sections 3(a)(vi)(3) or 3(a)(vi)(5) hereof, such Holder will forthwith discontinue disposition of Registrable Securities pursuant to the Shelf Registration Statement until such Holder’s receipt of the copies of the supplemented or amended Prospectus and any Free Writing Prospectus contemplated by Section 3(a)(x) hereof and, if so directed by the Company, such Holder will deliver to the Company (at its expense) all copies in its possession, other than permanent file copies then in such Holder’s possession, of the Prospectus and any Free Writing Prospectus covering such Registrable Securities that are current at the time of receipt of such notice.

(d) If the Company shall give any notice to suspend the disposition of Registrable Securities pursuant to a Registration Statement, the Company shall extend the period during which such Registration Statement shall be maintained effective pursuant to this Agreement by the number of days during the period from and including the date of the giving of such notice to and including the date when the Holders of such Registrable Securities shall have received copies of the supplemented or amended Prospectus or any Free Writing Prospectus necessary to resume such dispositions. The Company may give any such notice only twice during any 365-day period, any such suspensions shall not exceed 60 days for each suspension and there shall not be more than two suspensions in effect during any 365-day period.

(e) The Holders of Registrable Securities covered by a Shelf Registration Statement who desire to do so may sell such Registrable Securities in an Underwritten Offering. In any such Underwritten Offering, the investment bank or investment banks and manager or managers (each, an “Underwriter”) that will administer the offering will be selected by the Company (provided that the lead Underwriter shall also be reasonably acceptable to Holders of a majority in principal amount of the Registrable Securities included in such offering). However, in the event of an Underwritten Offering, each Holder agrees that, neither such Holder nor any Underwriter participating in any disposition pursuant to any Registration Statement on such Holder’s behalf, will make any offer relating to the Registrable Securities that would constitute an Issuer Free

 

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Writing Prospectus (as defined in Rule 433 under the Securities Act) or that would otherwise constitute a “free writing prospectus” (as defined in Rule 405 under the Securities Act) required to be filed by the Company with the SEC or retained by the Company under Rule 433 of the Securities Act, unless it has obtained the prior written consent of the Company.

4. Participation of Broker-Dealers in Exchange Offer.

(a) The Company has been advised that the Staff has taken the position that any broker-dealer that receives Exchange Securities for its own account in the Exchange Offer in exchange for Securities that were acquired by such broker-dealer as a result of market-making or other trading activities (a “Participating Broker-Dealer”) may be deemed to be an “underwriter” within the meaning of the Securities Act and must deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such Exchange Securities.

The Company has been advised that it is the Staff’s position that if the Prospectus contained in the Exchange Offer Registration Statement includes a plan of distribution containing a statement to the above effect and the means by which Participating Broker-Dealers may resell the Exchange Securities, without naming the Participating Broker-Dealers or specifying the amount of Exchange Securities owned by them, such Prospectus may be delivered by Participating Broker-Dealers (or, to the extent permitted by law, made available to purchasers) to satisfy their prospectus delivery obligation under the Securities Act in connection with resales of Exchange Securities for their own accounts, so long as the Prospectus otherwise meets the requirements of the Securities Act.

(b) In light of the above, and notwithstanding the other provisions of this Agreement, the Company agrees, if so requested by one or more Holders who is a Participating Broker-Dealer, to use its reasonable best efforts to amend or supplement the Prospectus contained in the Exchange Offer Registration Statement for a period ending on the earlier of (i) 180 days after the date the Exchange Offer Registration Statement becomes effective (as such period may be extended pursuant to Section 3(d) hereof) and (ii) the date on which each Participating Broker-Dealer is no longer required to deliver a prospectus in connection with market making or other trading activities, in each case to the extent necessary to ensure that the Exchange Offer Registration Statement is available for resale of the Registrable Securities acquired by the Participating Broker-Dealers. The Company further consents to the delivery of (or, to the extent permitted by law, agrees to make available) such Prospectus by Participating Broker-Dealers during such period in connection with the resales contemplated by this Section 4.

(c) The Initial Purchasers shall have no liability to the Company or any Holder with respect to any request that a Holder may make pursuant to Section 4(b) hereof.

 

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5. Indemnification and Contribution.

(a) The Company agrees to indemnify and hold harmless each Initial Purchaser, each Holder, their respective affiliates, directors and officers and each Person, if any, who controls any Initial Purchaser or any Holder within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any and all losses, claims, damages and liabilities (including, without limitation, reasonable legal fees and other expenses reasonably incurred in connection with any suit, action or proceeding or any claim asserted, as such fees and expenses are incurred), joint or several, that arise out of, or are based upon, (1) any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement or any omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein not misleading or (2) any untrue statement or alleged untrue statement of a material fact contained in any Prospectus, or in any amendment thereof or any supplement thereto, any Free Writing Prospectus or any “issuer information” (“Issuer Information”) filed or required to be filed pursuant to Rule 433(d) under the Securities Act, or any omission or alleged omission to state therein a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, in each case except insofar as such losses, claims, damages or liabilities arise out of, or are based upon, any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with any information relating to any Initial Purchaser or information relating to any Holder furnished to the Company in writing by or on behalf of such parties expressly for use therein. In connection with any Underwritten Offering permitted by Section 3 hereof, the Company agrees to also indemnify the Underwriters, if any, their respective affiliates and each Person who controls such Persons (within the meaning of the Securities Act and the Exchange Act) to the same extent as provided above (or as may otherwise be set forth in the underwriting agreement for such Underwritten Offering) with respect to the indemnification of the Holders, if requested in connection with any Registration Statement, any Prospectus, any Free Writing Prospectus or any Issuer Information.

(b) Each Holder agrees, severally and not jointly, to indemnify and hold harmless the Company and its affiliates, directors and officers, and the Initial Purchasers and the other selling Holders and each Person, if any, who controls the Company, any Initial Purchaser and any other selling Holder within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent as the indemnity set forth in paragraph (a) above, but only with respect to any losses, claims, damages or liabilities (including without limitation, legal fees and other expenses incurred in connection with any suit, action or proceeding or any claim asserted, as such fees and expenses are incurred) that arise out of, or are based upon, any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with any information relating to such Holder furnished to the Company in writing by or on behalf of such Holder expressly for use in any Registration Statement, any Prospectus or any Free Writing Prospectus.

 

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(c) If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or asserted against any Person in respect of which indemnification may be sought pursuant to either paragraph (a) or (b) above, such Person (the “Indemnified Person”) shall promptly notify the Person against whom such indemnification may be sought (the “Indemnifying Person”) in writing; provided that the failure to notify the Indemnifying Person shall not relieve it from any liability that it may have under paragraph (a) or (b) above except to the extent that it has been materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure; and provided, further, that the failure to notify the Indemnifying Person shall not relieve it from any liability that it may have to an Indemnified Person otherwise than under paragraph (a) or (b). If any such proceeding shall be brought or asserted against an Indemnified Person and it shall have notified the Indemnifying Person thereof, the Indemnifying Person shall retain counsel reasonably satisfactory to the Indemnified Person to represent the Indemnified Person and any others entitled to indemnification pursuant to this Section 5 that the Indemnifying Person may designate in such proceeding and shall pay the reasonable fees and expenses of such proceeding and shall pay the reasonable fees and expenses of such counsel related to such proceeding, as incurred. In any such proceeding, any Indemnified Person shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Person unless (i) the Indemnifying Person and the Indemnified Person shall have mutually agreed to the contrary; (ii) the Indemnifying Person has failed within a reasonable time to retain counsel reasonably satisfactory to the Indemnified Person; (iii) the Indemnified Person shall have reasonably concluded that there may be legal defenses available to it that are different from or in addition to those available to the Indemnifying Person; or (iv) the named parties in any such proceeding (including any impleaded parties) include both the Indemnifying Person and the Indemnified Person and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood and agreed that the Indemnifying Person shall not, in connection with any proceeding or related proceeding in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all Indemnified Persons, and that all such reasonable fees and expenses shall be reimbursed as they are incurred. Any such separate firm (x) for any Initial Purchaser or its affiliates, directors and officers and any control Persons of such Initial Purchaser shall be designated in writing by such Initial Purchasers, (y) for any Holder, its directors and officers and any control Persons of such Holder shall be designated in writing by the Majority Holders and (z) in all other cases shall be designated in writing by the Company. The Indemnifying Person shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the Indemnifying Person agrees to indemnify each Indemnified Person from and against any loss or liability by reason of such settlement or judgment. No Indemnifying Person shall, without the written consent of the Indemnified Person, effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Person is or could have been a party and indemnification could have been sought hereunder by such Indemnified Person, unless such settlement (A) includes an unconditional release of such Indemnified Person,

 

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in form and substance reasonably satisfactory to such Indemnified Person, from all liability on claims that are the subject matter of such proceeding and (B) does not include any statement as to or any admission of fault, culpability or failure to act by or on behalf of any Indemnified Person.

(d) If the indemnification provided for in paragraphs (a) or (b) above is unavailable to an Indemnified Person or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then each Indemnifying Person under such paragraph, in lieu of indemnifying such Indemnified Person thereunder, shall contribute to the amount paid or payable by such Indemnified Person as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the Company from the offering of the Securities and the Exchange Securities, on the one hand, and by the Holders from receiving Securities or Exchange Securities registered under the Securities Act, on the other hand or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) but also the relative fault of the Company, on the one hand, and the Holders, on the other, in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative fault of the Company, on the one hand, and the Holders, on the other, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or by the Holders, as applicable, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

(e) The Company and the Holders agree that it would not be just and equitable if contribution pursuant to this Section 5 were determined by pro rata allocation (even if the Holders were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in paragraph (d) above. The amount paid or payable by an Indemnified Person as a result of the losses, claims, damages and liabilities referred to in paragraph (d) above shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such Indemnified Person in connection with any such action or claim. Notwithstanding the provisions of this Section 5, in no event shall a Holder be required to contribute any amount in excess of the amount by which the total price at which the Securities or Exchange Securities sold by such Holder exceeds the amount of any damages that such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. The Holders’ obligations to contribute pursuant to this Section 5 are several and not joint.

 

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(f) The remedies provided for in this Section 5 are not exclusive and shall not limit any rights or remedies that may otherwise be available to any Indemnified Person at law or in equity.

(g) The indemnity and contribution provisions contained in this Section 5 shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of the Initial Purchasers or any Holder or any Person controlling any Initial Purchaser or any Holder, or by or on behalf of the Company or the officers or directors of or any Person controlling the Company, (iii) acceptance of any of the Exchange Securities and (iv) any sale of Registrable Securities pursuant to a Shelf Registration Statement.

6. General.

(a) No Inconsistent Agreements. The Company represents, warrants and agrees that (i) the rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of any other outstanding securities issued or guaranteed by the Company under any other agreement and (ii) the Company has not entered into, and on or after the date of this Agreement, will not enter into, any agreement that is inconsistent with the rights granted to the Holders of Registrable Securities in this Agreement or otherwise conflicts with the provisions hereof.

(b) Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given unless the Company has obtained the written consent of Holders of at least a majority in aggregate principal amount of the outstanding Registrable Securities affected by such amendment, modification, supplement, waiver or consent; provided that no amendment, modification, supplement, waiver or consent to any departure from the provisions of Section 6 hereof shall be effective as against any Holder of Registrable Securities unless consented to in writing by such Holder. Any amendments, modifications, supplements, waivers or consents pursuant to this Section 6(b) shall be by a written instrument executed by each of the parties hereto.

(c) Notices. Except as otherwise specified herein, all notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, registered first-class mail, email or any courier guaranteeing overnight delivery (i) if to a Holder, at the most current address given by such Holder to the Company by means of a notice given in accordance with the provisions of this Section 6(c), which address initially is, with respect to the Initial Purchasers, the address set forth in the Purchase Agreement; (ii) if to the Company, initially at the Company’s address set forth in the Purchase Agreement and thereafter at such other address, notice of which is given in accordance with the provisions of this Section 6(c); and (iii) if to such other Persons, at their respective addresses as provided in the Purchase Agreement and thereafter at such other address, notice of which is given in accordance with the provisions of this

 

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Section 6(c). All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when receipt is acknowledged, if emailed; and on the next Business Day if timely delivered to an air courier guaranteeing overnight delivery. Copies of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Trustee, at the address specified in the Indenture.

(d) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors, assigns and transferees of each of the parties, including, without limitation and without the need for an express assignment, subsequent Holders; provided that nothing herein shall be deemed to permit any assignment, transfer or other disposition of Registrable Securities in violation of the terms of the Purchase Agreement or the Indenture. If any transferee of any Holder shall acquire Registrable Securities in any manner, whether by operation of law or otherwise, such Registrable Securities shall be held subject to all the terms of this Agreement, and by taking and holding such Registrable Securities such Person shall be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement and such Person shall be entitled to receive the benefits hereof. The Initial Purchasers (in their capacity as Initial Purchasers) shall have no liability or obligation to the Company with respect to any failure by a Holder to comply with, or any breach by any Holder of, any of the obligations of such Holder under this Agreement.

(e) Third-Party Beneficiaries. Each Holder shall be a third-party beneficiary to the agreements made hereunder between the Company, on the one hand, and the Initial Purchasers, on the other hand, and shall have the right to enforce such agreements directly to the extent it deems such enforcement necessary or advisable to protect its rights or the rights of other Holders hereunder.

(f) Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same Agreement. Delivery of a signed counterpart of this Agreement by e-mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, for example, www.docusign.com) shall constitute valid and sufficient delivery proof.

(g) Headings. The headings in this Agreement are for convenience of reference only, are not a part of this Agreement and shall not limit or otherwise affect the meaning hereof.

(h) Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York.

(i) Entire Agreement; Severability. This Agreement contains the entire agreement between the parties relating to the subject matter hereof and supersedes all oral statements and prior writings with respect thereto. If any term, provision, covenant or

 

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restriction contained in this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable or against public policy, the remainder of the terms, provisions, covenants and restrictions contained herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated. The Company and the Initial Purchasers shall endeavor in good faith negotiations to replace the invalid, void or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of such invalid, void or unenforceable provisions.

(j) Delegation by the Company. All references to obligations of the Company to take or not take any actions shall be satisfied so long as the Company causes such actions to be taken or not taken, as applicable.

[Signatures on following pages]

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

JERSEY CENTRAL POWER & LIGHT COMPANY
By:   /s/ Weizhong Wang
  Name: Weizhong Wang
  Title: Treasurer

 

[Signature Page to the Registration Rights Agreement]


The foregoing Registration Rights Agreement is hereby confirmed and accepted as of the date first above written.

 

BARCLAYS CAPITAL INC.
By:   /s/ John Lembeck
  Name: John Lembeck
  Title: Director
MUFG SECURITIES AMERICAS INC.
By:   /s/ Lee Schreibstein
  Name: Lee Schreibstein
  Title: Managing Director
PNC CAPITAL MARKETS LLC
By:   /s/ Valerie Shadeck
  Name: Valerie Shadeck
  Title: Managing Director
WELLS FARGO SECURITIES, LLC
By:   /s/ Carolyn Hurley
  Name: Carolyn Hurley
  Title: Managing Director
Acting on behalf of themselves and as the Representatives of the several Initial Purchasers.

 

[Signature Page to the Registration Rights Agreement]

Exhibit 4.3

December 5, 2024

The Bank of New York Mellon Trust Company, N.A., as Trustee

601 Travis Street, 16th Floor

Houston, TX 77002

 

Re:

Company Order

Ladies and Gentlemen:

Pursuant to Section 2.05(c) of the Indenture, dated as of July 1, 1999 (as amended and supplemented, the “Indenture”), by and between Jersey Central Power & Light Company (the “Company”) and The Bank of New York Mellon Trust Company, N.A., as successor trustee, we deliver to you herewith an Officers’ Certificate, an Opinion of Counsel of Morgan, Lewis & Bockius LLP, reliance letters of Morgan, Lewis & Bockius LLP and Cozen O’Connor P.C., and Board Resolutions (as those terms are defined in the Indenture), and provide further that:

 

  1.

Capitalized Terms. All capitalized terms used but not defined herein shall have the meanings set forth in the Indenture. The following capitalized terms have the following meanings:

(a) “Additional Note” has the meaning specified in Section 3 of this Company Order.

(b) “Agent Members” has the meaning specified in Section 4(c) of this Company Order.

(c) “Applicable Procedures” means, with respect to any transfer or transaction involving a Global Note or beneficial interest therein, the rules and procedures of the Depositary for such Global Note, Euroclear or Clearstream, in each case to the extent applicable to such transaction and as in effect from time to time.

(d) “Automatic Exchange” has the meaning specified in Section 5(j) of this Company Order.

(e) “Automatic Exchange Date” has the meaning specified in Section 5(j) of this Company Order.

(f) “Automatic Exchange Notice” has the meaning specified in Section 5(j) of this Company Order.

(g) “Automatic Exchange Notice Date” has the meaning specified in Section 5(j) of this Company Order.

(h) “Clearstream” means Clearstream Banking, Société Anonyme, or any successor securities clearing agency.

(i) “Custodian” means the Trustee, as custodian for the Depositary with respect to the Notes in global form, or any successor entity thereto.


(j) “Definitive Note” means a certificated Initial Note, Additional Note or Exchange Note issued pursuant to the Indenture and this Company Order (bearing the Restricted Notes Legend if the transfer of such Note is restricted by applicable law) that does not include the Global Notes Legend.

(k) “Definitive Notes Legend” has the meaning specified in Section 5(e) of this Company Order.

(l) “Distribution Compliance Period” means (i) with respect to the Initial Notes, the period of 40 consecutive days beginning on and including the later of (a) the day on which such Note is first offered to persons other than distributors (as defined in Regulation S) in reliance on Regulation S, notice of which day shall be promptly given by the Company to the Trustee, and (b) the date of issuance with respect to such Note or any predecessor of such Initial Note and (ii) with respect to any Additional Notes that are Transfer Restricted Notes, the comparable period of 40 consecutive days.

(m) “Euroclear” means Euroclear Bank S.A./N.V., as operator of Euroclear System or any successor securities clearing agency.

(n) “Exchange Notes” means Notes issued pursuant to the Indenture and this Company Order in exchange for, and up to an aggregate principal amount equal to, the Initial Notes or Additional Notes in compliance with the terms of the Registration Rights Agreement and containing terms identical to the Initial Notes or Additional Notes (except that such Exchange Notes will be registered under the Securities Act of 1933, as amended (the “Securities Act”) and the transfer restrictions, registration rights and additional annual interest rate for failure to comply with the Registration Rights Agreement will not apply to such Exchange Notes).

(o) “Exchange Offer” has the meaning set forth in the Registration Rights Agreement.

(p) “Global Note” has the meaning specified in Section 4(b) of this Company Order.

(q) “Global Notes Legend” has the meaning specified in Section 5(e) of this Company Order.

(r) “Initial Note” has the meaning specified in Section 2 of this Company Order.

(s) “Permanent Regulation S Global Note” has the meaning specified in Section 4(b) of this Company Order.

(t) “QIB” means a “qualified institutional buyer” as defined in Rule 144A.

(u) “Registration Rights Agreement” means (i) the registration rights agreement, dated as of the date hereof, by and among the Company, Barclays Capital Inc., MUFG Securities Americas Inc., PNC Capital Markets LLC and Wells Fargo Securities, LLC, as representatives (the “Representatives”) of the initial purchasers set forth on Schedule 1 to the Purchase Agreement, dated December 2, 2024, between the Company and the Representatives, and (ii) with respect to any Additional Notes, one or more registration rights agreements entered into in connection with the issuance of such Additional Notes in a private offering by the Company after the date hereof, as such agreements may be amended from time to time.

 

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(v) “Regulation S” means Regulation S promulgated under the Securities Act.

(w) “Regulation S Notes” has the meaning specified in Section 4(a) of this Company Order.

(x) “Restricted Notes Legend” has the meaning specified in Section 5(e) of this Company Order.

(y) “Rule 144” means Rule 144 promulgated under the Securities Act.

(z) “Rule 144A” means Rule 144A promulgated under the Securities Act.

(aa) “Rule 144A Global Note” has the meaning specified in Section 4(b) of this Company Order.

(bb) “Rule 144A Notes” has the meaning specified in Section 4(a) of this Company Order.

(cc) “Temporary Regulation S Global Note” has the meaning specified in Section 4(b) of this Company Order.

(dd) “Temporary Regulation S Note Legend” has the meaning specified in Section 5(e) of this Company Order.

(ee) “Transfer Restricted Notes” means Definitive Notes and any Notes in global form that bear or are required to bear the Restricted Notes Legend.

(ff) “Unrestricted Global Note” means any Note in global form that does not bear or is not required to bear the Restricted Notes Legend.

(gg) “U.S. person” means a “U.S. person” as defined in Regulation S.

 

  2.

Establishment; Designation of Titles and Principal Amounts; Authentication and Delivery. The Company hereby establishes and designates its “5.100% Senior Notes due 2035” (the “Senior Notes”). The initial form of the Senior Notes is attached hereto as Exhibit A (the “Form of Note”). You are hereby requested to authenticate, in the manner provided in the Indenture, $700,000,000 aggregate principal amount of Senior Notes (such aggregate principal amount of Senior Notes issued on the date hereof, the “Initial Notes”), registered in the name of CEDE & CO., as nominee of The Depository Trust Company (“DTC”), as heretofore delivered to you, duly executed by duly authorized officers of the Company, as provided in the Indenture. You are hereby further requested to deliver the Initial Notes, as so authenticated, to DTC or pursuant to DTC’s instructions to hold the Initial Notes, as so authenticated, as custodian for DTC.

 

  3.

Additional Notes. Without the consent of the Holders of the Senior Notes, the Company may, from time to time, create and issue in accordance with the provisions of the Indenture, additional notes (the “Additional Notes”) of a series

 

3


  hereunder having terms and conditions substantially identical to those as the Senior Notes of such series (except for the issue date, public offering price and amount and date of the first payment of interest thereon); provided that if such Additional Notes are not fungible with such Senior Notes issued on the date hereof for United States federal income tax purposes, the Additional Notes will be issued under a separate CUSIP number. Any Additional Notes of a series, together with the Senior Notes of such series issued on the date hereof, shall be consolidated and constitute a single series of Notes under the Indenture. For the avoidance of doubt, references herein to the term “Senior Notes” of a series shall include references to the Additional Notes of such series, if any.

 

  4.

Form and Dating.

(a) The Initial Notes issued on the date hereof shall be (i) offered and sold by the Company to the initial purchasers thereof and (ii) resold, initially only to (1) QIBs in reliance on Rule 144A (“Rule 144A Notes”) and (2) Persons other than U.S. persons in reliance on Regulation S (“Regulation S Notes”). Additional Notes may also be considered to be Rule 144A Notes or Regulation S Notes, as applicable.

(b) Global Notes. Rule 144A Notes shall be issued initially in the form of one or more global Senior Notes, numbered RA-1 upward (collectively, the “Rule 144A Global Note”) and Regulation S Notes shall be issued initially in the form of one or more temporary global Senior Notes, numbered TRS-1 upward (collectively, the “Temporary Regulation S Global Note”), in each case in definitive, fully registered form, without interest coupons and bearing the legends set forth in Section 5(e) of this Company Order, which shall be deposited on behalf of the purchasers of the Senior Notes represented thereby with the Custodian, and registered in the name of the Depositary or a nominee of the Depositary, duly executed by the Company and authenticated by the Trustee as provided in the Indenture. Beneficial ownership interests in the Temporary Regulation S Global Note (x) will not be exchangeable for interests in the Rule 144A Global Note, a permanent global note (the “Permanent Regulation S Global Note” and, together with the Temporary Regulation S Global Notes, the “Regulation S Global Note”), or any other Senior Note prior to the expiration of the Distribution Compliance Period and (y) may be exchanged for interests in a Rule 144A Global Note or the Permanent Regulation S Global Note after the expiration of the Distribution Compliance Period in accordance with instructions from the Company. The Rule 144A Global Note, the Regulation S Global Note and any Unrestricted Global Note are each referred to herein as a “Global Note” and are collectively referred to herein as “Global Notes.” Each Global Note shall represent such of the outstanding Senior Notes as shall be specified in the “Schedule of Increases and Decreases of Interests in the Global Note” attached thereto and each shall provide that it shall represent the aggregate principal amount of Senior Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Senior Notes represented thereby may from time to time be reduced or increased, as applicable, to reflect exchanges and redemptions. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Senior Notes represented thereby shall be made by the Trustee or the Custodian, at the direction of the Trustee, in accordance with instructions given by the Holder thereof as required by the Indenture and this Company Order.

(c) Book-Entry Provisions. This Section 4(c) shall apply only to a Global Note deposited with or on behalf of the Depositary.

 

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Members of, or participants in, the Depositary (“Agent Members”) shall have no rights under the Indenture with respect to any Global Note held on their behalf by the Depositary or by the Trustee as Custodian or under such Global Note, and the Depositary shall be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner of such Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and its Agent Members, the operation of customary practices of such Depositary governing the exercise of the rights of a holder of a beneficial interest in any Global Note.

(d) Definitive Notes. Except as provided in Section 5 or Section 6 of this Company Order, owners of beneficial interests in Global Notes shall not be entitled to receive physical delivery of Definitive Notes.

 

  5.

Transfer and Exchange.

(a) Transfer and Exchange of Definitive Notes for Definitive Notes. When Definitive Notes are presented to the Note registrar with a written request:

(i) to register the transfer of such Definitive Notes, or

(ii) to exchange such Definitive Notes for an equal principal amount of Definitive Notes of other authorized denominations,

the Note registrar shall register the transfer or make the exchange as requested if its reasonable requirements for such transaction are met; provided, however, that the Definitive Notes surrendered for transfer or exchange:

(1) shall be duly endorsed or accompanied by a written instrument of transfer in form reasonably satisfactory to the Company and the Note registrar, duly executed by the Holder thereof or his attorney duly authorized in writing; and

(2) in the case of Transfer Restricted Notes, shall be transferred or exchanged pursuant to an effective registration statement under the Securities Act or pursuant to Section 5(b) of this Company Order or otherwise in accordance with the Restricted Notes Legend, and shall be accompanied by a certification from the transferor in the form provided on the reverse side of the Form of Note in Exhibit A hereto for exchange or registration of transfers and, as applicable, delivery of such legal opinions, certifications and other information as may be requested pursuant thereto.

(b) Restrictions on Transfer of a Definitive Note for a Beneficial Interest in a Global Note. A Definitive Note may not be exchanged for a beneficial interest in a Rule 144A Global Note or a Permanent Regulation S Global Note except upon satisfaction of the requirements set forth below. Upon receipt by the Trustee of a Definitive Note, duly endorsed or accompanied by a written instrument of transfer in form reasonably satisfactory to the Company and the Note registrar, together with:

 

5


(i) a certification from the transferor in the form provided on the reverse side of the Form of Note in Exhibit A hereto for exchange or registration of transfers and, as applicable, delivery of such legal opinions, certifications and other information as may be requested pursuant thereto, and

(ii) written instructions directing the Trustee to make, or to direct the Custodian to make, an adjustment on its books and records with respect to such Global Note to reflect an increase in the aggregate principal amount of the Senior Notes represented by the Global Note, such instructions to contain information regarding the Depositary account to be credited with such increase,

the Trustee shall cancel such Definitive Note and cause, or direct the Custodian to cause, in accordance with the standing instructions and procedures existing between the Depositary and the Custodian, the aggregate principal amount of Senior Notes represented by the Global Note to be increased by the aggregate principal amount of the Definitive Note to be exchanged and shall credit or cause to be credited to the account of the Person specified in such instructions a beneficial interest in the Global Note equal to the principal amount of the Definitive Note so canceled. If the applicable Global Note is not then outstanding, the Company shall issue and the Trustee shall authenticate, upon written order of the Company, a new applicable Global Note in the appropriate principal amount.

(c) Transfer and Exchange of Global Notes.

(i) The transfer and exchange of Global Notes or beneficial interests therein shall be effected through the Depositary, in accordance with the Indenture (including applicable restrictions on transfer set forth in Section 5(d) of this Company Order, if any) and the Applicable Procedures of the Depositary therefor.

(ii) Notwithstanding any other provisions of this Company Order (other than the provisions set forth in Section 6 of this Company Order), a Global Note may not be transferred except as a whole and not in part if the transfer is by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary.

(iii) A Regulation S Temporary Global Note or beneficial interests therein may not be exchanged for a Definitive Note or transferred to a Person who takes delivery thereof in the form of a Definitive Note prior to the expiration of the Distribution Compliance Period and the receipt by the Trustee of a written certification from the transferor of the beneficial interest in the form provided on the reverse side of the Form of Note in Exhibit A hereto for exchange or registration of transfers.

(d) Restrictions on Transfer of Global Notes; Voluntary Exchange of Interests in Transfer Restricted Notes That Are Global Notes for Interests in Unrestricted Global Notes.

(i) Transfers by an owner of a beneficial interest in a Rule 144A Global Note to a transferee who takes delivery of such interest through another Transfer Restricted Note that is a Global Note shall be made in accordance with the Applicable Procedures of the Depositary therefor and the Restricted Notes Legend.

 

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(ii) During the Distribution Compliance Period, beneficial ownership interests in the Temporary Regulation S Global Note may only be sold, pledged or transferred through Euroclear or Clearstream in accordance with the Applicable Procedures of the Depositary therefor, the Restricted Notes Legend and the Temporary Regulation S Note Legend on such Temporary Regulation S Global Note and any applicable securities laws of any state of the United States of America. Prior to the expiration of the Distribution Compliance Period, transfers by an owner of a beneficial interest in the Temporary Regulation S Global Note shall be made only in accordance with the Applicable Procedures of the Depositary therefor, the Restricted Notes Legend and the Temporary Regulation S Note Legend. Upon the expiration of the Distribution Compliance Period, beneficial ownership interests in the Temporary Regulation S Global Note shall be transferable in accordance with applicable law and the other terms of the Indenture.

(iii) Upon the expiration of the Distribution Compliance Period, beneficial interests in the Temporary Regulation S Global Note may be exchanged for beneficial interests in a Rule 144A Global Note or a Permanent Regulation S Global Note and shall be made in accordance with the Applicable Procedures of the Depositary therefor.

(iv) Beneficial interests in a Transfer Restricted Note that is a Rule 144A Global Note or Permanent Regulation S Global Note may be exchanged for beneficial interests in an Unrestricted Global Note in accordance with the Applicable Procedures of the Depositary therefor.

(v) If no Unrestricted Global Note is outstanding at the time of a transfer contemplated by the preceding clauses (iii) and (iv), the Company shall issue and the Trustee shall authenticate, upon written order of the Company, a new Unrestricted Global Note in the appropriate principal amount.

(e) Legends.

(i) Except as permitted by Section 5(d), this Section 5(e) and Section 5(i) of this Company Order, each Senior Note certificate evidencing the Global Notes and the Definitive Notes (and all Senior Notes issued in exchange therefor or in substitution thereof) shall bear a legend in substantially the following form (each defined term in the legend being defined as such for purposes of the legend only) (“Restricted Notes Legend”) (which shall include all three of the following paragraphs for Senior Notes issued pursuant to Regulation S, and shall only include the second and third of the following paragraphs for Senior Notes issued pursuant to Rule 144A):

[For Notes issued pursuant to Regulation S:]

 

7


THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF U.S. PERSONS (I) AS PART OF THEIR DISTRIBUTION AT ANY TIME OR (II) OTHERWISE UNTIL 40 DAYS AFTER THE LATER OF THE COMMENCEMENT OF THE OFFERING OF THE SECURITIES AND THE DATE OF ORIGINAL ISSUANCE OF THE SECURITIES, EXCEPT IN ACCORDANCE WITH REGULATION S OR RULE 144A UNDER THE SECURITIES ACT OR ANY OTHER AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT. TERMS USED ABOVE HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.

[For Notes issued pursuant to Regulation S or Rule 144A:]

NEITHER THIS SECURITY NOR ANY BENEFICIAL INTEREST HEREIN HAS BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”). EACH HOLDER HEREOF, AND EACH OWNER OF A BENEFICIAL INTEREST HEREIN, BY PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF JERSEY CENTRAL POWER & LIGHT COMPANY (THE “COMPANY”) THAT THIS SECURITY MAY NOT BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED OTHER THAN (A)(1) TO THE COMPANY, (2) IN A TRANSACTION ENTITLED TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY), (3) SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), (4) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR 904 OF REGULATION S UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), (5) IN ACCORDANCE WITH ANOTHER APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY), OR (6) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (B) IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, REPRESENTS AND AGREES FOR THE BENEFIT OF THE COMPANY THAT IT IS (1) A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT OR (2) A NON U.S. PERSON OUTSIDE THE UNITED STATES WITHIN THE MEANING OF, OR AN ACCOUNT SATISFYING THE REQUIREMENTS OF, PARAGRAPH (k)(2) OF RULE 902 UNDER REGULATION S UNDER THE SECURITIES ACT.

 

8


[For Notes issued pursuant to Regulation S or Rule 144A:]

THE TRANSFER RESTRICTIONS AND THE OTHER PROVISIONS SET FORTH IN THE INDENTURE ESTABLISHING THE FORM AND TERMS OF THE SENIOR NOTES, INCLUDING THE LEGENDS REQUIRED THEREBY, SHALL APPLY TO THE SENIOR NOTES EXCEPT AS OTHERWISE AGREED BY THE COMPANY AND THE INITIAL PURCHASERS. FOLLOWING THE INITIAL SALE OF THE SENIOR NOTES BY THE INITIAL PURCHASERS TO SUBSEQUENT PURCHASERS PURSUANT TO THE TERMS HEREOF, THE INITIAL PURCHASERS SHALL NOT BE LIABLE OR RESPONSIBLE TO THE COMPANY FOR ANY LOSSES, DAMAGES OR LIABILITIES SUFFERED OR INCURRED BY THE COMPANY, INCLUDING ANY LOSSES, DAMAGES OR LIABILITIES UNDER THE SECURITIES ACT, ARISING FROM OR RELATING TO ANY SUBSEQUENT SALE OR TRANSFER OF ANY SENIOR NOTE.

Each Temporary Regulation S Global Note shall bear the following additional legend (“Temporary Regulation S Note Legend”):

THIS GLOBAL SECURITY MAY NOT BE OFFERED OR SOLD TO A U.S. PERSON OR FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON WITHIN THE MEANING OF RULE 902(K) UNDER THE SECURITIES ACT (OTHER THAN A DISTRIBUTOR, AS SUCH TERM IS DEFINED UNDER RULE 902(D) UNDER THE SECURITIES ACT).

Each Definitive Note shall bear the following additional legend (“Definitive Notes Legend”):

IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE NOTE REGISTRAR AND TRUSTEE SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH NOTE REGISTRAR AND TRUSTEE MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.

Each Global Note shall bear the following additional legend (“Global Notes Legend”):

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, TO AN ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY

 

9


AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.

(ii) Upon any sale or transfer of a Transfer Restricted Note that is a Definitive Note, the Note registrar shall permit the Holder thereof to exchange such Transfer Restricted Note for a Definitive Note that does not bear the Restricted Notes Legend and the Definitive Notes Legend and rescind any restriction on the transfer of such Transfer Restricted Note if the Holder certifies in writing to the Note registrar that its request for such exchange is in respect of a transfer made in reliance on Rule 144 and provides such legal opinions, certifications and other information as the Company or the Trustee may reasonably request.

(iii) After a transfer of any Initial Notes or Additional Notes during the period of the effectiveness of a Shelf Registration Statement (as defined in the Registration Rights Agreement) with respect to such Initial Notes or Additional Notes, as the case may be, all requirements pertaining to the Restricted Notes Legend on such Initial Notes or Additional Notes shall cease to apply and the requirements that any such Initial Notes or Additional Notes be issued in global form shall continue to apply.

(iv) Upon the consummation of an Exchange Offer with respect to the Initial Notes or Additional Notes pursuant to which Holders of such Initial Notes or Additional Notes are offered Exchange Notes in exchange for their Initial Notes or Additional Notes, all requirements pertaining to Initial Notes or Additional Notes that Initial Notes or Additional Notes be issued in global form shall continue to apply, and Exchange Notes in global form without the Restricted Notes Legend shall be available to Holders that exchange such Initial Notes or Additional Notes in such Exchange Offer.

(v) Any Additional Notes sold in a registered offering shall not be required to bear the Restricted Notes Legend.

(f) Cancellation or Adjustment of Global Note. At such time as all beneficial interests in a Global Note have either been exchanged for Definitive Notes, transferred in exchange for an interest in another Global Note, redeemed, repurchased or canceled, such Global Note shall be returned by the Depositary to the Trustee for cancellation or retained and canceled by the Trustee. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for Definitive Notes, transferred in exchange for an interest in another Global Note, redeemed, repurchased or canceled, the principal amount of Senior Notes represented by such Global Note shall be reduced and an adjustment shall be made in accordance with the Applicable Procedures of the Depositary therefor.

 

10


(g) Obligations with Respect to Transfers and Exchanges of Senior Notes.

(i) To permit registrations of transfers and exchanges, the Company shall execute and the Trustee shall authenticate, Definitive Notes and Global Notes at the Note registrar’s request.

(ii) No service charge shall be made for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax, assessments, or other governmental charge payable in connection therewith (other than any such taxes or similar governmental charges payable upon exchanges pursuant to Section 2.06(d) of the Indenture).

(iii) Prior to the due presentation for registration of transfer of any Senior Note, the Company, the Trustee, the paying agent or the Note registrar may deem and treat the person in whose name a Senior Note is registered as the absolute owner of such Senior Note for the purpose of receiving payment of principal, premium, if any, and interest on such Senior Note and for all other purposes whatsoever, whether or not such Senior Note is overdue, and none of the Company, the Trustee, the paying agent or the Note registrar shall be affected by notice to the contrary.

(iv) All Senior Notes issued upon any transfer or exchange pursuant to the terms of the Indenture shall evidence the same debt and shall be entitled to the same benefits under the Indenture as the Senior Notes surrendered upon such transfer or exchange.

(v) In order to effect any transfer or exchange of an interest in any Transfer Restricted Note for an interest in a Senior Note that does not bear the Restricted Notes Legend and has not been registered under the Securities Act, if the Applicable Procedures of the Depositary therefor so require, an Opinion of Counsel, in form reasonably acceptable to the Note registrar to the effect that no registration under the Securities Act is required in respect of such exchange or transfer or the re-sale of such interest by the beneficial holder thereof, shall be required to be delivered to the Note registrar and the Trustee.

(h) No Obligation of the Trustee.

(i) The Trustee shall have no responsibility or obligation to any beneficial owner of a Global Note, a member of, or a participant in the Depositary or any other Person with respect to the accuracy of the records of the Depositary or its nominee or of any Agent Member thereof, with respect to any ownership interest in the Senior Notes or with respect to the delivery to any participant, member, beneficial owner or other Person (other than the Depositary) of any notice (including any notice of redemption or repurchase) or the payment of any amount, under or with respect to such Senior Notes. All notices and communications to be given to the Holders and

 

11


all payments to be made to Holders under the Senior Notes shall be given or made only to the registered Holders (which shall be the Depositary or its nominee in the case of a Global Note). The rights of beneficial owners in any Global Note shall be exercised only through the Depositary subject to the Applicable Procedures of the Depositary therefor. The Trustee may conclusively rely and shall be fully protected in conclusively relying upon information furnished by the Depositary with respect to its members, participants and any beneficial owners.

(ii) The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under the Indenture or under applicable law with respect to any transfer of any interest in any Senior Note (including any transfers between or among Agent Members or beneficial owners in any Global Note) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of the Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.

(iii) None of the Trustee, the paying agent, the Authenticating Agent, the Note registrar or the Company shall have any responsibility or liability for any actions taken or not taken by the Depositary.

(i) Exchange Offer. Upon the occurrence of the Exchange Offer in accordance with the Registration Rights Agreement, the Company shall issue and, upon receipt of a Company Order in accordance with Section 2.05(c) of the Indenture, the Trustee shall authenticate (i) one or more Global Notes without the Restricted Notes Legend in an aggregate principal amount equal to the principal amounts of the beneficial interests in the Global Notes tendered for acceptance by Persons that provide in the applicable letters of transmittal such certifications as are required by the Registration Rights Agreement and applicable law, and accepted for exchange in the Exchange Offer and (ii) Definitive Notes without the Restricted Notes Legend in an aggregate principal amount equal to the principal amount of the Definitive Notes tendered for acceptance by Persons that provide in the applicable letters of transmittal such certification as are required by the Registration Rights Agreement and applicable law, and accepted for exchange in the Exchange Offer. Concurrently with the issuance of such Senior Notes, the Trustee shall cause the aggregate principal amount of the applicable Global Notes with the Restricted Notes Legend to be reduced accordingly, and the Company shall execute and the Trustee shall authenticate and mail to the Persons designated by the Holders of the Definitive Notes so accepted Definitive Notes without the Restricted Notes Legend in the applicable principal amount. Any Senior Notes that remain outstanding after the consummation of the Exchange Offer, and Exchange Notes issued in connection with the Exchange Offer, shall be treated as a single series of Notes under the Indenture.

(j) Automatic Exchange from Transfer Restricted Note to Unrestricted Global Note. Upon the Company’s satisfaction that the Restricted Notes Legend shall no longer be required in order to maintain compliance with the Securities Act, the Company may, at its option, cause beneficial interests in a Transfer Restricted Note to be automatically exchanged into beneficial interests in an Unrestricted Global Note without any action required by or on behalf of the Holder (the “Automatic Exchange”) at any time on or after the date that is the 366th calendar day after the date on which the Senior Notes are issued, or, if such day is not a Business Day, on the next succeeding Business Day (the “Automatic Exchange Date”). Upon the Company’s satisfaction

 

12


that the Restricted Notes Legend shall no longer be required in order to maintain compliance with the Securities Act, the Company may, at its option, (i) provide written notice to DTC and the Trustee at least fifteen (15) calendar days prior to the Automatic Exchange Date, instructing DTC to exchange all of the outstanding beneficial interests in a particular Transfer Restricted Note to the Unrestricted Global Note, which the Company shall have previously otherwise made eligible for exchange with the DTC, (ii) provide prior written notice (the “Automatic Exchange Notice”) to each Holder at such Holder’s address appearing in the register of Holders at least fifteen (15) calendar days prior to the Automatic Exchange Date (the “Automatic Exchange Notice Date”), which notice must include (w) the Automatic Exchange Date, (x) the section of this Senior Note pursuant to which the Automatic Exchange shall occur, (y) the “CUSIP” number of the Transfer Restricted Note from which such Holder’s beneficial interests will be transferred and (z) the “CUSIP” number of the Unrestricted Global Note into which such Holder’s beneficial interests will be transferred, and (iii) on or prior to the Automatic Exchange Date, deliver to the Trustee for authentication one or more Unrestricted Global Notes, duly executed by the Company and a Company Order requesting the Trustee to authenticate such Unrestricted Global Notes, in an aggregate principal amount equal to the aggregate principal amount of Transfer Restricted Notes to be exchanged into such Unrestricted Global Notes. At the Company’s written request on no less than five (5) calendar days’ notice prior to the Automatic Exchange Notice Date, the Trustee shall deliver, in the Company’s name and at its expense, the Automatic Exchange Notice, which shall be prepared by the Company, to each Holder at such Holder’s address appearing in the register of Holders. Notwithstanding anything to the contrary in this Section 5(j), during the fifteen (15) calendar day period prior to the Automatic Exchange Date, no transfers or exchanges other than pursuant to this Section 5(j) shall be permitted without the prior written consent of the Company. As a condition to any Automatic Exchange, the Company shall provide, and the Trustee shall be entitled to conclusively rely upon, an Officer’s Certificate and Opinion of Counsel to the Company to the effect that the Automatic Exchange shall be effected in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Restricted Notes Legend shall no longer be required in order to maintain compliance with the Securities Act and that the aggregate principal amount of the particular Transfer Restricted Note is to be transferred to the particular Unrestricted Global Note by adjustment made on the records of the Trustee, as custodian for the Depositary to reflect the Automatic Exchange. Upon such exchange of beneficial interests pursuant to this Section 5(j), the aggregate principal amount of the Global Notes shall be increased or decreased by adjustments made on the records of the Trustee, as custodian for the Depositary, to reflect the relevant increase or decrease in the principal amount of such Global Note resulting from the applicable exchange. The Restricted Global Note from which beneficial interests are transferred pursuant to an Automatic Exchange shall be cancelled following the Automatic Exchange and disposed of in accordance with the Trustee’s procedures for the disposition of cancelled securities.

 

  6.

Definitive Note.

(a) A Global Note deposited with the Depositary or with the Trustee as Custodian pursuant to Section 4 of this Company Order or issued in connection with an Exchange Offer may be transferred to the beneficial owners thereof in the form of Definitive Notes in an aggregate principal amount equal to the principal amount of such Global Note, in exchange for such Global Note, only if such transfer complies with Section 5 of this Company Order and (i) the Depositary notifies the Company that it is unwilling or unable to continue as a Depositary for such Global Note or if at any time the Depositary ceases to be a “clearing agency” registered under the

 

13


Securities Exchange Act of 1934, as amended, and, in each case, a successor depositary is not appointed by the Company within 90 days of such notice or after the Company becomes aware of such cessation, (ii) the Company, at its option, notifies the Trustee in writing that it elects to exchange in whole, but not in part, the Global Note for Definitive Notes or (iii) an Event of Default has occurred and is continuing and the Depositary so requests (or a beneficial owner thereof requests such exchange in writing delivered through the Depositary).

(b) Any Global Note that is transferable to the beneficial owners thereof pursuant to this Section 6 shall be surrendered by the Depositary to the Trustee, to be so transferred, in whole or from time to time in part, without charge, and the Trustee shall authenticate and deliver, upon such transfer of each portion of such Global Note, an equal aggregate principal amount of Definitive Notes of authorized denominations. Any portion of a Global Note transferred pursuant to this Section 6 shall be executed, authenticated and delivered only in denominations of $2,000 and integral multiples of $1,000 in excess thereof and registered in such names as the Depositary shall direct. Any Definitive Note delivered in exchange for an interest in a Global Note that is a Transfer Restricted Note shall, except as otherwise provided by Section 5(e) of this Company Order, bear the Restricted Notes Legend.

(c) The registered Holder of a Global Note may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under the Indenture or the Senior Notes.

(d) In the event of the occurrence of any of the events specified in Section 6 of this Company Order, the Company shall promptly make available to the Trustee a reasonable supply of Definitive Notes in fully registered form without interest coupons.

 

  7.

In addition to modifications that can be made without consent of Holders set forth in Section 13.01 of the Indenture, the Company may also, solely with respect to the Senior Notes, make such provisions as may be necessary to issue any Exchange Notes issued in exchange for the Senior Notes pursuant to the Registration Rights Agreement or similar agreement.

 

  8.

Solely with respect to the Senior Notes, in addition to the conditions set forth in Section 12.01 and Section 12.02 of the Indenture, a successor Person formed by consolidation with or into which the Company is merged or the Person to which the Company sold or otherwise disposed of its properties as or substantially as an entirety, or a conveyance or transfer is made in accordance with Section 12.01 of the Indenture shall assume the obligations of the Company under the Registration Rights Agreement.

 

  9.

The Original Issue Date for the Senior Notes shall be December 5, 2024.

 

  10.

The Senior Notes shall mature and the principal thereof shall be due and payable together with all accrued and unpaid interest thereon on January 15, 2035.

 

14


  11.

The Senior Notes shall bear interest at the rate of 5.100% per annum accruing from December 5, 2024 or from the most recent Interest Payment Date to which interest has been paid or duly provided for.

 

  12.

The Interest Payment Dates for the Senior Notes shall be January 15 and July 15 of each year, commencing July 15, 2025.

 

  13.

The Regular Record Dates for the Senior Notes shall be the Business Day immediately preceding each Interest Payment Date, so long as the Senior Notes are issued in book-entry only form. Otherwise, the Regular Record Date will be the fifteenth calendar day next preceding each Interest Payment Date (whether or not a Business Day). Notwithstanding the foregoing, interest payable at the Stated Maturity or upon earlier redemption will be payable to the Persons to whom principal shall be payable.

 

  14.

The Senior Notes shall be issuable in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof.

 

  15.

The Senior Notes shall be redeemable as set forth in the Form of Note, which is attached as Exhibit A hereto.

 

  16.

The Senior Notes shall have such other terms and provisions as are provided in the Form of Note, which is attached as Exhibit A hereto.

[Signature Page Follows]

 

15


IN WITNESS WHEREOF I have executed this Company Order as of the date first written above.

 

Very truly yours,
JERSEY CENTRAL POWER & LIGHT COMPANY
By:  

/s/ Weizhong Wang

Name:   Weizhong Wang
Title:   Treasurer

Signature Page to Company Order under the

Indenture of Jersey Central Power & Light Company


EXHIBIT A

FORM OF NOTE

[Intentionally Omitted]

Exhibit 4.4

FORM OF FACE OF SENIOR NOTE DUE 2035

[Insert the Restricted Notes Legend, if applicable pursuant to the provisions of the Indenture and the Company Order]

[Insert the Global Notes Legend, if applicable pursuant to the provisions of the Indenture and the Company Order]

[Insert the Temporary Regulation S Note Legend, if applicable pursuant to the provisions of the Indenture and the Company Order]

[Insert the Definitive Notes Legend, if applicable pursuant to the provisions of the Indenture and the Company Order]

 

1


JERSEY CENTRAL POWER & LIGHT COMPANY

5.100% SENIOR NOTES DUE 2035

 

Original Issue Date:   
Stated Maturity:    January 15, 2035
Interest Rate:    5.100%
Interest Payment Dates:    January 15 and July 15, commencing July 15, 2025.
Regular Record Dates:    The Business Day immediately preceding each Interest Payment Date so long as this Note is issued in book-entry only form, otherwise the fifteenth calendar day next preceding each Interest Payment Date (whether or not a Business Day).
Redeemable:    Yes ☒  No ☐
Principal Amount:    $
  

No. [RA-[●]]1[RS-[●]]2[TRS-[●]]3
ISIN No.:

CUSIP:

[Signature Page Follows]

 

1 

Rule 144A Note only

2 

Permanent Regulation S Note only

3 

Temporary Regulation S Note only


IN WITNESS WHEREOF, Jersey Central Power & Light Company has caused this Note to be executed on behalf of the Company by its Treasurer and attested by its Corporate Secretary.

 

 

JERSEY CENTRAL POWER & LIGHT COMPANY
By:  

 

Name:   Weizhong Wang
Title:   Treasurer

 

Attested:
By:  

 

Name:   Darnella T. Robertson
Title:   Corporate Secretary

[Signature Page to Global Note ([Rule 144A] [Permanent Regulation S][Temporary Regulation S])]


CERTIFICATE OF AUTHENTICATION

This is one of the Notes of the series herein designated, described or provided for in the within-mentioned Indenture.

 

 

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee
By:  

 

Name:  
Title:   Authorized Officer

[Signature Page to Global Note ([Rule 144A] [Permanent Regulation S][Temporary Regulation S])]


FORM OF REVERSE OF SENIOR NOTE

JERSEY CENTRAL POWER & LIGHT COMPANY, a corporation duly organized and existing under the laws of the State of New Jersey (herein called the “Company, which term includes any successor under the Indenture referred to below), for value received, hereby promises to pay to [if Definitive Note:_______][if Global Note: Cede & Co.], or registered assigns, the principal sum of _______ ($______), or such principal amount as shall be set forth in the Schedule attached hereto, on the Stated Maturity specified on the face hereof, and to pay interest thereon from the Original Issue Date specified on the face hereof or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually in arrears on the Interest Payment Dates specified on the face hereof in each year, commencing with the Interest Payment Date specified on the face hereof, and at the Stated Maturity, at the Interest Rate per annum specified on the face hereof, until the principal hereof is paid or made available for payment. No interest shall accrue on the Maturity Date, so long as the principal amount of this Global Note is paid on the Maturity Date. The interest so payable and punctually paid or duly provided for on any such Interest Payment Date (except for interest payable on the Stated Maturity specified on the face hereof, or, if applicable, upon redemption or acceleration) will, as provided in the Indenture (as defined below), be paid to the Person in whose name this Global Note is registered at the close of business on the Regular Record Date specified on the face hereof (whether or not a Business Day) next preceding such Interest Payment Date; provided, that the first Interest Payment Date for any part of this Global Note, the Original Issue Date of which is after a Regular Record Date but prior to the applicable Interest Payment Date, shall be the Interest Payment Date following the next succeeding Regular Record Date; provided further, that interest payable on the Stated Maturity specified on the face hereof or, if applicable, upon redemption or acceleration, shall be payable to the Person to whom principal shall be payable on such Maturity Date. Except as otherwise provided in the Indenture, any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and shall be paid to the Person in whose name this Global Note is registered at the close of business on a Special Record Date for the payment of such defaulted interest not less than ten days nor more than 15 days next preceding the date of payment of such defaulted interest, such Special Record Date to be established by the Trustee, when moneys become available for the payment of interest by notice given by mail by or on behalf of the Company to the registered owner hereof not less than ten days next preceding such Special Record Date. Payment of principal of, premium, if any, and interest on, this Global Note shall be payable pursuant to Section 2.12(a) of the Indenture.

Upon the occurrence, if any, of the events set forth in the Registration Rights Agreement (as defined in the Company Order establishing the terms and the form of the Notes pursuant to the Indenture), the Company shall pay additional interest on this Note, which shall accrue at a rate of 0.25% for the first 90-day period after the date of such event and increased by an additional 0.25% for each subsequent 90-day period thereafter, up to a maximum additional interest rate of 0.50% per annum over the interest rate otherwise then applicable for this Note, as set forth in the Registration Rights Agreement (“Additional Interest”). The Company shall pay all Additional Interest, if any, on the applicable interest payment date described herein in the same manner as interest is paid on this Note. Unless the context otherwise requires, for the avoidance of doubt any references to “interest” with respect to this Note herein, in the Indenture or in the Company Order establishing the terms and the form of the Notes pursuant to the Indenture shall include any Additional Interest that may be payable pursuant to this paragraph.

 

1


This Global Note is one of a duly authorized issue of notes of the Company (herein called the “Notes”), issued and issuable in one or more series under an Indenture, dated as of July 1, 1999 (such Indenture, as originally executed and delivered and as supplemented or amended from time to time thereafter, together with any constituent instruments establishing the terms of particular Notes, being herein called the “Indenture”), between the Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (herein called the “Trustee, which term includes any successor trustee under the Indenture). Under the Indenture, one or more series of notes may be issued and, as used herein, the term “Notes” refers to the Notes of this series and any other outstanding series of Notes. Reference is hereby made to the Indenture for a more complete statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Noteholders and of the terms upon which the Notes are, and are to be, authenticated and delivered. This Global Note has been issued in respect of the Notes of the series designated on the face hereof.

Each Note of this series shall be dated and issued as of the date of its authentication by the Trustee and shall bear an Original Issue Date. Each Note of this series or Global Note issued upon registration of transfer, exchange or substitution of such Note of this series or Global Note shall bear the Original Issue Date of such transferred, exchanged or substituted Note or Global Note, as the case may be.

Prior to October 15, 2034 (three months prior to the Stated Maturity of the Notes) (the “Par Call Date”), the Company may redeem the Notes at its option, in whole or in part, at any time and from time to time, at a redemption price (expressed as a percentage of principal amount and rounded to three decimal places) equal to the greater of:

 

   

(a) the sum of the present values of the remaining scheduled payments of principal of the Notes to be redeemed and interest thereon discounted to the redemption date (assuming the Notes matured on the Par Call Date) on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined below) plus 15 basis points less (b) interest accrued to the redemption date, and

 

   

100% of the principal amount of the Notes to be redeemed,

plus, in either case, accrued and unpaid interest thereon to, but not including, the redemption date.

On or after the Par Call Date, the Company may redeem the Notes, in whole or in part, at any time and from time to time, at a redemption price equal to 100% of the principal amount of the Notes being redeemed, plus accrued and unpaid interest thereon to, but not including, the redemption date.

 

2


The term “Treasury Rate,” as used above means, with respect to any redemption date, the yield determined by the Company in accordance with the following two paragraphs:

The Treasury Rate shall be determined by the Company after 4:15 p.m., New York City time (or after such time as yields on U.S. government securities are posted daily by the Board of Governors of the Federal Reserve System), on the third Business Day preceding the redemption date based upon the yield or yields for the most recent day that appear after such time on such day in the most recent statistical release published by the Board of Governors of the Federal Reserve System designated as “Selected Interest Rates (Daily)—H.15” (or any successor designation or publication) (“H.15”) under the caption “U.S. government securities—Treasury constant maturities—Nominal” (or any successor caption or heading) (“H.15 TCM”). In determining the Treasury Rate, the Company shall select, as applicable: (1) the yield for the Treasury constant maturity on H.15 exactly equal to the period from the redemption date to the Par Call Date (the “Remaining Life”); or (2) if there is no such Treasury constant maturity on H.15 exactly equal to the Remaining Life, the two yields—one yield corresponding to the Treasury constant maturity on H.15 immediately shorter than and one yield corresponding to the Treasury constant maturity on H.15 immediately longer than the Remaining Life—and shall interpolate to the Par Call Date on a straight-line basis (using the actual number of days) using such yields and rounding the result to three decimal places; or (3) if there is no such Treasury constant maturity on H.15 shorter than or longer than the Remaining Life, the yield for the single Treasury constant maturity on H.15 closest to the Remaining Life. For purposes of this paragraph, the applicable Treasury constant maturity or maturities on H.15 shall be deemed to have a maturity date equal to the relevant number of months or years, as applicable, of such Treasury constant maturity from the redemption date.

If on the third Business Day preceding the redemption date H.15 TCM is no longer published, or, if published, no longer contains the yields for nominal Treasury constant maturities, the Company shall calculate the Treasury Rate based on the rate per annum equal to the semi-annual equivalent yield to maturity at 11:00 a.m., New York City time, on the second Business Day preceding such redemption date as follows: (1) the Company shall select (a) the United States Treasury security maturing on the Par Call Date, subject to clause (3) below, or (b) if there is no United States Treasury security maturing on the Par Call Date, then the United States Treasury security with the maturity date that is closest to the Par Call Date, subject to clauses (2) and (3) below, as applicable; or (2) if there is no United States Treasury security described in clause (1), but there are two or more United States Treasury securities with maturity dates equally distant from the Par Call Date, one or more with maturity dates preceding the Par Call Date and one or more with maturity dates following the Par Call Date, the Company shall select the United States Treasury security with a maturity date preceding and closest to the Par Call Date, subject to clause (3) below; or (3) if there are two or more United States Treasury securities meeting the criteria of the preceding clauses (1) or (2), the Company shall select from among these two or more United States Treasury securities the United States Treasury security that is trading closest to par based upon the average of the bid and asked prices for such United States Treasury securities at 11:00 a.m., New York City time. In determining the Treasury Rate in accordance with the terms of this paragraph, the semi-annual yield to maturity of the applicable United States Treasury security shall be based upon the average of the bid and asked prices of such United States Treasury security (expressed as a percentage of principal amount and rounded to three decimal places) at 11:00 a.m., New York City time.

The Company’s actions and determinations in determining the redemption price shall be conclusive and binding for all purposes, absent manifest error.

 

3


The Company will send notice of any redemption between 30 days and 60 days before the redemption date to each holder of the Notes of this series to be redeemed.

If fewer than all of the Notes of this series are to be redeemed, not more than 60 days prior to the redemption date, the particular Notes of this series or portions thereof shall be selected for redemption from the outstanding Notes of this series by lot; provided that as long as the Notes are represented by one or more Global Notes, the particular Notes of this series or portions thereof shall be selected for redemption by The Depository Trust Company (“DTC) in such manner as DTC shall determine. Any notice of redemption of Notes of this series may be conditional on the Company depositing funds with the Trustee, or irrevocably directing the Trustee to apply moneys held by it, sufficient to pay the redemption price thereof, and if such funds are not so deposited or such direction is not given, such notice shall be of no effect.

Unless the Company is in default in payment of the redemption price and accrued interest, on and after the redemption date, interest will cease to accrue on Notes of this series, or portion thereof, called for redemption.

The Company will not be required to make any mandatory redemption or sinking fund payments with respect to the Notes of this series.

In the event of redemption of this Note in part only, a new Note, of like tenor, representing the unredeemed portion hereof shall be issued in the name of the Holder hereof upon the cancellation thereof.

Interest payments for this Note shall be computed and paid on the basis of a 360-day year of twelve 30-day months (and for any partial period, shall be calculated on the basis of the number of days elapsed in a 360-day year of twelve 30-day months). If any Interest Payment Date or date on which the principal of this Note is required to be paid is not a Business Day, then payment of principal, premium, if any, or interest need not be made on such date but may be made on the next succeeding Business Day with the same force and effect as if made on such Interest Payment Date or date on which the principal of this Note is required to be paid and, in the case of timely payment thereof, no interest shall accrue for the period from and after such Interest Payment Date or the date on which the principal of this Note is required to be paid.

The Company, at its option, and subject to the terms and conditions provided in the Indenture, will be discharged from any and all obligations in respect of the Notes (except for certain obligations including obligations to register the transfer or exchange of Notes, replace stolen, lost or mutilated Notes, maintain paying agencies and hold monies for payment in trust, all as set forth in the Indenture) if the Company deposits with the Trustee cash, U.S. Government Obligations which through the payment of interest thereon and principal thereof in accordance with their terms will provide cash, or a combination of cash and U.S. Government Obligations, in any event in an amount sufficient, without reinvestment, to pay all the principal of and premium, if any, and interest on the Notes on the dates such payments are due in accordance with the terms of the Notes.

If an Event of Default shall occur and be continuing, the principal of the Notes may be declared due and payable in the manner and with the effect provided in the Indenture.

 

4


The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modifications of the rights and obligations of the Company and the rights of the Noteholders under the Indenture at any time by the Company and the Trustee with the consent of the Holders of not less than a majority in principal amount of the Outstanding Notes. Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange therefor or in lieu thereof whether or not notation of such consent or waiver is made upon this Note.

As set forth in and subject to the provisions of the Indenture, no Holder of any Notes will have any right to institute any proceeding with respect to the Indenture or for any remedy thereunder unless such Holder shall have previously given to the Trustee written notice of a continuing Event of Default with respect to such Notes, the Holders of not less than a majority in principal amount of the Outstanding Notes affected by such Event of Default shall have made written request and offered reasonable indemnity to the Trustee to institute such proceeding as Trustee and the Trustee shall have failed to institute such proceeding within 60 days; provided, however, that such limitations do not apply to a suit instituted by the Holder hereof for the enforcement of payment of principal of, premium, if any, or interest on, this Note on or after the respective due dates expressed herein.

So long as any Notes of this series are outstanding:

(1) at any time the Company is not subject to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Company will make available to the holders of the Notes of this series its audited annual and unaudited quarterly financial statements within 105 days after the end of the period covered by such financial statements either by posting such financial statements on a website (which may be a private website or any website maintained by the Securities and Exchange Commission (“SEC”), including EDGAR) or by delivering such financial statements through any other method as may be permitted by the procedures of DTC. For the avoidance of doubt, “financial statements,” as used in the Indenture, will include only a balance sheet, a statement of operations and a statement of cash flows, each prepared in accordance with generally accepted accounting principles (United States or, as may become applicable in the future, international), and such financial statements need not satisfy the requirements of Regulation S-X under the Securities Act of 1933, as amended (the “Securities Act”), and, in the case of such statements that are unaudited, may be subject to year-end adjustments and may exclude detailed footnotes; and

(2) at any time the Company is subject to Section 13 or 15(d) of the Exchange Act, any annual or quarterly reports (on Form 10-K or Form 10-Q or any respective successor form) that the Company is required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act (excluding any such information, documents or reports, or portions thereof, subject to confidential treatment and any correspondence with the SEC) must be filed by the Company with the Trustee within 15 days after the same are required to be filed with the SEC (giving effect to any grace period provided by Rule 12b-25 under the Exchange Act (or any

 

5


successor rule)). Documents filed by the Company with the SEC via the EDGAR system (or any successor system) will be deemed to be filed with the Trustee as of the time such documents are filed via EDGAR (or any successor thereto), it being understood that the Trustee shall not be responsible for determining whether such filings have been made.

Delivery of reports, information and documents to the Trustee is for informational purposes only and the Trustee’s receipt of such shall not constitute actual or constructive notice or knowledge of any information contained therein or determinable from information contained therein, including the Company’s compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers’ Certificates).

No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and premium, if any, and interest, if any, on this Note at the times, places, and rates, in the coin or currency, and in the manner, herein prescribed.

As provided in the Indenture and subject to certain limitations therein set forth, this Note may be transferred only as permitted by the legend hereto. The Company is not required to make any transfers or exchanges of the Notes of this series for a period of 15 calendar days next preceding an Interest Payment Date.

The Indenture contains terms, provisions, and conditions relating to the consolidation or merger of the Company with or into, and the conveyance or other transfer of assets to, another Person, to the assumption by such other Person, in certain circumstances, of all of the obligations of the Company under the Indenture and on the Notes and to the release and discharge of the Company in certain circumstances, from such obligations.

The Notes of this series are issuable only in registered form, without coupons, in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof. As provided in the Indenture and subject to certain limitations therein set forth, Notes of this series are exchangeable for a like aggregate principal amount of Notes of this series of like tenor and of a different authorized denomination, as requested by the Holder surrendering the same.

Each Holder shall be deemed to understand that the offer and sale of this Note has not been registered under the Securities Act and that this Note may not be offered or sold except as permitted in the following sentence. Each Holder shall be deemed to agree, on its own behalf and on behalf of any accounts for which it is acting as hereinafter stated, that if such Holder sells any Notes of this series, such Holder will do so only (A) to the Company, (B) pursuant to the exemption from registration provided by Rule 144 under the Securities Act (if available) (and based upon an Opinion of Counsel acceptable to the Company), (C) so long as such Note is eligible for resale pursuant to Rule 144A under the Securities Act (“Rule 144A”) to a person whom it reasonably believes is a “qualified institutional buyer” within the meaning of Rule 144A that purchases for its own account or for the account of a qualified institutional buyer to whom notice is given that the resale, pledge or transfer is being made in reliance on Rule 144A, (D) in an offshore transaction in accordance with Rule 903 or 904 of Regulation S under the Securities Act, (E) in accordance with another applicable exemption from the registration requirements of the Securities Act (and based

 

6


upon an Opinion of Counsel acceptable to the Company), or (F) pursuant to an effective registration statement under the Securities Act and, in each case, in accordance with any applicable securities laws of any state of the United States, and each Holder is further deemed to agree to provide to any person purchasing any Notes of this series from it a notice advising such purchaser that resales of such Notes are restricted as stated herein.

Each Holder shall be deemed to understand that, on any proposed resale of any Notes of this series pursuant to the exemption from registration under Rule 144, any Holder making any such proposed resale will be required to furnish to the Trustee and Company such certifications, legal opinions, and other information as the Trustee and Company may reasonably require to confirm that the proposed sale complies with the transfer restrictions contained in this Global Note and the Indenture.

The Indenture and the Notes shall be governed by and construed in accordance with the laws of the State of New York.

As used herein, “Business Day shall mean each day that is not a day on which banking institutions or trust companies in the Borough of Manhattan, the City and State of New York, or in the city where the Corporate Trust Office of the Trustee is located, are obligated or authorized by law or executive order to close.

As provided in the Indenture, no recourse shall be had for the payment of the principal of, premium, if any, or interest on any Notes, or for any claim based thereon or otherwise in respect thereof, or of the indebtedness represented thereby, or upon any obligation, covenant or agreement under the Indenture, against, and no personal liability whatsoever shall attach to, or be incurred by, any incorporator, stockholder, officer or director, as such, past, present or future, of the Company or of any predecessor or successor (either directly or through the Company or a predecessor or successor), whether by virtue of any constitutional provision, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly agreed and understood that the Indenture and this Note are solely corporate obligations and that any such personal liability is hereby expressly waived and released as a condition of, and as part of the consideration for, the execution of the Indenture and the issuance of this Note.

Unless the certificate of authentication hereon has been executed by the Trustee, directly or through an Authenticating Agent, by manual, electronic or facsimile signature of an authorized officer, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

All terms used in this Note which are defined in the Indenture shall have the meanings assigned to them in the Indenture unless otherwise indicated herein.

 

7


CERTIFICATE OF TRANSFER

5.100% SENIOR NOTES DUE 2035

FOR VALUE RECEIVED, the undersigned sells, assigns and transfers unto

PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE:             

Name and address of assignee must be printed or typewritten:

 

 
 
 

$_____________________ principal amount of or beneficial interests* in the within Note of the Company and does hereby irrevocably constitute and appoint _______________________ to transfer the said principal amount of or beneficial interests in said Note on the books of the within-named Company, with full power of substitution in the premises.

The undersigned certifies that said principal amount of or beneficial interests in said Note are being resold, pledged or otherwise transferred as follows: (check one)

 

   to the Company;
   pursuant to an exemption from registration provided by Rule 144 under the Securities Act of 1933, as amended (the “Securities Act’) (if available);
   to a Person whom the undersigned reasonably believes is a “qualified institutional buyer” within the meaning of Rule 144A under the Securities Act (“Rule 144A”) purchasing for its own account or for the account of a qualified institutional buyer to whom notice is given that the resale, pledge or other transfer is being made in reliance on Rule 144A;
   in an offshore transaction in accordance with Rule 903 or 904 of Regulation S under the Securities Act;
   as otherwise permitted by the non-registration legend appearing on this Note; or
   as otherwise agreed by the Company, confirmed in writing to the Trustee, as follows: [describe]

 

* 

Transfers of beneficial interests in this Note may be made only to another Note of the same series or as otherwise permitted by applicable securities laws.

 

1


Dated:             Signature:  

 

    Print Name:  

 

Unless one of the boxes is checked, the Trustee will refuse to register any of the Notes evidenced by this certificate in the name of any Person other than the registered Holder thereof; provided, however, that if the second or fifth box is checked, the Company or the Trustee may require, prior to registering any such transfer of the Notes, such legal opinions, certifications and other information as the Company or the Trustee has reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act.

NOTICE. The signature to this assignment must correspond with the name as written upon the face of the Note in every particular without alteration or enlargement or any change whatsoever.

SIGNATURE GUARANTEE. Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Note Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Note Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

 

2


TO BE COMPLETED BY PURCHASER IF THIRD BOX ABOVE IS CHECKED.

The undersigned represents and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a “qualified institutional buyer” within the meaning of Rule 144A, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned’s foregoing representations in order to claim the exemption from registration provided by Rule 144A.

 

Date:   NOTICE:   To be executed by an executive officer
    Name:  
    Title:  
Signature Guarantee*:

 

*

Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).

 

3


[Include if Global Note]

SCHEDULE OF INCREASES AND DECREASES OF INTERESTS

IN THE GLOBAL NOTE

The following increases or decreases in this Global Note have been made:

 

Date of Exchange

   Amount of
decrease in
Principal Amount
of this Global
Note
   Amount of
increase in
Principal Amount
of this Global
Note
   Principal Amount
of this Global
Note following
such decrease (or
increase)
   Signature of
authorized officer
of Trustee

 

4

Exhibit 4.5

EXECUTION COPY

 

 

 

FIRST SUPPLEMENTAL INDENTURE

 

 

JERSEY CENTRAL POWER & LIGHT COMPANY

AND

THE BANK OF NEW YORK

AND

THE BANK OF NEW YORK TRUST COMPANY, N.A.,

SUCCESSOR TRUSTEE

 

 

Dated October 31, 2007

 

 

 


This FIRST SUPPLEMENTAL INDENTURE, dated October 31, 2007 (the “First Supplemental Indenture”), by and among JERSEY CENTRAL POWER & LIGHT COMPANY, a corporation duly organized and existing under the laws of the State of New Jersey (the “Company”), THE BANK OF NEW YORK, a New York banking corporation organized and existing under the laws of the State of New York (the “Resigning Trustee”) and successor in interest to United States Trust Company of New York (the “Initial Trustee”) under the Indenture (as defined below), and THE BANK OF NEW YORK TRUST COMPANY, N.A., a national banking association organized and existing under the laws of the United States of America, as successor in interest to the Resigning Trustee (the “Successor Trustee”). As used herein, “Trustee” shall refer to the entity serving as trustee under the Indenture, with all the authority, rights, powers and immunities vested in, and all duties and obligations binding on, the trustee and shall also include any successor trustee appointed pursuant to Article IX of the Indenture.

WITNESSETH:

WHEREAS, for its lawful corporate purposes, the Company executed and delivered that certain Indenture, dated as of July 1, 1999 (the “Indenture”; capitalized terms used but not defined herein shall have the meanings set forth in the Indenture), by and between the Company and the Initial Trustee to provide for the issuance from time to time of Notes as provided by the Indenture;

WHEREAS, the Resigning Trustee, as successor in interest to the Initial Trustee under the Indenture, acted in the capacities assigned to it by the Indenture;

WHEREAS, pursuant to Article IX of the Indenture and that certain Agreement of Resignation, Appointment and Acceptance, dated as of May 16, 2007 (the “Tri-Party Agreement”), by and among the Company, the Resigning Trustee and the Successor Trustee, the Resigning Trustee resigned as Trustee, the Company appointed the Successor Trustee to act as Trustee under the Indenture, and the Successor Trustee accepted its appointment as Trustee under the Indenture with all the authority, rights, powers and immunities vested in the Trustee under the Indenture and agreed to serve as Trustee under the Indenture and to perform the duties and obligations of the Trustee under the Indenture;

WHEREAS, the Successor Trustee is now acting as Trustee under the Indenture and this First Supplemental Indenture;

WHEREAS, Sections 13.01(a)(1) and 13.01(a)(10) of the Indenture provide that the Company, when authorized by resolution of the Company’s Board of Directors, and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental without the consent of the Noteholders to make such provision in regard to matters or questions arising under the Indenture as may be necessary or desirable, and not inconsistent with the Indenture or prejudicial to the interests of the Noteholders in any material respect, for the purpose of supplying any omission, curing any ambiguity, or curing, correcting or supplementing any defective or inconsistent provision or to make any other change that is not prejudicial to the Noteholders in any material respect;

WHEREAS, the Company, in the exercise of the powers and authority conferred upon and reserved to it under the provisions of the Indenture and pursuant to appropriate action of its Board


of Directors, has fully resolved and determined to make, execute and deliver to the Successor Trustee this First Supplemental Indenture in the form hereof for the purpose of amending the Indenture by, among other things, removing the requirement that the Trustee maintain its principal place of business in the Borough of Manhattan, the City of New York, State of New York;

WHEREAS, the execution and delivery of this First Supplemental Indenture by the Company has been authorized by resolution of the Company’s Board of Directors;

WHEREAS, the Company has heretofore delivered or is delivering contemporaneously herewith to the Successor Trustee an Officers’ Certificate in compliance with and to the effect set forth in Sections 13.05 and 15.05 of the Indenture with respect to this First Supplemental Indenture;

WHEREAS, all conditions and requirements necessary to make this First Supplemental Indenture, in the form and upon the terms hereof, a valid and legally binding instrument, in accordance with its terms and for the purposes expressed herein, have been complied with, performed and fulfilled, and the execution and delivery hereof, in the form and upon the terms hereof, have been in all respects duly authorized;

WHEREAS, the Company has requested that the Resigning Trustee execute and deliver this First Supplemental Indenture pursuant to Section 1.05 of the Tri-Party Agreement to further acknowledge and confirm the vesting in the Successor Trustee of all the property, rights, powers, duties, trusts, immunities and obligations of the Resigning Trustee as Trustee under the Indenture; and

WHEREAS, the Company has requested that the Successor Trustee execute and deliver this First Supplemental Indenture and satisfy all requirements necessary to make this First Supplemental Indenture a valid and legally binding instrument in accordance with its terms, duly authorized in all respects.

NOW THEREFORE, for and in consideration of the premises and intending to be legally bound hereby, it is mutually covenanted and agreed by the Company, the Resigning Trustee and the Successor Trustee, for the equal and proportionate benefit of all Noteholders, as follows:

ARTICLE I

SCOPE OF FIRST SUPPLEMENTAL INDENTURE

The changes, modifications and supplements to the Indenture effected by Article II hereof shall be applicable with respect to, and govern the terms of, any Notes created before, on or after the date hereof

 

2


ARTICLE II

AMENDMENTS

Section 2.01.Amendment to Section 9.09.  The second sentence of Section 9.09 of the Indenture is hereby deleted, and Section 9.09 of the Indenture is hereby replaced and superseded in its entirety by the following:

Existence And Eligibility Of Trustee. There shall at all times be a Trustee hereunder which Trustee shall at all times be a corporation organized and doing business under the laws of the United States or any State thereof or of the District of Columbia having a combined capital and surplus of at least $50,000,000 and which is authorized under such laws to exercise corporate trust powers and is subject to supervision or examination by Federal or State authorities. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid authority, then for the purposes of this Section 9.09, the combined capital and surplus shall be deemed to be as set forth in its most recent report of condition so published. No obligor upon the Notes or Person directly or indirectly controlling, controlled by, or under common control with such obligor shall serve as Trustee. If at any time the Trustee shall cease to be eligible in accordance with this Section 9.09, the Trustee shall resign immediately in the manner and with the effect specified in Section 9.10 hereof.

Section 2.02.Acknowledgement of Resigning Trustee.  In connection with the execution and delivery of this First Supplemental Indenture and pursuant to Section 1.05 of the Tri-Party Agreement, the Resigning Trustee, upon the reasonable request of the Company, acknowledges, executes and delivers this First Supplemental Indenture to provide further assurances of the vesting in the Successor Trustee of all the property, rights, powers, duties, trusts, immunities and obligations as Trustee under the Indenture. The Resigning Trustee hereby further confirms the assignment to the Successor Trustee, in trust under the Indenture, all property, rights, powers, duties, trusts, immunities and obligations as Trustee under the Indenture as of the Effective Date of the Tri-Party Agreement (as defined therein).

Section 2.03.Acknowledgment of Successor Trustee.  In connection with the execution and delivery of this First Supplemental Indenture, the Successor Trustee acknowledges its appointment as Trustee under the Indenture pursuant to the Tri-Party Agreement with all the authority, rights, powers and immunities vested in the Trustee under the Indenture. The Successor Trustee represents and warrants that it is qualified and eligible to serve as Trustee under the Indenture.

Section 2.04.Ratification of Indenture; First Supplemental Indenture Part of Indenture.  Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed, and all the terms, conditions and provisions thereof shall remain in full force and effect. This First Supplemental Indenture shall form a part of the Indenture for all purposes of the Notes, and every Note heretofore or hereafter authenticated and delivered shall be bound hereby.

 

3


ARTICLE III

MISCELLANEOUS

Section 3.01.Defined Terms.  As used in this First Supplemental Indenture, terms defined in the Indenture or in the preamble or recitals hereto are used herein as therein defined. The words “herein,” “hereof’ and “hereby” and other words of similar import used in this First Supplemental Indenture refer to this First Supplemental Indenture as a whole and not to any particular section hereof.

Section 3.02.Governing Law.  THIS FIRST SUPPLEMENTAL INDENTURE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF SAID STATE WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THEREOF, EXCEPT AS MAY BE OTHERWISE REQUIRED BY MANDATORY PROVISIONS OF LAW.

Section 3.03.Severability.  In case any provision in this First Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

Section 3.04.Conflicts.  If and to the extent that any provision of this First Supplemental Indenture limits, qualifies or conflicts with another provision included in this First Supplemental Indenture or in the Indenture that is required to be included in this First Supplemental Indenture or the Indenture by any of the provisions of Sections 310 to 317, inclusive, of the Trust Indenture Act of 1939, such required provision shall control.

Section 3.05.No Additional Rights.  Nothing in this First Supplemental Indenture is intended to or shall provide any rights to any parties other than those expressly contemplated by this First Supplemental Indenture.

Section 3.06.Counterparts.  The parties hereto may sign one or more copies of this First Supplemental Indenture in counterparts, all of which together shall constitute one and the same agreement.

Section 3.07.Headings.  The section headings herein are for convenience of reference only and shall not be deemed to alter or affect the meaning or interpretation of any provisions hereof.

Section 3.08.Successors and Assigns.  All agreements in the Indenture, as supplemented and amended by this First Supplemental Indenture, by the parties hereto shall bind their respective successors and assigns and inure to the benefit of their respective successors and assigns, whether so expressed or not.

Section 3.09.Acceptance by Successor Trustee.  The Successor Trustee accepts the amendments to the Indenture effected by this First Supplemental Indenture. Without limiting the generality of the foregoing, the Successor Trustee assumes no responsibility for the correctness of the recitals contained herein, which shall be taken as the statements of the Company. All rights, protections, privileges, indemnities and benefits granted or afforded to the Trustee under the

 

4


Indenture shall be deemed incorporated herein by this reference and shall be deemed applicable to all actions taken, suffered or omitted by the Successor Trustee under this First Supplemental Indenture.

Section 3.10.Effective Date.  This First Supplemental Indenture shall become effective upon the execution and delivery by the parties hereto as of the date of the Effective Date of the Tri-Party Agreement (as defined therein).

[Signature page follows.]

 

5


IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly executed as of the date first above written.

 

JERSEY CENTRAL POWER & LIGHT COMPANY
By:   /s/ Randy Scilla
  Name: Randy Scilla
  Title: Treasurer
THE BANK OF NEW YORK TRUST COMPANY, N.A., as Successor Trustee
By:    
  Name: Biagio S. Impala
  Title: Vice President

 

Acknowledged and agreed:

THE BANK OF NEW YORK,

as Resigning Trustee

By:    
  Name:
  Title:

 

Signature Page to First Supplemental Indenture


IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly executed as of the date first above written.

 

JERSEY CENTRAL POWER & LIGHT COMPANY
By:    
  Name: Randy Scilla
  Title: Treasurer
THE BANK OF NEW YORK TRUST COMPANY, N.A., as Successor Trustee
By:   /s/ Biagio S. Impala
  Name: Biagio S. Impala
  Title: Vice President

 

Acknowledged and agreed:

THE BANK OF NEW YORK,

as Resigning Trustee

By:    
  Name:
  Title:

 

Signature Page to First Supplemental Indenture


IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly executed as of the date first above written.

 

JERSEY CENTRAL POWER & LIGHT COMPANY
By:    
  Name: Randy Scilla
  Title: Treasurer
THE BANK OF NEW YORK TRUST COMPANY, N.A., as Successor Trustee
By:    
  Name: Biagio S. Impala
  Title: Vice President

 

Acknowledged and agreed:

THE BANK OF NEW YORK,

as Resigning Trustee

By:   /s/ CARLOS R. LUCIANO
  Name: CARLOS R. LUCIANO
  Title: VICE PRESIDENT

 

Signature Page to First Supplemental Indenture

Exhibit 5.1

 

LOGO

April 1, 2025

Jersey Central Power & Light Company

300 Madison Avenue

Morriston, New Jersey 07962

Re:  Jersey Central Power & Light Company’s Registration Statement on Form S-4

Ladies and Gentlemen:

We have acted as counsel to Jersey Central Power & Light Company, a New Jersey corporation (the “Company”), in connection with the filing of the referenced Registration Statement on Form S-4 (the “Registration Statement”) under the Securities Act of 1933, as amended (the “Securities Act”), with the Securities and Exchange Commission (the “SEC”). The Registration Statement relates to the proposed offer by the Company to exchange (the “Exchange Offer”) up to $700,000,000 aggregate principal amount of the Company’s 5.100% Senior Notes due 2035 (collectively, the “New Notes”), which will be registered under the Securities Act for a like principal amount of the Company’s 5.100% Senior Notes due 2035 (collectively, the “Outstanding Notes”).

The Outstanding Notes have been, and the New Notes will be, issued pursuant to a base indenture, dated as of July 1, 1999, between the Company and The Bank of New York Mellon Trust Company, National Association (as successor in interest to U.S. Trust Company of New York) as trustee (the “Trustee”), as supplemented by Company Orders for the Outstanding Notes and the New Notes (collectively, the “Indenture”).

In connection with this opinion letter, we have examined originals, or copies certified or otherwise identified to our satisfaction, of (i) the Certificate of Incorporation, as amended, of the Company and Bylaws, as amended, of the Company, (ii) certain resolutions of the Company’s Board of Directors relating to the Registration Statement, (iii) the Registration Statement and the prospectus included therein (the “Prospectus”), (iv) the Indenture and (v) such other documents and records as we have deemed necessary.

We have assumed the genuineness of all signatures, the legal capacity of all natural persons, the authenticity of the documents submitted to us as originals, the conformity to the original documents of all documents submitted to us as copies (whether in PDF, another electronic format, or otherwise) and the authenticity of the originals of all documents submitted to us as copies. With respect to matters of fact relevant to the opinions expressed below, we have relied upon certificates of officers of the Company, representations made by the Company in documents examined by us and representations of officers of the Company. We have also obtained and relied upon such certificates and assurances from public officials as we have deemed necessary for the purposes of the opinions expressed below.

We have also assumed for purposes of the opinions expressed below that the Indenture has been duly authorized, executed and delivered by the Trustee; that the Indenture has been qualified under the Trust Indenture Act of 1939, as amended; that the Trustee has the requisite organizational and legal power and authority to perform its obligations under the Indenture; and that the Indenture constitutes a legal, valid and binding obligation of the Trustee.

Based upon the foregoing, we are of the opinion that, when the New Notes have been duly executed, authenticated, issued and delivered against receipt of the Outstanding Notes in accordance with the provisions of the Indenture and the Exchange Offer as described in the Prospectus, the New Notes will constitute legal, valid and binding obligations of the Company enforceable against the Company in accordance with their terms.

 

 

Morgan, Lewis & Bockius LLP

 

One Oxford Centre

Thirty-Second Floor

Pittsburgh, PA 15219-6401

United States

 

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+1.412.560.3300

+1.412.560.7001


The opinions expressed above are subject to the effects of (i) bankruptcy, insolvency, fraudulent conveyance, fraudulent transfer, reorganization, moratorium or other similar laws relating to or affecting enforcement of creditors’ rights or remedies generally and (ii) general principles of equity (whether such principles are considered in a proceeding at law or equity), including the discretion of the court before which any proceeding may be brought, concepts of good faith, reasonableness and fair dealing and standards of materiality.

We render the foregoing opinions as members of the bar of the State of New York and express no opinion as to laws other than the laws of the State of New York, the New Jersey Business Corporation Act and the federal laws of the United States of America.

We hereby consent to the use of this opinion letter as Exhibit 5.1 to the Registration Statement and to the reference to us under the caption “Legal Matters” in the Prospectus. In giving such consent, we do not hereby admit that we are acting within the category of persons whose consent is required under Section 7 of the Securities Act or the rules or regulations of the SEC thereunder.

Very truly yours,

/s/ Morgan, Lewis & Bockius LLP

Exhibit 10.1

EXECUTION VERSION

 

 

 

U.S. $500,000,000

CREDIT AGREEMENT

dated as of October 18, 2021,

by and among

JERSEY CENTRAL POWER & LIGHT COMPANY,

as Borrower,

THE BANKS NAMED HEREIN,

as Banks,

MIZUHO BANK, LTD.,

as Administrative Agent,

and

THE FRONTING BANKS

PARTY HERETO FROM TIME TO TIME

as Fronting Banks

 

 

 

 

JPMORGAN CHASE BANK, N.A.

PNC CAPITAL MARKETS LLC

MUFG BANK, LTD.

BARCLAYS BANK PLC

BofA SECURITIES, INC.

  

MIZUHO BANK, LTD.

CITIBANK, N.A.

MORGAN STANLEY SENIOR FUNDING, INC.

THE BANK OF NOVA SCOTIA

RBC CAPITAL MARKETS1

as Joint Lead Arrangers

 

1 

RBC Capital Markets is a brand name for the capital markets business of Royal Bank of Canada and its affiliates.


TABLE OF CONTENTS

 

          Page  

ARTICLE I DEFINITIONS AND ACCOUNTING TERMS

     1  

SECTION 1.01.

   Certain Defined Terms      1  

SECTION 1.02.

   Computation of Time Periods      26  

SECTION 1.03.

   Accounting Terms      26  

SECTION 1.04.

   Terms Generally      26  

SECTION 1.05.

   Divisions      27  

SECTION 1.06.

   Interest Rates; LIBOR Notification      27  

ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES AND LETTERS OF CREDIT

     28  

SECTION 2.01.

   The Advances      28  

SECTION 2.02.

   Making the Advances      28  

SECTION 2.03.

   [Reserved]      30  

SECTION 2.04.

   Letters of Credit      30  

SECTION 2.05.

   Fees      38  

SECTION 2.06.

   Adjustment of the Commitments      39  

SECTION 2.07.

   Repayment of Advances      41  

SECTION 2.08.

   Interest on Advances      41  

SECTION 2.09.

   Additional Interest on Advances      41  

SECTION 2.10.

   Interest Rate Determination      42  

SECTION 2.11.

   Conversion of Advances      43  

SECTION 2.12.

   Prepayments      43  

SECTION 2.13.

   Increased Costs      44  

SECTION 2.14.

   Illegality      45  

SECTION 2.15.

   Payments and Computations      46  

SECTION 2.16.

   Taxes      48  

SECTION 2.17.

   Sharing of Payments, Etc.      52  

SECTION 2.18.

   Noteless Agreement; Evidence of Indebtedness      53  

SECTION 2.19.

   Extension of Termination Date      54  

SECTION 2.20.

   [Reserved]      55  

SECTION 2.21.

   Defaulting Lenders      55  

 

-i-


TABLE OF CONTENTS

(continued)

 

          Page  

SECTION 2.22.

   Mitigation Obligations; Replacement of Lenders      58  

SECTION 2.23.

   Benchmark Replacement Setting      59  

ARTICLE III CONDITIONS OF LENDING AND ISSUING LETTERS OF CREDIT

     61  

SECTION 3.01.

   Conditions Precedent to Initial Extension of Credit      61  

SECTION 3.02.

   Conditions Precedent to Each Extension of Credit      63  

ARTICLE IV REPRESENTATIONS AND WARRANTIES

     64  

SECTION 4.01.

   Representations and Warranties of the Borrower      64  

ARTICLE V COVENANTS OF THE BORROWER

     68  

SECTION 5.01.

   Affirmative Covenants of the Borrower      68  

SECTION 5.02.

   Financial Covenant      72  

SECTION 5.03.

   Negative Covenants of the Borrower      72  

ARTICLE VI EVENTS OF DEFAULT

     75  

SECTION 6.01.

   Events of Default      75  

ARTICLE VII THE ADMINISTRATIVE AGENT

     78  

SECTION 7.01.

   Authorization and Action      78  

SECTION 7.02.

   Administrative Agent’s Reliance, Limitation of Liability, Etc.      81  

SECTION 7.03.

   Posting of Communications      82  

SECTION 7.04.

   The Administrative Agent Individually      84  

SECTION 7.05.

   Successor Administrative Agent      84  

SECTION 7.06.

   Acknowledgements of Lenders and Fronting Banks      85  

SECTION 7.07.

   Certain ERISA Matters      87  

ARTICLE VIII MISCELLANEOUS

     89  

SECTION 8.01.

   Amendments, Etc.      89  

SECTION 8.02.

   Notices, Etc.      90  

SECTION 8.03.

   Electronic Communications      91  

SECTION 8.04.

   No Waiver; Remedies      91  

SECTION 8.05.

   Costs and Expenses; Indemnification      91  

SECTION 8.06.

   Right of Set-off      92  

SECTION 8.07.

   Binding Effect      93  

SECTION 8.08.

   Assignments and Participations      93  

 

-ii-


TABLE OF CONTENTS

(continued)

 

          Page  

SECTION 8.09.

   Governing Law      99  

SECTION 8.10.

   Consent to Jurisdiction; Waiver of Jury Trial      99  

SECTION 8.11.

   Severability      101  

SECTION 8.12.

   Entire Agreement      101  

SECTION 8.13.

   Execution in Counterparts; Electronic Execution      101  

SECTION 8.14.

   USA PATRIOT Act Notice      101  

SECTION 8.15.

   No Fiduciary Duty      101  

SECTION 8.16.

   Acknowledgment and Consent to Bail-In of Affected Financial Institutions      102  

SECTION 8.17.

   Treatment of Certain Information; Confidentiality      103  

 

-iii-


SCHEDULES AND EXHIBITS

 

Schedule I    -    List of Commitments and Lending Offices
Schedule II    -    List of L/C Fronting Bank Commitments
Schedule III    -    Existing Letters of Credit
Schedule IV    -    Disclosure Documents
Schedule V    -    Approvals
Exhibit A    -    Form of Assignment and Assumption
Exhibit B    -    Form of Note
Exhibit C    -    Form of Notice of Borrowing
Exhibit D    -    Form of Letter of Credit Request
Exhibit E-1    -    Form of U.S. Tax Compliance Certificate (For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)
Exhibit E-2    -    Form of U.S. Tax Compliance Certificate (For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)
Exhibit E-3    -    Form of U.S. Tax Compliance Certificate (For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)
Exhibit E-4    -    Form of U.S. Tax Compliance Certificate (For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)


CREDIT AGREEMENT

CREDIT AGREEMENT, dated as of October 18, 2021, by and among JERSEY CENTRAL POWER & LIGHT COMPANY (“JCP&L” or the “Borrower”), the banks and other financial institutions (the “Banks”) party hereto from time to time, MIZUHO BANK, LTD. (“Mizuho”), as Administrative Agent (in such capacity, the “Administrative Agent”) for the Lenders hereunder and the fronting banks party hereto from time to time.

PRELIMINARY STATEMENTS

(1) The Borrower has requested that the Lenders establish a five-year unsecured revolving credit facility in the amount of $500,000,000 in favor of the Borrower, all of which may be used for general corporate purposes (including, without limitation, the refinancing of the Existing FE Credit Agreement (as defined herein)) and $100,000,000 of which may be used for the issuance of Letters of Credit.

(2) Subject to the terms and conditions of this Agreement, the Lenders severally, to the extent of their respective Commitments (as defined herein), are willing to establish the requested revolving credit facility in favor of the Borrower.

NOW, THEREFORE, in consideration of the premises, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

SECTION 1.01.   Certain Defined Terms.

As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

Account Party” has the meaning set forth in Section 2.04(a).

Additional Commitment Lender” has the meaning set forth in Section 2.19(d).

Additional Lender” has the meaning set forth in Section 2.06(b).

Administrative Agent” has the meaning set forth in the preamble hereto.

Administrative Questionnaire” means an Administrative Questionnaire in a form supplied by the Administrative Agent.

Advance” means an advance by a Lender to the Borrower made as part of a Borrowing pursuant to Section 2.02.


Affected Financial Institution” means (i) any EEA Financial Institution or (ii) any UK Financial Institution.

Affiliate” means, as to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person or is a director or officer of such Person.

Agreement” means this Credit Agreement, as amended, restated, amended and restated, modified and supplemented from time to time in accordance with its terms.

Alternate Base Rate” means, for any period, a fluctuating interest rate per annum as shall be in effect from time to time, which rate per annum shall at all times be equal to the highest of (i) the prime rate as most recently published by The Wall Street Journal from time to time, (ii) the sum of 1/2 of 1% per annum plus the Federal Funds Rate in effect from time to time and (iii) the rate of interest per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on the Service equal to the one-month London interbank offered rate for deposits in Dollars as determined at approximately 11:00 a.m. (London time) on such day (or if such day is not a Business Day, on the next preceding Business Day), plus 1%.

Alternate Base Rate Advance” means an Advance that bears interest as provided in Section 2.08(a).

Anniversary Date” has the meaning set forth in Section 2.19(a).

Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction applicable to the Covered Entities or their respective activities from time to time concerning or relating to terrorism, money-laundering, bribery or corruption, including, without limitation, (i) the United States Foreign Corrupt Practices Act of 1977, as amended from time to time, and the applicable regulations thereunder, and (ii) the United Kingdom’s Anti-Bribery Act 2010, as amended from time to time.

Applicable Law” means all applicable laws, statutes, treaties, rules, codes, ordinances, regulations, permits, certificates, orders, interpretations, licenses and permits of any Governmental Authority and judgments, decrees, injunctions, writs, orders or like action of any court, arbitrator or other judicial or quasi-judicial tribunal of competent jurisdiction (including those pertaining to health, safety or the environment or otherwise).

Applicable Lending Office” means, with respect to each Lender, such Lender’s Domestic Lending Office in the case of an Alternate Base Rate Advance, and such Lender’s Eurodollar Lending Office in the case of a Eurodollar Rate Advance.

Applicable Margin” means, for any Alternate Base Rate Advance or any Eurodollar Rate Advance made to the Borrower, the interest rate per annum set forth in the relevant row of the table immediately below, determined by reference to the Reference Ratings for the Borrower from time to time in effect (and, solely in the case that there are no Reference Ratings, Applicable Margin shall be at Level 6):

 

2


BASIS FOR PRICING    LEVEL 1   LEVEL 2   LEVEL 3   LEVEL 4   LEVEL 5   LEVEL 6
 

Reference Ratings at

least A-by S&P or

A3 by Moody’s

 

Reference Ratings

lower than Level 1 but at

least BBB+ by S&P or
Baa1 by Moody’s

 

Reference Ratings

lower than Level 2 but at
least BBB by S&P or
Baa2 by Moody’s

  Reference Ratings
lower than Level 3 but at
least BBB- by S&P or
Baa3 by Moody’s
 

Reference Ratings
lower than Level 4 but at
least BB+ by S&P or

Ba1 by Moody’s

 

Reference Ratings

lower than Level 5

Applicable Margin for Eurodollar Rate Advances

  1.125%   1.25%   1.50%   1.75%   2.00%   2.50%

Applicable Margin for Alternate Base Rate Advances

  0.125%   0.25%   0.50%   0.75%   1.00%   1.50%

For purposes of the foregoing, (i) if there is a difference of one level in Reference Ratings of S&P and Moody’s and the higher of such Reference Ratings falls in Level 1, Level 2, Level 3, Level 4 and Level 5 then the higher Reference Rating will be used to determine the pricing level and (ii) if there is a difference of more than one level in Reference Ratings of S&P and Moody’s, the Reference Rating that is one level above the lower of such Reference Ratings will be used to determine the pricing level, unless the lower of such Reference Ratings falls in Level 6, in which case the lower of such Reference Ratings will be used to determine the pricing level. If there exists only one Reference Rating, such Reference Rating will be used to determine the pricing level.

Approval” means each approval of FERC under the Federal Power Act or of the “state commission” (as that term is defined under 18 C.F.R. 1.101(k)) that has jurisdiction over the Borrower and that is identified on Schedule V.

Approved Electronic Platform” has the meaning assigned to it in Section 7.03(a).

Approved Fund” means any Fund that is administered or managed by (i) a Lender, (ii) an Affiliate of a Lender or (iii) an entity or an Affiliate of an entity that administers or manages a Lender.

Assignment and Assumption” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 8.08(b)), and accepted by the Administrative Agent, in substantially the form of Exhibit A hereto or any other form approved by the Administrative Agent (so long as such other form is not disadvantageous to the Borrower in any respect).

ATSI” means American Transmission Systems, Incorporated, an Ohio corporation.

 

3


Attributable Securitization Obligations” has the meaning set forth in the definition of “Permitted Securitization”.

Authorized Officer” means, with respect to any notice, certificate or other communication to be delivered by the Borrower hereunder, the chief executive officer, president, chief financial officer, treasurer, assistant treasurer or controller of the Borrower, which officer shall have all necessary corporate or limited liability company authorization to deliver such notice, certificate or other communication.

Available Commitment” means, for each Lender, the excess of such Lender’s Commitment over such Lender’s Percentage of the Outstanding Credits. “Available Commitments” shall refer to the aggregate of the Lenders’ Available Commitments hereunder.

Available Tenor” means, as of any date of determination and with respect to the then-current Benchmark, as applicable, (x) if the then-current Benchmark is a term rate, any tenor for such Benchmark that is or may be used for determining the length of an Interest Period or (y) otherwise, any payment period for interest calculated with reference to such Benchmark, as applicable, pursuant to this Agreement as of such date.

Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial Institution.

Bail-In Legislation” means (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law, regulation rule or requirement for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than through liquidation, administration or other insolvency proceedings).

Bankruptcy Code” means the Bankruptcy Reform Act of 1978, as amended from time to time, and any Federal law with respect to bankruptcy, insolvency, reorganization, liquidation, moratorium or similar laws affecting creditors’ rights generally.

Bankruptcy Event” means, with respect to any Person, such Person has become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar Person charged with the reorganization or liquidation of its business appointed for it, or, in the good faith determination of the Administrative Agent, has taken any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any such proceeding or appointment, provided that the acquisition of an ownership interest in such Person by a Governmental Authority or instrumentality thereof shall not, itself, alone constitute a Bankruptcy Event, provided, further, that such ownership interest does not result in or provide such Person with immunity from the

 

4


jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Person (or such Governmental Authority or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or agreements made by such Person.

Banks” has the meaning set forth in the preamble hereto.

Benchmark” means, initially, USD LIBOR; provided that if a replacement of the Benchmark has occurred pursuant to Section 2.23, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate. Any reference to “Benchmark” shall include, as applicable, the published component used in the calculation thereof.

Benchmark Replacement” means, for any Available Tenor:

(1) For purposes of Section 2.23(a), the first alternative set forth below that can be determined by the Administrative Agent:

(a) the sum of: (i) Term SOFR and (ii) 0.11448% (11.448 basis points) for an Available Tenor of one-month’s duration, 0.26161% (26.161 basis points) for an Available Tenor of three-months’ duration, and 0.42826% (42.826 basis points) for an Available Tenor of six-months’ duration, or

(b) the sum of: (i) Daily Simple SOFR and (ii) the spread adjustment selected or recommended by the Relevant Governmental Body for the replacement of the tenor of USD LIBOR with a SOFR-based rate having approximately the same length as the interest payment period specified in Section 2.23(a); and

(2) For purposes of Section 2.23(b), the sum of (a) the alternate benchmark rate and (b) an adjustment (which may be a positive or negative value or zero), in each case, that has been reasonably selected by the Administrative Agent and the Borrower as the replacement for such Available Tenor of such Benchmark giving due consideration to any evolving or then-prevailing market convention, including any applicable recommendations made by the Relevant Governmental Body, for U.S. dollar-denominated syndicated credit facilities at such time;

provided that, if the Benchmark Replacement as determined pursuant to clause (1) or (2) above would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Loan Documents.

Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Alternate Base Rate”, the definition of “Business Day”, the definition of “Interest Period”, timing and frequency of determining rates and making payments

 

5


of interest, timing of borrowing requests or prepayment, conversion or continuation notices, the applicability and length of lookback periods, the applicability of breakage provisions, the formula for calculating any successor rates identified pursuant to the definition of “Benchmark Replacement”, the formula, methodology or convention for applying the successor Floor to the successor Benchmark Replacement and other technical, administrative or operational matters) that the Administrative Agent decides may be appropriate to reflect the adoption and implementation of such Benchmark Replacement and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for the administration of such Benchmark Replacement exists, in such other manner of administration as the Administrative Agent decides is reasonably necessary in connection with the administration of this Agreement and the other Loan Documents).

Benchmark Transition Event” means, with respect to any then-current Benchmark other than USD LIBOR, the occurrence of a public statement or publication of information by or on behalf of the administrator of the then-current Benchmark, the regulatory supervisor for the administrator of such Benchmark, the Board of Governors of the Federal Reserve System, the Federal Reserve Bank of New York, an insolvency official with jurisdiction over the administrator for such Benchmark, a resolution authority with jurisdiction over the administrator for such Benchmark or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark, announcing or stating that (a) such administrator has ceased or will cease on a specified date to provide all Available Tenors of such Benchmark, permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark or (b) all Available Tenors of such Benchmark are or will no longer be representative of the underlying market and economic reality that such Benchmark is intended to measure and that representativeness will not be restored.

Beneficial Ownership Certification” means a certification regarding beneficial ownership as required by the Beneficial Ownership Regulation.

Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230, as amended, or any successor thereto.

Beneficiary” means any Person designated by an Account Party to whom a Fronting Bank is to make payment, or on whose order payment is to be made, under a Letter of Credit.

Borrower” has the meaning set forth in the preamble hereto.

Borrower Communications” has the meaning set forth in Section 8.03.

Borrower Extension Notice Date” has the meaning set forth in Section 2.19(a).

 

6


Borrowing” means a borrowing consisting of simultaneous Advances of the same Type made by each of the Lenders pursuant to Section 2.02 or Converted pursuant to Section 2.10 or 2.11.

Business Day” means a day of the year on which banks are not required or authorized to close in New York City or Akron, Ohio and, if the applicable Business Day relates to any Eurodollar Rate Advances, a day on which dealings are carried on in the London interbank market.

CEI” means The Cleveland Electric Illuminating Company, an Ohio corporation.

Change in Law” means the occurrence, after the date of this Agreement, of any of the following: (i) the adoption or taking effect of any law, rule, regulation or treaty, (ii) any change (other than any change by way of imposition or increase of reserve requirements included in the Eurodollar Rate Reserve Percentage) in any law, rule, regulation or treaty or in the administration, interpretation or application thereof by any Governmental Authority or (iii) the making or issuance of any request, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided, however, the Dodd-Frank Wall Street Reform and Consumer Protection Act, and all requests, rules, guidelines and directives promulgated thereunder, and all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to have been introduced or adopted after the date of this Agreement, regardless of the date enacted or adopted.

Change of Control” has the meaning set forth in Section 6.01(j).

Closing Date” means October 18, 2021.

Code” means the United States Internal Revenue Code of 1986, as amended from time to time, and the applicable regulations thereunder.

Commitment” means, as to any Lender, the amount set forth opposite such Lender’s name on Schedule I hereto or, if such Lender has entered into any Assignment and Assumption, set forth for such Lender in the Register maintained by the Administrative Agent pursuant to Section 8.08(c), as such amount may be reduced pursuant to Section 2.06(a) or increased pursuant to Section 2.06(b).

Commitment Increase” has the meaning set forth in Section 2.06(b).

Commodity Trading Obligations” means the obligations of any Person under any commodity swap agreement, commodity future agreement, commodity option agreement, commodity cap agreement, commodity floor agreement, commodity collar agreement, commodity hedge agreement, commodity forward contract or derivative transaction and any put, call or other agreement, arrangement or transaction, including natural gas, power, emissions forward contracts, renewable energy credits, or any combination of any such arrangements,

 

7


agreements and/or transactions, employed in the ordinary course of such Person’s business, including such Person’s energy marketing, trading and asset optimization business. The term “commodity” shall include electric energy and/or capacity, transmission rights, coal, petroleum, natural gas, fuel transportation rights, emissions allowances, weather derivatives and related products and by-products and ancillary services.

Communications” means, collectively, any notice, demand, communication, information, document or other material provided by or on behalf of the Borrower pursuant to any Loan Document or the transactions contemplated therein which is distributed by the Administrative Agent, any Lender or any Fronting Bank by means of electronic communications pursuant to Section 7.03, including through an Approved Electronic Platform.

Consolidated Debt” means, with respect to the Borrower at any date of determination the aggregate Indebtedness of the Borrower and its Consolidated Subsidiaries determined on a consolidated basis in accordance with GAAP, but shall not include (i) Nonrecourse Indebtedness of the Borrower and any of its Subsidiaries, (ii) obligations under leases that shall have been or should be, in accordance with GAAP, recorded as operating leases in respect of which the Borrower or any of its Consolidated Subsidiaries is liable as a lessee, (iii) the aggregate principal and/or face amount of Attributable Securitization Obligations of the Borrower and its Consolidated Subsidiaries and (iv) the aggregate principal amount of Trust Preferred Securities and Junior Subordinated Deferred Interest Debt Obligations not exceeding 15% of the Total Capitalization of the Borrower and its Consolidated Subsidiaries (determined, for purposes of such calculation, without regard to the amount of Trust Preferred Securities and Junior Subordinated Deferred Interest Debt Obligations outstanding of the Borrower); provided that the amount of any mandatory principal amortization or defeasance of Trust Preferred Securities or Junior Subordinated Deferred Interest Debt Obligations prior to the latest Termination Date shall be included in this definition of Consolidated Debt.

Consolidated Subsidiary” means, as to any Person, any Subsidiary of such Person the accounts of which are or are required to be consolidated with the accounts of such Person in accordance with GAAP.

Controlled Group” means all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control that, together with the Borrower, are treated as a single employer under Section 414(b), (c), (m) or (o) of the Code.

Convert”, “Conversion” and “Converted” each refers to a conversion of Advances of one Type into Advances of another Type or the selection of a new, or the renewal of the same, Interest Period for Eurodollar Rate Advances pursuant to Section 2.10 or 2.11.

Corresponding Tenor” with respect to any Available Tenor means, as applicable, either a tenor (including overnight) or an interest payment period having approximately the same length (disregarding business day adjustment) as such Available Tenor.

 

8


Covered Entity” means, with respect to the Borrower (i) the Borrower and each of its Subsidiaries and (ii) each Person that, directly or indirectly, is in control of a Person described in clause (i) above. For purposes of this definition, control of a Person shall mean the direct or indirect (x) ownership of, or power to vote, 25% or more of the issued and outstanding equity interests having ordinary voting power for the election of directors of such Person or other Persons performing similar functions for such Person, or (y) power to direct or cause the direction of the management and policies of such Person whether by ownership of equity interests, contract or otherwise.

Credit Parties” has the meaning set forth in Section 8.15.

Criminal Information” means the Criminal Information in United States v. FirstEnergy Corporation, filed in the United States District Court for the Southern District of Ohio on July 22, 2021.

Daily Simple SOFR” means, for any day, SOFR, with the conventions for this rate (which may include a lookback) being established by the Administrative Agent in accordance with the conventions for this rate recommended by the Relevant Governmental Body for determining “Daily Simple SOFR” for syndicated business loans; provided, that if the Administrative Agent decides that any such convention is not administratively feasible for the Administrative Agent, then the Administrative Agent may establish another convention in its reasonable discretion.

Date of Issuance” means the date of issuance by a Fronting Bank of a Letter of Credit under this Agreement.

Debt to Capitalization Ratio” means, for the Borrower, the ratio of Consolidated Debt of the Borrower to Total Capitalization of the Borrower.

Defaulting Lender” means any Lender that (i) has failed, within two Business Days of the date required to be funded or paid, to (A) fund any portion of its Advances, (B) fund any portion of its participations in Letters of Credit or (C) pay over to the Administrative Agent or any Fronting Bank any other amount required to be paid by it hereunder, unless, in the case of clause (A) or (B) above, such Lender notifies the Administrative Agent in writing that such failure is the result of such Lender’s good faith determination that a condition precedent to funding (specifically identified and including the particular default, if any) has not been satisfied, (ii) has notified the Borrower or the Administrative Agent or any Fronting Bank in writing, or has made a public statement to the effect, that it does not intend or expect to comply with any of its funding obligations under this Agreement (unless such writing or public statement indicates that such position is based on such Lender’s good faith determination that a condition precedent (specifically identified and including the particular default, if any) to funding a loan under this Agreement cannot be satisfied) or generally under other agreements in which it commits to extend credit, (iii) has failed, within three Business Days after request by the Administrative Agent or any Fronting Bank, acting in good faith, to provide a certification in writing from an authorized officer of such Lender that it will comply with its obligations (and is financially able

 

9


to meet such obligations as of the date of certification) to fund prospective Advances and participations in then outstanding Letters of Credit under this Agreement; provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (iii) upon the Administrative Agent’s or such Fronting Bank’s (as applicable) receipt of such certification in form and substance satisfactory to it and the Administrative Agent, (iv) has become the subject of a Bankruptcy Event or (v) has, or has a direct or indirect parent company that has, become the subject of a Bail-In Action.

Disclosure Documents” means, with respect to the Borrower, its (A) consolidated balance sheet as of December 31, 2020, and the related consolidated statements of income, retained earnings and cash flows for the fiscal year then ended, certified by PricewaterhouseCoopers LLP, with, in each case, any accompanying notes, (B) unaudited consolidated balance sheet as of June 30, 2021, and the related consolidated statements of income, retained earnings and cash flows for the six-month period then ended, in each case with respect to the foregoing clauses (A) and (B), prepared in accordance with GAAP (but, in the case of such statements that are unaudited, subject to year-end adjustments and the exclusion of detailed footnotes) and copies of which have been furnished to each Lender and each Fronting Bank and (C) the matters, if any, described in the portion of Schedule IV hereto applicable to the Borrower as indicated thereon.

Dollars” and “$” each means lawful currency of the United States of America.

Domestic Lending Office” means, with respect to any Lender, the office of such Lender specified as its “Domestic Lending Office” opposite its name on Schedule I hereto or in the Assignment and Assumption pursuant to which it became a Lender, or such other office of such Lender as such Lender may from time to time specify to the Administrative Agent.

DPA” means the Deferred Prosecution Agreement, dated as of July 21, 2021, between the United States Attorney’s Office for the Southern District of Ohio and FE.

Drawing” means a drawing by a Beneficiary under any Letter of Credit.

Early Opt-in Effective Date” means, with respect to any Early Opt-in Election, the sixth (6th) Business Day after the date notice of such Early Opt-in Election is provided to the Lenders, so long as the Administrative Agent has not received, by 5:00 p.m. (New York City time) on the fifth (5th) Business Day after the date notice of such Early Opt-in Election is provided to the Lenders, written notice of objection to such Early Opt-in Election from Lenders comprising the Majority Lenders; provided however, that the Administrative Agent, the Lenders and the Borrower may select a later date as specified in such notice.

Early Opt-in Election” means, if the then-current Benchmark is USD LIBOR, the occurrence of: (1) a notification by the Administrative Agent to (or the request by the Borrower to the Administrative Agent to notify) each of the other parties hereto that at least five currently outstanding U.S. dollar-denominated syndicated credit facilities at such time contain (as a result of amendment or as originally executed) a SOFR-based rate (including SOFR, a term SOFR or

 

10


any other rate based upon SOFR) as a benchmark rate (and such syndicated credit facilities are identified in such notice and are publicly available for review), and (2) the joint election by the Administrative Agent and the Borrower to trigger a fallback from USD LIBOR and the provision by the Administrative Agent of written notice of such election to the Lenders.

EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a Subsidiary of an institution described in clause (a) or (b) of this definition and is subject to consolidated supervision with its parent.

EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

EEA Resolution Authority” means any public administrative authority, any Governmental Authority or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.

Electronic Signature” means an electronic sound, symbol, or process attached to, or associated with, a contract or other record and adopted by a Person with the intent to sign, authenticate or accept such contract or record.

Eligible Assignee” means any Person that meets the requirements to be an assignee under Section 8.08(b)(iii), (v) and (vi) (subject to such consents, if any, as may be required under Section 8.08(b)(iii)).

Environmental Laws” means any federal, state or local laws, ordinances or codes, rules, orders, or regulations relating to pollution or protection of the environment, including, without limitation, laws relating to hazardous substances, laws relating to reclamation of land and waterways and laws relating to emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals, or industrial, toxic or hazardous substances or wastes into the environment (including, without limitation, ambient air, surface water, ground water, land surface or subsurface strata) or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollution, contaminants, chemicals, or industrial, toxic or hazardous substances or wastes.

ERISA” means the Employee Retirement Income Security Act of 1974, and the regulations promulgated and rulings issued thereunder, each as amended, modified and in effect from time to time.

EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor thereto), as in effect from time to time.

 

11


Eurocurrency Liabilities” has the meaning assigned to that term in Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time.

Eurodollar Lending Office” means, with respect to any Lender, the office of such Lender specified as its “Eurodollar Lending Office” opposite its name on Schedule I hereto or in the Assignment and Assumption pursuant to which it became a Lender (or, if no such office is specified, its Domestic Lending Office), or such other office of such Lender as such Lender may from time to time specify to the Administrative Agent.

Eurodollar Rate” means, for the Interest Period for any Eurodollar Rate Advance made in connection with any Borrowing, the greater of (a) 0.00% and (b) the rate of interest per annum (rounded upward to the nearest 1/100 of 1%) as calculated by ICE Benchmark Administration Limited (or any other Person which takes over the administration of that rate) and obtained through a nationally recognized service such as the Dow Jones Market Service (Telerate), Reuters or other such service then being used by the Administrative Agent to ascertain such rates of interest (in each case, the “Service”) as the London interbank offered rate for deposits in Dollars at approximately 11:00 a.m. (London time) two Business Days before the first day of such Interest Period for a period equal to such Interest Period; provided, however, that if an event set forth in Section 2.23(a) or Section 2.23(b) and its related effective date have occurred with respect to USD LIBOR or the then-current Benchmark, then the rate described in clause (b) above shall mean the applicable Benchmark Replacement to the extent that such Benchmark Replacement has become effective pursuant to Section 2.23.

Eurodollar Rate Advance” means an Advance that bears interest as provided in Section 2.08(b).

Eurodollar Rate Reserve Percentage” of any Lender for the Interest Period for any Eurodollar Rate Advance means the reserve percentage applicable during such Interest Period (or if more than one such percentage shall be so applicable, the daily average of such percentages for those days in such Interest Period during which any such percentage shall be so applicable) under regulations issued from time to time by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including, without limitation, any emergency, supplemental or other marginal reserve requirement) for such Lender with respect to liabilities or assets consisting of or including Eurocurrency Liabilities having a term equal to such Interest Period.

Event of Default” has the meaning set forth in Section 6.01.

Exchange Act” means the Securities Exchange Act of 1934, and the regulations promulgated thereunder, in each case as amended and in effect from time to time.

Excluded Taxes” means, with respect to any Recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (i) income, franchise or branch profits Taxes (A) imposed on (or measured by) the Recipient’s net income by the United States, or by the jurisdiction under the laws of which such Recipient is organized or in which its principal

 

12


office is located or, in the case of any Lender, in which its Applicable Lending Office is located or (B) that are Other Connection Taxes, (ii) any U.S. federal withholding Taxes that are imposed on amounts payable to a Lender at the time such Lender becomes a Lender under this Agreement (other than pursuant to an assignment request by the Borrower under Section 2.22(b)) or designates a new lending office, except in each case to the extent that amounts with respect to such Taxes were payable either (A) to such Lender’s assignor immediately before such Lender became a Lender under this Agreement, or (B) to such Lender immediately before it designated a new lending office, (iii) Taxes attributable to such Recipient’s failure to comply with Section 2.16(g), and (iv) withholding Taxes imposed under FATCA.

Existing FE Credit Agreement” means the Credit Agreement, dated as of December 6, 2016, by and among FE, CEI, Met-Ed, OE, Penn, TE, JCP&L, MP, Penelec, PE and West-Penn, as borrowers, the lenders party thereto, Mizuho Bank, Ltd., as administrative agent, the fronting banks party thereto and the swing line lenders party thereto, as amended, restated or otherwise modified from time to time and in effect on the Closing Date.

Existing Letters of Credit” means those Letters of Credit outstanding on the Closing Date and identified on Schedule III hereto.

Existing Termination Date” has the meaning set forth in Section 2.19(a).

Expiration Date” means, with respect to a Letter of Credit, its stated expiration date.

Extension of Credit” means the making of any Advance or the issuance, extension or renewal, or any amendment that increases the Stated Amount, of a Letter of Credit.

FATCA” means Sections 1471 through 1474 of the Code as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code and any fiscal or regulatory legislation, rules or official practices adopted pursuant to any intergovernmental agreement, treaty or convention among Governmental Authorities and implementing such Sections of the Code.

FE” means FirstEnergy Corp., a public utility holding company.

Federal Funds Rate” means, for any period, the greater of (a) 0.00% and (b) a fluctuating interest rate per annum (rounded upward, if necessary, to the nearest whole multiple of 1/100 of 1% per annum) equal for each day during such period to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average rate (rounded upward to the nearest whole multiple of 1/100 of 1% per annum, if such average is not such a multiple) charged to Mizuho on such day on such transactions as determined by the Administrative Agent.

 

13


Fee Letters” means (i) the fee letter, dated September 23, 2021, by and among the Borrower, FE, certain of FE’s other Subsidiaries, JPMorgan, Mizuho, PNC Capital Markets LLC, PNC Bank, National Association, Barclays Bank PLC, BofA Securities, Inc., Bank of America, N.A., Citigroup Global Markets Inc., Morgan Stanley Senior Funding, Inc., MUFG Bank, Ltd. and The Bank of Nova Scotia, (ii) the fee letter, dated September 23, 2021, by and among the Borrower, FE, certain of FE’s other Subsidiaries, JPMorgan and Mizuho, and (iii) the fee letter, dated September 23, 2021, by and among the Borrower, FE certain of FE’s other Subsidiaries, and Mizuho, in each case, as amended, modified or supplemented from time to time.

FERC” means the Federal Energy Regulatory Commission or successor organization.

FET” means FirstEnergy Transmission, LLC, a Delaware limited liability company.

First Mortgage Indenture” means a first mortgage indenture pursuant to which the Borrower or any Subsidiary of the Borrower may issue bonds, notes or similar instruments secured by a lien on all or substantially all of the Borrower’s or such Subsidiary’s fixed assets, as the case may be.

Floor” means the benchmark rate floor, if any, provided in this Agreement initially (as of the execution of this Agreement, the modification, amendment or renewal of this Agreement or otherwise) with respect to USD LIBOR or, if no floor is specified, zero.

Foreign Lender” means any Lender that is organized under the laws of a jurisdiction other than that in which the Borrower is resident for tax purposes. For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

Fronting Bank” means each Lender identified as a “Fronting Bank” on Schedule II and any other Lender (in each case, acting directly or through an Affiliate) that delivers an instrument in form and substance satisfactory to the Borrower and the Administrative Agent whereby such other Lender (or its Affiliate) agrees to act as “Fronting Bank” hereunder and that specifies the maximum aggregate Stated Amount of Letters of Credit that such other Lender (or its Affiliates) will agree to issue hereunder.

Fronting Exposure” means, at any time there is a Defaulting Lender, with respect to any Fronting Bank, such Defaulting Lender’s Percentage of the outstanding L/C Obligations with respect to Letters of Credit issued by such Fronting Bank other than L/C Obligations as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or cash collateralized in accordance with the terms hereof.

Fund” means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business.

 

14


GAAP” means generally accepted accounting principles in the United States in effect from time to time.

Governmental Action” means all authorizations, consents, approvals, waivers, exceptions, variances, orders, licenses, exemptions, publications, filings, notices to and declarations of or with any Governmental Authority (other than requirements the failure to comply with which will not affect the validity or enforceability of any Loan Document or have a material adverse effect on the transactions contemplated by any Loan Document or any material rights, power or remedy of any Person thereunder or any other action in respect of any Governmental Authority).

Governmental Authority” means the government of the United States of America or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank) and any group or body charged with setting financial accounting or regulatory capital rules or standards (including, without limitation, the Financial Accounting Standards Board, the Bank for International Settlements or the Basel Committee on Banking Supervision or any successor or similar authority to any of the foregoing).

Granting Lender” has the meaning set forth in Section 8.08(g).

Hedging Obligations” mean, with respect to any Person, the obligations of such Person under any interest rate or currency swap agreement, interest rate or currency future agreement, interest rate collar agreement, interest rate or currency hedge agreement, and any put, call or other agreement or arrangement designed to protect such Person against fluctuations in interest rates or currency exchange rates.

Hostile Acquisition” means any Target Acquisition (as defined below) involving a tender offer or proxy contest that has not been recommended or approved by the board of directors (or similar governing body) of the Person that is the subject of such Target Acquisition. As used in this definition, the term “Target Acquisition” means any transaction, or any series of related transactions, by which any Person directly or indirectly (i) acquires all or substantially all of the assets or ongoing business of any other Person, whether through purchase of assets, merger or otherwise, (ii) acquires (in one transaction or as the most recent transaction in a series of transactions) control of at least a majority in ordinary voting power of the securities of any such Person that have ordinary voting power for the election of directors or (iii) otherwise acquires control of more than a 50% ownership interest in any such Person.

Increasing Lender” has the meaning set forth in Section 2.06(b).

Indebtedness” means, with respect to any Person, at any date, without duplication, (i) all obligations of such Person for borrowed money, or with respect to deposits or advances of any kind, or for the deferred purchase price of property or services other than trade accounts payable,

 

15


(ii) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (iii) all obligations of such Person upon which interest charges are customarily paid, (iv) all obligations under leases that shall have been or should be, in accordance with GAAP, recorded as capital leases in respect of which such Person is liable as lessee, (v) withdrawal liability incurred under ERISA by such Person or any of its affiliates to any Multiemployer Plan, (vi) reimbursement obligations of such Person (whether contingent or otherwise) in respect of letters of credit, bankers acceptances, surety or other bonds and similar instruments, (vii) all Indebtedness of others secured by a Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person and (viii) obligations of such Person under direct or indirect guaranties in respect of, and obligations (contingent or otherwise) to purchase or otherwise acquire, or otherwise to assure a creditor against loss in respect of, indebtedness or obligations of others of the kinds referred to above.

Indemnified Person” has the meaning set forth in Section 8.05(c).

Indemnified Taxes” means (i) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of the Borrower under any Loan Document and (ii) to the extent not otherwise described in clause (i), Other Taxes.

Information” has the meaning set forth in Section 8.17.

Interest Period” means, for each Eurodollar Rate Advance made to the Borrower as part of the same Borrowing, the period commencing on the date of such Eurodollar Rate Advance or the date of the Conversion of any Advance into such Eurodollar Rate Advance and ending on the last day of the period selected by the Borrower pursuant to the provisions below and, thereafter in the case of Advances, each subsequent period commencing on the last day of the immediately preceding Interest Period and ending on the last day of the period selected by the Borrower pursuant to the provisions below. The duration of each such Interest Period shall be, in the case of any Eurodollar Rate Advance, one, three or six months, in each case, as the Borrower may select by notice to the Administrative Agent pursuant to Section 2.02(a) or Section 2.11(a); provided, however, that:

(i) the Borrower may not select any Interest Period that ends after the latest Termination Date;

(ii) Interest Periods commencing on the same date for Advances made as part of the same Borrowing shall be of the same duration;

(iii) no more than five different Interest Periods shall apply to outstanding Eurodollar Rate Advances with respect to the Borrower on any date of determination; and

(iv) whenever the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on the next succeeding Business Day, provided, that if such extension would cause

 

16


the last day of such Interest Period to occur in the next following calendar month, the last day of such Interest Period shall occur on the next preceding Business Day.

IRS” means the United States Internal Revenue Service.

JCP&L” has the meaning set forth in the preamble hereto.

JPMorgan” means JPMorgan Chase Bank, N.A.

Junior Subordinated Deferred Interest Debt Obligations” means subordinated deferrable interest debt obligations of the Borrower or any of its Subsidiaries (i) for which the maturity date is subsequent to the latest Termination Date and (ii) that are fully subordinated in right of payment to the Indebtedness hereunder.

L/C Commitment Amount” means $100,000,000 as the same may be reduced permanently from time to time pursuant to Section 2.06.

L/C Fronting Bank Commitment” means, with respect to any Fronting Bank, the aggregate Stated Amount of all Letters of Credit that such Fronting Bank agrees to issue, as modified from time to time pursuant to an agreement signed by such Fronting Bank. With respect to each Lender that is a Fronting Bank on the date hereof, such Fronting Bank’s L/C Fronting Bank Commitment shall equal such Fronting Bank’s “L/C Fronting Bank Commitment” listed on Schedule II, and (ii) with respect to any Lender that becomes a Fronting Bank after the date hereof, such Lender’s L/C Fronting Bank Commitment shall equal the amount agreed upon between the Borrower and such Lender at the time that such Lender becomes a Fronting Bank, in each case as such L/C Fronting Bank Commitment may be modified in accordance with the terms of this Agreement.

L/C Obligations” means, on any date of determination, an amount equal to (i) the Lenders’ participation interests in the aggregate undrawn amount of all issued Letters of Credit outstanding on such date plus (ii) the aggregate amount of Reimbursement Obligations outstanding on such date.

Lender Extension Notice Date” has the meaning set forth in Section 2.19(b).

Lenders” means the Banks listed on the signature pages hereof and each assignee of a Bank or another Lender that shall become a party hereto pursuant to Section 8.08.

Letter of Credit” means any standby letter of credit issued hereunder and includes the Existing Letters of Credit.

Letter of Credit Cash Cover” has the meaning set forth in Section 6.01.

Letter of Credit Request” has the meaning set forth in Section 2.04(c).

 

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Lien” means, with respect to any asset, any mortgage, deed of trust, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset. For the purposes of this Agreement, a Person or any of its Subsidiaries shall be deemed to own, subject to a Lien, any asset that it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such asset.

Loan Documents” means this Agreement, any Note and the Fee Letters.

MAIT” means Mid-Atlantic Interstate Transmission, LLC, a Delaware limited liability company.

Majority Lenders” means, at any time prior to the latest Termination Date, Lenders having in the aggregate more than 50% of the Commitments (without giving effect to any termination in whole of the Commitments pursuant to Section 6.01) and at any time on or after the latest Termination Date, Lenders having more than 50% of the then aggregate Outstanding Credits of the Lenders; provided, that for purposes hereof, no Borrower, nor any of its Affiliates, if a Lender, shall be included in (i) the Lenders having such amount of the Commitments or the Advances or (ii) determining the total amount of the Commitments or the Outstanding Credits.

Margin Stock” has the meaning assigned to that term in Regulation U issued by the Board of Governors of the Federal Reserve System, and as amended and in effect from time to time.

Material Adverse Effect” means, with respect to the Borrower, (i) any material adverse effect on, or a material adverse change in, the business, property, assets, operations, condition (financial or otherwise), liabilities (actual or contingent) or prospects of the Borrower and its Consolidated Subsidiaries, taken as a whole, (ii) any material adverse effect on the legality, validity, binding effect or enforceability against the Borrower of this Agreement or any other Loan Document to which it is a party or (iii) a material impairment of the ability of the Borrower to perform any of its obligations under this Agreement or any other Loan Document to which it is a party.

Maximum Accordion Amount” has the meaning set forth in Section 2.06(b).

Met-Ed” means Metropolitan Edison Company, a Pennsylvania corporation.

Mizuho” has the meaning set forth in the preamble hereto.

Moody’s” means Moody’s Investors Service, Inc.

MP” means Monongahela Power Company, an Ohio corporation.

Multiemployer Plan” means a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA to which the Borrower or any member of the Controlled Group has, or may reasonably be expected to have, an obligation to make contributions, or with respect to which the Borrower has, or may reasonably be expected to incur, liability.

 

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Non-Approving Lender” means any Lender that does not approve any consent, waiver or amendment that (i) requires the approval of all affected Lenders in accordance with the terms of Section 8.01 and (ii) has been approved by the Majority Lenders.

Noncompliance Event” means the Criminal Information and the DPA, and the entry by FE into the DPA, together with those events, actions, or omissions to act that are described in the Criminal Information and the Statement of Facts attached thereto.

Nonconsenting Lender” has the meaning set forth in Section 2.19(b).

Nonrecourse Indebtedness” means, with respect to the Borrower and its Subsidiaries, (i) any Indebtedness that finances the acquisition, development, construction or improvement of an asset in respect of which the Person to which such Indebtedness is owed has no recourse whatsoever to the Borrower or any of its Affiliates and (ii) any Indebtedness existing on the date of this Agreement that finances the ownership or operation of an asset in respect of which the Person to which such Indebtedness is owed has no recourse whatsoever to the Borrower or any of its Affiliates, in each case of clauses (i) and (ii), other than:

 

  (A)

recourse to the named obligor with respect to such Indebtedness (the “Debtor”) for amounts limited to the cash flow or net cash flow (other than historic cash flow) from the asset; and

 

  (B)

recourse to the Debtor for the purpose only of enabling amounts to be claimed in respect of such Indebtedness in an enforcement of any security interest or lien given by the Debtor over the asset or the income, cash flow or other proceeds deriving from the asset (or given by any shareholder or the like in the Debtor over its shares or like interest in the capital of the Debtor) to secure the Indebtedness, but only if the extent of the recourse to the Debtor is limited solely to the amount of any recoveries made on any such enforcement; and

 

  (C)

recourse to the Debtor generally or indirectly to any Affiliate of the Debtor, under any form of assurance, undertaking or support, which recourse is limited to a claim for damages (other than liquidated damages and damages required to be calculated in a specified way) for a breach of an obligation (other than a payment obligation or an obligation to comply or to procure compliance by another with any financial ratios or other tests of financial condition) by the Person against which such recourse is available.

Note” means any promissory note issued at the request of a Lender pursuant to Section 2.18 in the form of Exhibit B hereto.

Notice of Borrowing” means a notice of a Borrowing pursuant to Section 2.02(a), which shall be substantially in the form of Exhibit C.

OE” means Ohio Edison Company, an Ohio corporation.

 

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OFAC” means The Office of Foreign Assets Control of the U.S. Department of the Treasury.

Organizational Documents” means, as applicable to any Person, the charter, code of regulations, articles of incorporation, by-laws, certificate of formation, operating agreement, certificate of partnership, limited liability company agreement, operating agreement, partnership agreement, certificate of limited partnership, limited partnership agreement or other constitutive documents of such Person.

Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Advance or Loan Document).

Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 2.22(b)).

Outstanding Credits” means, on any date of determination, an amount equal to (i) the aggregate principal amount of all Advances outstanding on such date plus (ii) the aggregate undrawn amount of all issued Letters of Credit outstanding on such date plus (iii) the aggregate amount of Reimbursement Obligations outstanding on such date (excluding Reimbursement Obligations that, on such date of determination, are repaid with the proceeds of Advances made in accordance with Sections 2.04(f) and (g), to the extent the principal amount of such Advances is included in the determination of the aggregate principal amount of all outstanding Advances as provided in clause (i) of this definition). The Outstanding Credits of a Lender on any date of determination shall be an amount equal to the outstanding Advances made by such Lender plus the amount of such Lender’s participation interest in outstanding Letters of Credit and Reimbursement Obligations included in the definition of “Outstanding Credits”.

Parent” means, with respect to any Lender, any Person as to which such Lender is, directly or indirectly, a subsidiary.

Parent Credit Agreement” means that Credit Agreement, dated as of the date hereof, by and among FE and FET as borrowers, the banks and other financial institutions party thereto from time to time, and JPMorgan as administrative agent, as amended, amended and restated or otherwise modified from time to time.

Participant” has the meaning set forth in Section 8.08(d).

 

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Participant Register” has the meaning set forth in Section 8.08(d).

Patriot Act” means the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)), as in effect from time to time.

Payment” has the meaning set forth in Section 7.06(c).

Payment Date” means the date on which payment of a Drawing is made by a Fronting Bank.

Payment Notice” has the meaning set forth in Section 7.06(c).

PBGC” means the Pension Benefit Guaranty Corporation and any entity succeeding to any or all of its functions under ERISA.

PE” means The Potomac Edison Company, a Maryland and Virginia corporation.

Penelec” means Pennsylvania Electric Company, a Pennsylvania corporation.

Penn” means Pennsylvania Power Company, a Pennsylvania corporation.

Percentage” means, in respect of any Lender on any date of determination, the quotient (expressed as a percentage) obtained by (i) dividing such Lender’s Commitment on such day by the total of the Commitments on such day or (ii) if the Commitments have terminated or expired, dividing the Outstanding Credits of such Lender on such day by the aggregate Outstanding Credits on such day.

Permitted Obligations” mean (i) nonspeculative Hedging Obligations of any Person and its Subsidiaries arising in the ordinary course of business and in accordance with such Person’s established risk management policies that are designed to protect such Person against, among other things, fluctuations in interest rates or currency exchange rates and which in the case of agreements relating to interest rates shall have a notional amount no greater than the payments due with respect to the applicable obligations being hedged and (ii) Commodity Trading Obligations. For the avoidance of doubt, such transactions shall be considered nonspeculative with respect to the Borrower, if undertaken in conformance with the FE Corporate Risk Management Policy then in effect, as approved by FE’s Audit Committee, together with the Approved Business Unit Risk Management Policies referenced thereunder.

Permitted Securitization” means, for the Borrower and its Subsidiaries, any sale, assignment, conveyance, grant and/or contribution, or series of related sales, assignments, conveyances, grants and/or contributions, by the Borrower or any of its Subsidiaries of Receivables (or purported sale, assignment, conveyance, grant and/or contribution) to a trust, corporation or other entity, where the purchase of such Receivables may be funded or exchanged in whole or in part by the incurrence or issuance by the applicable Securitization SPV, if any, of Indebtedness or securities (such Indebtedness and securities being “Attributable Securitization Obligations”) that are to be secured by or otherwise satisfied by payments from, or that represent

 

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interests in, the cash flow derived primarily from such Receivables (provided, however, that “Indebtedness” as used in this definition shall not include Indebtedness incurred by a Securitization SPV owed to the Borrower or any of its Subsidiaries, which Indebtedness represents all or a portion of the purchase price or other consideration paid by such Securitization SPV for such receivables or interests therein), where (i) any representation, warranty, covenant, recourse, repurchase, hold harmless, indemnity or similar obligations of the Borrower or any of its Subsidiaries, as applicable, in respect of Receivables sold, assigned, conveyed, granted or contributed, or payments made in respect thereof, are customary for transactions of this type, and do not prevent the characterization of the transaction as a true sale under Applicable Laws (including debtor relief laws) and (ii) any representation, warranty, covenant, recourse, repurchase, hold harmless, indemnity or similar obligations of any Securitization SPV in respect of Receivables sold, assigned, conveyed, granted or contributed or payments made in respect thereof, are customary for transactions of this type.

Person” means an individual, partnership, corporation (including a business trust), limited liability company, joint stock company, trust, unincorporated association, joint venture or other entity, or a government or any political subdivision or agency thereof.

Plan” means, at any time, an “employee pension benefit plan” (as defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 or 430 of the Code and (i) is (A) maintained by or contributed to by (or to which there is or may be an obligation to contribute to by) the Borrower or any member of the Controlled Group, or (B) maintained pursuant to a collective bargaining agreement or any other arrangement under which more than one employer makes contributions, or (ii) as to which the Borrower or a member of the Controlled Group has within the preceding five plan years maintained, contributed to or had an obligation to contribute to.

Plan Asset Regulations” means 29 CFR § 2510.3-101 et seq., as modified by Section 3(42) of ERISA, as amended from time to time.

PTE” means a prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be amended from time to time.

Receivables” means any accounts receivable, payment intangibles, notes receivable, rights to receive future payments and related rights (whether now existing or arising or acquired in the future, whether constituting accounts, chattel paper, instruments, general intangibles or otherwise, and including the right to payment of any interest or finance charges), including (i) financial transmission rights (“FTRs”) or any other rights to payment from PJM Interconnection, L.L.C. or another regional transmission authority of the Borrower or any of its Subsidiaries or (ii) the right to impose, charge, collect and receive special, irrevocable, nonbypassable charges based upon the consumption of electricity imposed pursuant to Applicable Law on the Borrower’s or any of its Subsidiaries’ ratepayers, and any supporting obligations and other financial assets related thereto (including all collateral securing such accounts receivables, FTRs or other assets, contracts and contract rights, all guarantees with respect thereto, and all proceeds

 

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thereof) that are transferred, or in respect of which security interests are granted in one or more transactions that are customary for asset securitizations of such Receivables.

Recipient” means, as applicable, (i) the Administrative Agent, (ii) any Lender and (iii) any Fronting Bank.

Reference Ratings” means, with respect to the Borrower, the ratings assigned by S&P and Moody’s to the senior unsecured non-credit enhanced debt of the Borrower; provided that, if there is no such rating, “Reference Ratings” shall mean the ratings that are one level below the respective ratings assigned by S&P and Moody’s to the senior secured debt of the Borrower.

Register” has the meaning set forth in Section 8.08(c).

Reimbursement Obligation” means the obligation of the Borrower to reimburse a Fronting Bank for any Drawing paid by such Fronting Bank pursuant to Section 2.04(g).

Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees, administrators, managers, advisors and representatives of such Person and of such Person’s Affiliates.

Relevant Governmental Body” means the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or any successor thereto.

Reportable Compliance Event” means that any Covered Entity becomes a Sanctioned Person, or is charged by indictment, criminal complaint or similar charging instrument, arraigned, or custodially detained in connection with any Anti-Corruption Law or any predicate crime to any Anti-Corruption Law, or has knowledge of facts or circumstances to the effect that it is reasonably likely that any aspect of its operations is in actual or probable violation of any Anti-Corruption Law.

Required Reimbursement Date” has the meaning set forth in Section 2.04(f)(i).

Resolution Authority” means an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.

S&P” means S&P Global Ratings, a business unit of Standard & Poor’s Financial Services LLC, a subsidiary of S&P Global Inc.

Sanctioned Country” means, at any time, a region, country or territory which is, or whose government is, the subject or target of any Sanctions (at the date of this Agreement, the Crimea region of Ukraine, Cuba, Iran, North Korea and Syria).

Sanctioned Person” means (a) any Person named on the list of Specially Designated Nationals maintained by OFAC, or any other Sanctions-related list of designated Persons

 

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maintained by the U.S. Department of State, the U.S. Department of Commerce, the U.S. Department of the Treasury or any other U.S. Governmental Authority, or maintained by the United Nations Security Council, Her Majesty’s Treasury of the United Kingdom, the European Union or any member state thereof, as may be amended, supplemented or substituted from time to time, (b) any Person that is (i) operating, located, organized or resident in a Sanctioned Country, to the extent such presence in the Sanctioned Country means that such Person is the target of Sanctions, or (ii) the subject or target of any Sanctions, or (c) any Person controlled by any such Person described in the foregoing clause (a) or clause (b). For purposes of the foregoing clause (c), “control” shall have the meaning ascribed to such term in the definition of “Covered Entity”.

Sanctions” means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by OFAC, the U.S. Department of State, the U.S. Department of Commerce or the U.S. Department of Treasury, or (b) the United Nations Security Council, the European Union or any member state thereof, Her Majesty’s Treasury of the United Kingdom or any other Governmental Authority with jurisdiction over any of the parties to this Agreement.

SEC” means the United States Securities and Exchange Commission.

Securitization SPV” means any trust, partnership or other Person established by the Borrower or a Subsidiary of the Borrower to implement a Permitted Securitization.

Service” has the meaning set forth in the definition of “Eurodollar Rate”.

Significant Subsidiaries” means, with respect to the Borrower, each significant subsidiary of the Borrower (as such term is defined in Regulation S-X of the SEC (17 C.F.R. §210.1-02(w)), or any successor provision) (excluding Securitization SPVs).

SOFR” means, with respect to any Business Day, a rate per annum equal to the secured overnight financing rate for such Business Day published by the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate) on the website of the Federal Reserve Bank of New York, currently at http://www.newyorkfed.org (or any successor source for the secured overnight financing rate identified as such by the administrator of the secured overnight financing rate from time to time) on the immediately succeeding Business Day.

SPC” has the meaning set forth in Section 8.08(g).

Specified Date” has the meaning set forth in Section 2.19(c).

Specified Disposition” means the sale by FE or the Borrower, directly or indirectly, of up to 20% of the issued and outstanding voting equity in any of its Significant Subsidiaries (solely with respect to FE, as such term is defined in the Parent Credit Agreement) at the time of such disposition, and for which the Borrower and FE shall have received all necessary and applicable Governmental Action.

Specified Event” means the occurrence of an Event of Default pursuant to Section 6.01(k) of the Parent Credit Agreement.

Stated Amount” means the maximum amount available to be drawn by a Beneficiary under a Letter of Credit.

Subsidiary” means, with respect to any Person, any corporation or other entity of which securities or other ownership interests having ordinary voting power to elect a majority of the Board of Directors or other persons performing similar functions are at the time directly or indirectly owned by such a Person, or one or more Subsidiaries, or by such Person and one or more of its Subsidiaries.

Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

TE” means The Toledo Edison Company, an Ohio corporation.

Term SOFR” means, for the applicable Corresponding Tenor, the forward-looking term rate based on SOFR that has been selected or recommended by the Relevant Governmental Body.

Termination Date” means October 18, 2026, subject, for certain Lenders, to the extension described in Section 2.19 hereof, or, in any case, the earlier date of termination in whole of the Commitments pursuant to Section 2.06 or Section 6.01 hereof.

Termination Event” means (i) a Reportable Event described in Section 4043(c) of ERISA and the regulations issued thereunder (other than a Reportable Event not subject to the provision for 30-day notice to the PBGC with respect to a Plan under such regulations), or (ii) the withdrawal of the Borrower or any member of the Controlled Group from a Plan during a plan year in which it was a “substantial employer” as defined in Section 4001(a)(2) of ERISA, or (iii) a cessation of operations with respect to which the Borrower or any member of the Controlled Group has incurred liability under Section 4062(e) of ERISA, or (iv) the filing of a notice of intent to terminate a Plan or the treatment of a Plan amendment as a termination under Section 4041 or 4042 of ERISA, or (v) the institution of proceedings to terminate a Plan by the PBGC, or (vi) any other event or condition that might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment by a court of competent jurisdiction of a trustee to administer, any Plan.

Total Capitalization” means, with respect to the Borrower at any date of determination, the sum, without duplication, of (i) Consolidated Debt of the Borrower, (ii) the capital stock (but excluding treasury stock and capital stock subscribed and unissued) and other equity accounts (including retained earnings and paid in capital but excluding accumulated other comprehensive income and loss) of the Borrower and its Consolidated Subsidiaries, (iii) consolidated equity of the preference stockholders of the Borrower and its Consolidated Subsidiaries, and (iv) the

 

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aggregate principal amount of Trust Preferred Securities and Junior Subordinated Deferred Interest Debt Obligations of the Borrower and its Consolidated Subsidiaries.

TrAILCo” means Trans-Allegheny Interstate Line Company, a Maryland and Virginia corporation.

Trust Preferred Securities” means any securities, however denominated, (i) issued by the Borrower or any Consolidated Subsidiary of the Borrower, (ii) that are not subject to mandatory redemption or the underlying securities, if any, of which are not subject to mandatory redemption, (iii) that are perpetual or mature no less than 30 years from the date of issuance, (iv) the indebtedness issued in connection with which, including any guaranty, is subordinate in right of payment to the unsecured and unsubordinated indebtedness of the issuer of such indebtedness or guaranty, and (v) the terms of which permit the deferral of the payment of interest or distributions thereon to a date occurring after the latest Termination Date.

Type” means the designation of a Borrowing or an Advance as a Eurodollar Rate Borrowing or Advance or as an Alternate Base Rate Borrowing or Advance.

UK Financial Institution” means any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended from time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any Person falling within IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms.

UK Resolution Authority” means the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution.

United States” and “U.S.” each means the United States of America.

Unmatured Default” means any event that, with the giving of notice or the passage of time, or both, would constitute an Event of Default.

USD LIBOR” means the London interbank offered rate for U.S. dollars.

U.S. Person” means any Person that is a “United States person” as defined in Section 7701(a)(30) of the Code.

U.S. Tax Compliance Certificate” has the meaning set forth in Section 2.16(g)(ii)(B)(iii).

West-Penn” means West Penn Power Company, a Pennsylvania corporation.

Withholding Agent” means the Borrower and the Administrative Agent.

 

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Write-Down and Conversion Powers” means, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.

SECTION 1.02.   Computation of Time Periods.

In this Agreement in the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each means “to but excluding”.

SECTION 1.03.   Accounting Terms.

All accounting terms not specifically defined herein shall be construed in accordance with GAAP consistent with those applied in the preparation of the financial statements referred to in Section 4.01(g). Notwithstanding any other provision contained herein, all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein, and the determination of Indebtedness hereunder, shall be made without giving effect to Financial Accounting Standards Board (FASB) Standard ASC 842 (Leases) (or any other applicable financial accounting standard having a similar result or effect) and related interpretations, in each case, to the extent any lease (or similar arrangement conveying the right to use) would be required to be treated as a capital lease thereunder where such lease (or similar arrangement) would have been treated as an operating lease under GAAP as in effect immediately prior to the effectiveness of the ASC 842.

SECTION 1.04.   Terms Generally.

Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, amended and restated, supplemented or otherwise modified (subject to any restrictions on such amendments, restatements, supplements or modifications set forth herein), (ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (iii) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provisions hereof,

 

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(iv) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement, and (v) the definitions of terms herein shall apply equally to the singular and plural forms of the terms defined.

SECTION 1.05.   Divisions.

For all purposes under the Loan Documents, in connection with any division or plan of division under Delaware law (or any comparable event under a different jurisdiction’s laws): (a) if any asset, right, obligation or liability of any Person becomes the asset, right, obligation or liability of a different Person, then it shall be deemed to have been transferred from the original Person to the subsequent Person, and (b) if any new Person comes into existence, such new Person shall be deemed to have been organized on the first date of its existence by the holders of its equity interests at such time.

SECTION 1.06.   Interest Rates; LIBOR Notification.

The interest rate on a Eurodollar Rate Advance is determined by reference to the London interbank offered rate (“LIBOR”). LIBOR is intended to represent the rate at which contributing banks may obtain short-term borrowings from each other in the London interbank market. On March 5, 2021, the U.K. Financial Conduct Authority (“FCA”) publicly announced that: immediately after December 31, 2021, publication of the 1-week and 2-month U.S. Dollar LIBOR settings will permanently cease; immediately after June 30, 2023, publication of the overnight and 12-month U.S. Dollar LIBOR settings will permanently cease; and immediately after June 30, 2023, the 1-month, 3-month and 6-month U.S. Dollar LIBOR settings will cease to be provided or, subject to the FCA’s consideration of the case, be provided on a synthetic basis and no longer be representative of the underlying market and economic reality they are intended to measure and that representativeness will not be restored. There is no assurance that dates announced by the FCA will not change or that the administrator of LIBOR and/or regulators will not take further action that could impact the availability, composition, or characteristics of LIBOR or the currencies and/or tenors for which LIBOR is published. Each party to this Agreement should consult its own advisors to stay informed of any such developments. Public and private sector industry initiatives are currently underway to identify new or alternative reference rates to be used in place of LIBOR. On the earlier of (i) the date that all Available Tenors of USD LIBOR have either permanently or indefinitely ceased to be provided by IBA or have been announced by the FCA pursuant to public statement or publication of information to be no longer representative and (ii) the Early Opt-in Effective Date, Section 2.23 provides a mechanism for determining an alternative rate of interest. The Administrative Agent will promptly notify the Borrower, pursuant to Section 2.23(d), of any change to the reference rate upon which the interest rate on Eurodollar Rate Advances is based. However, the Administrative Agent does not warrant or accept any responsibility for, and shall not have any liability with respect to, the administration, submission, performance or any other matter related to LIBOR or with respect to any alternative or successor rate thereto, or replacement rate thereof (including, without limitation, any such alternative, successor or replacement rate implemented pursuant to Section 2.23(a) or (b), whether upon the occurrence of an event described in Section 2.23(a), a

 

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Benchmark Transition Event, or an Early Opt-in Election, and the implementation of any Benchmark Replacement Conforming Changes pursuant to Section 2.23(c)), including without limitation, whether the composition or characteristics of any such alternative, successor or replacement reference rate will be similar to, or produce the same value or economic equivalence of, LIBOR or have the same volume or liquidity as did the London interbank offered rate prior to its discontinuance or unavailability. The Administrative Agent and its affiliates and/or other related entities may engage in transactions that affect the calculation of any alternative, successor or replacement rate (including any Benchmark Replacement) and/or any relevant adjustments thereto, in each case, in a manner adverse to the Borrower. The Administrative Agent may select information sources or services in its reasonable discretion to ascertain LIBOR or such alternative, successor or replacement rate, in each case pursuant to the terms of this Agreement, and shall have no liability to the Borrower, any Lender or any other person or entity for damages of any kind, including direct or indirect, special, punitive, incidental or consequential damages, costs, losses or expenses (whether in tort, contract or otherwise and whether at law or in equity), for any error or calculation of any such rate (or component thereof) provided by any such information source or service.

ARTICLE II

AMOUNTS AND TERMS OF THE ADVANCES AND LETTERS OF CREDIT

SECTION 2.01.   The Advances.

Each Lender severally agrees, on the terms and conditions hereinafter set forth, to make Advances to the Borrower in Dollars only from time to time on any Business Day during the period from the date hereof until the Termination Date applicable to such Lender in an aggregate amount not to exceed at any time outstanding the Available Commitment of such Lender. Each Borrowing shall be in an aggregate amount not less than $5,000,000 or an integral multiple of $1,000,000 in excess thereof and shall consist of Advances of the same Type and, in the case of Eurodollar Rate Advances, having the same Interest Period made or Converted on the same day by the Lenders ratably according to their respective Commitments. Within the limits of each Lender’s Available Commitment, and subject to the conditions set forth in Article III and the other terms and conditions hereof, the Borrower may from time to time borrow, prepay pursuant to Section 2.12 and reborrow under this Section 2.01; provided, that in no case shall any Lender be required to make an Advance to the Borrower hereunder if (i) the amount of such Advance would exceed such Lender’s Available Commitment or (ii) the making of such Advance, together with the making of the other Advances constituting part of the same Borrowing, would cause the total amount of all Outstanding Credits to exceed the aggregate amount of the Commitments.

SECTION 2.02.   Making the Advances.

(a)   Each Borrowing shall be made on notice, given (i) in the case of a Borrowing comprising Eurodollar Rate Advances, not later than 11:00 a.m. (New York time) on the third Business Day prior to the date of the proposed Borrowing, and (ii) in the case of a Borrowing comprising Alternate Base Rate Advances, not later than 11:00 a.m. (New York time)

 

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on the date of the proposed Borrowing, by the Borrower to the Administrative Agent, which shall give to each Lender prompt notice thereof. Each such Notice of Borrowing by the Borrower shall be by email or any other electronic manner reasonably acceptable to the Administrative Agent, in substantially the form of Exhibit C hereto, specifying therein the requested (A) date of such Borrowing, (B) Type of Advances to be made in connection with such Borrowing, (C) aggregate amount of such Borrowing, (D) in the case of a Borrowing comprising Eurodollar Rate Advances, the initial Interest Period for each such Advance, which Borrowing shall be subject to the limitations stated in the definition of “Interest Period” in Section 1.01, and (E) the identity of the Borrower requesting such Borrowing. The Borrower may request that more than one Borrowing be made on any date. Each Lender shall, before 1:00 p.m. (New York time) on the date of such Borrowing, make available for the account of its Applicable Lending Office to the Administrative Agent at its address referred to in Section 8.02, in same day funds, such Lender’s Percentage of such Borrowing. After the Administrative Agent’s receipt of such funds and upon fulfillment of the applicable conditions set forth in Article III, the Administrative Agent will make such funds available to the Borrower at the Administrative Agent’s aforesaid address.

(b)   Each Notice of Borrowing delivered by the Borrower shall be irrevocable and binding on the Borrower. In the case of any Notice of Borrowing delivered by the Borrower requesting Eurodollar Rate Advances, the Borrower shall indemnify each Lender against any loss, cost or expense incurred by such Lender as a result of any failure by the Borrower to fulfill on or before the date specified in such Notice of Borrowing the applicable conditions set forth in Article III, including, without limitation, any loss (including loss of anticipated profits), cost or expense incurred by reason of the liquidation or redeployment of deposits or other funds acquired by such Lender to fund the Advance to be made by such Lender as part of such Borrowing when such Advance, as a result of such failure, is not made on such date.

(c)   Unless the Administrative Agent shall have received written notice via facsimile transmission from a Lender prior to (A) 5:00 p.m. (New York time) one Business Day prior to the date of a Borrowing comprising Eurodollar Rate Advances or (B) 12:00 p.m. (New York time) on the date of a Borrowing comprising Alternate Base Rate Advances that such Lender will not make available to the Administrative Agent such Lender’s Percentage of such Borrowing, the Administrative Agent may assume that such Lender has made such portion available to the Administrative Agent on the date of such Borrowing in accordance with subsection (a) of this Section 2.02 and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If and to the extent that such Lender shall not have so made such Percentage of such Borrowing available to the Administrative Agent, such Lender and the Borrower severally agree to repay to the Administrative Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Administrative Agent, at (i) in the case of the Borrower, the interest rate applicable at the time to Advances made in connection with such Borrowing and (ii) in the case of such Lender, the Federal Funds Rate. If such Lender shall repay to the Administrative Agent

 

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such corresponding amount, such amount so repaid shall constitute such Lender’s Advance as part of such Borrowing for purposes of this Agreement.

(d)   The obligations of the Lenders hereunder to make Advances are several and not joint. The failure of any Lender to make the Advance to be made by it as part of any Borrowing shall not relieve any other Lender of its obligation, if any, hereunder to make its Advance on the date of such Borrowing, but no Lender shall be responsible for the failure of any other Lender to make the Advance to be made by such other Lender on the date of any Borrowing.

SECTION 2.03.   [Reserved].

SECTION 2.04.   Letters of Credit.

(a)   Agreement of Fronting Banks. Subject to the terms and conditions of this Agreement, each Fronting Bank agrees to issue and amend (including, without limitation, to extend or renew) for the account of the Borrower or any Subsidiary thereof (each such Person, an “Account Party”) one or more Letters of Credit from and including the date hereof to the third Business Day preceding the Termination Date applicable to such Fronting Bank, in an aggregate Stated Amount at any time outstanding not to exceed such Fronting Bank’s L/C Fronting Bank Commitment, up to a maximum aggregate Stated Amount of all Letters of Credit at any one time outstanding equal to the L/C Commitment Amount minus Reimbursement Obligations outstanding at such time. Each Letter of Credit may be renewable (if so requested by the Borrower), shall have a Stated Amount not less than $100,000 and shall have an Expiration Date of no later than the earlier of (x) the third Business Day preceding the then-scheduled Termination Date applicable to the Fronting Bank issuing such Letter of Credit and (y) the date occurring one year after the Date of Issuance of such Letter of Credit; provided, however, that no Fronting Bank will issue or amend a Letter of Credit if, immediately following such issuance or amendment, (i) the Stated Amount of such Letter of Credit would (A) exceed the Available Commitments or (B) when aggregated with (1) the Stated Amounts of all other outstanding Letters of Credit and (2) the outstanding Reimbursement Obligations, exceed the L/C Commitment Amount or (ii) the total amount of all Outstanding Credits would exceed the aggregate amount of the Commitments. Letters of Credit shall be denominated in Dollars only. Notwithstanding that any Letter of Credit issued or outstanding hereunder may be in support of any obligations of, or for the account of, a Subsidiary of the Borrower, the Borrower that requests the issuance of any such Letter of Credit in support of any obligations of, or for the account of, any of its Subsidiaries shall be obligated to reimburse the applicable Fronting Bank for any and all drawings under such Letter of Credit. The Borrower that requests the issuance of any such Letter of Credit hereby acknowledges that the issuance of Letters of Credit for the account of its Subsidiaries inures to the Borrower’s benefit and that the Borrower’s business derives substantial benefits from the businesses of such Subsidiary. No Fronting Bank shall be under any obligation to issue any Letter of Credit if (A) any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain such Fronting Bank from issuing such Letter of Credit, or if the Approvals are no longer in effect or no longer provide approval for the issuance of such Letter of Credit, (B) any law applicable to

 

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such Fronting Bank or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over such Fronting Bank shall prohibit, or request that such Fronting Bank refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon such Fronting Bank with respect to such Letter of Credit any restriction, reserve or capital requirement (for which such Fronting Bank is not otherwise compensated hereunder) not in effect on the date hereof, or shall impose upon such Fronting Bank any unreimbursed loss, cost or expense that was not applicable on the date hereof and that such Fronting Bank in good faith deems material to it, (C) the issuance of such Letter of Credit would violate one or more policies of such Fronting Bank or (D) such Fronting Bank is not required to make any Extension of Credit in connection with a Letter of Credit under Section 2.21(e).

(b)   Forms. Each Letter of Credit shall be in a form customarily used by the Fronting Bank that is to issue such Letter of Credit or in such other form as has been approved by such Fronting Bank. At the time of issuance or amendment, subject to the terms and conditions of this Agreement, the amount and the terms and conditions of each Letter of Credit shall be subject to approval by the applicable Fronting Bank and the Borrower.

(c)   Notice of Issuance; Application. The Borrower shall give the applicable Fronting Bank and the Administrative Agent written notice, or telephonic notice confirmed in writing, in any case, at least two (2) Business Days (or such shorter period as such Fronting Bank may agree in its sole discretion) prior to the requested Date of Issuance of a Letter of Credit, such notice to be in substantially the form of Exhibit D hereto (a “Letter of Credit Request”). The Borrower shall also execute and deliver such customary letter of credit application forms as requested from time to time by such Fronting Bank. Such application forms shall indicate the identity of the Account Party and that the Borrower is the “Applicant” or shall otherwise indicate that the Borrower is the obligor in respect of any Letter of Credit to be issued thereunder. If the terms or conditions of the application forms conflict with any provision of this Agreement, the terms of this Agreement shall govern.

(d)   Issuance. Provided that the Borrower has given the notice prescribed by Section 2.04(c) and subject to the other terms and conditions of this Agreement, including the satisfaction of the applicable conditions precedent set forth in Article III, the applicable Fronting Bank shall issue the requested Letter of Credit on the requested Date of Issuance as set forth in the applicable Letter of Credit Request for the benefit of the stipulated Beneficiary and shall deliver the original of such Letter of Credit to the Beneficiary at the address specified in the notice. At the request of the Borrower, such Fronting Bank shall deliver a copy of each Letter of Credit to the Borrower within a reasonable time after the Date of Issuance thereof. Upon the request of the Borrower, such Fronting Bank shall deliver to the Borrower a copy of any Letter of Credit proposed to be issued hereunder prior to the issuance thereof.

(e)   Notice of Drawing. Each Fronting Bank shall promptly notify the Borrower by telephone, facsimile or other telecommunication of any Drawing under a Letter of Credit issued for the account of the Borrower by such Fronting Bank.

 

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(f)   Payments. The Borrower hereby agrees to pay to each Fronting Bank, in the manner provided in subsection (g) below:

(i)   on the date of receipt by the Borrower of notice of any Drawing pursuant to a subsection (e) above, if such notice is received not later than 11:00 a.m. (New York City time), or on the first Business Day following receipt of such notice by the Borrower, if such notice is received later than 11:00 a.m. (New York City time), an amount equal to the amount paid by such Fronting Bank in connection with such Drawing (such date being the “Required Reimbursement Date”); and

(ii)   if any Drawing shall be reimbursed to any Fronting Bank after 12:00 p.m. (New York time) on the applicable Payment Date, interest on any and all amounts required to be paid pursuant to clause (i) of this subsection (f) from and after such Payment Date until payment in full, payable on demand, at the annual rate of interest applicable to Alternate Base Rate Advances as in effect from time to time, provided, however, that from and after the Required Reimbursement Date with respect to such Drawing until payment in full, such interest rate shall be increased by 2.00% per annum.

(g)   Method of Reimbursement. The Borrower shall reimburse each Fronting Bank for each Drawing under any Letter of Credit issued for the account of the Borrower by such Fronting Bank pursuant to subsection (f) above in the following manner:

(i)   the Borrower shall reimburse such Fronting Bank in the manner described in subsection (f) above and Section 2.15; or

(ii)   if (A) the Borrower has not reimbursed such Fronting Bank pursuant to paragraph (i) above, (B) the applicable conditions to Borrowing set forth in Articles II and III have been fulfilled, and (C) the Available Commitments in effect at such time exceed the amount of the Drawing to be reimbursed, the Borrower may reimburse such Fronting Bank for such Drawing with the proceeds of an Alternate Base Rate Advance or, if the conditions specified in the foregoing clauses (A), (B) and (C) have been satisfied and a Notice of Borrowing requesting a Eurodollar Rate Advance has been given, in accordance with Section 2.02, three (3) Business Days prior to the relevant Payment Date, with the proceeds of a Eurodollar Rate Advance.

(h)   Nature of Fronting Banks’ Duties. In determining whether to honor any Drawing under any Letter of Credit issued by any Fronting Bank, such Fronting Bank shall be responsible only to determine that the documents and certificates required to be delivered under such Letter of Credit have been delivered and that they comply on their face with the requirements of such Letter of Credit. The Borrower otherwise assumes all risks of the acts and omissions of, or misuse of any Letter of Credit issued by any Fronting Bank for the account of the Borrower by, the Beneficiary of such Letter of Credit. In furtherance and not in limitation of the foregoing, but consistent with Applicable Law, no Fronting Bank shall be responsible, absent gross negligence or willful misconduct (as determined by the final, non-appealable judgment of a

 

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court of competent jurisdiction), (i) for the form, validity, sufficiency, accuracy, genuineness or legal effects of any document submitted by any party in connection with the application for and issuance of any drawing honored under a Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any such Letter of Credit, or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (iii) for errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex, facsimile or otherwise, whether or not they be in cipher; (iv) for errors in interpretation of technical terms; (v) for any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any such Letter of Credit, or the proceeds thereof; (vi) for the misapplication by the Beneficiary of any such Letter of Credit or of the proceeds of any drawing honored under such Letter of Credit; and (vii) for any consequences arising from causes beyond the control of such Fronting Bank. None of the above shall affect, impair or prevent the vesting of any of such Fronting Bank’s rights or powers hereunder. Not in limitation of the foregoing, any action taken or omitted to be taken by any Fronting Bank under or in connection with any Letter of Credit shall not create against such Fronting Bank any liability to the Borrower or any Lender, except for actions or omissions resulting from the gross negligence or willful misconduct (as determined by the final, non-appealable judgment of a court of competent jurisdiction) of such Fronting Bank or any of its agents or representatives, and such Fronting Bank shall not be required to take any action that exposes such Fronting Bank to personal liability or that is contrary to this Agreement or Applicable Law.

(i)   Obligations of Borrower Absolute. The obligation of the Borrower to reimburse each Fronting Bank for Drawings honored under the Letters of Credit issued for the account of the Borrower by such Fronting Bank shall be unconditional and irrevocable and shall be paid strictly in accordance with the terms of this Agreement under all circumstances including, without limitation, the following circumstances:

(i)   any lack of validity or enforceability of any Letter of Credit;

(ii)   the existence of any claim, set-off, defense or other right that the Borrower, any Account Party or any Affiliate of the Borrower or any Account Party may have at any time against a Beneficiary or any transferee of any Letter of Credit (or any Persons or entities for whom any such Beneficiary or transferee may be acting), such Fronting Bank or any other Person, whether in connection with this Agreement, the transactions contemplated herein or any unrelated transaction;

(iii)   any draft, demand, certificate or any other documents presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect;

(iv)   the surrender or impairment of any security for the performance or observance of any of the terms of any of the Loan Documents;

 

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(v)   any non-application or misapplication by the Beneficiary of the proceeds of any Drawing under a Letter of Credit; or

(vi)   the fact that an Event of Default or an Unmatured Default shall have occurred and be continuing.

No payment made under this Section 2.04 shall be deemed to be a waiver of any claim the Borrower may have against any Fronting Bank or any other Person.

(j)   Participations by Lenders. By the issuance of a Letter of Credit and without any further action on the part of any Fronting Bank or any Lender in respect thereof, each Fronting Bank shall hereby be deemed to have granted to each Lender, and each Lender shall hereby be deemed to have acquired from such Fronting Bank, an undivided interest and participation in such Letter of Credit (including any letter of credit issued by such Fronting Bank in substitution or exchange for such Letter of Credit pursuant to the terms thereof) equal to such Lender’s Percentage of the Stated Amount of such Letter of Credit, effective upon the issuance of such Letter of Credit. In consideration and in furtherance of the foregoing, each Lender hereby absolutely and unconditionally agrees to pay to such Fronting Bank, in accordance with this subsection (j), such Lender’s Percentage of each payment made by such Fronting Bank in respect of an unreimbursed Drawing under a Letter of Credit. Such Fronting Bank shall notify the Administrative Agent of the amount of such unreimbursed Drawing honored by it not later than (x) 12:00 p.m. (New York time) on the date of payment of a draft under a Letter of Credit, if such payment is made at or prior to 11:00 a.m. (New York time) on such day, and (y) the close of business (New York time) on the date of payment of a draft under a Letter of Credit, if such payment is made after 11:00 a.m. (New York time) on such day, and the Administrative Agent shall notify each Lender of the date and amount of such unreimbursed Drawing under such Letter of Credit honored by such Fronting Bank and the amount of such Lender’s Percentage therein no later than (1) 1:00 p.m. (New York time) on such day, if such payment is made at or prior to 11:00 a.m. (New York time) on such day, and (2) 11:00 a.m. (New York time) on the next following Business Day, if such payment is made after 11:00 a.m. (New York time) on such day. Not later than 2:00 p.m. (New York time) on the date of receipt of a notice of an unreimbursed Drawing by a Lender, such Lender agrees to pay to such Fronting Bank an amount equal to the product of (A) such Lender’s Percentage and (B) the amount of the payment made by such Fronting Bank in respect of such unreimbursed Drawing.

If payment of the amount due pursuant to the preceding sentence from a Lender is received by such Fronting Bank after the close of business on the date it is due, such Lender agrees to pay to such Fronting Bank, in addition to (and along with) its payment of the amount due pursuant to the preceding sentence, interest on such amount at a rate per annum equal to (i) for the period from and including the date such payment is due to but excluding the second succeeding Business Day, the Federal Funds Rate, and (ii) for the period from and including the second Business Day succeeding the date such payment is due to but excluding the date on which such amount is paid in full, the Federal Funds Rate plus 2.00% per annum.

 

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(k)   Obligations of Lenders Absolute. Each Lender acknowledges and agrees that (i) its obligation to acquire a participation in any Fronting Bank’s liability in respect of the Letters of Credit and (ii) its obligation to make the payments specified herein, and the right of each Fronting Bank to receive the same, in the manner specified herein, are absolute and unconditional and shall not be affected by any circumstances whatsoever, including, without limitation, (A) the occurrence and continuance of any Event of Default or Unmatured Default; (B) any other breach or default by the Borrower, the Administrative Agent or any Lender hereunder; (C) any lack of validity or enforceability of any Letter of Credit or any Loan Document; (D) the existence of any claim, setoff, defense or other right that the Lender may have at any time against the Borrower, any other Account Party, any Beneficiary, any Fronting Bank or any other Lender; (E) the existence of any claim, setoff, defense or other right that the Borrower may have at any time against any Beneficiary, any Fronting Bank, the Administrative Agent, any Lender or any other Person, whether in connection with this Agreement or any other documents contemplated hereby or any unrelated transactions; (F) any amendment or waiver of, or consent to any departure from, all or any of the Letters of Credit or this Agreement; (G) any statement or any document presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; (H) payment by any Fronting Bank under any Letter of Credit against presentation of a draft or certificate that does not comply with the terms of such Letter of Credit, so long as such payment is not the consequence of such Fronting Bank’s gross negligence or willful misconduct (as determined by the final, non-appealable judgment of a court of competent jurisdiction) in determining whether documents presented under a Letter of Credit comply with the terms thereof; (I) the occurrence of the Termination Date; or (J) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing. Nothing herein shall prevent the assertion by any Lender of a claim by separate suit or compulsory counterclaim, nor shall any payment made by a Lender under Section 2.04 be deemed to be a waiver of any claim that a Lender may have against any Fronting Bank or any other Person.

(l)   Proceeds of Reimbursements. Upon receipt of a payment from the Borrower pursuant to subsection (f) hereof, the applicable Fronting Bank shall promptly transfer to each Lender that has funded its participation in the applicable Drawing pursuant to subsection (j) above, such Lender’s pro rata share (determined in accordance with such Lender’s Percentage) of such payment. All payments due to the Lenders from any Fronting Bank pursuant to this subsection (l) shall be made to the Lenders if, as, and, to the extent possible, when such Fronting Bank receives payments in respect of Drawings under the Letters of Credit pursuant to subsection (f) hereof, and in the same funds in which such amounts are received; provided that if any Lender to which such Fronting Bank is required to transfer any such payment (or any portion thereof) pursuant to this subsection (l) does not receive such payment (or portion thereof) prior to (i) the close of business on the Business Day on which such Fronting Bank received such payment from the Borrower, if such Fronting Bank received such payment prior to 1:00 p.m. (New York time) on such day, or (ii) 1:00 p.m. (New York time) on the Business Day next succeeding the Business Day on which such Fronting Bank received such payment from the Borrower, if such Fronting Bank received such payment after 1:00 p.m. (New York time) on such day, such Fronting Bank agrees to pay to such Lender, along with its payment of the portion

 

35


of such payment due to such Lender, interest on such amount at a rate per annum equal to (A) for the period from and including the Business Day when such payment was required to be made to the Lenders to but excluding the second succeeding Business Day, the Federal Funds Rate and (B) for the period from and including the second Business Day succeeding the Business Day when such payment was required to be made to the Lenders to but excluding the date on which such amount is paid in full, the Federal Funds Rate plus 2.00% per annum.

(m)   Concerning the Fronting Banks. Each Fronting Bank will exercise and give the same care and attention to the Letters of Credit issued by it as it gives to its other letters of credit and similar obligations, and each Lender agrees that each Fronting Bank’s sole liability to such Lender shall be (i) to distribute promptly, as and when received by such Fronting Bank, and in accordance with the provisions of subsection (l) above, such Lender’s Percentage of any payments to such Fronting Bank by the Borrower pursuant to subsection (f) above in respect of Drawings under the Letters of Credit issued by such Fronting Bank, (ii) to exercise or refrain from exercising any right or to take or to refrain from taking any action under this Agreement or any Letter of Credit issued by such Fronting Bank as may be directed in writing by the Majority Lenders (or, when expressly required by the terms of this Agreement, all of the Lenders) or the Administrative Agent acting at the direction and on behalf of the Majority Lenders (or, when expressly required by the terms of this Agreement, all of the Lenders), except to the extent required by the terms hereof or thereof or by Applicable Law, and (iii) as otherwise expressly set forth in this Section 2.04. No Fronting Bank shall be liable for any action taken or omitted at the request or with approval of the Majority Lenders (or, when expressly required by the terms of this Agreement, all of the Lenders) or of the Administrative Agent acting on behalf of the Majority Lenders (or, when expressly required by the terms of this Agreement, all of the Lenders) or for the nonperformance of the obligations of any other party under this Agreement, any Letter of Credit or any other document contemplated hereby or thereby. Without in any way limiting any of the foregoing, each Fronting Bank may rely upon the advice of counsel concerning legal matters and upon any written communication or any telephone conversation that it believes to be genuine or to have been signed, sent or made by the proper Person and shall not be required to make any inquiry concerning the performance by the Borrower, any Beneficiary or any other Person of any of their respective obligations and liabilities under or in respect of this Agreement, any Letter of Credit or any other documents contemplated hereby or thereby. No Fronting Bank shall have any obligation to make any claim, or assert any Lien, upon any property held by such Fronting Bank or assert any offset thereagainst in satisfaction of all or any part of the obligations of the Borrower hereunder; provided that each Fronting Bank shall, if so directed by the Majority Lenders or the Administrative Agent acting on behalf of and with the consent of the Majority Lenders, have an obligation to make a claim, or assert a Lien, upon property held by such Fronting Bank in connection with this Agreement, or assert an offset thereagainst.

Each Fronting Bank may accept deposits from, make loans or otherwise extend credit to, and generally engage in any kind of banking or trust business with the Borrower or any of its Affiliates, or any other Person, and receive payment on such loans or extensions of credit and

 

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otherwise act with respect thereto freely and without accountability in the same manner as if it were not a Fronting Bank hereunder.

Each Fronting Bank makes no representation or warranty and shall have no responsibility with respect to: (i) the genuineness, legality, validity, binding effect or enforceability of this Agreement or any other documents contemplated hereby; (ii) the truthfulness, accuracy or performance of any of the representations, warranties or agreements contained in this Agreement or any other documents contemplated hereby; (iii) the collectibility of any amounts due under this Agreement; (iv) the financial condition of the Borrower or any other Person; or (v) any act or omission of any Beneficiary with respect to its use of any Letter of Credit or the proceeds of any Drawing under any Letter of Credit.

(n)   Indemnification of Fronting Banks by Lenders. To the extent that any Fronting Bank is not reimbursed and indemnified by the Borrower under Section 8.05 hereof, each Lender agrees to reimburse and indemnify such Fronting Bank on demand, pro rata in accordance with such Lender’s Percentage, for and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred by or asserted against such Fronting Bank, in any way relating to or arising out of this Agreement, any Letter of Credit or any other document contemplated hereby or thereby, or any action taken or omitted by such Fronting Bank under or in connection with this Agreement, any Letter of Credit or any other document contemplated hereby or thereby; provided, however, that such Lender shall not be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from such Fronting Bank’s gross negligence or willful misconduct as determined by the final, non-appealable judgment of a court of competent jurisdiction; and provided further, however, that such Lender shall not be liable to such Fronting Bank or any other Lender for the failure of the Borrower to reimburse such Fronting Bank for any drawing made under a Letter of Credit issued for the account of the Borrower with respect to which such Lender has paid such Fronting Bank such Lender’s pro rata share (determined in accordance with such Lender’s Percentage), or for the Borrower’s failure to pay interest thereon. Each Lender’s obligations under this subsection (n) shall survive the payment in full of all amounts payable by such Lender under subsection (j) above, and the termination of this Agreement and the Letters of Credit. Nothing in this subsection (n) is intended to limit any Lender’s reimbursement obligation contained in subsection (j) above.

(o)   Representations of Lenders. As between any Fronting Bank and the Lenders, by its execution and delivery of this Agreement each Lender hereby represents and warrants solely to such Fronting Bank that (i) it is duly organized and validly existing in good standing under the laws of the jurisdiction of its formation, and has full corporate power, authority and legal right to execute, deliver and perform its obligations to such Fronting Bank under this Agreement; and (ii) this Agreement constitutes its legal, valid and binding obligation enforceable against it in accordance with the terms hereof, except as such enforceability may be limited by applicable bank organization, moratorium, conservatorship or other laws now or hereafter in effect affecting the enforcement of creditors rights in general and the rights of

 

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creditors of banks, and except as such enforceability may be limited by general principles of equity (whether considered in a proceeding at law or in equity).

(p)   Existing Letters of Credit. All Existing Letters of Credit shall be deemed to have been issued pursuant hereto, and from and after the Closing Date shall be subject to and governed by the terms and conditions hereof.

(q)   Successor Fronting Bank. Any Fronting Bank may resign at any time by giving written notice thereof to the Lenders, the other Fronting Banks and the Borrower, as long as such Fronting Bank has no Letters of Credit outstanding under this Agreement. Upon such resignation, the Borrower may designate one or more Lenders as Fronting Banks to replace the retiring Fronting Bank. If a Fronting Bank has any Letters of Credit outstanding under this Agreement and delivers a written notice of its intent to resign to the Lenders, the other Fronting Banks and the Borrower, such Fronting Bank shall continue to honor its obligations under this Agreement, but shall have no obligation to issue any new Letter of Credit. Upon receipt of such notice of intent to resign, the Borrower and such Fronting Bank may agree to replace or terminate the outstanding Letters of Credit issued by such Fronting Bank and to designate one or more Lenders as Fronting Banks to replace such Fronting Bank.

SECTION 2.05.   Fees.

(a)   The Borrower agrees to pay to the Administrative Agent for the account of each Lender a commitment fee on the amount of such Lender’s Available Commitment at such time from the date hereof in the case of each Bank and from the effective date specified in the Assignment and Assumption pursuant to which it became a Lender in the case of each other Lender until the Termination Date applicable to such Lender, payable quarterly in arrears on the last Business Day of each March, June, September and December during such period, and on such Termination Date, at the rate per annum set forth below determined by reference to the Reference Ratings of the Borrower from time to time in effect (and, solely in the case that there are no Reference Ratings, the rate shall be at Level 6):

 

BASIS FOR PRICING    LEVEL 1   LEVEL 2   LEVEL 3   LEVEL 4   LEVEL 5   LEVEL 6
 

Reference Ratings at

least A-by S&P or

A3 by Moody’s

 

Reference Ratings

lower than Level 1 but at

least BBB+ by S&P or

Baa1 by Moody’s

 

Reference Ratings

lower than Level 2 but at

least BBB by S&P or

Baa2 by Moody’s

 

Reference Ratings

lower than Level 3 but at

least BBB-by S&P or

Baa3 by Moody’s

 

Reference Ratings

lower than Level 4 but at

least BB+ by S&P or

Ba1 by Moody’s

 

Reference Ratings

lower than Level 5

Commitment Fee

  0.125%   0.175%   0.225%   0.275%   0.350%   0.50%

For purposes of the foregoing, (i) if there is a difference of one level in Reference Ratings of S&P and Moody’s and the higher of such Reference Ratings falls in Level 1, Level 2, Level 3,

 

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Level 4 or Level 5, then the higher Reference Rating will be used to determine the commitment fee, and (ii) if there is a difference of more than one level in Reference Ratings of S&P and Moody’s, the Reference Rating that is one level above the lower of such Reference Ratings will be used to determine the commitment fee, unless the lower of such Reference Ratings falls in Level 6, in which case the lower of such Reference Ratings will be used to determine the commitment fee. If there exists only one Reference Rating, such Reference Rating will be used to determine the commitment fee.

(b)   The Borrower agrees to pay the fees payable by the Borrower in such amounts and payable on such terms as set forth in the Fee Letters.

(c)   The Borrower agrees to pay to the Administrative Agent, for the account of the Lenders, a fee in an amount equal to the then Applicable Margin for Eurodollar Rate Advances for the Borrower multiplied by the Stated Amount of each Letter of Credit issued for the account of the Borrower, in each case for the number of days that such Letter of Credit is issued and outstanding, payable quarterly in arrears on the last day of each March, June, September and December and on the date such Letter of Credit expires.

(d)   The Borrower agrees to pay to each Fronting Bank, for its own account, certain fees payable by the Borrower in such amounts and payable on such terms as set forth in the Fee Letter to which such Fronting Bank is a party.

SECTION 2.06.   Adjustment of the Commitments.

(a)   Commitment Reduction. The Borrower shall have the right, upon at least two Business Days’ notice to the Administrative Agent, to terminate in whole or, upon same day notice, from time to time to permanently reduce ratably in part the unused portion of the Commitments; provided that each partial reduction shall be in the aggregate amount of $5,000,000 or in an integral multiple of $1,000,000 in excess thereof; provided, further, that the Commitments may not be reduced to an amount that is less than the aggregate Stated Amount of outstanding Letters of Credit. Subject to the foregoing, any reduction of the Commitments to an amount below $100,000,000 shall also result in a reduction of the L/C Commitment Amount to the extent of such deficit (with automatic reductions in the amount of each L/C Fronting Bank Commitment ratably in proportion to the amount of such reduction of the L/C Commitment Amount). Each such notice of termination or reduction shall be irrevocable. Without limiting subsection (b) below, any Commitment reduced or terminated pursuant to this subsection (a) may not be reinstated.

(b)   Commitment Increase. On any date prior to the latest Termination Date, the Borrower may increase the aggregate amount of the Commitments by an amount not less than $50,000,000 for any such increase but not more than $250,000,000 (the “Maximum Accordion Amount”) for all such increases (any such increase, a “Commitment Increase”) by designating one or more of the existing Lenders or one or more Affiliates thereof (each of which, in its sole discretion, may determine whether and to what degree to participate in such Commitment Increase) or one or more other Persons that at the time agree, in the case of any

 

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existing Lender, to increase its Commitment (an “Increasing Lender”) and, in the case of any other Person or an Affiliate of a Lender (an “Additional Lender”), to become a party to this Agreement; provided that (i) each Additional Lender shall be acceptable to the Administrative Agent, and each Increasing Lender and each Additional Lender shall be acceptable to the Fronting Banks, (ii) the allocations of the Commitment Increase among the Increasing Lenders shall be determined by the Administrative Agent in consultation with the Borrower, and (iii) the amount of the Commitment of each Additional Lender shall not be less than $5,000,000. The sum of the increases in the Commitments of the Increasing Lenders pursuant to this subsection (b) plus the Commitments of the Additional Lenders upon giving effect to the Commitment Increase shall not exceed the amount of the Commitment Increase. The Borrower shall provide prompt notice of any proposed Commitment Increase pursuant to this Section 2.06(b) to the Administrative Agent, which shall promptly provide a copy of such notice to the Lenders and the Fronting Banks.

(ii)   Any Commitment Increase shall become effective upon (A) the receipt by the Administrative Agent of an agreement in form and substance satisfactory to the Administrative Agent signed by the Borrower, each Increasing Lender and each Additional Lender, setting forth the new Commitment of each such Lender and setting forth the agreement of each Additional Lender to become a party to this Agreement and to be bound by all the terms and provisions hereof binding upon each Lender, (B) the funding by each Lender of the Advance(s) to be made by each such Lender described in paragraph (iii) below, (C) receipt by the Administrative Agent of a certificate (the statements contained in which shall be true) of an Authorized Officer of the Borrower stating that both before and after giving effect to such Commitment Increase (1) no Event of Default has occurred and is continuing and (2) all representations and warranties made by the Borrower in this Agreement are true and correct in all material respects (or in the case of any representation or warranty already qualified by materiality, true and correct in all respects) and (D) receipt by the Administrative Agent of a certificate of the Secretary or an Assistant Secretary of the Borrower, in each case, certifying, with respect to itself, that attached thereto are true and correct copies of (1) the resolutions of the Board of Directors (or appropriate committee thereof) of the Borrower approving such Commitment Increase and (2) all governmental and regulatory authorizations and approvals required to be obtained by the Borrower for such Commitment Increase.

(iii)   Upon the effective date of any Commitment Increase, the Borrower shall prepay the outstanding Advances (if any) in full, and shall simultaneously make new Advances hereunder in an amount equal to such prepayment, so that, after giving effect thereto, the Advances are held ratably by the Lenders in accordance with their respective Commitments (after giving effect to such Commitment Increase). Prepayments made under this paragraph (iii) shall not be subject to the notice requirements of Section 2.12.

(iv)   Notwithstanding any provision contained herein to the contrary, from and after the date of any Commitment Increase and the making of any Advances on such date pursuant to paragraph (iii) above, all calculations and payments of the

 

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commitment fee, Letter of Credit fees and interest on the Advances shall take into account the actual Commitment of each Lender and the principal amount outstanding of each Advance made by such Lender during the relevant period of time.

SECTION 2.07.   Repayment of Advances.

The Borrower agrees to repay the principal amount of each Advance made by each Lender to the Borrower no later than the earlier of (i) 364 days after the date such Advance is made and (ii) the latest Termination Date applicable to such Lender; provided, however, that if the Borrower shall deliver to the Administrative Agent evidence reasonably satisfactory to the Administrative Agent (including, without limitation, certified copies of governmental approvals and legal opinions) that the Borrower is authorized under Applicable Law to incur Indebtedness hereunder maturing more than 364 days after the date of incurrence of such Indebtedness, the Borrower shall repay each Advance made to it by a Lender no later than the latest Termination Date applicable to such Lender.

SECTION 2.08.   Interest on Advances.

The Borrower agrees to pay interest on the unpaid principal amount of each Advance made by each Lender to the Borrower from the date of such Advance until such principal amount shall be paid in full, at the following rates per annum, subject to Section 2.15(f):

(a)   Alternate Base Rate Advances. If such Advance is an Alternate Base Rate Advance, a rate per annum equal at all times to the Alternate Base Rate in effect from time to time plus the Applicable Margin for such Alternate Base Rate Advance in effect from time to time, payable quarterly in arrears on the last day of each March, June, September and December, on the Termination Date applicable to such Lender and on the date such Alternate Base Rate Advance shall be Converted or be paid in full and as provided in Section 2.12; and

(b)   Eurodollar Rate Advances. If such Advance is a Eurodollar Rate Advance, a rate per annum equal at all times during the Interest Period for such Advance to the sum of the Eurodollar Rate for such Interest Period plus the Applicable Margin for such Eurodollar Rate Advance in effect from time to time, payable on the last day of each Interest Period for such Eurodollar Rate Advance (and, in the case of any Interest Period of six months, on the last day of the third month of such Interest Period), on the Termination Date applicable to such Lender and on the date such Eurodollar Rate Advance shall be Converted or be paid in full and as provided in Section 2.12.

SECTION 2.09.   Additional Interest on Advances.

The Borrower agrees to pay to each Lender, so long as such Lender shall be required under regulations of the Board of Governors of the Federal Reserve System to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency Liabilities, additional interest on the unpaid principal amount of each Eurodollar Rate Advance made by such Lender to the Borrower, from the date of such Advance until such principal amount is paid in full, at an

 

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interest rate per annum equal at all times to the remainder obtained by subtracting (i) the Eurodollar Rate for the Interest Period for such Advance from (ii) the rate obtained by dividing such Eurodollar Rate by a percentage equal to 100% minus the Eurodollar Rate Reserve Percentage of such Lender for such Interest Period, payable on each date on which interest is payable on such Advance; provided, that no Lender shall be entitled to demand additional interest under this Section 2.09 more than 90 days following the last day of the Interest Period in respect of which such demand is made; provided further, however, that the foregoing proviso shall in no way limit the right of any Lender to demand or receive such additional interest to the extent that such additional interest relates to the retroactive application by the Board of Governors of the Federal Reserve System of any regulation described above if such demand is made within 90 days after the implementation of such retroactive regulation. Such additional interest shall be determined by such Lender and notified to the Borrower through the Administrative Agent, and such determination shall be conclusive and binding for all purposes, absent manifest error.

SECTION 2.10.   Interest Rate Determination.

(a)   The Administrative Agent shall give prompt notice to the Borrower and the Lenders of the applicable interest rate determined by the Administrative Agent for purposes of Section 2.08(a) or (b).

(b)   If, with respect to any Eurodollar Rate Advances, the Majority Lenders notify the Administrative Agent that (i) Dollar deposits are not being offered to banks in the London interbank eurodollar market for the applicable amount and Interest Period of such Eurodollar Rate Advances, (ii) adequate and reasonable means do not exist for determining the Eurodollar Rate or (iii) the Eurodollar Rate for any Interest Period for such Advances will not adequately reflect the cost to such Majority Lenders of making or funding their respective Eurodollar Rate Advances for such Interest Period, the Administrative Agent shall forthwith so notify the Borrower and the Lenders, whereupon

(i)   each Eurodollar Rate Advance will automatically, on the last day of the then existing Interest Period therefor, Convert into an Alternate Base Rate Advance, and

(ii)   the obligation of the Lenders to make, or to Convert Advances into, Eurodollar Rate Advances shall be suspended until the Administrative Agent shall notify the Borrower and the Lenders that the circumstances causing such suspension no longer exist.

(c)   Upon the occurrence and during the continuance of any Event of Default, (i) each Eurodollar Rate Advance will automatically, on the last day of the then existing Interest Period therefor, Convert into a Base Rate Advance, and the obligation of the Lenders to make or to Convert Advances into, Eurodollar Rate Advances shall be suspended.

 

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SECTION 2.11.   Conversion of Advances.

(a)   Voluntary. The Borrower may on any Business Day, upon notice given to the Administrative Agent not later than 11:00 a.m. (New York time) on the third Business Day prior to the date of any proposed Conversion into Eurodollar Rate Advances, and on the date of any proposed Conversion into Alternate Base Rate Advances, and subject to the provisions of Sections 2.10 and 2.14, Convert all Advances of one Type made to the Borrower in connection with the same Borrowing into Advances of another Type or Types or Advances of the same Type having the same or a new Interest Period; provided, however, that any Conversion of, or with respect to, any Eurodollar Rate Advances into Advances of another Type or Advances of the same Type having the same or new Interest Periods, shall be made on, and only on, the last day of an Interest Period for such Eurodollar Rate Advances, unless the Borrower shall also reimburse the Lenders in respect thereof pursuant to Section 8.05(b) on the date of such Conversion. Each such notice of a Conversion shall, within the restrictions specified above, specify (i) the date of such Conversion, (ii) the Advances to be Converted, and (iii) if such Conversion is into, or with respect to, Eurodollar Rate Advances, the duration of the Interest Period for each such resulting Advance.

(b)   Mandatory. (i)  If the Borrower shall fail to select the Type of any Advance or the duration of any Interest Period for any Borrowing comprising Eurodollar Rate Advances in accordance with the provisions contained in the definition of “Interest Period” in Section 1.01 and Section 2.11(a), or if any proposed Conversion of a Borrowing that is to comprise Eurodollar Rate Advances upon Conversion shall not occur as a result of the circumstances described in subsection (c) below, the Administrative Agent will forthwith so notify the Borrower and the Lenders, and such Advances will automatically, on the last day of the then existing Interest Period therefor, Convert into Alternate Base Rate Advances.

(ii)   Failure to Convert. Each notice of Conversion given by the Borrower pursuant to subsection (a) above shall be irrevocable and binding on the Borrower. In the case of any Borrowing that is to comprise Eurodollar Rate Advances upon Conversion, the Borrower agrees to indemnify each Lender against any loss, cost or expense incurred by such Lender as a result of any failure of such Conversion to occur pursuant to the provisions of Section 2.10(c), including, without limitation, any loss, cost or expense incurred by reason of the liquidation or redeployment of deposits or other funds acquired by such Lender to fund such Eurodollar Rate Advances upon such Conversion, when such Conversion does not occur. The Borrower’s obligations under this subsection (c) shall survive the repayment of all other amounts owing by the Borrower to the Lenders and the Administrative Agent under this Agreement and any Note and the termination of the Commitments.

SECTION 2.12.   Prepayments.

(a)   Optional. The Borrower may at any time prepay the outstanding principal amounts of the Advances made to the Borrower as part of the same Borrowing in whole or ratably in part, together with accrued interest to the date of such prepayment on the principal amount prepaid, upon notice thereof given to the Administrative Agent by the Borrower not later than 11:00 a.m. (New York time) (i) on the date of any such prepayment in

 

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the case of Alternate Base Rate Advances and (ii) on the second Business Day prior to any such prepayment in the case of Eurodollar Rate Advances; provided, however, that (x) each partial prepayment of any Borrowing shall be in an aggregate principal amount not less than $5,000,000 and (y) in the case of any such prepayment of a Eurodollar Rate Advance, the Borrower shall be obligated to reimburse the Lenders in respect thereof pursuant to Section 8.05(b) on the date of such prepayment.

(b)   Mandatory. If and to the extent that the Outstanding Credits on any date hereunder shall exceed the aggregate amount of the Commitments hereunder on such date, the Borrower agrees to (A) prepay on such date a principal amount of Advances and/or (B) pay to the Administrative Agent an amount in immediately available funds (which funds shall be held as collateral pursuant to arrangements satisfactory to the Administrative Agent) equal to all or a portion of the amount available for drawing under the Letters of Credit outstanding at such time, which prepayment under clause (A) and payment under clause (B) shall, when taken together result in the amount of Outstanding Credits minus the amount paid to the Administrative Agent pursuant to clause (B) being less than or equal to the aggregate amount of the Commitments hereunder on such date. Any prepayment of Advances shall be accompanied by accrued interest on the amount prepaid to the date of such prepayment and, in the case of any such prepayment of Eurodollar Rate Advances, the Borrower shall be obligated to reimburse the Lenders in respect thereof pursuant to Section 8.05(b).

SECTION 2.13.   Increased Costs.

(a) If, due to any Change in Law, there shall be any increase in the cost (other than in respect of Taxes, which are addressed exclusively in Section 2.16) to any Lender of agreeing to make or making, funding or maintaining Eurodollar Rate Advances or any increase in the cost to any Fronting Bank or any Lender of issuing, maintaining or participating in Letters of Credit, then the Borrower shall from time to time, upon demand by such Lender or such Fronting Bank (as the case may be) (with a copy of such demand to the Administrative Agent), pay to the Administrative Agent for the account of such Lender or such Fronting Bank (as the case may be) additional amounts sufficient to compensate such Lender or such Fronting Bank (as the case may be) for such increased cost. A certificate as to the amount of such increased cost and the basis therefor, submitted to the Borrower and the Administrative Agent by such Lender or such Fronting Bank (as the case may be), shall constitute such demand and shall be conclusive and binding for all purposes, absent manifest error.

(b)   If any Lender or any Fronting Bank determines that any Change in Law affects or would affect the amount of capital or liquidity required or expected to be maintained by such Lender or such Fronting Bank (as the case may be) or any corporation controlling such Lender or such Fronting Bank (as the case may be) and that the amount of such capital or liquidity is increased by or based upon the existence of (i) such Lender’s commitment to lend or participate in Letters of Credit hereunder and other commitments of this type or (ii) the Advances made by such Lender or (iii) the participations in Letters of Credit acquired by such Lender or (iv) in the case of any Fronting Bank, such Fronting Bank’s commitment to issue, maintain and honor drawings under Letters of Credit hereunder, or (v) the honoring of Letters of Credit by any Fronting Bank hereunder, then, upon demand by such Lender or such Fronting Bank (as the case

 

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may be) (with a copy of such demand to the Administrative Agent), the Borrower shall immediately pay to the Administrative Agent for the account of such Lender or such Fronting Bank (as the case may be), from time to time as specified by such Lender or such Fronting Bank (as the case may be), additional amounts sufficient to compensate such Lender, such Fronting Bank or such corporation in the light of such circumstances, to the extent that such Lender or such Fronting Bank (as the case may be) determines such increase in capital or liquidity to be allocable to (i) in the case of such Lender, the existence of such Lender’s commitment to lend hereunder or the Advances made by such Lender or (ii) the participations in Letters of Credit acquired by such Lender or (iii) in the case of any Fronting Bank, such Fronting Bank’s Commitment to issue, maintain and honor drawings under Letters of Credit hereunder, or (iv) the honoring of Letters of Credit by any Fronting Bank hereunder. A certificate as to such amounts submitted to the Borrower and the Administrative Agent by such Lender or such Fronting Bank (as the case may be) shall constitute such demand and shall be conclusive and binding for all purposes, absent manifest error.

(c)   Failure or delay on the part of any Lender or Fronting Bank to demand compensation pursuant to this Section 2.13 shall not constitute a waiver of such Lender’s or Fronting Bank’s right to demand such compensation, provided that the Borrower shall not be required to compensate a Lender or Fronting Bank pursuant to this Section 2.13 for any increased costs or additional amounts incurred more than 180 days prior to the date that such Lender or Fronting Bank notifies the Borrower of such Lender’s or Fronting Bank’s intention to claim such compensation (except that, if such Change in Law giving rise to such increased costs is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof).

(d)   The Borrower’s obligations under this Section 2.13 shall survive (x) the repayment of all amounts owing to the Lenders, the Fronting Banks and the Administrative Agent under this Agreement and any Note, (y) the termination of the Commitments, the commitments of the Fronting Banks hereunder and any Letters of Credit and (z) the termination of this Agreement, in each case to the extent such obligations were incurred prior to such repayment and termination.

SECTION 2.14.   Illegality.

Notwithstanding any other provision of this Agreement, if any Lender shall notify the Administrative Agent that the introduction of or any change in or in the interpretation of any law or regulation makes it unlawful, or any central bank or other governmental authority asserts that it is unlawful, for any Lender or its Eurodollar Lending Office to perform its obligations hereunder to make Eurodollar Rate Advances or to fund or maintain Eurodollar Rate Advances hereunder, (i) the obligation of the Lenders to make, or to Convert Advances into, Eurodollar Rate Advances shall be suspended until the Administrative Agent shall notify the Borrower and the Lenders that the circumstances causing such suspension no longer exist and (ii) the Borrower shall forthwith prepay in full all Eurodollar Rate Advances of all Lenders then outstanding, together with interest accrued thereon, unless (A) the Borrower, within five Business Days of notice from the Administrative Agent, Converts all Eurodollar Rate Advances of all Lenders then

 

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outstanding into Advances of another Type in accordance with Section 2.11 or (B) the Administrative Agent notifies the Borrower that the circumstances causing such prepayment no longer exist. Any Lender that becomes aware of circumstances that would permit such Lender to notify the Administrative Agent of any illegality under this Section 2.14 shall use its best efforts (consistent with its internal policy and legal and regulatory restrictions) to change the jurisdiction of its Applicable Lending Office if the making of such change would avoid or eliminate such illegality and would not, in the reasonable judgment of such Lender, be otherwise disadvantageous to such Lender.

SECTION 2.15.   Payments and Computations.

(a)   The Borrower shall make each payment hereunder and under any Note not later than 12:00 p.m. (New York time) on the day when due in Dollars to the Administrative Agent or, with respect to payments made in respect of Reimbursement Obligations, to the applicable Fronting Bank, at its address referred to in Section 8.02 in same day funds, without set-off, counterclaim or defense and any such payment to the Administrative Agent or any Fronting Bank (as the case may be) shall constitute payment by the Borrower hereunder or under any Note, as the case may be, for all purposes, and upon such payment the Lenders shall look solely to the Administrative Agent or such Fronting Bank (as the case may be) for their respective interests in such payment. The Administrative Agent or such Fronting Bank (as the case may be) will promptly after any such payment cause to be distributed like funds relating to the payment of principal or interest or commitment fees or Reimbursement Obligations ratably (other than amounts payable pursuant to Section 2.02(c), 2.05, 2.09, 2.11(c), 2.13, 2.16, 2.21 or 8.05(b)) (according to the Lenders’ respective Percentages) to the Lenders for the account of their respective Applicable Lending Offices, and like funds relating to the payment of any other amount payable to any Lender to such Lender for the account of its Applicable Lending Office, in each case to be applied in accordance with the terms of this Agreement. Upon its acceptance of an Assignment and Assumption and recording of the information contained therein in the Register pursuant to Section 8.08(d), from and after the effective date specified in such Assignment and Assumption, the Administrative Agent and each Fronting Bank shall make all payments hereunder and under any Note in respect of the interest assigned thereby to the Lender assignee thereunder, and the parties to such Assignment and Assumption shall make all appropriate adjustments in such payments for periods prior to such effective date directly between themselves.

(b)   The Borrower hereby authorizes each Lender and each Fronting Bank, if and to the extent payment owed to such Lender or such Fronting Bank (as the case may be) is not made by the Borrower to the Administrative Agent or such Fronting Bank (as the case may be) when due hereunder or under any Note held by such Lender, to charge from time to time against any or all of the Borrower’s accounts (other than any payroll account maintained by the Borrower with such Lender or such Fronting Bank (as the case may be) if and to the extent that such Lender or such Fronting Bank (as the case may be) shall have expressly waived its set-off rights in writing in respect of such payroll account) with such Lender or such Fronting Bank (as the case may be) any amount so due.

 

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(c)   All computations of interest based on the Alternate Base Rate (based upon The Wall Street Journal’s published “prime rate”) shall be made by the Administrative Agent on the basis of a year of 365 or 366 days, as the case may be, and all computations of commitment fees and of interest based on the Alternate Base Rate (based upon the Federal Funds Rate or upon clause (iii) of the definition of Alternate Base Rate), the Eurodollar Rate or the Federal Funds Rate shall be made by the Administrative Agent, and all computations of interest pursuant to Section 2.09 shall be made by a Lender, on the basis of a year of 360 days, in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such commitment fees or interest are payable. Each determination by the Administrative Agent (or, in the case of Section 2.09, by a Lender) of an interest rate hereunder shall be conclusive and binding for all purposes, absent manifest error.

(d)   Whenever any payment hereunder or under any Note shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest or commitment fees, as the case may be; provided, however, if such extension would cause payment of interest on or principal of Eurodollar Rate Advances to be made in the next following calendar month, such payment shall be made on the next preceding Business Day.

(e)   Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Lenders hereunder that the Borrower will not make such payment in full, the Administrative Agent may assume that the Borrower has made such payment in full to the Administrative Agent on such date and the Administrative Agent may, in reliance upon such assumption, cause to be distributed to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent that the Borrower shall not have so made such payment in full to the Administrative Agent, each Lender shall repay to the Administrative Agent forthwith on demand such amount distributed to such Lender together with interest thereon, for each day from the date such amount is distributed to such Lender until the date such Lender repays such amount to the Administrative Agent, at the Federal Funds Rate.

(f)   The principal amount of any Advance (or any portion thereof) payable by the Borrower hereunder or under any Note that is not paid when due (whether at stated maturity, by acceleration or otherwise) shall (to the fullest extent permitted by law) bear interest from the date when due until paid in full at a rate per annum equal at all times to the rate otherwise applicable to such Advance plus 2% per annum, payable upon demand. Any other amount payable by the Borrower hereunder or under any Note that is not paid when due (whether at stated maturity, by acceleration or otherwise) shall (to the fullest extent permitted by law) bear interest from the date when due until paid in full at a rate per annum equal at all times to the rate of interest applicable to Alternate Base Rate Advances plus 2% per annum, payable upon demand.

(g)   To the extent that any payment by or on behalf of the Borrower is made to the Administrative Agent, any Fronting Bank or any Lender, or the Administrative Agent, any

 

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Fronting Bank or any Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Administrative Agent, such Fronting Bank or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any bankruptcy, insolvency or other similar law now or hereafter in effect or otherwise, then (i) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred, and (ii) each Lender and each Fronting Bank severally agrees to pay to the Administrative Agent upon demand its applicable share (without duplication) of any amount so recovered from or repaid by the Administrative Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the Federal Funds Rate from time to time in effect. The obligations of the Lenders and the Fronting Banks under clause (ii) of the preceding sentence shall survive the payment in full of any amounts hereunder and the termination of this Agreement.

SECTION 2.16.   Taxes.

(a)   Defined Terms. For purposes of this Section 2.16, (i) the term “Applicable Law” includes FATCA and (ii) the term “Lender” includes any Fronting Bank.

(b)   Payments Free of Taxes. Any and all payments by or on account of any obligation of the Borrower under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by Applicable Law. If any Applicable Law (as determined in the good faith discretion of an applicable Withholding Agent) requires the deduction or withholding of any Tax from any such payment by a Withholding Agent, then the applicable Withholding Agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with Applicable Law and, if such Tax is an Indemnified Tax, then the sum payable by the Borrower shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section 2.16) the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made.

(c)   Payment of Other Taxes by the Borrower. The Borrower shall timely pay to the relevant Governmental Authority in accordance with Applicable Law, or at the option of the Administrative Agent timely reimburse it for the payment of, any Other Taxes.

(d)   Indemnification by the Borrower. The Borrower shall indemnify each Recipient, within 30 days after written demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 2.16) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability

 

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delivered to the Borrower by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.

(e)   Indemnification by the Lenders. Each Lender shall severally indemnify the Administrative Agent, within 30 days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that the Borrower has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Borrower to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 8.08(d) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this subsection (e).

(f)   Evidence of Payments. As soon as practicable after any payment of Taxes by the Borrower to a Governmental Authority pursuant to this Section 2.16, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

(g)   Status of Lenders. Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to the Borrower and the Administrative Agent, at the time or times reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by Applicable Law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Sections 2.16(g)(ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.

(i)   Without limiting the generality of the foregoing, in the event that the Borrower is a U.S. Person,

 

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(A)   any Lender that is a U.S. Person shall deliver to the Borrower and the Administrative Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed copies of IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding tax;

(B)   any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), whichever of the following is applicable:

(i)   in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed copies of IRS Form W-8BEN or IRS Form W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN or IRS Form W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;

(ii)   executed copies of IRS Form W-8ECI;

(iii)   in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit E-1 to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) executed copies of IRS Form W-8BEN or IRS Form W-8BEN-E; or

(iv)   to the extent a Foreign Lender is not the beneficial owner, executed copies of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, IRS Form W-8BEN-E, a U.S. Tax Compliance Certificate substantially in the form of Exhibit E -2 or Exhibit E -3, IRS Form W-9, and/or

 

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other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit E -4 on behalf of each such direct and indirect partner;

(C)   any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed copies of any other form prescribed by Applicable Law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by Applicable Law to permit the Borrower or the Administrative Agent to determine the withholding or deduction required to be made; and

(D)   if a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by Applicable Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount, if any, to deduct and withhold from such payment. Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Administrative Agent in writing of its legal inability to do so.

(h)   On or before the date on which the Administrative Agent (including any successor or replacement Administrative Agent) becomes the Administrative Agent hereunder, it shall deliver to the Borrower two executed copies of either (a) IRS Form W-9 or (b) with respect to amounts received on its own account, IRS Form W-8ECI and with respect to amounts received on account of any Lender, IRS Form W-8IMY certifying that it is a U.S. branch that has

 

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agreed to be treated as a U.S. Person for U.S. federal tax purposes or a qualified intermediary that has agreed to assume primary withholding obligations for Chapter 3 and Chapter 4 of the Code with respect to payments received by it from the Borrower in its capacity as Administrative Agent, as applicable.

(i)   Treatment of Certain Refunds. If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 2.16 (including by the payment of additional amounts pursuant to this Section 2.16), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section 2.16 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this subsection (i) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this subsection (i), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this subsection (i) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This subsection shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.

(j)   Survival. Each party’s obligations under this Section 2.16 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of this Agreement and the repayment, satisfaction or discharge of all obligations under any Loan Document.

SECTION 2.17.   Sharing of Payments, Etc.

(a)   If any Lender shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) on account of the Advances made by it or participations in Letters of Credit acquired by it (other than pursuant to Section 2.02(c), 2.09, 2.11(c), 2.13, 2.16, 2.21 or 8.05(b)) in excess of its ratable share of payments on account of the Advances or Letters of Credit (as the case may be) obtained by all the Lenders, such Lender shall forthwith purchase from the other Lenders such participations in the Advances made by them or participations in Letters of Credit acquired by them (as the case may be) as shall be necessary to cause such purchasing Lender to share the excess payment ratably with each of them; provided, however, that if all or any portion of such excess payment is thereafter recovered from such purchasing Lender, such purchase from each Lender shall be rescinded and such Lender shall repay to the purchasing Lender the purchase price to the extent of such recovery together with an amount equal to such Lender’s ratable share (according to the proportion of (a) the amount of

 

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such Lender’s required repayment to (b) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered. The Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to this Section 2.17 may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off) with respect to such participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation.

(b)   If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.02(c) or 2.04(j), then the Administrative Agent may, in its discretion and notwithstanding any contrary provision hereof, (i) apply any amounts thereafter received by the Administrative Agent for the account of such Lender for the benefit of the Administrative Agent or any Fronting Bank to satisfy such Lender’s obligations to it under such Section until all such unsatisfied obligations are fully paid, and/or (ii) hold any such amounts in a segregated account as cash collateral for, and application to, any future funding obligations of such Lender under any such Section, in the case of each of clauses (i) and (ii) above, in any order as determined by the Administrative Agent in its discretion.

SECTION 2.18.   Noteless Agreement; Evidence of Indebtedness.

(a)   Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Advance made by such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.

(b)   The Administrative Agent shall also maintain accounts in which it will record (i) the amount of each Advance made hereunder, the Borrower thereof, the Type thereof and the Interest Period (if any) with respect thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder, and (iii) the amount of any sum received by the Administrative Agent hereunder from the Borrower and each Lender’s share thereof.

(c)   Subject to Section 8.08(c), the entries maintained in the accounts maintained pursuant to subsections (a) and (b) above shall be prima facie evidence of the existence and amounts of the obligations therein recorded; provided, however, that the failure of the Administrative Agent or any Lender to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay such obligations in accordance with their terms.

(d)   Any Lender may request that its Advances be evidenced by a Note. In such event, the Borrower shall prepare, execute and deliver to such Lender a Note payable to such Lender or its registered assigns. Thereafter, the Advances evidenced by such Note and interest thereon shall at all times (including after any assignment pursuant to Section 8.08) be represented by one or more Notes payable to the payee named therein, or to its registered assigns pursuant to Section 8.08, except to the extent that any such Lender or assignee subsequently

 

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returns any such Note for cancellation and requests that such Borrowings once again be evidenced as described in subsections (a) and (b) above.

SECTION 2.19.   Extension of Termination Date.

(a)   The Borrower may, by notice to the Administrative Agent (which shall promptly notify the Lenders) not earlier than 60 days prior to any anniversary of the Closing Date (the “Anniversary Date”) but no later than 30 days prior to such Anniversary Date (the date of delivery of any such notice being the “Borrower Extension Notice Date”), request that each Lender extend such Lender’s Termination Date for an additional one year after the Termination Date then in effect for such Lender hereunder (the “Existing Termination Date”). The Borrower may request no more than two extensions pursuant to this Section 2.19.

(b)   Each Lender, acting in its sole and individual discretion, shall, by notice to the Administrative Agent given not earlier than 30 days prior to the applicable Anniversary Date and not later than the date (the “Lender Extension Notice Date”) that is 20 days prior to the applicable Anniversary Date, advise the Administrative Agent whether or not such Lender agrees to such extension (and each Lender that determines not to so extend its Existing Termination Date (a “Nonconsenting Lender”) shall notify the Administrative Agent of such fact promptly after such determination (but in any event no later than the Lender Extension Notice Date), and any Lender that does not so advise the Administrative Agent on or before the Lender Extension Notice Date shall be deemed to be a Nonconsenting Lender. The election of any Lender to agree to such extension shall not obligate any other Lender to so agree.

(c)   The Administrative Agent shall notify the Borrower of each Lender’s determination under this Section 2.19 no later than the date 15 days prior to the applicable Anniversary Date, or, if such date is not a Business Day, on the next preceding Business Day (the “Specified Date”).

(d)   The Borrower shall have the right on or before the fifth Business Day after the Specified Date to replace each Nonconsenting Lender (i) with an existing Lender, and/or (ii) by adding as “Lenders” under this Agreement in place thereof, one or more Persons (each Lender in clauses (i) and (ii), an “Additional Commitment Lender”), in each case, with the approval of the Administrative Agent and the Fronting Banks (which approvals shall not be unreasonably withheld), each of which Additional Commitment Lenders shall have entered into an agreement in form and substance satisfactory to the Borrower and the Administrative Agent pursuant to which such Additional Commitment Lender shall, effective as of the Specified Date, undertake a Commitment (and, if any such Additional Commitment Lender is already a Lender, its Commitment shall be in addition to such Lender’s Commitment hereunder on such date); provided that the aggregate amount of the Commitments for all Additional Commitment Lenders shall be no more than the aggregate amount of the Commitments of all Nonconsenting Lenders.

(e)   If (and only if) the aggregate amount of the Commitments of the Lenders that have agreed to extend their Existing Termination Dates plus the aggregate additional Commitments of the Additional Commitment Lenders shall be more than 50% of the aggregate

 

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amount of the Commitments in effect immediately prior to the Specified Date, then, effective as of the Specified Date, the Existing Termination Date of each Lender agreeing to an extension and of each Additional Commitment Lender shall be extended to the date that is one year after the Existing Termination Date, and each Additional Commitment Lender shall thereupon become a “Lender” for all purposes of this Agreement.

(f)   Notwithstanding the foregoing, the extension of a Lender’s Existing Termination Date pursuant to this Section 2.19 shall be effective with respect to such Lender on the Specified Date but only if (i) the following statements shall be true: (A) no event has occurred and is continuing, or would result from the extension of the Existing Termination Date, that constitutes an Event of Default or an Unmatured Default and (B) the representations and warranties contained in Section 4.01 are correct in all material respects (or in the case of any such representation or warranty already qualified by materiality, true and correct in all respects) on and as of the Specified Date, before and after giving effect to such extension, as though made on and as of such date, except for those made specifically as of another date, in which case such representations and warranties shall be true as of such other date, provided that, for purposes of the representations and warranties in Sections 4.01(f) and the last sentence of 4.01(g), the Disclosure Documents shall include all the SEC filings made by FE and the Borrower prior to the applicable Borrower Extension Notice Date and (ii) on or prior to the Specified Date the Administrative Agent shall have received the following, each dated the Specified Date and in form and substance satisfactory to the Administrative Agent: (x) a certificate of an Authorized Officer of the Borrower to the effect that as of the Specified Date the statements set forth in clauses (A) and (B) above are true, (y) certified copies of the resolutions of the Board of Directors of the Borrower authorizing such extension and the performance of this Agreement on and after the Specified Date, and of all documents evidencing other necessary corporate action and Governmental Action with respect to this Agreement and such extension of the Existing Termination Date and (z) an opinion of counsel to the Borrower, as to such matters related to the foregoing as the Administrative Agent or the Lenders through the Administrative Agent may reasonably request.

(g)   Subject to subsection (d) above, the Commitment of any Nonconsenting Lender shall automatically terminate on its Existing Termination Date (without regard to any extension by any other Lender).

(h)   Each Fronting Bank may, in its sole discretion, elect not to serve in such capacity following any extension of the Termination Date; provided that, (i) the Borrower and the Administrative Agent may appoint a replacement for any such resigning Fronting Bank and (ii) the extension of the Termination Date may become effective without regard to whether such replacement is found.

SECTION 2.20.   [Reserved].

SECTION 2.21.   Defaulting Lenders.

 

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Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender:

(a)   fees shall cease to accrue on the Percentage of such Defaulting Lender in the unused portion of the Commitments pursuant to Section 2.05(a);

(b)   any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article VII or otherwise) or received by the Administrative Agent from such Defaulting Lender pursuant to Section 8.06 shall be applied at such time or times as may be determined by the Administrative Agent as follows: first, to the payment of any amounts owing by such Defaulting Lender to the Administrative Agent hereunder; second, to the payment on a pro rata basis of any amounts owing by such Defaulting Lender to any Fronting Bank hereunder; third, to cash collateralize the Fronting Banks’ Fronting Exposure with respect to such Defaulting Lender in accordance with this Section 2.21; fourth, as the Borrower may request (so long as no Unmatured Default or Event of Default exists), to the funding of any Advance in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; fifth, if so determined by the Administrative Agent and the Borrower, to be held in a deposit account and released pro rata in order to (x) satisfy such Defaulting Lender’s potential future funding obligations with respect to Advances under this Agreement and (y) cash collateralize future Fronting Exposure with respect to such Defaulting Lender with respect to future Letters of Credit issued under this Agreement, in accordance with this Section 2.21; sixth, to the payment of any amounts owing to the Lenders, or the Fronting Banks as a result of any judgment of a court of competent jurisdiction obtained by any Lender, or Fronting Banks against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement or under any other Loan Document; seventh, so long as no Unmatured Default or Event of Default exists, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement or under any other Loan Document; and eighth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Advances or Reimbursement Obligations in respect of which such Defaulting Lender has not fully funded its appropriate share, and (y) such Advances were made or the related Letters of Credit were issued at a time when the conditions set forth in Section 3.02 were satisfied or waived, such payment shall be applied solely to pay the Advances of, and Reimbursement Obligations owed to, all non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Advances of, or Reimbursement Obligations owed to, such Defaulting Lender until such time as all Advances and funded and unfunded participations in the Borrower’s obligations corresponding to such Defaulting Lender’s L/C Obligations are held by the Lenders pro rata in accordance with their respective Percentages without giving effect to clause (d) below. Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post cash collateral

 

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pursuant to this subsection (e) shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto;

(c)   the Commitment and Outstanding Credits of such Defaulting Lender shall not be included in determining whether the Majority Lenders have taken or may take any action hereunder (including any consent to any amendment, waiver or other modification pursuant to Section 8.02); provided that this clause (c) shall not apply to the vote of a Defaulting Lender in the case of an amendment, waiver or other modification requiring the consent of such Lender or each Lender affected thereby;

(d)   if any Letter of Credit or Reimbursement Obligation is outstanding at the time such Lender becomes a Defaulting Lender then:

(i)   all or any part of the L/C Obligations of such Defaulting Lender shall be reallocated among the non-Defaulting Lenders in accordance with their respective Percentages but only to the extent that such reallocation does not, as to any non-Defaulting Lender, cause such non-Defaulting Lender’s Outstanding Credits to exceed its Commitment;

(ii)   if the reallocation described in clause (i) above cannot, or can only partially, be effected, the Borrower shall within one Business Day following notice by the Administrative Agent cash collateralize for the benefit of the Fronting Banks only the Borrower’s obligations corresponding to such Defaulting Lender’s L/C Obligations (after giving effect to any partial reallocation pursuant to clause (i) above) in a manner consistent with Section 6.01 as set forth therein with respect to the Letter of Credit Cash Cover for so long as such L/C Obligations are outstanding;

(iii)   if the Borrower cash collateralizes any portion of such Defaulting Lender’s L/C Obligations pursuant to clause (ii) above, the Borrower shall not be required to pay any fees to such Defaulting Lender pursuant to Section 2.05(c) or Section 2.05(d) with respect to such Defaulting Lender’s L/C Obligations during the period such Defaulting Lender’s L/C Obligations is cash collateralized;

(iv)   if the L/C Obligations of the non-Defaulting Lenders are reallocated pursuant to clause (i) above, then the fees payable to the Lenders pursuant to Section 2.05(a), Section 2.05(c) and Section 2.05(d) shall be adjusted in accordance with such non-Defaulting Lenders’ Applicable Percentages; and

(v)   if all or any portion of such Defaulting Lender’s L/C Obligations are neither reallocated nor cash collateralized pursuant to clause (i) or (ii) above, then, without prejudice to any rights or remedies of any Fronting Bank or any other Lender hereunder, all fees payable under Section 2.05(c) and Section 2.05(d) with respect to such Defaulting Lender’s L/C Obligations shall be payable to the Fronting Banks until and to the extent that such L/C Obligations are reallocated and/or cash collateralized; and

 

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(e)   so long as such Lender is a Defaulting Lender, no Fronting Bank shall be required to issue, amend or increase any Letter of Credit, unless it is satisfied that the related exposure and the Defaulting Lender’s then outstanding L/C Obligations will be 100% covered by the Commitments of the non-Defaulting Lenders and/or cash collateral will be provided by the Borrower in accordance with Section 2.21(d), and L/C Obligations related to any newly issued or increased Letter of Credit shall be allocated among non-Defaulting Lenders in a manner consistent with Section 2.21(d)(i) (and such Defaulting Lender shall not participate therein).

If a Bankruptcy Event or a Bail-In Action with respect to a Parent of any Lender shall occur following the date hereof and for so long as such event shall continue, no Fronting Bank shall be required to issue, amend or increase any Letter of Credit, unless the Fronting Banks shall have entered into arrangements with the Borrower or such Lender, reasonably satisfactory to such Fronting Bank, as the case may be, to defease any risk to it in respect of such Lender hereunder.

In the event that each of the Administrative Agent, the Borrower and each Fronting Bank agrees that a Defaulting Lender has adequately remedied all matters that caused such Lender to be a Defaulting Lender, then the L/C Obligations of the Lenders shall be readjusted to reflect the inclusion of such Lender’s Commitment and on such date such Lender shall purchase at par such of the Advances of the other Lenders as the Administrative Agent shall determine may be necessary in order for such Lender to hold such Advances in accordance with its Percentage.

SECTION 2.22.   Mitigation Obligations; Replacement of Lenders.

(a)   Designation of a Different Lending Office.

(i)   If any Lender requests compensation from the Borrower under Section 2.13, or requires the Borrower to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.16, then such Lender shall (at the request of the Borrower) use reasonable efforts

to designate a different Applicable Lending Office for funding or booking its Advances hereunder or to assign its rights and obligations hereunder to another of its offices, branches or Affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.13 or 2.16, as the case may be, in the future, and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender.

(ii)   Any Lender that becomes aware of circumstances that would permit such Lender to notify the Administrative Agent of any illegality under Section 2.14 shall use its commercially reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to change the jurisdiction of its Applicable Lending Office if the making of such change would avoid or eliminate such illegality and would not, in the reasonable judgment of such Lender, be otherwise disadvantageous to such Lender.

 

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(iii)   The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

(b)   Replacement of Lenders. If any Lender requests compensation under Section 2.13 or delivers any notice to the Administrative Agent pursuant to Section 2.14 resulting in the suspension of obligations of the Lenders with respect to Eurodollar Rate Advances, or if the Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.16, and, in each case, such Lender has declined or is unable to designate a different Applicable Lending Office in accordance with Section 2.22(a), or if any Lender is a Defaulting Lender or a Non-Approving Lender, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 8.08(b)), all of its interests, rights (other than its existing rights to payments pursuant to Section 2.13, 2.14 or 2.16) and obligations under this Agreement and the related Loan Documents to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that:

(i)   the Borrower shall have paid to the Administrative Agent the assignment fee (if any) specified in Section 8.08(b);

(ii)   such Lender shall have received payment of an amount equal to the outstanding principal amount of its Advances, accrued interest thereon and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Section 8.05(b)) from the assignee (to the extent of such outstanding principal and accrued interest) or the Borrower (in the case of all other amounts);

(iii)   in the case of any such assignment resulting from a claim for compensation under Section 2.13 or payments required to be made pursuant to Section 2.16, such assignment will result in a reduction in such compensation or payments thereafter;

(iv)   such assignment does not conflict with Applicable Law; and

(v)   in the case of any assignment resulting from a Lender becoming a Non-Approving Lender, the applicable assignee shall have consented to the applicable amendment, waiver or consent.

A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.

SECTION 2.23.   Benchmark Replacement Setting.

Notwithstanding anything to the contrary herein or in any other Loan Document:

 

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(a)   Replacing USD LIBOR. On March 5, 2021 the Financial Conduct Authority (“FCA”), the regulatory supervisor of USD LIBOR’s administrator (“IBA”), announced in a public statement the future cessation or loss of representativeness of overnight/Spot Next, 1-week, 1-month, 2-month, 3-month, 6-month and 12- month USD LIBOR tenor settings. On the earlier of (i) the date that all Available Tenors of USD LIBOR have either permanently or indefinitely ceased to be provided by IBA or have been announced by the FCA pursuant to public statement or publication of information to be no longer representative and (ii) the Early Opt-in Effective Date, if the then-current Benchmark is USD LIBOR, the Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of any setting of such Benchmark on such day and all subsequent settings without any amendment to, or further action or consent of any other party to this Agreement or any other Loan Document; provided that, in the Administrative Agent’s sole discretion and without obligation to do so, if the Administrative Agent determines that Term SOFR has become available and has been recommended for use by the Relevant Governmental Body, is administratively feasible for the Administrative Agent and would have been identified as the Benchmark Replacement in accordance with the foregoing if it had been so available at the time that the Benchmark Replacement then in effect was so identified, and the Administrative Agent notifies the Borrower of such availability, then, from and after the beginning of the Interest Period, relevant interest payment date or payment period for interest calculated, in each case, commencing no less than thirty (30) days after the date of such notice, the Benchmark Replacement shall be the sum of: (i) Term SOFR and (ii) 0.11448% (11.448 basis points) for an Available Tenor of one-month’s duration, 0.26161% (26.161 basis points) for an Available Tenor of three-months’ duration, and 0.42826% (42.826 basis points) for an Available Tenor of six-months’ duration (provided that, if the Benchmark Replacement as determined pursuant to the foregoing would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Loan Documents). If the Benchmark Replacement is Daily Simple SOFR, all interest payments will be payable on a quarterly basis.

(b)   Replacing Future Benchmarks. Upon the occurrence of a Benchmark Transition Event, the Benchmark Replacement will replace the then-current Benchmark for all purposes hereunder and under any Loan Document in respect of any Benchmark setting at or after 5:00 p.m. (New York City time) on the fifth (5th) Business Day after the date notice of such Benchmark Replacement is provided to the Lenders without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document so long as the Administrative Agent has not received, by such time, written notice of objection to such Benchmark Replacement from Lenders comprising the Majority Lenders. At any time that the administrator of the then-current Benchmark has permanently or indefinitely ceased to provide such Benchmark or such Benchmark has been announced by the regulatory supervisor for the administrator of such Benchmark pursuant to public statement or publication of information to be no longer representative of the underlying market and economic reality that such Benchmark is intended to measure and that representativeness will not be restored, the Borrower may revoke any request for a borrowing of, conversion to or continuation of Advances to be made, converted or continued that would bear interest by reference to such Benchmark until the Borrower’s receipt of notice from the Administrative Agent that a Benchmark Replacement has replaced

 

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such Benchmark, and, failing that, the Borrower will be deemed to have converted any such request into a request for a borrowing of or conversion to Alternate Base Rate Advances. During the period referenced in the foregoing sentence, the component of Alternate Base Rate based upon the Benchmark will not be used in any determination of Alternate Base Rate.

(c)   Benchmark Replacement Conforming Changes. In connection with the implementation and administration of a Benchmark Replacement, the Administrative Agent will have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Loan Document.

(d)   Notices; Standards for Decisions and Determinations. The Administrative Agent will promptly notify the Borrower and the Lenders of (i) the implementation of any Benchmark Replacement and (ii) the effectiveness of any Benchmark Replacement Conforming Changes. Any determination, decision or election that may be made by the Administrative Agent or, if applicable, any Lender (or group of Lenders) pursuant to this Section 2.23, including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party hereto or any other Loan Document, except, in each case, as expressly required pursuant to this Section 2.23, and shall not be a basis of any claim of liability of any kind or nature by any party hereto, all such claims being hereby waived individually by each party hereto.

(e)   Unavailability of Tenor of Benchmark. At any time (including in connection with the implementation of a Benchmark Replacement), (i) if the then-current Benchmark is a term rate (including Term SOFR or USD LIBOR), then the Administrative Agent may remove any tenor of such Benchmark that is unavailable or non-representative for Benchmark (including Benchmark Replacement) settings and (ii) the Administrative Agent may reinstate any such previously removed tenor for Benchmark (including Benchmark Replacement) settings.

ARTICLE III

CONDITIONS OF LENDING AND ISSUING LETTERS OF CREDIT

SECTION 3.01.   Conditions Precedent to Initial Extension of Credit.

The obligation of each Lender to make its initial Advance to the Borrower, and the obligation of each Fronting Bank to issue its initial Letter of Credit, are subject to the conditions precedent that on or before the date of any such Extension of Credit:

(a)   The Administrative Agent shall have received the following, each dated the same date (except for the financial statements referred to in paragraph (iv)), in form and

 

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substance satisfactory to the Administrative Agent and (except for any Note) with one copy for each Fronting Bank and each Lender:

(i)   This Agreement, duly executed by each of the parties hereto, and Notes requested by any Lender pursuant to Section 2.18(d), duly completed and executed by the Borrower and payable to such Lender;

(ii)   Certified copies of the resolutions of the Board of Directors of the Borrower approving this Agreement and the other Loan Documents to which it is, or is to be, a party and of all documents evidencing any other necessary corporate action with respect to this Agreement and such Loan Documents;

(iii)   A certificate of the Secretary or an Assistant Secretary of the Borrower certifying (A) the names and true signatures of the officers of the Borrower authorized to sign each Loan Document to which the Borrower is, or is to become, a party and the other documents to be delivered hereunder and (B) that attached thereto are true and correct copies of the Organizational Documents of the Borrower, in each case as in effect on such date;

(iv)   Copies of all the Disclosure Documents (it being agreed that those Disclosure Documents publicly available on the SEC’s EDGAR Database or on FE’s website no later than the Business Day immediately preceding the date of such Extension of Credit will be deemed to have been delivered under this clause (iv));

(v)   An opinion of Jones Day, special counsel for the Borrower;

(vi)   A certificate of an Authorized Officer of the Borrower certifying the satisfaction of the conditions specified in Section 3.02(i) with respect to the Borrower; and

(vii)   Such other certifications, opinions, financial or other information, approvals and documents as the Administrative Agent, any Fronting Bank or any other Lender may reasonably request, all in form and substance satisfactory to the Administrative Agent, such Fronting Bank or such other Lender (as the case may be).

(b)   The Administrative Agent shall have received the Fee Letters, duly executed by each of the parties thereto.

(c)   The Borrower shall have paid, or caused to be paid, all of the fees payable in accordance with the Fee Letters.

(d)   Prior to or concurrently with the making of such initial Extension of Credit, all amounts outstanding under the Existing FE Credit Agreement, in each case, whether for principal, interest, fees or otherwise, shall have been paid in full, all commitments to lend thereunder shall have been terminated, and the Existing FE Credit Agreement shall have been terminated.

 

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(e)   The Administrative Agent shall have received all documentation and information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including without limitation the Patriot Act (including, for the avoidance of doubt, Beneficial Ownership Certifications), to the extent such documentation or information is requested by the Administrative Agent on behalf of the Lenders prior to the date hereof.

SECTION 3.02.   Conditions Precedent to Each Extension of Credit.

The obligation of each Lender to make an Advance to the Borrower as part of any Borrowing (including the initial Borrowing) that would increase the aggregate principal amount of Advances outstanding hereunder, and the obligation of each Fronting Bank to issue, amend, extend or renew a Letter of Credit (including the initial Letter of Credit for the account of the Borrower), in each case, as part of an Extension of Credit, shall be subject to the further conditions precedent that on the date of such Extension of Credit:

(i)   The following statements shall be true (and each of the giving of the applicable Notice of Borrowing or Letter of Credit Request and the acceptance by the Borrower of the proceeds of such Borrowing or the acceptance of a Letter of Credit by the Beneficiary thereof, as the case may be, shall constitute a representation and warranty by the Borrower that on the date of such Extension of Credit such statements are true):

(A)   The representations and warranties of the Borrower contained in Section 4.01 with respect to any Extension of Credit following the initial Extension of Credit are true and correct on and as of the date of such Extension of Credit, before and after giving effect to such Extension of Credit and to the application of the proceeds therefrom, as though made on and as of such date (other than, as to any such representation or warranty that by its terms refers to a specific date other than the date of such Extension of Credit, in which case, such representation and warranty shall be true and correct as of such specific date);

(B)   No event has occurred and is continuing, or would result from such Extension of Credit or from the application of the proceeds therefrom, that constitutes an Event of Default or an Unmatured Default with respect to the Borrower;

(C)   Immediately following such Extension of Credit, (1) the aggregate amount of Outstanding Credits shall not exceed the aggregate amount of the Commitments then in effect, (2) the Outstanding Credits of any Lender shall not exceed the amount of such Lender’s Commitment, (3) the aggregate principal amount of Advances outstanding for the Borrower shall not exceed the amounts authorized under the Borrower’s Approval and (4) if such Extension of Credit relates to a Letter of Credit,

 

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the Stated Amount thereof, when aggregated with (x) the Stated Amount of each other Letter of Credit that is outstanding or with respect to which a Letter of Credit Request has been received and (y) the outstanding Reimbursement Obligations, shall not exceed the L/C Commitment Amount; and

(D)   No event has occurred and is continuing, or would result from such Extension of Credit or from the application of the proceeds therefrom, that constitutes a Specified Event.

(ii)   The Borrower shall have delivered to the Administrative Agent a duly executed Notice of Borrowing.

(iii)   The Borrower shall have delivered to the Administrative Agent copies of such other approvals and documents as the Administrative Agent, any Fronting Bank or any other Lender (through the Administrative Agent) may reasonably request.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

SECTION 4.01.   Representations and Warranties of the Borrower.

The Borrower represents and warrants as follows:

(a)   Existence and Power. It is a corporation or limited liability company, as the case may be, duly formed, validly existing and in good standing under the laws of the jurisdiction of its formation, is duly qualified to do business as a foreign corporation or limited liability company 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 reasonably be expected to have a Material Adverse Effect with respect to the Borrower, and has all corporate or limited liability company powers and all governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted except where the failure to do so, in each case, would not reasonably be expected to have a Material Adverse Effect.

(b)   Due Authorization. The execution, delivery and performance by it of each Loan Document to which it is, 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 members, as the case may be, other than such consents and approvals as have been duly obtained, given or accomplished.

(c)   No Violation, Etc. Neither the execution, delivery or performance by it of this Agreement or any other Loan Document to which it is, or is to become, a party, nor the consummation by it of the transactions contemplated hereby or thereby, nor compliance by it with the provisions hereof or thereof, contravenes or will contravene, or results or will result in a breach of, any of the provisions of its Organizational Documents, any Applicable Law, or any

 

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indenture, mortgage, deed of trust, lease, license or any other agreement or instrument to which it or any of its Subsidiaries is party or by which its property or the property of any of its Subsidiaries 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 Subsidiaries except as provided herein, except to the extent such contravention or breach, or the creation or imposition of any such Lien, individually or in the aggregate, has not had and would not reasonably be expected to have a Material Adverse Effect with respect to the Borrower. The Borrower 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 would not reasonably be expected to have a Material Adverse Effect with respect to the Borrower.

(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 Agreement or any other Loan Document to which it is, or is to become, a party other than the Borrower’s Approval, as applicable, which has been duly issued and is in full force and effect.

(e)   Execution and Delivery. This Agreement and the other Loan Documents to which it is, or is to become, a party have been or will be (as the case may be) duly executed and delivered by it, and this Agreement is, and upon execution and delivery thereof each other Loan Document will be, 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.

(f)   Litigation. Except as disclosed in the Disclosure Documents, there is no pending or, to the Borrower’s knowledge, threatened action or proceeding (including, without limitation, any proceeding relating to or arising out of Environmental Laws) affecting the Borrower or any of its Subsidiaries before any court, governmental agency or arbitrator that would reasonably be expected to have a Material Adverse Effect with respect to the Borrower.

(g)   Financial Statements; Material Adverse Change. The consolidated balance sheet of the Borrower and its Subsidiaries, as at December 31, 2020, and the related consolidated statements of income, retained earnings and cash flows of the Borrower and its Subsidiaries, certified by PricewaterhouseCoopers LLP, independent public accountants, and the unaudited consolidated balance sheet of the Borrower and its Subsidiaries, as at June 30, 2021, and the related consolidated statements of income, retained earnings and cash flows of the Borrower and its Subsidiaries, for the six months then ended, copies of which have been furnished to each Lender and each Fronting Bank, in all cases as amended and restated to the date hereof, present fairly in all material respects the consolidated financial position of the Borrower and its Subsidiaries as at the indicated dates and the consolidated results of the operations of the Borrower and its Subsidiaries for the periods ended on the indicated dates, all in accordance with GAAP consistently applied (in the case of such statements that are unaudited,

 

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subject to year-end adjustments and the exclusion of detailed footnotes). Except as disclosed in the Disclosure Documents, there has been no change, event or occurrence since December 31, 2020 that has had a Material Adverse Effect with respect to the Borrower.

(h)   ERISA. Except as would not reasonably be expected to have a Material Adverse Effect:

(i)   No Plan is in at-risk status within the meaning of Section 430 of the Code or Section 303 of ERISA and no Multiemployer Plan is endangered or in critical status within the meaning of Section 432 of the Code or Section 305 of ERISA.

(ii)   No failure to (A) meet the minimum funding standard of Section 303 of ERISA with respect to any Plan, (B) timely make a required installment under Section 430(j) of the Code with respect to any Plan, or (C) make any required contribution to a Multiemployer Plan has occurred.

(iii)   No Termination Event has occurred or is reasonably expected to occur with respect to any Plan.

(iv)   Schedule SB (Actuarial Information) to the most recent annual report (Form 5500 Series) with respect to each Plan, copies of which have been filed with the Department of Labor and furnished (or made available) to the Lenders, (A) is complete and accurate, (B) fairly presents the funding status of such Plan, and (C) since the date of such Schedule SB there has been no change in such funding status.

(v)   Neither it nor any member of the Controlled Group has incurred or reasonably expects to incur any withdrawal liability under ERISA with respect to any Multiemployer Plan.

(vi)   No Multiemployer Plan is insolvent and no action has been taken to terminate any Multiemployer Plan under Section 4041A of ERISA.

(i)   Margin Stock. After applying the proceeds of each Extension of Credit, not more than 25% of the value of the assets of the Borrower and its Subsidiaries subject to the restrictions of Section 5.03(a) or (b) will consist of or be represented by Margin Stock. The Borrower is not engaged in the business of extending credit for the purpose of purchasing or carrying Margin Stock, and no proceeds of any Extension of Credit will be used to purchase or carry any Margin Stock or to extend credit to others for the purpose of purchasing or carrying any Margin Stock.

(j)   Investment Company. The Borrower 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.

 

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(k)   No Event of Default. No event has occurred and is continuing that constitutes an Event of Default or an Unmatured Default in each case with respect to the Borrower.

(l)   No Material Misstatements. The reports, financial statements and other written information furnished by or on behalf of the Borrower to the Administrative Agent, any Fronting Bank or any Lender pursuant to or in connection with the Loan Documents and the transactions contemplated thereby, when taken together with the Disclosure Documents, 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.

(m)   Anti-Corruption Laws and Sanctions. The Borrower has implemented and maintains in effect policies and procedures designed to ensure compliance with Anti-Corruption Laws and Sanctions in all respects by the Covered Entities and their respective directors, officers, employees and agents under the control and acting on behalf of the Covered Entities. The Covered Entities are in compliance in all material respects with (i) the Trading with the Enemy Act, as amended, and each of the regulations promulgated by OFAC (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation or executive orders relating thereto, and (ii) the Patriot Act. The Covered Entities and their respective officers and employees and, to the knowledge of the Borrower, the Covered Entities’ directors, officers, employees and agents, are in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects, except for the Noncompliance Event. None of the Covered Entities or any of their respective directors, officers or employees or, to the knowledge of the Borrower, any agent of the Covered Entities (i) is a Sanctioned Person, (ii) has assets located in Sanctioned Countries in violation of applicable Sanctions, (iii) does business in or with, or derives its operating income from investments in, or transactions with, Sanctioned Persons or (iv) does business in or with, or derives its operating income from investments in, or transactions with, Sanctioned Countries. No Borrowing, no Letter of Credit or use of proceeds thereof will violate Anti-Corruption Laws or applicable Sanctions.

(n)   Affected Financial Institutions. The Borrower is not an Affected Financial Institution.

(o)   Beneficial Ownership Certification. The information included in the most recent Beneficial Ownership Certification delivered by the Borrower to the Administrative Agent and the Lenders is true and correct in all respects.

(p)   Taxes. The Borrower and each of its Subsidiaries have filed all federal, state and other Tax returns and reports required to be filed, and have paid all federal, state and other Taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties, income or assets otherwise due and payable, except (a) Taxes that are being contested in good faith by appropriate proceedings diligently conducted and for which adequate

 

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reserves are being maintained in accordance with GAAP or (b) to the extent that the failure to do so would not reasonably be expected to have a Material Adverse Effect.

ARTICLE V

COVENANTS OF THE BORROWER

SECTION 5.01.   Affirmative Covenants of the Borrower.

Unless the Majority Lenders shall otherwise consent in writing, so long as any amount payable by the Borrower hereunder shall remain unpaid, any Letter of Credit shall remain outstanding or any Lender shall have any Commitment hereunder, the Borrower will:

(a)   Preservation of Corporate Existence, Etc. (i) Without limiting the right of the Borrower to merge with or into or consolidate with or into any other corporation or entity in accordance with the provisions of Section 5.03(c), preserve and maintain its corporate or limited liability company (as the case may be) existence under the laws of a State of the United States or the District of Columbia, (ii) qualify and remain qualified as a foreign corporation or limited liability company (as the case may be) in each jurisdiction in which such qualification is reasonably necessary in view of its business and operations or the ownership of its properties and (iii) preserve, renew and keep in full force and effect the rights, privileges and franchises necessary or desirable in the normal conduct of its business, except, in the case of clauses (ii) and (iii) above, to the extent that failure to do so would not reasonably be expected to result in a Material Adverse Effect with respect to the Borrower; provided, however, that the Borrower may change its form of organization from a corporation to a limited liability company or from a limited liability company to a corporation if the Administrative Agent is reasonably satisfied that such change shall not affect any obligations of the Borrower under the Loan Documents.

(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 reasonably be expected to result in a Material Adverse Effect with respect to the Borrower, such compliance to include, without limitation, compliance with the Patriot Act, regulations promulgated by OFAC, Environmental Laws, FERC and each “state commission” (as that term is defined under 18 C.F.R. 1.101(k)) having jurisdiction over the Borrower, 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.

(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 Borrower operates.

 

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(d)   Inspection Rights. At any reasonable time and from time to time as the Administrative Agent, any Fronting Bank or any Lender may reasonably request (upon five Business Days’ prior notice delivered to the Borrower and no more than once a year, unless an Event of Default has occurred and is continuing), permit the Administrative Agent, such Fronting Bank or such Lender 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 Borrower and any of its Subsidiaries, and to discuss the affairs, finances and accounts of the Borrower and any of its Subsidiaries with any of their respective officers or directors; provided, however, that (x) the Borrower reserves the right to restrict access to any of its Subsidiaries’ facilities in accordance with reasonably adopted procedures relating to safety and security and (y) neither Borrower nor any of its Subsidiaries shall be required to disclose to the Administrative Agent, any Fronting Bank or any Lender or any agents or representatives thereof any information that is the subject of attorney-client privilege or attorney work-product privilege properly asserted by the applicable Person to prevent the loss of such privilege in connection with such information or that is prevented from disclosure pursuant to a confidentiality agreement with third parties (provided that the Borrower agrees to use commercially reasonable efforts to obtain any required third-party consent to such disclosure, subject to customary nondisclosure restrictions applicable to the Administrative Agent, any Fronting Bank or the Lenders, as applicable). The Administrative Agent, each Fronting Bank and each Lender agree to use reasonable efforts to ensure that any information concerning the Borrower or any of its Subsidiaries obtained by the Administrative Agent, such Fronting Bank or such Lender pursuant to this subsection (d) or subsection (g) below that is not contained in a report or other document filed with the SEC, distributed by the Borrower or FE 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, such Fronting Bank’s or such Lender’s business operations be treated confidentially by the Administrative Agent, such Fronting Bank or such Lender, as the case may be, and will not be distributed or otherwise made available by the Administrative Agent, such Fronting Bank or such Lender, as the case may be, to any Person, other than the Administrative Agent’s, such Fronting Bank’s or such Lender’s employees, authorized agents or representatives (including, without limitation, attorneys and accountants).

(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 Borrower and each of its Subsidiaries in accordance with GAAP.

(f)   Maintenance of Properties. Maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, all of its properties (except such properties the failure of which to maintain or preserve would not have, individually or in the aggregate, a Material Adverse Effect with respect to the Borrower) that are used or that are useful in the conduct of its business in good working order and condition, ordinary wear and tear excepted, and in accordance with prudent industry practices applicable to the industry of the Borrower, in all material respects, and (subject to subsection (b) above) Applicable Law it being understood that this covenant relates only to the good working order and condition of such properties and shall

 

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not be construed as a covenant of the Borrower or any of its Subsidiaries not to dispose of such properties by sale, lease, transfer or otherwise.

(g)   Reporting Requirements. Furnish, or cause to be furnished, to the Administrative Agent, with sufficient copies for each Lender and each Fronting Bank, the following:

(i)   promptly after becoming aware of the occurrence of any Event of Default with respect to the Borrower continuing on the date of such statement, the statement of an Authorized Officer of the Borrower setting forth details of such Event of Default and the action that the Borrower has taken or proposes to take with respect thereto;

(ii)   as soon as available and in any event within 60 days after the close of each of the first three quarters in each fiscal year of the Borrower, consolidated balance sheets of the Borrower and its Subsidiaries as at the end of such quarter and consolidated statements of income of the Borrower 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 in all material respects the financial condition of the Borrower and its Subsidiaries as at such date and the results of operations of the Borrower 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 adjustments and the exclusion of detailed footnotes) by the chief financial officer, treasurer, assistant treasurer or controller of the Borrower as having been prepared in accordance with GAAP consistently applied (in the case of such statements that are unaudited, subject to year-end adjustments and the exclusion of detailed footnotes);

(iii)   as soon as available and in any event within 105 days after the end of each fiscal year of the Borrower, a copy of the annual report for such year for the Borrower and its Subsidiaries, containing consolidated and consolidating financial statements of the Borrower and its Subsidiaries for such year certified by PricewaterhouseCoopers LLP or other independent public accountants of recognized national standing as fairly presenting, in all material respects, the financial position of the Borrower and its Subsidiaries as at the end of such year and the results of their operations and their cash flows for the three-year period (or, if the Borrower is not then required to file reports with the SEC pursuant to Section 13 or 15(d) of the Exchange Act, the two-year period) ending as at the end of such year in conformity with GAAP;

(iv)   concurrently with the delivery of the financial statements specified in clauses (ii) and (iii) above a certificate of the chief financial officer, treasurer, assistant treasurer or controller of the Borrower (A) stating whether the Borrower has any knowledge of the occurrence and continuance at the date of such certificate of any Event of Default not theretofore reported pursuant to the provisions of clause (i) of this subsection (g), and, if so, stating the facts with respect thereto, and (B) setting forth in a

 

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true and correct manner, the calculation of the ratio contemplated by Section 5.02, as of the date of the most recent financial statements accompanying such certificate, to show the Borrower’s compliance with or the status of the financial covenant contained in Section 5.02;

(v)   promptly after the sending or filing thereof, copies of any reports that the Borrower sends to any of its securityholders, and copies of all reports on Form 10-K, Form 10-Q or Form 8-K, if any, that the Borrower or any of its Subsidiaries files with the SEC;

(vi)   as soon as possible and in any event within 20 days after the Borrower or any member of the Controlled Group knows or has reason to know that any Termination Event with respect to any Plan has occurred or is reasonably likely to occur, that would reasonably be expected to result in liability exceeding $100,000,000 to the Borrower or such member of the Controlled Group, a statement of the chief financial officer of the Borrower describing such Termination Event and the action, if any, that the Borrower or such member of the Controlled Group, as the case may be, proposes to take with respect thereto;

(vii)   promptly upon reasonable request by the Administrative Agent or any Lender, after the filing thereof with the Department of Labor, copies of each Schedule SB (Actuarial Information) to the annual report (Form 5500 Series) with respect to each Plan;

(viii)   promptly upon request and in any event within five Business Days after receipt thereof by the Borrower or any member of the Controlled Group from a Multiemployer Plan sponsor, a copy of each notice received by the Borrower or such member of the Controlled Group concerning the imposition of withdrawal liability pursuant to Section 4202 of ERISA;

(ix)   promptly and in any event within five Business Days (or one Business Day, if such change would require a prepayment under Section 2.12(b)(iv)) after Moody’s or S&P has changed any relevant Reference Rating, notice of such change;

(x)   (A) promptly upon the occurrence of a Reportable Compliance Event, notice of such occurrence, and (B) promptly after the Borrower becomes aware of any change in the information provided in a Beneficial Ownership Certification that would result in a change to the list of beneficial owners identified in parts (c) or (d) of such certification, a written notice specifying any such change; and

(xi)   such other information respecting the condition or operations, financial or otherwise, of the Borrower or any of its Subsidiaries, including, without limitation, copies of all reports and registration statements that the Borrower or any Subsidiary files with the SEC or any national securities exchange, as the Administrative Agent, any Fronting Bank or any Lender (through the Administrative

 

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Agent) may from time to time reasonably request.

The financial statements and reports described in paragraphs (ii), (iii) and (v) above will be deemed to have been delivered hereunder if publicly available on the SEC’s EDGAR Database or on FE’s website no later than the date specified for delivery of same under paragraph (ii), (iii) or (v), as applicable, above. If any financial statements or report described in paragraph (ii) or (iii) above is due on a date that is not a Business Day, then such financial statements or report shall be delivered on the next succeeding Business Day.

(h)   Maintenance of Ratings. Use commercially reasonable efforts to maintain a senior unsecured non-credit enhanced debt rating from each of S&P and Moody’s.

(i)   Compliance with Anti-Corruption Laws and Sanctions. (i) Maintain in effect and enforce, and cause the other Covered Entities to maintain in effect and enforce, policies and procedures designed to ensure compliance with Anti-Corruption Laws and applicable Sanctions in all respects by the Covered Entities and their respective directors, officers, employees and, to the extent commercially reasonable, agents under the control and acting on behalf of the Covered Entities, and (ii) comply, and cause the other Covered Entities to comply, in all material respects with Anti-Corruption Laws and Sanctions applicable to it or its property.

SECTION 5.02.   Financial Covenant.

Debt to Capitalization Ratio. Unless the Majority Lenders shall otherwise consent in writing, so long as any amount payable by the Borrower hereunder shall remain unpaid, any Letter of Credit for the account of the Borrower shall remain outstanding or any Lender shall have any Commitment to the Borrower hereunder, the Borrower will maintain a Debt to Capitalization Ratio, as of the last day of each fiscal quarter of the Borrower, commencing with the fiscal quarter ending December 31, 2021, of no more than 0.65 to 1.00 (determined as of the last day of each fiscal quarter).

SECTION 5.03.   Negative Covenants of the Borrower.

Unless the Majority Lenders shall otherwise consent in writing, so long as any amount payable by the Borrower hereunder shall remain unpaid, any Letter of Credit for the account of the Borrower shall remain outstanding or any Lender shall have any Commitment to the Borrower hereunder, the Borrower will not:

(a)   Sales, Etc. (i) Sell, lease, transfer or otherwise dispose of any shares of common stock of any Significant Subsidiary of the Borrower, whether now owned or hereafter acquired by the Borrower, or permit any Significant Subsidiary of the Borrower to do so; provided, however, the limitation in this clause (i) shall not in any way restrict, and shall not apply to, any Specified Disposition; or (ii) sell, lease, transfer or otherwise dispose of (whether in one transaction or a series of transactions) or permit any of its Subsidiaries to sell, lease, transfer

 

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or dispose of (whether in one transaction or a series of transactions) assets located in the United States (other than any assets that are purported to be conveyed in connection with a Permitted Securitization but including assets purported to be conveyed pursuant to any sale leaseback transaction) having an aggregate book value (determined as of the date of such transaction for all such transactions since the date hereof) that is greater than 20% of the book value of all of the consolidated fixed assets of the Borrower, as reported on the most recent consolidated balance sheet of the Borrower prior to the date of such sale, lease, transfer or disposition to any entity other than the Borrower or any of its wholly owned direct or indirect Subsidiaries; provided, however, that the limitation in this clause (ii) shall not in any way restrict, and shall not apply to, (A) [reserved], (B) [reserved], or (C) the sale, lease, transfer or other disposition of the Borrower’s assets to a newly-formed Person to which all or substantially all of the assets and liabilities of the Borrower or its Subsidiaries are being transferred, in the case under this clause (C), pursuant to a transaction permitted under subsection (c) below.

(b)   Liens, Etc. Create or suffer to exist, or permit any Significant Subsidiary of the Borrower 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 of the Borrower), in each case to secure or provide for the payment of Indebtedness, 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 Borrower or Significant Subsidiary is a party, (C) [reserved], (D) 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 (E) 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 Borrower 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 property acquired by the Borrower or Significant Subsidiary or on the property of any Person at the time that such Person becomes a direct or indirect Significant Subsidiary of the Borrower or Significant Subsidiary or is merged into or consolidated with the Borrower or Significant Subsidiary; provided, in each case, that such Liens were not created to secure the acquisition of such Person; (iv) Liens in existence on the date of this Agreement; (v) Liens created by any First Mortgage Indenture, so long as 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 Unmatured Default; (vi) Liens securing Attributable Securitization Obligations on the assets purported to be sold in connection with the applicable Permitted Securitization; (vii) Liens securing Nonrecourse Indebtedness; (viii) Liens on cash or cash equivalents deposited on behalf of or pledged to counterparties with respect to Permitted Obligations of the Borrower or any of its Significant Subsidiaries; (ix) Liens on cash or cash equivalents to defease Indebtedness of the Borrower or any of its Subsidiaries; (x) Liens on cash or cash equivalents constituting proceeds from a disposition of assets otherwise not prohibited under subsection (a) above, which proceeds are deposited in escrow accounts for indemnification, adjustment of purchase price or similar obligations to the purchaser of such assets; (xi) Liens securing obligations in respect of pollution control or industrial revenue bonds or nuclear fuel leases, provided that such Liens extend to only the equipment, project, nuclear fuel or other assets financed with the proceeds of such financing; (xii) Liens arising in connection with leases that shall have been or should be, in accordance with GAAP, recorded as capital leases in respect of which the Borrower or Significant Subsidiary is liable as lessee; provided, that no such Lien shall extend to or cover any assets of the Borrower or Significant Subsidiary other than the assets of the Borrower or Significant Subsidiary subject to such lease and proceeds thereof; and (xiii) Liens created for the sole purpose of refinancing, extending, renewing or replacing in whole or in part Indebtedness secured by any Lien referred to in the foregoing clauses (i) through (xii); provided, however, that the principal amount of Indebtedness (or, if greater, the aggregate lending commitment) secured thereby shall not exceed the principal amount of Indebtedness (or, if greater, the aggregate lending commitment) so secured at the time of such refinancing, extension, renewal or replacement, and that such refinancing, extension, renewal or replacement, as the case may be, shall be limited to all or a part of the property or Indebtedness that secured the Lien so extended, renewed or replaced (and any improvements on such property).

(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 have occurred and be continuing that constitutes an Event of Default, (ii) the consolidation or merger shall not materially and adversely affect the ability of the Borrower (or its successor by merger or consolidation as contemplated by clause (A) of this subsection (c)) to

 

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perform its obligations hereunder or under any other Loan Document, and (iii) in the case of any merger or consolidation to which the Borrower is a party, the Person formed by such consolidation or into which the Borrower shall be merged shall (1) assume the Borrower’s obligations under this Agreement and the other Loan Documents to which it is a party in a writing reasonably satisfactory in form and substance to the Administrative Agent and (2) be organized under the laws of a State of the United States or the District of Columbia. Without limiting the foregoing, (A) the Borrower may merge with or into or consolidate with or into a newly-formed Person into which the Borrower is being merged or consolidated (which Person will become the Borrower hereunder and a wholly-owned Subsidiary of the Borrower) and (B) the Borrower may transfer all or substantially all of its assets and liabilities to a newly-formed Person to which all or substantially all of the assets and liabilities of the Borrower is being transferred (which Person will become the Borrower hereunder and a wholly-owned Subsidiary of the Borrower), in each case of clauses (A) and (B), if (1) the surviving Person, transferee or Person otherwise specified above to become the Borrower hereunder assumes the Borrower’s obligations under this Agreement and the other Loan Documents pursuant to an instrument in form and substance reasonably satisfactory to the Administrative Agent, (2) the Reference Ratings of the surviving or resulting Borrower are not, after giving effect to such transactions, any lower than the Reference Ratings of the Borrower immediately prior to the consummation of such transactions, unless the Reference Ratings of such surviving or resulting Borrower are at least BBB- and Baa3, and (3) the parties to such transaction deliver to the

 

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Administrative Agent certified copies of all corporate or limited liability, equity holder and Governmental Authority approvals required in connection with such transactions and legal opinions of counsel to such parties relating to such transactions and the assumption agreement described in clause (1) above.

(d)   Compliance with ERISA. (i) Enter into any nonexempt “prohibited transaction” (within the meaning of Section 4975 of the Code or Section 406 of ERISA) involving any Plan that may result in any liability of the Borrower to any Person that (in the opinion of the Majority Lenders and the Fronting Banks) would reasonably be expected to have a Material Adverse Effect with respect to the Borrower or (ii) allow or suffer to exist any event or condition that results in any liability of the Borrower to the PBGC, any Plan, or any Multiemployer Plan that would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect with respect to the Borrower.

(e)   Use of Proceeds. Use the proceeds of any Borrowing or any Letter of Credit for any purpose other than (i) refinancing the Existing FE Credit Agreement and (ii) working capital and other general corporate purposes of the Borrower and its Subsidiaries (which, for the avoidance of doubt, shall include intercompany loans and advances by the Borrower to any of its Subsidiaries); provided, however, that (A) the Borrower may not use such proceeds in connection with any Hostile Acquisition and (B) the Borrower may not, directly or indirectly, use such proceeds to repay any Indebtedness other than (1) to repay any Advances or (2) to make scheduled repayments or other repayments of other Indebtedness in the ordinary course of business.

(f)   [Reserved].

(g)   Compliance with Anti-Corruption Laws and Sanctions. Request any Borrowing or any Letter of Credit, or use, or permit any of the other Covered Entities and its or their respective directors, officers, employees and agents to use, the proceeds of any Borrowing or any Letter of Credit (i) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws, (ii) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, (iii) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Country, or (iv) in any manner that would result in the violation of any Sanctions applicable to, or the imposition of any Sanctions on, any Covered Entity or, to the knowledge of the Borrower, any other party hereto.

ARTICLE VI

EVENTS OF DEFAULT

SECTION 6.01.   Events of Default.

If any of the following events shall occur and be continuing with respect to the Borrower (an “Event of Default”):

 

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(a)   (i) Any principal of any Advance or any Reimbursement Obligation shall not be paid by the Borrower when the same becomes due and payable, or (ii) any interest on any Advance or any fees or other amounts payable hereunder shall not be paid by the Borrower within three Business Days after the same becomes due and payable; or

(b)   Any representation or warranty made by the Borrower (or any of its officers) in any Loan Document or in connection with any Loan Document shall prove to have been incorrect or misleading in any material respect when made; or

(c)   (i) The Borrower shall fail to perform or observe any covenant set forth in Section 5.01(a)(i), Section 5.01(g)(i), Section 5.01(i), Section 5.02 or Section 5.03 on its part to be performed or observed, or (ii) the Borrower shall fail to perform or observe any other term, covenant or agreement (other than those covenants otherwise covered in clause (a) or (c)(i) of this Section 6.01) contained in this Agreement or any other Loan 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 Borrower by the Administrative Agent or any Lender; or

(d)   Any material provision of this Agreement or any other Loan Document shall at any time and for any reason cease to be valid and binding upon the Borrower, except pursuant to the terms thereof, or shall be declared to be null and void, or the validity or enforceability thereof shall be contested in any manner by the Borrower or any Governmental Authority, or the Borrower shall deny in any manner that it has any or further liability or obligation under this Agreement or any other Loan Document; or

(e)   The Borrower or any Significant Subsidiary of the Borrower shall fail to pay any principal of or premium or interest on any Indebtedness (other than Indebtedness of the Borrower under this Agreement) that is outstanding in a principal amount in excess of $100,000,000 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 Indebtedness; or any other event shall occur or condition shall exist under any agreement or instrument relating to any such Indebtedness 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 Indebtedness; or any such Indebtedness 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

(f)   The Borrower or any Significant Subsidiary of the Borrower 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 Borrower or any Significant Subsidiary of the Borrower 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

 

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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 Borrower or any Significant Subsidiary of the Borrower shall take any corporate action to authorize or to consent to any of the actions set forth above in this subsection (f); or

(g)   Any judgment or order for the payment of money exceeding any applicable insurance coverage by more than $100,000,000 shall be rendered by a court of final adjudication against the Borrower or any Significant Subsidiary of the Borrower 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 30 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

(h)   Any Termination Event with respect to a Plan shall have occurred or the Borrower or any member of the Controlled Group as employer under a Multiemployer Plan shall have made a complete or partial withdrawal from such Multiemployer Plan, and, 30 days after notice thereof shall have been given to the Borrower by the Administrative Agent or any Lender, such Termination Event (if correctable) shall not have been corrected, and, as applicable, (1) the actual liability in respect of such Termination Event to the Borrower would reasonably be expected to exceed $100,000,000, or (2) as a result of such complete or partial withdrawal from a Multiemployer Plan, the Borrower would reasonably be expected to incur withdrawal liability in an amount exceeding $100,000,000; or

(i)   (i) FE shall fail to own directly or indirectly 100% of the issued and outstanding shares of common stock of the Borrower (with any such failure constituting an Event of Default with respect to the Borrower), (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 SEC under the Exchange Act), directly or indirectly, of securities of the Borrower (or other securities convertible into such securities) representing 30% or more of the combined voting power of all securities of the Borrower, as applicable, entitled to vote in the election of directors; or (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 the Borrower, as applicable, unless the Persons replacing such individuals were nominated by the stockholders or the Board of Directors of the Borrower in accordance with the Borrower’s Organizational Documents (each a “Change of Control”); provided, however, that any Specified Disposition shall not constitute a Change of Control; or

(j)   (i) Any indictment shall be issued against the Borrower or any of its Affiliates arising from a purported violation of any Anti-Corruption Law, or (ii) the Borrower or any of its Affiliates shall have entered into any deferred prosecution agreement (or similar

 

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agreement) with respect to a purported violation of any Anti-Corruption Law (other than the DPA); or

(k)   The Borrower shall breach any of its obligations under the DPA, which breach results in an enforcement action including, without limitation, the filing of any charging document, by any Governmental Authority, the imposition of penalties on the Borrower or the withdrawal from, or termination of, the DPA with respect to the Borrower;

then, and in any such event, the Administrative Agent shall at the request, or may with the consent, of the Majority Lenders, (i) by notice to the defaulting Borrower, declare the obligation of each Lender to make Advances to the Borrower and the obligation of the Fronting Banks to issue Letters of Credit for the account of the Borrower, to be terminated, whereupon the same shall forthwith terminate, and (ii) by notice to the Borrower, declare the Advances made to the Borrower, an amount equal to the aggregate Stated Amount of all issued but undrawn Letters of Credit issued for the account of the Borrower, (such amount being the “Letter of Credit Cash Cover”) and all other amounts payable under this Agreement and the other Loan Documents by the Borrower to be forthwith due and payable, whereupon such Advances and all such amounts shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Borrower; provided, however, that in the event of an actual or deemed entry of an order for relief with respect to the Borrower or any Significant Subsidiary of the Borrower under the Bankruptcy Code, (A) the obligation of each Lender to make Advances to the Borrower and the obligation of the Fronting Banks to issue Letters of Credit for the account of the Borrower shall automatically be terminated and (B) all Advances made to the Borrower, the Letter of Credit Cash Cover with respect to the Borrower and all other amounts payable under this Agreement by the Borrower shall automatically become and be due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Borrower. In the event that the Borrower is required to pay the Letter of Credit Cash Cover pursuant to this Section 6.01, such payment shall be made in immediately available funds to the Administrative Agent, which shall hold such funds as collateral pursuant to arrangements reasonably satisfactory to the Administrative Agent and the Fronting Banks to secure Reimbursement Obligations in respect of Letters of Credit then outstanding, for the benefit of the Lenders and the Fronting Banks.

ARTICLE VII

THE ADMINISTRATIVE AGENT

SECTION 7.01.   Authorization and Action.

(a)   Each Lender and each Fronting Bank hereby irrevocably appoints the entity named as Administrative Agent in the heading of this Agreement and its successors and assigns to serve as the administrative agent under the Loan Documents and each Lender and each Fronting Bank authorizes the Administrative Agent to take such actions as agent on its behalf and to exercise such powers under this Agreement and the other Loan Documents as are delegated to the Administrative Agent under such agreements and to exercise such powers as are reasonably incidental thereto. Without limiting the foregoing, each Lender and each Fronting

 

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Bank hereby authorizes the Administrative Agent to execute and deliver, and to perform its obligations under, each of the Loan Documents to which the Administrative Agent is a party, and to exercise all rights, powers and remedies that the Administrative Agent may have under such Loan Documents.

(b)   As to any matters not expressly provided for herein and in the other Loan Documents (including enforcement or collection), the Administrative Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the written instructions of the Majority Lenders (or such other number or percentage of the Lenders as shall be necessary, pursuant to the terms in the Loan Documents), and, unless and until revoked in writing, such instructions shall be binding upon each Lender and each Fronting Bank; provided, however, that the Administrative Agent shall not be required to take any action that the Administrative Agent in good faith believes exposes it to liability unless the Administrative Agent receives an indemnification and is exculpated in a manner satisfactory to it from the Lenders and the Fronting Banks with respect to such action or is contrary to this Agreement or any other Loan Document or applicable law, including any action that may be in violation of the automatic stay under any requirement of law relating to bankruptcy, insolvency or reorganization or relief of debtors or that may effect a forfeiture, modification or termination of property of a Defaulting Lender in violation of any requirement of law relating to bankruptcy, insolvency or reorganization or relief of debtors; provided, further, that the Administrative Agent may seek clarification or direction from the Majority Lenders prior to the exercise of any such instructed action and may refrain from acting until such clarification or direction has been provided. Except as expressly set forth in the Loan Documents, the Administrative Agent shall not have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower, any Subsidiary or any Affiliate of any of the foregoing that is communicated to or obtained by the Person serving as Administrative Agent or any of its Affiliates in any capacity. Nothing in this Agreement shall require the Administrative Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.

(c)   In performing its functions and duties hereunder and under the other Loan Documents, the Administrative Agent is acting solely on behalf of the Lenders and the Fronting Banks (except in limited circumstances expressly provided for herein relating to the maintenance of the Register), and its duties are entirely mechanical and administrative in nature. Without limiting the generality of the foregoing:

(i)   the Administrative Agent does not assume and shall not be deemed to have assumed any obligation or duty or any other relationship as the agent, fiduciary or trustee of or for any Lender, Fronting Bank or holder of any other obligation other than as expressly set forth herein and in the other Loan Documents, regardless of whether an Unmatured Default or an Event of Default has occurred and is continuing (and it is understood and agreed that the use of the term “agent” (or any similar term) herein or in

 

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any other Loan Document with reference to the Administrative Agent is not intended to connote any fiduciary duty or other implied (or express) obligations arising under agency doctrine of any applicable law, and that such term is used as a matter of market custom and is intended to create or reflect only an administrative relationship between contracting parties); additionally, each Lender agrees that it will not assert any claim against the Administrative Agent based on an alleged breach of fiduciary duty by the Administrative Agent in connection with this Agreement and/or the transactions contemplated hereby; and

(ii)   nothing in this Agreement or any Loan Document shall require the Administrative Agent to account to any Lender for any sum or the profit element of any sum received by the Administrative Agent for its own account.

(d)   The Administrative Agent may perform any of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any of their respective duties and exercise their respective rights and powers through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities pursuant to this Agreement. The Administrative Agent shall not be responsible for the negligence or misconduct of any sub-agent except to the extent that a court of competent jurisdiction determines in a final and nonappealable judgment that the Administrative Agent acted with gross negligence or willful misconduct in the selection of such sub-agent.

(e)   None of the “Joint Lead Arrangers” shall have obligations or duties whatsoever in such capacity under this Agreement or any other Loan Document and shall incur no liability hereunder or thereunder in such capacity, but all such persons shall have the benefit of the indemnities provided for hereunder.

(f)   In case of the pendency of any proceeding with respect to the Borrower under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, the Administrative Agent (irrespective of whether the principal of any Advance or any Reimbursement Obligation shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered (but not obligated) by intervention in such proceeding or otherwise:

(i)   to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Advances, Reimbursement Obligations and all other obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders, the Fronting Banks and the Administrative Agent (including any claim under Sections 2.05, 2.08, 2.13, 2.16 and 8.05) allowed in such judicial proceeding; and

 

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(ii)   to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such proceeding is hereby authorized by each Lender and each Fronting Bank to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders or the Fronting Banks, to pay to the Administrative Agent any amount due to it, in its capacity as the Administrative Agent, under the Loan Documents (including under Section 8.05). Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender or Fronting Bank any plan of reorganization, arrangement, adjustment or composition affecting the obligations of the Borrower hereunder or the rights of any Lender or Fronting Bank or to authorize the Administrative Agent to vote in respect of the claim of any Lender or Fronting Bank in any such proceeding.

(g)   The provisions of this Article are solely for the benefit of the Administrative Agent, the Lenders and the Fronting Banks, and, except solely to the extent of the Borrower’s rights to consent pursuant to and subject to the conditions set forth in this Article, none of the Borrower or any Subsidiary, or any of their respective Affiliates, shall have any rights as a third party beneficiary under any such provisions.

SECTION 7.02.   Administrative Agent’s Reliance, Limitation of Liability, Etc.

(a)   Neither the Administrative Agent nor any of its Related Parties shall be liable for any action taken or omitted to be taken by such party, the Administrative Agent or any of its Related Parties under or in connection with this Agreement or the other Loan Documents (x) with the consent of or at the request of the Majority Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith to be necessary, under the circumstances as provided in the Loan Documents) or (y) in the absence of its own gross negligence or willful misconduct (such absence to be presumed unless otherwise determined by a court of competent jurisdiction by a final and non-appealable judgment) or responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by the Borrower or any officer thereof contained in this Agreement or any other Loan Document or in any certificate, report, statement or other document referred to or provided for in, or received by the Administrative Agent under or in connection with, this Agreement or any other Loan Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document (including, for the avoidance of doubt, in connection with the Administrative Agent’s reliance on any Electronic Signature transmitted by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page) or for any failure of the Borrower to perform its obligations hereunder or thereunder.

(b)   The Administrative Agent shall be deemed not to have knowledge of any notice of any of the events or circumstances set forth or described in Section 5.01 unless and until written notice thereof stating that it is a “notice under Section 5.01” in respect of this

 

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Agreement and identifying the specific clause under said Section is given to the Administrative Agent by the Borrower, or notice of any Unmatured Default or Event of Default unless and until written notice thereof (stating that it is a “notice of an Unmatured Default” or a “notice of an Event of Default”) is given to the Administrative Agent by the Borrower, a Lender or a Fronting Bank. Further, the Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into any statement, warranty or representation made in or in connection with any Loan Document, the contents of any certificate, report or other document delivered thereunder or in connection therewith, the performance or observance of any of the covenants, agreements or other terms or conditions set forth in any Loan Document or the occurrence of any Unmatured Default or Event of Default, the sufficiency, validity, enforceability, effectiveness or genuineness of any Loan Document or any other agreement, instrument or document, or the satisfaction of any condition set forth in Article III or elsewhere in any Loan Document, other than to confirm receipt of items (which on their face purport to be such items) expressly required to be delivered to the Administrative Agent or satisfaction of any condition that expressly refers to the matters described therein being acceptable or satisfactory to the Administrative Agent. Notwithstanding anything herein to the contrary, the Administrative Agent shall not be liable for, or be responsible for any liabilities, costs or expenses suffered by the Borrower, any Subsidiary, any Lender or any Fronting Bank as a result of, any determination of the Outstanding Credit Available, any of the component amounts thereof or any portion thereof attributable to each Lender or Fronting Bank.

(c)   Without limiting the foregoing, the Administrative Agent may treat the payee of any promissory note as its holder until such promissory note has been assigned in accordance with Section 8.08, may rely on the Register to the extent set forth in Section 8.08(c), may consult with legal counsel (including counsel to the Borrower), independent public accountants and other experts selected by it, and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts, makes no warranty or representation to any Lender or Fronting Bank and shall not be responsible to any Lender or Fronting Bank for any statements, warranties or representations made by or on behalf of the Borrower in connection with this Agreement or any other Loan Document, in determining compliance with any condition hereunder to the making of an Advance, or the issuance of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or an Fronting Bank, may presume that such condition is satisfactory to such Lender or Fronting Bank unless the Administrative Agent shall have received notice to the contrary from such Lender or Fronting Bank sufficiently in advance of the making of such Advance or the issuance of such Letter of Credit and shall be entitled to rely on, and shall incur no liability under or in respect of this Agreement or any other Loan Document by acting upon, any notice, consent, certificate or other instrument or writing (which writing may be a fax, any electronic message, Internet or intranet website posting or other distribution) or any statement made to it orally or by telephone and believed by it to be genuine and signed or sent or otherwise authenticated by the proper party or parties (whether or not such Person in fact meets the requirements set forth in the Loan Documents for being the maker thereof).

SECTION 7.03.   Posting of Communications.

 

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(a)   The Borrower agrees that the Administrative Agent may, but shall not be obligated to, make any Communications available to the Lenders and the Fronting Banks by posting the Communications on IntraLinks™, DebtDomain, SyndTrak, ClearPar or any other electronic platform chosen by the Administrative Agent to be its electronic transmission system (the “Approved Electronic Platform”).

(b)   Although the Approved Electronic Platform and its primary web portal are secured with generally-applicable security procedures and policies implemented or modified by the Administrative Agent from time to time (including, as of the Closing Date, a user ID/password authorization system) and the Approved Electronic Platform is secured through a per-deal authorization method whereby each user may access the Approved Electronic Platform only on a deal-by-deal basis, each of the Lenders, each of the Fronting Banks and the Borrower acknowledges and agrees that the distribution of material through an electronic medium is not necessarily secure, that the Administrative Agent is not responsible for approving or vetting the representatives or contacts of any Lender that are added to the Approved Electronic Platform, and that there may be confidentiality and other risks associated with such distribution. Each of the Lenders, each of the Fronting Banks and the Borrower hereby approves distribution of the Communications through the Approved Electronic Platform and understands and assumes the risks of such distribution.

(c)   THE APPROVED ELECTRONIC PLATFORM AND THE COMMUNICATIONS ARE PROVIDED “AS IS” AND “AS AVAILABLE”. THE APPLICABLE PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE COMMUNICATIONS, OR THE ADEQUACY OF THE APPROVED ELECTRONIC PLATFORM AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS OR OMISSIONS IN THE APPROVED ELECTRONIC PLATFORM AND THE COMMUNICATIONS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY THE APPLICABLE PARTIES IN CONNECTION WITH THE COMMUNICATIONS OR THE APPROVED ELECTRONIC PLATFORM. IN NO EVENT SHALL THE ADMINISTRATIVE AGENT, ANY JOINT LEAD ARRANGER OR ANY OF THEIR RESPECTIVE RELATED PARTIES (COLLECTIVELY, “APPLICABLE PARTIES”) HAVE ANY LIABILITY TO THE BORROWER, ANY LENDER, ANY FRONTING BANK OR ANY OTHER PERSON OR ENTITY FOR DAMAGES OF ANY KIND, INCLUDING DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING OUT OF THE BORROWER’S OR THE ADMINISTRATIVE AGENT’S TRANSMISSION OF COMMUNICATIONS THROUGH THE INTERNET OR THE APPROVED ELECTRONIC PLATFORM.

(d)   Each Lender and each Fronting Bank agrees that notice to it (as provided in the next sentence) specifying that Communications have been posted to the Approved Electronic Platform shall constitute effective delivery of the Communications to such Lender for purposes of the Loan Documents. Each Lender and Fronting Bank agrees to notify the

 

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Administrative Agent in writing (which could be in the form of electronic communication) from time to time of such Lender’s or Fronting Bank’s (as applicable) email address to which the foregoing notice may be sent by electronic transmission and that the foregoing notice may be sent to such email address.

(e)   Each of the Lenders, each of the Fronting Banks and the Borrower agrees that the Administrative Agent may, but (except as may be required by applicable law) shall not be obligated to, store the Communications on the Approved Electronic Platform in accordance with the Administrative Agent’s generally applicable document retention procedures and policies.

(f)   Nothing herein shall prejudice the right of the Administrative Agent, any Lender or any Fronting Bank to give any notice or other communication pursuant to any Loan Document in any other manner specified in such Loan Document.

SECTION 7.04.   The Administrative Agent Individually.

With respect to its Commitment, Advances, L/C Fronting Bank Commitments and Letters of Credit, the Person serving as the Administrative Agent shall have and may exercise the same rights and powers hereunder and is subject to the same obligations and liabilities as and to the extent set forth herein for any other Lender or Fronting Bank, as the case may be. The terms “Fronting Banks”, “Lenders”, “Majority Lenders” and any similar terms shall, unless the context clearly otherwise indicates, include the Administrative Agent in its individual capacity as a Lender, Fronting Bank or as one of the Majority Lenders, as applicable. The Person serving as the Administrative Agent and its Affiliates may accept deposits from, lend money to, own securities of, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of banking, trust or other business with, the Borrower, any Subsidiary or any Affiliate of any of the foregoing as if such Person was not acting as the Administrative Agent and without any duty to account therefor to the Lenders or the Fronting Banks.

SECTION 7.05.   Successor Administrative Agent.

(a)   The Administrative Agent may resign at any time by giving 30 days’ prior written notice thereof to the Lenders, the Fronting Banks and the Borrower, whether or not a successor Administrative Agent has been appointed. Upon any such resignation, the Majority Lenders shall have the right to appoint a successor Administrative Agent. If no successor Administrative Agent shall have been so appointed by the Majority Lenders, and shall have accepted such appointment, within 30 days after the retiring Administrative Agent’s giving of notice of resignation, then the retiring Administrative Agent may, on behalf of the Lenders and the Fronting Banks, appoint a successor Administrative Agent, which shall be a bank with an office in New York, New York or an Affiliate of any such bank. In either case, such appointment shall be subject to the prior written approval of the Borrower (which approval may not be unreasonably withheld and shall not be required while an Event of Default has occurred and is continuing). Upon the acceptance of any appointment as Administrative Agent by a successor Administrative Agent, such successor Administrative Agent shall succeed to, and

 

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become vested with, all the rights, powers, privileges and duties of the retiring Administrative Agent. Upon the acceptance of appointment as Administrative Agent by a successor Administrative Agent, the retiring Administrative Agent shall be discharged from its duties and obligations under this Agreement and the other Loan Documents. Prior to any retiring Administrative Agent’s resignation hereunder as Administrative Agent, the retiring Administrative Agent shall take such action as may be reasonably necessary to assign to the successor Administrative Agent its rights as Administrative Agent under the Loan Documents.

(b)   Notwithstanding paragraph (a) of this Section 7.05, in the event no successor Administrative Agent shall have been so appointed and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its intent to resign, the retiring Administrative Agent may give notice of the effectiveness of its resignation to the Lenders, the Fronting Banks and the Borrower, whereupon, on the date of effectiveness of such resignation stated in such notice, the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents and the Majority Lenders shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent; provided that all payments required to be made hereunder or under any other Loan Document to the Administrative Agent for the account of any Person other than the Administrative Agent shall be made directly to such Person and all notices and other communications required or contemplated to be given or made to the Administrative Agent shall directly be given or made to each Lender and each Fronting Bank. Following the effectiveness of the Administrative Agent’s resignation from its capacity as such, the provisions of this Article and Section 8.05, as well as any exculpatory, reimbursement and indemnification provisions set forth in any other Loan Document, shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Administrative Agent was acting as Administrative Agent.

SECTION 7.06.   Acknowledgements of Lenders and Fronting Banks.

(a)   Each Lender and each Fronting Bank represents and warrants that the Loan Documents set forth the terms of a commercial lending facility, it is engaged in making, acquiring or holding commercial loans and in providing other facilities set forth herein as may be applicable to such Lender or Fronting Bank, in each case in the ordinary course of business, and is making the Advances hereunder as commercial loans in the ordinary course of its business and not for the purpose of purchasing, acquiring or holding any other type of financial instrument (and each Lender and each Fronting Bank agrees not to assert a claim in contravention of the foregoing), it has, independently and without reliance upon the Administrative Agent, any “Joint Lead Arranger” or any other Lender or Fronting Bank, or any of the Related Parties of any of the foregoing, and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement as a Lender, and to make, acquire or hold Advances hereunder and it is sophisticated with respect to decisions to make, acquire and/or hold commercial loans and to provide other facilities set forth herein, as may be applicable to such Lender or such Fronting Bank, and either it, or the Person exercising discretion in making its decision to make, acquire and/or hold such commercial loans or to

 

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provide such other facilities, is experienced in making, acquiring or holding such commercial loans or providing such other facilities. Each Lender and each Fronting Bank also acknowledges that it will, independently and without reliance upon the Administrative Agent, any “Joint Lead Arranger” or any other Lender or Fronting Bank, or any of the Related Parties of any of the foregoing, and based on such documents and information (which may contain material, non-public information within the meaning of the United States securities laws concerning the Borrower and its Affiliates) as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.

(b)   Each Lender, by delivering its signature page to this Agreement on the Closing Date, or delivering its signature page to an Assignment and Assumption or any other Loan Document pursuant to which it shall become a Lender hereunder, shall be deemed to have acknowledged receipt of, and consented to and approved, each Loan Document and each other document required to be delivered to, or be approved by or satisfactory to, the Administrative Agent or the Lenders on the Closing Date or the Effective Date of such Assignment and Assumption, as applicable.

(c)   Each Lender hereby agrees that (x) if the Administrative Agent notifies such Lender that the Administrative Agent has determined in its sole discretion that any funds received by such Lender from the Administrative Agent or any of its Affiliates (whether as a payment, prepayment or repayment of principal, interest, fees or otherwise; individually and collectively, a “Payment”) were erroneously transmitted to such Lender (whether or not known to such Lender), and demands the return of such Payment (or a portion thereof), such Lender shall promptly, but in no event later than one Business Day thereafter, return to the Administrative Agent the amount of any such Payment (or portion thereof) as to which such a demand was made in same day funds, together with interest thereon in respect of each day from and including the date such Payment (or portion thereof) was received by such Lender to the date such amount is repaid to the Administrative Agent at the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect, and (y) to the extent permitted by applicable law, such Lender shall not assert, and hereby waives, as to the Administrative Agent, any claim, counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim by the Administrative Agent for the return of any Payments received, including without limitation any defense based on “discharge for value” or any similar doctrine. A notice of the Administrative Agent to any Lender under this Section 7.06(c) shall be conclusive, absent manifest error.

(ii) Each Lender hereby further agrees that if it receives a Payment from the Administrative Agent or any of its Affiliates (x) that is in a different amount than, or on a different date from, that specified in a notice of payment sent by the Administrative Agent (or any of its Affiliates) with respect to such Payment (a “Payment Notice”) or (y) that was not preceded or accompanied by a Payment Notice, it shall be on notice, in each such case, that an error has been made with respect to such Payment. Each Lender agrees that, in each such case, or if it otherwise becomes aware a Payment (or portion thereof)

 

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may have been sent in error, such Lender shall promptly notify the Administrative Agent of such occurrence and, upon demand from the Administrative Agent, it shall promptly, but in no event later than one Business Day thereafter, return to the Administrative Agent the amount of any such Payment (or portion thereof) as to which such a demand was made in same day funds, together with interest thereon in respect of each day from and including the date such Payment (or portion thereof) was received by such Lender to the date such amount is repaid to the Administrative Agent at the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect.

(iii) The Borrower hereby agrees that (x) in the event an erroneous Payment (or portion thereof) are not recovered from any Lender that has received such Payment (or portion thereof) for any reason, the Administrative Agent shall be subrogated to all the rights of such Lender with respect to such amount and (y) an erroneous Payment shall not pay, prepay, repay, discharge or otherwise satisfy any obligations owed by the Borrower.

(iv) Each party’s obligations under this Section 7.06(c) shall survive the resignation or replacement of the Administrative Agent or any transfer of rights or obligations by, or the replacement of, a Lender, the termination of the Commitments or the repayment, satisfaction or discharge of all Obligations under any Loan Document.

(v) The Borrower shall be liable to the Administrative Agent for any erroneous Payment not returned or paid to it by any Lender that receives such Payment pursuant to, and in accordance with, this Section 7.06, and agrees to indemnify and hold the Administrative Agent harmless from and against any and all liabilities and related expenses, including the fees, charges and disbursements of any kind whatsoever that may at any time (whether before or after the payment of the Advances) be imposed on, incurred by or asserted against the Administrative Agent in any way relating to or arising out of the Commitments, this Agreement, any of the other Loan Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by the Administrative Agent under or in connection with any of the foregoing.

SECTION 7.07.   Certain ERISA Matters.

(a)   Each Lender (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent and its Affiliates, and not, for the avoidance of doubt, to or for the benefit of the Borrower, that at least one of the following is and will be true:

(i)   such Lender is not using “plan assets” (within the meaning of the Plan Asset Regulations) of one or more Plans in connection with the Advances, the Letters of Credit or the Commitments,

 

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(ii)   the transaction exemption set forth in one or more PTEs, such as PTE 84-14 (a class exemption for certain transactions determined by independent qualified professional asset managers), PTE 95-60 (a class exemption for certain transactions involving insurance company general accounts), PTE 90-1 (a class exemption for certain transactions involving insurance company pooled separate accounts), PTE 91-38 (a class exemption for certain transactions involving bank collective investment funds) or PTE 96-23 (a class exemption for certain transactions determined by in-house asset managers), is applicable with respect to such Lender’s entrance into, participation in, administration of and performance of the Advances, the Letters of Credit, the Commitments and this Agreement,

(iii)   (A) such Lender is an investment fund managed by a “Qualified Professional Asset Manager” (within the meaning of Part VI of PTE 84-14), (B) such Qualified Professional Asset Manager made the investment decision on behalf of such Lender to enter into, participate in, administer and perform the Advances, the Letters of Credit, the Commitments and this Agreement, (C) the entrance into, participation in, administration of and performance of the Advances, the Letters of Credit, the Commitments and this Agreement satisfies the requirements of sub-sections (b) through (g) of Part I of PTE 84-14 and (D) to the best knowledge of such Lender, the requirements of subsection (a) of Part I of PTE 84-14 are satisfied with respect to such Lender’s entrance into, participation in, administration of and performance of the Advances, the Letters of Credit, the Commitments and this Agreement, or

(iv)   such other representation, warranty and covenant as may be agreed in writing between the Administrative Agent, in its sole discretion, and such Lender.

(b)   In addition, unless sub-clause (i) in the immediately preceding clause (a) is true with respect to a Lender or such Lender has provided another representation, warranty and covenant as provided in sub-clause (iv) in the immediately preceding clause (a), such Lender further (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent and its Affiliates, and not, for the avoidance of doubt, to or for the benefit of the Borrower, that none of the Administrative Agent, or any “Joint Lead Arranger” or any of their respective Affiliates is a fiduciary with respect to the assets of such Lender (including in connection with the reservation or exercise of any rights by the Administrative Agent under this Agreement, any Loan Document or any documents related to hereto or thereto).

(c)   The Administrative Agent, and each “Joint Lead Arranger” hereby informs the Lenders that each such Person is not undertaking to provide investment advice or to give advice in a fiduciary capacity, in connection with the transactions contemplated hereby, and that such Person has a financial interest in the transactions contemplated hereby in that such Person or an Affiliate thereof may receive interest or other payments with respect to the Advances, the Letters of Credit, the Commitments, this Agreement and any other Loan Documents may recognize a gain if it extended the Advances, the Letters of Credit or the

 

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Commitments for an amount less than the amount being paid for an interest in the Advances, the Letters of Credit or the Commitments by such Lender or may receive fees or other payments in connection with the transactions contemplated hereby, the Loan Documents or otherwise, including structuring fees, commitment fees, arrangement fees, facility fees, upfront fees, underwriting fees, ticking fees, agency fees, administrative agent or collateral agent fees, utilization fees, minimum usage fees, letter of credit fees, fronting fees, deal-away or alternate transaction fees, amendment fees, processing fees, term out premiums, banker’s acceptance fees, breakage or other early termination fees or fees similar to the foregoing.

ARTICLE VIII

MISCELLANEOUS

SECTION 8.01.   Amendments, Etc.

Subject to Section 2.21(b) and except as otherwise expressly provided in the definition of “Eurodollar Rate” set forth in Section 1.01, no amendment or waiver of any provision of this Agreement or any Note, nor consent to any departure by the Borrower therefrom, shall in any event be effective unless the same shall be in writing and signed by the Majority Lenders (and notified to the Administrative Agent) and, in the case of any such amendment, the Borrower, 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 Lenders affected thereby (other than, in the case of clause (a), (f) or (g)(ii) below, any Defaulting Lender), do any of the following: (a) waive any of the conditions specified in Section 3.01 or 3.02, (b) increase or extend the Commitments of the Lenders or subject the Lenders to any additional obligations, (c) change any provision hereof in a manner that would alter the pro rata sharing of payments or the pro rata reduction of Commitments among the Lenders, (d) reduce the principal of, or interest (or rate of interest) on, the Advances or any fees or other amounts payable hereunder, (e) postpone any date fixed for any payment of principal of, or interest on, the Advances or any fees or other amounts payable hereunder, (f) change the percentage of the Commitments or of the aggregate unpaid principal amount of the Advances, the aggregate undrawn amount of outstanding Letters of Credit or the number of Lenders, that shall be required for the Lenders or any of them to take any action hereunder, (g) waive or amend (i) this Section 8.01, (ii) the definition of “Majority Lenders”, (iii) clause (x) of Section 2.04(a) or (iv) the proviso contained in Section 8.07, (h) extend the obligation of any Lender pursuant to Section 2.04(j) to participate in any Letter of Credit to any date later than the Termination Date applicable to such Lender or (i) subordinate the obligations hereunder or under the other Loan Documents, to any other Indebtedness or Liens (including, without limitations, Indebtedness issued under this Agreement); and provided, further, that (i) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required above to take such action, affect the rights or duties of the Administrative Agent under this Agreement or Section 2.21; (ii) no amendment, waiver or consent that would adversely affect the rights of, or increase the obligations of, any Fronting Bank, or that would alter any provision hereof relating to or affecting Letters of Credit issued by such Fronting Bank or modify or waive Section 2.21, shall be effective unless agreed to in writing by such Fronting Bank or modify or waive Section 2.21; (iii) [reserved]; (iv) Section 8.08(g) may not be amended,

 

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waived or otherwise modified without the consent of each Granting Lender all or any part of whose Advances are being funded by an SPC at the time of such amendment, waiver or other modification; and (v) this Agreement may be amended and restated without the consent of any Lender, any Fronting Bank or the Administrative Agent if, upon giving effect to such amendment and restatement, such Lender, such Fronting Bank or the Administrative Agent, as the case may be, shall no longer be a party to this Agreement (as so amended and restated) or have any Commitment or other obligation hereunder (including, without limitation, any obligation to make payment on account of a Drawing) and shall have been paid in full all amounts payable hereunder to such Lender, such Fronting Bank or the Administrative Agent, as the case may be. Notwithstanding the foregoing, the Borrower and the Administrative Agent may amend this Agreement and the other Loan Documents without the consent of any Lender or any Fronting Bank to the extent necessary (a) to cure any ambiguity, omission, mistake, error, defect or inconsistency (as determined by the Administrative Agent in its reasonable discretion) or (b) to make administrative changes of a technical or immaterial nature, provided, that, in each case, (x) such amendment does not adversely affect the rights of any Lender or any Fronting Bank and (y) the Lenders and the Fronting Banks shall have received at least five (5) Business Days’ prior written notice thereof and the Administrative Agent shall not have received, within five (5) Business Days of the date of such notice to the Lenders and the Fronting Banks, a written notice from the Majority Lenders or any Fronting Bank stating that the Majority Lenders or such Fronting Bank, as the case may be, object to such amendment.

SECTION 8.02.   Notices, Etc.

Unless specifically provided otherwise in this Agreement, all notices and other communications provided for hereunder shall be in writing (including facsimile) and delivered by hand or overnight courier service, mailed or sent by facsimile, if to the Borrower, to it in care of FE at its address at 76 South Main Street, Akron, Ohio 44308, Attention: Treasurer, Facsimile: (330) 384-3772; if to any Bank, at its Domestic Lending Office specified opposite its name on Schedule I hereto; if to any other Lender, at its Domestic Lending Office specified in the Assignment and Assumption pursuant to which it became a Lender; if to the Administrative Agent, at its address at, Mizuho Bank, Ltd., Harborside Financial Center, 1800 Plaza Ten, Jersey City, New Jersey 07311, Attention: Joyce Raynor, Phone: (201) 626-9330, Email: lau_agent@mizuhogroup.com; if to any Fronting Bank identified on Schedule II hereto, at the address specified opposite its name on Schedule II hereto; if to any other Fronting Bank, at such address as shall be designated by such Fronting Bank in a written notice to the other parties; or, as to each party, at such other address as shall be designated by such party in a written notice to the other parties. Subject to the other notice requirements of this Agreement, all notices and communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt if delivered by hand or overnight courier service, mailed or sent by facsimile to such party and received during the normal business hours of such party as provided in this Section 8.02 or in accordance with the latest unrevoked direction from such party given in accordance with this Section 8.02. If such notices and communications are received after the normal business hours of such party, receipt shall be deemed to have been given upon the opening of the recipient’s next Business Day.

 

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SECTION 8.03.   Electronic Communications.

The Borrower hereby agrees that it will provide to the Administrative Agent all information, documents and other materials that it is obligated to furnish to the Administrative Agent pursuant to the Loan Documents, including, without limitation, all notices, requests, financial statements, financial and other reports, certificates and other information materials, but excluding any such communication that (i) relates to a request for a new, or a conversion of an existing, Borrowing or other Extension of Credit (including any election of an interest rate or Interest Period relating thereto), (ii) relates to the payment of any principal or other amount due under this Agreement prior to the scheduled date therefor, (iii) provides notice of any Unmatured Default or Event of Default under this Agreement or (iv) is required to be delivered to satisfy any condition precedent to the effectiveness of this Agreement and/or any Borrowing or other Extension of Credit hereunder (all such non-excluded communications being referred to herein collectively as “Borrower Communications”), by transmitting the Borrower Communications in an electronic/soft medium in a format acceptable to the Administrative Agent to lau_agent@mizuhogroup.com. In addition, the Borrower agrees to continue to provide the Borrower Communications to the Administrative Agent in the manner otherwise specified in this Agreement, but only to the extent requested by the Administrative Agent.

SECTION 8.04.   No Waiver; Remedies.

No failure on the part of any Lender, any Fronting Bank or the Administrative Agent to exercise, and no delay in exercising, any right hereunder or under any Note shall operate as a waiver thereof; nor shall any single or partial exercise of any such right 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 8.05.   Costs and Expenses; Indemnification.

(a)   The Borrower agrees to pay on demand all reasonable out-of-pocket costs and expenses incurred by the Administrative Agent and each Fronting Bank in connection with the preparation, execution, delivery, syndication administration, modification and amendment of this Agreement, any Note, any Letter of Credit and the other documents to be delivered hereunder, including, without limitation, the reasonable fees and out-of-pocket expenses of counsel for the Administrative Agent and the Fronting Banks with respect thereto and with respect to advising the Administrative Agent and the Fronting Banks as to their rights and responsibilities under this Agreement. The Borrower further agrees to pay on demand all reasonable out-of-pocket costs and expenses, if any (including, without limitation, reasonable counsel fees and expenses of counsel), incurred by the Administrative Agent, the Fronting Banks and the Lenders in connection with the enforcement (whether through negotiations, legal proceedings or otherwise) of this Agreement, any Note and the other documents to be delivered hereunder, including, without limitation, counsel fees and expenses in connection with the enforcement of rights under this Section 8.05(a). The Borrower’s obligations under this subsection (a) shall survive the repayment of all other amounts owing to the Lenders, the

 

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Fronting Banks and the Administrative Agent under this Agreement and any Note and the termination of the Commitments.

(b)   Except as otherwise expressly provided to the contrary herein, if any payment of principal of, or Conversion of, any Eurodollar Rate Advance is made other than on the last day of the Interest Period for such Advance, as a result of a payment or Conversion pursuant to Section 2.11 or 2.14 or a prepayment pursuant to Section 2.12 or acceleration of the maturity of any amounts owing hereunder pursuant to Section 6.01 or upon an assignment made upon demand of the Borrower pursuant to Section 2.22(b) or for any other reason, the Borrower shall, upon demand by any Lender (with a copy of such demand to the Administrative Agent), pay to the Administrative Agent for the account of such Lender any amounts required to compensate such Lender for any additional losses, costs or expenses that it may reasonably incur as a result of such payment or Conversion, including, without limitation, any loss, cost or expense incurred by reason of the liquidation or redeployment of deposits or other funds acquired by any Lender to fund or maintain such Advance. The Borrower’s obligations under this subsection (b) shall survive the repayment of all other amounts owing to the Lenders and the Administrative Agent under this Agreement and any Note and the termination of the Commitments.

(c)   The Borrower hereby agrees to indemnify and hold each Lender, each Fronting Bank, the Administrative Agent and their respective Related Parties (each, an “Indemnified Person”) harmless from and against any and all claims, damages, liabilities, obligations, losses, penalties, costs or expenses (including reasonable attorney’s fees and expenses, whether or not such Indemnified Person is named as a party to any proceeding or is otherwise subjected to judicial or legal process arising from any such proceeding) that any of them may incur or that may be claimed against any of them by any Person (including the Borrower) by reason of or in connection with or arising out of any investigation, litigation or proceeding related to the Commitments or the commitment of any Fronting Bank hereunder and any use or proposed use by the Borrower of the proceeds of any Extension of Credit or the existence or use of any Letter of Credit or the amounts drawn thereunder, except to the extent such claim, damage, liability, obligation, loss, penalty, cost or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Person’s gross negligence or willful misconduct. The Borrower’s obligations under this Section 8.05(c) shall survive (x) the repayment of all amounts owing to the Lenders, the Fronting Banks and the Administrative Agent under this Agreement and any Note, (y) the termination of the Commitments, the commitments of the Fronting Banks hereunder and any Letters of Credit and (z) the termination of this Agreement. If and to the extent that the obligations of the Borrower under this Section 8.05(c) are unenforceable for any reason, the Borrower agrees to make the maximum payment in satisfaction of such obligations that are not unenforceable that is permissible under Applicable Law or, if less, such amount that may be ordered by a court of competent jurisdiction.

(d)   To the extent permitted by law, the Borrower also agrees not to assert any claim against any Indemnified Person on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to actual or direct damages) in connection with, arising out of, or otherwise relating to this Agreement, any of the transactions contemplated herein or the actual or proposed use of the proceeds of the Advances.

(e)   The Borrower shall be liable for any payment to be made by the Borrower under this Section 8.05.

(f)   This Section 8.05 shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim.

SECTION 8.06.   Right of Set-off.

Upon the occurrence and during the continuance of any Event of Default each Lender and each Fronting 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, excluding, however, any payroll accounts maintained by the Borrower with such Lender or such Fronting Bank (as the case may be) if and to the extent that such Lender or

 

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such Fronting Bank (as the case may be) 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 Lender or such Fronting Bank (as the case may be) to or for the credit or the account of the Borrower against any and all of the obligations of the Borrower now or hereafter existing under this Agreement and any Note held by such Lender, whether or not such Lender or such Fronting Bank (as the case may be) shall have made any demand under this Agreement or such Note and although such obligations may be unmatured. Each Lender and each Fronting Bank agrees promptly to notify the Borrower after any such set-off and application made by such Lender or such Fronting Bank (as the case may be), provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of each Lender and each Fronting Bank under this Section 8.06 are in addition to other rights and remedies (including, without limitation, other rights of set-off) that such Lender or such Fronting Bank (as the case may be) may have.

SECTION 8.07.   Binding Effect.

This Agreement shall become effective when it shall have been executed by the Borrower and the Administrative Agent and when the Administrative Agent shall have been notified by each Bank and each Fronting Bank that such Bank or such Fronting Bank (as the case may be) has executed it and thereafter shall be binding upon and inure to the benefit of the Borrower, the Administrative Agent, each Fronting Bank and each Lender and their respective successors and permitted assigns; provided, that the Borrower shall not have the right to assign their rights or obligations hereunder or any interest herein except (x) with the prior written consent of each Lender and each Fronting Bank (and any such assignment (other than any assignment pursuant to the following clause (y)) without such consent shall be null and void ab initio) or (y) pursuant to Section 5.03(c).

SECTION 8.08.   Assignments and Participations.

 

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(a)   Successors and Assigns Generally. No Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance with the provisions of subsection (b) of this Section 8.08, (ii) by way of participation in accordance with the provisions of subsection (d) of this Section 8.08, (iii) by way of pledge or assignment of a security interest subject to the restrictions of subsection (f) of this Section 8.08, or (iv) to an SPC in accordance with the provisions of subsection (g) of this Section 8.08 (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (d) of this Section 8.08 and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b)   Assignments by Lenders. Any Lender may at any time assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Advances at the time owing to it); provided that any such assignment shall be subject to the following conditions:

(i)   Minimum Amounts.

(A)   in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment and/or the Advances at the time owing to it or contemporaneous assignments to related Approved Funds that equal at least the amount specified in subsection (b)(i)(B) of this Section 8.08 in the aggregate or in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and

(B)   in any case not described in subsection (b)(i)(A) of this Section 8.08, the aggregate amount of the Commitment (which for this purpose includes Advances outstanding thereunder) or, if the applicable Commitment is not then in effect, the principal outstanding balance of the Advances of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if the “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date) shall not be less than $5,000,000, or an integral multiple of $1,000,000 in excess thereof, unless each of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrower otherwise consent (each such consent not to be unreasonably withheld or delayed); provided that the Borrower shall be deemed to have consented to any such assignment unless they shall object thereto by giving written notice to the Administrative Agent within five Business Days after having received notice thereof.

 

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(ii)   Proportionate Amounts. Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Advance or the Commitment assigned.

(iii)   Required Consents. No consent shall be required for any assignment except to the extent required by subsection (b)(i)(B) of this Section 8.08 and, in addition:

(A)   the consent of the Borrower (such consent not to be unreasonably withheld or delayed) shall be required unless (x) an Event of Default has occurred and is continuing at the time of such assignment, or (y) such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund; provided that the Borrower shall be deemed to have consented to any such assignment unless they shall object thereto by giving written notice to the Administrative Agent within five Business Days after having received notice thereof, and provided, further, that the Borrower’s consent shall not be required during the primary syndication hereof;

(B)   the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required for assignments if such assignment is to a Person that is not a Lender, an Affiliate of such Lender or an Approved Fund with respect to such Lender; and

(C)   the consent of each Fronting Bank shall be required for all assignments, other than pursuant to subsection (e) below; provided that the consent of any Fronting Bank shall not be required if the L/C Fronting Bank Commitments of such Fronting Bank have been terminated and no Letters of Credit issued by such Fronting Bank are outstanding.

(iv)   Assignment and Assumption. The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500 provided that the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment. The assignee, if it is not a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire and the tax forms required by Section 2.16(g).

(v)   No Assignment to Certain Persons. No such assignment shall be made to (A) the Borrower or any of the Borrower’s Affiliates or Subsidiaries or (B) to any Defaulting Lender or any of its Subsidiaries, or any Person who, upon becoming a Lender hereunder, would constitute any of the foregoing Persons described in this clause (B).

 

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(vi)   No Assignment to Natural Persons. No such assignment shall be made to a natural Person (or to a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of, a natural Person).

(vii)   Certain Additional Payments. In connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the Administrative Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or subparticipations, or other compensating actions, including funding, with the consent of the Borrower and the Administrative Agent, the applicable pro rata share of Advances previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Administrative Agent, each Fronting Bank and each other Lender hereunder (and interest accrued thereon), and (y) acquire (and fund as appropriate) its full pro rata share of all Advances and participations in Letters of Credit in accordance with its Percentage. Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under Applicable Law without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.

Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c) of this Section 8.08, from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 2.13, 2.16 and 8.05 with respect to facts and circumstances occurring prior to the effective date of such assignment; provided, that except to the extent otherwise expressly agreed by the affected parties and subject to Section 8.16, no assignment by a Defaulting Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (d) of this Section 8.08.

(c)   Register. The Administrative Agent, acting solely for this purpose as an agent of the Borrower, shall maintain at its offices a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts (and stated interest) of the Advances owing to, each

 

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Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive absent manifest error, and the Borrower, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

(d)   Participations. Any Lender may at any time, without the consent of, or notice to, the Borrower, the Fronting Banks or the Administrative Agent, sell participations to any Person (other than a Person described in Section 8.08(b)(v) or (vi)) (each, a “Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Advances owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, and (iii) the Borrower, the Administrative Agent, the Fronting Banks and Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement.

Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in clauses (a) through (g) of Section 8.01 that affects such Participant. The Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.13, 2.16 and 8.05(b) (subject to the requirements and limitations therein, including the requirements under Section 2.16(g) (it being understood that the documentation required under Section 2.16(g) shall be delivered to the participating Lender)) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to subsection (b) of this Section 8.08; provided that such Participant (A) agrees to be subject to the provisions of Section 2.22 as if it were an assignee under subsection (b) of this Section 8.08 and (B) shall not be entitled to receive any greater payment under Section 2.13 or 2.16, with respect to any participation, than its participating Lender would have been entitled to receive, except to the extent (x) such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation or (y) the sale to such Participant is made with the Borrower’s prior written consent. Each Lender that sells a participation to any Participant agrees, at the Borrower’s request and expense, to use reasonable efforts to cooperate with the Borrower to effectuate the provisions of Section 2.22(b) with respect to such Participant. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 8.06 as though it were a Lender; provided that such Participant agrees to be subject to Section 2.17 as though it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Advances or other obligations under the Loan Documents (the “Participant Register”); provided that no Lender shall have any obligation to

 

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disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any Commitments, Advances, Letters of Credit or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such Commitment, Advance, Letter of Credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.

(e)   Certain Pledges. Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank or other central banking authority; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

(f)   Disclosure of Certain Information. Any Lender may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section 8.08, disclose to the assignee or participant or proposed assignee or participant, any information relating to the Borrower furnished to such Lender by or on behalf of the Borrower; provided, that prior to any such disclosure, the assignee or participant or proposed assignee or participant shall agree to preserve the confidentiality of any confidential information relating to the Borrower received by it from such Lender.

(g)   Special Purpose Funding Vehicles. Notwithstanding anything to the contrary contained herein, any Lender (a “Granting Lender”) may grant to a special purpose funding vehicle identified as such in writing from time to time by the Granting Lender to the Administrative Agent and the Borrower (an “SPC”) the option to provide all or any part of any Advance that such Granting Lender would otherwise be obligated to make pursuant to this Agreement; provided that (i) nothing herein shall constitute a commitment by any SPC to fund any Advance, and (ii) if an SPC elects not to exercise such option or otherwise fails to make all or any part of such Advance, the Granting Lender shall be obligated to make such Advance pursuant to the terms hereof or, if it fails to do so, to make such payment to the Administrative Agent as is required under Section 2.15(e). Each party hereto hereby agrees that (A) neither the grant to any SPC nor the exercise by any SPC of such option shall increase the costs or expenses or otherwise increase or change the obligations of the Borrower under this Agreement (including its obligations under Section 2.13), (B) no SPC shall be liable for any indemnity or similar payment obligation under this Agreement for which a Lender would be liable, and (C) the Granting Lender shall for all purposes, including the approval of any amendment, waiver or other modification of any provision of any Loan Document, remain the lender of record hereunder. The making of an Advance by an SPC hereunder shall utilize the Commitment of the Granting Lender to the same extent, and as if, such Advance were made by such Granting Lender. In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall

 

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survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding commercial paper or other senior debt of any SPC, it will not institute against, or join any other Person in instituting against, such SPC any bankruptcy, reorganization, arrangement, insolvency, or liquidation proceeding under the laws of the United States or any State thereof. Notwithstanding anything to the contrary contained herein, any SPC may (1) with notice to, but without prior consent of, the Borrower and the Administrative Agent and with the payment of a processing fee in the amount of $3,500 (which processing fee may be waived by the Administrative Agent in its sole discretion), assign all or any portion of its right to receive payment with respect to any Advance to the Granting Lender and (2) disclose on a confidential basis any non-public information relating to its funding of Advances to any rating agency, commercial paper dealer or provider of any surety or guarantee or credit or liquidity enhancement to such SPC.

SECTION 8.09. Governing Law.

THIS AGREEMENT AND EACH OTHER LOAN DOCUMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

SECTION 8.10. Consent to Jurisdiction; Waiver of Jury Trial.

(a)   To the fullest extent permitted by law, the Borrower hereby irrevocably (i) submits to the exclusive jurisdiction of any New York State or Federal court sitting in the Borough of Manhattan, New York City and any appellate court from any thereof in any action or proceeding arising out of or relating to this Agreement, any other Loan Document or any Letter of Credit, and (ii) agrees that all claims in respect of such action or proceeding may be heard and determined in such New York State court or in such Federal court. The Borrower hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding. The Borrower 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 by certified mail of copies of such process to the Borrower at its address specified in Section 8.02. The Borrower 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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(b)   THE BORROWER, THE ADMINISTRATIVE AGENT, EACH FRONTING BANK AND THE LENDERS HEREBY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR ANY LETTER OF CREDIT, OR ANY OTHER INSTRUMENT OR DOCUMENT DELIVERED HEREUNDER OR THEREUNDER.

 

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SECTION 8.11.   Severability.

Any provision of this Agreement that is prohibited, unenforceable or not authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition, unenforceability or non-authorization without invalidating the remaining provisions hereof or affecting the validity, enforceability or legality of such provision in any other jurisdiction.

SECTION 8.12.   Entire Agreement.

This Agreement and the Notes issued hereunder constitute the entire contract among the parties relative to the subject matter hereof. Any previous agreement among the parties with respect to the subject matter hereof is superseded by this Agreement, except (i) as expressly agreed in any such previous agreement and (ii) for the Fee Letters. Except as is expressly provided for herein, nothing in this Agreement, expressed or implied, is intended to confer upon any party other than the parties hereto any rights, remedies, obligations or liabilities under or by reason of this Agreement.

SECTION 8.13.   Execution in Counterparts; Electronic Execution.

This Agreement may be executed in any number of counterparts and by different parties hereto 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. The words “execution,” “signed,” “signature,” and words of like import in any Loan Document shall in each case be deemed to include Electronic Signatures, signatures exchanged by electronic transmission, or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act; provided that upon the request of the Administrative Agent or any Lender, any Electronic Signature shall be promptly followed by a manually executed counterpart.

SECTION 8.14.   USA PATRIOT Act Notice.

Each Lender that is subject to the Patriot Act, each Fronting Bank and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower pursuant to the requirements of the Patriot Act that it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender, such Fronting Bank or the Administrative Agent, as applicable, to identify the Borrower in accordance with the Patriot Act.

SECTION 8.15.   No Fiduciary Duty.

The Administrative Agent, each Fronting Bank, each Lender and their respective Affiliates (collectively, the “Credit Parties”), may have economic interests that conflict with

 

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those of the Borrower, their stockholders and/or their affiliates. The Borrower agrees that nothing in the Loan Documents or otherwise will be deemed to create an advisory, fiduciary or agency relationship or fiduciary or other implied duty between any Credit Party, on the one hand, and the Borrower, its stockholders or its affiliates, on the other. The Borrower acknowledges and agrees that (i) the transactions contemplated by the Loan Documents (including the exercise of rights and remedies hereunder and thereunder) are arm’s-length commercial transactions between the Credit Parties, on the one hand, and the Borrower, on the other, and (ii) in connection therewith and with the process leading thereto, (x) no Credit Party has assumed an advisory or fiduciary responsibility in favor of the Borrower, its stockholders or its affiliates with respect to the transactions contemplated hereby (or the exercise of rights or remedies with respect thereto) or the process leading thereto (irrespective of whether any Credit Party has advised, is currently advising or will advise the Borrower, its stockholders or its Affiliates on other matters) or any other obligation to the Borrower except the obligations expressly set forth in the Loan Documents and (y) each Credit Party is acting solely as principal and not as the agent or fiduciary of the Borrower, its management, stockholders, creditors or any other Person. The Borrower acknowledges and agrees that it has consulted its own legal and financial advisors to the extent it deemed appropriate and that it is responsible for making its own independent judgment with respect to such transactions and the process leading thereto. The Borrower agrees that it will not claim that any Credit Party has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to the Borrower, in connection with such transaction or the process leading thereto.

SECTION 8.16.   Acknowledgment and Consent to Bail-In of Affected Financial Institutions.

Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any of the parties hereto, each party hereto acknowledges that any liability of any Lender or Fronting Bank that is an Affected Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the Write-Down and Conversion Powers of the applicable Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:

(a)   the application of any Write-Down and Conversion Powers by the applicable Resolution Authority to any such liabilities arising hereunder which may be payable to it by any Lender or Fronting Bank that is an Affected Financial Institution; and

(b)   the effects of any Bail-in Action on any such liability, including, if applicable:

(i)   a reduction in full or in part or cancellation of any such liability;

(ii)   a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such Affected Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of

 

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any rights with respect to any such liability under this Agreement or any other Loan Document; or

(iii)   the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers of the applicable Resolution Authority.

SECTION 8.17.   Treatment of Certain Information; Confidentiality.

Each of the Administrative Agent, the Lenders and the Fronting Banks agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates, its auditors and its Related Parties, including, without limitation, their respective accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent required or requested by any regulatory authority purporting to have jurisdiction over such Person or its Related Parties (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by Applicable Laws or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section 8.17, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights and obligations under this Agreement or (ii) any actual or prospective party (or its Related Parties) to any swap, derivative or other transaction under which payments are to be made by reference to the Borrower and its obligations, this Agreement or payments hereunder, (g) on a confidential basis to (i) any rating agency in connection with rating the Borrower or its Subsidiaries or the credit facilities provided hereunder or (ii) the CUSIP Service Bureau or any similar agency in connection with the issuance and monitoring of CUSIP numbers or other market identifiers with respect to the credit facilities provided hereunder, (h) with the consent of the Borrower or (i) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section 8.17 or (y) becomes available to the Administrative Agent, any Lender, any Fronting Bank or any of their respective Affiliates on a non-confidential basis from a source other than the Borrower; in the event of any required disclosure by the Administrative Agent, any Lender or any Fronting Bank under clause (c) above, the Administrative Agent, such Lender or such Fronting Bank, as applicable, agrees to use reasonable efforts to inform the Borrower as promptly as practicable to the extent legally permitted to do so. In addition, the Administrative Agent, the Lenders and the Fronting Banks may disclose the existence of this Agreement and information about this Agreement to market data collectors and similar service providers to the lending industry, such information to consist of deal terms and other information customarily found in Gold Sheets and similar industry publications.

For purposes of this Section 8.17, “Information” means all information received from the Borrower or any of its Subsidiaries relating to the Borrower or

 

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any Subsidiary of the Borrower or any of their respective businesses, other than any such information that is available to the Administrative Agent, any Lender or any Fronting Bank on a non-confidential basis prior to disclosure by the Borrower or such Subsidiary, provided that, in the case of information received from the Borrower or any Subsidiary of the Borrower after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section 8.17 shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

EACH LENDER ACKNOWLEDGES THAT INFORMATION (AS DEFINED IN THE IMMEDIATELY PRECEDING PARAGRAPH) FURNISHED TO IT BY THE BORROWER OR THE ADMINISTRATIVE AGENT PURSUANT TO, OR IN THE COURSE OF ADMINISTERING, THIS AGREEMENT (INCLUDING, WITHOUT LIMITATION, REQUESTS FOR WAIVERS AND AMENDMENTS) MAY INCLUDE MATERIAL NON-PUBLIC INFORMATION CONCERNING THE BORROWER AND ITS AFFILIATES OR THEIR RESPECTIVE SECURITIES, AND CONFIRMS THAT IT HAS DEVELOPED COMPLIANCE PROCEDURES REGARDING THE USE OF MATERIAL NON-PUBLIC INFORMATION AND THAT IT WILL HANDLE SUCH MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH THOSE PROCEDURES AND APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS.

[Signatures to Follow]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.

 

JERSEY CENTRAL POWER & LIGHT COMPANY
By  

/s/ Weizhong Wang

  Name: Weizhong Wang
  Title: Treasurer

 

[Signature Page to New Jersey Utility Credit Agreement]


MIZUHO BANK, LTD., as Administrative Agent, as a Bank and as a Fronting Bank
By  

/s/ Edward Sacks

  Name: Edward Sacks
  Title: Authorized Signatory

 

[Signature Page to New Jersey Utility Credit Agreement]


JPMORGAN CHASE BANK, N.A., as a Bank
By  

/s/ Nancy R. Barwig

  Name: Nancy R. Barwig
  Title: Executive Director

 

[Signature Page to New Jersey Utility Credit Agreement]


PNC BANK, NATIONAL ASSOCIATION, as a Bank
By  

/s/ Ryan Rockwood

  Name: Ryan Rockwood
  Title: Vice President

 

[Signature Page to New Jersey Utility Credit Agreement]


BARCLAYS BANK PLC, as a Bank and as a Fronting Bank
By  

/s/ Sydney G. Dennis

  Name: Sydney G. Dennis
  Title: Director

 

[Signature Page to New Jersey Utility Credit Agreement]


BANK OF AMERICA, N.A., as a Bank and as a Fronting Bank
By  

/s/ Holli Balzer

  Name: Holli Balzer
  Title: Vice President

 

[Signature Page to New Jersey Utility Credit Agreement]


CITIBANK, N.A., as a Bank
By  

/s/ Richard Rivera

  Name: Richard Rivera
  Title: Vice President

 

[Signature Page to New Jersey Utility Credit Agreement]


MORGAN STANLEY BANK, N.A., as a Bank
By  

/s/ Michael King

  Name: Michael King
  Title: Authorized Signatory

 

[Signature Page to New Jersey Utility Credit Agreement]


MUFG BANK, LTD., as a Bank
By  

/s/ Jeffrey Fesenmaier

  Name: Jeffrey Fesenmaier
  Title: Managing Director

 

[Signature Page to New Jersey Utility Credit Agreement]


THE BANK OF NOVA SCOTIA, as a Bank
By  

/s/ Frank Sandler

  Name: Frank Sandler
  Title: Managing Director

 

[Signature Page to New Jersey Utility Credit Agreement]


Royal Bank of Canada, as a Bank
By  

/s/ Frank Lambrinos

  Name: Frank Lambrinos
  Title: Authorized Signatory

 

[Signature Page to New Jersey Utility Credit Agreement]


Canadian Imperial Bank of Commerce, New York Branch, as a Bank
By  

/s/ Anju Abraham

  Name: Anju Abraham
  Title: Executive Director

 

[Signature Page to New Jersey Utility Credit Agreement]


CREDIT ACRIGOLE CORPORATE AND INVESTMENT BANK, as a Bank
By  

/s/ Dixon Shultz

  Name: Dixon Shultz
  Title: Managing Director
By  

/s/ Nimisha Srivastav

  Name: Nimisha Srivastav
  Title: Director

 

[Signature Page to New Jersey Utility Credit Agreement]


KEYBANK NATIONAL ASSOCIATION, as a Bank
By  

/s/ Renee M. Bonnell

  Name: Renee M. Bonnell
  Title: Senior Vice President

 

[Signature Page to New Jersey Utility Credit Agreement]


SUMITOMO MITSUI BANKING CORPORATION, as a Bank
By  

/s/ Rosa Pritsch

  Name: Rosa Pritsch
  Title: Director

 

[Signature Page to New Jersey Utility Credit Agreement]


TD Bank, N.A., as a Bank
By  

/s/ Steve Levi

  Name: Steve Levi
  Title: Senior Vice President

 

[Signature Page to New Jersey Utility Credit Agreement]


Truist Bank, as a Bank
By  

/s/ Andrew Johnson

  Name: Andrew Johnson
  Title: Managing Director

 

[Signature Page to New Jersey Utility Credit Agreement]


U.S. Bank National Association, as a Bank
By  

/s/ Joe Horrigan

  Name: Joe Horrigan
  Title: Managing Director

 

[Signature Page to New Jersey Utility Credit Agreement]


CITIZENS BANK, NATIONAL ASSOCIATION, as a Bank
By  

/s/ Stephen A. Maenhout

  Name: Stephen A. Maenhout
  Title: Senior Vice President

 

[Signature Page to New Jersey Utility Credit Agreement]


Fifth Third Bank, National Association, as a Bank
By  

/s/ Larry Hayes

  Name: Larry Hayes
  Title: Director

 

[Signature Page to New Jersey Utility Credit Agreement]


THE BANK OF NEW YORK MELLON, as a Bank
By  

/s/ Tak Cheng

  Name: Tak Cheng
  Title: Vice President

 

[Signature Page to New Jersey Utility Credit Agreement]


HUNTINGTON NATIONAL BANK, as a Bank
By  

/s/ Brian H. Gallagher

  Name: Brian H. Gallagher
  Title: Senior Vice President

 

[Signature Page to New Jersey Utility Credit Agreement]


CoBank, ACB, as a Bank
By  

/s/ Josh Batchelder

  Name: Josh Batchelder
  Title: Managing Director

 

[Signature Page to New Jersey Utility Credit Agreement]


First National Bank of Pennsylvania, as a Bank
By  

/s/ Robert E. Heuler

  Name: Robert E. Heuler
  Title: Vice President

 

[Signature Page to New Jersey Utility Credit Agreement]


SCHEDULE I

List of Commitments and Lending Offices

 

Lender

   Commitment
Amount
    

Domestic Lending Office

  

Eurodollar

Lending Office

JPMorgan Chase Bank, N.A.    $ 24,459,131.88     

GR. FLR., 1ST- 6TH FLR., PLATINA BLOCK-3,

KODBISANHAL, FLR. 04

Bengaluru, IN-KA, 560103, India

 

Contact: Vithal Giri

Phone: (+91-80) 67905186 ext. 75186

Email: vithal.giri@jpmorgan.com

   Same as Domestic Lending Office
Mizuho Bank, Ltd.    $ 24,459,131.87     

1271 Avenue of the Americas

New York, NY 10020

 

Contact: Joseph Chan

Email: Joseph.chan@mizuhogroup.com

   Same as Domestic Lending Office
PNC Bank, National Association    $ 24,459,131.88     

300 Fifth Avenue

Pittsburgh, PA 15222

 

Contact: Montreal Phillips, Loan Support Analyst

Phone: (440) 546-9431

Email: Montreal.Phillips@pnc.com

   Same as Domestic Lending Office
Barclays Bank PLC    $ 24,459,131.88     

745 Seventh Avenue, 8th Floor

New York, NY 10019

 

Contact: Oksana Shtogrin

Phone: (212) 526 3441

Email: Oksana.shtogrin@barclays.com

   Same as Domestic Lending Office

 

I-1


Bank of America, N.A.    $ 24,459,131.88     

Bank of America Tower – Charlotte

NC1-030-24-02

620 S Tryon St

Charlotte, NC 2825

 

Contact: Holli Balzer

Phone: (704) 302-7836

Email: holli.deyerle@bofa.com

   Same as Domestic Lending Office
Citibank, N.A.    $ 24,459,131.88     

388 Greenwich St.

New York, NY 10013

 

Contact: Ashwani Khubani

Phone: (212) 816-3690

Email: ashwani.khubani@citi.com

   Same as Domestic Lending Office
Morgan Stanley Bank, N.A.    $ 24,459,131.88     

1300 Thames Street Wharf, 4th Floor

Baltimore, MD 21231

 

Contact: Morgan Stanley Loan Servicing

Phone: (443) 627-6648

Email: msloanservicing@morganstanley.com

   Same as Domestic Lending Office
MUFG Bank, Ltd.    $ 24,459,131.88     

1251 Avenue of the Americas

New York, NY 10020-1104

 

Contact: Nadia Sleiman

Phone: (212) 782-6974

Email: CCD-docunit@us.mufg.jp

   Same as Domestic Lending Office
The Bank of Nova Scotia    $ 24,459,131.88     

250 Vesey Street, 23rd floor

New York, NY 10281

 

Contact: Sandy Dewar

Phone: (917) 439-2391

Email: sandy.dewar@scotiabank.com

   Same as Domestic Lending Office

 

I-2


Royal Bank of Canada    $ 24,459,131.88     

3 World Financial Center

200 Vesey St

New York, NY 10281

 

Contact: Frank Lambrinos

Phone: (212)858-7374

Email: frank.lambrinos@rbccm.com

   Same as Domestic Lending Office
Canadian Imperial Bank of Commerce, New York Branch    $ 19,363,479.41     

300 Madison Ave

New York, NY 10017

 

Contact: Anju Abraham

Phone: (212) 856-3769

Email: Anju.Abraham@cibc.com

   Same as Domestic Lending Office
Credit Agricole Corporate and Investment Bank    $ 23,170,731.71     

1100 Louisiana St. Ste 4750

Houston, TX 77002

 

Contact: Dixon Schultz

Phone: (713) 890-8607

Email: dixon.schultz@ca-cib.com

   Same as Domestic Lending Office
KeyBank National Association    $ 19,363,479.41     

127 Public Square

Cleveland, OH 44114

 

Contact: Renee Bonnell

Phone: (216) 689-7729

Email: renee.bonnell@key.com

KAS_servicing@keybank.com

   Same as Domestic Lending Office
Sumitomo Mitsui Banking Corporation    $ 19,363,479.41     

277 Park Avenue

New York, NY 10172

 

Contact: Emily Estevez

Phone: (212) 224-4177

Email: eestevez@smbc-Lf.com

   Same as Domestic Lending Office

 

I-3


TD Bank, N.A.    $ 19,363,479.41     

222 Bay Street, 15th Floor

Toronto, ON M5K 1A2

 

Contact: Diana Macecevic

Phone: (416) 350-9135

Email: TDBNANotices@tdsecurities.com

   Same as Domestic Lending Office
Truist Bank    $ 19,363,479.41     

3333 Peachtree Road NE

3rd Floor

Atlanta, GA 30326

 

Contact: Jackie Johnson

Email: TeammateA.gaccs.rightfax@suntrust.com

   Same as Domestic Lending Office
U.S. Bank National Association    $ 19,363,479.41     

400 City Center

Oshkosh, WI 54901

 

Contact: CLS Syndication Services

Phone: 920-237-7601

Email: CLSSyndicationServicesteam@usbank.com

   Same as Domestic Lending Office
Citizens Bank, National Association    $ 14,267,826.93     

71 S. Wacker Drive, 29th Floor

Chicago, IL 60606

 

Contact: Stephen Maenhout

Phone: (312) 777-3454

Email: stephen.a.maenhout@citizensbank.com

   Same as Domestic Lending Office
Fifth Third Bank, National Association    $ 14,267,826.93     

38 Fountain Square Plaza

Cincinnati, OH 45263

 

Contact: Larry Hayes

Phone: (713) 470-9248

Email: Lawrence.Hayes@53.com

   Same as Domestic Lending Office

 

I-4


The Bank of New York Mellon    $ 14,267,826.93     

240 Greenwich Street

New York, NY 10286

 

Contact: Steve Murphy

Phone: (315) 765-4317

Email: Cbla2@bnymellon.com or

CBLA6@bnymellon.com

   Same as Domestic Lending Office
Huntington National Bank    $ 14,267,826.93     

41 South High St.

HCO520

Columbus, OH 43287

 

Contact: Debbie Cabungcal

Phone: (614) 480-1283

Email: Debbie.cabungcal@huntington.com

   Same as Domestic Lending Office
CoBank, ACB    $ 51,851,851.85     

6340 S. Fiddlers Green Circle

Greenwood Village, CO 80111

Attn: Loan Administration

 

Contact: Beth Johnson

Phone: (303) 740-4347

Email: loanadminnotices@cobank.com

loanadmin@cobank.com

   Same as Domestic Lending Office
First National Bank of Pennsylvania    $ 7,133,913.47     

12 Federal Street

One Northshore Ctr., Suite 500

Pittsburgh PA 15212

 

Contact: Robert E Heuler

Phone: (412) 359-2612

Email: HeulerR@fnb-corp.com

   Same as Domestic Lending Office

TOTAL

   $ 500,000,000.00        

 

I-5


SCHEDULE II

List of L/C Fronting Bank Commitments

 

Fronting Bank

  

Fronting Bank Address

  

L/C Fronting Bank

Commitment

Mizuho Bank, Ltd.   

1271 Avenue of the Americas

New York, NY 10020

Attention: Joseph Chan

Email: Joseph.chan@mizuhogroup.com

   $15,000,000
Barclays Bank PLC   

745 Seventh Avenue, 8th Floor

New York, NY 10019

 

Attention: Nnamdi Otudoh

Phone: 212 526 8527

Email: xrabdmlcsupport@barclays.com

   $15,000,000
Bank of America, N.A.   

1 Fleet Way

Scranton, PA 18507

Attention: Scranton Standby

   $5,000,000
JPMorgan Chase Bank, N.A.   

Global Trade Services

10420 Highland Manor Drive

Floor 4, Tampa, FL 33610-9128

Attention: Letter of Credit Department

Email: James.Alonzo@jpmchase.com

   Solely with respect to the Existing Letters of Credit set forth on Schedule III

 

II-1


SCHEDULE III

Existing Letters of Credit

 

Borrower

   Fronting Bank      Outstanding
Stated Amount
     Date of Issuance      Maturity Date      Letter of Credit No.  

Jersey Central Power & Light Company

     JPMorgan Chase Bank, N.A.      $ 28,350.00        06/10/13        06/03/22        TFTS-227453  

Jersey Central Power & Light Company

     JPMorgan Chase Bank, N.A.      $ 94,680.00        06/12/14        06/06/22        TFTS-912022  

Jersey Central Power & Light Company

     JPMorgan Chase Bank, N.A.      $ 87,960.00        06/12/14        06/06/22        TFTS-912020  

Jersey Central Power & Light Company

     JPMorgan Chase Bank, N.A.      $ 55,000.00        02/03/15        02/02/22        TFTS-911552  

Jersey Central Power & Light Company

     JPMorgan Chase Bank, N.A.      $ 84,940.00        04/01/16        03/31/22        TFTS-984549  

Jersey Central Power & Light Company

     JPMorgan Chase Bank, N.A.      $ 251,779.71        03/08/17        03/31/22        TFTS-916340  

Jersey Central Power & Light Company

     JPMorgan Chase Bank, N.A.      $ 64,650.00        04/10/17        04/30/22        TFTS-705794  

Jersey Central Power & Light Company

     JPMorgan Chase Bank, N.A.      $ 58,650.00        09/01/17        09/01/22        TFTS-777609  

Jersey Central Power & Light Company

     JPMorgan Chase Bank, N.A.      $ 46,500.00        12/15/20        12/01/21        NUSCGS035845  

 

III-1


SCHEDULE IV

Disclosure Documents

None.

 

IV-1


SCHEDULE V

Approvals

 

1.

The order of the FERC, Docket No. ES19-62-000, dated December 20, 2019, that authorizes JCP&L to obtain Extensions of Credit until December 19, 2021, as amended, extended, supplemented, replaced or renewed from time to time (169 FERC ¶ 62,113)

 

V-1


EXHIBIT A

Form of Assignment and Assumption

ASSIGNMENT AND ASSUMPTION

This Assignment and Assumption (this “Assignment and Assumption”) is dated as of the Effective Date set forth below and is entered into by and between [the][each]1 Assignor identified in item 1 below ([the][each, an] “Assignor”) and [the][each]2 Assignee identified in item 2 below ([the][each, an] “Assignee”). [It is understood and agreed that the rights and obligations of [the Assignors][the Assignees]3 hereunder are several and not joint.]4 Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), receipt of a copy of which is hereby acknowledged by [the][each] Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.

For an agreed consideration, [the][each] Assignor hereby irrevocably sells and assigns to [the Assignee][the respective Assignees], and [the][each] Assignee hereby irrevocably purchases and assumes from [the Assignor][the respective Assignors], subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of [the Assignor’s][the respective Assignors’] rights and obligations in [its capacity as a Lender][their respective capacities as Lenders] under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of [the Assignor][the respective Assignors] under the respective facilities identified below (including without limitation any letters of credit and guarantees included in such facilities), and (ii) to the extent permitted to be assigned under Applicable Law, all claims, suits, causes of action and any other right of [the Assignor (in its capacity as a Lender)][the respective Assignors (in their respective capacities as Lenders)] against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned by [the][any] Assignor to [the][any] Assignee pursuant to clauses (i) and (ii) above being referred to herein collectively

 

1 

For bracketed language here and elsewhere in this form relating to the Assignor(s), if the assignment is from a single Assignor, choose the first bracketed language. If the assignment is from multiple Assignors, choose the second bracketed language.

2 

For bracketed language here and elsewhere in this form relating to the Assignee(s), if the assignment is to a single Assignee, choose the first bracketed language. If the assignment is to multiple Assignees, choose the second bracketed language.

3 

Select as appropriate.

4 

Include bracketed language if there are either multiple Assignors or multiple Assignees.

 

A-1


as [the][an] “Assigned Interest”). Each such sale and assignment is without recourse to [the][any] Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by [the][any] Assignor.

 

1.

Assignor[s]:                  

                 

[Assignor [is] [is not] a Defaulting Lender]

 

2.

Assignee[s]:                  

                 

[for each Assignee, indicate [Affiliate][Approved Fund] of [identify Lender]

 

3.

Borrower: Jersey Central Power & Light Company

 

4.

Administrative Agent: Mizuho Bank, Ltd., as the administrative agent under the Credit Agreement

 

5.   Credit Agreement:   The $500,000,000 Credit Agreement, dated as of October 18, 2021, among Jersey Central Power & Light Company, as Borrower, the Lenders parties thereto, Mizuho Bank, Ltd., as Administrative Agent, and the fronting banks party thereto

 

6.

Assigned Interest[s]:

 

Assignor[s]5

   Assignee[s]6      Aggregate Amount of
Commitment/Advances
for all Lenders7
     Amount of
Commitment/
Advances
Assigned8
     Percentage
Assigned of
Commitment/
Advances8
     CUSIP
Number
 
              $        $          %           
              $        $          %           
              $        $          %           

 

[7.

Trade Date:         ]9

 

 

5 

List each Assignor, as appropriate.

6 

List each Assignee, as appropriate.

7 

Amount to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and the Effective Date.

8 

Set forth, to at least 9 decimals, as a percentage of the Commitment/Advances of all Lenders thereunder.

9 

To be completed if the Assignor(s) and the Assignee(s) intend that the minimum assignment amount is to be determined as of the Trade Date.

 

A-2


Effective Date:     , 20   [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

The terms set forth in this Assignment and Assumption are hereby agreed to:

 

ASSIGNOR[S]10
[NAME OF ASSIGNOR]
By  

 

Name:  
Title:  
[NAME OF ASSIGNOR]
By  

 

Name:  
Title:  
ASSIGNEE[S]11
[NAME OF ASSIGNEE]
By:  

 

Name:  
Title:  
[NAME OF ASSIGNEE]
By:  

 

Name:  
Title:  

[Consented to and]12 Accepted:

MIZUHO BANK, LTD., as

 Administrative Agent

 

10 

Add additional signature blocks as needed. Include both Fund/Pension Plan and manager making the trade (if applicable).

13 

To be added only if the consent of the Borrower is required by the terms of the Credit Agreement.

11 

Add additional signature blocks as needed. Include both Fund/Pension Plan and manager making the trade (if applicable).

12 

To be added only if the consent of the Administrative Agent is required by the terms of the Credit Agreement.

 

A-3


By:  

 

  Name:
  Title:

Consented to:

 

[LIST ALL FRONTING BANKS], as a Fronting Bank

 

By:  

 

  Name:
  Title:

[JERSEY CENTRAL POWER & LIGHT COMPANY]13

 

By:  

 

  Name:
  Title:

 

 

A-4


ANNEX 1

$500,000,000 Credit Agreement, dated as of October 18, 2021, among Jersey Central Power & Light Company, as Borrower, the Lenders parties thereto, Mizuho Bank, Ltd., as Administrative Agent, and the fronting banks party thereto

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

1.   Representations and Warranties.

1.1   Assignor[s]. [The][Each] Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of [the][the relevant] Assigned Interest, (ii) [the][such] Assigned Interest is free and clear of any lien, encumbrance or other adverse claim, (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and (iv) it is [not] a Defaulting Lender; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document, or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.

1.2.   Assignee[s]. [The][Each] Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it meets all the requirements to be an assignee under Section 8.08(b)(iii), (v) and (vi) of the Credit Agreement (subject to such consents, if any, as may be required under Section 8.08(b)(iii) of the Credit Agreement), (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of [the][the relevant] Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it is sophisticated with respect to decisions to acquire assets of the type represented by the Assigned Interest and either it, or the Person exercising discretion in making its decision to acquire the Assigned Interest, is experienced in acquiring assets of such type, (v) it has received a copy of the Credit Agreement, and has received or has been accorded the opportunity to receive copies of the most recent financial statements delivered pursuant to Section 5.01(g) thereof, as applicable, and such other documents and information as it deems appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase [the][such] Assigned Interest, (vi) it has, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into

 

A-5


this Assignment and Assumption and to purchase [the][such] Assigned Interest, and (vii) if it is not a U.S. Person, attached to the Assignment and Assumption is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement (including pursuant to Section 2.16(g) of the Credit Agreement), duly completed and executed by [the][such] Assignee; (b) appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers under the Loan Documents as are delegated to the Administrative Agent by the terms thereof, together with such powers as are reasonably incidental thereto; and (c) agrees that (i) it will, independently and without reliance on the Administrative Agent, [the][any] Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.

2.   Payments. From and after the Effective Date, the Administrative Agent shall make all payments in respect of [the][each] Assigned Interest (including payments of principal, interest, fees and other amounts) to [the][the relevant] Assignor for amounts which have accrued to but excluding the Effective Date and to [the][the relevant] Assignee for amounts which have accrued from and after the Effective Date. Notwithstanding the foregoing, the Administrative Agent shall make all payments of interest, fees or other amounts paid or payable in kind from and after the Effective Date to [the][the relevant] Assignee.

3.   General Provisions. This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Assumption by facsimile shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption. This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of New York.

 

A-6


EXHIBIT B

Form of Note

PROMISSORY NOTE

 

U.S.$[     ]        , 20

FOR VALUE RECEIVED, the undersigned, JERSEY CENTRAL POWER & LIGHT COMPANY, a New Jersey corporation (the “Borrower”), HEREBY PROMISES TO PAY to [     ] (the “Lender”) for the account of its Applicable Lending Office (such term and other capitalized terms herein being used as defined in the Credit Agreement referred to below), or its registered assigns, the principal sum of U.S.$[     ] or, if less, the aggregate principal amount of the Advances made by the Lender to the Borrower pursuant to the Credit Agreement outstanding on the Termination Date, payable on the Termination Date.

The Borrower promises to pay interest on the unpaid principal amount of each Advance from the date of such Advance until such principal amount is paid in full, at such interest rates, and payable at such times, as are specified in the Credit Agreement.

Both principal and interest are payable in lawful money of the United States of America to Mizuho Bank, Ltd., as Administrative Agent, at [INSERT PAYMENT ADDRESS], in same day funds. Each Advance made by the Lender to the Borrower pursuant to the Credit Agreement, and all payments made on account of principal thereof, shall be recorded by the Lender and, prior to any transfer hereof, endorsed on the grid attached hereto which is part of this Promissory Note.

This Promissory Note is one of the Notes referred to in, and is entitled to the benefits of, the Credit Agreement, dated as of October 18, 2021 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among the Borrower, the banks named therein and the other Lenders party thereto from time to time, Mizuho Bank, Ltd., as Administrative Agent for the Lenders thereunder, and the fronting banks party thereto from time to time. The Credit Agreement, among other things, (i) provides for the making of Advances by the Lender to the Borrower from time to time in an aggregate amount not to exceed at any time outstanding the Dollar amount first above mentioned, the indebtedness of the Borrower resulting from each such Advance being evidenced by this Promissory Note, and (ii) contains provisions for acceleration of the maturity hereof upon the happening of certain stated events and also for prepayments on account of principal hereof prior to the maturity hereof upon the terms and conditions therein specified.

The Borrower hereby waives presentment, demand, protest and notice of any kind. No failure to exercise, and no delay in exercising, any rights hereunder on the part of the holder hereof shall operate as a waiver of such rights.

THIS PROMISSORY NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

B-1


JERSEY CENTRAL POWER & LIGHT COMPANY
By  

 

  Name:
  Title:

 

B-2


EXHIBIT C

Form of Notice of Borrowing

Mizuho Bank, Ltd., as Administrative Agent

for the Lenders party to the Credit Agreement

referred to below

      , 20__            

Ladies and Gentlemen:

The undersigned refers to the Credit Agreement, dated as of October 18, 2021 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”, the terms defined therein being used herein as therein defined), among the undersigned, the banks named therein and the other Lenders party thereto from time to time, Mizuho Bank, Ltd., as Administrative Agent for the Lenders thereunder, and the fronting banks party thereto from time to time, and hereby gives you notice, irrevocably, pursuant to Section 2.02 of the Credit Agreement that the undersigned hereby requests [a] Borrowing[s] under the Credit Agreement, and in that connection sets forth below the information relating to such Borrowing[s] (the “Proposed Borrowing[s]”) as required by Section 2.02(a) of the Credit Agreement:

(i)   The Business Day of the Proposed Borrowing[s] is       ,   .

(ii)   The Type of Advance to be made in connection with the [First] Proposed Borrowing is [an Alternate Base Rate Advance] [a Eurodollar Rate Advance]. The aggregate amount of such Proposed Borrowing is $       . [The Interest Period for each Eurodollar Rate Advance made as part of such Proposed Borrowing is    [month[s]].]

[(iii)   The Type of Advance to be made in connection with the [Second] Proposed Borrowing is [an Alternate Base Rate Advance] [a Eurodollar Rate Advance]. The aggregate amount of such Proposed Borrowing is $      . [The Interest Period for each Eurodollar Rate Advance made as part of such Proposed Borrowing is    [month[s]].]

[(iii)][(iv)]   The Borrower requesting the Proposed Borrowing[s] is        .

The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the Proposed Borrowing[s]:

 

C-1


(A)   the representations and warranties of the Borrower contained in Section 4.01 of the Credit Agreement are correct, before and after giving effect to the Proposed Borrowing[s] and to the application of the proceeds therefrom, as though made on and as of such date (other than, as to any such representation or warranty that by its terms refers to a specific date other than the date of the Proposed Borrowing[s], in which case, such representation and warranty is true and correct as of such specific date);

(B)   no event has occurred and is continuing, or would result from such Proposed Borrowing[s] or from the application of the proceeds therefrom, that constitutes an Event of Default or an Unmatured Default with respect to the Borrower; and

(C)   immediately following such Proposed Borrowing[s], (1) the aggregate amount of Outstanding Credits shall not exceed the aggregate amount of the Commitments then in effect and (2) the Outstanding Credits of any Lender shall not exceed the amount of such Lender’s Commitment.

Please transfer or credit the funds to the following account:

Bank:             

Address:            

ABA #:             

Account #:             

Beneficiary:           

[remainder of page intentionally left blank]

 

C-2


Very truly yours,
JERSEY CENTRAL POWER & LIGHT COMPANY
By  

 

  Name:
  Title:

 

C-3


EXHIBIT D

Form of Letter of Credit Request

    , 20         

Mizuho Bank, Ltd., as Administrative Agent

[INSERT ADMINISTRATIVE AGENT’S

ADDRESS]

Attn:           

[        , as Fronting Bank

[ADDRESS]]

Ladies and Gentlemen:

The undersigned, JERSEY CENTRAL POWER & LIGHT COMPANY, a New Jersey corporation (the “Borrower”), refers to that certain Credit Agreement, dated as of October 18, 2021 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among the Borrower, the banks named therein and the other Lenders party thereto from time to time, Mizuho Bank, Ltd., as Administrative Agent for the Lenders thereunder, and the fronting banks party thereto from time to time. Capitalized terms used herein, and not otherwise defined herein, shall have their respective defined meanings as set forth in the Credit Agreement.

Pursuant to Section 2.04(d) of the Credit Agreement, the Borrower irrevocably requests that the Fronting Bank to which this Letter of Credit Request is addressed issue a Letter of Credit on the following terms:

 

  1.

Date of Issuance:

 

  2.

Expiration Date:

 

  3.

Stated Amount:

 

  4.

Beneficiary:

 

  5.

Account Party:

and the terms set forth in the attached application for said Letter of Credit.

The Borrower hereby further certifies that (i) as of the date hereof, (ii) as of the Date of Issuance and (iii) after the issuance of the Letter of Credit requested hereby:

(A)   the representations and warranties of the Borrower contained in Section 4.01 of the Credit Agreement are true and correct on and as of the date hereof, before and after giving

 

D-1


effect to the issuance of such Letter of Credit and to the application of the proceeds therefrom, as though made on and as of such date (other than, as to any such representation or warranty that by its terms refers to a specific date other than the date of the issuance of such Letter of Credit, in which case, such representation and warranty is true and correct as of such specified date);

(B)   no event has occurred and is continuing, or would result from the issuance of the Letter of Credit requested hereby or from the application of the proceeds therefrom, that constitutes an Event of Default or an Unmatured Default with respect to the Borrower; and

(C)   immediately following the issuance of such Letter of Credit, (1) the aggregate amount of Outstanding Credits shall not exceed the aggregate amount of the Commitments then in effect, (2) the Outstanding Credits of any Lender shall not exceed the amount of such Lender’s Commitment, (3) the Stated Amount thereof, when aggregated with (x) the Stated Amount of each other Letter of Credit that is outstanding or with respect to which a Letter of Credit Request has been received and (y) the outstanding Reimbursement Obligations, shall not exceed the L/C Commitment Amount, and (4) the aggregate Stated Amount of all outstanding Letters of Credit issued by the Fronting Bank to which this Letter of Credit Request is addressed will not exceed $[     ]**.

If notice of the request for the above referenced Letter of Credit has been given by the Borrower previously by telephone, then this notice shall be considered a written confirmation of such telephone notice as required by Section 2.04(d) of the Credit Agreement.

[remainder of page intentionally left blank]

 

**

Insert applicable Fronting Bank’s L/C Fronting Bank Commitment.

 

D-2


Very truly yours,
JERSEY CENTRAL POWER & LIGHT COMPANY
By  

 

  Name:
  Title:

 

D-3


EXHIBIT E-1

Form of U.S. Tax Compliance Certificate

(For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)

Reference is hereby made to the $500,000,000 Credit Agreement, dated as of October 18, 2021 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among Jersey Central Power & Light Company (the “Borrower”), the Lenders named therein and party thereto from time to time, Mizuho Bank, Ltd., as Administrative Agent, and the Fronting Banks named therein and party thereto from time to time.

Pursuant to the provisions of Section 2.16 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the Advance(s) (as well as any Note(s) evidencing such Advance(s)) in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code and (iv) it is not a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished the Administrative Agent and the Borrower with a certificate of its non-U.S. Person status on IRS Form W-8BEN or IRS Form W-8BEN-E. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrower and the Administrative Agent, and (2) the undersigned shall have at all times furnished the Borrower and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

 

[NAME OF LENDER]
By:  

 

Name:  
Title:  

Date:       , 20[ ]

 

E-1-1


EXHIBIT E-2

Form of U.S. Tax Compliance Certificate

(For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)

Reference is hereby made to the $500,000,000 Credit Agreement, dated as of October 18, 2021 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among Jersey Central Power & Light Company (the “Borrower”), the Lenders named therein and party thereto from time to time, Mizuho Bank, Ltd., as Administrative Agent, and the Fronting Banks named therein and party thereto from time to time.

Pursuant to the provisions of Section 2.16 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the participation in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code, and (iv) it is not a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished its participating Lender with a certificate of its non-U.S. Person status on IRS Form W-8BEN or IRS Form W-8BEN-E. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender in writing, and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

 

[NAME OF PARTICIPANT]
By:  

 

Name:  
Title:  

Date:        , 20[ ]

 

E-2-1


EXHIBIT E-3

Form of U.S. Tax Compliance Certificate

(For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)

Reference is hereby made to the $500,000,000 Credit Agreement, dated as of October 18, 2021 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among Jersey Central Power & Light Company (the “Borrower”), the Lenders named therein and party thereto from time to time, Mizuho Bank, Ltd., as Administrative Agent, and the Fronting Banks named therein and party thereto from time to time.

Pursuant to the provisions of Section 2.16 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the participation in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such participation, (iii) with respect such participation, neither the undersigned nor any of its direct or indirect partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct or indirect partners/members is a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code and (v) none of its direct or indirect partners/members is a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished its participating Lender with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

 

[NAME OF PARTICPANT]
By:  

 

Name:  
Title:  

Date:        , 20[ ]

 

E-3-1


EXHIBIT E-4

Form of U.S. Tax Compliance Certificate

(For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)

Reference is hereby made to the $500,000,000 Credit Agreement, dated as of October 18, 2021 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among Jersey Central Power & Light Company (the “Borrower”), the Lenders named therein and party thereto from time to time, Mizuho Bank, Ltd., as Administrative Agent, and the Fronting Banks named therein and party thereto from time to time.

Pursuant to the provisions of Section 2.16 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the Advance(s) (as well as any Note(s) evidencing such Advance(s)) in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such Advance(s) (as well as any Note(s) evidencing such Advance(s)), (iii) with respect to each extension of credit pursuant to the Credit Agreement or any other Loan Document, neither the undersigned nor any of its direct or indirect partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct or indirect partners/members is a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code and (v) none of its direct or indirect partners/members is a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished the Administrative Agent and the Borrower with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN or an IRS Form W-8BEN-E, as applicable, from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrower and the Administrative Agent, and (2) the undersigned shall have at all times furnished the Borrower and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

 

[NAME OF LENDER]

 

E-4-1


By:  

 

Name:  
Title:  

Date:        , 20[ ]

 

E-4-2

Exhibit 10.2

EXECUTION VERSION

 

 

 

AMENDMENT NO. 1

TO CREDIT AGREEMENT

dated as of April 27, 2023

among

JERSEY CENTRAL POWER & LIGHT COMPANY,

as Borrower,

THE LENDERS NAMED HEREIN,

as Lenders,

MIZUHO BANK, LTD.,

as Administrative Agent,

and

THE FRONTING BANKS NAMED HEREIN,

as Fronting Banks

 

 

 

 

JPMORGAN CHASE BANK, N.A.

PNC CAPITAL MARKETS LLC

MUFG BANK, LTD.

BARCLAYS BANK PLC

BofA SECURITIES, INC.

  

MIZUHO BANK, LTD.

CITIBANK, N.A.

MORGAN STANLEY SENIOR FUNDING, INC.

THE BANK OF NOVA SCOTIA

RBC CAPITAL MARKETS1

as Joint Lead Arrangers

 

 

1 

RBC Capital Markets is a brand name for the capital markets business of Royal Bank of Canada and its affiliates.


AMENDMENT NO. 1 TO CREDIT AGREEMENT

This AMENDMENT NO. 1, dated as of April 27, 2023 (this “Amendment”), to the Existing Credit Agreement referred to below, is entered into by and among Jersey Central Power & Light Company (“JCP&L” or the “Borrower”), each of the Lenders party hereto, Mizuho Bank, Ltd., as Administrative Agent for the Lenders, and each of the Fronting Banks party hereto.

PRELIMINARY STATEMENTS

1.   The Borrower, the Lenders, the Administrative Agent and the Fronting Banks are parties to that certain Credit Agreement, dated as of October 18, 2021 (as amended prior to the date hereof, the “Existing Credit Agreement”; the Existing Credit Agreement, as amended by this Amendment, the “Credit Agreement”). Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to such terms in the Credit Agreement.

2.   The Borrower desires to amend the Existing Credit Agreement as set forth herein, and the Lenders, the Administrative Agent and the Fronting Banks have agreed to such amendments on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

SECTION 1. Amendments to Existing Credit Agreement. The Existing Credit Agreement is, effective as of the date hereof and subject to the satisfaction or waiver of the conditions precedent set forth in Section 3 hereof, hereby amended to delete the stricken text (indicated textually in the same manner as the following examples: stricken text and stricken text) and to add the double-underlined text (indicated textually in the same manner as the following examples: double-underlined text and double-underlined text) as set forth on the pages attached hereto as Annex A.

SECTION 2. Existing LIBOR Advances. Notwithstanding anything to the contrary in this Amendment or the Credit Agreement, (i) each Eurodollar Rate Advance (as defined in the Existing Credit Agreement) outstanding immediately prior to the Amendment Effective Date (each, an “Existing LIBOR Advance”) shall continue to accrue interest based on the Eurodollar Rate (as defined in the Existing Credit Agreement) applicable to such Existing LIBOR Advance until the last day of the Interest Period (as defined in the Existing Credit Agreement) applicable to such Existing LIBOR Advance in effect immediately prior to the Amendment Effective Date (such last day, with respect to any Existing LIBOR Advance, a “LIBOR Termination Date”), and thereafter shall be a Term Benchmark Advance or an Alternate Base Rate Advance as determined in accordance with the Credit Agreement and (ii) the terms of the Existing Credit Agreement in respect of the calculation, payment and administration of each Existing LIBOR Advance shall remain in effect from and after the date hereof until the LIBOR Termination Date applicable to such Existing LIBOR Advance solely for purposes of making, and the administration of, fee and interest payments on such Existing LIBOR Advance.

SECTION 3. Conditions to Effectiveness. This Amendment shall become effective as of the date first above written (the “Amendment Effective Date”) when, and only when, the following conditions have been satisfied (or waived by the Administrative Agent and the Lenders party hereto in their sole discretion):


(a)   The Administrative Agent shall have received, in immediately available funds, to the extent invoiced prior to the Amendment Effective Date, reimbursement or payment of all reasonable out-of-pocket costs and expenses of the Administrative Agent (including, but not limited to, the reasonable fees and expenses of counsel (including, but not limited to, one local counsel and any specialist counsel in each relevant jurisdiction) to the Administrative Agent) required to be reimbursed or paid by the Borrower hereunder or under any other Loan Document.

(b)   The Administrative Agent shall have received the following documents, each document being dated the date of receipt thereof by the Administrative Agent (which date shall be the same for all such documents, except as otherwise specified below), in form and substance satisfactory to the Administrative Agent:

(i)   either (A) counterparts of this Amendment duly executed by the Borrower, the Lenders, the Administrative Agent, and the Fronting Banks or (B) written evidence satisfactory to the Administrative Agent that such parties have signed counterparts of this Amendment;

(ii)   certified copies of (A) the resolutions of the Board of Directors of the Borrower approving this Amendment and the Credit Agreement, and (B) all documents evidencing any other necessary corporate action with respect to this Amendment and the Credit Agreement;

(iii)   a certificate of the Secretary or an Assistant Secretary of the Borrower certifying (A) the names and true signatures of the officers of the Borrower authorized to sign this Amendment and the other documents to be delivered hereunder, (B) that attached thereto are true and correct copies of the Organizational Documents of the Borrower, in each case as in effect on such date, and (C) that true and correct copies of all governmental and regulatory authorizations and approvals (including the Borrower’s Approval) required for the due execution, delivery and performance by the Borrower of this Amendment and the Credit Agreement have previously been delivered to the Administrative Agent and remain in full force and effect on such date; and

(iv)   a certificate of an Authorized Officer of the Borrower (the statements in which shall be true) certifying that, both before and after giving effect to this Amendment, (A) no event has occurred and is continuing that constitutes an Event of Default or an Unmatured Default with respect to the Borrower and (B) all representations and warranties of the Borrower contained in the Credit Agreement and each other Loan Document to which the Borrower is a party are true and correct in all material respects (or in the case of any representation or warranty already qualified by materiality, true and correct in all respects) on and as of the Amendment Effective Date, as though made on and as of such date (other than any such representation or warranty that by its terms refers to a specific date, in which case such representation and warranty shall be true and correct as of such specific date).

(c)   The Administrative Agent shall have received all documentation and information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including, without limitation, the Patriot Act and the Beneficial Ownership Regulation, to the extent such documentation or information is requested by the Administrative Agent on behalf of any Lender prior to the Amendment Effective Date.

 

- 2 -


SECTION 4. Representations and Warranties. The Borrower represents and warrants as follows:

(a)   Due Authorization. The execution, delivery and performance by it of this Amendment and each other Loan Document being executed and delivered in connection with this Amendment to which the Borrower is 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 members, as the case may be, other than such consents and approvals as have been duly obtained, given or accomplished.

(b)   No Violation, Etc. Neither the execution, delivery or performance by it of this Amendment, any other Loan Document being executed and delivered in connection with this Amendment to which it is a party, nor the consummation by it of the transactions contemplated hereby or thereby, nor compliance by it with the provisions hereof or thereof, nor the performance by it of the Credit Agreement, contravenes or will contravene, or results or will result in a breach of, any of the provisions of its Organizational Documents, any Applicable Law, or any indenture, mortgage, deed of trust, lease, license or any other agreement or instrument to which it or any of its Subsidiaries is party or by which its property or the property of any of its Subsidiaries 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 Subsidiaries, except to the extent such contravention or breach, or the creation or imposition of any such Lien, individually or in the aggregate, has not had and would not reasonably be expected to have a Material Adverse Effect with respect to the Borrower.

(c)   Governmental Actions. No Governmental Action is or will be required in connection with (i) the execution, delivery or performance by it of, or the consummation by it of the transactions contemplated by, this Amendment or any other Loan Document being executed and delivered in connection with this Amendment to which it is, or is to become, a party other than the Borrower’s Approval, as applicable, which has been duly issued and is in full force and effect, or (ii) the performance by it of the Credit Agreement.

(d)   Execution and Delivery. This Amendment and the other Loan Documents being executed and delivered in connection with this Amendment to which it is, or is to become, a party have been or will be (as the case may be) duly executed and delivered by it, and each of this Amendment and the Credit Agreement is, and upon execution and delivery thereof each such other Loan Document will be, the legal, valid and binding obligation of it enforceable against it in accordance with its terms, subject, however, solely with respect to this Amendment, the Credit Agreement and such other Loan Document, 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.

(e)   No Material Misstatements. The reports, financial statements and other written information furnished by or on behalf of the Borrower to the Administrative Agent, any Fronting Bank or any Lender pursuant to or in connection with this Amendment and the transactions contemplated hereby, when taken together with the Disclosure Documents, do not contain, when taken as a whole, any untrue statement of a material fact and do 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 made, not misleading in any material respect.

(f)   Litigation. There are no actions, suits or proceedings by or before any arbitrator or Governmental Authority pending against or, to the knowledge of the Borrower, threatened against the Borrower or any of its Subsidiaries that involve this Amendment, the Credit Agreement or any other Loan Document.

 

- 3 -


(g)   No Default. No Unmatured Default or Event of Default has occurred and is continuing or would occur as a result of (i) the execution, delivery or performance by the Borrower of this Amendment or any other Loan Document being executed and delivered in connection with this Amendment to which it is, or is to become, a party or (ii) the performance by the Borrower of the Credit Agreement.

(h)   Anti-Corruption Laws. No proceeds of any Borrowing have been used in violation of any Anti-Corruption Law.

SECTION 5. Reference to and Effect on the Credit Agreement and the Other Loan Documents.

(a)   Except as expressly amended hereby, all of the representations, warranties, terms, covenants and conditions of the Credit Agreement and the other Loan Documents shall remain in full force and effect in accordance with their respective terms and are hereby in all respects ratified and confirmed. The amendments set forth herein shall be limited precisely as provided for herein and shall not be deemed to be a waiver of, amendment of, consent to departure from or modification of any term or provision of the Loan Documents or any other document or instrument referred to therein or of any transaction or further or future action on the part of the Borrower requiring the consent of the Administrative Agent, the Fronting Banks or the Lenders except to the extent specifically provided for herein. The Administrative Agent and the Lenders have not and shall not be deemed to have waived any of their respective rights and remedies against the Borrower for any existing or future Unmatured Default or Event of Default. The Administrative Agent, the Fronting Banks and the Lenders reserve the right to insist on strict compliance with the terms of the Credit Agreement and the other Loan Documents, and the Borrower expressly acknowledges such reservation of rights. Any future additional amendment of any provision of the Credit Agreement or any other Loan Document shall be effective only if set forth in a writing separate and distinct from this Amendment and executed by the appropriate parties in accordance with the terms thereof.

(b)   Upon the effectiveness of this Amendment: (i) each reference in the Existing Credit Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the Existing Credit Agreement shall mean and be a reference to the Credit Agreement; and (ii) each reference in any other Loan Document to “the Credit Agreement”, “thereunder”, “thereof” or words of like import referring to the Existing Credit Agreement shall mean and be a reference to the Credit Agreement. This Amendment shall constitute a “Loan Document” for all purposes under the Credit Agreement and the other Loan Documents.

(c)   The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of the Lenders, the Administrative Agent or the Fronting Banks under the Existing Credit Agreement or any other Loan Document, nor constitute a waiver of any provision of the Existing Credit Agreement or any other Loan Document.

SECTION 6. Costs and Expenses. The Borrower agrees to pay on demand all reasonable out-of-pocket costs and expenses incurred by the Administrative Agent, each Fronting Bank and each Lender in connection with the preparation, execution, delivery, syndication and administration of this Amendment and the other documents to be delivered hereunder, including, without limitation, the reasonable fees and out-of-pocket expenses of counsel (including, but not limited to, one local counsel and any specialist counsel in each relevant jurisdiction) for the Administrative Agent, the Fronting Banks and the Lenders with respect thereto and with respect to advising the Administrative Agent, the Fronting Banks and each Lender as to their rights and responsibilities under this Amendment. The Borrower further agrees to pay on demand all reasonable out-of-pocket costs and expenses, if any (including,

 

- 4 -


without limitation, reasonable fees and expenses of counsel), incurred by the Administrative Agent, the Fronting Banks and the Lenders in connection with the enforcement (whether through negotiations, legal proceedings or otherwise) of this Amendment, the Credit Agreement and the other documents to be delivered hereunder, including, without limitation, counsel fees and expenses in connection with the enforcement of rights under this Section. The Borrower acknowledges and agrees that, pursuant to Section 8.05(a) of the Credit Agreement, it is required to pay, among other costs and expenses set forth therein, the reasonable fees and expenses of counsel for the Administrative Agent (including, but not limited to, any local counsel and any specialist counsel for the Administrative Agent), in accordance with the terms thereof.

SECTION 7. Counterparts. This Amendment may be executed in any number of counterparts (and by different parties hereto in separate counterparts), each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same instrument. Delivery of an executed signature page to this Amendment by facsimile or other electronic transmission (including, without limitation, by Adobe portable document format file (also known as a “PDF” file)) shall be as effective as delivery of a manually signed counterpart of this Amendment. The words “execution,” “executed,” “signed,” “signature,” “delivery,” and words of like import in or relating to this Amendment or any document to be signed in connection with this Amendment and the transactions contemplated hereby shall be deemed to include electronic signatures, deliveries or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act; provided, that nothing herein shall require the Administrative Agent to accept electronic signatures in any form or format without its prior written consent; provided, further, that, without limiting the foregoing, upon the request of the Administrative Agent, any electronic signature shall be promptly followed by such manually executed counterpart.

SECTION 8. Governing Law. This Amendment shall be governed by, and construed in accordance with, the laws of the State of New York.

SECTION 9. Miscellaneous. This Amendment shall be subject to the provisions of Sections 8.05, 8.10, 8.11 and 8.12 of the Credit Agreement, each of which is incorporated by reference herein, mutatis mutandis.

SECTION 10. Release. In consideration of, among other things, the Administrative Agent’s, the Fronting Banks’ and the Lenders’ execution and delivery of this Amendment, the Borrower, on behalf of itself and its agents, representatives, officers, directors, advisors, employees, subsidiaries, affiliates, successors and assigns (collectively, “Releasors”), hereby forever agrees and covenants not to sue or prosecute against any Releasee (as hereinafter defined) and hereby forever waives, releases and discharges, to the fullest extent permitted by law, each Releasee from any and all claims (including, without limitation, crossclaims, counterclaims, rights of set-off and recoupment), actions, causes of action, suits, debts, liens, warranties, damages and consequential damages, judgments, costs or expenses whatsoever, that such Releasor now has or hereafter may have, of whatsoever nature and kind, whether now existing or hereafter arising, whether arising at law or in equity (collectively, the “Claims”), against any or all of the Credit Parties in any capacity and their respective affiliates, subsidiaries, shareholders and “controlling persons” (within the meaning of the federal securities laws), and their respective successors and assigns and each and all of the officers, directors, employees, agents, attorneys, advisors and other representatives of each of the foregoing (collectively, the “Releasees”), based in whole or in part on facts existing on or before the Amendment Effective

 

- 5 -


Date, that relate to, arise out of or otherwise are in connection with: (i) any or all of the Loan Documents or transactions contemplated thereby or any actions or omissions in connection therewith; or (ii) any aspect of the dealings or relationships between or among the Borrower, on the one hand, and any or all of the Credit Parties, on the other hand, relating to any or all of the documents, transactions, actions or omissions referenced in clause (i) hereof. The receipt by the Borrower of any Advances or other financial accommodations made by any Credit Party after the date hereof shall constitute a ratification, adoption, and confirmation by such party of the foregoing general release of all Claims against the Releasees that are based in whole or in part on facts existing on or prior to the date of receipt of any such Advances or other financial accommodations. In entering into this Amendment, the Borrower consulted with, and has been represented by, legal counsel and expressly disclaims any reliance on any representations, acts or omissions by any of the Releasees and hereby agrees and acknowledges that the validity and effectiveness of the releases set forth above do not depend in any way on any such representations, acts and/or omissions or the accuracy, completeness or validity thereof. The provisions of this Section 10 shall survive the termination of this Amendment, the Credit Agreement, the other Loan Documents and payment in full of the Advances.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGES FOLLOW]

 

 

- 6 -


IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized, as of the date first above written.

 

JERSEY CENTRAL POWER & LIGHT COMPANY
By  

/s/ Weizhong Wang

  Name: Weizhong Wang
  Title: Treasurer

[Signature Page to Amendment No. 1 to New Jersey Utility Credit Agreement]


MIZUHO BANK, LTD., as Administrative Agent, as a Lender and as a Fronting Bank
By  

/s/ Edward Sacks

  Name: Edward Sacks
  Title: Authorized Signatory

[Signature Page to Amendment No. 1 to New Jersey Utility Credit Agreement]


MUFG Bank, Ltd. as a Lender
By  

/s/ Matt Bly

  Name: Matt Bly
  Title: Director

[Signature Page to Amendment No. 1 to New Jersey Utility Credit Agreement]


Credit Agricole Corporate and Investment Bank, as a Lender
By  

/s/ Dixon Shultz

  Name: Dixon Shultz
  Title: Managing Director
By  

/s/ Michael Willis

  Name: Michael Willis
  Title: Managing Director

[Signature Page to Amendment No. 1 to FirstEnergy New Jersey Credit Agreement]


Citizens Bank, National Association as a Lender
By  

/s/ Kelly Hamrick

  Name: Kelly Hamrick
  Title: Senior Vice President

[Signature Page to Amendment No. 1 to New Jersey Utility Credit Agreement]


ROYAL BANK OF CANADA, as a Lender
By  

/s/ Meg Donnelly

  Name: Meg Donnelly
  Title: Authorized Signatory

[Signature Page to Amendment No. 1 to New Jersey Utility Credit Agreement]


SUMITOMO MITSUI BANKING CORPORATION, as a Lender
By  

/s/ Alkesh V Nanavaty

  Name: Alkesh Nanavaty
  Title: Executive Director

[Signature Page to Amendment No. 1 to New Jersey Utility Credit Agreement]


FIFTH THIRD BANK, NATIONAL ASSOCIATION, as a Lender
By  

/s/ Thomas Kleiderer

  Name: Thomas Kleiderer
  Title: Managing Director

[Signature Page to Amendment No. 1 to New Jersey Utility Credit Agreement]


KEYBANK NATIONAL ASSOCIATION, as a Lender
By  

/s/ Renee M. Bonnell

  Name: Renee M. Bonnell
  Title: Senior Vice President

[Signature Page to Amendment No. 1 to New Jersey Utility Credit Agreement]


BARCLAYS BANK PLC, as a Lender
By  

/s/ Sydney G. Dennis

  Name: Sydney G. Dennis
  Title: Director

[Signature Page to Amendment No. 1 to New Jersey Utility Credit Agreement]


BANK OF AMERICA, N.A., as a Lender and as a Fronting Bank
By  

/s/ Jacqueline G. Margetis

  Name: Jacqueline G. Margetis
  Title: Director

[Signature Page to Amendment No. 1 to New Jersey Utility Credit Agreement]


U.S. BANK NATIONAL ASSOCIATION, as a Lender
By  

/s/ Michael E. Temnick

  Name: Michael E. Temnick
  Title: Senior Vice President

[Signature Page to Amendment No. 1 to New Jersey Utility Credit Agreement]


Canadian Imperial Bank of Commerce, New York Branch, as a Lender
By  

/s/ Anju Abraham

  Name: Anju Abraham
  Title: Executive Director

[Signature Page to Amendment No. 1 to New Jersey Utility Credit Agreement]


TD BANK, N.A., as a Lender
By  

/s/ Steve Levi

  Name: Steve Levi
  Title: Senior Vice President

[Signature Page to Amendment No. 1 to New Jersey Utility Credit Agreement]


MORGAN STANLEY SENIOR FUNDING, INC., as a Lender
By  

/s/ Rikin Pandya

  Name: Rikin Pandya
  Title: Senior Vice President

[Signature Page to Amendment No. 1 to New Jersey Utility Credit Agreement]


CoBank, ACB, as a Lender
By  

/s/ Matthew Leatherman

  Name: Matthew Leatherman
  Title: Executive Director

[Signature Page to Amendment No. 1 to New Jersey Utility Credit Agreement]


TRUIST BANK, as a Lender
By  

/s/ Catherine Strickland

  Name: Catherine Strickland
  Title: Vice President

[Signature Page to Amendment No. 1 to New Jersey Utility Credit Agreement]


THE BANK OF NEW YORK MELLON, as a Lender
By  

/s/ Molly H. Ross

  Name: Molly H. Ross
  Title: Vice President

[Signature Page to Amendment No. 1 to New Jersey Utility Credit Agreement]


The Bank of Nova Scotia, as a Lender
By  

/s/ David Dewar

  Name: David Dewar
  Title: Director

[Signature Page to Amendment No. 1 to New Jersey Utility Credit Agreement]


First National Bank of Pennsylvania, as a Lender
By  

/s/ Paul Wargo

  Name: Paul Wargo
  Title: Corporate Relationship Manager

[Signature Page to Amendment No. 1 to New Jersey Utility Credit Agreement]


JP MORGAN CHASE BANK, N.A., as a Lender and a Fronting Bank
By  

/s/ Khawaja Tariq

  Name: Khawaja Tariq
  Title: Vice President

[Signature Page to Amendment No. 1 to New Jersey Utility Credit Agreement]


CITIBANK, N.A., as a Lender
By  

/s/ Richard Rivera

  Name: Richard Rivera
  Title: Vice President

[Signature Page to Amendment No. 1 to New Jersey Utility Credit Agreement]


PNC BANK, NATIONAL ASSOCIATION, as a Lender
By  

/s/ Ryan Rockwood

  Name: Ryan Rockwood
  Title: Vice President

[Signature Page to Amendment No. 1 to New Jersey Utility Credit Agreement]


THE HUNTINGTON NATIONAL BANK, as a Lender
By  

/s/ Christopher Olsen

  Name: Christopher Olsen
  Title: Vice President

[Signature Page to Amendment No. 1 to New Jersey Utility Credit Agreement]


Annex A

Credit Agreement

[Attached]


Annex A

EXECUTION VERSION

Deal CUSIP Number: 47655RAA7

Facility CUSIP Number: 47655RAB5

 

 

 

U.S. $500,000,000

CREDIT AGREEMENT

dated as of October 18, 2021,

by and among

JERSEY CENTRAL POWER & LIGHT COMPANY,

as Borrower,

THE BANKS NAMED HEREIN,

as Banks,

MIZUHO BANK, LTD.,

as Administrative Agent,

and

THE FRONTING BANKS

PARTY HERETO FROM TIME TO TIME

as Fronting Banks

 

 

 

 

JPMORGAN CHASE BANK, N.A.

PNC CAPITAL MARKETS LLC

MUFG BANK, LTD.

BARCLAYS BANK PLC

BofA SECURITIES, INC.

  

MIZUHO BANK, LTD.

CITIBANK, N.A.

MORGAN STANLEY SENIOR FUNDING, INC.

THE BANK OF NOVA SCOTIA

RBC CAPITAL MARKETS2

as Joint Lead Arrangers

2 RBC Capital Markets is a brand name for the capital markets business of Royal Bank of Canada and its affiliates.


TABLE OF CONTENTS

 

     Page  

ARTICLE I DEFINITIONS AND ACCOUNTING TERMS

     1  

SECTION 1.01.

  Certain Defined Terms.      1  

SECTION 1.02.

  Computation of Time Periods.      2628  

SECTION 1.03.

  Accounting Terms.      2628  

SECTION 1.04.

  Terms Generally.      2629  

SECTION 1.05.

  Divisions.      2629  

SECTION 1.06.

  Interest Rates; LIBOR NotificationDisclaimer and Exculpation With Respect to any Rate.      2729  

ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES AND LETTERS OF CREDIT

     2830  

SECTION 2.01.

  The Advances.      2830  

SECTION 2.02.

  Making the Advances.      2831  

SECTION 2.03.

  [Reserved].      2932  

SECTION 2.04.

  Letters of Credit.      2932  

SECTION 2.05.

  Fees.      3740  

SECTION 2.06.

  Adjustment of the Commitments.      3841  

SECTION 2.07.

  Repayment of Advances.      4042  

SECTION 2.08.

  Interest on Advances.      4043  

SECTION 2.09.

  Additional Interest on Advances.      4043  

SECTION 2.10.

  Interest Rate Determination.      4144  

SECTION 2.11.

  Conversion of Advances.      4244  

SECTION 2.12.

  Prepayments.      4245  

SECTION 2.13.

  Increased Costs.      4346  

SECTION 2.14.

  Illegality.      4447  

SECTION 2.15.

  Payments and Computations.      4547  

SECTION 2.16.

  Taxes.      4749  

SECTION 2.17.

  Sharing of Payments, Etc.      5154  

SECTION 2.18.

  Noteless Agreement; Evidence of Indebtedness.      5154  

SECTION 2.19.

  Extension of Termination Date.      5255  

SECTION 2.20.

  [Reserved].      5457  


SECTION 2.21.

  Defaulting Lenders.      5457  

SECTION 2.22.

  Mitigation Obligations; Replacement of Lenders.      5659  

SECTION 2.23.

  Benchmark Replacement SettingAlternate Rate of Interest.      5860  

ARTICLE III CONDITIONS OF LENDING AND ISSUING LETTERS OF CREDIT

     5963  

SECTION 3.01.

  Conditions Precedent to Initial Extension of Credit.      5963  

SECTION 3.02.

  Conditions Precedent to Each Extension of Credit.      6165  

ARTICLE IV REPRESENTATIONS AND WARRANTIES

     6266  

SECTION 4.01.

  Representations and Warranties of the Borrower.      6266  

ARTICLE V COVENANTS OF THE BORROWER

     6569  

SECTION 5.01.

  Affirmative Covenants of the Borrower.      6569  

SECTION 5.02.

  Financial Covenant.      7073  

SECTION 5.03.

  Negative Covenants of the Borrower.      7074  

ARTICLE VI EVENTS OF DEFAULT

     7377  

SECTION 6.01.

  Events of Default.      7377  

ARTICLE VII THE ADMINISTRATIVE AGENT

     7679  

SECTION 7.01.

  Authorization and Action.      7679  

SECTION 7.02.

  Administrative Agent’s Reliance, Limitation of Liability, Etc.      7882  

SECTION 7.03.

  Posting of Communications.      8083  

SECTION 7.04.

  The Administrative Agent Individually.      8185  

SECTION 7.05.

  Successor Administrative Agent.      8185  

SECTION 7.06.

  Acknowledgements of Lenders and Fronting Banks.      8286  

SECTION 7.07.

  Certain ERISA Matters.      8488  

ARTICLE VIII MISCELLANEOUS

     8689  

SECTION 8.01.

  Amendments, Etc.      8689  

SECTION 8.02.

  Notices, Etc.      8791  

SECTION 8.03.

  Electronic Communications.      8791  

SECTION 8.04.

  No Waiver; Remedies.      8892  

SECTION 8.05.

  Costs and Expenses; Indemnification.      8892  

 


SECTION 8.06.

  Right of Set-off.      8993  

SECTION 8.07.

  Binding Effect.      9094  

SECTION 8.08.

  Assignments and Participations.      9094  

SECTION 8.09.

  Governing Law.      9599  

SECTION 8.10.

  Consent to Jurisdiction; Waiver of Jury Trial.      9599  

SECTION 8.11.

  Severability.      96100  

SECTION 8.12.

  Entire Agreement.      96100  

SECTION 8.13.

  Execution in Counterparts; Electronic Execution.      96100  

SECTION 8.14.

  USA PATRIOT Act Notice.      96100  

SECTION 8.15.

  No Fiduciary Duty.      97100  

SECTION 8.16.

  Acknowledgment and Consent to Bail-In of Affected Financial Institutions.      97101  

SECTION 8.17.

  Treatment of Certain Information; Confidentiality.      98102  


SCHEDULES AND EXHIBITS
Schedule I—List of Commitments and Lending Offices
Schedule II—List of L/C Fronting Bank Commitments
Schedule III—Existing Letters of Credit
Schedule IV—Disclosure Documents
Schedule V—Approvals
Exhibit A—Form of Assignment and Assumption
Exhibit B—Form of Note
Exhibit C—Form of Notice of Borrowing
Exhibit D—Form of Letter of Credit Request
Exhibit E-1—Form of U.S. Tax Compliance Certificate (For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)
Exhibit E-2—Form of U.S. Tax Compliance Certificate (For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)
Exhibit E-3—Form of U.S. Tax Compliance Certificate (For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)
Exhibit E-4—Form of U.S. Tax Compliance Certificate (For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)


CREDIT AGREEMENT

CREDIT AGREEMENT, dated as of October 18, 2021, by and among JERSEY CENTRAL POWER & LIGHT COMPANY (“JCP&L” or the “Borrower”), the banks and other financial institutions (the “Banks”) party hereto from time to time, MIZUHO BANK, LTD. (“Mizuho”), as Administrative Agent (in such capacity, the “Administrative Agent”) for the Lenders hereunder and the fronting banks party hereto from time to time.

PRELIMINARY STATEMENTS

(1) The Borrower has requested that the Lenders establish a five-year unsecured revolving credit facility in the amount of $500,000,000 in favor of the Borrower, all of which may be used for general corporate purposes (including, without limitation, the refinancing of the Existing FE Credit Agreement (as defined herein)) and $100,000,000 of which may be used for the issuance of Letters of Credit.

(2) Subject to the terms and conditions of this Agreement, the Lenders severally, to the extent of their respective Commitments (as defined herein), are willing to establish the requested revolving credit facility in favor of the Borrower.

NOW, THEREFORE, in consideration of the premises, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

SECTION 1.01. Certain Defined Terms.

As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

Account Party” has the meaning set forth in Section 2.04(a).

Additional Commitment Lender” has the meaning set forth in Section 2.19(d).

Additional Lender” has the meaning set forth in Section 2.06(b).

Adjusted Daily Simple SOFR” means an interest rate per annum equal to (a) Daily Simple SOFR, plus (b) 0.10%; provided that if Adjusted Daily Simple SOFR as so determined would be less than the Floor, such rate shall be deemed to be equal to the Floor for the purposes of this Agreement.

Adjusted Term SOFR Rate” means, for any Interest Period and subject to the provisions of Section 2.23(b), an interest rate per annum equal to (a) the Term SOFR Rate for such Interest Period, plus (b) 0.10%; provided that if the Adjusted Term SOFR Rate as so determined would be less than the Floor, such rate shall be deemed to be equal to the Floor for the purposes of this Agreement.

 

1


Administrative Agent” has the meaning set forth in the preamble hereto.

Administrative Questionnaire” means an Administrative Questionnaire in a form supplied by the Administrative Agent.

Advance” means an advance by a Lender to the Borrower made as part of a Borrowing pursuant to Section 2.02.

Affected Financial Institution” means (i) any EEA Financial Institution or (ii) any UK Financial Institution.

Affiliate” means, as to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person or is a director or officer of such Person.

Agreement” means this Credit Agreement, as amended, restated, amended and restated, modified and supplemented from time to time in accordance with its terms.

Alternate Base Rate” means, for any period, a fluctuating interest rate per annum as shall be in effect from time to time, which rate per annum shall at all times be equal to the highest of (i) the prime rate as most recently published by The Wall Street Journal from time to time, (ii) the sum of 1/2 of 1% per annum plus the Federal Funds Rate in effect from time to time and (iii) the rate of interest per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on the Service equal to the one-month London interbank offered rate for deposits in Dollars as determined at approximately 11:00 a.m. (London time) onAdjusted Term SOFR Rate for a one month Interest Period as published two U.S. Government Securities Business Days prior to such day (or if such day is not a U.S. Government Securities Business Day, on the nextimmediately preceding U.S. Government Securities Business Day), plus 1%.; provided that for the purpose of this definition, the Adjusted Term SOFR Rate for any day shall be based on the Term SOFR Reference Rate at approximately 5:00 a.m. Chicago time on such day (or any amended publication time for the Term SOFR Reference Rate, as specified by the CME Term SOFR Administrator in the Term SOFR Reference Rate methodology). Any change in the Alternate Base Rate due to a change in the prime rate, the Federal Funds Rate or the Adjusted Term SOFR Rate shall be effective from and including the effective date of such change in the prime rate, the Federal Funds Rate or the Adjusted Term SOFR Rate, respectively. If the Alternate Base Rate is being used as an alternate rate of interest pursuant to Section 2.23 (for the avoidance of doubt, only until the Benchmark Replacement has been determined pursuant to Section 2.23(b)) or Section 2.14 (only if necessary to avoid illegality), then the Alternate Base Rate shall be the greater of clauses (i) and (ii) above and shall be determined without reference to clause (iii) above.

Alternate Base Rate Advance” means an Advance that bears interest as provided in Section 2.08(a).

Anniversary Date” has the meaning set forth in Section 2.19(a).

 

2


Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction applicable to the Covered Entities or their respective activities from time to time concerning or relating to terrorism, money-laundering, bribery or corruption, including, without limitation, (i) the United States Foreign Corrupt Practices Act of 1977, as amended from time to time, and the applicable regulations thereunder, and (ii) the United Kingdom’s Anti-Bribery Act 2010, as amended from time to time.

Applicable Law” means all applicable laws, statutes, treaties, rules, codes, ordinances, regulations, permits, certificates, orders, interpretations, licenses and permits of any Governmental Authority and judgments, decrees, injunctions, writs, orders or like action of any court, arbitrator or other judicial or quasi-judicial tribunal of competent jurisdiction (including those pertaining to health, safety or the environment or otherwise).

Applicable Lending Office” means, with respect to each Lender, such Lender’s Domestic Lending Office in the case of an Alternate Base Rate Advance, and such Lender’s Eurodollar Lending Office in the case of a Eurodollar Rate Advance.any Lender, the office of such Lender specified as its “Lending Office” opposite its name on Schedule I hereto or in the Assignment and Assumption pursuant to which it became a Lender, or such other office of such Lender as such Lender may from time to time specify to the Administrative Agent.

Applicable Margin” means, for any Alternate Base Rate Advance or any Eurodollar RateTerm Benchmark Advance (or, if applicable, RFR Advance) made to the Borrower, the interest rate per annum set forth in the relevant row of the table immediately below, determined by reference to the Reference Ratings for the Borrower from time to time in effect (and, solely in the case that there are no Reference Ratings, Applicable Margin shall be at Level 6):

 

BASIS FOR
PRICING

  

LEVEL 1

Reference Ratings
at least A- by S&P
or A3 by Moody’s

  

LEVEL 2

Reference Ratings
lower than Level 1
but at least BBB+
by S&P or Baa1 by
Moody’s

  

LEVEL 3

Reference Ratings
lower than Level 2
but at least BBB by
S&P or Baa2 by
Moody’s

  

LEVEL 4

Reference Ratings
lower than Level 3
but at least BBB-
by S&P or Baa3 by
Moody’s

  

LEVEL 5

Reference Ratings
lower than Level 4
but at least BB+ by
S&P or Ba1 by
Moody’s

  

LEVEL 6

Reference Ratings
lower than Level 5

Applicable Margin for Eurodollar RateTerm Benchmark Advances (or, if applicable RFR Advances)    1.125%    1.25%    1.50%    1.75%    2.00%    2.50%
Applicable Margin for Alternate Base Rate Advances    0.125%    0.25%    0.50%    0.75%    1.00%    1.50%

 

3


For purposes of the foregoing, (i) if there is a difference of one level in Reference Ratings of S&P and Moody’s and the higher of such Reference Ratings falls in Level 1, Level 2, Level 3, Level 4 and Level 5 then the higher Reference Rating will be used to determine the pricing level and (ii) if there is a difference of more than one level in Reference Ratings of S&P and Moody’s, the Reference Rating that is one level above the lower of such Reference Ratings will be used to determine the pricing level, unless the lower of such Reference Ratings falls in Level 6, in which case the lower of such Reference Ratings will be used to determine the pricing level. If there exists only one Reference Rating, such Reference Rating will be used to determine the pricing level.

Approval” means each approval of FERC under the Federal Power Act or of the “state commission” (as that term is defined under 18 C.F.R. 1.101(k)) that has jurisdiction over the Borrower and that is identified on Schedule V.

Approved Electronic Platform” has the meaning assigned to it in Section 7.03(a).

Approved Fund” means any Fund that is administered or managed by (i) a Lender, (ii) an Affiliate of a Lender or (iii) an entity or an Affiliate of an entity that administers or manages a Lender.

Assignment and Assumption” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 8.08(b)), and accepted by the Administrative Agent, in substantially the form of Exhibit A hereto or any other form approved by the Administrative Agent (so long as such other form is not disadvantageous to the Borrower in any respect).

ATSI” means American Transmission Systems, Incorporated, an Ohio corporation.

Attributable Securitization Obligations” has the meaning set forth in the definition of “Permitted Securitization”.

Authorized Officer” means, with respect to any notice, certificate or other communication to be delivered by the Borrower hereunder, the chief executive officer, president, chief financial officer, treasurer, assistant treasurer or controller of the Borrower, which officer shall have all necessary corporate or limited liability company authorization to deliver such notice, certificate or other communication.

Available Commitment” means, for each Lender, the excess of such Lender’s Commitment over such Lender’s Percentage of the Outstanding Credits. “Available Commitments” shall refer to the aggregate of the Lenders’ Available Commitments hereunder.

Available Tenor” means, as of any date of determination and with respect to the then-current Benchmark, as applicable, (x) if the then-current Benchmark is a term rate, any tenor for such Benchmark (or component thereof) or payment period for interest calculated with reference to such Benchmark (or component thereof), as applicable, that is or may be used for determining the length of an Interest Period or (y)for any term rate or otherwise, any payment period forfor determining any frequency of making payments of interest calculated with reference to such Benchmark, as applicable, pursuant to this Agreement as of such date and not including, for the avoidance of doubt, any tenor for such Benchmark that is then-removed from the definition of “Interest Period” pursuant to clause (e) of Section 2.23.

 

4


Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial Institution.

Bail-In Legislation” means (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law, regulation rule or requirement for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than through liquidation, administration or other insolvency proceedings).

Bankruptcy Code” means the Bankruptcy Reform Act of 1978, as amended from time to time, and any Federal law with respect to bankruptcy, insolvency, reorganization, liquidation, moratorium or similar laws affecting creditors’ rights generally.

Bankruptcy Event” means, with respect to any Person, such Person has become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar Person charged with the reorganization or liquidation of its business appointed for it, or, in the good faith determination of the Administrative Agent, has taken any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any such proceeding or appointment, provided that the acquisition of an ownership interest in such Person by a Governmental Authority or instrumentality thereof shall not, itself, alone constitute a Bankruptcy Event, provided, further, that such ownership interest does not result in or provide such Person with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Person (or such Governmental Authority or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or agreements made by such Person.

Banks” has the meaning set forth in the preamble hereto.

Benchmark” means, initially, USD LIBORwith respect to any (i) RFR Advance, Daily Simple SOFR or (ii) Term Benchmark Advance, the Term SOFR Rate; provided that if a replacement of the Benchmark has occurred pursuant to Section 2.23Benchmark Transition Event and the related Benchmark Replacement Date have occurred with respect to Daily Simple SOFR or Term SOFR Rate, as applicable, or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate. Any reference to “Benchmark” shall include, as applicable, the published component used in the calculation thereof pursuant to clause (b) of Section 2.23.

 

5


Benchmark Replacement” means, for any Available Tenor:

(1) For purposes of Section 2.23(a)Benchmark Replacement” means, for any Available Tenor, the first alternative set forth in the order below that can be determined by the Administrative Agent for the applicable Benchmark Replacement Date:

(1) the Adjusted Daily Simple SOFR; and

(a) the sum of: (i) Term SOFR and (ii) 0.11448% (11.448 basis points) for an Available Tenor of one-month’s duration, 0.26161% (26.161 basis points) for an Available Tenor of three-months’ duration, and 0.42826% (42.826 basis points) for an Available Tenor of six-months’ duration, or

(b) the sum of: (i) Daily Simple SOFR and (ii) the spread adjustment selected or recommended by the Relevant Governmental Body for the replacement of the tenor of USD LIBOR with a SOFR-based rate having approximately the same length as the interest payment period specified in Section 2.23(a); and

(2) For purposes of Section 2.23(b), the sum of: (a) the alternate benchmark rate and (b) an adjustment (which may be a positive or negative value or zero), in each case, that has been reasonablythat has been selected by the Administrative Agent and the Borrower as the replacement for such Available Tenor of suchthe then-current Benchmark for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention, including any applicable recommendations made by the Relevant Governmental Body, for U.S. for determining a benchmark rate as a replacement for the then-current Benchmark for dollar-denominated syndicated credit facilities at such time; in the United States and (b) the related Benchmark Replacement Adjustment.

provided that, ifIf the Benchmark Replacement as determined pursuant to clause (1) or (2) above would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Loan Documents.

Benchmark Replacement Adjustment” means, with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement for any applicable Interest Period and Available Tenor for any setting of such Unadjusted Benchmark Replacement, the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Administrative Agent and the Borrower for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body on the applicable Benchmark Replacement Date and/or (ii) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for dollar-denominated syndicated credit facilities at such time.

 

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Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement and/or any Term Benchmark Advance, any technical, administrative or operational changes (including changes to the definition of “Alternate Base Rate”, the definition of “Business Day”, the definition of “U.S. Government Securities Business Day”, the definition of “Interest Period” or any similar or analogous definition (or the addition of a concept of “interest period”), timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, the applicability and length of lookback periods, the applicability of breakage provisions, the formula for calculating any successor rates identified pursuant to the definition of “Benchmark Replacement”, the formula, methodology or convention for applying the successor Floor to the successor Benchmark Replacement and other technical, administrative or operational matters) that the Administrative Agent decides may be appropriate to reflect the adoption and implementation of such Benchmark Replacement and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for the administration of such Benchmark Replacement exists, in such other manner of administration as the Administrative Agent decides is reasonably necessary in connection with the administration of this Agreement and the other Loan Documents).

Benchmark Replacement Date” means, with respect to any Benchmark, the earliest to occur of the following events with respect to such then-current Benchmark:

(1) in the case of clause (1) or (2) of the definition of “Benchmark Transition Event”, the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such Benchmark (or such component thereof); or

(2) in the case of clause (3) of the definition of “Benchmark Transition Event”, the first date on which such Benchmark (or the published component used in the calculation thereof) has been determined and announced by the regulatory supervisor for the administrator of such Benchmark (or such component thereof) to be no longer representative; provided, that such non-representativeness will be determined by reference to the most recent statement or publication referenced in such clause (c) and even if any Available Tenor of such Benchmark (or such component thereof) continues to be provided on such date.

For the avoidance of doubt, (i) if the event giving rise to the Benchmark Replacement Date occurs on the same day as, but earlier than, the Reference Time in respect of any determination, the Benchmark Replacement Date will be deemed to have occurred prior to the Reference Time for such determination and (ii) the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (1) or (2) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).

 

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Benchmark Transition Event” means, with respect to any Benchmark, the occurrence of one or more of the following events with respect to such then-current Benchmark:

(1) a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof);

Benchmark Transition Event” means, with respect to any then-current Benchmark other than USD LIBOR, the occurrence of(2) a public statement or publication of information by or on behalf of the administrator of the then-current Benchmark, thethe regulatory supervisor for the administrator of such Benchmark, the Board of Governors of the (or the published component used in the calculation thereof), the Federal Reserve System, the Federal Reserve Bank of New YorkBoard, the NYFRB, the CME Term SOFR Administrator, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark, announcing or stating that (a) such (or such component), in each case, which states that the administrator of such Benchmark (or such component) has ceased or will cease on a specified date to provide all Available Tenors of such Benchmark, (or such component thereof) permanently or indefinitely,; provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark or (b) all Available Tenors of such Benchmark are or will no longer be representative of the underlying market and economic reality that such Benchmark is intended to measure and that representativeness will not be restored. (or such component thereof); or

(3) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that all Available Tenors of such Benchmark (or such component thereof) are no longer, or as of a specified future date will no longer be, representative.

For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof).

Benchmark Unavailability Period” means, with respect to any then-current Benchmark, the period (if any) (x) beginning at the time that a Benchmark Replacement Date pursuant to clauses (1) or (2) of that definition has occurred if, at such time, no Benchmark Replacement has replaced such then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with Section 2.23 and (y) ending at the time that a Benchmark Replacement has replaced such then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with Section 2.23.

 

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Beneficial Ownership Certification” means a certification regarding beneficial ownership as required by the Beneficial Ownership Regulation.

Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230, as amended, or any successor thereto.

Beneficiary” means any Person designated by an Account Party to whom a Fronting Bank is to make payment, or on whose order payment is to be made, under a Letter of Credit.

Borrower” has the meaning set forth in the preamble hereto.

Borrower Communications” has the meaning set forth in Section 8.03.

Borrower Extension Notice Date” has the meaning set forth in Section 2.19(a).

Borrowing” means a borrowing consisting of simultaneous Advances of the same Type made by each of the Lenders pursuant to Section 2.02 or Converted pursuant to Section 2.10 or 2.11 or 2.23(a).

Business Day” means aany day of the year(other than a Saturday or a Sunday) on which banks are not required or authorized to closeopen for business in New York City orand Akron, Ohio and, if the applicable Business Day relates to any Eurodollar Rate Advances, a day on which dealings are carried on in the London interbank market.; provided that, in addition to the foregoing, a Business Day shall be (a) in relation to RFR Advances and any interest rate settings, fundings, disbursements, settlements or payments of any such RFR Advance, or any other dealings of such RFR Advance and (b) in relation to Advances referencing the Adjusted Term SOFR Rate and any interest rate settings, fundings, disbursements, settlements or payments of any such Advances referencing the Adjusted Term SOFR Rate or any other dealings of such Advances referencing the Adjusted Term SOFR Rate, any such day that is only a U.S. Government Securities Business Day.

CEI” means The Cleveland Electric Illuminating Company, an Ohio corporation.

Change in Law” means the occurrence, after the date of this Agreement, of any of the following: (i) the adoption or taking effect of any law, rule, regulation or treaty, (ii) any change (other than any change by way of imposition or increase of reserve requirements included in the Eurodollar Rate Reserve Percentage) in any law, rule, regulation or treaty or in the administration, interpretation or application thereof by any Governmental Authority or (iii) the making or issuance of any request, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided, however, the Dodd-Frank Wall Street Reform and Consumer Protection Act, and all requests, rules, guidelines and directives promulgated thereunder, and all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to have been introduced or adopted after the date of this Agreement, regardless of the date enacted or adopted.

 

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Change of Control” has the meaning set forth in Section 6.01(ji).

Closing Date” means October 18, 2021.

CME Term SOFR Administrator” means CME Group Benchmark Administration Limited (CBA) as administrator of the forward-looking term Secured Overnight Financing Rate (SOFR) (or a successor administrator).

Code” means the United States Internal Revenue Code of 1986, as amended from time to time, and the applicable regulations thereunder.

Commitment” means, as to any Lender, the amount set forth opposite such Lender’s name on Schedule I hereto or, if such Lender has entered into any Assignment and Assumption, set forth for such Lender in the Register maintained by the Administrative Agent pursuant to Section 8.08(c), as such amount may be reduced pursuant to Section 2.06(a) or increased pursuant to Section 2.06(b).

Commitment Increase” has the meaning set forth in Section 2.06(b).

Commodity Trading Obligations” means the obligations of any Person under any commodity swap agreement, commodity future agreement, commodity option agreement, commodity cap agreement, commodity floor agreement, commodity collar agreement, commodity hedge agreement, commodity forward contract or derivative transaction and any put, call or other agreement, arrangement or transaction, including natural gas, power, emissions forward contracts, renewable energy credits, or any combination of any such arrangements, agreements and/or transactions, employed in the ordinary course of such Person’s business, including such Person’s energy marketing, trading and asset optimization business. The term “commodity” shall include electric energy and/or capacity, transmission rights, coal, petroleum, natural gas, fuel transportation rights, emissions allowances, weather derivatives and related products and by-products and ancillary services.

Communications” means, collectively, any notice, demand, communication, information, document or other material provided by or on behalf of the Borrower pursuant to any Loan Document or the transactions contemplated therein which is distributed by the Administrative Agent, any Lender or any Fronting Bank by means of electronic communications pursuant to Section 7.03, including through an Approved Electronic Platform.

Consolidated Debt” means, with respect to the Borrower at any date of determination the aggregate Indebtedness of the Borrower and its Consolidated Subsidiaries determined on a consolidated basis in accordance with GAAP, but shall not include (i) Nonrecourse Indebtedness of the Borrower and any of its Subsidiaries, (ii) obligations under leases that shall have been or should be, in accordance with GAAP, recorded as operating leases in respect of which the Borrower or any of its Consolidated Subsidiaries is liable as a lessee, (iii) the aggregate principal and/or face amount of Attributable Securitization Obligations of the

 

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Borrower and its Consolidated Subsidiaries and (iv) the aggregate principal amount of Trust Preferred Securities and Junior Subordinated Deferred Interest Debt Obligations not exceeding 15% of the Total Capitalization of the Borrower and its Consolidated Subsidiaries (determined, for purposes of such calculation, without regard to the amount of Trust Preferred Securities and Junior Subordinated Deferred Interest Debt Obligations outstanding of the Borrower); provided that the amount of any mandatory principal amortization or defeasance of Trust Preferred Securities or Junior Subordinated Deferred Interest Debt Obligations prior to the latest Termination Date shall be included in this definition of Consolidated Debt.

Consolidated Subsidiary” means, as to any Person, any Subsidiary of such Person the accounts of which are or are required to be consolidated with the accounts of such Person in accordance with GAAP.

Controlled Group” means all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control that, together with the Borrower, are treated as a single employer under Section 414(b), (c), (m) or (o) of the Code.

Convert”, “Conversion” and “Converted” each refers to a conversion of Advances of one Type into Advances of another Type or the selection of a new, or the renewal of the same, Interest Period for Eurodollar RateTerm Benchmark Advances pursuant to Section 2.10 or 2.11 or 2.23(a).

Corresponding Tenor” with respect to any Available Tenor means, as applicable, either a tenor (including overnight) or an interest payment period having approximately the same length (disregarding business day adjustment) as such Available Tenor.

Covered Entity” means, with respect to the Borrower (i) the Borrower and each of its Subsidiaries and (ii) each Person that, directly or indirectly, is in control of a Person described in clause (i) above. For purposes of this definition, control of a Person shall mean the direct or indirect (x) ownership of, or power to vote, 25% or more of the issued and outstanding equity interests having ordinary voting power for the election of directors of such Person or other Persons performing similar functions for such Person, or (y) power to direct or cause the direction of the management and policies of such Person whether by ownership of equity interests, contract or otherwise.

Credit Parties” has the meaning set forth in Section 8.15.

Criminal Information” means the Criminal Information in United States v. FirstEnergy Corporation, filed in the United States District Court for the Southern District of Ohio on July 22, 2021.

Daily Simple SOFR means, for any day, (a “SOFR, with the conventions for this rate (which may include a lookback) being established by the Administrative Agent in accordance with the conventions for this rate recommended by the Relevant Governmental Body for determining “Daily Simple SOFR” for syndicated business loans; provided, that if the Administrative Agent decides that any such convention is not administratively feasible for the Administrative Agent, then the Administrative Agent may establish another convention in its reasonable discretion. Rate Day”), a rate per annum equal to SOFR for the day (such day “SOFR

 

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Determination Date”) that is five (5) U.S. Government Securities Business Day prior to (i) if such SOFR Rate Day is a U.S. Government Securities Business Day, such SOFR Rate Day or (ii) if such SOFR Rate Day is not a U.S. Government Securities Business Day, the U.S. Government Securities Business Day immediately preceding such SOFR Rate Day, in each case, as such SOFR is published by the SOFR Administrator on the SOFR Administrator’s Website. Any change in Daily Simple SOFR due to a change in SOFR shall be effective from and including the effective date of such change in SOFR without notice to the Borrower.

Date of Issuance” means the date of issuance by a Fronting Bank of a Letter of Credit under this Agreement.

Debt to Capitalization Ratio” means, for the Borrower, the ratio of Consolidated Debt of the Borrower to Total Capitalization of the Borrower.

Defaulting Lender” means any Lender that (i) has failed, within two Business Days of the date required to be funded or paid, to (A) fund any portion of its Advances, (B) fund any portion of its participations in Letters of Credit or (C) pay over to the Administrative Agent or any Fronting Bank any other amount required to be paid by it hereunder, unless, in the case of clause (A) or (B) above, such Lender notifies the Administrative Agent in writing that such failure is the result of such Lender’s good faith determination that a condition precedent to funding (specifically identified and including the particular default, if any) has not been satisfied, (ii) has notified the Borrower or the Administrative Agent or any Fronting Bank in writing, or has made a public statement to the effect, that it does not intend or expect to comply with any of its funding obligations under this Agreement (unless such writing or public statement indicates that such position is based on such Lender’s good faith determination that a condition precedent (specifically identified and including the particular default, if any) to funding a loan under this Agreement cannot be satisfied) or generally under other agreements in which it commits to extend credit, (iii) has failed, within three Business Days after request by the Administrative Agent or any Fronting Bank, acting in good faith, to provide a certification in writing from an authorized officer of such Lender that it will comply with its obligations (and is financially able to meet such obligations as of the date of certification) to fund prospective Advances and participations in then outstanding Letters of Credit under this Agreement; provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (iii) upon the Administrative Agent’s or such Fronting Bank’s (as applicable) receipt of such certification in form and substance satisfactory to it and the Administrative Agent, (iv) has become the subject of a Bankruptcy Event or (v) has, or has a direct or indirect parent company that has, become the subject of a Bail-In Action.

Disclosure Documents” means, with respect to the Borrower, its (A) consolidated balance sheet as of December 31, 2020, and the related consolidated statements of income, retained earnings and cash flows for the fiscal year then ended, certified by PricewaterhouseCoopers LLP, with, in each case, any accompanying notes, (B) unaudited consolidated balance sheet as of June 30, 2021, and the related consolidated statements of income, retained earnings and cash flows for the six-month period then ended, in each case with respect to the foregoing clauses (A) and (B), prepared in accordance with GAAP (but, in the case of such statements that are unaudited, subject to year-end adjustments and the exclusion of detailed footnotes) and copies of which have been furnished to each Lender and each Fronting Bank and (C) the matters, if any, described in the portion of Schedule IV hereto applicable to the Borrower as indicated thereon.

 

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Dollars” and “$” each means lawful currency of the United States of America.

Domestic Lending Office” means, with respect to any Lender, the office of such Lender specified as its “Domestic Lending Office” opposite its name on Schedule I hereto or in the Assignment and Assumption pursuant to which it became a Lender, or such other office of such Lender as such Lender may from time to time specify to the Administrative Agent.

DPA” means the Deferred Prosecution Agreement, dated as of July 21, 2021, between the United States Attorney’s Office for the Southern District of Ohio and FE.

Drawing” means a drawing by a Beneficiary under any Letter of Credit.

Early Opt-in Effective Date” means, with respect to any Early Opt-in Election, the sixth (6th) Business Day after the date notice of such Early Opt-in Election is provided to the Lenders, so long as the Administrative Agent has not received, by 5:00 p.m. (New York City time) on the fifth (5th) Business Day after the date notice of such Early Opt-in Election is provided to the Lenders, written notice of objection to such Early Opt-in Election from Lenders comprising the Majority Lenders; provided however, that the Administrative Agent, the Lenders and the Borrower may select a later date as specified in such notice.

Early Opt-in Election” means, if the then-current Benchmark is USD LIBOR, the occurrence of: (1) a notification by the Administrative Agent to (or the request by the Borrower to the Administrative Agent to notify) each of the other parties hereto that at least five currently outstanding U.S. dollar-denominated syndicated credit facilities at such time contain (as a result of amendment or as originally executed) a SOFR-based rate (including SOFR, a term SOFR or any other rate based upon SOFR) as a benchmark rate (and such syndicated credit facilities are identified in such notice and are publicly available for review), and (2) the joint election by the Administrative Agent and the Borrower to trigger a fallback from USD LIBOR and the provision by the Administrative Agent of written notice of such election to the Lenders.

EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a Subsidiary of an institution described in clause (a) or (b) of this definition and is subject to consolidated supervision with its parent.

EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

EEA Resolution Authority” means any public administrative authority, any Governmental Authority or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.

 

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Electronic Signature” means an electronic sound, symbol, or process attached to, or associated with, a contract or other record and adopted by a Person with the intent to sign, authenticate or accept such contract or record.

Eligible Assignee” means any Person that meets the requirements to be an assignee under Section 8.08(b)(iii), (v) and (vi) (subject to such consents, if any, as may be required under Section 8.08(b)(iii)).

Environmental Laws” means any federal, state or local laws, ordinances or codes, rules, orders, or regulations relating to pollution or protection of the environment, including, without limitation, laws relating to hazardous substances, laws relating to reclamation of land and waterways and laws relating to emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals, or industrial, toxic or hazardous substances or wastes into the environment (including, without limitation, ambient air, surface water, ground water, land surface or subsurface strata) or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollution, contaminants, chemicals, or industrial, toxic or hazardous substances or wastes.

ERISA” means the Employee Retirement Income Security Act of 1974, and the regulations promulgated and rulings issued thereunder, each as amended, modified and in effect from time to time.

EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor thereto), as in effect from time to time.

Eurocurrency Liabilities” has the meaning assigned to that term in Regulation D of the Board of Governors of the Federal Reserve SystemBoard, as in effect from time to time.

Eurodollar Lending Office” means, with respect to any Lender, the office of such Lender specified as its “Eurodollar Lending Office” opposite its name on Schedule I hereto or in the Assignment and Assumption pursuant to which it became a Lender (or, if no such office is specified, its Domestic Lending Office), or such other office of such Lender as such Lender may from time to time specify to the Administrative Agent.

Eurodollar Rate” means, for the Interest Period for any Eurodollar Rate Advance made in connection with any Borrowing, the greater of (a) 0.00% and (b) the rate of interest per annum (rounded upward to the nearest 1/100 of 1%) as calculated by ICE Benchmark Administration Limited (or any other Person which takes over the administration of that rate) and obtained through a nationally recognized service such as the Dow Jones Market Service (Telerate), Reuters or other such service then being used by the Administrative Agent to ascertain such rates of interest (in each case, the “Service”) as the London interbank offered rate for deposits in Dollars at approximately 11:00 a.m. (London time) two Business Days before the first day of such Interest Period for a period equal to such Interest Period; provided, however, that if an event set forth in Section 2.23(a) or Section 2.23(b) and its related effective date have occurred with respect to USD LIBOR or the then-current Benchmark, then the rate described in clause (b) above shall mean the applicable Benchmark Replacement to the extent that such Benchmark Replacement has become effective pursuant to Section 2.23.

 

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Eurodollar Rate Advance” means an Advance that bears interest as provided in Section 2.08(b).

Eurodollar Rate Reserve Percentage” of any Lender for the Interest Period for any Eurodollar RateTerm Benchmark Advance means the reserve percentage applicable during such Interest Period (or if more than one such percentage shall be so applicable, the daily average of such percentages for those days in such Interest Period during which any such percentage shall be so applicable) under regulations issued from time to time by the Board of Governors of the Federal Reserve SystemBoard (or any successor) for determining the maximum reserve requirement (including, without limitation, any emergency, supplemental or other marginal reserve requirement) for such Lender with respect to liabilities or assets consisting of or including Eurocurrency Liabilities having a term equal to such Interest Period.

Event of Default” has the meaning set forth in Section 6.01.

Exchange Act” means the Securities Exchange Act of 1934, and the regulations promulgated thereunder, in each case as amended and in effect from time to time.

Excluded Taxes” means, with respect to any Recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (i) income, franchise or branch profits Taxes (A) imposed on (or measured by) the Recipient’s net income by the United States, or by the jurisdiction under the laws of which such Recipient is organized or in which its principal office is located or, in the case of any Lender, in which its Applicable Lending Office is located or (B) that are Other Connection Taxes, (ii) any U.S. federal withholding Taxes that are imposed on amounts payable to a Lender at the time such Lender becomes a Lender under this Agreement (other than pursuant to an assignment request by the Borrower under Section 2.22(b)) or designates a new lending office, except in each case to the extent that amounts with respect to such Taxes were payable either (A) to such Lender’s assignor immediately before such Lender became a Lender under this Agreement, or (B) to such Lender immediately before it designated a new lending office, (iii) Taxes attributable to such Recipient’s failure to comply with Section 2.16(g), and (iv) withholding Taxes imposed under FATCA.

Existing FE Credit Agreement” means the Credit Agreement, dated as of December 6, 2016, by and among FE, CEI, Met-Ed, OE, Penn, TE, JCP&L, MP, Penelec, PE and West-Penn, as borrowers, the lenders party thereto, Mizuho Bank, Ltd., as administrative agent, the fronting banks party thereto and the swing line lenders party thereto, as amended, restated or otherwise modified from time to time and in effect on the Closing Date.

Existing Letters of Credit” means those Letters of Credit outstanding on the Closing Date and identified on Schedule III hereto.

Existing Termination Date” has the meaning set forth in Section 2.19(a).

Expiration Date” means, with respect to a Letter of Credit, its stated expiration date.

 

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Extension of Credit” means the making of any Advance or the issuance, extension or renewal, or any amendment that increases the Stated Amount, of a Letter of Credit.

FATCA” means Sections 1471 through 1474 of the Code as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code and any fiscal or regulatory legislation, rules or official practices adopted pursuant to any intergovernmental agreement, treaty or convention among Governmental Authorities and implementing such Sections of the Code.

FE” means FirstEnergy Corp., a public utility holding company.

Federal Funds Rate” means, for any period, the greater of (a) 0.00% and (b) a fluctuating interest rate per annum (rounded upward, if necessary, to the nearest whole multiple of 1/100 of 1% per annum) equal for each day during such period to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New YorkNYFRB, or, if such rate is not so published for any day that is a Business Day, the average rate (rounded upward to the nearest whole multiple of 1/100 of 1% per annum, if such average is not such a multiple) charged to Mizuho on such day on such transactions as determined by the Administrative Agent.

Federal Reserve Board” means the Board of Governors of the Federal Reserve System of the United States of America.

Fee Letters” means (i) the fee letter, dated September 23, 2021, by and among the Borrower, FE, certain of FE’s other Subsidiaries, JPMorgan, Mizuho, PNC Capital Markets LLC, PNC Bank, National Association, Barclays Bank PLC, BofA Securities, Inc., Bank of America, N.A., Citigroup Global Markets Inc., Morgan Stanley Senior Funding, Inc., MUFG Bank, Ltd. and The Bank of Nova Scotia, (ii) the fee letter, dated September 23, 2021, by and among the Borrower, FE, certain of FE’s other Subsidiaries, JPMorgan and Mizuho, and (iii) the fee letter, dated September 23, 2021, by and among the Borrower, FE, certain of FE’s other Subsidiaries, and Mizuho, in each case, as amended, modified or supplemented from time to time.

FERC” means the Federal Energy Regulatory Commission or successor organization.

FET” means FirstEnergy Transmission, LLC, a Delaware limited liability company.

First Mortgage Indenture” means a first mortgage indenture pursuant to which the Borrower or any Subsidiary of the Borrower may issue bonds, notes or similar instruments secured by a lien on all or substantially all of the Borrower’s or such Subsidiary’s fixed assets, as the case may be.

 

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Floor” means the benchmark rate floor, if any, provided in this Agreement initially (as of the execution of this Agreement, the modification, amendment or renewal of this Agreement or otherwise) with respect to USD LIBOR or, if no floor is specified,the Adjusted Term SOFR Rate or the Adjusted Daily Simple SOFR, as applicable. For the avoidance of doubt the initial Floor for each of Adjusted Term SOFR Rate or the Adjusted Daily Simple SOFR shall be zero.

Foreign Lender” means any Lender that is organized under the laws of a jurisdiction other than that in which the Borrower is resident for tax purposes. For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

Fronting Bank” means each Lender identified as a “Fronting Bank” on Schedule II and any other Lender (in each case, acting directly or through an Affiliate) that delivers an instrument in form and substance satisfactory to the Borrower and the Administrative Agent whereby such other Lender (or its Affiliate) agrees to act as “Fronting Bank” hereunder and that specifies the maximum aggregate Stated Amount of Letters of Credit that such other Lender (or its Affiliates) will agree to issue hereunder.

Fronting Exposure” means, at any time there is a Defaulting Lender, with respect to any Fronting Bank, such Defaulting Lender’s Percentage of the outstanding L/C Obligations with respect to Letters of Credit issued by such Fronting Bank other than L/C Obligations as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or cash collateralized in accordance with the terms hereof.

Fund” means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business.

GAAP” means generally accepted accounting principles in the United States in effect from time to time.

Governmental Action” means all authorizations, consents, approvals, waivers, exceptions, variances, orders, licenses, exemptions, publications, filings, notices to and declarations of or with any Governmental Authority (other than requirements the failure to comply with which will not affect the validity or enforceability of any Loan Document or have a material adverse effect on the transactions contemplated by any Loan Document or any material rights, power or remedy of any Person thereunder or any other action in respect of any Governmental Authority).

Governmental Authority” means the government of the United States of America or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank) and any group or body charged with setting financial accounting or regulatory capital rules or standards (including, without limitation, the Financial Accounting Standards Board, the Bank for International Settlements or the Basel Committee on Banking Supervision or any successor or similar authority to any of the foregoing).

 

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Granting Lender” has the meaning set forth in Section 8.08(g).

Hedging Obligations” mean, with respect to any Person, the obligations of such Person under any interest rate or currency swap agreement, interest rate or currency future agreement, interest rate collar agreement, interest rate or currency hedge agreement, and any put, call or other agreement or arrangement designed to protect such Person against fluctuations in interest rates or currency exchange rates.

Hostile Acquisition” means any Target Acquisition (as defined below) involving a tender offer or proxy contest that has not been recommended or approved by the board of directors (or similar governing body) of the Person that is the subject of such Target Acquisition. As used in this definition, the term “Target Acquisition” means any transaction, or any series of related transactions, by which any Person directly or indirectly (i) acquires all or substantially all of the assets or ongoing business of any other Person, whether through purchase of assets, merger or otherwise, (ii) acquires (in one transaction or as the most recent transaction in a series of transactions) control of at least a majority in ordinary voting power of the securities of any such Person that have ordinary voting power for the election of directors or (iii) otherwise acquires control of more than a 50% ownership interest in any such Person.

Increasing Lender” has the meaning set forth in Section 2.06(b).

Indebtedness” means, with respect to any Person, at any date, without duplication, (i) all obligations of such Person for borrowed money, or with respect to deposits or advances of any kind, or for the deferred purchase price of property or services other than trade accounts payable, (ii) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (iii) all obligations of such Person upon which interest charges are customarily paid, (iv) all obligations under leases that shall have been or should be, in accordance with GAAP, recorded as capital leases in respect of which such Person is liable as lessee, (v) withdrawal liability incurred under ERISA by such Person or any of its affiliates to any Multiemployer Plan, (vi) reimbursement obligations of such Person (whether contingent or otherwise) in respect of letters of credit, bankers acceptances, surety or other bonds and similar instruments, (vii) all Indebtedness of others secured by a Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person and (viii) obligations of such Person under direct or indirect guaranties in respect of, and obligations (contingent or otherwise) to purchase or otherwise acquire, or otherwise to assure a creditor against loss in respect of, indebtedness or obligations of others of the kinds referred to above.

Indemnified Person” has the meaning set forth in Section 8.05(c).

Indemnified Taxes” means (i) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of the Borrower under any Loan Document and (ii) to the extent not otherwise described in clause (i), Other Taxes.

Information” has the meaning set forth in Section 8.17.

 

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Interest Period” means, for each Eurodollar RateTerm Benchmark Advance made to the Borrower as part of the same Borrowing, the period commencing on the date of such Eurodollar RateTerm Benchmark Advance or the date of the Conversion of any Advance into such Eurodollar RateTerm Benchmark Advance and ending on the last day of the period selected by the Borrower pursuant to the provisions below and, thereafter in the case of Advances, each subsequent period commencing on the last day of the immediately preceding Interest Period and ending on the last day of the period selected by the Borrower pursuant to the provisions below. The duration of each such Interest Period shall be, in the case of any Eurodollar RateTerm Benchmark Advance, one, three or six months (in each case, subject to the availability for the Benchmark applicable to the relevant Advance or Commitment), in each case, as the Borrower may select by notice to the Administrative Agent pursuant to Section 2.02(a) or Section 2.11(a); provided, however, that:

(i) the Borrower may not select any Interest Period that ends after the latest Termination Date;

(ii) Interest Periods commencing on the same date for Advances made as part of the same Borrowing shall be of the same duration;

(iii) no more than five different Interest Periods shall apply to outstanding Eurodollar RateTerm Benchmark Advances with respect to the Borrower on any date of determination; and

(iv) whenever the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on the next succeeding Business Day, provided, that if such extension would cause the last day of such Interest Period to occur in the next following calendar month, the last day of such Interest Period shall occur on the next preceding Business Day.;

(v) any Interest Period that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period; and

(vi) no tenor that has been removed from this definition pursuant to Section 2.23(e) shall be available for specification in such Notice of Borrowing or notice of Conversion.

IRS” means the United States Internal Revenue Service.

JCP&L” has the meaning set forth in the preamble hereto.

JPMorgan” means JPMorgan Chase Bank, N.A.

Junior Subordinated Deferred Interest Debt Obligations” means subordinated deferrable interest debt obligations of the Borrower or any of its Subsidiaries (i) for which the maturity date is subsequent to the latest Termination Date and (ii) that are fully subordinated in right of payment to the Indebtedness hereunder.

 

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L/C Commitment Amount” means $100,000,000 as the same may be reduced permanently from time to time pursuant to Section 2.06.

L/C Fronting Bank Commitment” means, with respect to any Fronting Bank, the aggregate Stated Amount of all Letters of Credit that such Fronting Bank agrees to issue, as modified from time to time pursuant to an agreement signed by such Fronting Bank. With respect to each Lender that is a Fronting Bank on the date hereof, such Fronting Bank’s L/C Fronting Bank Commitment shall equal such Fronting Bank’s “L/C Fronting Bank Commitment” listed on Schedule II, and (ii) with respect to any Lender that becomes a Fronting Bank after the date hereof, such Lender’s L/C Fronting Bank Commitment shall equal the amount agreed upon between the Borrower and such Lender at the time that such Lender becomes a Fronting Bank, in each case as such L/C Fronting Bank Commitment may be modified in accordance with the terms of this Agreement.

L/C Obligations” means, on any date of determination, an amount equal to (i) the Lenders’ participation interests in the aggregate undrawn amount of all issued Letters of Credit outstanding on such date plus (ii) the aggregate amount of Reimbursement Obligations outstanding on such date.

Lender Extension Notice Date” has the meaning set forth in Section 2.19(b).

Lenders” means the Banks listed on the signature pages hereof and each assignee of a Bank or another Lender that shall become a party hereto pursuant to Section 8.08.

Letter of Credit” means any standby letter of credit issued hereunder and includes the Existing Letters of Credit.

Letter of Credit Cash Cover” has the meaning set forth in Section 6.01.

Letter of Credit Request” has the meaning set forth in Section 2.04(c).

Lien” means, with respect to any asset, any mortgage, deed of trust, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset. For the purposes of this Agreement, a Person or any of its Subsidiaries shall be deemed to own, subject to a Lien, any asset that it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such asset.

Loan Documents” means this Agreement, any Note and the Fee Letters.

MAIT” means Mid-Atlantic Interstate Transmission, LLC, a Delaware limited liability company.

Majority Lenders” means, at any time prior to the latest Termination Date, Lenders having in the aggregate more than 50% of the Commitments (without giving effect to any termination in whole of the Commitments pursuant to Section 6.01) and at any time on or after the latest Termination Date, Lenders having more than 50% of the then aggregate Outstanding Credits of the Lenders; provided, that for purposes hereof, no Borrower, nor any of its Affiliates, if a Lender, shall be included in (i) the Lenders having such amount of the Commitments or the Advances or (ii) determining the total amount of the Commitments or the Outstanding Credits.

 

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Margin Stock” has the meaning assigned to that term in Regulation U issued by the Board of Governors of the Federal Reserve System, and as amended and in effect from time to time.

Material Adverse Effect” means, with respect to the Borrower, (i) any material adverse effect on, or a material adverse change in, the business, property, assets, operations, condition (financial or otherwise), liabilities (actual or contingent) or prospects of the Borrower and its Consolidated Subsidiaries, taken as a whole, (ii) any material adverse effect on the legality, validity, binding effect or enforceability against the Borrower of this Agreement or any other Loan Document to which it is a party or (iii) a material impairment of the ability of the Borrower to perform any of its obligations under this Agreement or any other Loan Document to which it is a party.

Maximum Accordion Amount” has the meaning set forth in Section 2.06(b).

Met-Ed” means Metropolitan Edison Company, a Pennsylvania corporation.

Mizuho” has the meaning set forth in the preamble hereto.

Moody’s” means Moody’s Investors Service, Inc.

MP” means Monongahela Power Company, an Ohio corporation.

Multiemployer Plan” means a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA to which the Borrower or any member of the Controlled Group has, or may reasonably be expected to have, an obligation to make contributions, or with respect to which the Borrower has, or may reasonably be expected to incur, liability.

Non-Approving Lender” means any Lender that does not approve any consent, waiver or amendment that (i) requires the approval of all affected Lenders in accordance with the terms of Section 8.01 and (ii) has been approved by the Majority Lenders.

Noncompliance Event” means the Criminal Information and the DPA, and the entry by FE into the DPA, together with those events, actions, or omissions to act that are described in the Criminal Information and the Statement of Facts attached thereto.

Nonconsenting Lender” has the meaning set forth in Section 2.19(b).

Nonrecourse Indebtedness” means, with respect to the Borrower and its Subsidiaries, (i) any Indebtedness that finances the acquisition, development, construction or improvement of an asset in respect of which the Person to which such Indebtedness is owed has no recourse whatsoever to the Borrower or any of its Affiliates and (ii) any Indebtedness existing on the date of this Agreement that finances the ownership or operation of an asset in respect of which the Person to which such Indebtedness is owed has no recourse whatsoever to the Borrower or any of its Affiliates, in each case of clauses (i) and (ii), other than:

 

  (A)

recourse to the named obligor with respect to such Indebtedness (the “Debtor”) for amounts limited to the cash flow or net cash flow (other than historic cash flow) from the asset; and

 

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  (B)

recourse to the Debtor for the purpose only of enabling amounts to be claimed in respect of such Indebtedness in an enforcement of any security interest or lien given by the Debtor over the asset or the income, cash flow or other proceeds deriving from the asset (or given by any shareholder or the like in the Debtor over its shares or like interest in the capital of the Debtor) to secure the Indebtedness, but only if the extent of the recourse to the Debtor is limited solely to the amount of any recoveries made on any such enforcement; and

 

  (C)

recourse to the Debtor generally or indirectly to any Affiliate of the Debtor, under any form of assurance, undertaking or support, which recourse is limited to a claim for damages (other than liquidated damages and damages required to be calculated in a specified way) for a breach of an obligation (other than a payment obligation or an obligation to comply or to procure compliance by another with any financial ratios or other tests of financial condition) by the Person against which such recourse is available.

Note” means any promissory note issued at the request of a Lender pursuant to Section 2.18 in the form of Exhibit B hereto.

Notice of Borrowing” means a notice of a Borrowing pursuant to Section 2.02(a), which shall be substantially in the form of Exhibit C.

NYFRB ” means the Federal Reserve Bank of New York.

NYFRB’s Website” means the website of the NYFRB at http://www.newyorkfed.org, or any successor source.

OE” means Ohio Edison Company, an Ohio corporation.

OFAC” means The Office of Foreign Assets Control of the U.S. Department of the Treasury.

Organizational Documents” means, as applicable to any Person, the charter, code of regulations, articles of incorporation, by-laws, certificate of formation, operating agreement, certificate of partnership, limited liability company agreement, operating agreement, partnership agreement, certificate of limited partnership, limited partnership agreement or other constitutive documents of such Person.

Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Advance or Loan Document).

 

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Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 2.22(b)).

Outstanding Credits” means, on any date of determination, an amount equal to (i) the aggregate principal amount of all Advances outstanding on such date plus (ii) the aggregate undrawn amount of all issued Letters of Credit outstanding on such date plus (iii) the aggregate amount of Reimbursement Obligations outstanding on such date (excluding Reimbursement Obligations that, on such date of determination, are repaid with the proceeds of Advances made in accordance with Sections 2.04(f) and (g), to the extent the principal amount of such Advances is included in the determination of the aggregate principal amount of all outstanding Advances as provided in clause (i) of this definition). The Outstanding Credits of a Lender on any date of determination shall be an amount equal to the outstanding Advances made by such Lender plus the amount of such Lender’s participation interest in outstanding Letters of Credit and Reimbursement Obligations included in the definition of “Outstanding Credits”.

Parent” means, with respect to any Lender, any Person as to which such Lender is, directly or indirectly, a subsidiary.

Parent Credit Agreement” means that Credit Agreement, dated as of the date hereof, by and among FE and FET as borrowers, the banks and other financial institutions party thereto from time to time, and JPMorgan as administrative agent, as amended, amended and restated or otherwise modified from time to time.

Participant” has the meaning set forth in Section 8.08(d).

Participant Register” has the meaning set forth in Section 8.08(d).

Patriot Act” means the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)), as in effect from time to time.

Payment” has the meaning set forth in Section 7.06(c).

Payment Date” means the date on which payment of a Drawing is made by a Fronting Bank.

Payment Notice” has the meaning set forth in Section 7.06(c).

PBGC” means the Pension Benefit Guaranty Corporation and any entity succeeding to any or all of its functions under ERISA.

PE” means The Potomac Edison Company, a Maryland and Virginia corporation.

Penelec” means Pennsylvania Electric Company, a Pennsylvania corporation.

 

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Penn” means Pennsylvania Power Company, a Pennsylvania corporation.

Percentage” means, in respect of any Lender on any date of determination, the quotient (expressed as a percentage) obtained by (i) dividing such Lender’s Commitment on such day by the total of the Commitments on such day or (ii) if the Commitments have terminated or expired, dividing the Outstanding Credits of such Lender on such day by the aggregate Outstanding Credits on such day.

Permitted Obligations” mean (i) nonspeculative Hedging Obligations of any Person and its Subsidiaries arising in the ordinary course of business and in accordance with such Person’s established risk management policies that are designed to protect such Person against, among other things, fluctuations in interest rates or currency exchange rates and which in the case of agreements relating to interest rates shall have a notional amount no greater than the payments due with respect to the applicable obligations being hedged and (ii) Commodity Trading Obligations. For the avoidance of doubt, such transactions shall be considered nonspeculative with respect to the Borrower, if undertaken in conformance with the FE Corporate Risk Management Policy then in effect, as approved by FE’s Audit Committee, together with the Approved Business Unit Risk Management Policies referenced thereunder.

Permitted Securitization” means, for the Borrower and its Subsidiaries, any sale, assignment, conveyance, grant and/or contribution, or series of related sales, assignments, conveyances, grants and/or contributions, by the Borrower or any of its Subsidiaries of Receivables (or purported sale, assignment, conveyance, grant and/or contribution) to a trust, corporation or other entity, where the purchase of such Receivables may be funded or exchanged in whole or in part by the incurrence or issuance by the applicable Securitization SPV, if any, of Indebtedness or securities (such Indebtedness and securities being “Attributable Securitization Obligations”) that are to be secured by or otherwise satisfied by payments from, or that represent interests in, the cash flow derived primarily from such Receivables (provided, however, that “Indebtedness” as used in this definition shall not include Indebtedness incurred by a Securitization SPV owed to the Borrower or any of its Subsidiaries, which Indebtedness represents all or a portion of the purchase price or other consideration paid by such Securitization SPV for such receivables or interests therein), where (i) any representation, warranty, covenant, recourse, repurchase, hold harmless, indemnity or similar obligations of the Borrower or any of its Subsidiaries, as applicable, in respect of Receivables sold, assigned, conveyed, granted or contributed, or payments made in respect thereof, are customary for transactions of this type, and do not prevent the characterization of the transaction as a true sale under Applicable Laws (including debtor relief laws) and (ii) any representation, warranty, covenant, recourse, repurchase, hold harmless, indemnity or similar obligations of any Securitization SPV in respect of Receivables sold, assigned, conveyed, granted or contributed or payments made in respect thereof, are customary for transactions of this type.

Person” means an individual, partnership, corporation (including a business trust), limited liability company, joint stock company, trust, unincorporated association, joint venture or other entity, or a government or any political subdivision or agency thereof.

 

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Plan” means, at any time, an “employee pension benefit plan” (as defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 or 430 of the Code and (i) is (A) maintained by or contributed to by (or to which there is or may be an obligation to contribute to by) the Borrower or any member of the Controlled Group, or (B) maintained pursuant to a collective bargaining agreement or any other arrangement under which more than one employer makes contributions, or (ii) as to which the Borrower or a member of the Controlled Group has within the preceding five plan years maintained, contributed to or had an obligation to contribute to.

Plan Asset Regulations” means 29 CFR § 2510.3-101 et seq., as modified by Section 3(42) of ERISA, as amended from time to time.

PTE” means a prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be amended from time to time.

Receivables” means any accounts receivable, payment intangibles, notes receivable, rights to receive future payments and related rights (whether now existing or arising or acquired in the future, whether constituting accounts, chattel paper, instruments, general intangibles or otherwise, and including the right to payment of any interest or finance charges), including (i) financial transmission rights (“FTRs”) or any other rights to payment from PJM Interconnection, L.L.C. or another regional transmission authority of the Borrower or any of its Subsidiaries or (ii) the right to impose, charge, collect and receive special, irrevocable, nonbypassable charges based upon the consumption of electricity imposed pursuant to Applicable Law on the Borrower’s or any of its Subsidiaries’ ratepayers, and any supporting obligations and other financial assets related thereto (including all collateral securing such accounts receivables, FTRs or other assets, contracts and contract rights, all guarantees with respect thereto, and all proceeds thereof) that are transferred, or in respect of which security interests are granted in one or more transactions that are customary for asset securitizations of such Receivables.

Recipient” means, as applicable, (i) the Administrative Agent, (ii) any Lender and (iii) any Fronting Bank.

Reference Ratings” means, with respect to the Borrower, the ratings assigned by S&P and Moody’s to the senior unsecured non-credit enhanced debt of the Borrower; provided that, if there is no such rating, “Reference Ratings” shall mean the ratings that are one level below the respective ratings assigned by S&P and Moody’s to the senior secured debt of the Borrower.

Reference Time” with respect to any setting of the then-current Benchmark means (1) if such Benchmark is the Term SOFR Rate, 5:00 a.m. (Chicago time) on the day that is two U.S. Government Securities Business Days preceding the date of such setting , (2) if the RFR for such Benchmark is Daily Simple SOFR, then four U.S. Government Securities Business Days prior to such setting or (3) if such Benchmark is none of the Term SOFR Rate or Daily Simple SOFR, the time determined by the Administrative Agent in its reasonable discretion.

Register” has the meaning set forth in Section 8.08(c).

 

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Reimbursement Obligation” means the obligation of the Borrower to reimburse a Fronting Bank for any Drawing paid by such Fronting Bank pursuant to Section 2.04(g).

Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees, administrators, managers, advisors and representatives of such Person and of such Person’s Affiliates.

Relevant Governmental Body” means the Board of Governors of the Federal Reserve System Board and/or the Federal Reserve Bank of New YorkNYFRB, or a committee officially endorsed or convened by the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, orBoard and/or the NYRFB or, in each case, any successor thereto.

Relevant Rate” means (i) with respect to any Term Benchmark Borrowing, the Adjusted Term SOFR Rate or (ii) with respect to any RFR Borrowing, the Adjusted Daily Simple SOFR, as applicable.

Reportable Compliance Event” means that any Covered Entity becomes a Sanctioned Person, or is charged by indictment, criminal complaint or similar charging instrument, arraigned, or custodially detained in connection with any Anti-Corruption Law or any predicate crime to any Anti-Corruption Law, or has knowledge of facts or circumstances to the effect that it is reasonably likely that any aspect of its operations is in actual or probable violation of any Anti-Corruption Law.

Required Reimbursement Date” has the meaning set forth in Section 2.04(f)(i).

Resolution Authority” means an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.

RFR Advance” means an Advance that bears interest at a rate based on the Adjusted Daily Simple SOFR.

RFR Borrowing” means, as to any Borrowing, the RFR Advances comprising such Borrowing.

S&P” means S&P Global Ratings, a business unit of Standard & Poor’s Financial Services LLC, a subsidiary of S&P Global Inc.

Sanctioned Country” means, at any time, a region, country or territory which is, or whose government is, the subject or target of any Sanctions (at the date of this Agreement, the Crimea region of Ukraine, Cuba, Iran, North Korea and Syria).

Sanctioned Person” means (a) any Person named on the list of Specially Designated Nationals maintained by OFAC, or any other Sanctions-related list of designated Persons maintained by the U.S. Department of State, the U.S. Department of Commerce, the U.S. Department of the Treasury or any other U.S. Governmental Authority, or maintained by the United Nations Security Council, HerHis Majesty’s Treasury of the United Kingdom, the European Union or any member state thereof, as may be amended, supplemented or substituted

 

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from time to time, (b) any Person that is (i) operating, located, organized or resident in a Sanctioned Country, to the extent such presence in the Sanctioned Country means that such Person is the target of Sanctions, or (ii) the subject or target of any Sanctions, or (c) any Person controlled by any such Person described in the foregoing clause (a) or clause (b). For purposes of the foregoing clause (c), “control” shall have the meaning ascribed to such term in the definition of “Covered Entity”.

Sanctions” means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by OFAC, the U.S. Department of State, the U.S. Department of Commerce or the U.S. Department of Treasury, or (b) the United Nations Security Council, the European Union or any member state thereof, HerHis Majesty’s Treasury of the United Kingdom or any other Governmental Authority with jurisdiction over any of the parties to this Agreement.

SEC” means the United States Securities and Exchange Commission.

Securitization SPV” means any trust, partnership or other Person established by the Borrower or a Subsidiary of the Borrower to implement a Permitted Securitization.

Service” has the meaning set forth in the definition of “Eurodollar Rate”.

Significant Subsidiaries” means, with respect to the Borrower, each significant subsidiary of the Borrower (as such term is defined in Regulation S-X of the SEC (17 C.F.R. §210.1-02(w)), or any successor provision) (excluding Securitization SPVs).

SOFR” means a rate equal to the secured overnight financing rate as administered by the SOFR Administrator.

SOFR Administrator” means the NYFRB (or a successor administrator of the secured overnight financing rate).

SOFR” means, with respect to any Business Day, a rate per annum equal to the secured overnight financing rate for such Business Day published by the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate) on the website of the Federal Reserve Bank of New York Administrator’s Website” means the NYRFB’s website, currently at http://www.newyorkfed.org (, or any successor source for the secured overnight financing rate identified as such by the administrator of the secured overnight financing rateSOFR Administrator from time to time) on the immediately succeeding Business Day.

SOFR Determination Date” has the meaning specified in the definition of “Daily Simple SOFR”.

SOFR Rate Day” has the meaning specified in the definition of “Daily Simple SOFR”.

SPC” has the meaning set forth in Section 8.08(g).

 

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Specified Date” has the meaning set forth in Section 2.19(c).

Specified Disposition” means the sale by FE or the Borrower, directly or indirectly, of up to 20% of the issued and outstanding voting equity in any of its Significant Subsidiaries (solely with respect to FE, as such term is defined in the Parent Credit Agreement) at the time of such disposition, and for which the Borrower and FE shall have received all necessary and applicable Governmental Action.

Specified Event” means the occurrence of an Event of Default pursuant to Section 6.01(k) of the Parent Credit Agreement.

Stated Amount” means the maximum amount available to be drawn by a Beneficiary under a Letter of Credit.

Subsidiary” means, with respect to any Person, any corporation or other entity of which securities or other ownership interests having ordinary voting power to elect a majority of the Board of Directors or other persons performing similar functions are at the time directly or indirectly owned by such a Person, or one or more Subsidiaries, or by such Person and one or more of its Subsidiaries.

Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

TE” means The Toledo Edison Company, an Ohio corporation.

Term Benchmark” when used in reference to any Advance or Borrowing, refers to whether such Advance, or the Advances comprising such Borrowing, are bearing interest at a rate determined by reference to the Adjusted Term SOFR Rate (other than pursuant to clause (iii) of the definition of “Alternate Base Rate”).

Term SOFR” means, for the applicable Corresponding Tenor, the forward-looking term rate based on SOFR that has been selected or recommended by the Relevant Governmental Body. Determination Day” has the meaning assigned to it under the definition of Term SOFR Reference Rate.

Term SOFR Rate” means, with respect to any Term Benchmark Borrowing and for any tenor comparable to the applicable Interest Period, the Term SOFR Reference Rate at approximately 5:00 a.m., Chicago time, two U.S. Government Securities Business Days prior to the commencement of such tenor comparable to the applicable Interest Period, as such rate is published by the CME Term SOFR Administrator.

Term SOFR Reference Rate” means, for any day and time (such day, the “Term SOFR Determination Day”), with respect to any Term Benchmark Borrowing denominated in Dollars and for any tenor comparable to the applicable Interest Period, the rate per annum published by the CME Term SOFR Administrator and identified by the Administrative Agent as the forward-looking term rate based on SOFR. If by 5:00 pm (New York City time) on such Term SOFR Determination Day, the “Term SOFR Reference Rate” for the applicable tenor has

 

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not been published by the CME Term SOFR Administrator and a Benchmark Replacement Date with respect to the Term SOFR Rate has not occurred, then, so long as such day is otherwise a U.S. Government Securities Business Day, the Term SOFR Reference Rate for such Term SOFR Determination Day will be the Term SOFR Reference Rate as published in respect of the first preceding U.S. Government Securities Business Day for which such Term SOFR Reference Rate was published by the CME Term SOFR Administrator, so long as such first preceding U.S. Government Securities Business Day is not more than five (5) U.S. Government Securities Business Days prior to such Term SOFR Determination Day.

Termination Date” means October 18, 2026, subject, for certain Lenders, to the extension described in Section 2.19 hereof, or, in any case, the earlier date of termination in whole of the Commitments pursuant to Section 2.06 or Section 6.01 hereof.

Termination Event” means (i) a Reportable Event described in Section 4043(c) of ERISA and the regulations issued thereunder (other than a Reportable Event not subject to the provision for 30-day notice to the PBGC with respect to a Plan under such regulations), or (ii) the withdrawal of the Borrower or any member of the Controlled Group from a Plan during a plan year in which it was a “substantial employer” as defined in Section 4001(a)(2) of ERISA, or (iii) a cessation of operations with respect to which the Borrower or any member of the Controlled Group has incurred liability under Section 4062(e) of ERISA, or (iv) the filing of a notice of intent to terminate a Plan or the treatment of a Plan amendment as a termination under Section 4041 or 4042 of ERISA, or (v) the institution of proceedings to terminate a Plan by the PBGC, or (vi) any other event or condition that might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment by a court of competent jurisdiction of a trustee to administer, any Plan.

Total Capitalization” means, with respect to the Borrower at any date of determination, the sum, without duplication, of (i) Consolidated Debt of the Borrower, (ii) the capital stock (but excluding treasury stock and capital stock subscribed and unissued) and other equity accounts (including retained earnings and paid in capital but excluding accumulated other comprehensive income and loss) of the Borrower and its Consolidated Subsidiaries, (iii) consolidated equity of the preference stockholders of the Borrower and its Consolidated Subsidiaries, and (iv) the aggregate principal amount of Trust Preferred Securities and Junior Subordinated Deferred Interest Debt Obligations of the Borrower and its Consolidated Subsidiaries.

TrAILCo” means Trans-Allegheny Interstate Line Company, a Maryland and Virginia corporation.

Trust Preferred Securities” means any securities, however denominated, (i) issued by the Borrower or any Consolidated Subsidiary of the Borrower, (ii) that are not subject to mandatory redemption or the underlying securities, if any, of which are not subject to mandatory redemption, (iii) that are perpetual or mature no less than 30 years from the date of issuance, (iv) the indebtedness issued in connection with which, including any guaranty, is subordinate in right of payment to the unsecured and unsubordinated indebtedness of the issuer of such indebtedness or guaranty, and (v) the terms of which permit the deferral of the payment of interest or distributions thereon to a date occurring after the latest Termination Date.

 

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Typemeans the designation of a Borrowing or an Advance as a Eurodollar Rate Borrowing or Advance or as an when used in reference to any Advance or Borrowing, refers to whether the rate of interest on such Advance, or on the Advances comprising such Borrowing, is determined by reference to the Adjusted Term SOFR Rate (other than pursuant to clause (iii) of the definition of “Alternate Base Rate Borrowing or Advance”) or the Alternate Base Rate or, if applicable, Adjusted Daily Simple SOFR.

UK Financial Institution” means any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended from time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any Person falling within IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms.

UK Resolution Authority” means the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution.

Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment.

United States” and “U.S.” each means the United States of America.

Unmatured Default” means any event that, with the giving of notice or the passage of time, or both, would constitute an Event of Default.

USD LIBOR” means the London interbank offered rate for U.S. dollars.

U.S. Government Securities Business Day” means any day except for (i) a Saturday, (ii) a Sunday or (iii) a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities.

U.S. Person” means any Person that is a “United States person” as defined in Section 7701(a)(30) of the Code.

U.S. Tax Compliance Certificate” has the meaning set forth in Section 2.16(g)(ii)(B)(iii).

West-Penn” means West Penn Power Company, a Pennsylvania corporation.

Withholding Agent” means the Borrower and the Administrative Agent.

Write-Down and Conversion Powers” means, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK

 

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Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.

SECTION 1.02. Computation of Time Periods.

In this Agreement in the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each means “to but excluding”.

SECTION 1.03. Accounting Terms.

All accounting terms not specifically defined herein shall be construed in accordance with GAAP consistent with those applied in the preparation of the financial statements referred to in Section 4.01(g). Notwithstanding any other provision contained herein, all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein, and the determination of Indebtedness hereunder, shall be made without giving effect to Financial Accounting Standards Board (FASB) Standard ASC 842 (Leases) (or any other applicable financial accounting standard having a similar result or effect) and related interpretations, in each case, to the extent any lease (or similar arrangement conveying the right to use) would be required to be treated as a capital lease thereunder where such lease (or similar arrangement) would have been treated as an operating lease under GAAP as in effect immediately prior to the effectiveness of the ASC 842.

SECTION 1.04. Terms Generally.

Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, amended and restated, supplemented or otherwise modified (subject to any restrictions on such amendments, restatements, supplements or modifications set forth herein), (ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (iii) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provisions hereof, (iv) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement, and (v) the definitions of terms herein shall apply equally to the singular and plural forms of the terms defined.

 

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SECTION 1.05. Divisions.

For all purposes under the Loan Documents, in connection with any division or plan of division under Delaware law (or any comparable event under a different jurisdiction’s laws): (a) if any asset, right, obligation or liability of any Person becomes the asset, right, obligation or liability of a different Person, then it shall be deemed to have been transferred from the original Person to the subsequent Person, and (b) if any new Person comes into existence, such new Person shall be deemed to have been organized on the first date of its existence by the holders of its equity interests at such time.

SECTION 1.06. Interest Rates; LIBOR NotificationDisclaimer and Exculpation With Respect to any Rate.

 

The interest rate on a Eurodollar Rate Advance is determined by reference to the London interbank offered rate (“LIBOR”). LIBOR is intended to represent the rate at which contributing banks may obtain short-term borrowings from each other in the London interbank market. On March 5, 2021, the U.K. Financial Conduct Authority (“FCA”) publicly announced that: (a) immediately after December 31, 2021, publication of the 1-week and 2-month U.S. Dollar LIBOR settings will permanently cease; immediately after June 30, 2023, publication of the overnight and 12-month U.S. Dollar LIBOR settings will permanently cease; and immediately after June 30, 2023, the 1-month, 3-month and 6-month U.S. Dollar LIBOR settings will cease to be provided or, subject to the FCA’s consideration of the case, be provided on a synthetic basis and no longer be representative of the underlying market and economic reality they are intended to measure and that representativeness will not be restored. There is no assurance that dates announced by the FCA will not change or that the administrator of LIBOR and/or regulators will not take further action that could impact the availability, composition, or characteristics of LIBOR or the currencies and/or tenors for which LIBOR is published. Each party to this Agreement should consult its own advisors to stay informed of any such developments. Public and private sector industry initiatives are currently underway to identify new or alternative reference rates to be used in place of LIBOR. On the earlier of (i) the date that all Available Tenors of USD LIBOR have either permanently or indefinitely ceased to be provided by IBA or have been announced by the FCA pursuant to public statement or publication of information to be no longer representative and (ii) the Early Opt-in Effective Date, Section 2.23 provides a mechanism for determining an alternative rate of interest. The Administrative Agent will promptly notify the Borrower, pursuant to Section 2.23(d), of any change to the reference rate upon which the interest rate on Eurodollar Rate Advances is based. However, the Administrative AgentThe Administrative Agent does not warrant or accept any responsibility for, and shall not have any liability with respect to, the administration, submission, performance or any other matter related to LIBORthe Alternate Base Rate, Term SOFR Reference Rate, Adjusted Term SOFR Rate, Term SOFR Rate, Daily Simple SOFR, Adjusted Daily Simple SOFR or any Benchmark or with respect to any alternative or, successor rate thereto, or replacement rate thereof (including any Benchmark Replacement), or any calculation, component definition thereof or rate referenced in the definition thereof, including, without limitation, (i)(i) any such alternative, successor or replacement rate (including any Benchmark Replacement) implemented pursuant to Section 2.23(a) or (b), whether upon the occurrence of an event described in Section 2.23(a), a Benchmark Transition Event, or an Early Opt-in Election, and (ii)(ii) the effect, implementation or composition of any Benchmark Replacement Conforming Changes pursuant to Section 2.23(c)), including without limitation, whether the composition or characteristics of any such alternative, successor or replacement reference rate (including any Benchmark Replacement) will be similar to, or produce the same value or economic equivalence of, LIBORthe Alternate Base Rate, Term SOFR Reference Rate, Adjusted

 

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Term SOFR Rate, Term SOFR Rate, Daily Simple SOFR, Adjusted Daily Simple SOFR or any Benchmark or have the same volume or liquidity as did the London interbank offered rateAlternate Base Rate, Term SOFR Reference Rate, Adjusted Term SOFR Rate, Term SOFR Rate, Daily Simple SOFR, Adjusted Daily Simple SOFR or any Benchmark prior to its discontinuance or unavailability. In addition, the discontinuation of the Alternate Base Rate, Term SOFR Reference Rate, Adjusted Term SOFR Rate, Term SOFR Rate, Daily Simple SOFR, Adjusted Daily Simple SOFR, any Benchmark and any alternative, successor or replacement reference rate may result in a mismatch between the reference rate referenced in this Agreement and your other financial instruments, including potentially those that are intended as hedges. The Administrative Agent and its affiliatesAffiliates and/or other related entities may engage in transactions that affect the calculation of anythe Alternate Base Rate, Term SOFR Reference Rate, Adjusted Term SOFR Rate, Term SOFR Rate, Daily Simple SOFR, Adjusted Daily Simple SOFR, any Benchmark or any alternative, successor or replacement rate (including any Benchmark Replacement) and/or any relevant adjustments thereto, in each case, in a manner adverse to the Borrowerwith all determinations of such Alternate Base Rate, Term SOFR Reference Rate, Adjusted Term SOFR Rate, Term SOFR Rate, Daily Simple SOFR, Adjusted Daily Simple SOFR, any Benchmark or such alternative, successor or replacement rate by the Administrative Agent to be conclusive, absent manifest error. The Administrative Agent may select information sources or services in its reasonable discretion to ascertain LIBOR orthe Alternate Base Rate, Term SOFR Reference Rate, Adjusted Term SOFR Rate, Term SOFR Rate, Daily Simple SOFR, Adjusted Daily Simple SOFR, any Benchmark, or any component definition thereof or rates referred to in the definition thereof, or any such alternative, successor or replacement rate, in each case pursuant to the terms of this Agreement (as amended, amended and restated, supplemented or otherwise modified from time to time), and shall have no liability to the Borrower, any Lender or any other person or entity for damages of any kind, including direct or indirect, special, punitive, incidental or consequential damages, costs, losses or expenses (whether in tort, contract or otherwise and whether at law or in equity), for any error or calculation of any such rate (or component thereof) provided by any such information source or service.

ARTICLE II

AMOUNTS AND TERMS OF THE ADVANCES AND LETTERS OF CREDIT

SECTION 2.01. The Advances.

Each Lender severally agrees, on the terms and conditions hereinafter set forth, to make Advances to the Borrower in Dollars only from time to time on any Business Day during the period from the date hereof until the Termination Date applicable to such Lender in an aggregate amount not to exceed at any time outstanding the Available Commitment of such Lender. Each Borrowing shall be in an aggregate amount not less than $5,000,000 or an integral multiple of $1,000,000 in excess thereof and shall consist of Advances of the same Type and, in the case of Eurodollar RateTerm Benchmark Advances, having the same Interest Period made or Converted on the same day by the Lenders ratably according to their respective Commitments. Within the limits of each Lender’s Available Commitment, and subject to the conditions set forth in Article III and the other terms and conditions hereof, the Borrower may from time to time borrow, prepay pursuant to Section 2.12 and reborrow under this Section 2.01; provided, that in no case shall any Lender be required to make an Advance to the Borrower hereunder if (i) the

 

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amount of such Advance would exceed such Lender’s Available Commitment or (ii) the making of such Advance, together with the making of the other Advances constituting part of the same Borrowing, would cause the total amount of all Outstanding Credits to exceed the aggregate amount of the Commitments. For the avoidance of doubt, the making of, or Conversion into, RFR Advances, shall only be applicable as set forth in Section 2.14 or Section 2.23.

SECTION 2.02. Making the Advances.

(a) Each Borrowing shall be made on notice, given (i) (x) in the case of a Borrowing comprising Eurodollar RateTerm Benchmark Advances, not later than 11:00 a.m. (New York time) on the third U.S. Government Securities Business Day prior to the date of the proposed Borrowing, or (y) in the case of an RFR Borrowing, if applicable, not later than 11:00 a.m. (New York time) on the fifth U.S. Government Securities Business Day prior to the date of the proposed Borrowing, and (ii) in the case of a Borrowing comprising Alternate Base Rate Advances, not later than 11:00 a.m. (New York time) on the date of the proposed Borrowing, by the Borrower to the Administrative Agent, which shall give to each Lender prompt notice thereof. Each such Notice of Borrowing by the Borrower shall be by email or any other electronic manner reasonably acceptable to the Administrative Agent, in substantially the form of Exhibit C hereto, specifying therein the requested (A) date of such Borrowing, (B) Type of Advances to be made in connection with such Borrowing, (C) aggregate amount of such Borrowing, (D) in the case of a Borrowing comprising Eurodollar RateTerm Benchmark Advances, the initial Interest Period for each such Advance, which Borrowing shall be subject to the limitations stated in the definition of “Interest Period” in Section 1.01, and (E) the identity of the Borrower requesting such Borrowing. The Borrower may request that more than one Borrowing be made on any date. Each Lender shall, before 1:00 p.m. (New York time) on the date of such Borrowing, make available for the account of its Applicable Lending Office to the Administrative Agent at its address referred to in Section 8.02, in same day funds, such Lender’s Percentage of such Borrowing. After the Administrative Agent’s receipt of such funds and upon fulfillment of the applicable conditions set forth in Article III, the Administrative Agent will make such funds available to the Borrower at the Administrative Agent’s aforesaid address.

(b) Each Notice of Borrowing delivered by the Borrower shall be irrevocable and binding on the Borrower. In the case of any Notice of Borrowing delivered by the Borrower requesting Eurodollar RateTerm Benchmark Advances (or, if applicable, RFR Advances), the Borrower shall indemnify each Lender against any loss, cost or expense incurred by such Lender as a result of any failure by the Borrower to fulfill on or before the date specified in such Notice of Borrowing the applicable conditions set forth in Article III, including, without limitation, any loss (including loss of anticipated profits), cost or expense incurred by reason of the liquidation or redeployment of deposits or other funds acquired by such Lender to fund the Advance to be made by such Lender as part of such Borrowing when such Advance, as a result of such failure, is not made on such date.

(c) Unless the Administrative Agent shall have received written notice via facsimile transmission from a Lender prior to (A) 5:00 p.m. (New York time) one U.S. Government Securities Business Day prior to the date of a Borrowing comprising Eurodollar RateTerm Benchmark Advances (or, if applicable, RFR Advances) or (B) 12:00 p.m. (New York time) on the date of a Borrowing comprising Alternate Base Rate Advances that such Lender will not make

 

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available to the Administrative Agent such Lender’s Percentage of such Borrowing, the Administrative Agent may assume that such Lender has made such portion available to the Administrative Agent on the date of such Borrowing in accordance with subsection (a) of this Section 2.02 and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If and to the extent that such Lender shall not have so made such Percentage of such Borrowing available to the Administrative Agent, such Lender and the Borrower severally agree to repay to the Administrative Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Administrative Agent, at (i) in the case of the Borrower, the interest rate applicable at the time to Advances made in connection with such Borrowing and (ii) in the case of such Lender, the Federal Funds Rate. If such Lender shall repay to the Administrative Agent such corresponding amount, such amount so repaid shall constitute such Lender’s Advance as part of such Borrowing for purposes of this Agreement.

(d) The obligations of the Lenders hereunder to make Advances are several and not joint. The failure of any Lender to make the Advance to be made by it as part of any Borrowing shall not relieve any other Lender of its obligation, if any, hereunder to make its Advance on the date of such Borrowing, but no Lender shall be responsible for the failure of any other Lender to make the Advance to be made by such other Lender on the date of any Borrowing.

SECTION 2.03. [Reserved].

SECTION 2.04. Letters of Credit.

(a) Agreement of Fronting Banks. Subject to the terms and conditions of this Agreement, each Fronting Bank agrees to issue and amend (including, without limitation, to extend or renew) for the account of the Borrower or any Subsidiary thereof (each such Person, an “Account Party”) one or more Letters of Credit from and including the date hereof to the third Business Day preceding the Termination Date applicable to such Fronting Bank, in an aggregate Stated Amount at any time outstanding not to exceed such Fronting Bank’s L/C Fronting Bank Commitment, up to a maximum aggregate Stated Amount of all Letters of Credit at any one time outstanding equal to the L/C Commitment Amount minus Reimbursement Obligations outstanding at such time. Each Letter of Credit may be renewable (if so requested by the Borrower), shall have a Stated Amount not less than $100,000 and shall have an Expiration Date of no later than the earlier of (x) the third Business Day preceding the then-scheduled Termination Date applicable to the Fronting Bank issuing such Letter of Credit and (y) the date occurring one year after the Date of Issuance of such Letter of Credit; provided, however, that no Fronting Bank will issue or amend a Letter of Credit if, immediately following such issuance or amendment, (i) the Stated Amount of such Letter of Credit would (A) exceed the Available Commitments or (B) when aggregated with (1) the Stated Amounts of all other outstanding Letters of Credit and (2) the outstanding Reimbursement Obligations, exceed the L/C Commitment Amount or (ii) the total amount of all Outstanding Credits would exceed the aggregate amount of the Commitments. Letters of Credit shall be denominated in Dollars only. Notwithstanding that any Letter of Credit issued or outstanding hereunder may be in support of any obligations of, or for the account of, a Subsidiary of the Borrower, the Borrower that requests the issuance of any such Letter of Credit in support of any obligations of, or for the account of, any of its Subsidiaries shall be obligated to reimburse the

 

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applicable Fronting Bank for any and all drawings under such Letter of Credit. The Borrower that requests the issuance of any such Letter of Credit hereby acknowledges that the issuance of Letters of Credit for the account of its Subsidiaries inures to the Borrower’s benefit and that the Borrower’s business derives substantial benefits from the businesses of such Subsidiary. No Fronting Bank shall be under any obligation to issue any Letter of Credit if (A) any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain such Fronting Bank from issuing such Letter of Credit, or if the Approvals are no longer in effect or no longer provide approval for the issuance of such Letter of Credit, (B) any law applicable to such Fronting Bank or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over such Fronting Bank shall prohibit, or request that such Fronting Bank refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon such Fronting Bank with respect to such Letter of Credit any restriction, reserve or capital requirement (for which such Fronting Bank is not otherwise compensated hereunder) not in effect on the date hereof, or shall impose upon such Fronting Bank any unreimbursed loss, cost or expense that was not applicable on the date hereof and that such Fronting Bank in good faith deems material to it, (C) the issuance of such Letter of Credit would violate one or more policies of such Fronting Bank or (D) such Fronting Bank is not required to make any Extension of Credit in connection with a Letter of Credit under Section 2.21(e).

(b) Forms. Each Letter of Credit shall be in a form customarily used by the Fronting Bank that is to issue such Letter of Credit or in such other form as has been approved by such Fronting Bank. At the time of issuance or amendment, subject to the terms and conditions of this Agreement, the amount and the terms and conditions of each Letter of Credit shall be subject to approval by the applicable Fronting Bank and the Borrower.

(c) Notice of Issuance; Application. The Borrower shall give the applicable Fronting Bank and the Administrative Agent written notice, or telephonic notice confirmed in writing, in any case, at least two (2) Business Days (or such shorter period as such Fronting Bank may agree in its sole discretion) prior to the requested Date of Issuance of a Letter of Credit, such notice to be in substantially the form of Exhibit D hereto (a “Letter of Credit Request”). The Borrower shall also execute and deliver such customary letter of credit application forms as requested from time to time by such Fronting Bank. Such application forms shall indicate the identity of the Account Party and that the Borrower is the “Applicant” or shall otherwise indicate that the Borrower is the obligor in respect of any Letter of Credit to be issued thereunder. If the terms or conditions of the application forms conflict with any provision of this Agreement, the terms of this Agreement shall govern.

(d) Issuance. Provided that the Borrower has given the notice prescribed by Section 2.04(c) and subject to the other terms and conditions of this Agreement, including the satisfaction of the applicable conditions precedent set forth in Article III, the applicable Fronting Bank shall issue the requested Letter of Credit on the requested Date of Issuance as set forth in the applicable Letter of Credit Request for the benefit of the stipulated Beneficiary and shall deliver the original of such Letter of Credit to the Beneficiary at the address specified in the notice. At the request of the Borrower, such Fronting Bank shall deliver a copy of each Letter of Credit to the Borrower within a reasonable time after the Date of Issuance thereof. Upon the request of the Borrower, such Fronting Bank shall deliver to the Borrower a copy of any Letter of Credit proposed to be issued hereunder prior to the issuance thereof.

 

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(e) Notice of Drawing. Each Fronting Bank shall promptly notify the Borrower by telephone, facsimile or other telecommunication of any Drawing under a Letter of Credit issued for the account of the Borrower by such Fronting Bank.

(f) Payments. The Borrower hereby agrees to pay to each Fronting Bank, in the manner provided in subsection (g) below:

(i) on the date of receipt by the Borrower of notice of any Drawing pursuant to a subsection (e) above, if such notice is received not later than 11:00 a.m. (New York City time), or on the first Business Day following receipt of such notice by the Borrower, if such notice is received later than 11:00 a.m. (New York City time), an amount equal to the amount paid by such Fronting Bank in connection with such Drawing (such date being the “Required Reimbursement Date”); and

(ii) if any Drawing shall be reimbursed to any Fronting Bank after 12:00 p.m. (New York time) on the applicable Payment Date, interest on any and all amounts required to be paid pursuant to clause (i) of this subsection (f) from and after such Payment Date until payment in full, payable on demand, at the annual rate of interest applicable to Alternate Base Rate Advances as in effect from time to time, provided, however, that from and after the Required Reimbursement Date with respect to such Drawing until payment in full, such interest rate shall be increased by 2.00% per annum.

(g) Method of Reimbursement. The Borrower shall reimburse each Fronting Bank for each Drawing under any Letter of Credit issued for the account of the Borrower by such Fronting Bank pursuant to subsection (f) above in the following manner:

(i) the Borrower shall reimburse such Fronting Bank in the manner described in subsection (f) above and Section 2.15; or

(ii) if (A) the Borrower has not reimbursed such Fronting Bank pursuant to paragraph (i) above, (B) the applicable conditions to Borrowing set forth in Articles II and III have been fulfilled, and (C) the Available Commitments in effect at such time exceed the amount of the Drawing to be reimbursed, the Borrower may reimburse such Fronting Bank for such Drawing with the proceeds of an Alternate Base Rate Advance or, if the conditions specified in the foregoing clauses (A), (B) and (C) have been satisfied and a Notice of Borrowing requesting a Eurodollar RateTerm Benchmark Advance (or, if applicable, RFR Advance) has been given, in accordance with Section 2.02, three (3) U.S. Government Securities Business Days (or, with respect to a request for an RFR Advance, if applicable, five (5) U.S. Government Securities Business Days) prior to the relevant Payment Date, with the proceeds of a Eurodollar RateTerm Benchmark Advance (or, if applicable, RFR Advance).

(h) Nature of Fronting Banks’ Duties. In determining whether to honor any Drawing under any Letter of Credit issued by any Fronting Bank, such Fronting Bank shall be responsible only to determine that the documents and certificates required to be delivered under such Letter of Credit have been delivered and that they comply on their face with the requirements of such Letter of Credit. The Borrower otherwise assumes all risks of the acts and omissions of, or misuse of any Letter of Credit issued by any Fronting Bank for the account of the Borrower by,

 

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the Beneficiary of such Letter of Credit. In furtherance and not in limitation of the foregoing, but consistent with Applicable Law, no Fronting Bank shall be responsible, absent gross negligence or willful misconduct (as determined by the final, non-appealable judgment of a court of competent jurisdiction), (i) for the form, validity, sufficiency, accuracy, genuineness or legal effects of any document submitted by any party in connection with the application for and issuance of any drawing honored under a Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any such Letter of Credit, or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (iii) for errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex, facsimile or otherwise, whether or not they be in cipher; (iv) for errors in interpretation of technical terms; (v) for any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any such Letter of Credit, or the proceeds thereof; (vi) for the misapplication by the Beneficiary of any such Letter of Credit or of the proceeds of any drawing honored under such Letter of Credit; and (vii) for any consequences arising from causes beyond the control of such Fronting Bank. None of the above shall affect, impair or prevent the vesting of any of such Fronting Bank’s rights or powers hereunder. Not in limitation of the foregoing, any action taken or omitted to be taken by any Fronting Bank under or in connection with any Letter of Credit shall not create against such Fronting Bank any liability to the Borrower or any Lender, except for actions or omissions resulting from the gross negligence or willful misconduct (as determined by the final, non-appealable judgment of a court of competent jurisdiction) of such Fronting Bank or any of its agents or representatives, and such Fronting Bank shall not be required to take any action that exposes such Fronting Bank to personal liability or that is contrary to this Agreement or Applicable Law.

(i) Obligations of Borrower Absolute. The obligation of the Borrower to reimburse each Fronting Bank for Drawings honored under the Letters of Credit issued for the account of the Borrower by such Fronting Bank shall be unconditional and irrevocable and shall be paid strictly in accordance with the terms of this Agreement under all circumstances including, without limitation, the following circumstances:

(i) any lack of validity or enforceability of any Letter of Credit;

(ii) the existence of any claim, set-off, defense or other right that the Borrower, any Account Party or any Affiliate of the Borrower or any Account Party may have at any time against a Beneficiary or any transferee of any Letter of Credit (or any Persons or entities for whom any such Beneficiary or transferee may be acting), such Fronting Bank or any other Person, whether in connection with this Agreement, the transactions contemplated herein or any unrelated transaction;

(iii) any draft, demand, certificate or any other documents presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect;

(iv) the surrender or impairment of any security for the performance or observance of any of the terms of any of the Loan Documents;

 

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(v) any non-application or misapplication by the Beneficiary of the proceeds of any Drawing under a Letter of Credit; or

(vi) the fact that an Event of Default or an Unmatured Default shall have occurred and be continuing.

No payment made under this Section 2.04 shall be deemed to be a waiver of any claim the Borrower may have against any Fronting Bank or any other Person.

(j) Participations by Lenders. By the issuance of a Letter of Credit and without any further action on the part of any Fronting Bank or any Lender in respect thereof, each Fronting Bank shall hereby be deemed to have granted to each Lender, and each Lender shall hereby be deemed to have acquired from such Fronting Bank, an undivided interest and participation in such Letter of Credit (including any letter of credit issued by such Fronting Bank in substitution or exchange for such Letter of Credit pursuant to the terms thereof) equal to such Lender’s Percentage of the Stated Amount of such Letter of Credit, effective upon the issuance of such Letter of Credit. In consideration and in furtherance of the foregoing, each Lender hereby absolutely and unconditionally agrees to pay to such Fronting Bank, in accordance with this subsection (j), such Lender’s Percentage of each payment made by such Fronting Bank in respect of an unreimbursed Drawing under a Letter of Credit. Such Fronting Bank shall notify the Administrative Agent of the amount of such unreimbursed Drawing honored by it not later than (x) 12:00 p.m. (New York time) on the date of payment of a draft under a Letter of Credit, if such payment is made at or prior to 11:00 a.m. (New York time) on such day, and (y) the close of business (New York time) on the date of payment of a draft under a Letter of Credit, if such payment is made after 11:00 a.m. (New York time) on such day, and the Administrative Agent shall notify each Lender of the date and amount of such unreimbursed Drawing under such Letter of Credit honored by such Fronting Bank and the amount of such Lender’s Percentage therein no later than (1) 1:00 p.m. (New York time) on such day, if such payment is made at or prior to 11:00 a.m. (New York time) on such day, and (2) 11:00 a.m. (New York time) on the next following Business Day, if such payment is made after 11:00 a.m. (New York time) on such day. Not later than 2:00 p.m. (New York time) on the date of receipt of a notice of an unreimbursed Drawing by a Lender, such Lender agrees to pay to such Fronting Bank an amount equal to the product of (A) such Lender’s Percentage and (B) the amount of the payment made by such Fronting Bank in respect of such unreimbursed Drawing.

If payment of the amount due pursuant to the preceding sentence from a Lender is received by such Fronting Bank after the close of business on the date it is due, such Lender agrees to pay to such Fronting Bank, in addition to (and along with) its payment of the amount due pursuant to the preceding sentence, interest on such amount at a rate per annum equal to (i) for the period from and including the date such payment is due to but excluding the second succeeding Business Day, the Federal Funds Rate, and (ii) for the period from and including the second Business Day succeeding the date such payment is due to but excluding the date on which such amount is paid in full, the Federal Funds Rate plus 2.00% per annum.

(k) Obligations of Lenders Absolute. Each Lender acknowledges and agrees that (i) its obligation to acquire a participation in any Fronting Bank’s liability in respect of the Letters of Credit and (ii) its obligation to make the payments specified herein, and the right of each Fronting Bank to receive the same, in the manner specified herein, are absolute and unconditional

 

39


and shall not be affected by any circumstances whatsoever, including, without limitation, (A) the occurrence and continuance of any Event of Default or Unmatured Default; (B) any other breach or default by the Borrower, the Administrative Agent or any Lender hereunder; (C) any lack of validity or enforceability of any Letter of Credit or any Loan Document; (D) the existence of any claim, setoff, defense or other right that the Lender may have at any time against the Borrower, any other Account Party, any Beneficiary, any Fronting Bank or any other Lender; (E) the existence of any claim, setoff, defense or other right that the Borrower may have at any time against any Beneficiary, any Fronting Bank, the Administrative Agent, any Lender or any other Person, whether in connection with this Agreement or any other documents contemplated hereby or any unrelated transactions; (F) any amendment or waiver of, or consent to any departure from, all or any of the Letters of Credit or this Agreement; (G) any statement or any document presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; (H) payment by any Fronting Bank under any Letter of Credit against presentation of a draft or certificate that does not comply with the terms of such Letter of Credit, so long as such payment is not the consequence of such Fronting Bank’s gross negligence or willful misconduct (as determined by the final, non-appealable judgment of a court of competent jurisdiction) in determining whether documents presented under a Letter of Credit comply with the terms thereof; (I) the occurrence of the Termination Date; or (J) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing. Nothing herein shall prevent the assertion by any Lender of a claim by separate suit or compulsory counterclaim, nor shall any payment made by a Lender under Section 2.04 be deemed to be a waiver of any claim that a Lender may have against any Fronting Bank or any other Person.

(l) Proceeds of Reimbursements. Upon receipt of a payment from the Borrower pursuant to subsection (f) hereof, the applicable Fronting Bank shall promptly transfer to each Lender that has funded its participation in the applicable Drawing pursuant to subsection (j) above, such Lender’s pro rata share (determined in accordance with such Lender’s Percentage) of such payment. All payments due to the Lenders from any Fronting Bank pursuant to this subsection (l) shall be made to the Lenders if, as, and, to the extent possible, when such Fronting Bank receives payments in respect of Drawings under the Letters of Credit pursuant to subsection (f) hereof, and in the same funds in which such amounts are received; provided that if any Lender to which such Fronting Bank is required to transfer any such payment (or any portion thereof) pursuant to this subsection (l) does not receive such payment (or portion thereof) prior to (i) the close of business on the Business Day on which such Fronting Bank received such payment from the Borrower, if such Fronting Bank received such payment prior to 1:00 p.m. (New York time) on such day, or (ii) 1:00 p.m. (New York time) on the Business Day next succeeding the Business Day on which such Fronting Bank received such payment from the Borrower, if such Fronting Bank received such payment after 1:00 p.m. (New York time) on such day, such Fronting Bank agrees to pay to such Lender, along with its payment of the portion of such payment due to such Lender, interest on such amount at a rate per annum equal to (A) for the period from and including the Business Day when such payment was required to be made to the Lenders to but excluding the second succeeding Business Day, the Federal Funds Rate and (B) for the period from and including the second Business Day succeeding the Business Day when such payment was required to be made to the Lenders to but excluding the date on which such amount is paid in full, the Federal Funds Rate plus 2.00% per annum.

 

40


(m) Concerning the Fronting Banks. Each Fronting Bank will exercise and give the same care and attention to the Letters of Credit issued by it as it gives to its other letters of credit and similar obligations, and each Lender agrees that each Fronting Bank’s sole liability to such Lender shall be (i) to distribute promptly, as and when received by such Fronting Bank, and in accordance with the provisions of subsection (l) above, such Lender’s Percentage of any payments to such Fronting Bank by the Borrower pursuant to subsection (f) above in respect of Drawings under the Letters of Credit issued by such Fronting Bank, (ii) to exercise or refrain from exercising any right or to take or to refrain from taking any action under this Agreement or any Letter of Credit issued by such Fronting Bank as may be directed in writing by the Majority Lenders (or, when expressly required by the terms of this Agreement, all of the Lenders) or the Administrative Agent acting at the direction and on behalf of the Majority Lenders (or, when expressly required by the terms of this Agreement, all of the Lenders), except to the extent required by the terms hereof or thereof or by Applicable Law, and (iii) as otherwise expressly set forth in this Section 2.04. No Fronting Bank shall be liable for any action taken or omitted at the request or with approval of the Majority Lenders (or, when expressly required by the terms of this Agreement, all of the Lenders) or of the Administrative Agent acting on behalf of the Majority Lenders (or, when expressly required by the terms of this Agreement, all of the Lenders) or for the nonperformance of the obligations of any other party under this Agreement, any Letter of Credit or any other document contemplated hereby or thereby. Without in any way limiting any of the foregoing, each Fronting Bank may rely upon the advice of counsel concerning legal matters and upon any written communication or any telephone conversation that it believes to be genuine or to have been signed, sent or made by the proper Person and shall not be required to make any inquiry concerning the performance by the Borrower, any Beneficiary or any other Person of any of their respective obligations and liabilities under or in respect of this Agreement, any Letter of Credit or any other documents contemplated hereby or thereby. No Fronting Bank shall have any obligation to make any claim, or assert any Lien, upon any property held by such Fronting Bank or assert any offset thereagainst in satisfaction of all or any part of the obligations of the Borrower hereunder; provided that each Fronting Bank shall, if so directed by the Majority Lenders or the Administrative Agent acting on behalf of and with the consent of the Majority Lenders, have an obligation to make a claim, or assert a Lien, upon property held by such Fronting Bank in connection with this Agreement, or assert an offset thereagainst.

Each Fronting Bank may accept deposits from, make loans or otherwise extend credit to, and generally engage in any kind of banking or trust business with the Borrower or any of its Affiliates, or any other Person, and receive payment on such loans or extensions of credit and otherwise act with respect thereto freely and without accountability in the same manner as if it were not a Fronting Bank hereunder.

Each Fronting Bank makes no representation or warranty and shall have no responsibility with respect to: (i) the genuineness, legality, validity, binding effect or enforceability of this Agreement or any other documents contemplated hereby; (ii) the truthfulness, accuracy or performance of any of the representations, warranties or agreements contained in this Agreement or any other documents contemplated hereby; (iii) the collectibility of any amounts due under this Agreement; (iv) the financial condition of the Borrower or any other Person; or (v) any act or omission of any Beneficiary with respect to its use of any Letter of Credit or the proceeds of any Drawing under any Letter of Credit.

 

41


(n) Indemnification of Fronting Banks by Lenders. To the extent that any Fronting Bank is not reimbursed and indemnified by the Borrower under Section 8.05 hereof, each Lender agrees to reimburse and indemnify such Fronting Bank on demand, pro rata in accordance with such Lender’s Percentage, for and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred by or asserted against such Fronting Bank, in any way relating to or arising out of this Agreement, any Letter of Credit or any other document contemplated hereby or thereby, or any action taken or omitted by such Fronting Bank under or in connection with this Agreement, any Letter of Credit or any other document contemplated hereby or thereby; provided, however, that such Lender shall not be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from such Fronting Bank’s gross negligence or willful misconduct as determined by the final, non-appealable judgment of a court of competent jurisdiction; and provided further, however, that such Lender shall not be liable to such Fronting Bank or any other Lender for the failure of the Borrower to reimburse such Fronting Bank for any drawing made under a Letter of Credit issued for the account of the Borrower with respect to which such Lender has paid such Fronting Bank such Lender’s pro rata share (determined in accordance with such Lender’s Percentage), or for the Borrower’s failure to pay interest thereon. Each Lender’s obligations under this subsection (n) shall survive the payment in full of all amounts payable by such Lender under subsection (j) above, and the termination of this Agreement and the Letters of Credit. Nothing in this subsection (n) is intended to limit any Lender’s reimbursement obligation contained in subsection (j) above.

(o) Representations of Lenders. As between any Fronting Bank and the Lenders, by its execution and delivery of this Agreement each Lender hereby represents and warrants solely to such Fronting Bank that (i) it is duly organized and validly existing in good standing under the laws of the jurisdiction of its formation, and has full corporate power, authority and legal right to execute, deliver and perform its obligations to such Fronting Bank under this Agreement; and (ii) this Agreement constitutes its legal, valid and binding obligation enforceable against it in accordance with the terms hereof, except as such enforceability may be limited by applicable bank organization, moratorium, conservatorship or other laws now or hereafter in effect affecting the enforcement of creditors rights in general and the rights of creditors of banks, and except as such enforceability may be limited by general principles of equity (whether considered in a proceeding at law or in equity).

(p) Existing Letters of Credit. All Existing Letters of Credit shall be deemed to have been issued pursuant hereto, and from and after the Closing Date shall be subject to and governed by the terms and conditions hereof.

(q) Successor Fronting Bank. Any Fronting Bank may resign at any time by giving written notice thereof to the Lenders, the other Fronting Banks and the Borrower, as long as such Fronting Bank has no Letters of Credit outstanding under this Agreement. Upon such resignation, the Borrower may designate one or more Lenders as Fronting Banks to replace the retiring Fronting Bank. If a Fronting Bank has any Letters of Credit outstanding under this Agreement and delivers a written notice of its intent to resign to the Lenders, the other Fronting Banks and the Borrower, such Fronting Bank shall continue to honor its obligations under this Agreement, but shall have no obligation to issue any new Letter of Credit. Upon receipt of such notice of intent to resign, the Borrower and such Fronting Bank may agree to replace or terminate the outstanding Letters of Credit issued by such Fronting Bank and to designate one or more Lenders as Fronting Banks to replace such Fronting Bank.

 

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SECTION 2.05. Fees.

(a) The Borrower agrees to pay to the Administrative Agent for the account of each Lender a commitment fee on the amount of such Lender’s Available Commitment at such time from the date hereof in the case of each Bank and from the effective date specified in the Assignment and Assumption pursuant to which it became a Lender in the case of each other Lender until the Termination Date applicable to such Lender, payable quarterly in arrears on the last Business Day of each March, June, September and December during such period, and on such Termination Date, at the rate per annum set forth below determined by reference to the Reference Ratings of the Borrower from time to time in effect (and, solely in the case that there are no Reference Ratings, the rate shall be at Level 6):

 

BASIS FOR PRICING

   LEVEL 1

 

Reference

Ratings at least
A- by S&P or
A3 by Moody’s

    LEVEL 2

 

Reference
Ratings lower
than Level 1
but at least
BBB+ by S&P
or Baa1 by
Moody’s

    LEVEL 3

 

Reference
Ratings lower
than Level 2
but at least
BBB by S&P
or Baa2 by
Moody’s

    LEVEL 4

 

Reference
Ratings lower
than Level 3
but at least
BBB- by
S&P or Baa3
by Moody’s

    LEVEL 5

 

Reference
Ratings lower
than Level 4
but at least
BB+ by S&P
or Ba1 by
Moody’s

    LEVEL 6

 

Reference
Ratings lower
than Level 5

 

Commitment Fee

     0.125     0.175     0.225     0.275     0.350     0.50

For purposes of the foregoing, (i) if there is a difference of one level in Reference Ratings of S&P and Moody’s and the higher of such Reference Ratings falls in Level 1, Level 2, Level 3, Level 4 or Level 5, then the higher Reference Rating will be used to determine the commitment fee, and (ii) if there is a difference of more than one level in Reference Ratings of S&P and Moody’s, the Reference Rating that is one level above the lower of such Reference Ratings will be used to determine the commitment fee, unless the lower of such Reference Ratings falls in Level 6, in which case the lower of such Reference Ratings will be used to determine the commitment fee. If there exists only one Reference Rating, such Reference Rating will be used to determine the commitment fee.

(b) The Borrower agrees to pay the fees payable by the Borrower in such amounts and payable on such terms as set forth in the Fee Letters.

(c) The Borrower agrees to pay to the Administrative Agent, for the account of the Lenders, a fee in an amount equal to the then Applicable Margin for Eurodollar RateTerm Benchmark Advances and RFR Advances for the Borrower multiplied by the Stated Amount of each Letter of Credit issued for the account of the Borrower, in each case for the number of days that such Letter of Credit is issued and outstanding, payable quarterly in arrears on the last day of each March, June, September and December and on the date such Letter of Credit expires.

 

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(d) The Borrower agrees to pay to each Fronting Bank, for its own account, certain fees payable by the Borrower in such amounts and payable on such terms as set forth in the Fee Letter to which such Fronting Bank is a party.

SECTION 2.06. Adjustment of the Commitments.

(a) Commitment Reduction. The Borrower shall have the right, upon at least two Business Days’ notice to the Administrative Agent, to terminate in whole or, upon same day notice, from time to time to permanently reduce ratably in part the unused portion of the Commitments; provided that each partial reduction shall be in the aggregate amount of $5,000,000 or in an integral multiple of $1,000,000 in excess thereof; provided, further, that the Commitments may not be reduced to an amount that is less than the aggregate Stated Amount of outstanding Letters of Credit. Subject to the foregoing, any reduction of the Commitments to an amount below $100,000,000 shall also result in a reduction of the L/C Commitment Amount to the extent of such deficit (with automatic reductions in the amount of each L/C Fronting Bank Commitment ratably in proportion to the amount of such reduction of the L/C Commitment Amount). Each such notice of termination or reduction shall be irrevocable. Without limiting subsection (b) below, any Commitment reduced or terminated pursuant to this subsection (a) may not be reinstated.

(b) Commitment Increase. (i) On any date prior to the latest Termination Date, the Borrower may increase the aggregate amount of the Commitments by an amount not less than $50,000,000 for any such increase but not more than $250,000,000 (the “Maximum Accordion Amount”) for all such increases (any such increase, a “Commitment Increase”) by designating one or more of the existing Lenders or one or more Affiliates thereof (each of which, in its sole discretion, may determine whether and to what degree to participate in such Commitment Increase) or one or more other Persons that at the time agree, in the case of any existing Lender, to increase its Commitment (an “Increasing Lender”) and, in the case of any other Person or an Affiliate of a Lender (an “Additional Lender”), to become a party to this Agreement; provided that (i) each Additional Lender shall be acceptable to the Administrative Agent, and each Increasing Lender and each Additional Lender shall be acceptable to the Fronting Banks, (ii) the allocations of the Commitment Increase among the Increasing Lenders shall be determined by the Administrative Agent in consultation with the Borrower, and (iii) the amount of the Commitment of each Additional Lender shall not be less than $5,000,000. The sum of the increases in the Commitments of the Increasing Lenders pursuant to this subsection (b) plus the Commitments of the Additional Lenders upon giving effect to the Commitment Increase shall not exceed the amount of the Commitment Increase. The Borrower shall provide prompt notice of any proposed Commitment Increase pursuant to this Section 2.06(b) to the Administrative Agent, which shall promptly provide a copy of such notice to the Lenders and the Fronting Banks.

(ii) Any Commitment Increase shall become effective upon (A) the receipt by the Administrative Agent of an agreement in form and substance satisfactory to the Administrative Agent signed by the Borrower, each Increasing Lender and each Additional Lender, setting forth the new Commitment of each such Lender and setting forth the agreement of each Additional Lender to become a party to this Agreement and to be bound by all the terms and provisions hereof binding upon each Lender, (B) the funding by each Lender of the Advance(s) to be made by each such Lender described in paragraph (iii) below, (C) receipt by the Administrative Agent of a certificate (the statements contained in which shall be true) of an Authorized Officer of the

 

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Borrower stating that both before and after giving effect to such Commitment Increase (1) no Event of Default has occurred and is continuing and (2) all representations and warranties made by the Borrower in this Agreement are true and correct in all material respects (or in the case of any representation or warranty already qualified by materiality, true and correct in all respects) and (D) receipt by the Administrative Agent of a certificate of the Secretary or an Assistant Secretary of the Borrower, in each case, certifying, with respect to itself, that attached thereto are true and correct copies of (1) the resolutions of the Board of Directors (or appropriate committee thereof) of the Borrower approving such Commitment Increase and (2) all governmental and regulatory authorizations and approvals required to be obtained by the Borrower for such Commitment Increase.

(iii) Upon the effective date of any Commitment Increase, the Borrower shall prepay the outstanding Advances (if any) in full, and shall simultaneously make new Advances hereunder in an amount equal to such prepayment, so that, after giving effect thereto, the Advances are held ratably by the Lenders in accordance with their respective Commitments (after giving effect to such Commitment Increase). Prepayments made under this paragraph (iii) shall not be subject to the notice requirements of Section 2.12.

(iv) Notwithstanding any provision contained herein to the contrary, from and after the date of any Commitment Increase and the making of any Advances on such date pursuant to paragraph (iii) above, all calculations and payments of the commitment fee, Letter of Credit fees and interest on the Advances shall take into account the actual Commitment of each Lender and the principal amount outstanding of each Advance made by such Lender during the relevant period of time.

SECTION 2.07. Repayment of Advances.

The Borrower agrees to repay the principal amount of each Advance made by each Lender to the Borrower no later than the earlier of (i) 364 days after the date such Advance is made and (ii) the latest Termination Date applicable to such Lender; provided, however, that if the Borrower shall deliver to the Administrative Agent evidence reasonably satisfactory to the Administrative Agent (including, without limitation, certified copies of governmental approvals and legal opinions) that the Borrower is authorized under Applicable Law to incur Indebtedness hereunder maturing more than 364 days after the date of incurrence of such Indebtedness, the Borrower shall repay each Advance made to it by a Lender no later than the latest Termination Date applicable to such Lender.

SECTION 2.08. Interest on Advances.

The Borrower agrees to pay interest on the unpaid principal amount of each Advance made by each Lender to the Borrower from the date of such Advance until such principal amount shall be paid in full, at the following rates per annum, subject to Section 2.15(f):

(a) Alternate Base Rate Advances. If such Advance is an Alternate Base Rate Advance, a rate per annum equal at all times to the Alternate Base Rate in effect from time to time plus the Applicable Margin for such Alternate Base Rate Advance in effect from time to time, payable quarterly in arrears on the last day of each March, June, September and December, on the Termination Date applicable to such Lender and on the date such Alternate Base Rate Advance shall be Converted or be paid in full and as provided in Section 2.12; and

 

45


(b) Eurodollar RateTerm Benchmark Advances. If such Advance is a Eurodollar RateTerm Benchmark Advance, a rate per annum equal at all times during the Interest Period for such Advance to the sum of the EurodollarAdjusted Term SOFR Rate for such Interest Period plus the Applicable Margin for such Eurodollar RateTerm Benchmark Advance in effect from time to time, payable on the last day of each Interest Period for such Eurodollar Rateapplicable to the borrowing of which such Advance is a part (and, in the case of anya Term Benchmark Borrowing with an Interest Period of sixmore than three months, on’ duration, each day prior to the last day of the third monthsuch Interest Period that occurs at intervals of three months’ duration after the first day of such Interest Period), on the Termination Date applicable to such Lender and on the date such Eurodollar RateTerm Benchmark Advance shall be Converted or be paid in full and as provided in Section 2.12.

(c) RFR Advances. If such Advance is an RFR Advance, a rate per annum equal at all times to the sum of Adjusted Daily Simple SOFR plus the Applicable Margin for such RFR Advance in effect from time to time, payable on each date that is on the numerically corresponding day in each calendar month that is one month after the Borrowing of such Advance (or, if there is no such numerically corresponding day in such month, then the last day of such month), on the Termination Date applicable to such Lender and on the date such RFR Advance shall be Converted or be paid in full and as provided in Section 2.12.

SECTION 2.09. Additional Interest on Advances.

The Borrower agrees to pay to each Lender, so long as such Lender shall be required under regulations of the Board of Governors of the Federal Reserve SystemBoard to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency Liabilities, additional interest on the unpaid principal amount of each Eurodollar RateTerm Benchmark Advance made by such Lender to the Borrower, from the date of such Advance until such principal amount is paid in full, at an interest rate per annum equal at all times to the remainder obtained by subtracting (i) the EurodollarTerm Benchmark Rate for the Interest Period for such Advance from (ii) the rate obtained by dividing such EurodollarTerm Benchmark Rate by a percentage equal to 100% minus the Eurodollar Rate Reserve Percentage of such Lender for such Interest Period, payable on each date on which interest is payable on such Advance; provided, that no Lender shall be entitled to demand additional interest under this Section 2.09 more than 90 days following the last day of the Interest Period in respect of which such demand is made; provided further, however, that the foregoing proviso shall in no way limit the right of any Lender to demand or receive such additional interest to the extent that such additional interest relates to the retroactive application by the Board of Governors of the Federal Reserve SystemBoard of any regulation described above if such demand is made within 90 days after the implementation of such retroactive regulation. Such additional interest shall be determined by such Lender and notified to the Borrower through the Administrative Agent, and such determination shall be conclusive and binding for all purposes, absent manifest error.

 

46


SECTION 2.10. Interest Rate Determination.

(a) The Administrative Agent shall give prompt notice to the Borrower and the Lenders of the applicable interest rate determined by the Administrative Agent for purposes of Section 2.08(a) or (b).

(b) [Reserved].

(b) If, with respect to any Eurodollar Rate Advances, the Majority Lenders notify the Administrative Agent that (i) Dollar deposits are not being offered to banks in the London interbank eurodollar market for the applicable amount and Interest Period of such Eurodollar Rate Advances, (ii) adequate and reasonable means do not exist for determining the Eurodollar Rate or (iii) the Eurodollar Rate for any Interest Period for such Advances will not adequately reflect the cost to such Majority Lenders of making or funding their respective Eurodollar Rate Advances for such Interest Period, the Administrative Agent shall forthwith so notify the Borrower and the Lenders, whereupon

(i) each Eurodollar Rate Advance will automatically, on the last day of the then existing Interest Period therefor, Convert into an Alternate Base Rate Advance, and

(ii) the obligation of the Lenders to make, or to Convert Advances into, Eurodollar Rate Advances shall be suspended until the Administrative Agent shall notify the Borrower and the Lenders that the circumstances causing such suspension no longer exist.

(c) Upon the occurrence and during the continuance of any Event of Default, (i) each Eurodollar RateTerm Benchmark Advance (or, if applicable, RFR Advance) will automatically, on the last day of the then existing Interest Period therefor, Convert into aan Alternate Base Rate Advance, and (ii) the obligation of the Lenders to make or to Convert Advances into, Eurodollar RateTerm Benchmark Advances (or, if applicable, RFR Advances) shall be suspended.

SECTION 2.11. Conversion of Advances.

(a) Voluntary. The Borrower may on any Business Day, upon notice given to the Administrative Agent not later than 11:00 a.m. (New York time) on the third U.S. Government Securities Business Day prior to the date of any proposed Conversion into Eurodollar Rate AdvancesTerm Benchmark Advances (or, if applicable, not later than 11:00 a.m. (New York time) on the fifth U.S. Government Securities Business Day prior to the date of any proposed Conversion into RFR Advances), and on the date of any proposed Conversion into Alternate Base Rate Advances, and subject to the provisions of Sections 2.10 and, 2.14 and 2.23, Convert all Advances of one Type made to the Borrower in connection with the same Borrowing into Advances of another Type or Types or Advances of the same Type having the same or a new Interest Period; provided, however, that any Conversion of, or with respect to, any Eurodollar RateTerm Benchmark Advances into Advances of another Type or Advances of the same Type having the same or new Interest Periods, shall be made on, and only on, the last day of an Interest Period for such Eurodollar RateTerm Benchmark Advances, unless the Borrower shall also reimburse the Lenders in respect thereof pursuant to Section 8.05(b) on the date of such Conversion. Each such notice of a Conversion shall, within the restrictions specified above, specify (i) the date of such Conversion, (ii) the Advances to be Converted, and (iii) if such Conversion is into, or with respect to, Eurodollar RateTerm Benchmark Advances, the duration of the Interest Period for each such resulting Advance.

 

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(b) Mandatory. (i) If the Borrower shall fail to select the Type of any Advance for any Borrowing comprising Term Benchmark Advances (or, if applicable, RFR Advances) or the duration of any Interest Period for any Borrowing comprising Eurodollar RateTerm Benchmark Advances in accordance with the provisions contained in the definition of “Interest Period” in Section 1.01 and Section 2.11(a), or if any proposed Conversion of a Borrowing that is to comprise Eurodollar RateTern Benchmark Advances (or, if applicable, RFR Advances) upon Conversion shall not occur as a result of the circumstances described in subsection (c) below, the Administrative Agent will forthwith so notify the Borrower and the Lenders, and such Advances will automatically, on the last day of the then existing Interest Period therefor (or, with respect to RFR Advances, on the interest payment date applicable thereto pursuant to Section 2.08(c)), Convert into Alternate Base Rate Advances.

(c) (ii) Failure to Convert. Each notice of Conversion given by the Borrower pursuant to subsection (a) above shall be irrevocable and binding on the Borrower. In the case of any Borrowing that is to comprise Eurodollar RateTerm Benchmark Advances (or, if applicable, RFR Advances) upon Conversion, the Borrower agrees to indemnify each Lender against any loss, cost or expense incurred by such Lender as a result of any failure of such Conversion to occur pursuant to the provisions of Section 2.10(c), including, without limitation, any loss, cost or expense incurred by reason of the liquidation or redeployment of deposits or other funds acquired by such Lender to fund such Eurodollar Rate Advances upon such Conversion, when such Conversion does not occur. The Borrower’s obligations under this subsection (c) shall survive the repayment of all other amounts owing by the Borrower to the Lenders and the Administrative Agent under this Agreement and any Note and the termination of the Commitments.

SECTION 2.12. Prepayments.

(a) Optional. The Borrower may at any time prepay the outstanding principal amounts of the Advances made to the Borrower as part of the same Borrowing in whole or ratably in part, together with accrued interest to the date of such prepayment on the principal amount prepaid, upon notice thereof given to the Administrative Agent by the Borrower not later than 11:00 a.m. (New York time) (i) on the date of any such prepayment in the case of Alternate Base Rate Advances and (ii) (x) on the secondthird U.S. Government Securities Business Day prior to any such prepayment in the case of Eurodollar RateTerm Benchmark Advances, or (y) if applicable, on the fifth U.S. Government Securities Business Day prior to any such prepayment in the case of Term Benchmark Advances; provided, however, that (x) each partial prepayment of any Borrowing shall be in an aggregate principal amount not less than $5,000,000 and (y) in the case of any such prepayment of a Eurodollar RateTerm Benchmark Advance (or, if applicable, an RFR Advance), the Borrower shall be obligated to reimburse the Lenders in respect thereof pursuant to Section 8.05(b) on the date of such prepayment.

(b) Mandatory. If and to the extent that the Outstanding Credits on any date hereunder shall exceed the aggregate amount of the Commitments hereunder on such date, the Borrower agrees to (A) prepay on such date a principal amount of Advances and/or (B) pay to the Administrative Agent an amount in immediately available funds (which funds shall be held as

 

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collateral pursuant to arrangements satisfactory to the Administrative Agent) equal to all or a portion of the amount available for drawing under the Letters of Credit outstanding at such time, which prepayment under clause (A) and payment under clause (B) shall, when taken together result in the amount of Outstanding Credits minus the amount paid to the Administrative Agent pursuant to clause (B) being less than or equal to the aggregate amount of the Commitments hereunder on such date. Any prepayment of Advances shall be accompanied by accrued interest on the amount prepaid to the date of such prepayment and, in the case of any such prepayment of Eurodollar RateTerm Benchmark Advances (or, if applicable, RFR Advances), the Borrower shall be obligated to reimburse the Lenders in respect thereof pursuant to Section 8.05(b).

SECTION 2.13. Increased Costs.

(a) If, due to any Change in Law, there shall be any increase in the cost (other than in respect of Taxes, which are addressed exclusively in Section 2.16) to any Lender of agreeing to make or making, funding or maintaining Eurodollar RateTerm Benchmark Advances (or, if applicable, RFR Advances) or any increase in the cost to any Fronting Bank or any Lender of issuing, maintaining or participating in Letters of Credit, then the Borrower shall from time to time, upon demand by such Lender or such Fronting Bank (as the case may be) (with a copy of such demand to the Administrative Agent), pay to the Administrative Agent for the account of such Lender or such Fronting Bank (as the case may be) additional amounts sufficient to compensate such Lender or such Fronting Bank (as the case may be) for such increased cost. A certificate as to the amount of such increased cost and the basis therefor, submitted to the Borrower and the Administrative Agent by such Lender or such Fronting Bank (as the case may be), shall constitute such demand and shall be conclusive and binding for all purposes, absent manifest error.

(b) If any Lender or any Fronting Bank determines that any Change in Law affects or would affect the amount of capital or liquidity required or expected to be maintained by such Lender or such Fronting Bank (as the case may be) or any corporation controlling such Lender or such Fronting Bank (as the case may be) and that the amount of such capital or liquidity is increased by or based upon the existence of (i) such Lender’s commitment to lend or participate in Letters of Credit hereunder and other commitments of this type or (ii) the Advances made by such Lender or (iii) the participations in Letters of Credit acquired by such Lender or (iv) in the case of any Fronting Bank, such Fronting Bank’s commitment to issue, maintain and honor drawings under Letters of Credit hereunder, or (v) the honoring of Letters of Credit by any Fronting Bank hereunder, then, upon demand by such Lender or such Fronting Bank (as the case may be) (with a copy of such demand to the Administrative Agent), the Borrower shall immediately pay to the Administrative Agent for the account of such Lender or such Fronting Bank (as the case may be), from time to time as specified by such Lender or such Fronting Bank (as the case may be), additional amounts sufficient to compensate such Lender, such Fronting Bank or such corporation in the light of such circumstances, to the extent that such Lender or such Fronting Bank (as the case may be) determines such increase in capital or liquidity to be allocable to (i) in the case of such Lender, the existence of such Lender’s commitment to lend hereunder or the Advances made by such Lender or (ii) the participations in Letters of Credit acquired by such Lender or (iii) in the case of any Fronting Bank, such Fronting Bank’s Commitment to issue, maintain and honor drawings under Letters of Credit hereunder, or (iv) the honoring of Letters of Credit by any Fronting Bank hereunder. A certificate as to such amounts submitted to the Borrower and the Administrative Agent by such Lender or such Fronting Bank (as the case may be) shall constitute such demand and shall be conclusive and binding for all purposes, absent manifest error.

 

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(c) Failure or delay on the part of any Lender or Fronting Bank to demand compensation pursuant to this Section 2.13 shall not constitute a waiver of such Lender’s or Fronting Bank’s right to demand such compensation, provided that the Borrower shall not be required to compensate a Lender or Fronting Bank pursuant to this Section 2.13 for any increased costs or additional amounts incurred more than 180 days prior to the date that such Lender or Fronting Bank notifies the Borrower of such Lender’s or Fronting Bank’s intention to claim such compensation (except that, if such Change in Law giving rise to such increased costs is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof).

(d) The Borrower’s obligations under this Section 2.13 shall survive (x) the repayment of all amounts owing to the Lenders, the Fronting Banks and the Administrative Agent under this Agreement and any Note, (y) the termination of the Commitments, the commitments of the Fronting Banks hereunder and any Letters of Credit and (z) the termination of this Agreement, in each case to the extent such obligations were incurred prior to such repayment and termination.

SECTION 2.14. Illegality.

Notwithstanding any other provision of this Agreement, if any Lender shall notify the Administrative Agent that the introduction of or any change in or in the interpretation of any law or regulation makes it unlawful, or any central bank or other governmental authority asserts that it is unlawful, for any Lender or its EurodollarApplicable Lending Office to perform its obligations hereunder to make Eurodollar RateTerm Benchmark Advances (or, if applicable, RFR Advances) or to fund or maintain Eurodollar RateTerm Benchmark Advances (or, if applicable, RFR Advances) hereunder, (i) the obligation of the Lenders to make, or to Convert Advances into, Eurodollar RateTerm Benchmark Advances (or, if applicable, RFR Advances) shall be suspended until the Administrative Agent shall notify the Borrower and the Lenders that the circumstances causing such suspension no longer exist and (ii) the Borrower shall forthwith prepay in full all Eurodollar RateTerm Benchmark Advances (or, if applicable, RFR Advances) of all Lenders then outstanding, together with interest accrued thereon, unless (A) the Borrower, within five U.S. Government Securities Business Days of notice from the Administrative Agent, Converts all Eurodollar RateConvert all Term Benchmark Advances (or, if applicable, RFR Advances) of all Lenders then outstanding into Advances of another Type in accordance with Section 2.11 or (B) the Administrative Agent notifies the Borrower that the circumstances causing such prepayment no longer exist. Any Lender that becomes aware of circumstances that would permit such Lender to notify the Administrative Agent of any illegality under this Section 2.14 shall use its best efforts (consistent with its internal policy and legal and regulatory restrictions) to change the jurisdiction of its Applicable Lending Office if the making of such change would avoid or eliminate such illegality and would not, in the reasonable judgment of such Lender, be otherwise disadvantageous to such Lender.

 

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SECTION 2.15. Payments and Computations.

(a) The Borrower shall make each payment hereunder and under any Note not later than 12:00 p.m. (New York time) on the day when due in Dollars to the Administrative Agent or, with respect to payments made in respect of Reimbursement Obligations, to the applicable Fronting Bank, at its address referred to in Section 8.02 in same day funds, without set-off, counterclaim or defense and any such payment to the Administrative Agent or any Fronting Bank (as the case may be) shall constitute payment by the Borrower hereunder or under any Note, as the case may be, for all purposes, and upon such payment the Lenders shall look solely to the Administrative Agent or such Fronting Bank (as the case may be) for their respective interests in such payment. The Administrative Agent or such Fronting Bank (as the case may be) will promptly after any such payment cause to be distributed like funds relating to the payment of principal or interest or commitment fees or Reimbursement Obligations ratably (other than amounts payable pursuant to Section 2.02(c), 2.05, 2.09, 2.11(c), 2.13, 2.16, 2.21 or 8.05(b)) (according to the Lenders’ respective Percentages) to the Lenders for the account of their respective Applicable Lending Offices, and like funds relating to the payment of any other amount payable to any Lender to such Lender for the account of its Applicable Lending Office, in each case to be applied in accordance with the terms of this Agreement. Upon its acceptance of an Assignment and Assumption and recording of the information contained therein in the Register pursuant to Section 8.08(d), from and after the effective date specified in such Assignment and Assumption, the Administrative Agent and each Fronting Bank shall make all payments hereunder and under any Note in respect of the interest assigned thereby to the Lender assignee thereunder, and the parties to such Assignment and Assumption shall make all appropriate adjustments in such payments for periods prior to such effective date directly between themselves.

(b) The Borrower hereby authorizes each Lender and each Fronting Bank, if and to the extent payment owed to such Lender or such Fronting Bank (as the case may be) is not made by the Borrower to the Administrative Agent or such Fronting Bank (as the case may be) when due hereunder or under any Note held by such Lender, to charge from time to time against any or all of the Borrower’s accounts (other than any payroll account maintained by the Borrower with such Lender or such Fronting Bank (as the case may be) if and to the extent that such Lender or such Fronting Bank (as the case may be) shall have expressly waived its set-off rights in writing in respect of such payroll account) with such Lender or such Fronting Bank (as the case may be) any amount so due.

(c) All computations of interest based on the Alternate Base Rate (based upon The Wall Street Journal’s published “prime rate”) shall be made by the Administrative Agent on the basis of a year of 365 or 366 days, as the case may be, and all computations of commitment fees and of interest based on the Alternate Base Rate (based upon the Federal Funds Rate or upon clause (iii) of the definition of Alternate Base Rate), the EurodollarTerm SOFR Rate, Daily Simple SOFR (if applicable) or the Federal Funds Rate shall be made by the Administrative Agent, and all computations of interest pursuant to Section 2.09 shall be made by a Lender, on the basis of a year of 360 days, in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such commitment fees or interest are payable. Each determination by the Administrative Agent (or, in the case of Section 2.09, by a Lender) of an interest rate hereunder shall be conclusive and binding for all purposes, absent manifest error.

 

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(d) Whenever any payment hereunder or under any Note shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest or commitment fees, as the case may be; provided, however, if such extension would cause payment of interest on or principal of Eurodollar RateTerm Benchmark Advances to be made in the next following calendar month, such payment shall be made on the next preceding Business Day.

(e) Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Lenders hereunder that the Borrower will not make such payment in full, the Administrative Agent may assume that the Borrower has made such payment in full to the Administrative Agent on such date and the Administrative Agent may, in reliance upon such assumption, cause to be distributed to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent that the Borrower shall not have so made such payment in full to the Administrative Agent, each Lender shall repay to the Administrative Agent forthwith on demand such amount distributed to such Lender together with interest thereon, for each day from the date such amount is distributed to such Lender until the date such Lender repays such amount to the Administrative Agent, at the Federal Funds Rate.

(f) The principal amount of any Advance (or any portion thereof) payable by the Borrower hereunder or under any Note that is not paid when due (whether at stated maturity, by acceleration or otherwise) shall (to the fullest extent permitted by law) bear interest from the date when due until paid in full at a rate per annum equal at all times to the rate otherwise applicable to such Advance plus 2% per annum, payable upon demand. Any other amount payable by the Borrower hereunder or under any Note that is not paid when due (whether at stated maturity, by acceleration or otherwise) shall (to the fullest extent permitted by law) bear interest from the date when due until paid in full at a rate per annum equal at all times to the rate of interest applicable to Alternate Base Rate Advances plus 2% per annum, payable upon demand.

(g) To the extent that any payment by or on behalf of the Borrower is made to the Administrative Agent, any Fronting Bank or any Lender, or the Administrative Agent, any Fronting Bank or any Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Administrative Agent, such Fronting Bank or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any bankruptcy, insolvency or other similar law now or hereafter in effect or otherwise, then (i) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred, and (ii) each Lender and each Fronting Bank severally agrees to pay to the Administrative Agent upon demand its applicable share (without duplication) of any amount so recovered from or repaid by the Administrative Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the Federal Funds Rate from time to time in effect. The obligations of the Lenders and the Fronting Banks under clause (ii) of the preceding sentence shall survive the payment in full of any amounts hereunder and the termination of this Agreement.

 

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SECTION 2.16. Taxes.

(a) Defined Terms. For purposes of this Section 2.16, (i) the term “Applicable Law” includes FATCA and (ii) the term “Lender” includes any Fronting Bank.

(b) Payments Free of Taxes. Any and all payments by or on account of any obligation of the Borrower under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by Applicable Law. If any Applicable Law (as determined in the good faith discretion of an applicable Withholding Agent) requires the deduction or withholding of any Tax from any such payment by a Withholding Agent, then the applicable Withholding Agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with Applicable Law and, if such Tax is an Indemnified Tax, then the sum payable by the Borrower shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section 2.16) the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made.

(c) Payment of Other Taxes by the Borrower. The Borrower shall timely pay to the relevant Governmental Authority in accordance with Applicable Law, or at the option of the Administrative Agent timely reimburse it for the payment of, any Other Taxes.

(d) Indemnification by the Borrower. The Borrower shall indemnify each Recipient, within 30 days after written demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 2.16) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.

(e) Indemnification by the Lenders. Each Lender shall severally indemnify the Administrative Agent, within 30 days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that the Borrower has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Borrower to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 8.08(d) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this subsection (e).

 

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(f) Evidence of Payments. As soon as practicable after any payment of Taxes by the Borrower to a Governmental Authority pursuant to this Section 2.16, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

(g) Status of Lenders. (i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to the Borrower and the Administrative Agent, at the time or times reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by Applicable Law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Sections 2.16(g)(ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.

(ii) Without limiting the generality of the foregoing, in the event that the Borrower is a U.S. Person,

(A) any Lender that is a U.S. Person shall deliver to the Borrower and the Administrative Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed copies of IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding tax;

(B) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), whichever of the following is applicable:

(i) in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed copies of IRS Form W-8BEN or IRS Form W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN or IRS Form W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;

 

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(ii) executed copies of IRS Form W-8ECI;

(iii) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit E-1 to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) executed copies of IRS Form W-8BEN or IRS Form W-8BEN-E; or

(iv) to the extent a Foreign Lender is not the beneficial owner, executed copies of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, IRS Form W-8BEN-E, a U.S. Tax Compliance Certificate substantially in the form of Exhibit E -2 or Exhibit E -3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit E -4 on behalf of each such direct and indirect partner;

(C) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed copies of any other form prescribed by Applicable Law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by Applicable Law to permit the Borrower or the Administrative Agent to determine the withholding or deduction required to be made; and

(D) if a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by Applicable Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount, if any, to deduct and withhold from such payment. Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

 

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Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Administrative Agent in writing of its legal inability to do so.

(h) On or before the date on which the Administrative Agent (including any successor or replacement Administrative Agent) becomes the Administrative Agent hereunder, it shall deliver to the Borrower two executed copies of either (a) IRS Form W-9 or (b) with respect to amounts received on its own account, IRS Form W-8ECI and with respect to amounts received on account of any Lender, IRS Form W-8IMY certifying that it is a U.S. branch that has agreed to be treated as a U.S. Person for U.S. federal tax purposes or a qualified intermediary that has agreed to assume primary withholding obligations for Chapter 3 and Chapter 4 of the Code with respect to payments received by it from the Borrower in its capacity as Administrative Agent, as applicable.

(i) Treatment of Certain Refunds. If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 2.16 (including by the payment of additional amounts pursuant to this Section 2.16), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section 2.16 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this subsection (i) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this subsection (i), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this subsection (i) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This subsection shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.

(j) Survival. Each party’s obligations under this Section 2.16 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of this Agreement and the repayment, satisfaction or discharge of all obligations under any Loan Document.

 

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SECTION 2.17. Sharing of Payments, Etc.

(a) If any Lender shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) on account of the Advances made by it or participations in Letters of Credit acquired by it (other than pursuant to Section 2.02(c), 2.09, 2.11(c), 2.13, 2.16, 2.21 or 8.05(b)) in excess of its ratable share of payments on account of the Advances or Letters of Credit (as the case may be) obtained by all the Lenders, such Lender shall forthwith purchase from the other Lenders such participations in the Advances made by them or participations in Letters of Credit acquired by them (as the case may be) as shall be necessary to cause such purchasing Lender to share the excess payment ratably with each of them; provided, however, that if all or any portion of such excess payment is thereafter recovered from such purchasing Lender, such purchase from each Lender shall be rescinded and such Lender shall repay to the purchasing Lender the purchase price to the extent of such recovery together with an amount equal to such Lender’s ratable share (according to the proportion of (a) the amount of such Lender’s required repayment to (b) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered. The Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to this Section 2.17 may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off) with respect to such participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation.

(b) If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.02(c) or 2.04(j), then the Administrative Agent may, in its discretion and notwithstanding any contrary provision hereof, (i) apply any amounts thereafter received by the Administrative Agent for the account of such Lender for the benefit of the Administrative Agent or any Fronting Bank to satisfy such Lender’s obligations to it under such Section until all such unsatisfied obligations are fully paid, and/or (ii) hold any such amounts in a segregated account as cash collateral for, and application to, any future funding obligations of such Lender under any such Section, in the case of each of clauses (i) and (ii) above, in any order as determined by the Administrative Agent in its discretion.

SECTION 2.18. Noteless Agreement; Evidence of Indebtedness.

(a) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Advance made by such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.

(b) The Administrative Agent shall also maintain accounts in which it will record (i) the amount of each Advance made hereunder, the Borrower thereof, the Type thereof and the Interest Period (if any) with respect thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder, and (iii) the amount of any sum received by the Administrative Agent hereunder from the Borrower and each Lender’s share thereof.

 

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(c) Subject to Section 8.08(c), the entries maintained in the accounts maintained pursuant to subsections (a) and (b) above shall be prima facie evidence of the existence and amounts of the obligations therein recorded; provided, however, that the failure of the Administrative Agent or any Lender to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay such obligations in accordance with their terms.

(d) Any Lender may request that its Advances be evidenced by a Note. In such event, the Borrower shall prepare, execute and deliver to such Lender a Note payable to such Lender or its registered assigns. Thereafter, the Advances evidenced by such Note and interest thereon shall at all times (including after any assignment pursuant to Section 8.08) be represented by one or more Notes payable to the payee named therein, or to its registered assigns pursuant to Section 8.08, except to the extent that any such Lender or assignee subsequently returns any such Note for cancellation and requests that such Borrowings once again be evidenced as described in subsections (a) and (b) above.

SECTION 2.19. Extension of Termination Date.

(a) The Borrower may, by notice to the Administrative Agent (which shall promptly notify the Lenders) not earlier than 60 days prior to any anniversary of the Closing Date (the “Anniversary Date”) but no later than 30 days prior to such Anniversary Date (the date of delivery of any such notice being the “Borrower Extension Notice Date”), request that each Lender extend such Lender’s Termination Date for an additional one year after the Termination Date then in effect for such Lender hereunder (the “Existing Termination Date”). The Borrower may request no more than two extensions pursuant to this Section 2.19.

(b) Each Lender, acting in its sole and individual discretion, shall, by notice to the Administrative Agent given not earlier than 30 days prior to the applicable Anniversary Date and not later than the date (the “Lender Extension Notice Date”) that is 20 days prior to the applicable Anniversary Date, advise the Administrative Agent whether or not such Lender agrees to such extension (and each Lender that determines not to so extend its Existing Termination Date (a “Nonconsenting Lender”) shall notify the Administrative Agent of such fact promptly after such determination (but in any event no later than the Lender Extension Notice Date), and any Lender that does not so advise the Administrative Agent on or before the Lender Extension Notice Date shall be deemed to be a Nonconsenting Lender. The election of any Lender to agree to such extension shall not obligate any other Lender to so agree.

(c) The Administrative Agent shall notify the Borrower of each Lender’s determination under this Section 2.19 no later than the date 15 days prior to the applicable Anniversary Date, or, if such date is not a Business Day, on the next preceding Business Day (the “Specified Date”).

(d) The Borrower shall have the right on or before the fifth Business Day after the Specified Date to replace each Nonconsenting Lender (i) with an existing Lender, and/or (ii) by adding as “Lenders” under this Agreement in place thereof, one or more Persons (each Lender in clauses (i) and (ii), an “Additional Commitment Lender”), in each case, with the approval of the Administrative Agent and the Fronting Banks (which approvals shall not be unreasonably withheld), each of which Additional Commitment Lenders shall have entered into an agreement in form and substance satisfactory to the Borrower and the Administrative Agent pursuant to which

 

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such Additional Commitment Lender shall, effective as of the Specified Date, undertake a Commitment (and, if any such Additional Commitment Lender is already a Lender, its Commitment shall be in addition to such Lender’s Commitment hereunder on such date); provided that the aggregate amount of the Commitments for all Additional Commitment Lenders shall be no more than the aggregate amount of the Commitments of all Nonconsenting Lenders.

(e) If (and only if) the aggregate amount of the Commitments of the Lenders that have agreed to extend their Existing Termination Dates plus the aggregate additional Commitments of the Additional Commitment Lenders shall be more than 50% of the aggregate amount of the Commitments in effect immediately prior to the Specified Date, then, effective as of the Specified Date, the Existing Termination Date of each Lender agreeing to an extension and of each Additional Commitment Lender shall be extended to the date that is one year after the Existing Termination Date, and each Additional Commitment Lender shall thereupon become a “Lender” for all purposes of this Agreement.

(f) Notwithstanding the foregoing, the extension of a Lender’s Existing Termination Date pursuant to this Section 2.19 shall be effective with respect to such Lender on the Specified Date but only if (i) the following statements shall be true: (A) no event has occurred and is continuing, or would result from the extension of the Existing Termination Date, that constitutes an Event of Default or an Unmatured Default and (B) the representations and warranties contained in Section 4.01 are correct in all material respects (or in the case of any such representation or warranty already qualified by materiality, true and correct in all respects) on and as of the Specified Date, before and after giving effect to such extension, as though made on and as of such date, except for those made specifically as of another date, in which case such representations and warranties shall be true as of such other date, provided that, for purposes of the representations and warranties in Sections 4.01(f) and the last sentence of 4.01(g), the Disclosure Documents shall include all the SEC filings made by FE and the Borrower prior to the applicable Borrower Extension Notice Date and (ii) on or prior to the Specified Date the Administrative Agent shall have received the following, each dated the Specified Date and in form and substance satisfactory to the Administrative Agent: (x) a certificate of an Authorized Officer of the Borrower to the effect that as of the Specified Date the statements set forth in clauses (A) and (B) above are true, (y) certified copies of the resolutions of the Board of Directors of the Borrower authorizing such extension and the performance of this Agreement on and after the Specified Date, and of all documents evidencing other necessary corporate action and Governmental Action with respect to this Agreement and such extension of the Existing Termination Date and (z) an opinion of counsel to the Borrower, as to such matters related to the foregoing as the Administrative Agent or the Lenders through the Administrative Agent may reasonably request.

(g) Subject to subsection (d) above, the Commitment of any Nonconsenting Lender shall automatically terminate on its Existing Termination Date (without regard to any extension by any other Lender).

(h) Each Fronting Bank may, in its sole discretion, elect not to serve in such capacity following any extension of the Termination Date; provided that, (i) the Borrower and the Administrative Agent may appoint a replacement for any such resigning Fronting Bank and (ii) the extension of the Termination Date may become effective without regard to whether such replacement is found.

 

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SECTION 2.20. [Reserved].

SECTION 2.21. Defaulting Lenders.

Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender:

(a) fees shall cease to accrue on the Percentage of such Defaulting Lender in the unused portion of the Commitments pursuant to Section 2.05(a);

(b) any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article VII or otherwise) or received by the Administrative Agent from such Defaulting Lender pursuant to Section 8.06 shall be applied at such time or times as may be determined by the Administrative Agent as follows: first, to the payment of any amounts owing by such Defaulting Lender to the Administrative Agent hereunder; second, to the payment on a pro rata basis of any amounts owing by such Defaulting Lender to any Fronting Bank hereunder; third, to cash collateralize the Fronting Banks’ Fronting Exposure with respect to such Defaulting Lender in accordance with this Section 2.21; fourth, as the Borrower may request (so long as no Unmatured Default or Event of Default exists), to the funding of any Advance in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; fifth, if so determined by the Administrative Agent and the Borrower, to be held in a deposit account and released pro rata in order to (x) satisfy such Defaulting Lender’s potential future funding obligations with respect to Advances under this Agreement and (y) cash collateralize future Fronting Exposure with respect to such Defaulting Lender with respect to future Letters of Credit issued under this Agreement, in accordance with this Section 2.21; sixth, to the payment of any amounts owing to the Lenders, or the Fronting Banks as a result of any judgment of a court of competent jurisdiction obtained by any Lender, or Fronting Banks against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement or under any other Loan Document; seventh, so long as no Unmatured Default or Event of Default exists, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement or under any other Loan Document; and eighth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Advances or Reimbursement Obligations in respect of which such Defaulting Lender has not fully funded its appropriate share, and (y) such Advances were made or the related Letters of Credit were issued at a time when the conditions set forth in Section 3.02 were satisfied or waived, such payment shall be applied solely to pay the Advances of, and Reimbursement Obligations owed to, all non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Advances of, or Reimbursement Obligations owed to, such Defaulting Lender until such time as all Advances and funded and unfunded participations in the Borrower’s obligations corresponding to such Defaulting Lender’s L/C Obligations are held by

 

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the Lenders pro rata in accordance with their respective Percentages without giving effect to clause (d) below. Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post cash collateral pursuant to this subsection (e) shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto;

(c) the Commitment and Outstanding Credits of such Defaulting Lender shall not be included in determining whether the Majority Lenders have taken or may take any action hereunder (including any consent to any amendment, waiver or other modification pursuant to Section 8.02); provided that this clause (c) shall not apply to the vote of a Defaulting Lender in the case of an amendment, waiver or other modification requiring the consent of such Lender or each Lender affected thereby;

(d) if any Letter of Credit or Reimbursement Obligation is outstanding at the time such Lender becomes a Defaulting Lender then:

(i) all or any part of the L/C Obligations of such Defaulting Lender shall be reallocated among the non-Defaulting Lenders in accordance with their respective Percentages but only to the extent that such reallocation does not, as to any non-Defaulting Lender, cause such non-Defaulting Lender’s Outstanding Credits to exceed its Commitment;

(ii) if the reallocation described in clause (i) above cannot, or can only partially, be effected, the Borrower shall within one Business Day following notice by the Administrative Agent cash collateralize for the benefit of the Fronting Banks only the Borrower’s obligations corresponding to such Defaulting Lender’s L/C Obligations (after giving effect to any partial reallocation pursuant to clause (i) above) in a manner consistent with Section 6.01 as set forth therein with respect to the Letter of Credit Cash Cover for so long as such L/C Obligations are outstanding;

(iii) if the Borrower cash collateralizes any portion of such Defaulting Lender’s L/C Obligations pursuant to clause (ii) above, the Borrower shall not be required to pay any fees to such Defaulting Lender pursuant to Section 2.05(c) or Section 2.05(d) with respect to such Defaulting Lender’s L/C Obligations during the period such Defaulting Lender’s L/C Obligations is cash collateralized;

(iv) if the L/C Obligations of the non-Defaulting Lenders are reallocated pursuant to clause (i) above, then the fees payable to the Lenders pursuant to Section 2.05(a), Section 2.05(c) and Section 2.05(d) shall be adjusted in accordance with such non-Defaulting Lenders’ Applicable Percentages; and

(v) if all or any portion of such Defaulting Lender’s L/C Obligations are neither reallocated nor cash collateralized pursuant to clause (i) or (ii) above, then, without prejudice to any rights or remedies of any Fronting Bank or any other Lender hereunder, all fees payable under Section 2.05(c) and Section 2.05(d) with respect to such Defaulting Lender’s L/C Obligations shall be payable to the Fronting Banks until and to the extent that such L/C Obligations are reallocated and/or cash collateralized; and

 

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(e) so long as such Lender is a Defaulting Lender, no Fronting Bank shall be required to issue, amend or increase any Letter of Credit, unless it is satisfied that the related exposure and the Defaulting Lender’s then outstanding L/C Obligations will be 100% covered by the Commitments of the non-Defaulting Lenders and/or cash collateral will be provided by the Borrower in accordance with Section 2.21(d), and L/C Obligations related to any newly issued or increased Letter of Credit shall be allocated among non-Defaulting Lenders in a manner consistent with Section 2.21(d)(i) (and such Defaulting Lender shall not participate therein).

If a Bankruptcy Event or a Bail-In Action with respect to a Parent of any Lender shall occur following the date hereof and for so long as such event shall continue, no Fronting Bank shall be required to issue, amend or increase any Letter of Credit, unless the Fronting Banks shall have entered into arrangements with the Borrower or such Lender, reasonably satisfactory to such Fronting Bank, as the case may be, to defease any risk to it in respect of such Lender hereunder.

In the event that each of the Administrative Agent, the Borrower and each Fronting Bank agrees that a Defaulting Lender has adequately remedied all matters that caused such Lender to be a Defaulting Lender, then the L/C Obligations of the Lenders shall be readjusted to reflect the inclusion of such Lender’s Commitment and on such date such Lender shall purchase at par such of the Advances of the other Lenders as the Administrative Agent shall determine may be necessary in order for such Lender to hold such Advances in accordance with its Percentage.

SECTION 2.22. Mitigation Obligations; Replacement of Lenders.

(a) Designation of a Different Lending Office.

(i) If any Lender requests compensation from the Borrower under Section 2.13, or requires the Borrower to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.16, then such Lender shall (at the request of the Borrower) use reasonable efforts to designate a different Applicable Lending Office for funding or booking its Advances hereunder or to assign its rights and obligations hereunder to another of its offices, branches or Affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.13 or 2.16, as the case may be, in the future, and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender.

(ii) Any Lender that becomes aware of circumstances that would permit such Lender to notify the Administrative Agent of any illegality under Section 2.14 shall use its commercially reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to change the jurisdiction of its Applicable Lending Office if the making of such change would avoid or eliminate such illegality and would not, in the reasonable judgment of such Lender, be otherwise disadvantageous to such Lender.

(iii) The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

 

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(b) Replacement of Lenders. If any Lender requests compensation under Section 2.13 or delivers any notice to the Administrative Agent pursuant to Section 2.14 resulting in the suspension of obligations of the Lenders with respect to Eurodollar RateTerm Benchmark Advances (or, if applicable, RFR Advances), or if the Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.16, and, in each case, such Lender has declined or is unable to designate a different Applicable Lending Office in accordance with Section 2.22(a), or if any Lender is a Defaulting Lender or a Non-Approving Lender, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 8.08(b)), all of its interests, rights (other than its existing rights to payments pursuant to Section 2.13, 2.14 or 2.16) and obligations under this Agreement and the related Loan Documents to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that:

(i) the Borrower shall have paid to the Administrative Agent the assignment fee (if any) specified in Section 8.08(b);

(ii) such Lender shall have received payment of an amount equal to the outstanding principal amount of its Advances, accrued interest thereon and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Section 8.05(b)) from the assignee (to the extent of such outstanding principal and accrued interest) or the Borrower (in the case of all other amounts);

(iii) in the case of any such assignment resulting from a claim for compensation under Section 2.13 or payments required to be made pursuant to Section 2.16, such assignment will result in a reduction in such compensation or payments thereafter;

(iv) such assignment does not conflict with Applicable Law; and

(v) in the case of any assignment resulting from a Lender becoming a Non-Approving Lender, the applicable assignee shall have consented to the applicable amendment, waiver or consent.

A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.

SECTION 2.23. Benchmark Replacement SettingAlternate Rate of Interest.

Notwithstanding anything to the contrary herein or in any other Loan Document:

(a) Replacing USD LIBOR. On March 5, 2021 the Financial Conduct Authority (“FCA”), the regulatory supervisor of USD LIBOR’s administrator (“IBA”), announced in a public statement the future cessation or loss of representativeness of overnight/Spot Next, 1-week, 1-month, 2-month, 3-month, 6-month and 12- month USD LIBOR tenor settings. On the earlier of (i) the date that all Available Tenors of USD LIBOR have either permanently or indefinitely ceased to be provided by IBA or have been announced by the FCA pursuant to public statement or publication of information to be no longer representative and (ii) the Early Opt-in Effective Date,

 

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if the then-current Benchmark is USD LIBOR, the Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of any setting of such Benchmark on such day and all subsequent settings without any amendment to, or further action or consent of any other party to this Agreement or any other Loan Document; provided that, in the Administrative Agent’s sole discretion and without obligation to do so, if the Administrative Agent determines that Term SOFR has become available and has been recommended for use by the Relevant Governmental Body, is administratively feasible for the Administrative Agent and would have been identified as the Benchmark Replacement in accordance with the foregoing if it had been so available at the time that the Benchmark Replacement then in effect was so identified, and the Administrative Agent notifies the Borrower of such availability, then, from and after the beginning of the Interest Period, relevant interest payment date or payment period for interest calculated, in each case, commencing no less than thirty (30) days after the date of such notice, the Benchmark Replacement shall be the sum of: (i) Term SOFR and (ii) 0.11448% (11.448 basis points) for an Available Tenor of one-month’s duration, 0.26161% (26.161 basis points) for an Available Tenor of three-months’ duration, and 0.42826% (42.826 basis points) for an Available Tenor of six-months’ duration (provided that, if the Benchmark Replacement as determined pursuant to the foregoing would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Loan Documents). If the Benchmark Replacement is Daily Simple SOFR, all interest payments will be payable on a quarterly basis.

(a) Subject to clauses (b), (c), (d), (e) and (f) of this Section 2.23, if:

(i) the Administrative Agent determines (which determination shall be conclusive absent manifest error) (A) prior to the commencement of any Interest Period for a Term Benchmark Borrowing, that adequate and reasonable means do not exist for ascertaining the Adjusted Term SOFR Rate (including because the Term SOFR Reference Rate is not available or published on a current basis), for such Interest Period or (B) at any time, that adequate and reasonable means do not exist for ascertaining the applicable Adjusted Daily Simple SOFR; or

(ii) the Administrative Agent is advised by the Majority Lenders that (A) prior to the commencement of any Interest Period for a Term Benchmark Borrowing, the Adjusted Term SOFR Rate for such Interest Period will not adequately and fairly reflect the cost to such Lenders (or Lender) of making or maintaining their Advances (or its Advance) included in such Borrowing for such Interest Period or (B) at any time, Adjusted Daily Simple SOFR will not adequately and fairly reflect the cost to such Lenders (or Lender) of making or maintaining their Advances (or its Advance) included in such Borrowing;

then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by telephone, telecopy or electronic mail as promptly as practicable thereafter and, until (x) the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist with respect to the relevant Benchmark and (y) the Borrower delivers a new notice of Conversion in accordance with the terms of Section 2.11 or a new Notice of Borrowing in accordance with the terms of Section 2.02(a), (1) a notice of Conversion in accordance with Section 2.11 that requests the Conversion of any Borrowing to a Term Benchmark Borrowing and any Notice of Borrowing that requests a Term Benchmark Borrowing shall instead be deemed to be a request for (x) an RFR Borrowing so long as the Adjusted Daily Simple SOFR

 

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is not also the subject of Section 2.23(a)(i) or (ii) above or (y) an Alternate Base Rate Borrowing if the Adjusted Daily Simple SOFR also is the subject of Section 2.23(a)(i) or (ii) above and (2) any Notice of Borrowing that requests an RFR Borrowing shall instead be deemed to be a Notice of Borrowing, as applicable, for an Alternate Base Rate Borrowing; provided that if the circumstances giving rise to such notice affect only one Type of Borrowings, then all other Types of Borrowings shall be permitted. Furthermore, if any Term Benchmark Advance or RFR Advance is outstanding on the date of the Borrower’s receipt of the notice from the Administrative Agent referred to in this Section 2.23(a) with respect to a Relevant Rate applicable to such Term Benchmark Advance or RFR Advance, then until (x) the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist with respect to the relevant Benchmark and (y) the Borrower delivers a new notice of Conversion in accordance with the terms of Section 2.11 or a new Notice of Borrowing in accordance with the terms of Section 2.02(a), (1) any Term Benchmark Advance shall on the last day of the Interest Period applicable to such Advance, be converted by the Administrative Agent to, and shall constitute, (x) an RFR Borrowing so long as the Adjusted Daily Simple SOFR is not also the subject of Section 2.23(a)(i) or (ii) above or (y) an Alternate Base Rate Advance if the Adjusted Daily Simple SOFR also is the subject of Section 2.23(a)(i) or (ii) above, on such day, and (2) any RFR Advance shall on and from such day be converted by the Administrative Agent to, and shall constitute an Alternate Base Rate Advance.

(b) Replacing Future Benchmarks. Upon the occurrence of Notwithstanding anything to the contrary herein or in any other Loan Document, if a Benchmark Transition Event, the and its related Benchmark Replacement Date have occurred prior to the Reference Time in respect of any setting of the then-current Benchmark, then (x) if a Benchmark Replacement is determined in accordance with clause (1) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace the then-currentsuch Benchmark for all purposes hereunder and under any Loan Document in respect of such Benchmark setting and subsequent Benchmark settings without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document and (y) if a Benchmark Replacement is determined in accordance with clause (2) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of any Benchmark setting at or after 5:00 p.m. (New York City time) on the fifth (5th) Business Day after the date notice of such Benchmark Replacement is provided to the Lenders without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document so long as the Administrative Agent has not received, by such time, written notice of objection to such Benchmark Replacement from Lenders comprising the Majority Lenders. At any time that the administrator of the then-current Benchmark has permanently or indefinitely ceased to provide such Benchmark or such Benchmark has been announced by the regulatory supervisor for the administrator of such Benchmark pursuant to public statement or publication of information to be no longer representative of the underlying market and economic reality that such Benchmark is intended to measure and that representativeness will not be restored, the Borrower may revoke any request for a borrowing of, conversion to or continuation of Advances to be made, converted or continued that would bear interest by reference to such Benchmark until the Borrower’s receipt of notice from the Administrative Agent that a Benchmark Replacement has replaced such Benchmark, and, failing that, the Borrower will be deemed to have converted any such request into a request for a borrowing of or conversion to Alternate Base Rate Advances. During the period referenced in the foregoing sentence, the component of Alternate Base Rate based upon the Benchmark will not be used in any determination of Alternate Base Rate.

 

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(c) Benchmark Replacement Conforming Changes. In connection with the implementation and administration of a Benchmark ReplacementNotwithstanding anything to the contrary herein or in any other Loan Document, the Administrative Agent will have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Loan Document.

(d) Notices; Standards for Decisions and Determinations. The Administrative Agent will promptly notify the Borrower and the Lenders of (i1) any occurrence of a Benchmark Transition Event, (2) the implementation of any Benchmark Replacement and, (ii3) the effectiveness of any Benchmark Replacement Conforming Changes, (4) the removal or reinstatement of any tenor of a Benchmark pursuant to clause (f) below and (5) the commencement or conclusion of any Benchmark Unavailability Period. Any determination, decision or election that may be made by the Administrative Agent or, if applicable, any Lender (or group of Lenders) pursuant to this Section 2.23, including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party heretoto this Agreement or any other Loan Document, except, in each case, as expressly required pursuant to this Section 2.23, and shall not be a basis of any claim of liability of any kind or nature by any party hereto, all such claims being hereby waived individually by each party hereto.

(e) Unavailability of Tenor of Benchmark. AtNotwithstanding anything to the contrary herein or in any other Loan Document, at any time (including in connection with the implementation of a Benchmark Replacement), (i1) if the then-current Benchmark is a term rate (including the Term SOFR or USD LIBOR)Rate) and either (a) any tenor for such Benchmark is not displayed on a screen or other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion or (b) the regulatory supervisor for the administrator of such Benchmark has provided a public statement or publication of information announcing that any tenor for such Benchmark is or will be no longer representative, then the Administrative Agent may remove any tenor of suchmodify the definition of “Interest Period” for any Benchmark that issettings at or after such time to remove such unavailable or non-representative fortenor and (2) if a tenor that was removed pursuant to clause (i) above either (a) is subsequently displayed on a screen or information service for a Benchmark (including a Benchmark Replacement) settings and (ii)or (b) is not, or is no longer, subject to an announcement that it is or will no longer be representative for a Benchmark (including a Benchmark Replacement), then the Administrative Agent may modify the definition of “Interest Period” for all Benchmark settings at or after such time to reinstate any such previously removed tenor for Benchmark (including Benchmark Replacement) settings.

 

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(f) Upon the Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period, the Borrower may revoke any pending request for a Term Benchmark Borrowing or RFR Borrowing of, conversion to or continuation of Term Benchmark Advances to be made, converted or continued during any Benchmark Unavailability Period and, failing that, the Borrower will be deemed to have converted any request for a Term Benchmark Borrowing into a request for a Borrowing of or conversion to (A) an RFR Borrowing so long as the Adjusted Daily Simple SOFR is not the subject of a Benchmark Transition Event or (B) an Alternate Base Rate Borrowing if the Adjusted Daily Simple SOFR is the subject of a Benchmark Transition Event. During any Benchmark Unavailability Period or at any time that a tenor for the then-current Benchmark is not an Available Tenor, the component of the Alternate Base Rate based upon the then-current Benchmark or such tenor for such Benchmark, as applicable, will not be used in any determination of the Alternate Base Rate. Furthermore, if any Term Benchmark Advance or RFR Advance is outstanding on the date of the Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period with respect to a Relevant Rate applicable to such Term Benchmark Advance or RFR Advance, then until such time as a Benchmark Replacement is implemented pursuant to this Section 2.23, (1) any Term Benchmark Advance shall on the last day of the Interest Period applicable to such Advance, be converted by the Administrative Agent to, and shall constitute, (x) an RFR Borrowing so long as the Adjusted Daily Simple SOFR is not the subject of a Benchmark Transition Event or (y) an Alternate Base Rate Advance if the Adjusted Daily Simple SOFR is the subject of a Benchmark Transition Event, on such day and (2) if applicable, any RFR Advance shall on and from such day be converted by the Administrative Agent to, and shall constitute an Alternate Base Rate Advance.

ARTICLE III

CONDITIONS OF LENDING AND ISSUING LETTERS OF CREDIT

SECTION 3.01. Conditions Precedent to Initial Extension of Credit.

The obligation of each Lender to make its initial Advance to the Borrower, and the obligation of each Fronting Bank to issue its initial Letter of Credit, are subject to the conditions precedent that on or before the date of any such Extension of Credit:

(a) The Administrative Agent shall have received the following, each dated the same date (except for the financial statements referred to in paragraph (iv)), in form and substance satisfactory to the Administrative Agent and (except for any Note) with one copy for each Fronting Bank and each Lender:

(i) This Agreement, duly executed by each of the parties hereto, and Notes requested by any Lender pursuant to Section 2.18(d), duly completed and executed by the Borrower and payable to such Lender;

(ii) Certified copies of the resolutions of the Board of Directors of the Borrower approving this Agreement and the other Loan Documents to which it is, or is to be, a party and of all documents evidencing any other necessary corporate action with respect to this Agreement and such Loan Documents;

 

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(iii) A certificate of the Secretary or an Assistant Secretary of the Borrower certifying (A) the names and true signatures of the officers of the Borrower authorized to sign each Loan Document to which the Borrower is, or is to become, a party and the other documents to be delivered hereunder and (B) that attached thereto are true and correct copies of the Organizational Documents of the Borrower, in each case as in effect on such date;

(iv) Copies of all the Disclosure Documents (it being agreed that those Disclosure Documents publicly available on the SEC’s EDGAR Database or on FE’s website no later than the Business Day immediately preceding the date of such Extension of Credit will be deemed to have been delivered under this clause (iv));

(v) An opinion of Jones Day, special counsel for the Borrower;

(vi) A certificate of an Authorized Officer of the Borrower certifying the satisfaction of the conditions specified in Section 3.02(i) with respect to the Borrower; and

(vii) Such other certifications, opinions, financial or other information, approvals and documents as the Administrative Agent, any Fronting Bank or any other Lender may reasonably request, all in form and substance satisfactory to the Administrative Agent, such Fronting Bank or such other Lender (as the case may be).

(b) The Administrative Agent shall have received the Fee Letters, duly executed by each of the parties thereto.

(c) The Borrower shall have paid, or caused to be paid, all of the fees payable in accordance with the Fee Letters.

(d) Prior to or concurrently with the making of such initial Extension of Credit, all amounts outstanding under the Existing FE Credit Agreement, in each case, whether for principal, interest, fees or otherwise, shall have been paid in full, all commitments to lend thereunder shall have been terminated, and the Existing FE Credit Agreement shall have been terminated.

(e) The Administrative Agent shall have received all documentation and information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including without limitation the Patriot Act (including, for the avoidance of doubt, Beneficial Ownership Certifications), to the extent such documentation or information is requested by the Administrative Agent on behalf of the Lenders prior to the date hereof.

SECTION 3.02. Conditions Precedent to Each Extension of Credit.

The obligation of each Lender to make an Advance to the Borrower as part of any Borrowing (including the initial Borrowing) that would increase the aggregate principal amount of Advances outstanding hereunder, and the obligation of each Fronting Bank to issue, amend, extend or renew a Letter of Credit (including the initial Letter of Credit for the account of the Borrower), in each case, as part of an Extension of Credit, shall be subject to the further conditions precedent that on the date of such Extension of Credit:

 

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(i) The following statements shall be true (and each of the giving of the applicable Notice of Borrowing or Letter of Credit Request and the acceptance by the Borrower of the proceeds of such Borrowing or the acceptance of a Letter of Credit by the Beneficiary thereof, as the case may be, shall constitute a representation and warranty by the Borrower that on the date of such Extension of Credit such statements are true):

(A) The representations and warranties of the Borrower contained in Section 4.01 with respect to any Extension of Credit following the initial Extension of Credit are true and correct on and as of the date of such Extension of Credit, before and after giving effect to such Extension of Credit and to the application of the proceeds therefrom, as though made on and as of such date (other than, as to any such representation or warranty that by its terms refers to a specific date other than the date of such Extension of Credit, in which case, such representation and warranty shall be true and correct as of such specific date);

(B) No event has occurred and is continuing, or would result from such Extension of Credit or from the application of the proceeds therefrom, that constitutes an Event of Default or an Unmatured Default with respect to the Borrower;

(C) Immediately following such Extension of Credit, (1) the aggregate amount of Outstanding Credits shall not exceed the aggregate amount of the Commitments then in effect, (2) the Outstanding Credits of any Lender shall not exceed the amount of such Lender’s Commitment, (3) the aggregate principal amount of Advances outstanding for the Borrower shall not exceed the amounts authorized under the Borrower’s Approval and (4) if such Extension of Credit relates to a Letter of Credit, the Stated Amount thereof, when aggregated with (x) the Stated Amount of each other Letter of Credit that is outstanding or with respect to which a Letter of Credit Request has been received and (y) the outstanding Reimbursement Obligations, shall not exceed the L/C Commitment Amount; and

(D) No event has occurred and is continuing, or would result from such Extension of Credit or from the application of the proceeds therefrom, that constitutes a Specified Event.

(ii) The Borrower shall have delivered to the Administrative Agent a duly executed Notice of Borrowing.

(iii) The Borrower shall have delivered to the Administrative Agent copies of such other approvals and documents as the Administrative Agent, any Fronting Bank or any other Lender (through the Administrative Agent) may reasonably request.

 

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ARTICLE IV

REPRESENTATIONS AND WARRANTIES

SECTION 4.01. Representations and Warranties of the Borrower.

The Borrower represents and warrants as follows:

(a) Existence and Power. It is a corporation or limited liability company, as the case may be, duly formed, validly existing and in good standing under the laws of the jurisdiction of its formation, is duly qualified to do business as a foreign corporation or limited liability company 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 reasonably be expected to have a Material Adverse Effect with respect to the Borrower, and has all corporate or limited liability company powers and all governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted except where the failure to do so, in each case, would not reasonably be expected to have a Material Adverse Effect.

(b) Due Authorization. The execution, delivery and performance by it of each Loan Document to which it is, 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 members, as the case may be, other than such consents and approvals as have been duly obtained, given or accomplished.

(c) No Violation, Etc. Neither the execution, delivery or performance by it of this Agreement or any other Loan Document to which it is, or is to become, a party, nor the consummation by it of the transactions contemplated hereby or thereby, nor compliance by it with the provisions hereof or thereof, contravenes or will contravene, or results or will result in a breach of, any of the provisions of its Organizational Documents, any Applicable Law, or any indenture, mortgage, deed of trust, lease, license or any other agreement or instrument to which it or any of its Subsidiaries is party or by which its property or the property of any of its Subsidiaries 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 Subsidiaries except as provided herein, except to the extent such contravention or breach, or the creation or imposition of any such Lien, individually or in the aggregate, has not had and would not reasonably be expected to have a Material Adverse Effect with respect to the Borrower. The Borrower 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 would not reasonably be expected to have a Material Adverse Effect with respect to the Borrower.

(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 Agreement or any other Loan Document to which it is, or is to become, a party other than the Borrower’s Approval, as applicable, which has been duly issued and is in full force and effect.

(e) Execution and Delivery. This Agreement and the other Loan Documents to which it is, or is to become, a party have been or will be (as the case may be) duly executed and delivered by it, and this Agreement is, and upon execution and delivery thereof each other Loan Document will be, 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, to the Borrower’s knowledge, threatened action or proceeding (including, without limitation, any proceeding relating to or arising out of Environmental Laws) affecting the Borrower or any of its Subsidiaries before any court, governmental agency or arbitrator that would reasonably be expected to have a Material Adverse Effect with respect to the Borrower.

(g) Financial Statements; Material Adverse Change. The consolidated balance sheet of the Borrower and its Subsidiaries, as at December 31, 2020, and the related consolidated statements of income, retained earnings and cash flows of the Borrower and its Subsidiaries, certified by PricewaterhouseCoopers LLP, independent public accountants, and the unaudited consolidated balance sheet of the Borrower and its Subsidiaries, as at June 30, 2021, and the related consolidated statements of income, retained earnings and cash flows of the Borrower and its Subsidiaries, for the six months then ended, copies of which have been furnished to each Lender and each Fronting Bank, in all cases as amended and restated to the date hereof, present fairly in all material respects the consolidated financial position of the Borrower and its Subsidiaries as at the indicated dates and the consolidated results of the operations of the Borrower and its Subsidiaries for the periods ended on the indicated dates, all in accordance with GAAP consistently applied (in the case of such statements that are unaudited, subject to year-end adjustments and the exclusion of detailed footnotes). Except as disclosed in the Disclosure Documents, there has been no change, event or occurrence since December 31, 2020 that has had a Material Adverse Effect with respect to the Borrower.

(h) ERISA. Except as would not reasonably be expected to have a Material Adverse Effect:

(i) No Plan is in at-risk status within the meaning of Section 430 of the Code or Section 303 of ERISA and no Multiemployer Plan is endangered or in critical status within the meaning of Section 432 of the Code or Section 305 of ERISA.

(ii) No failure to (A) meet the minimum funding standard of Section 303 of ERISA with respect to any Plan, (B) timely make a required installment under Section 430(j) of the Code with respect to any Plan, or (C) make any required contribution to a Multiemployer Plan has occurred.

(iii) No Termination Event has occurred or is reasonably expected to occur with respect to any Plan.

(iv) Schedule SB (Actuarial Information) to the most recent annual report (Form 5500 Series) with respect to each Plan, copies of which have been filed with the Department of Labor and furnished (or made available) to the Lenders, (A) is complete and accurate, (B) fairly presents the funding status of such Plan, and (C) since the date of such Schedule SB there has been no change in such funding status.

(v) Neither it nor any member of the Controlled Group has incurred or reasonably expects to incur any withdrawal liability under ERISA with respect to any Multiemployer Plan.

 

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(vi) No Multiemployer Plan is insolvent and no action has been taken to terminate any Multiemployer Plan under Section 4041A of ERISA.

(i) Margin Stock. After applying the proceeds of each Extension of Credit, not more than 25% of the value of the assets of the Borrower and its Subsidiaries subject to the restrictions of Section 5.03(a) or (b) will consist of or be represented by Margin Stock. The Borrower is not engaged in the business of extending credit for the purpose of purchasing or carrying Margin Stock, and no proceeds of any Extension of Credit will be used to purchase or carry any Margin Stock or to extend credit to others for the purpose of purchasing or carrying any Margin Stock.

(j) Investment Company. The Borrower 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.

(k) No Event of Default. No event has occurred and is continuing that constitutes an Event of Default or an Unmatured Default in each case with respect to the Borrower.

(l) No Material Misstatements. The reports, financial statements and other written information furnished by or on behalf of the Borrower to the Administrative Agent, any Fronting Bank or any Lender pursuant to or in connection with the Loan Documents and the transactions contemplated thereby, when taken together with the Disclosure Documents, 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.

(m) Anti-Corruption Laws and Sanctions. The Borrower has implemented and maintains in effect policies and procedures designed to ensure compliance with Anti-Corruption Laws and Sanctions in all respects by the Covered Entities and their respective directors, officers, employees and agents under the control and acting on behalf of the Covered Entities. The Covered Entities are in compliance in all material respects with (i) the Trading with the Enemy Act, as amended, and each of the regulations promulgated by OFAC (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation or executive orders relating thereto, and (ii) the Patriot Act. The Covered Entities and their respective officers and employees and, to the knowledge of the Borrower, the Covered Entities’ directors, officers, employees and agents, are in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects, except for the Noncompliance Event. None of the Covered Entities or any of their respective directors, officers or employees or, to the knowledge of the Borrower, any agent of the Covered Entities (i) is a Sanctioned Person, (ii) has assets located in Sanctioned Countries in violation of applicable Sanctions, (iii) does business in or with, or derives its operating income from investments in, or transactions with, Sanctioned Persons or (iv) does business in or with, or derives its operating income from investments in, or transactions with, Sanctioned Countries. No Borrowing, no Letter of Credit or use of proceeds thereof will violate Anti-Corruption Laws or applicable Sanctions.

(n) Affected Financial Institutions. The Borrower is not an Affected Financial Institution.

 

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(o) Beneficial Ownership Certification. The information included in the most recent Beneficial Ownership Certification delivered by the Borrower to the Administrative Agent and the Lenders is true and correct in all respects.

(p) Taxes. The Borrower and each of its Subsidiaries have filed all federal, state and other Tax returns and reports required to be filed, and have paid all federal, state and other Taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties, income or assets otherwise due and payable, except (a) Taxes that are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves are being maintained in accordance with GAAP or (b) to the extent that the failure to do so would not reasonably be expected to have a Material Adverse Effect.

ARTICLE V

COVENANTS OF THE BORROWER

SECTION 5.01. Affirmative Covenants of the Borrower.

Unless the Majority Lenders shall otherwise consent in writing, so long as any amount payable by the Borrower hereunder shall remain unpaid, any Letter of Credit shall remain outstanding or any Lender shall have any Commitment hereunder, the Borrower will:

(a) Preservation of Corporate Existence, Etc. (i) Without limiting the right of the Borrower to merge with or into or consolidate with or into any other corporation or entity in accordance with the provisions of Section 5.03(c), preserve and maintain its corporate or limited liability company (as the case may be) existence under the laws of a State of the United States or the District of Columbia, (ii) qualify and remain qualified as a foreign corporation or limited liability company (as the case may be) in each jurisdiction in which such qualification is reasonably necessary in view of its business and operations or the ownership of its properties and (iii) preserve, renew and keep in full force and effect the rights, privileges and franchises necessary or desirable in the normal conduct of its business, except, in the case of clauses (ii) and (iii) above, to the extent that failure to do so would not reasonably be expected to result in a Material Adverse Effect with respect to the Borrower; provided, however, that the Borrower may change its form of organization from a corporation to a limited liability company or from a limited liability company to a corporation if the Administrative Agent is reasonably satisfied that such change shall not affect any obligations of the Borrower under the Loan Documents.

(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 reasonably be expected to result in a Material Adverse Effect with respect to the Borrower, such compliance to include, without limitation, compliance with the Patriot Act, regulations promulgated by OFAC, Environmental Laws, FERC and each “state commission” (as that term is defined under 18 C.F.R. 1.101(k)) having jurisdiction over the Borrower, 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 Borrower operates.

(d) Inspection Rights. At any reasonable time and from time to time as the Administrative Agent, any Fronting Bank or any Lender may reasonably request (upon five Business Days’ prior notice delivered to the Borrower and no more than once a year, unless an Event of Default has occurred and is continuing), permit the Administrative Agent, such Fronting Bank or such Lender 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 Borrower and any of its Subsidiaries, and to discuss the affairs, finances and accounts of the Borrower and any of its Subsidiaries with any of their respective officers or directors; provided, however, that (x) the Borrower reserves the right to restrict access to any of its Subsidiaries’ facilities in accordance with reasonably adopted procedures relating to safety and security and (y) neither Borrower nor any of its Subsidiaries shall be required to disclose to the Administrative Agent, any Fronting Bank or any Lender or any agents or representatives thereof any information that is the subject of attorney-client privilege or attorney work-product privilege properly asserted by the applicable Person to prevent the loss of such privilege in connection with such information or that is prevented from disclosure pursuant to a confidentiality agreement with third parties (provided that the Borrower agrees to use commercially reasonable efforts to obtain any required third-party consent to such disclosure, subject to customary nondisclosure restrictions applicable to the Administrative Agent, any Fronting Bank or the Lenders, as applicable). The Administrative Agent, each Fronting Bank and each Lender agree to use reasonable efforts to ensure that any information concerning the Borrower or any of its Subsidiaries obtained by the Administrative Agent, such Fronting Bank or such Lender pursuant to this subsection (d) or subsection (g) below that is not contained in a report or other document filed with the SEC, distributed by the Borrower or FE 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, such Fronting Bank’s or such Lender’s business operations be treated confidentially by the Administrative Agent, such Fronting Bank or such Lender, as the case may be, and will not be distributed or otherwise made available by the Administrative Agent, such Fronting Bank or such Lender, as the case may be, to any Person, other than the Administrative Agent’s, such Fronting Bank’s or such Lender’s employees, authorized agents or representatives (including, without limitation, attorneys and accountants).

(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 Borrower and each of its Subsidiaries in accordance with GAAP.

(f) Maintenance of Properties. Maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, all of its properties (except such properties the failure of which to maintain or preserve would not have, individually or in the aggregate, a Material Adverse Effect with respect to the Borrower) that are used or that are useful in the conduct of its business in good working order and condition, ordinary wear and tear excepted, and in accordance with prudent industry practices applicable to the industry of the Borrower, in all material respects, and (subject to subsection (b) above) Applicable Law 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 Borrower or any of its Subsidiaries not to dispose of such properties by sale, lease, transfer or otherwise.

 

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(g) Reporting Requirements. Furnish, or cause to be furnished, to the Administrative Agent, with sufficient copies for each Lender and each Fronting Bank, the following:

(i) promptly after becoming aware of the occurrence of any Event of Default with respect to the Borrower continuing on the date of such statement, the statement of an Authorized Officer of the Borrower setting forth details of such Event of Default and the action that the Borrower has taken or proposes to take with respect thereto;

(ii) as soon as available and in any event within 60 days after the close of each of the first three quarters in each fiscal year of the Borrower, consolidated balance sheets of the Borrower and its Subsidiaries as at the end of such quarter and consolidated statements of income of the Borrower 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 in all material respects the financial condition of the Borrower and its Subsidiaries as at such date and the results of operations of the Borrower 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 adjustments and the exclusion of detailed footnotes) by the chief financial officer, treasurer, assistant treasurer or controller of the Borrower as having been prepared in accordance with GAAP consistently applied (in the case of such statements that are unaudited, subject to year-end adjustments and the exclusion of detailed footnotes);

(iii) as soon as available and in any event within 105 days after the end of each fiscal year of the Borrower, a copy of the annual report for such year for the Borrower and its Subsidiaries, containing consolidated and consolidating financial statements of the Borrower and its Subsidiaries for such year certified by PricewaterhouseCoopers LLP or other independent public accountants of recognized national standing as fairly presenting, in all material respects, the financial position of the Borrower and its Subsidiaries as at the end of such year and the results of their operations and their cash flows for the three-year period (or, if the Borrower is not then required to file reports with the SEC pursuant to Section 13 or 15(d) of the Exchange Act, the two-year period) ending as at the end of such year in conformity with GAAP;

(iv) concurrently with the delivery of the financial statements specified in clauses (ii) and (iii) above a certificate of the chief financial officer, treasurer, assistant treasurer or controller of the Borrower (A) stating whether the Borrower has any knowledge of the occurrence and continuance at the date of such certificate of any Event of Default not theretofore reported pursuant to the provisions of clause (i) of this subsection (g), 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 5.02, as of the date of the most recent financial statements accompanying such certificate, to show the Borrower’s compliance with or the status of the financial covenant contained in Section 5.02;

 

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(v) promptly after the sending or filing thereof, copies of any reports that the Borrower sends to any of its securityholders, and copies of all reports on Form 10-K, Form 10-Q or Form 8-K, if any, that the Borrower or any of its Subsidiaries files with the SEC;

(vi) as soon as possible and in any event within 20 days after the Borrower or any member of the Controlled Group knows or has reason to know that any Termination Event with respect to any Plan has occurred or is reasonably likely to occur, that would reasonably be expected to result in liability exceeding $100,000,000 to the Borrower or such member of the Controlled Group, a statement of the chief financial officer of the Borrower describing such Termination Event and the action, if any, that the Borrower or such member of the Controlled Group, as the case may be, proposes to take with respect thereto;

(vii) promptly upon reasonable request by the Administrative Agent or any Lender, after the filing thereof with the Department of Labor, copies of each Schedule SB (Actuarial Information) to the annual report (Form 5500 Series) with respect to each Plan;

(viii) promptly upon request and in any event within five Business Days after receipt thereof by the Borrower or any member of the Controlled Group from a Multiemployer Plan sponsor, a copy of each notice received by the Borrower or such member of the Controlled Group concerning the imposition of withdrawal liability pursuant to Section 4202 of ERISA;

(ix) promptly and in any event within five Business Days (or one Business Day, if such change would require a prepayment under Section 2.12(b)(iv)) after Moody’s or S&P has changed any relevant Reference Rating, notice of such change;

(x) (A) promptly upon the occurrence of a Reportable Compliance Event, notice of such occurrence, and (B) promptly after the Borrower becomes aware of any change in the information provided in a Beneficial Ownership Certification that would result in a change to the list of beneficial owners identified in parts (c) or (d) of such certification, a written notice specifying any such change; and

(xi) such other information respecting the condition or operations, financial or otherwise, of the Borrower or any of its Subsidiaries, including, without limitation, copies of all reports and registration statements that the Borrower or any Subsidiary files with the SEC or any national securities exchange, as the Administrative Agent, any Fronting Bank or any Lender (through the Administrative Agent) may from time to time reasonably request.

The financial statements and reports described in paragraphs (ii), (iii) and (v) above will be deemed to have been delivered hereunder if publicly available on the SEC’s EDGAR Database or on FE’s website no later than the date specified for delivery of same under paragraph (ii), (iii) or (v), as applicable, above. If any financial statements or report described in paragraph (ii) or (iii) above is due on a date that is not a Business Day, then such financial statements or report shall be delivered on the next succeeding Business Day.

 

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(h) Maintenance of Ratings. Use commercially reasonable efforts to maintain a senior unsecured non-credit enhanced debt rating from each of S&P and Moody’s.

(i) Compliance with Anti-Corruption Laws and Sanctions. (i) Maintain in effect and enforce, and cause the other Covered Entities to maintain in effect and enforce, policies and procedures designed to ensure compliance with Anti-Corruption Laws and applicable Sanctions in all respects by the Covered Entities and their respective directors, officers, employees and, to the extent commercially reasonable, agents under the control and acting on behalf of the Covered Entities, and (ii) comply, and cause the other Covered Entities to comply, in all material respects with Anti-Corruption Laws and Sanctions applicable to it or its property.

SECTION 5.02. Financial Covenant.

Debt to Capitalization Ratio. Unless the Majority Lenders shall otherwise consent in writing, so long as any amount payable by the Borrower hereunder shall remain unpaid, any Letter of Credit for the account of the Borrower shall remain outstanding or any Lender shall have any Commitment to the Borrower hereunder, the Borrower will maintain a Debt to Capitalization Ratio, as of the last day of each fiscal quarter of the Borrower, commencing with the fiscal quarter ending December 31, 2021, of no more than 0.65 to 1.00 (determined as of the last day of each fiscal quarter).

SECTION 5.03. Negative Covenants of the Borrower.

Unless the Majority Lenders shall otherwise consent in writing, so long as any amount payable by the Borrower hereunder shall remain unpaid, any Letter of Credit for the account of the Borrower shall remain outstanding or any Lender shall have any Commitment to the Borrower hereunder, the Borrower will not:

(a) Sales, Etc. (i) Sell, lease, transfer or otherwise dispose of any shares of common stock of any Significant Subsidiary of the Borrower, whether now owned or hereafter acquired by the Borrower, or permit any Significant Subsidiary of the Borrower to do so; provided, however, the limitation in this clause (i) shall not in any way restrict, and shall not apply to, any Specified Disposition; or (ii) sell, lease, transfer or otherwise dispose of (whether in one transaction or a series of transactions) or permit any of its Subsidiaries to sell, lease, transfer or dispose of (whether in one transaction or a series of transactions) assets located in the United States (other than any assets that are purported to be conveyed in connection with a Permitted Securitization but including assets purported to be conveyed pursuant to any sale leaseback transaction) having an aggregate book value (determined as of the date of such transaction for all such transactions since the date hereof) that is greater than 20% of the book value of all of the consolidated fixed assets of the Borrower, as reported on the most recent consolidated balance sheet of the Borrower prior to the date of such sale, lease, transfer or disposition to any entity other than the Borrower or any of its wholly owned direct or indirect Subsidiaries; provided, however, that the limitation in this clause (ii) shall not in any way restrict, and shall not apply to, (A) [reserved], (B) [reserved], or (C) the sale, lease, transfer or other disposition of the Borrower’s assets to a newly-formed Person to which all or substantially all of the assets and liabilities of the Borrower or its Subsidiaries are being transferred, in the case under this clause (C), pursuant to a transaction permitted under subsection (c) below.

 

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(b) Liens, Etc. Create or suffer to exist, or permit any Significant Subsidiary of the Borrower 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 of the Borrower), in each case to secure or provide for the payment of Indebtedness, 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 Borrower or Significant Subsidiary is a party, (C) [reserved], (D) 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 (E) 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 Borrower 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 property acquired by the Borrower or Significant Subsidiary or on the property of any Person at the time that such Person becomes a direct or indirect Significant Subsidiary of the Borrower or Significant Subsidiary or is merged into or consolidated with the Borrower or Significant Subsidiary; provided, in each case, that such Liens were not created to secure the acquisition of such Person; (iv) Liens in existence on the date of this Agreement; (v) Liens created by any First Mortgage Indenture, so long as 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 Unmatured Default; (vi) Liens securing Attributable Securitization Obligations on the assets purported to be sold in connection with the applicable Permitted Securitization; (vii) Liens securing Nonrecourse Indebtedness; (viii) Liens on cash or cash equivalents deposited on behalf of or pledged to counterparties with respect to Permitted Obligations of the Borrower or any of its Significant Subsidiaries; (ix) Liens on cash or cash equivalents to defease Indebtedness of the Borrower or any of its Subsidiaries; (x) Liens on cash or cash equivalents constituting proceeds from a disposition of assets otherwise not prohibited under subsection (a) above, which proceeds are deposited in escrow accounts for indemnification, adjustment of purchase price or similar obligations to the purchaser of such assets; (xi) Liens securing obligations in respect of pollution control or industrial revenue bonds or nuclear fuel leases, provided that such Liens extend to only the equipment, project, nuclear fuel or other assets financed with the proceeds of such financing; (xii) Liens arising in connection with leases that shall have been or should be, in accordance with GAAP, recorded as capital leases in respect of which the Borrower or Significant Subsidiary is liable as lessee; provided, that no such Lien shall extend to or cover any assets of the Borrower or Significant Subsidiary other than the assets of the Borrower or Significant Subsidiary subject to such lease and proceeds thereof; and (xiii) Liens created for the sole purpose of refinancing, extending, renewing or replacing in whole or in part Indebtedness secured by any Lien referred to in the foregoing clauses (i) through (xii); provided, however, that the principal amount of Indebtedness (or, if greater, the aggregate lending commitment) secured thereby shall not exceed the principal amount of Indebtedness (or, if greater, the aggregate lending commitment) so secured at the time of such refinancing, extension, renewal or replacement, and that such refinancing, extension, renewal or replacement, as the case may be, shall be limited to all or a part of the property or Indebtedness that secured the Lien so extended, renewed or replaced (and any improvements on such property).

 

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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 have occurred and be continuing that constitutes an Event of Default, (ii) the consolidation or merger shall not materially and adversely affect the ability of the Borrower (or its successor by merger or consolidation as contemplated by clause (A) of this subsection (c)) to perform its obligations hereunder or under any other Loan Document, and (iii) in the case of any merger or consolidation to which the Borrower is a party, the Person formed by such consolidation or into which the Borrower shall be merged shall (1) assume the Borrower’s obligations under this Agreement and the other Loan Documents to which it is a party in a writing reasonably satisfactory in form and substance to the Administrative Agent and (2) be organized under the laws of a State of the United States or the District of Columbia. Without limiting the foregoing, (A) the Borrower may merge with or into or consolidate with or into a newly-formed Person into which the Borrower is being merged or consolidated (which Person will become the Borrower hereunder and a wholly-owned Subsidiary of the Borrower) and (B) the Borrower may transfer all or substantially all of its assets and liabilities to a newly-formed Person to which all or substantially all of the assets and liabilities of the Borrower is being transferred (which Person will become the Borrower hereunder and a wholly-owned Subsidiary of the Borrower), in each case of clauses (A) and (B), if (1) the surviving Person, transferee or Person otherwise specified above to become the Borrower hereunder assumes the Borrower’s obligations under this Agreement and the other Loan Documents pursuant to an instrument in form and substance reasonably satisfactory to the Administrative Agent, (2) the Reference Ratings of the surviving or resulting Borrower are not, after giving effect to such transactions, any lower than the Reference Ratings of the Borrower immediately prior to the consummation of such transactions, unless the Reference Ratings of such surviving or resulting Borrower are at least BBB- and Baa3, and (3) the parties to such transaction deliver to the Administrative Agent certified copies of all corporate or limited liability, equity holder and Governmental Authority approvals required in connection with such transactions and legal opinions of counsel to such parties relating to such transactions and the assumption agreement described in clause (1) above.

(d) Compliance with ERISA. (i) Enter into any nonexempt “prohibited transaction” (within the meaning of Section 4975 of the Code or Section 406 of ERISA) involving any Plan that may result in any liability of the Borrower to any Person that (in the opinion of the Majority Lenders and the Fronting Banks) would reasonably be expected to have a Material Adverse Effect with respect to the Borrower or (ii) allow or suffer to exist any event or condition that results in any liability of the Borrower to the PBGC, any Plan, or any Multiemployer Plan that would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect with respect to the Borrower.

(e) Use of Proceeds. Use the proceeds of any Borrowing or any Letter of Credit for any purpose other than (i) refinancing the Existing FE Credit Agreement and (ii) working capital and other general corporate purposes of the Borrower and its Subsidiaries (which, for the avoidance of doubt, shall include intercompany loans and advances by the Borrower to any of its Subsidiaries); provided, however, that (A) the Borrower may not use such proceeds in connection with any Hostile Acquisition and (B) the Borrower may not, directly or indirectly, use such proceeds to repay any Indebtedness other than (1) to repay any Advances or (2) to make scheduled repayments or other repayments of other Indebtedness in the ordinary course of business.

 

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(f) [Reserved].

(g) Compliance with Anti-Corruption Laws and Sanctions. Request any Borrowing or any Letter of Credit, or use, or permit any of the other Covered Entities and its or their respective directors, officers, employees and agents to use, the proceeds of any Borrowing or any Letter of Credit (i) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws, (ii) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, (iii) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Country, or (iv) in any manner that would result in the violation of any Sanctions applicable to, or the imposition of any Sanctions on, any Covered Entity or, to the knowledge of the Borrower, any other party hereto.

ARTICLE VI

EVENTS OF DEFAULT

SECTION 6.01. Events of Default.

If any of the following events shall occur and be continuing with respect to the Borrower (an “Event of Default”):

(a) (i) Any principal of any Advance or any Reimbursement Obligation shall not be paid by the Borrower when the same becomes due and payable, or (ii) any interest on any Advance or any fees or other amounts payable hereunder shall not be paid by the Borrower within three Business Days after the same becomes due and payable; or

(b) Any representation or warranty made by the Borrower (or any of its officers) in any Loan Document or in connection with any Loan Document shall prove to have been incorrect or misleading in any material respect when made; or

(c) (i) The Borrower shall fail to perform or observe any covenant set forth in Section 5.01(a)(i), Section 5.01(g)(i), Section 5.01(i), Section 5.02 or Section 5.03 on its part to be performed or observed, or (ii) the Borrower shall fail to perform or observe any other term, covenant or agreement (other than those covenants otherwise covered in clause (a) or (c)(i) of this Section 6.01) contained in this Agreement or any other Loan 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 Borrower by the Administrative Agent or any Lender; or

(d) Any material provision of this Agreement or any other Loan Document shall at any time and for any reason cease to be valid and binding upon the Borrower, except pursuant to the terms thereof, or shall be declared to be null and void, or the validity or enforceability thereof shall be contested in any manner by the Borrower or any Governmental Authority, or the Borrower shall deny in any manner that it has any or further liability or obligation under this Agreement or any other Loan Document; or

 

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(e) The Borrower or any Significant Subsidiary of the Borrower shall fail to pay any principal of or premium or interest on any Indebtedness (other than Indebtedness of the Borrower under this Agreement) that is outstanding in a principal amount in excess of $100,000,000 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 Indebtedness; or any other event shall occur or condition shall exist under any agreement or instrument relating to any such Indebtedness 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 Indebtedness; or any such Indebtedness 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

(f) The Borrower or any Significant Subsidiary of the Borrower 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 Borrower or any Significant Subsidiary of the Borrower 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 Borrower or any Significant Subsidiary of the Borrower shall take any corporate action to authorize or to consent to any of the actions set forth above in this subsection (f); or

(g) Any judgment or order for the payment of money exceeding any applicable insurance coverage by more than $100,000,000 shall be rendered by a court of final adjudication against the Borrower or any Significant Subsidiary of the Borrower 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 30 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

(h) Any Termination Event with respect to a Plan shall have occurred or the Borrower or any member of the Controlled Group as employer under a Multiemployer Plan shall have made a complete or partial withdrawal from such Multiemployer Plan, and, 30 days after notice thereof shall have been given to the Borrower by the Administrative Agent or any Lender, such Termination Event (if correctable) shall not have been corrected, and, as applicable, (1) the actual liability in respect of such Termination Event to the Borrower would reasonably be expected to exceed $100,000,000, or (2) as a result of such complete or partial withdrawal from a Multiemployer Plan, the Borrower would reasonably be expected to incur withdrawal liability in an amount exceeding $100,000,000; or

 

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(i) (i) FE shall fail to own directly or indirectly 100% of the issued and outstanding shares of common stock of the Borrower (with any such failure constituting an Event of Default with respect to the Borrower), (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 SEC under the Exchange Act), directly or indirectly, of securities of the Borrower (or other securities convertible into such securities) representing 30% or more of the combined voting power of all securities of the Borrower, as applicable, entitled to vote in the election of directors; or (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 the Borrower, as applicable, unless the Persons replacing such individuals were nominated by the stockholders or the Board of Directors of the Borrower in accordance with the Borrower’s Organizational Documents (each a “Change of Control”); provided, however, that any Specified Disposition shall not constitute a Change of Control; or

(j) (i) Any indictment shall be issued against the Borrower or any of its Affiliates arising from a purported violation of any Anti-Corruption Law, or (ii) the Borrower or any of its Affiliates shall have entered into any deferred prosecution agreement (or similar agreement) with respect to a purported violation of any Anti-Corruption Law (other than the DPA); or

(k) The Borrower shall breach any of its obligations under the DPA, which breach results in an enforcement action including, without limitation, the filing of any charging document, by any Governmental Authority, the imposition of penalties on the Borrower or the withdrawal from, or termination of, the DPA with respect to the Borrower;

then, and in any such event, the Administrative Agent shall at the request, or may with the consent, of the Majority Lenders, (i) by notice to the defaulting Borrower, declare the obligation of each Lender to make Advances to the Borrower and the obligation of the Fronting Banks to issue Letters of Credit for the account of the Borrower, to be terminated, whereupon the same shall forthwith terminate, and (ii) by notice to the Borrower, declare the Advances made to the Borrower, an amount equal to the aggregate Stated Amount of all issued but undrawn Letters of Credit issued for the account of the Borrower, (such amount being the “Letter of Credit Cash Cover”) and all other amounts payable under this Agreement and the other Loan Documents by the Borrower to be forthwith due and payable, whereupon such Advances and all such amounts shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Borrower; provided, however, that in the event of an actual or deemed entry of an order for relief with respect to the Borrower or any Significant Subsidiary of the Borrower under the Bankruptcy Code, (A) the obligation of each Lender to make Advances to the Borrower and the obligation of the Fronting Banks to issue Letters of Credit for the account of the Borrower shall automatically be terminated and (B) all Advances made to the Borrower, the Letter of Credit Cash Cover with respect to the Borrower and all other amounts payable under this Agreement by the Borrower shall automatically become and be due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Borrower. In the event that the Borrower is required to pay the Letter of Credit Cash Cover pursuant to this Section 6.01, such payment shall be made in immediately available funds to the Administrative Agent, which shall hold such funds as collateral pursuant to arrangements reasonably satisfactory to the Administrative Agent and the Fronting Banks to secure Reimbursement Obligations in respect of Letters of Credit then outstanding, for the benefit of the Lenders and the Fronting Banks.

 

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ARTICLE VII

THE ADMINISTRATIVE AGENT

SECTION 7.01. Authorization and Action.

(a) Each Lender and each Fronting Bank hereby irrevocably appoints the entity named as Administrative Agent in the heading of this Agreement and its successors and assigns to serve as the administrative agent under the Loan Documents and each Lender and each Fronting Bank authorizes the Administrative Agent to take such actions as agent on its behalf and to exercise such powers under this Agreement and the other Loan Documents as are delegated to the Administrative Agent under such agreements and to exercise such powers as are reasonably incidental thereto. Without limiting the foregoing, each Lender and each Fronting Bank hereby authorizes the Administrative Agent to execute and deliver, and to perform its obligations under, each of the Loan Documents to which the Administrative Agent is a party, and to exercise all rights, powers and remedies that the Administrative Agent may have under such Loan Documents.

(b) As to any matters not expressly provided for herein and in the other Loan Documents (including enforcement or collection), the Administrative Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the written instructions of the Majority Lenders (or such other number or percentage of the Lenders as shall be necessary, pursuant to the terms in the Loan Documents), and, unless and until revoked in writing, such instructions shall be binding upon each Lender and each Fronting Bank; provided, however, that the Administrative Agent shall not be required to take any action that (i) the Administrative Agent in good faith believes exposes it to liability unless the Administrative Agent receives an indemnification and is exculpated in a manner satisfactory to it from the Lenders and the Fronting Banks with respect to such action or (ii) is contrary to this Agreement or any other Loan Document or applicable law, including any action that may be in violation of the automatic stay under any requirement of law relating to bankruptcy, insolvency or reorganization or relief of debtors or that may effect a forfeiture, modification or termination of property of a Defaulting Lender in violation of any requirement of law relating to bankruptcy, insolvency or reorganization or relief of debtors; provided, further, that the Administrative Agent may seek clarification or direction from the Majority Lenders prior to the exercise of any such instructed action and may refrain from acting until such clarification or direction has been provided. Except as expressly set forth in the Loan Documents, the Administrative Agent shall not have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower, any Subsidiary or any Affiliate of any of the foregoing that is communicated to or obtained by the Person serving as Administrative Agent or any of its Affiliates in any capacity. Nothing in this Agreement shall require the Administrative Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.

 

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(c) In performing its functions and duties hereunder and under the other Loan Documents, the Administrative Agent is acting solely on behalf of the Lenders and the Fronting Banks (except in limited circumstances expressly provided for herein relating to the maintenance of the Register), and its duties are entirely mechanical and administrative in nature. Without limiting the generality of the foregoing:

(i) the Administrative Agent does not assume and shall not be deemed to have assumed any obligation or duty or any other relationship as the agent, fiduciary or trustee of or for any Lender, Fronting Bank or holder of any other obligation other than as expressly set forth herein and in the other Loan Documents, regardless of whether an Unmatured Default or an Event of Default has occurred and is continuing (and it is understood and agreed that the use of the term “agent” (or any similar term) herein or in any other Loan Document with reference to the Administrative Agent is not intended to connote any fiduciary duty or other implied (or express) obligations arising under agency doctrine of any applicable law, and that such term is used as a matter of market custom and is intended to create or reflect only an administrative relationship between contracting parties); additionally, each Lender agrees that it will not assert any claim against the Administrative Agent based on an alleged breach of fiduciary duty by the Administrative Agent in connection with this Agreement and/or the transactions contemplated hereby; and

(ii) nothing in this Agreement or any Loan Document shall require the Administrative Agent to account to any Lender for any sum or the profit element of any sum received by the Administrative Agent for its own account.

(d) The Administrative Agent may perform any of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any of their respective duties and exercise their respective rights and powers through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities pursuant to this Agreement. The Administrative Agent shall not be responsible for the negligence or misconduct of any sub-agent except to the extent that a court of competent jurisdiction determines in a final and nonappealable judgment that the Administrative Agent acted with gross negligence or willful misconduct in the selection of such sub-agent.

(e) None of the “Joint Lead Arrangers” shall have obligations or duties whatsoever in such capacity under this Agreement or any other Loan Document and shall incur no liability hereunder or thereunder in such capacity, but all such persons shall have the benefit of the indemnities provided for hereunder.

(f) In case of the pendency of any proceeding with respect to the Borrower under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, the Administrative Agent (irrespective of whether the principal of any Advance or any Reimbursement Obligation shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered (but not obligated) by intervention in such proceeding or otherwise:

 

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(i) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Advances, Reimbursement Obligations and all other obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders, the Fronting Banks and the Administrative Agent (including any claim under Sections 2.05, 2.08, 2.13, 2.16 and 8.05) allowed in such judicial proceeding; and

(ii) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such proceeding is hereby authorized by each Lender and each Fronting Bank to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders or the Fronting Banks, to pay to the Administrative Agent any amount due to it, in its capacity as the Administrative Agent, under the Loan Documents (including under Section 8.05). Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender or Fronting Bank any plan of reorganization, arrangement, adjustment or composition affecting the obligations of the Borrower hereunder or the rights of any Lender or Fronting Bank or to authorize the Administrative Agent to vote in respect of the claim of any Lender or Fronting Bank in any such proceeding.

(g) The provisions of this Article are solely for the benefit of the Administrative Agent, the Lenders and the Fronting Banks, and, except solely to the extent of the Borrower’s rights to consent pursuant to and subject to the conditions set forth in this Article, none of the Borrower or any Subsidiary, or any of their respective Affiliates, shall have any rights as a third party beneficiary under any such provisions.

SECTION 7.02. Administrative Agent’s Reliance, Limitation of Liability, Etc.

(a) Neither the Administrative Agent nor any of its Related Parties shall be (i) liable for any action taken or omitted to be taken by such party, the Administrative Agent or any of its Related Parties under or in connection with this Agreement or the other Loan Documents (x) with the consent of or at the request of the Majority Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith to be necessary, under the circumstances as provided in the Loan Documents) or (y) in the absence of its own gross negligence or willful misconduct (such absence to be presumed unless otherwise determined by a court of competent jurisdiction by a final and non-appealable judgment) or (ii) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by the Borrower or any officer thereof contained in this Agreement or any other Loan Document or in any certificate, report, statement or other document referred to or provided for in, or received by the Administrative Agent under or in connection with, this Agreement or any other Loan Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document (including, for the avoidance of doubt, in connection with the Administrative Agent’s reliance on any Electronic Signature transmitted by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page) or for any failure of the Borrower to perform its obligations hereunder or thereunder.

 

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(b) The Administrative Agent shall be deemed not to have knowledge of any (i) notice of any of the events or circumstances set forth or described in Section 5.01 unless and until written notice thereof stating that it is a “notice under Section 5.01” in respect of this Agreement and identifying the specific clause under said Section is given to the Administrative Agent by the Borrower, or (ii) notice of any Unmatured Default or Event of Default unless and until written notice thereof (stating that it is a “notice of an Unmatured Default” or a “notice of an Event of Default”) is given to the Administrative Agent by the Borrower, a Lender or a Fronting Bank. Further, the Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (A) any statement, warranty or representation made in or in connection with any Loan Document, (B) the contents of any certificate, report or other document delivered thereunder or in connection therewith, (C) the performance or observance of any of the covenants, agreements or other terms or conditions set forth in any Loan Document or the occurrence of any Unmatured Default or Event of Default, (D) the sufficiency, validity, enforceability, effectiveness or genuineness of any Loan Document or any other agreement, instrument or document, or (E) the satisfaction of any condition set forth in Article III or elsewhere in any Loan Document, other than to confirm receipt of items (which on their face purport to be such items) expressly required to be delivered to the Administrative Agent or satisfaction of any condition that expressly refers to the matters described therein being acceptable or satisfactory to the Administrative Agent. Notwithstanding anything herein to the contrary, the Administrative Agent shall not be liable for, or be responsible for any liabilities, costs or expenses suffered by the Borrower, any Subsidiary, any Lender or any Fronting Bank as a result of, any determination of the Outstanding Credit Available, any of the component amounts thereof or any portion thereof attributable to each Lender or Fronting Bank.

(c) Without limiting the foregoing, the Administrative Agent (i) may treat the payee of any promissory note as its holder until such promissory note has been assigned in accordance with Section 8.08, (ii) may rely on the Register to the extent set forth in Section 8.08(c), (iii) may consult with legal counsel (including counsel to the Borrower), independent public accountants and other experts selected by it, and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts, (iv) makes no warranty or representation to any Lender or Fronting Bank and shall not be responsible to any Lender or Fronting Bank for any statements, warranties or representations made by or on behalf of the Borrower in connection with this Agreement or any other Loan Document, (v) in determining compliance with any condition hereunder to the making of an Advance, or the issuance of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or an Fronting Bank, may presume that such condition is satisfactory to such Lender or Fronting Bank unless the Administrative Agent shall have received notice to the contrary from such Lender or Fronting Bank sufficiently in advance of the making of such Advance or the issuance of such Letter of Credit and (vi) shall be entitled to rely on, and shall incur no liability under or in respect of this Agreement or any other Loan Document by acting upon, any notice, consent, certificate or other instrument or writing (which writing may be a fax, any electronic message, Internet or intranet website posting or other distribution) or any statement made to it orally or by telephone and believed by it to be genuine and signed or sent or otherwise authenticated by the proper party or parties (whether or not such Person in fact meets the requirements set forth in the Loan Documents for being the maker thereof).

 

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SECTION 7.03. Posting of Communications.

(a) The Borrower agrees that the Administrative Agent may, but shall not be obligated to, make any Communications available to the Lenders and the Fronting Banks by posting the Communications on IntraLinks™, DebtDomain, SyndTrak, ClearPar or any other electronic platform chosen by the Administrative Agent to be its electronic transmission system (the “Approved Electronic Platform”).

(b) Although the Approved Electronic Platform and its primary web portal are secured with generally-applicable security procedures and policies implemented or modified by the Administrative Agent from time to time (including, as of the Closing Date, a user ID/password authorization system) and the Approved Electronic Platform is secured through a per-deal authorization method whereby each user may access the Approved Electronic Platform only on a deal-by-deal basis, each of the Lenders, each of the Fronting Banks and the Borrower acknowledges and agrees that the distribution of material through an electronic medium is not necessarily secure, that the Administrative Agent is not responsible for approving or vetting the representatives or contacts of any Lender that are added to the Approved Electronic Platform, and that there may be confidentiality and other risks associated with such distribution. Each of the Lenders, each of the Fronting Banks and the Borrower hereby approves distribution of the Communications through the Approved Electronic Platform and understands and assumes the risks of such distribution.

(c) THE APPROVED ELECTRONIC PLATFORM AND THE COMMUNICATIONS ARE PROVIDED “AS IS” AND “AS AVAILABLE”. THE APPLICABLE PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE COMMUNICATIONS, OR THE ADEQUACY OF THE APPROVED ELECTRONIC PLATFORM AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS OR OMISSIONS IN THE APPROVED ELECTRONIC PLATFORM AND THE COMMUNICATIONS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY THE APPLICABLE PARTIES IN CONNECTION WITH THE COMMUNICATIONS OR THE APPROVED ELECTRONIC PLATFORM. IN NO EVENT SHALL THE ADMINISTRATIVE AGENT, ANY JOINT LEAD ARRANGER OR ANY OF THEIR RESPECTIVE RELATED PARTIES (COLLECTIVELY, “APPLICABLE PARTIES”) HAVE ANY LIABILITY TO THE BORROWER, ANY LENDER, ANY FRONTING BANK OR ANY OTHER PERSON OR ENTITY FOR DAMAGES OF ANY KIND, INCLUDING DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING OUT OF THE BORROWER’S OR THE ADMINISTRATIVE AGENT’S TRANSMISSION OF COMMUNICATIONS THROUGH THE INTERNET OR THE APPROVED ELECTRONIC PLATFORM.

 

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(d) Each Lender and each Fronting Bank agrees that notice to it (as provided in the next sentence) specifying that Communications have been posted to the Approved Electronic Platform shall constitute effective delivery of the Communications to such Lender for purposes of the Loan Documents. Each Lender and Fronting Bank agrees (i) to notify the Administrative Agent in writing (which could be in the form of electronic communication) from time to time of such Lender’s or Fronting Bank’s (as applicable) email address to which the foregoing notice may be sent by electronic transmission and (ii) that the foregoing notice may be sent to such email address.

(e) Each of the Lenders, each of the Fronting Banks and the Borrower agrees that the Administrative Agent may, but (except as may be required by applicable law) shall not be obligated to, store the Communications on the Approved Electronic Platform in accordance with the Administrative Agent’s generally applicable document retention procedures and policies.

(f) Nothing herein shall prejudice the right of the Administrative Agent, any Lender or any Fronting Bank to give any notice or other communication pursuant to any Loan Document in any other manner specified in such Loan Document.

SECTION 7.04. The Administrative Agent Individually.

With respect to its Commitment, Advances, L/C Fronting Bank Commitments and Letters of Credit, the Person serving as the Administrative Agent shall have and may exercise the same rights and powers hereunder and is subject to the same obligations and liabilities as and to the extent set forth herein for any other Lender or Fronting Bank, as the case may be. The terms “Fronting Banks”, “Lenders”, “Majority Lenders” and any similar terms shall, unless the context clearly otherwise indicates, include the Administrative Agent in its individual capacity as a Lender, Fronting Bank or as one of the Majority Lenders, as applicable. The Person serving as the Administrative Agent and its Affiliates may accept deposits from, lend money to, own securities of, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of banking, trust or other business with, the Borrower, any Subsidiary or any Affiliate of any of the foregoing as if such Person was not acting as the Administrative Agent and without any duty to account therefor to the Lenders or the Fronting Banks.

SECTION 7.05. Successor Administrative Agent.

(a) The Administrative Agent may resign at any time by giving 30 days’ prior written notice thereof to the Lenders, the Fronting Banks and the Borrower, whether or not a successor Administrative Agent has been appointed. Upon any such resignation, the Majority Lenders shall have the right to appoint a successor Administrative Agent. If no successor Administrative Agent shall have been so appointed by the Majority Lenders, and shall have accepted such appointment, within 30 days after the retiring Administrative Agent’s giving of notice of resignation, then the retiring Administrative Agent may, on behalf of the Lenders and the Fronting Banks, appoint a successor Administrative Agent, which shall be a bank with an office in New York, New York or an Affiliate of any such bank. In either case, such appointment shall be subject to the prior written approval of the Borrower (which approval may not be unreasonably withheld and shall not be required while an Event of Default has occurred and is continuing). Upon the acceptance of any appointment as Administrative Agent by a successor Administrative Agent, such successor Administrative Agent shall succeed to, and become vested with, all the rights,

 

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powers, privileges and duties of the retiring Administrative Agent. Upon the acceptance of appointment as Administrative Agent by a successor Administrative Agent, the retiring Administrative Agent shall be discharged from its duties and obligations under this Agreement and the other Loan Documents. Prior to any retiring Administrative Agent’s resignation hereunder as Administrative Agent, the retiring Administrative Agent shall take such action as may be reasonably necessary to assign to the successor Administrative Agent its rights as Administrative Agent under the Loan Documents.

(b) Notwithstanding paragraph (a) of this Section 7.05, in the event no successor Administrative Agent shall have been so appointed and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its intent to resign, the retiring Administrative Agent may give notice of the effectiveness of its resignation to the Lenders, the Fronting Banks and the Borrower, whereupon, on the date of effectiveness of such resignation stated in such notice, (i) the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents and (ii) the Majority Lenders shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent; provided that (A) all payments required to be made hereunder or under any other Loan Document to the Administrative Agent for the account of any Person other than the Administrative Agent shall be made directly to such Person and (B) all notices and other communications required or contemplated to be given or made to the Administrative Agent shall directly be given or made to each Lender and each Fronting Bank. Following the effectiveness of the Administrative Agent’s resignation from its capacity as such, the provisions of this Article and Section 8.05, as well as any exculpatory, reimbursement and indemnification provisions set forth in any other Loan Document, shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Administrative Agent was acting as Administrative Agent.

SECTION 7.06. Acknowledgements of Lenders and Fronting Banks.

(a) Each Lender and each Fronting Bank represents and warrants that (i) the Loan Documents set forth the terms of a commercial lending facility, (ii) it is engaged in making, acquiring or holding commercial loans and in providing other facilities set forth herein as may be applicable to such Lender or Fronting Bank, in each case in the ordinary course of business, and is making the Advances hereunder as commercial loans in the ordinary course of its business and not for the purpose of purchasing, acquiring or holding any other type of financial instrument (and each Lender and each Fronting Bank agrees not to assert a claim in contravention of the foregoing), (iii) it has, independently and without reliance upon the Administrative Agent, any “Joint Lead Arranger” or any other Lender or Fronting Bank, or any of the Related Parties of any of the foregoing, and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement as a Lender, and to make, acquire or hold Advances hereunder and (iv) it is sophisticated with respect to decisions to make, acquire and/or hold commercial loans and to provide other facilities set forth herein, as may be applicable to such Lender or such Fronting Bank, and either it, or the Person exercising discretion in making its decision to make, acquire and/or hold such commercial loans or to provide such other facilities, is experienced in making, acquiring or holding such commercial loans or providing such other facilities. Each Lender and each Fronting Bank also acknowledges that it will, independently and

 

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without reliance upon the Administrative Agent, any “Joint Lead Arranger” or any other Lender or Fronting Bank, or any of the Related Parties of any of the foregoing, and based on such documents and information (which may contain material, non-public information within the meaning of the United States securities laws concerning the Borrower and its Affiliates) as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.

(b) Each Lender, by delivering its signature page to this Agreement on the Closing Date, or delivering its signature page to an Assignment and Assumption or any other Loan Document pursuant to which it shall become a Lender hereunder, shall be deemed to have acknowledged receipt of, and consented to and approved, each Loan Document and each other document required to be delivered to, or be approved by or satisfactory to, the Administrative Agent or the Lenders on the Closing Date or the Effective Date of such Assignment and Assumption, as applicable.

(c) (i) Each Lender hereby agrees that (x) if the Administrative Agent notifies such Lender that the Administrative Agent has determined in its sole discretion that any funds received by such Lender from the Administrative Agent or any of its Affiliates (whether as a payment, prepayment or repayment of principal, interest, fees or otherwise; individually and collectively, a “Payment”) were erroneously transmitted to such Lender (whether or not known to such Lender), and demands the return of such Payment (or a portion thereof), such Lender shall promptly, but in no event later than one Business Day thereafter, return to the Administrative Agent the amount of any such Payment (or portion thereof) as to which such a demand was made in same day funds, together with interest thereon in respect of each day from and including the date such Payment (or portion thereof) was received by such Lender to the date such amount is repaid to the Administrative Agent at the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect, and (y) to the extent permitted by applicable law, such Lender shall not assert, and hereby waives, as to the Administrative Agent, any claim, counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim by the Administrative Agent for the return of any Payments received, including without limitation any defense based on “discharge for value” or any similar doctrine. A notice of the Administrative Agent to any Lender under this Section 7.06(c) shall be conclusive, absent manifest error.

(ii) Each Lender hereby further agrees that if it receives a Payment from the Administrative Agent or any of its Affiliates (x) that is in a different amount than, or on a different date from, that specified in a notice of payment sent by the Administrative Agent (or any of its Affiliates) with respect to such Payment (a “Payment Notice”) or (y) that was not preceded or accompanied by a Payment Notice, it shall be on notice, in each such case, that an error has been made with respect to such Payment. Each Lender agrees that, in each such case, or if it otherwise becomes aware a Payment (or portion thereof) may have been sent in error, such Lender shall promptly notify the Administrative Agent of such occurrence and, upon demand from the Administrative Agent, it shall promptly, but in no event later than one Business Day thereafter, return to the Administrative Agent the amount of any such Payment (or portion thereof) as to which such a demand was made in same day funds, together with interest thereon in respect of each day from and including the date

 

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such Payment (or portion thereof) was received by such Lender to the date such amount is repaid to the Administrative Agent at the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect.

(iii) The Borrower hereby agrees that (x) in the event an erroneous Payment (or portion thereof) are not recovered from any Lender that has received such Payment (or portion thereof) for any reason, the Administrative Agent shall be subrogated to all the rights of such Lender with respect to such amount and (y) an erroneous Payment shall not pay, prepay, repay, discharge or otherwise satisfy any obligations owed by the Borrower.

(iv) Each party’s obligations under this Section 7.06(c) shall survive the resignation or replacement of the Administrative Agent or any transfer of rights or obligations by, or the replacement of, a Lender, the termination of the Commitments or the repayment, satisfaction or discharge of all Obligations under any Loan Document.

(v) The Borrower shall be liable to the Administrative Agent for any erroneous Payment not returned or paid to it by any Lender that receives such Payment pursuant to, and in accordance with, this Section 7.06, and agrees to indemnify and hold the Administrative Agent harmless from and against any and all liabilities and related expenses, including the fees, charges and disbursements of any kind whatsoever that may at any time (whether before or after the payment of the Advances) be imposed on, incurred by or asserted against the Administrative Agent in any way relating to or arising out of the Commitments, this Agreement, any of the other Loan Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by the Administrative Agent under or in connection with any of the foregoing.

SECTION 7.07. Certain ERISA Matters.

(a) Each Lender (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent and its Affiliates, and not, for the avoidance of doubt, to or for the benefit of the Borrower, that at least one of the following is and will be true:

(i) such Lender is not using “plan assets” (within the meaning of the Plan Asset Regulations) of one or more Plans in connection with the Advances, the Letters of Credit or the Commitments,

(ii) the transaction exemption set forth in one or more PTEs, such as PTE 84-14 (a class exemption for certain transactions determined by independent qualified professional asset managers), PTE 95-60 (a class exemption for certain transactions involving insurance company general accounts), PTE 90-1 (a class exemption for certain transactions involving insurance company pooled separate accounts), PTE 91-38 (a class exemption for certain transactions involving bank collective investment funds) or PTE 96-23 (a class exemption for certain transactions determined by in-house asset managers), is applicable with respect to such Lender’s entrance into, participation in, administration of and performance of the Advances, the Letters of Credit, the Commitments and this Agreement,

 

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(iii) (A) such Lender is an investment fund managed by a “Qualified Professional Asset Manager” (within the meaning of Part VI of PTE 84-14), (B) such Qualified Professional Asset Manager made the investment decision on behalf of such Lender to enter into, participate in, administer and perform the Advances, the Letters of Credit, the Commitments and this Agreement, (C) the entrance into, participation in, administration of and performance of the Advances, the Letters of Credit, the Commitments and this Agreement satisfies the requirements of sub-sections (b) through (g) of Part I of PTE 84-14 and (D) to the best knowledge of such Lender, the requirements of subsection (a) of Part I of PTE 84-14 are satisfied with respect to such Lender’s entrance into, participation in, administration of and performance of the Advances, the Letters of Credit, the Commitments and this Agreement, or

(iv) such other representation, warranty and covenant as may be agreed in writing between the Administrative Agent, in its sole discretion, and such Lender.

(b) In addition, unless sub-clause (i) in the immediately preceding clause (a) is true with respect to a Lender or such Lender has provided another representation, warranty and covenant as provided in sub-clause (iv) in the immediately preceding clause (a), such Lender further (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent and its Affiliates, and not, for the avoidance of doubt, to or for the benefit of the Borrower, that none of the Administrative Agent, or any “Joint Lead Arranger” or any of their respective Affiliates is a fiduciary with respect to the assets of such Lender (including in connection with the reservation or exercise of any rights by the Administrative Agent under this Agreement, any Loan Document or any documents related to hereto or thereto).

(c) The Administrative Agent, and each “Joint Lead Arranger” hereby informs the Lenders that each such Person is not undertaking to provide investment advice or to give advice in a fiduciary capacity, in connection with the transactions contemplated hereby, and that such Person has a financial interest in the transactions contemplated hereby in that such Person or an Affiliate thereof (i) may receive interest or other payments with respect to the Advances, the Letters of Credit, the Commitments, this Agreement and any other Loan Documents (ii) may recognize a gain if it extended the Advances, the Letters of Credit or the Commitments for an amount less than the amount being paid for an interest in the Advances, the Letters of Credit or the Commitments by such Lender or (iii) may receive fees or other payments in connection with the transactions contemplated hereby, the Loan Documents or otherwise, including structuring fees, commitment fees, arrangement fees, facility fees, upfront fees, underwriting fees, ticking fees, agency fees, administrative agent or collateral agent fees, utilization fees, minimum usage fees, letter of credit fees, fronting fees, deal-away or alternate transaction fees, amendment fees, processing fees, term out premiums, banker’s acceptance fees, breakage or other early termination fees or fees similar to the foregoing.

 

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ARTICLE VIII

MISCELLANEOUS

SECTION 8.01. Amendments, Etc.

Subject to Section 2.21(b) and except as otherwise expressly provided in the definition of “Eurodollar Rate” set forth in Section 1.012.23, no amendment or waiver of any provision of this Agreement or any Note, nor consent to any departure by the Borrower therefrom, shall in any event be effective unless the same shall be in writing and signed by the Majority Lenders (and notified to the Administrative Agent) and, in the case of any such amendment, the Borrower, 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 Lenders affected thereby (other than, in the case of clause (a), (f) or (g)(ii) below, any Defaulting Lender), do any of the following: (a) waive any of the conditions specified in Section 3.01 or 3.02, (b) increase or extend the Commitments of the Lenders or subject the Lenders to any additional obligations, (c) change any provision hereof in a manner that would alter the pro rata sharing of payments or the pro rata reduction of Commitments among the Lenders, (d) reduce the principal of, or interest (or rate of interest) on, the Advances or any fees or other amounts payable hereunder, (e) postpone any date fixed for any payment of principal of, or interest on, the Advances or any fees or other amounts payable hereunder, (f) change the percentage of the Commitments or of the aggregate unpaid principal amount of the Advances, the aggregate undrawn amount of outstanding Letters of Credit or the number of Lenders, that shall be required for the Lenders or any of them to take any action hereunder, (g) waive or amend (i) this Section 8.01, (ii) the definition of “Majority Lenders”, (iii) clause (x) of Section 2.04(a) or (iv) the proviso contained in Section 8.07, (h) extend the obligation of any Lender pursuant to Section 2.04(j) to participate in any Letter of Credit to any date later than the Termination Date applicable to such Lender or (i) subordinate the obligations hereunder or under the other Loan Documents, to any other Indebtedness or Liens (including, without limitations, Indebtedness issued under this Agreement); and provided, further, that (i) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required above to take such action, affect the rights or duties of the Administrative Agent under this Agreement or Section 2.21; (ii) no amendment, waiver or consent that would adversely affect the rights of, or increase the obligations of, any Fronting Bank, or that would alter any provision hereof relating to or affecting Letters of Credit issued by such Fronting Bank or modify or waive Section 2.21, shall be effective unless agreed to in writing by such Fronting Bank or modify or waive Section 2.21; (iii) [reserved]; (iv) Section 8.08(g) may not be amended, waived or otherwise modified without the consent of each Granting Lender all or any part of whose Advances are being funded by an SPC at the time of such amendment, waiver or other modification; and (v) this Agreement may be amended and restated without the consent of any Lender, any Fronting Bank or the Administrative Agent if, upon giving effect to such amendment and restatement, such Lender, such Fronting Bank or the Administrative Agent, as the case may be, shall no longer be a party to this Agreement (as so amended and restated) or have any Commitment or other obligation hereunder (including, without limitation, any obligation to make payment on account of a Drawing) and shall have been paid in full all amounts payable hereunder to such Lender, such Fronting Bank or the Administrative Agent, as the case may be. Notwithstanding the foregoing, the Borrower and the Administrative Agent may amend this Agreement and the other Loan

 

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Documents without the consent of any Lender or any Fronting Bank to the extent necessary (a) to cure any ambiguity, omission, mistake, error, defect or inconsistency (as determined by the Administrative Agent in its reasonable discretion) or (b) to make administrative changes of a technical or immaterial nature, provided, that, in each case, (x) such amendment does not adversely affect the rights of any Lender or any Fronting Bank and (y) the Lenders and the Fronting Banks shall have received at least five (5) Business Days’ prior written notice thereof and the Administrative Agent shall not have received, within five (5) Business Days of the date of such notice to the Lenders and the Fronting Banks, a written notice from the Majority Lenders or any Fronting Bank stating that the Majority Lenders or such Fronting Bank, as the case may be, object to such amendment.

SECTION 8.02. Notices, Etc.

Unless specifically provided otherwise in this Agreement, all notices and other communications provided for hereunder shall be in writing (including facsimile) and delivered by hand or overnight courier service, mailed or sent by facsimile, if to the Borrower, to it in care of FE at its address at 76 South Main Street, Akron, Ohio 44308, Attention: Treasurer, Facsimile: (330) 384-3772; if to any Bank, at its DomesticApplicable Lending Office specified opposite its name on Schedule I hereto; if to any other Lender, at its DomesticApplicable Lending Office specified in the Assignment and Assumption pursuant to which it became a Lender; if to the Administrative Agent, at its address at, Mizuho Bank, Ltd., Harborside Financial Center, 1800 Plaza Ten, Jersey City, New Jersey 07311, Attention: Joyce Raynor, Phone: , Email: ; if to any Fronting Bank identified on Schedule II hereto, at the address specified opposite its name on Schedule II hereto; if to any other Fronting Bank, at such address as shall be designated by such Fronting Bank in a written notice to the other parties; or, as to each party, at such other address as shall be designated by such party in a written notice to the other parties. Subject to the other notice requirements of this Agreement, all notices and communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt if delivered by hand or overnight courier service, mailed or sent by facsimile to such party and received during the normal business hours of such party as provided in this Section 8.02 or in accordance with the latest unrevoked direction from such party given in accordance with this Section 8.02. If such notices and communications are received after the normal business hours of such party, receipt shall be deemed to have been given upon the opening of the recipient’s next Business Day.

SECTION 8.03. Electronic Communications.

The Borrower hereby agrees that it will provide to the Administrative Agent all information, documents and other materials that it is obligated to furnish to the Administrative Agent pursuant to the Loan Documents, including, without limitation, all notices, requests, financial statements, financial and other reports, certificates and other information materials, but excluding any such communication that (i) relates to a request for a new, or a conversion of an existing, Borrowing or other Extension of Credit (including any election of an interest rate or Interest Period relating thereto), (ii) relates to the payment of any principal or other amount due under this Agreement prior to the scheduled date therefor, (iii) provides notice of any Unmatured Default or Event of Default under this Agreement or (iv) is required to be delivered to satisfy any condition precedent to the effectiveness of this Agreement and/or any Borrowing or other

 

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Extension of Credit hereunder (all such non-excluded communications being referred to herein collectively as “Borrower Communications”), by transmitting the Borrower Communications in an electronic/soft medium in a format acceptable to the Administrative Agent to . In addition, the Borrower agrees to continue to provide the Borrower Communications to the Administrative Agent in the manner otherwise specified in this Agreement, but only to the extent requested by the Administrative Agent.

SECTION 8.04. No Waiver; Remedies.

No failure on the part of any Lender, any Fronting Bank or the Administrative Agent to exercise, and no delay in exercising, any right hereunder or under any Note shall operate as a waiver thereof; nor shall any single or partial exercise of any such right 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 8.05. Costs and Expenses; Indemnification.

(a) The Borrower agrees to pay on demand all reasonable out-of-pocket costs and expenses incurred by the Administrative Agent and each Fronting Bank in connection with the preparation, execution, delivery, syndication administration, modification and amendment of this Agreement, any Note, any Letter of Credit and the other documents to be delivered hereunder, including, without limitation, the reasonable fees and out-of-pocket expenses of counsel for the Administrative Agent and the Fronting Banks with respect thereto and with respect to advising the Administrative Agent and the Fronting Banks as to their rights and responsibilities under this Agreement. The Borrower further agrees to pay on demand all reasonable out-of-pocket costs and expenses, if any (including, without limitation, reasonable counsel fees and expenses of counsel), incurred by the Administrative Agent, the Fronting Banks and the Lenders in connection with the enforcement (whether through negotiations, legal proceedings or otherwise) of this Agreement, any Note and the other documents to be delivered hereunder, including, without limitation, counsel fees and expenses in connection with the enforcement of rights under this Section 8.05(a). The Borrower’s obligations under this subsection (a) shall survive the repayment of all other amounts owing to the Lenders, the Fronting Banks and the Administrative Agent under this Agreement and any Note and the termination of the Commitments.

(b) Except as otherwise expressly provided to the contrary herein, if any payment of principal of, or Conversion of, any Eurodollar RateTerm Benchmark Advance (or, if applicable RFR Advance) is made other than on the last day of the Interest Period for such Advance, (or, with respect to an RFR Advance, other than on the interest payment date applicable thereto pursuant to Section 2.08(c)), as a result of a payment or Conversion pursuant to Section 2.11 or 2.14 or a prepayment pursuant to Section 2.12 or acceleration of the maturity of any amounts owing hereunder pursuant to Section 6.01 or upon an assignment made upon demand of the Borrower pursuant to Section 2.22(b) or for any other reason, the Borrower shall, upon demand by any Lender (with a copy of such demand to the Administrative Agent), pay to the Administrative Agent for the account of such Lender any amounts required to compensate such Lender for any additional losses, costs or expenses that it may reasonably incur as a result of such payment or Conversion, including, without limitation, any loss, cost or expense incurred by reason of the liquidation or redeployment of deposits or other funds acquired by any Lender to fund or maintain such Advance. The Borrower’s obligations under this subsection (b) shall survive the repayment of all other amounts owing to the Lenders and the Administrative Agent under this Agreement and any Note and the termination of the Commitments.

 

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(c) The Borrower hereby agrees to indemnify and hold each Lender, each Fronting Bank, the Administrative Agent and their respective Related Parties (each, an “Indemnified Person”) harmless from and against any and all claims, damages, liabilities, obligations, losses, penalties, costs or expenses (including reasonable attorney’s fees and expenses, whether or not such Indemnified Person is named as a party to any proceeding or is otherwise subjected to judicial or legal process arising from any such proceeding) that any of them may incur or that may be claimed against any of them by any Person (including the Borrower) by reason of or in connection with or arising out of any investigation, litigation or proceeding related to the Commitments or the commitment of any Fronting Bank hereunder and any use or proposed use by the Borrower of the proceeds of any Extension of Credit or the existence or use of any Letter of Credit or the amounts drawn thereunder, except to the extent such claim, damage, liability, obligation, loss, penalty, cost or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Person’s gross negligence or willful misconduct. The Borrower’s obligations under this Section 8.05(c) shall survive (x) the repayment of all amounts owing to the Lenders, the Fronting Banks and the Administrative Agent under this Agreement and any Note, (y) the termination of the Commitments, the commitments of the Fronting Banks hereunder and any Letters of Credit and (z) the termination of this Agreement. If and to the extent that the obligations of the Borrower under this Section 8.05(c) are unenforceable for any reason, the Borrower agrees to make the maximum payment in satisfaction of such obligations that are not unenforceable that is permissible under Applicable Law or, if less, such amount that may be ordered by a court of competent jurisdiction.

(d) To the extent permitted by law, the Borrower also agrees not to assert any claim against any Indemnified Person on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to actual or direct damages) in connection with, arising out of, or otherwise relating to this Agreement, any of the transactions contemplated herein or the actual or proposed use of the proceeds of the Advances.

(e)

The Borrower shall be liable for any payment to be made by the Borrower under this Section 8.05.

(f) This Section 8.05 shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim.

SECTION 8.06. Right of Set-off.

Upon the occurrence and during the continuance of any Event of Default each Lender and each Fronting 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, excluding, however, any payroll accounts maintained by the Borrower with such Lender or such Fronting Bank (as the case may be) if and to the extent that such Lender or such Fronting Bank (as the case may be) shall have expressly waived its set-off rights in writing in respect of such payroll account) at any time held and other indebtedness at

 

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any time owing by such Lender or such Fronting Bank (as the case may be) to or for the credit or the account of the Borrower against any and all of the obligations of the Borrower now or hereafter existing under this Agreement and any Note held by such Lender, whether or not such Lender or such Fronting Bank (as the case may be) shall have made any demand under this Agreement or such Note and although such obligations may be unmatured. Each Lender and each Fronting Bank agrees promptly to notify the Borrower after any such set-off and application made by such Lender or such Fronting Bank (as the case may be), provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of each Lender and each Fronting Bank under this Section 8.06 are in addition to other rights and remedies (including, without limitation, other rights of set-off) that such Lender or such Fronting Bank (as the case may be) may have.

SECTION 8.07. Binding Effect.

This Agreement shall become effective when it shall have been executed by the Borrower and the Administrative Agent and when the Administrative Agent shall have been notified by each Bank and each Fronting Bank that such Bank or such Fronting Bank (as the case may be) has executed it and thereafter shall be binding upon and inure to the benefit of the Borrower, the Administrative Agent, each Fronting Bank and each Lender and their respective successors and permitted assigns; provided, that the Borrower shall not have the right to assign their rights or obligations hereunder or any interest herein except (x) with the prior written consent of each Lender and each Fronting Bank (and any such assignment (other than any assignment pursuant to the following clause (y)) without such consent shall be null and void ab initio) or (y) pursuant to Section 5.03(c).

SECTION 8.08. Assignments and Participations.

(a) Successors and Assigns Generally. No Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance with the provisions of subsection (b) of this Section 8.08, (ii) by way of participation in accordance with the provisions of subsection (d) of this Section 8.08, (iii) by way of pledge or assignment of a security interest subject to the restrictions of subsection (f) of this Section 8.08, or (iv) to an SPC in accordance with the provisions of subsection (g) of this Section 8.08 (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (d) of this Section 8.08 and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b) Assignments by Lenders. Any Lender may at any time assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Advances at the time owing to it); provided that any such assignment shall be subject to the following conditions:

(i) Minimum Amounts.

 

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(A) in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment and/or the Advances at the time owing to it or contemporaneous assignments to related Approved Funds that equal at least the amount specified in subsection (b)(i)(B) of this Section 8.08 in the aggregate or in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and

(B) in any case not described in subsection (b)(i)(A) of this Section 8.08, the aggregate amount of the Commitment (which for this purpose includes Advances outstanding thereunder) or, if the applicable Commitment is not then in effect, the principal outstanding balance of the Advances of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if the “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date) shall not be less than $5,000,000, or an integral multiple of $1,000,000 in excess thereof, unless each of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrower otherwise consent (each such consent not to be unreasonably withheld or delayed); provided that the Borrower shall be deemed to have consented to any such assignment unless they shall object thereto by giving written notice to the Administrative Agent within five Business Days after having received notice thereof.

(ii) Proportionate Amounts. Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Advance or the Commitment assigned.

(iii) Required Consents. No consent shall be required for any assignment except to the extent required by subsection (b)(i)(B) of this Section 8.08 and, in addition:

(A) the consent of the Borrower (such consent not to be unreasonably withheld or delayed) shall be required unless (x) an Event of Default has occurred and is continuing at the time of such assignment, or (y) such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund; provided that the Borrower shall be deemed to have consented to any such assignment unless they shall object thereto by giving written notice to the Administrative Agent within five Business Days after having received notice thereof, and provided, further, that the Borrower’s consent shall not be required during the primary syndication hereof;

(B) the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required for assignments if such assignment is to a Person that is not a Lender, an Affiliate of such Lender or an Approved Fund with respect to such Lender; and

(C) the consent of each Fronting Bank shall be required for all assignments, other than pursuant to subsection (e) below; provided that the consent of any Fronting Bank shall not be required if the L/C Fronting Bank Commitments of such Fronting Bank have been terminated and no Letters of Credit issued by such Fronting Bank are outstanding.

 

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(iv) Assignment and Assumption. The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500 provided that the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment. The assignee, if it is not a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire and the tax forms required by Section 2.16(g).

(v) No Assignment to Certain Persons. No such assignment shall be made to (A) the Borrower or any of the Borrower’s Affiliates or Subsidiaries or (B) to any Defaulting Lender or any of its Subsidiaries, or any Person who, upon becoming a Lender hereunder, would constitute any of the foregoing Persons described in this clause (B).

(vi) No Assignment to Natural Persons. No such assignment shall be made to a natural Person (or to a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of, a natural Person).

(vii) Certain Additional Payments. In connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the Administrative Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or subparticipations, or other compensating actions, including funding, with the consent of the Borrower and the Administrative Agent, the applicable pro rata share of Advances previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Administrative Agent, each Fronting Bank and each other Lender hereunder (and interest accrued thereon), and (y) acquire (and fund as appropriate) its full pro rata share of all Advances and participations in Letters of Credit in accordance with its Percentage. Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under Applicable Law without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.

Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c) of this Section 8.08, from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 2.13, 2.16 and 8.05 with respect to facts and circumstances occurring prior to the effective date of such assignment; provided, that except to the extent otherwise expressly agreed by the affected parties and subject to Section 8.16, no assignment by a Defaulting Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (d) of this Section 8.08.

 

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(c) Register. The Administrative Agent, acting solely for this purpose as an agent of the Borrower, shall maintain at its offices a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts (and stated interest) of the Advances owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive absent manifest error, and the Borrower, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

(d) Participations. Any Lender may at any time, without the consent of, or notice to, the Borrower, the Fronting Banks or the Administrative Agent, sell participations to any Person (other than a Person described in Section 8.08(b)(v) or (vi)) (each, a “Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Advances owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, and (iii) the Borrower, the Administrative Agent, the Fronting Banks and Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement.

Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in clauses (a) through (g) of Section 8.01 that affects such Participant. The Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.13, 2.16 and 8.05(b) (subject to the requirements and limitations therein, including the requirements under Section 2.16(g) (it being understood that the documentation required under Section 2.16(g) shall be delivered to the participating Lender)) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to subsection (b) of this Section 8.08; provided that such Participant (A) agrees to be subject to the provisions of Section 2.22 as if it were an assignee under subsection (b) of this Section 8.08 and (B) shall not be entitled to receive any greater payment under Section 2.13 or 2.16, with respect to any participation, than its participating Lender would have been entitled to receive, except to the extent (x) such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation or (y) the sale to such Participant is made with the Borrower’s prior written consent. Each Lender that sells a participation to any Participant agrees, at the Borrower’s request and expense, to use reasonable efforts to cooperate with the Borrower to effectuate the provisions of Section 2.22(b) with respect to such Participant. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 8.06 as though it were a Lender; provided that such Participant agrees to be subject to Section 2.17 as though it were a Lender. Each Lender that sells a

 

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participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Advances or other obligations under the Loan Documents (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any Commitments, Advances, Letters of Credit or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such Commitment, Advance, Letter of Credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.

(e) Certain Pledges. Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank or other central banking authority; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

(f) Disclosure of Certain Information. Any Lender may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section 8.08, disclose to the assignee or participant or proposed assignee or participant, any information relating to the Borrower furnished to such Lender by or on behalf of the Borrower; provided, that prior to any such disclosure, the assignee or participant or proposed assignee or participant shall agree to preserve the confidentiality of any confidential information relating to the Borrower received by it from such Lender.

(g) Special Purpose Funding Vehicles. Notwithstanding anything to the contrary contained herein, any Lender (a “Granting Lender”) may grant to a special purpose funding vehicle identified as such in writing from time to time by the Granting Lender to the Administrative Agent and the Borrower (an “SPC”) the option to provide all or any part of any Advance that such Granting Lender would otherwise be obligated to make pursuant to this Agreement; provided that (i) nothing herein shall constitute a commitment by any SPC to fund any Advance, and (ii) if an SPC elects not to exercise such option or otherwise fails to make all or any part of such Advance, the Granting Lender shall be obligated to make such Advance pursuant to the terms hereof or, if it fails to do so, to make such payment to the Administrative Agent as is required under Section 2.15(e). Each party hereto hereby agrees that (A) neither the grant to any SPC nor the exercise by any SPC of such option shall increase the costs or expenses or otherwise increase or change the obligations of the Borrower under this Agreement (including its obligations under Section 2.13), (B) no SPC shall be liable for any indemnity or similar payment obligation under this Agreement for which a Lender would be liable, and (C) the Granting Lender shall for all purposes, including the approval of any amendment, waiver or other modification of any provision of any Loan Document, remain the lender of record hereunder. The making of an Advance by an SPC hereunder shall utilize the Commitment of the Granting Lender to the same extent, and as if, such Advance

 

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were made by such Granting Lender. In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding commercial paper or other senior debt of any SPC, it will not institute against, or join any other Person in instituting against, such SPC any bankruptcy, reorganization, arrangement, insolvency, or liquidation proceeding under the laws of the United States or any State thereof. Notwithstanding anything to the contrary contained herein, any SPC may (1) with notice to, but without prior consent of, the Borrower and the Administrative Agent and with the payment of a processing fee in the amount of $3,500 (which processing fee may be waived by the Administrative Agent in its sole discretion), assign all or any portion of its right to receive payment with respect to any Advance to the Granting Lender and (2) disclose on a confidential basis any non-public information relating to its funding of Advances to any rating agency, commercial paper dealer or provider of any surety or guarantee or credit or liquidity enhancement to such SPC.

SECTION 8.09. Governing Law.

THIS AGREEMENT AND EACH OTHER LOAN DOCUMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

SECTION 8.10. Consent to Jurisdiction; Waiver of Jury Trial.

(a) To the fullest extent permitted by law, the Borrower hereby irrevocably (i) submits to the exclusive jurisdiction of any New York State or Federal court sitting in the Borough of Manhattan, New York City and any appellate court from any thereof in any action or proceeding arising out of or relating to this Agreement, any other Loan Document or any Letter of Credit, and (ii) agrees that all claims in respect of such action or proceeding may be heard and determined in such New York State court or in such Federal court. The Borrower hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding. The Borrower 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 by certified mail of copies of such process to the Borrower at its address specified in Section 8.02. The Borrower 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.

(b) THE BORROWER, THE ADMINISTRATIVE AGENT, EACH FRONTING BANK AND THE LENDERS HEREBY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR ANY LETTER OF CREDIT, OR ANY OTHER INSTRUMENT OR DOCUMENT DELIVERED HEREUNDER OR THEREUNDER.

SECTION 8.11. Severability.

Any provision of this Agreement that is prohibited, unenforceable or not authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition, unenforceability or non-authorization without invalidating the remaining provisions hereof or affecting the validity, enforceability or legality of such provision in any other jurisdiction.

 

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SECTION 8.12. Entire Agreement.

This Agreement and the Notes issued hereunder constitute the entire contract among the parties relative to the subject matter hereof. Any previous agreement among the parties with respect to the subject matter hereof is superseded by this Agreement, except (i) as expressly agreed in any such previous agreement and (ii) for the Fee Letters. Except as is expressly provided for herein, nothing in this Agreement, expressed or implied, is intended to confer upon any party other than the parties hereto any rights, remedies, obligations or liabilities under or by reason of this Agreement.

SECTION 8.13. Execution in Counterparts; Electronic Execution.

This Agreement may be executed in any number of counterparts and by different parties hereto 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. The words “execution,” “signed,” “signature,” and words of like import in any Loan Document shall in each case be deemed to include Electronic Signatures, signatures exchanged by electronic transmission, or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act; provided that upon the request of the Administrative Agent or any Lender, any Electronic Signature shall be promptly followed by a manually executed counterpart.

SECTION 8.14. USA PATRIOT Act Notice.

Each Lender that is subject to the Patriot Act, each Fronting Bank and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower pursuant to the requirements of the Patriot Act that it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender, such Fronting Bank or the Administrative Agent, as applicable, to identify the Borrower in accordance with the Patriot Act.

SECTION 8.15. No Fiduciary Duty.

The Administrative Agent, each Fronting Bank, each Lender and their respective Affiliates (collectively, the “Credit Parties”), may have economic interests that conflict with those of the Borrower, their stockholders and/or their affiliates. The Borrower agrees that nothing in the Loan Documents or otherwise will be deemed to create an advisory, fiduciary or agency relationship or fiduciary or other implied duty between any Credit Party, on the one hand, and the Borrower, its stockholders or its affiliates, on the other. The Borrower acknowledges and agrees that (i) the transactions contemplated by the Loan Documents (including the exercise of

 

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rights and remedies hereunder and thereunder) are arm’s-length commercial transactions between the Credit Parties, on the one hand, and the Borrower, on the other, and (ii) in connection therewith and with the process leading thereto, (x) no Credit Party has assumed an advisory or fiduciary responsibility in favor of the Borrower, its stockholders or its affiliates with respect to the transactions contemplated hereby (or the exercise of rights or remedies with respect thereto) or the process leading thereto (irrespective of whether any Credit Party has advised, is currently advising or will advise the Borrower, its stockholders or its Affiliates on other matters) or any other obligation to the Borrower except the obligations expressly set forth in the Loan Documents and (y) each Credit Party is acting solely as principal and not as the agent or fiduciary of the Borrower, its management, stockholders, creditors or any other Person. The Borrower acknowledges and agrees that it has consulted its own legal and financial advisors to the extent it deemed appropriate and that it is responsible for making its own independent judgment with respect to such transactions and the process leading thereto. The Borrower agrees that it will not claim that any Credit Party has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to the Borrower, in connection with such transaction or the process leading thereto.

SECTION 8.16. Acknowledgment and Consent to Bail-In of Affected Financial Institutions.

Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any of the parties hereto, each party hereto acknowledges that any liability of any Lender or Fronting Bank that is an Affected Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the Write-Down and Conversion Powers of the applicable Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:

(a) the application of any Write-Down and Conversion Powers by the applicable Resolution Authority to any such liabilities arising hereunder which may be payable to it by any Lender or Fronting Bank that is an Affected Financial Institution; and

(b) the effects of any Bail-in Action on any such liability, including, if applicable:

(i) a reduction in full or in part or cancellation of any such liability;

(ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such Affected Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or

(iii) the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers of the applicable Resolution Authority.

 

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SECTION 8.17. Treatment of Certain Information; Confidentiality.

Each of the Administrative Agent, the Lenders and the Fronting Banks agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates, its auditors and its Related Parties, including, without limitation, their respective accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent required or requested by any regulatory authority purporting to have jurisdiction over such Person or its Related Parties (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by Applicable Laws or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section 8.17, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights and obligations under this Agreement or (ii) any actual or prospective party (or its Related Parties) to any swap, derivative or other transaction under which payments are to be made by reference to the Borrower and its obligations, this Agreement or payments hereunder, (g) on a confidential basis to (i) any rating agency in connection with rating the Borrower or its Subsidiaries or the credit facilities provided hereunder or (ii) the CUSIP Service Bureau or any similar agency in connection with the issuance and monitoring of CUSIP numbers or other market identifiers with respect to the credit facilities provided hereunder, (h) with the consent of the Borrower or (i) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section 8.17 or (y) becomes available to the Administrative Agent, any Lender, any Fronting Bank or any of their respective Affiliates on a non-confidential basis from a source other than the Borrower; in the event of any required disclosure by the Administrative Agent, any Lender or any Fronting Bank under clause (c) above, the Administrative Agent, such Lender or such Fronting Bank, as applicable, agrees to use reasonable efforts to inform the Borrower as promptly as practicable to the extent legally permitted to do so. In addition, the Administrative Agent, the Lenders and the Fronting Banks may disclose the existence of this Agreement and information about this Agreement to market data collectors and similar service providers to the lending industry, such information to consist of deal terms and other information customarily found in Gold Sheets and similar industry publications.

For purposes of this Section 8.17, “Information” means all information received from the Borrower or any of its Subsidiaries relating to the Borrower or any Subsidiary of the Borrower or any of their respective businesses, other than any such information that is available to the Administrative Agent, any Lender or any Fronting Bank on a non-confidential basis prior to disclosure by the Borrower or such Subsidiary, provided that, in the case of information received from the Borrower or any Subsidiary of the Borrower after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section 8.17 shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

 

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EACH LENDER ACKNOWLEDGES THAT INFORMATION (AS DEFINED IN THE IMMEDIATELY PRECEDING PARAGRAPH) FURNISHED TO IT BY THE BORROWER OR THE ADMINISTRATIVE AGENT PURSUANT TO, OR IN THE COURSE OF ADMINISTERING, THIS AGREEMENT (INCLUDING, WITHOUT LIMITATION, REQUESTS FOR WAIVERS AND AMENDMENTS) MAY INCLUDE MATERIAL NON-PUBLIC INFORMATION CONCERNING THE BORROWER AND ITS AFFILIATES OR THEIR RESPECTIVE SECURITIES, AND CONFIRMS THAT IT HAS DEVELOPED COMPLIANCE PROCEDURES REGARDING THE USE OF MATERIAL NON-PUBLIC INFORMATION AND THAT IT WILL HANDLE SUCH MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH THOSE PROCEDURES AND APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS.

[Signatures to Follow]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.

 

JERSEY CENTRAL POWER & LIGHT COMPANY
By  
Name:  
Title:  

[Signature Page to New Jersey Utility Credit Agreement]

 

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MIZUHO BANK, LTD., as Administrative Agent, as a Bank and as a Fronting Bank
By  
Name:  
Title:  

[Signature Page to New Jersey Utility Credit Agreement]

 

108


JPMORGAN CHASE BANK, N.A., as a Bank
By  
Name:  
Title:  

[Signature Page to New Jersey Utility Credit Agreement]

 

109


PNC BANK, NATIONAL ASSOCIATION, as a Bank
By  
Name:  
Title:  

[Signature Page to New Jersey Utility Credit Agreement]

 

110


BARCLAYS BANK PLC, as a Bank and as a Fronting Bank
By  
Name:  
Title:  

[Signature Page to New Jersey Utility Credit Agreement]

 

111


BANK OF AMERICA, N.A., as a Bank and as a Fronting Bank
By  
Name:  
Title:  

[Signature Page to New Jersey Utility Credit Agreement]

 

112


CITIBANK, N.A., as a Bank
By  
Name:  
Title:  

[Signature Page to New Jersey Utility Credit Agreement]

 

113


MORGAN STANLEY BANK, N.A., as a Bank
By  
Name:  
Title:  

[Signature Page to New Jersey Utility Credit Agreement]

 

114


MUFG BANK, LTD., as a Bank
By  
Name:  
Title:  

[Signature Page to New Jersey Utility Credit Agreement]

 

115


THE BANK OF NOVA SCOTIA, as a Bank
By  
Name:  
Title:  

[Signature Page to New Jersey Utility Credit Agreement]

 

116


[LENDER], as a Bank
By  
Name:  
Title:  

[Signature Page to New Jersey Utility Credit Agreement]

 

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SCHEDULE I

List of Commitments and Lending Offices

 

Lender

  

Commitment

Amount

  

Domestic Lending Office

  

Eurodollar

Lending Office

JPMorgan Chase Bank, N.A.    $24,459,131.88   

GR. FLR., 1ST- 6TH FLR.,

PLATINA BLOCK-3,

KODBISANHAL, FLR. 04

Bengaluru, IN-KA, 560103, India

 

Contact: Vithal Giri

Phone:

Email:

   Same as Domestic Lending Office
Mizuho Bank, Ltd.    $24,459,131.87   

1271 Avenue of the Americas

New York, NY 10020

 

Contact: Joseph Chan

Email:

   Same as Domestic Lending Office
PNC Bank, National Association    $24,459,131.88   

300 Fifth Avenue

Pittsburgh, PA 15222

 

Contact: Montreal Phillips,

Loan Support Analyst

Phone:

Email:

   Same as Domestic Lending Office
Barclays Bank PLC    $24,459,131.88   

745 Seventh Avenue, 8th Floor

New York, NY 10019

   Same as Domestic Lending Office
     

Contact: Oksana Shtogrin

Phone:

Email:

  

 

I-1


Bank of America, N.A.    $24,459,131.88   

Bank of America Tower—Charlotte

NC1-030-24-02

620 S Tryon St

Charlotte, NC 2825

 

Contact: Holli Balzer

Phone:

Email:

   Same as Domestic Lending Office
Citibank, N.A.    $24,459,131.88   

388 Greenwich St.

New York, NY 10013

 

Contact: Ashwani Khubani

Phone:

Email:

   Same as Domestic Lending Office
Morgan Stanley Bank, N.A.    $24,459,131.88   

1300 Thames Street Wharf,

4th Floor

Baltimore, MD 21231

 

Contact: Morgan Stanley

Loan Servicing

Phone:

Email:

   Same as Domestic Lending Office
MUFG Bank, Ltd.    $24,459,131.88   

1251 Avenue of the Americas

New York, NY 10020-1104

 

Contact: Nadia Sleiman

Phone:

Email:

   Same as Domestic Lending Office
The Bank of Nova Scotia    $24,459,131.88   

250 Vesey Street, 23rd floor

New York, NY 10281

 

Contact: Sandy Dewar

Phone:

Email:

   Same as Domestic Lending Office

 

I-2


Royal Bank of Canada    $24,459,131.88   

3 World Financial Center

200 Vesey St

New York, NY 10281

 

Contact: Frank Lambrinos

Phone:

Email:

   Same as Domestic Lending Office

Canadian Imperial Bank of

Commerce, New York Branch

   $19,363,479.41   

300 Madison Ave

New York, NY 10017

 

Contact: Anju Abraham

Phone:

Email:

   Same as Domestic Lending Office

Credit Agricole Corporate

and Investment Bank

   $23,170,731.71   

1100 Louisiana St. Ste 4750

Houston, TX 77002

 

Contact: Dixon Schultz

Phone:

Email:

   Same as Domestic Lending Office
KeyBank National Association    $19,363,479.41   

127 Public Square

Cleveland, OH 44114

 

Contact: Renee Bonnell

Phone:

Email:

   Same as Domestic Lending Office
Sumitomo Mitsui Banking Corporation    $19,363,479.41   

277 Park Avenue

New York, NY 10172

 

Contact: Emily Estevez

Phone:

Email:

   Same as Domestic Lending Office

 

I-3


TD Bank, N.A.    $19,363,479.41   

222 Bay Street, 15th Floor

Toronto, ON M5K 1A2

 

Contact: Diana Macecevic

Phone:

 

Email:

   Same as Domestic Lending Office
Truist Bank    $19,363,479.41   

3333 Peachtree Road NE

3rd Floor

Atlanta, GA 30326

 

Contact: Jackie Johnson

Email:

 

   Same as Domestic Lending Office
U.S. Bank National Association    $19,363,479.41   

400 City Center

Oshkosh, WI 54901

 

Contact: CLS Syndication Services

Phone:

Email:

 

   Same as Domestic Lending Office
Citizens Bank, National Association    $14,267,826.93   

71 S. Wacker Drive, 29th Floor

Chicago, IL 60606

 

Contact: Stephen Maenhout

Phone:

Email:

 

   Same as Domestic Lending Office
Fifth Third Bank, National Association    $14,267,826.93   

38 Fountain Square Plaza Cincinnati, OH 45263

 

Contact: Larry Hayes

Phone:

Email:

   Same as Domestic Lending Office

 

I-3


The Bank of New York Mellon    $14,267,826.93   

240 Greenwich Street

New York, NY 10286

 

Contact: Steve Murphy

Phone:

Email: or

 

   Same as Domestic Lending Office
Huntington National Bank    $14,267,826.93   

41 South High St. HCO520

Columbus, OH 43287

 

Contact: Debbie Cabungcal

Phone:

Email:

 

   Same as Domestic Lending Office
CoBank, ACB    $51,851,851.85   

6340 S. Fiddlers Green Circle

Greenwood Village, CO 80111

Attn: Loan Administration

 

Contact: Beth Johnson

Phone:

Email:

 

   Same as Domestic Lending Office
First National Bank of Pennsylvania    $7,133,913.47   

12 Federal Street

One Northshore Ctr., Suite 500

Pittsburgh PA 15212

 

Contact: Robert E Heuler

Phone:

Email:

   Same as Domestic Lending Office
TOTAL    $500,000,000.00      

 

I-4


SCHEDULE II

List of L/C Fronting Bank Commitments

 

Fronting Bank

  

Fronting Bank Address

   L/C Fronting Bank
Commitment

Mizuho Bank, Ltd.

  

1271 Avenue of the Americas

New York, NY 10020

Attention: Joseph Chan

Email:

   $15,000,000

Barclays Bank PLC

  

745 Seventh Avenue, 8th Floor

New York, NY 10019

Attention: Nnamdi Otudoh

Phone:

Email:

   $15,000,000

Bank of America, N.A.

  

1 Fleet Way

Scranton, PA 18507

Attention: Scranton Standby

   $5,000,000

JPMorgan Chase Bank, N.A.

  

Global Trade Services

10420 Highland Manor Drive

Floor 410410 Highland Manor Drive-Floor 3, Tampa, FL 33610-9128

Attention: Letter of Credit DepartmentGlobal Trade Services

Phone:

Email:

   Solely with respect to the
Existing Letters of
Credit set forth on
Schedule III

 

II-1


SCHEDULE III

Existing Letters of Credit

 

Borrower

  

Fronting

Bank

   Outstanding
Stated
Amount
   Date of
Issuance
   Maturity
Date
   Letter of Credit
No.

Jersey Central Power & Light Company

   JPMorgan Chase Bank, N.A.    $28,350.00    06/10/13    06/03/22    TFTS-227453

Jersey Central Power & Light Company

   JPMorgan Chase Bank, N.A.    $94,680.00    06/12/14    06/06/22    TFTS-912022

Jersey Central Power & Light Company

   JPMorgan Chase Bank, N.A.    $87,960.00    06/12/14    06/06/22    TFTS-912020

Jersey Central Power & Light Company

   JPMorgan Chase Bank, N.A.    $55,000.00    02/03/15    02/02/22    TFTS-911552

Jersey Central Power & Light Company

   JPMorgan Chase Bank, N.A.    $84,940.00    04/01/16    03/31/22    TFTS-984549

Jersey Central Power & Light Company

   JPMorgan Chase Bank, N.A.    $251,779.71    03/08/17    03/31/22    TFTS-916340

Jersey Central Power & Light Company

   JPMorgan Chase Bank, N.A.    $64,650.00    04/10/17    04/30/22    TFTS-705794

Jersey Central Power & Light Company

   JPMorgan Chase Bank, N.A.    $58,650.00    09/01/17    09/01/22    TFTS-777609

Jersey Central Power & Light Company

   JPMorgan Chase Bank, N.A.    $46,500.00    12/15/20    12/01/21    NUSCGS035845

 

III-1


SCHEDULE IV

DISCLOSURE DOCUMENTS

None.

 

IV-1


SCHEDULE V

APPROVALS

 

1.

The order of the FERC, Docket No. ES19-62-000, dated December 20, 2019, that authorizes JCP&L to obtain Extensions of Credit until December 19, 2021, as amended, extended, supplemented, replaced or renewed from time to time (169 FERC ¶ 62,113)

 

V-1


EXHIBIT A

Form of Assignment and Assumption

ASSIGNMENT AND ASSUMPTION

This Assignment and Assumption (this “Assignment and Assumption”) is dated as of the Effective Date set forth below and is entered into by and between [the][each]3 Assignor identified in item 1 below ([the][each, an] “Assignor”) and [the][each]4 Assignee identified in item 2 below ([the][each, an] “Assignee”). [It is understood and agreed that the rights and obligations of [the Assignors][the Assignees]5 hereunder are several and not joint.]6 Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), receipt of a copy of which is hereby acknowledged by [the][each] Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.

For an agreed consideration, [the][each] Assignor hereby irrevocably sells and assigns to [the Assignee][the respective Assignees], and [the][each] Assignee hereby irrevocably purchases and assumes from [the Assignor][the respective Assignors], subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of [the Assignor’s][the respective Assignors’] rights and obligations in [its capacity as a Lender][their respective capacities as Lenders] under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of [the Assignor][the respective Assignors] under the respective facilities identified below (including without limitation any letters of credit and guarantees included in such facilities), and (ii) to the extent permitted to be assigned under Applicable Law, all claims, suits, causes of action and any other right of [the Assignor (in its capacity as a Lender)][the respective Assignors (in their respective capacities as Lenders)] against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned by [the][any] Assignor to [the][any] Assignee pursuant to clauses (i) and (ii) above being referred to herein collectively as [the][an] “Assigned Interest”). Each such sale and assignment is without recourse to

 

 

3 

For bracketed language here and elsewhere in this form relating to the Assignor(s), if the assignment is from a single Assignor, choose the first bracketed language. If the assignment is from multiple Assignors, choose the second bracketed language.

4 

For bracketed language here and elsewhere in this form relating to the Assignee(s), if the assignment is to a single Assignee, choose the first bracketed language. If the assignment is to multiple Assignees, choose the second bracketed language.

5 

Select as appropriate.

6 

Include bracketed language if there are either multiple Assignors or multiple Assignees.

 

A-1


[the][any] Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by [the][any] Assignor.

1. Assignor[s]:               

 

                            

[Assignor [is] [is not] a Defaulting Lender]

2. Assignee[s]:             

 

                            

[for each Assignee, indicate [Affiliate][Approved Fund] of [identify Lender]

3. Borrower: Jersey Central Power & Light Company

4. Administrative Agent: Mizuho Bank, Ltd., as the administrative agent under the Credit Agreement

5. Credit Agreement: The $500,000,000 Credit Agreement, dated as of October 18, 2021, among Jersey Central Power & Light Company, as Borrower, the Lenders parties thereto, Mizuho Bank, Ltd., as Administrative Agent, and the fronting banks party thereto

6. Assigned Interest[s]:

 

Assignor[s]7

   Assignee[s]8      Aggregate
Amount of
Commitment/Advances
for all
Lenders9
     Amount of
Commitment/Advances
Assigned8
     Percentage
Assigned of
Commitment/
Advances10
     CUSIP
Number
 
      $        $          %     
      $        $          %     
      $        $          %     

[7. Trade Date:    ]11

Effective Date:    , 20   [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

 

 

7 

List each Assignor, as appropriate.

8 

List each Assignee, as appropriate.

9 

Amount to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and the Effective Date.

10 

Set forth, to at least 9 decimals, as a percentage of the Commitment/Advances of all Lenders thereunder.

11 

To be completed if the Assignor(s) and the Assignee(s) intend that the minimum assignment amount is to be determined as of the Trade Date.

 

A-2


The terms set forth in this Assignment and Assumption are hereby agreed to:

 

ASSIGNOR[S]12
[NAME OF ASSIGNOR]
By    
Name:  
Title:  
[NAME OF ASSIGNOR]
By    
Name:  
Title:  
ASSIGNEE[S]13
[NAME OF ASSIGNEE]
By:    
Name:  
Title:  
[NAME OF ASSIGNEE]
By:    
Name:  
Title:  

[Consented to and]14 Accepted:

MIZUHO BANK, LTD., as Administrative Agent

 

By:    
Name:  
Title:  
Consented to:
[LIST ALL FRONTING BANKS], as a Fronting Bank

 

 

12 

Add additional signature blocks as needed. Include both Fund/Pension Plan and manager making the trade (if applicable).

13 

Add additional signature blocks as needed. Include both Fund/Pension Plan and manager making the trade (if applicable).

14 

To be added only if the consent of the Administrative Agent is required by the terms of the Credit Agreement.

 

A-3


By:    
Name:  
Title:  

[JERSEY CENTRAL POWER & LIGHT COMPANY]15

 

By:    
Name:  
Title:  

 

15 

To be added only if the consent of the Borrower is required by the terms of the Credit Agreement.

 

A-4


ANNEX 1

$500,000,000 Credit Agreement, dated as of October 18, 2021, among Jersey Central Power & Light Company, as Borrower, the Lenders parties thereto, Mizuho Bank, Ltd., as Administrative Agent, and the fronting banks party thereto

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

1. Representations and Warranties.

1.1 Assignor[s]. [The][Each] Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of [the][the relevant] Assigned Interest, (ii) [the][such] Assigned Interest is free and clear of any lien, encumbrance or other adverse claim, (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and (iv) it is [not] a Defaulting Lender; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document, or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.

1.2. Assignee[s]. [The][Each] Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it meets all the requirements to be an assignee under Section 8.08(b)(iii), (v) and (vi) of the Credit Agreement (subject to such consents, if any, as may be required under Section 8.08(b)(iii) of the Credit Agreement), (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of [the][the relevant] Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it is sophisticated with respect to decisions to acquire assets of the type represented by the Assigned Interest and either it, or the Person exercising discretion in making its decision to acquire the Assigned Interest, is experienced in acquiring assets of such type, (v) it has received a copy of the Credit Agreement, and has received or has been accorded the opportunity to receive copies of the most recent financial statements delivered pursuant to Section 5.01(g) thereof, as applicable, and such other documents and information as it deems appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase [the][such] Assigned Interest, (vi) it has, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Assignment and Assumption and to purchase [the][such] Assigned Interest, and (vii) if it is not a U.S. Person, attached to the Assignment and Assumption is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement (including pursuant to Section 2.16(g) of the Credit Agreement), duly completed and executed by [the][such] Assignee; (b) appoints and authorizes

 

A-5


the Administrative Agent to take such action as agent on its behalf and to exercise such powers under the Loan Documents as are delegated to the Administrative Agent by the terms thereof, together with such powers as are reasonably incidental thereto; and (c) agrees that (i) it will, independently and without reliance on the Administrative Agent, [the][any] Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.

2. Payments. From and after the Effective Date, the Administrative Agent shall make all payments in respect of [the][each] Assigned Interest (including payments of principal, interest, fees and other amounts) to [the][the relevant] Assignor for amounts which have accrued to but excluding the Effective Date and to [the][the relevant] Assignee for amounts which have accrued from and after the Effective Date. Notwithstanding the foregoing, the Administrative Agent shall make all payments of interest, fees or other amounts paid or payable in kind from and after the Effective Date to [the][the relevant] Assignee.

3. General Provisions. This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Assumption by facsimile shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption. This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of New York.

 

A-6


EXHIBIT B

Form of Note

PROMISSORY NOTE

U.S.$[   ]   , 20__

FOR VALUE RECEIVED, the undersigned, JERSEY CENTRAL POWER & LIGHT COMPANY, a New Jersey corporation (the “Borrower”), HEREBY PROMISES TO PAY to [   ] (the “Lender”) for the account of its Applicable Lending Office (such term and other capitalized terms herein being used as defined in the Credit Agreement referred to below), or its registered assigns, the principal sum of U.S.$[   ] or, if less, the aggregate principal amount of the Advances made by the Lender to the Borrower pursuant to the Credit Agreement outstanding on the Termination Date, payable on the Termination Date.

The Borrower promises to pay interest on the unpaid principal amount of each Advance from the date of such Advance until such principal amount is paid in full, at such interest rates, and payable at such times, as are specified in the Credit Agreement.

Both principal and interest are payable in lawful money of the United States of America to Mizuho Bank, Ltd., as Administrative Agent, at [INSERT PAYMENT ADDRESS], in same day funds. Each Advance made by the Lender to the Borrower pursuant to the Credit Agreement, and all payments made on account of principal thereof, shall be recorded by the Lender and, prior to any transfer hereof, endorsed on the grid attached hereto which is part of this Promissory Note.

This Promissory Note is one of the Notes referred to in, and is entitled to the benefits of, the Credit Agreement, dated as of October 18, 2021 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among the Borrower, the banks named therein and the other Lenders party thereto from time to time, Mizuho Bank, Ltd., as Administrative Agent for the Lenders thereunder, and the fronting banks party thereto from time to time. The Credit Agreement, among other things, (i) provides for the making of Advances by the Lender to the Borrower from time to time in an aggregate amount not to exceed at any time outstanding the Dollar amount first above mentioned, the indebtedness of the Borrower resulting from each such Advance being evidenced by this Promissory Note, and (ii) contains provisions for acceleration of the maturity hereof upon the happening of certain stated events and also for prepayments on account of principal hereof prior to the maturity hereof upon the terms and conditions therein specified.

The Borrower hereby waives presentment, demand, protest and notice of any kind. No failure to exercise, and no delay in exercising, any rights hereunder on the part of the holder hereof shall operate as a waiver of such rights.

THIS PROMISSORY NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

B-1


JERSEY CENTRAL POWER & LIGHT COMPANY
By  
Name:
Title:  

 

B-2


EXHIBIT C

Form of Notice of Borrowing

Mizuho Bank, Ltd., as Administrative Agent

for the Lenders party to the Credit Agreement

referred to below

  , 20__     

Ladies and Gentlemen:

The undersigned refers to the Credit Agreement, dated as of October 18, 2021 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”, the terms defined therein being used herein as therein defined), among the undersigned, the banks named therein and the other Lenders party thereto from time to time, Mizuho Bank, Ltd., as Administrative Agent for the Lenders thereunder, and the fronting banks party thereto from time to time, and hereby gives you notice, irrevocably, pursuant to Section 2.02 of the Credit Agreement that the undersigned hereby requests [a] Borrowing[s] under the Credit Agreement, and in that connection sets forth below the information relating to such Borrowing[s] (the “Proposed Borrowing[s]”) as required by Section 2.02(a) of the Credit Agreement:

(i) The Business Day of the Proposed Borrowing[s] is    ,    .

(ii) The Type of Advance to be made in connection with the [First] Proposed Borrowing is [an Alternate Base Rate Advance] [a Eurodollar RateTerm Benchmark Advance]. The aggregate amount of such Proposed Borrowing is $   . [The Interest Period for each Eurodollar RateTerm Benchmark Advance made as part of such Proposed Borrowing is    [month[s]].]

 

[(iii) The Type of Advance to be made in connection with the [Second] Proposed Borrowing is [an Alternate Base Rate Advance] [a Eurodollar RateTerm Benchmark Advance]. The aggregate amount of such Proposed Borrowing is $   . [The Interest Period for each Eurodollar RateTerm Benchmark Advance made as part of such Proposed Borrowing is    [month[s]].]

[(iii)][(iv)] The Borrower requesting the Proposed Borrowing[s] is    .

The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the Proposed Borrowing[s]:

(A) the representations and warranties of the Borrower contained in Section 4.01 of the Credit Agreement are correct, before and after giving effect to the Proposed Borrowing[s] and to the application of the proceeds therefrom, as though made on and as of such date (other than, as to any such representation or warranty that by its terms refers to a specific date other than the date of the Proposed Borrowing[s], in which case, such representation and warranty is true and correct as of such specific date);

 

C-1


(B) no event has occurred and is continuing, or would result from such Proposed Borrowing[s] or from the application of the proceeds therefrom, that constitutes an Event of Default or an Unmatured Default with respect to the Borrower; and

(C) immediately following such Proposed Borrowing[s], (1) the aggregate amount of Outstanding Credits shall not exceed the aggregate amount of the Commitments then in effect and (2) the Outstanding Credits of any Lender shall not exceed the amount of such Lender’s Commitment.

Please transfer or credit the funds to the following account:

 

Bank: ___________
Address:        
ABA #:        
Account #:       
Beneficiary:       

[remainder of page intentionally left blank]

 

C-2


Very truly yours,

 

JERSEY CENTRAL POWER & LIGHT COMPANY
By  
Name:  
Title:  

 

C-3


EXHIBIT D

Form of Letter of Credit Request

   , 20

Mizuho Bank, Ltd., as Administrative Agent

[INSERT ADMINISTRATIVE AGENT’S

ADDRESS]

Attn:          

[        , as Fronting Bank

[ADDRESS]]

Ladies and Gentlemen:

The undersigned, JERSEY CENTRAL POWER & LIGHT COMPANY, a New Jersey corporation (the “Borrower”), refers to that certain Credit Agreement, dated as of October 18, 2021 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among the Borrower, the banks named therein and the other Lenders party thereto from time to time, Mizuho Bank, Ltd., as Administrative Agent for the Lenders thereunder, and the fronting banks party thereto from time to time. Capitalized terms used herein, and not otherwise defined herein, shall have their respective defined meanings as set forth in the Credit Agreement.

Pursuant to Section 2.04(d) of the Credit Agreement, the Borrower irrevocably requests that the Fronting Bank to which this Letter of Credit Request is addressed issue a Letter of Credit on the following terms:

1. Date of Issuance:

2. Expiration Date:

3. Stated Amount:

4. Beneficiary:

5. Account Party:

and the terms set forth in the attached application for said Letter of Credit.

The Borrower hereby further certifies that (i) as of the date hereof, (ii) as of the Date of Issuance and (iii) after the issuance of the Letter of Credit requested hereby:

(A) the representations and warranties of the Borrower contained in Section 4.01 of the Credit Agreement are true and correct on and as of the date hereof, before and after giving effect to the issuance of such Letter of Credit and to the application of the proceeds therefrom, as though made on and as of such date (other than, as to any such representation or warranty that by its terms refers to a specific date other than the date of the issuance of such Letter of Credit, in which case, such representation and warranty is true and correct as of such specified date);

 

D-1


(B) no event has occurred and is continuing, or would result from the issuance of the Letter of Credit requested hereby or from the application of the proceeds therefrom, that constitutes an Event of Default or an Unmatured Default with respect to the Borrower; and

(C) immediately following the issuance of such Letter of Credit, (1) the aggregate amount of Outstanding Credits shall not exceed the aggregate amount of the Commitments then in effect, (2) the Outstanding Credits of any Lender shall not exceed the amount of such Lender’s Commitment, (3) the Stated Amount thereof, when aggregated with (x) the Stated Amount of each other Letter of Credit that is outstanding or with respect to which a Letter of Credit Request has been received and (y) the outstanding Reimbursement Obligations, shall not exceed the L/C Commitment Amount, and (4) the aggregate Stated Amount of all outstanding Letters of Credit issued by the Fronting Bank to which this Letter of Credit Request is addressed will not exceed $[   ]16.

If notice of the request for the above referenced Letter of Credit has been given by the Borrower previously by telephone, then this notice shall be considered a written confirmation of such telephone notice as required by Section 2.04(d) of the Credit Agreement.

[remainder of page intentionally left blank]

**Insert applicable Fronting Bank’s L/C Fronting Bank Commitment.

 

D-2


Very truly yours,
JERSEY CENTRAL POWER & LIGHT COMPANY
By    
Name:  
Title:  

 

D-3


EXHIBIT E-1

Form of U.S. Tax Compliance Certificate

(For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)

U.S. TAX COMPLIANCE CERTIFICATE

(FOR FOREIGN LENDERS THAT ARE NOT PARTNERSHIPS FOR U.S. FEDERAL INCOME TAX PURPOSES)

Reference is hereby made to the $500,000,000 Credit Agreement, dated as of October 18, 2021 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among Jersey Central Power & Light Company (the “Borrower”), the Lenders named therein and party thereto from time to time, Mizuho Bank, Ltd., as Administrative Agent, and the Fronting Banks named therein and party thereto from time to time.

Pursuant to the provisions of Section 2.16 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the Advance(s) (as well as any Note(s) evidencing such Advance(s)) in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code and (iv) it is not a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished the Administrative Agent and the Borrower with a certificate of its non-U.S. Person status on IRS Form W-8BEN or IRS Form W-8BEN-E. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrower and the Administrative Agent, and (2) the undersigned shall have at all times furnished the Borrower and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

 

[NAME OF LENDER]
By:    
Name:  
Title:  
Date:      , 20[ ]

 

E-1-1


EXHIBIT E-2

Form of U.S. Tax Compliance Certificate

(For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)

U.S. TAX COMPLIANCE CERTIFICATE

(FOR FOREIGN PARTICIPANTS THAT ARE NOT PARTNERSHIPS FOR U.S. FEDERAL INCOME TAX PURPOSES)

Reference is hereby made to the $500,000,000 Credit Agreement, dated as of October 18, 2021 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among Jersey Central Power & Light Company (the “Borrower”), the Lenders named therein and party thereto from time to time, Mizuho Bank, Ltd., as Administrative Agent, and the Fronting Banks named therein and party thereto from time to time.

Pursuant to the provisions of Section 2.16 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the participation in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code, and (iv) it is not a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished its participating Lender with a certificate of its non-U.S. Person status on IRS Form W-8BEN or IRS Form W-8BEN-E. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender in writing, and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

 

[NAME OF PARTICIPANT]
By:    
Name:  
Title:  
Date:      , 20[ ]

 

E-2-1


EXHIBIT E-3

Form of U.S. Tax Compliance Certificate

(For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)

U.S. TAX COMPLIANCE CERTIFICATE

(FOR FOREIGN PARTICIPANTS THAT ARE PARTNERSHIPS FOR U.S. FEDERAL INCOME TAX PURPOSES)

Reference is hereby made to the $500,000,000 Credit Agreement, dated as of October 18, 2021 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among Jersey Central Power & Light Company (the “Borrower”), the Lenders named therein and party thereto from time to time, Mizuho Bank, Ltd., as Administrative Agent, and the Fronting Banks named therein and party thereto from time to time.

Pursuant to the provisions of Section 2.16 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the participation in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such participation, (iii) with respect such participation, neither the undersigned nor any of its direct or indirect partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct or indirect partners/members is a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code and (v) none of its direct or indirect partners/members is a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished its participating Lender with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

 

[NAME OF PARTICIPANT]
By:    
Name:  
Title:  
Date:      , 20[ ]

 

E-3-1


EXHIBIT E-4

Form of U.S. Tax Compliance Certificate

(For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)

U.S. TAX COMPLIANCE CERTIFICATE

(FOR FOREIGN LENDERS THAT ARE PARTNERSHIPS FOR U.S. FEDERAL INCOME TAX PURPOSES)

Reference is hereby made to the $500,000,000 Credit Agreement, dated as of October 18, 2021 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among Jersey Central Power & Light Company (the “Borrower”), the Lenders named therein and party thereto from time to time, Mizuho Bank, Ltd., as Administrative Agent, and the Fronting Banks named therein and party thereto from time to time.

Pursuant to the provisions of Section 2.16 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the Advance(s) (as well as any Note(s) evidencing such Advance(s)) in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such Advance(s) (as well as any Note(s) evidencing such Advance(s)), (iii) with respect to each extension of credit pursuant to the Credit Agreement or any other Loan Document, neither the undersigned nor any of its direct or indirect partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct or indirect partners/members is a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code and (v) none of its direct or indirect partners/members is a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished the Administrative Agent and the Borrower with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN or an IRS Form W-8BEN-E, as applicable, from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrower and the Administrative Agent, and (2) the undersigned shall have at all times furnished the Borrower and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

 

[NAME OF LENDER]
By:    
Name:  
Title:  
Date:      , 20[ ]

 

E-4-1

Exhibit 10.3

EXECUTION VERSION

 

 

 

AMENDMENT NO. 2 TO CREDIT AGREEMENT

dated as of October 20, 2023

among

JERSEY CENTRAL POWER & LIGHT COMPANY,

as Borrower,

THE LENDERS NAMED HEREIN,

as Lenders,

MIZUHO BANK, LTD.,

as Administrative Agent,

and

THE FRONTING BANKS NAMED HEREIN,

as Fronting Banks

 

 

 

 

JPMORGAN CHASE BANK, N.A.    MIZUHO BANK, LTD.
PNC CAPITAL MARKETS LLC    CITIBANK, N.A.
MUFG BANK, LTD.    MORGAN STANLEY SENIOR FUNDING, INC.
BARCLAYS BANK PLC    THE BANK OF NOVA SCOTIA
BofA SECURITIES, INC.    RBC CAPITAL MARKETS1
   WELLS FARGO SECURITIES, LLC

as Joint Lead Arrangers

 

  1 

RBC Capital Markets is a brand name for the capital markets business of Royal Bank of Canada and its affiliates.


AMENDMENT NO. 2 TO CREDIT AGREEMENT

This AMENDMENT NO. 2 TO CREDIT AGREEMENT, dated as of October 20, 2023 (this “Amendment”), to the Existing Credit Agreement referred to below, is entered into by and among Jersey Central Power & Light Company (“JCP&L” or the “Borrower”), each of the Lenders party hereto, Mizuho Bank, Ltd., as Administrative Agent for the Lenders, and each of the Fronting Banks party hereto.

PRELIMINARY STATEMENTS

1.   The Borrower, the Lenders, the Administrative Agent and the Fronting Banks are parties to that certain Credit Agreement, dated as of October 18, 2021 (as amended prior to the date hereof, the “Existing Credit Agreement”; the Existing Credit Agreement, as amended by this Amendment, the “Credit Agreement”). Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to such terms in the Credit Agreement.

2.   The Borrower has requested that each Lender extend the Termination Date applicable to such Lender for an additional one year period, from October 18, 2026 to October 18, 2027 (the “Extension”) and each Lender has agreed to the Extension as to itself.

3.   The Borrower desires to amend the Existing Credit Agreement as set forth herein, and the Lenders, the Administrative Agent and the Fronting Banks have agreed to such amendments on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

SECTION 1. Amendments to Existing Credit Agreement.

(a)   Section 1.01 of the Existing Credit Agreement is hereby amended by adding the following terms in the proper alphabetical order therein:

(i)   “Second Amendment” means the Amendment No. 2 to Credit Agreement, dated as of October 20, 2023, by and among the Borrower, each of the Lenders party thereto, the Administrative Agent, and each of the Fronting Banks party thereto.

(b)   The definition of the term “Applicable Margin” set forth in Section 1.01 of the Existing Credit Agreement is hereby amended by adding the following at the end thereof:

“Any increase or decrease in the Applicable Margin resulting from a change in the Reference Rating shall become effective on the third (3rd) Business Day following such change in the Reference Rating.”

(c)   The definition of the term “Fee Letters” set forth in Section 1.01 of the Existing Credit Agreement is hereby amended as follows:

 

  (i)

  by deleting the word “and” at the end of clause (ii) thereof; and

 

  (ii)

  by adding the following at the end of clause (iii) thereof:


“and (iv) the amended and restated fee letter, dated October 20, 2023, by and among the Borrower, certain of FE’s other Subsidiaries, JPMorgan, Mizuho, PNC Capital Markets LLC and PNC Bank, National Association.”

(d) The definition of the term “Termination Date” set forth in Section 1.01 of the Existing Credit Agreement is hereby amended and restated in its entirety as follows:

““Termination Date means October 18, 2027, subject, for certain Lenders, to the extension described in Section 2.19 hereof, or, in any case, the earlier date of termination in whole of the Commitments pursuant to Section 2.06 or Section 6.01 hereof.”

(e) Section 2.04 of the Existing Credit Agreement is hereby amended as follows:

 

  (i)

by deleting the word “two (2)” and substituting therefor “three (3)” in clause (c) thereof;

 

  (ii)

by adding the following to the beginning of clause (f)(i) thereof:

“no later than 12:00 p.m. (New York City time)”

 

  (iii)

by deleting each instance of the words “11:00 a.m.” and substituting therefor “10:00 a.m.” in clause (f)(i) thereof.

(f) Section 2.05 of the Existing Credit Agreement is hereby amended as follows:

 

  (i)

by deleting the phrase “on the last Business Day” in the first sentence of clause (a) thereof and substituting therefor “fifteen (15) Business Days after the last day”;

 

  (ii)

by adding the following sentence at the end of clause (a) thereof:

“Any increase or decrease in the Commitment Fee resulting from a change in the Reference Rating shall become effective on the third (3rd) Business Day following such change in the Reference Rating.”

 

  (iii)

by deleting the phrase “payable quarterly in arrears on the last day” in clause (c) thereof and substituting therefor “on the fifteenth (15th) Business Day following the end”.

(g) Section 2.09 of the Existing Credit Agreement is hereby amended by deleting the phrase “Term Benchmark Rate” in clauses (i) and (ii) thereof and substituting therefor “Adjusted Term SOFR Rate” thereof.

(h) Article VII of the Existing Credit Agreement is hereby amended by adding the following at the end thereof:

“SECTION 7.08. Certain Investment Matters.

(a) Each Lender represents and warrants that in participating as a Lender, it is engaged in making, acquiring or holding commercial loans and in providing other facilities set forth herein as may be applicable to such

 

- 2 -


Lender, in each case in the ordinary course of business, and not for the purpose of investing in the general performance or operations of the Borrower, or for the purpose of purchasing, acquiring or holding any other type of financial instrument such as a security (and each Lender agrees not to assert a claim in contravention of the foregoing, such as a claim under the federal or state securities laws).

(b) The Administrative Agent represents and warrants that the motivations of the Administrative Agent are commercial in nature and not to invest in the general performance or operation of the Borrower.”

SECTION 2. Conditions to Effectiveness. This Amendment shall become effective as of the date first above written (the “Amendment Effective Date”) when, and only when, the following conditions have been satisfied (or waived by the Administrative Agent and the Lenders party hereto in their sole discretion):

(a) The Administrative Agent shall have received, in immediately available funds, to the extent invoiced prior to the Amendment Effective Date, reimbursement or payment of all reasonable out-of-pocket costs and expenses of the Administrative Agent (including, but not limited to, the reasonable fees and expenses of counsel (including, but not limited to, one local counsel and any specialist counsel in each relevant jurisdiction) to the Administrative Agent) required to be reimbursed or paid by the Borrower hereunder or under any other Loan Document.

(b) The Administrative Agent shall have received the following documents, each document being dated the date of receipt thereof by the Administrative Agent (which date shall be the same for all such documents, except as otherwise specified below), in form and substance satisfactory to the Administrative Agent:

(i) either (A) counterparts of this Amendment duly executed by the Borrower, the Lenders, the Administrative Agent, and the Fronting Banks or (B) written evidence satisfactory to the Administrative Agent that such parties have signed counterparts of this Amendment;

(ii) certified copies of (A) the resolutions of the Board of Directors of the Borrower approving this Amendment and the Credit Agreement and (B) all documents evidencing any other necessary corporate action with respect to this Amendment and the Credit Agreement;

(iii) a certificate of the Secretary or an Assistant Secretary of the Borrower certifying (A) the names and true signatures of the officers of the Borrower authorized to sign this Amendment and the other documents to be delivered hereunder, (B) that attached thereto are true and correct copies of the Organizational Documents of the Borrower, in each case as in effect on such date,

 

- 3 -


and (C) that true and correct copies of all governmental and regulatory authorizations and approvals required for the due execution, delivery and performance by the Borrower of this Amendment and the Credit Agreement have previously been delivered to the Administrative Agent and remain in full force and effect on such date;

(iv) a certificate of an Authorized Officer of the Borrower (the statements in which shall be true) certifying that, both before and after giving effect to this Amendment, (A) no event has occurred and is continuing that constitutes an Event of Default or an Unmatured Default with respect to the Borrower and (B) all representations and warranties of the Borrower contained in the Credit Agreement and each other Loan Document to which the Borrower is a party are true and correct in all material respects (or in the case of any representation or warranty already qualified by materiality, true and correct in all respects) on and as of the Amendment Effective Date, as though made on and as of such date (other than any such representation or warranty that by its terms refers to a specific date, in which case such representation and warranty shall be true and correct as of such specific date); and

(v) opinions of Jones Day, special counsel for the Borrower, and certain local counsel for the Borrower, as reasonably requested by the Administrative Agent.

(c) The Administrative Agent shall have received all documentation and information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including, without limitation, the Patriot Act and the Beneficial Ownership Regulation, to the extent such documentation or information is requested by the Administrative Agent on behalf of any Lender prior to the Amendment Effective Date.

SECTION 3. Representations and Warranties. The Borrower represents and warrants as follows:

(a) Due Authorization. The execution, delivery and performance by it of this Amendment and each other Loan Document being executed and delivered in connection with this Amendment to which the Borrower is 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 members, as the case may be, other than such consents and approvals as have been duly obtained, given or accomplished.

(b) No Violation, Etc. Neither the execution, delivery or performance by it of this Amendment, any other Loan Document being executed and delivered in connection with this Amendment to which it is a party, nor the consummation by it of the transactions contemplated hereby or thereby, nor compliance by it with the provisions hereof or thereof, nor, with respect to the Borrower, the performance by it of the Credit Agreement, contravenes or will contravene, or results or will result in a breach of, any of the provisions of its Organizational Documents, any Applicable Law, or any indenture, mortgage, deed of trust, lease, license or any other agreement or instrument to which it or any of its Subsidiaries is party or by which its property or the property of any of its Subsidiaries 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 Subsidiaries, except to the extent such contravention or breach, or the creation or imposition of any such Lien, individually or in the aggregate, has not had and would not reasonably be expected to have a Material Adverse Effect with respect to the Borrower.

(c) Governmental Actions. No Governmental Action is or will be required in connection with (i) the execution, delivery or performance by it of, or the consummation by it of

 

- 4 -


the transactions contemplated by, this Amendment or any other Loan Document being executed and delivered in connection with this Amendment to which it is, or is to become, a party, or (ii) with respect to the Borrower, the performance by it of the Credit Agreement.

(d) Execution and Delivery. This Amendment and the other Loan Documents being executed and delivered in connection with this Amendment to which it is, or is to become, a party have been or will be (as the case may be) duly executed and delivered by it, and each of this Amendment and, with respect to the Borrower, the Credit Agreement is, and upon execution and delivery thereof each such other Loan Document will be, the legal, valid and binding obligation of it enforceable against it in accordance with its terms, subject, however, solely with respect to this Amendment, the Credit Agreement and such other Loan Document, 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.

(e) No Material Misstatements. The reports, financial statements and other written information furnished by or on behalf of the Borrower to the Administrative Agent, any Fronting Bank or any Lender pursuant to or in connection with this Amendment and the transactions contemplated hereby, when taken together with the Disclosure Documents, do not contain, when taken as a whole, any untrue statement of a material fact and do 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 made, not misleading in any material respect.

(f) Litigation. There are no actions, suits or proceedings by or before any arbitrator or Governmental Authority pending against or, to the knowledge of the Borrower, threatened against the Borrower or any of its Subsidiaries that involve this Amendment, the Credit Agreement or any other Loan Document.

(g) No Default. No Unmatured Default or Event of Default has occurred and is continuing or would occur as a result of (i) the execution, delivery or performance by the Borrower of this Amendment or any other Loan Document being executed and delivered in connection with this Amendment to which it is, or is to become, a party or (ii) the performance by the Borrower of the Credit Agreement.

(h) Anti-Corruption Laws. No proceeds of any Borrowing have been used in violation of any Anti-Corruption Law.

SECTION 4. Reference to and Effect on the Credit Agreement and the Other Loan Documents.

(a) Except as expressly amended hereby, all of the representations, warranties, terms, covenants and conditions of the Credit Agreement and the other Loan Documents shall remain in full force and effect in accordance with their respective terms and are hereby in all respects ratified and confirmed. The amendments set forth herein shall be limited precisely as provided for herein

and shall not be deemed to be a waiver of, release of, amendment of, consent to, departure from or modification of any term or provision of the Loan Documents or any other document or instrument referred to therein or of any transaction or further or future action on the

 

- 5 -


part of the Borrower requiring the consent of the Administrative Agent, the Fronting Banks or the Lenders except to the extent specifically provided for herein. The Administrative Agent and the Lenders have not and shall not be deemed to have waived any of their respective rights and remedies against the Borrower for any existing or future Unmatured Default or Event of Default. The Administrative Agent, the Fronting Banks and the Lenders reserve the right to insist on strict compliance with the terms of the Credit Agreement and the other Loan Documents, and the Borrower expressly acknowledges such reservation of rights. Any future or additional amendment of any provision of the Credit Agreement or any other Loan Document shall be effective only if set forth in a writing separate and distinct from this Amendment and executed by the appropriate parties in accordance with the terms thereof.

(b) Upon the effectiveness of this Amendment: (i) each reference in the Existing Credit Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the Existing Credit Agreement shall mean and be a reference to the Credit Agreement; and (ii) each reference in any other Loan Document to “the Credit Agreement”, “thereunder”, “thereof” or words of like import referring to the Existing Credit Agreement shall mean and be a reference to the Credit Agreement. This Amendment shall constitute a “Loan Document” for all purposes under the Credit Agreement and the other Loan Documents.

(c) The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a release or waiver of any right, power or remedy of the Lenders, the Administrative Agent or the Fronting Banks under the Existing Credit Agreement or any other Loan Document, nor constitute a release or a waiver of any provision of the Existing Credit Agreement or any other Loan Document.

SECTION 5. Costs and Expenses. The Borrower agrees to pay on demand all reasonable out-of-pocket costs and expenses incurred by the Administrative Agent, each Fronting Bank and each Lender in connection with the preparation, execution, delivery, syndication and administration of this Amendment and the other documents to be delivered hereunder, including, without limitation, the reasonable fees and out-of-pocket expenses of counsel (including, but not limited to, one local counsel and any specialist counsel in each relevant jurisdiction) for the Administrative Agent, the Fronting Banks and the Lenders with respect thereto and with respect to advising the Administrative Agent, the Fronting Banks and each Lender as to their rights and responsibilities under this Amendment. The Borrower further agrees to pay on demand all reasonable out-of-pocket costs and expenses, if any (including, without limitation, reasonable fees and expenses of counsel), incurred by the Administrative Agent, the Fronting Banks and the Lenders in connection with the enforcement (whether through negotiations, legal proceedings or otherwise) of this Amendment, the Credit Agreement and the other documents to be delivered hereunder, including, without limitation, counsel fees and expenses in connection with the enforcement of rights under this Section. The Borrower acknowledges and agrees that, pursuant to Section 8.05(a) of the Credit Agreement, it is required to pay, among other costs and expenses set forth therein, the reasonable fees and expenses of counsel for the Administrative Agent (including, but not limited to, any local counsel and any specialist counsel for the Administrative Agent), in accordance with the terms thereof.

 

- 6 -


SECTION 6. Counterparts. This Amendment may be executed in any number of counterparts (and by different parties hereto in separate counterparts), each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same instrument. Delivery of an executed signature page to this Amendment by facsimile or other electronic transmission (including, without limitation, by Adobe portable document format file (also known as a “PDF” file)) shall be as effective as delivery of a manually signed counterpart of this Amendment. The words “execution,” “executed,” “signed,” “signature,” “delivery,” and words of like import in or relating to this Amendment or any document to be signed in connection with this Amendment and the transactions contemplated hereby shall be deemed to include electronic signatures, deliveries or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act; provided, that nothing herein shall require the Administrative Agent to accept electronic signatures in any form or format without its prior written consent; provided, further, that, without limiting the foregoing, upon the request of the Administrative Agent, any electronic signature shall be promptly followed by such manually executed counterpart.

SECTION 7. Governing Law. This Amendment shall be governed by, and construed in accordance with, the laws of the State of New York.

SECTION 8. Miscellaneous. This Amendment shall be subject to the provisions of Sections 8.05, 8.10, 8.11 and 8.12 of the Credit Agreement, each of which is incorporated by reference herein, mutatis mutandis.

SECTION 9. Release. In consideration of, among other things, the Administrative Agent’s, the Fronting Banks’ and the Lenders’ execution and delivery of this Amendment, the Borrower, on behalf of itself and its agents, representatives, officers, directors, advisors, employees, subsidiaries, affiliates, successors and assigns (collectively, “Releasors”), hereby forever agrees and covenants not to sue or prosecute against any Releasee (as hereinafter defined) and hereby forever waives, releases and discharges, to the fullest extent permitted by law, each Releasee from any and all claims (including, without limitation, crossclaims, counterclaims, rights of set-off and recoupment), actions, causes of action, suits, debts, liens, warranties, damages and consequential damages, judgments, costs or expenses whatsoever, that such Releasor now has or hereafter may have, of whatsoever nature and kind, whether now existing or hereafter arising, whether arising at law or in equity (collectively, the “Claims”), against any or all of the Credit Parties in any capacity and their respective affiliates, subsidiaries, shareholders and “controlling persons” (within the meaning of the federal securities laws), and their respective successors and assigns and each and all of the officers, directors, employees, agents, attorneys, advisors and other representatives of each of the foregoing (collectively, the “Releasees”), based in whole or in part on facts existing on or before the Amendment Effective Date, that relate to, arise out of or otherwise are in connection with: (i) any or all of the Loan Documents or transactions contemplated thereby or any actions or omissions in connection

 

- 7 -


therewith; or (ii) any aspect of the dealings or relationships between or among the Borrower, on the one hand, and any or all of the Credit Parties, on the other hand, relating to any or all of the documents, transactions, actions or omissions referenced in clause (i) hereof. The receipt by the Borrower of any Advances or other financial accommodations made by any Credit Party after the date hereof shall constitute a ratification, adoption, and confirmation by such party of the foregoing general release of all Claims against the Releasees that are based in whole or in part on facts existing on or prior to the date of receipt of any such Advances or other financial accommodations. In entering into this Amendment, the Borrower consulted with, and has been represented by, legal counsel and expressly disclaims any reliance on any representations, acts or omissions by any of the Releasees and hereby agrees and acknowledges that the validity and effectiveness of the releases set forth above do not depend in any way on any such representations, acts and/or omissions or the accuracy, completeness or validity thereof. The provisions of this Section 9 shall survive the termination of this Amendment, the Credit Agreement, the other Loan Documents and payment in full of the Advances.

[remainder of page intentionally left blank; signature pages follow]

 

- 8 -


IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized, as of the date first above written.

 

JERSEY CENTRAL POWER & LIGHT COMPANY
By:  

/s/ Weizhong Wang

Name:   Weizhong Wang
Title:   Treasurer

[Signature Page to Amendment No. 2 to Credit Agreement (New Jersey)]


MIZUHO BANK, LTD. Administrative Agent, as a Lender and as a Fronting Bank
By  

/s/ Edward Sacks

Name:   Edward Sacks
Title:   Authorized Signatory

[Signature Page to Amendment No. 2 to Credit Agreement (New Jersey)]


JPMORGAN CHASE BANK, N.A., as a Lender and as a Fronting Bank
By  

/s/ Khawaja Tariq

  Name: Khawaja Tariq
  Title: Vice President

[Signature Page to Amendment No. 2 to Credit Agreement (New Jersey)]


PNC BANK, NATIONAL ASSOCIATION as a Lender
By  

/s/ Rachel Kozemchak

  Name: Rachel Kozemchak
  Title: Assistant Vice President

[Signature Page to Amendment No. 2 to Credit Agreement (New Jersey)]


BARCLAYS BANK PLC, as a Lender and as a Fronting Bank
By  

/s/ Sydney G. Dennis

  Name: Sydney G. Dennis
  Title: Director

[Signature Page to Amendment No. 2 to Credit Agreement (New Jersey)]


BANK OF AMERICA, N.A., as a Lender and as a Fronting Bank
By  

/s/ Jacqueline G. Margetis

  Name: Jacqueline G. Margetis
  Title: Director

[Signature Page to Amendment No. 2 to Credit Agreement (New Jersey)]


CITIBANK, N.A., as a Lender
 

/s/ Richard Rivera

  Name: Richard Rivera
  Title: Vice President

[Signature Page to Amendment No. 2 to Credit Agreement (New Jersey)]


MORGAN STANLEY BANK, N.A., as a Lender
By  

/s/ Michael King

  Name: Michael King
  Title: Authorized Signatory

[Signature Page to Amendment No. 2 to Credit Agreement (New Jersey)]


MUFG BANK, LTD., as a Lender
By  

/s/ Matthew Bly

  Name: Matthew Bly
  Title: Director

[Signature Page to Amendment No. 2 to Credit Agreement (New Jersey)]


THE BANK OF NOVA SCOTIA, as a Lender
By  

/s/ David Dewar

  Name: David Dewar
  Title: Director

[Signature Page to Amendment No. 2 to Credit Agreement (New Jersey)]


ROYAL BANK OF CANADA, as a Lender
By  

/s/ Meg Donnelly

  Name: Meg Donnelly
  Title: Authorized Signatory

[Signature Page to Amendment No. 2 to Credit Agreement (New Jersey)]


Canadian Imperial Bank of Commerce, New York Branch, as a Lender
By  

/s/ Amit Vasani

  Name: Amit Vasani
  Title: Authorized Signatory

[Signature Page to Amendment No. 2 to Credit Agreement (New Jersey)]


CREDIT AGRICOLE CORPORATE AND
INVESTMENT BANK, as a Lender
By:  

/s/ Dixon Schultz

  Name: Dixon Schultz
  Title: Director
By:  

/s/ Nathalie Huet Rousset

  Name: Nathalie Huet Rousset
  Title: Director

[Signature Page to Amendment No. 2 to Credit Agreement (New Jersey)]


KEYBANK NATIONAL ASSOCIATION, as a Lender
By  

/s/ Renee M. Bonnell

  Name: Renee M. Bonnell
  Title: Senior Vice President

[Signature Page to Amendment No. 2 to Credit Agreement (New Jersey)]


Sumitomo Mitsui Banking Corporation, as a Lender
By  

/s/ Suela Von Bargen

  Name: Suela Von Bargen
  Title: Director

[Signature Page to Amendment No. 2 to Credit Agreement (New Jersey)]


TD BANK, N.A., as a Lender
By  

/s/ Bernadette Collins

  Name: Bernadette Collins
  Title: Senior Vice President

[Signature Page to Amendment No. 2 to Credit Agreement (New Jersey)]


TRUIST BANK, as a Lender
By  

/s/ Catherine Strickland

  Name: Catherine Strickland
  Title: Vice President

[Signature Page to Amendment No. 2 to Credit Agreement (New Jersey)]


U.S. BANK NATIONAL ASSOCIATION, as a Lender
By  

/s/ Michael Temnick

  Name: Michael Temnick
  Title: Senior Vice President

[Signature Page to Amendment No. 2 to Credit Agreement (New Jersey)]


CoBank, ACB, as a Lender
By:  

/s/ David B. Willis

  Name: David B. Willis
  Title: Lead Relationship Manager

[Signature Page to Amendment No. 2 to Credit Agreement (New Jersey)]


THE BANK OF NEW YORK MELLON, as a Lender
By  

/s/ Molly H. Ross

  Name: Molly H. Ross
  Title: Senior Vice President

[Signature Page to Amendment No. 2 to Credit Agreement (New Jersey)]


THE HUNTINGTON NATIONAL BANK, as a Lender
By  

/s/ Christopher Olsen

  Name: Christopher Olsen
  Title: Vice President

[Signature Page to Amendment No. 2 to Credit Agreement (New Jersey)]


First National Bank of Pennsylvania, as a Lender
By  

/s/ Paul Wargo

  Name: Paul Wargo
  Title: Vice President

[Signature Page to Amendment No. 2 to Credit Agreement (New Jersey)]


WELLS FARGO BANK, NATIONAL ASSOCIATION, as a Lender
By  

/s/ Patrick Engel

  Name: Patrick Engel
  Title: Managing Director

[Signature Page to Amendment No. 2 to Credit Agreement (New Jersey)]

Exhibit 10.4

 

 

 

AMENDMENT NO. 3 TO CREDIT AGREEMENT

dated as of October 24, 2024

among

JERSEY CENTRAL POWER & LIGHT COMPANY,

as Borrower,

THE LENDERS NAMED HEREIN,

as Lenders,

MIZUHO BANK, LTD.,

as Administrative Agent,

and

THE FRONTING BANKS NAMED HEREIN,

as Fronting Banks

 

 

 

 

JPMORGAN CHASE BANK, N.A.

PNC CAPITAL MARKETS LLC

MUFG BANK, LTD.

BARCLAYS BANK PLC

BofA SECURITIES, INC.

 

MIZUHO BANK, LTD.

CITIBANK, N.A.

MORGAN STANLEY SENIOR FUNDING, INC.

THE BANK OF NOVA SCOTIA

ROYAL BANK OF CANADA

WELLS FARGO SECURITIES, LLC

as Joint Lead Arrangers


AMENDMENT NO. 3 TO CREDIT AGREEMENT

This AMENDMENT NO. 3 TO CREDIT AGREEMENT, dated as of October 24, 2024 (this “Amendment”), to the Existing Credit Agreement referred to below, is entered into by and among Jersey Central Power & Light Company (“JCP&L” or the “Borrower”), each of the Lenders party hereto, Mizuho Bank, Ltd., as Administrative Agent for the Lenders, and each of the Fronting Banks party hereto.

PRELIMINARY STATEMENTS

1.   The Borrower, the Lenders, the Administrative Agent and the Fronting Banks are parties to that certain Credit Agreement, dated as of October 18, 2021 (as amended prior to the date hereof, the “Existing Credit Agreement”; the Existing Credit Agreement, as amended by this Amendment, the “Credit Agreement”). Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to such terms in the Credit Agreement.

2.   The Borrower desires to increase the aggregate amount of the Commitments by $250,000,000 (the “Commitment Increase”) pursuant to Section 2.06(b) of the Existing Credit Agreement and each Lender party hereto as an “Increasing Lender” (each, an “Increasing Lender”) has agreed to increase its Commitment as set forth herein.

3.   The Borrower has requested that each Lender extend the Termination Date applicable to such Lender for an additional one year period, from October 18, 2027 to October 18, 2028 (the “Extension”) and each Lender has agreed to the Extension as to itself.

4.   The Borrower desires to amend the Existing Credit Agreement as set forth herein, and the Lenders, the Administrative Agent and the Fronting Banks have agreed to such amendments on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

SECTION 1. Commitment Increase.

(a)   On the Amendment Effective Date (as defined below), each Increasing Lender agrees to increase its Commitment to the aggregate amount set forth opposite such Increasing Lender’s name on Schedule I to the Credit Agreement as amended hereby. After giving effect to the Commitment Increase, the aggregate amount of the availability under Section 2.06(b) of the Credit Agreement for additional Commitments shall be $0.

(b)   In connection with the foregoing and the other transactions contemplated hereby, on the Amendment Effective Date:

(i)   each Increasing Lender shall make available to the Administrative Agent such amounts in immediately available funds as the Administrative Agent shall


determine, for the benefit of the other Lenders, as being required in order to cause, after giving effect to the Commitment Increase and the use of such amounts to make payments to such other Lenders, each Lender’s portion of the total Commitments of all the Lenders to equal its Percentage of such Commitments; and

(ii)   the Administrative Agent shall make such reallocations or other relevant actions in respect of the “Commitments” (as defined in and in effect under the Existing Credit Agreement) as are necessary in order that each Lender’s Commitment under the Credit Agreement reflects such Lender’s Percentage of the total Commitments on the Amendment Effective Date.

SECTION 2. Amendments to Existing Credit Agreement.

(a)   Section 1.01 of the Existing Credit Agreement is hereby amended by adding the following terms in the proper alphabetical order therein:

(i)   “Third Amendment” means the Amendment No. 3 to Credit Agreement, dated as of October 24, 2024, by and among the Borrower, each of the Lenders party thereto, the Administrative Agent, and each of the Fronting Banks party thereto.

(ii)   “Third Amendment Effective Date” means the Amendment Effective Date (as defined in the Third Amendment), which date is October 24, 2024.

(b)   The definition of the term “Applicable Margin” set forth in Section 1.01 of the Existing Credit Agreement is hereby amended by replacing the table set forth therein with the below table:


BASIS FOR PRICING

  LEVEL 1   LEVEL 2   LEVEL 3   LEVEL 4   LEVEL 5
 

Reference Ratings at

least A by S&P or

A2 by Moody’s

 

Reference Ratings

lower than Level 1 but at

least A- by S&P or

A3 by Moody’s

 

Reference Ratings

lower than Level 2 but at

least BBB+ by S&P or

Baa1 by Moody’s

 

Reference Ratings

lower than Level 3 but at

least BBB by S&P or

Baa2 by Moody’s

 

Reference Ratings

lower than Level 4

Applicable Margin for Term Benchmark Advances (or, if applicable, RFR Advances)

  1.00%   1.125%   1.25%   1.50%   1.75%

Applicable Margin for Alternate Base Rate Advances

  0.00%   0.125%   0.25%   0.50%   0.75%

(c)   The definition of the term “Fee Letters” set forth in Section 1.01 of the Existing Credit Agreement is hereby amended as follows:

 

  (i)  

by deleting the word “and” at the end of clause (iii) thereof; and

 

  (ii)  

by adding the following at the end of clause (iv) thereof:

“(v) the fee letter, dated September 21, 2023, by and among the Borrower, certain of FE’s other Subsidiaries, Citigroup Global Markets Inc., Morgan Stanley Senior Funding, Inc., RBC Capital Markets, Barclays Bank PLC, BofA Securities, Inc., Bank of America, N.A., and The Bank of Nova Scotia, (vi) the fee letter, dated September 19, 2024, by and among the Borrowers, certain of FE’s other Subsidiaries, JPMorgan, Mizuho, PNC Capital Markets LLC and PNC Bank and (vii) the fee letter, dated September 19, 2024, by and among the Borrower, certain of FE’s other Subsidiaries, Citigroup Global Markets Inc., Morgan Stanley Senior Funding, Inc., Royal Bank of Canada, Barclays Bank PLC, BofA Securities, Inc., Bank of America, N.A., MUFG Bank, Ltd., The Bank of Nova Scotia and Wells Fargo Securities, LLC.”

(d)   The definition of the term “Parent Credit Agreement” set forth in Section 1.01 of the Existing Credit Agreement is hereby amended and restated in its entirety as follows:


“Parent Credit Agreement” means that Credit Agreement, dated as of October 18, 2021, by and among FE and FET as borrowers, the banks and other financial institutions party thereto from time to time, and JPMorgan as administrative agent, as amended, amended and restated or otherwise modified from time to time, including for the release of FET, as borrower thereunder, pursuant to Amendment No. 2 to Credit Agreement and Consent, Limited Waiver and Limited Release, dated as of October 20, 2023.”

(e)   The definition of the term “Termination Date” set forth in Section 1.01 of the Existing Credit Agreement is hereby amended and restated in its entirety as follows:

““Termination Date” means October 18, 2028, subject, for certain Lenders, to the extension described in Section 2.19 hereof, or, in any case, the earlier date of termination in whole of the Commitments pursuant to Section 2.06 or Section 6.01 hereof.”

(f)   Section 2.05(a) of the Existing Credit Agreement is hereby amended by replacing the table set forth therein with the below table:

 

BASIS FOR PRICING    LEVEL 1    LEVEL 2    LEVEL 3    LEVEL 4
   LEVEL 5
  

Reference Ratings at

least A by S&P or

A2 by Moody’s

  

Reference Ratings

lower than Level 1 but at

least A-by S&P or

A3 by Moody’s

  

Reference Ratings

lower than Level 2 but at

least BBB+ by S&P or

Baa1 by Moody’s

  

Reference Ratings

lower than Level 3 but at

least BBB by S&P or

Baa2 by Moody’s

  

Reference Ratings

lower than Level 4

Commitment Fee

   0.10%    0.125%    0.175%    0.225%    0.275%

(g)   Section 2.05(d) of the Existing Credit Agreement is hereby amended and restated in its entirety as follows:

(d)   The Borrower agrees to pay to each Fronting Bank, for its own account, certain fees payable by the Borrower in such amounts and payable on such terms as set forth in the Fee Letters or separately agreed upon between the Borrower and such Fronting Bank.

(h)   Section 2.19(a) of the Existing Credit Agreement is hereby amended by amending and restating the last sentence thereof in its entirety as follows:

“Following the Third Amendment Effective Date, the Borrower may request no more than two extensions pursuant to this Section 2.19.”


(i)   Section 5.03(e) of the Existing Credit Agreement is hereby amended by amending and restating the proviso thereof in its entirety as follows:

provided, however, that the Borrower may not use such proceeds in connection with any Hostile Acquisition.”

(j)   Schedule I to the Existing Credit Agreement is hereby amended and restated in its entirety as set forth on Schedule I hereto.

(k)   Schedule II to the Existing Credit Agreement is hereby amended and restated in its entirety as set forth on Schedule II hereto.

SECTION 3. Conditions to Effectiveness. This Amendment shall become effective as of the date first above written (the “Amendment Effective Date”) when, and only when, the following conditions have been satisfied (or waived by the Administrative Agent and the Lenders party hereto in their sole discretion):

(a)   The Administrative Agent shall have received, in immediately available funds, to the extent invoiced prior to the Amendment Effective Date, reimbursement or payment of all reasonable out-of-pocket costs and expenses of the Administrative Agent (including, but not limited to, the reasonable fees and expenses of counsel (including, but not limited to, one local counsel and any specialist counsel in each relevant jurisdiction) to the Administrative Agent) required to be reimbursed or paid by the Borrower hereunder or under any other Loan Document.

(b)   The Administrative Agent shall have received the following documents, each document being dated the date of receipt thereof by the Administrative Agent (which date shall be the same for all such documents, except as otherwise specified below), in form and substance satisfactory to the Administrative Agent:

(i)   either (A) counterparts of this Amendment duly executed by the Borrower, the Lenders, the Administrative Agent, and the Fronting Banks or (B) written evidence satisfactory to the Administrative Agent that such parties have signed counterparts of this Amendment;

(ii)   certified copies of (A) the resolutions of the Board of Directors of the Borrower approving this Amendment and the Credit Agreement and (B) all documents evidencing any other necessary corporate action with respect to this Amendment and the Credit Agreement;

(iii)   a certificate of the Secretary or an Assistant Secretary of the Borrower certifying (A) the names and true signatures of the officers of the Borrower authorized to sign this Amendment and the other documents to be delivered hereunder, (B) that attached thereto are true and correct copies of the Organizational Documents of the Borrower, in each case as in effect on such date, and (C) that true and correct copies of all governmental and regulatory authorizations and approvals required for the due execution, delivery and performance by the Borrower of this Amendment and the Credit Agreement


have previously been delivered to the Administrative Agent and remain in full force and effect on such date;

(iv)   a certificate of an Authorized Officer of the Borrower (the statements in which shall be true) certifying that, both before and after giving effect to this Amendment, (A) no event has occurred and is continuing that constitutes an Event of Default or an Unmatured Default with respect to the Borrower and (B) all representations and warranties of the Borrower contained in the Credit Agreement and each other Loan Document to which the Borrower is a party are true and correct in all material respects (or in the case of any representation or warranty already qualified by materiality, true and correct in all respects) on and as of the Amendment Effective Date, as though made on and as of such date (other than any such representation or warranty that by its terms refers to a specific date, in which case such representation and warranty shall be true and correct as of such specific date); and

(v)   an opinion of Morgan, Lewis & Bockius LLP, special counsel for the Borrower.

(c)   The Administrative Agent shall have received all documentation and information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including, without limitation, the Patriot Act and the Beneficial Ownership Regulation, to the extent such documentation or information is requested by the Administrative Agent on behalf of any Lender prior to the Amendment Effective Date.

SECTION 4. Representations and Warranties. The Borrower represents and warrants as follows:

(a)   Due Authorization. The execution, delivery and performance by it of this Amendment and each other Loan Document being executed and delivered in connection with this Amendment to which the Borrower is 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 members, as the case may be, other than such consents and approvals as have been duly obtained, given or accomplished.

(b)   No Violation, Etc. Neither the execution, delivery or performance by it of this Amendment, any other Loan Document being executed and delivered in connection with this Amendment to which it is a party, nor the consummation by it of the transactions contemplated hereby or thereby, nor compliance by it with the provisions hereof or thereof, nor the performance by it of the Credit Agreement, contravenes or will contravene, or results or will result in a breach of, any of the provisions of its Organizational Documents, any Applicable Law, or any indenture, mortgage, deed of trust, lease, license or any other agreement or instrument to which it or any of its Subsidiaries is party or by which its property or the property of any of its Subsidiaries 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 Subsidiaries, except to the extent such contravention or breach, or the creation or imposition of any such Lien, individually or in the aggregate, has not


had and would not reasonably be expected to have a Material Adverse Effect with respect to the Borrower.

(c)   Governmental Actions. No Governmental Action is or will be required in connection with (i) the execution, delivery or performance by it of, or the consummation by it of the transactions contemplated by, this Amendment or any other Loan Document being executed and delivered in connection with this Amendment to which it is, or is to become, a party, or (ii) the performance by it of the Credit Agreement.

(d)   Execution and Delivery. This Amendment and the other Loan Documents being executed and delivered in connection with this Amendment to which it is, or is to become, a party have been or will be (as the case may be) duly executed and delivered by it, and each of this Amendment and the Credit Agreement is, and upon execution and delivery thereof each such other Loan Document will be, the legal, valid and binding obligation of it enforceable against it in accordance with its terms, subject, however, solely with respect to this Amendment, the Credit Agreement and such other Loan Document, 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.

(e)   No Material Misstatements. The reports, financial statements and other written information furnished by or on behalf of the Borrower to the Administrative Agent, any Fronting Bank or any Lender pursuant to or in connection with this Amendment and the transactions contemplated hereby, when taken together with the Disclosure Documents, do not contain, when taken as a whole, any untrue statement of a material fact and do 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 made, not misleading in any material respect.

(f)   Litigation. There are no actions, suits or proceedings by or before any arbitrator or Governmental Authority pending against or, to the knowledge of the Borrower, threatened against the Borrower or any of its Subsidiaries that involve this Amendment, the Credit Agreement or any other Loan Document.

(g)   No Default. No Unmatured Default or Event of Default has occurred and is continuing or would occur as a result of (i) the execution, delivery or performance by the Borrower of this Amendment or any other Loan Document being executed and delivered in connection with this Amendment to which it is, or is to become, a party or (ii) the performance by the Borrower of the Credit Agreement.

(h)   Anti-Corruption Laws. No proceeds of any Borrowing have been used in violation of any Anti-Corruption Law.

SECTION 5. Reference to and Effect on the Credit Agreement and the Other Loan Documents.

(a)   Except as expressly amended hereby, all of the representations, warranties, terms, covenants and conditions of the Credit Agreement and the other Loan Documents shall remain in


full force and effect in accordance with their respective terms and are hereby in all respects ratified and confirmed. The amendments set forth herein shall be limited precisely as provided for herein and shall not be deemed to be a waiver of, release of, amendment of, consent to, departure from or modification of any term or provision of the Loan Documents or any other document or instrument referred to therein or of any transaction or further or future action on the part of the Borrower requiring the consent of the Administrative Agent, the Fronting Banks or the Lenders except to the extent specifically provided for herein. The Administrative Agent and the Lenders have not and shall not be deemed to have waived any of their respective rights and remedies against the Borrower for any existing or future Unmatured Default or Event of Default. The Administrative Agent, the Fronting Banks and the Lenders reserve the right to insist on strict compliance with the terms of the Credit Agreement and the other Loan Documents, and the Borrower expressly acknowledges such reservation of rights. Any future or additional amendment of any provision of the Credit Agreement or any other Loan Document shall be effective only if set forth in a writing separate and distinct from this Amendment and executed by the appropriate parties in accordance with the terms thereof.

(b)   Upon the effectiveness of this Amendment: (i) each reference in the Existing Credit Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the Existing Credit Agreement shall mean and be a reference to the Credit Agreement; and (ii) each reference in any other Loan Document to “the Credit Agreement”, “thereunder”, “thereof” or words of like import referring to the Existing Credit Agreement shall mean and be a reference to the Credit Agreement. This Amendment shall constitute a “Loan Document” for all purposes under the Credit Agreement and the other Loan Documents.

(c)   The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a release or waiver of any right, power or remedy of the Lenders, the Administrative Agent or the Fronting Banks under the Existing Credit Agreement or any other Loan Document, nor constitute a release or a waiver of any provision of the Existing Credit Agreement or any other Loan Document. The execution, delivery and effectiveness of this Amendment shall not constitute a novation of any amount owing under the Existing Credit Agreement or any other Loan Document and all amounts owing in respect of principal, interest, fees and other amounts pursuant to the Existing Credit Agreement and the other Loan Documents shall, to the extent not paid on or prior to the Amendment Effective Date, continue to be owing under the Credit Agreement or such other Loan Documents until paid in accordance therewith.

SECTION 6. Costs and Expenses. The Borrower agrees to pay on demand all reasonable out-of-pocket costs and expenses incurred by the Administrative Agent, each Fronting Bank and each Lender in connection with the preparation, execution, delivery, syndication and administration of this Amendment and the other documents to be delivered hereunder, including, without limitation, the reasonable fees and out-of-pocket expenses of counsel (including, but not limited to, one local counsel and any specialist counsel in each relevant jurisdiction) for the Administrative Agent, the Fronting Banks and the Lenders with respect thereto and with respect to advising the Administrative Agent, the Fronting Banks and each Lender as to their rights and responsibilities under this Amendment. The Borrower further


agrees to pay on demand all reasonable out-of-pocket costs and expenses, if any (including, without limitation, reasonable fees and expenses of counsel), incurred by the Administrative Agent, the Fronting Banks and the Lenders in connection with the enforcement (whether through negotiations, legal proceedings or otherwise) of this Amendment, the Credit Agreement and the other documents to be delivered hereunder, including, without limitation, counsel fees and expenses in connection with the enforcement of rights under this Section. The Borrower acknowledges and agrees that, pursuant to Section 8.05(a) of the Credit Agreement, it is required to pay, among other costs and expenses set forth therein, the reasonable fees and expenses of counsel for the Administrative Agent (including, but not limited to, any local counsel and any specialist counsel for the Administrative Agent), in accordance with the terms thereof.

SECTION 7. Counterparts. This Amendment may be executed in any number of counterparts (and by different parties hereto in separate counterparts), each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same instrument. Delivery of an executed signature page to this Amendment by facsimile or other electronic transmission (including, without limitation, by Adobe portable document format file (also known as a “PDF” file)) shall be as effective as delivery of a manually signed counterpart of this Amendment. The words “execution,” “executed,” “signed,” “signature,” “delivery,” and words of like import in or relating to this Amendment or any document to be signed in connection with this Amendment and the transactions contemplated hereby shall be deemed to include electronic signatures, deliveries or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act; provided, that nothing herein shall require the Administrative Agent to accept electronic signatures in any form or format without its prior written consent; provided, further, that, without limiting the foregoing, upon the request of the Administrative Agent, any electronic signature shall be promptly followed by such manually executed counterpart.

SECTION 8. Governing Law. This Amendment shall be governed by, and construed in accordance with, the laws of the State of New York.

SECTION 9. Miscellaneous. This Amendment shall be subject to the provisions of Sections 8.05, 8.10, 8.11 and 8.12 of the Credit Agreement, each of which is incorporated by reference herein, mutatis mutandis.

SECTION 10. Release. In consideration of, among other things, the Administrative Agent’s, the Fronting Banks’ and the Lenders’ execution and delivery of this Amendment, the Borrower, on behalf of itself and its agents, representatives, officers, directors, advisors, employees, subsidiaries, affiliates, successors and assigns (collectively, “Releasors”), hereby forever agrees and covenants not to sue or prosecute against any Releasee (as hereinafter defined) and hereby forever waives, releases and discharges, to the fullest extent permitted by


law, each Releasee from any and all claims (including, without limitation, crossclaims, counterclaims, rights of set-off and recoupment), actions, causes of action, suits, debts, liens, warranties, damages and consequential damages, judgments, costs or expenses whatsoever, that such Releasor now has or hereafter may have, of whatsoever nature and kind, whether now existing or hereafter arising, whether arising at law or in equity (collectively, the “Claims”), against any or all of the Credit Parties in any capacity and their respective affiliates, subsidiaries, shareholders and “controlling persons” (within the meaning of the federal securities laws), and their respective successors and assigns and each and all of the officers, directors, employees, agents, attorneys, advisors and other representatives of each of the foregoing (collectively, the “Releasees”), based in whole or in part on facts existing on or before the Amendment Effective Date, that relate to, arise out of or otherwise are in connection with: (i) any or all of the Loan Documents or transactions contemplated thereby or any actions or omissions in connection therewith; or (ii) any aspect of the dealings or relationships between or among the Borrower, on the one hand, and any or all of the Credit Parties, on the other hand, relating to any or all of the documents, transactions, actions or omissions referenced in clause (i) hereof. The receipt by the Borrower of any Advances or other financial accommodations made by any Credit Party after the date hereof shall constitute a ratification, adoption, and confirmation by such party of the foregoing general release of all Claims against the Releasees that are based in whole or in part on facts existing on or prior to the date of receipt of any such Advances or other financial accommodations. In entering into this Amendment, the Borrower consulted with, and has been represented by, legal counsel and expressly disclaims any reliance on any representations, acts or omissions by any of the Releasees and hereby agrees and acknowledges that the validity and effectiveness of the releases set forth above do not depend in any way on any such representations, acts and/or omissions or the accuracy, completeness or validity thereof. The provisions of this Section 10 shall survive the termination of this Amendment, the Credit Agreement, the other Loan Documents and payment in full of the Advances.

[remainder of page intentionally left blank; signature pages follow]


IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized, as of the date first above written.

 

JERSEY CENTRAL POWER & LIGHT COMPANY
By:  

/s/ Weizhong Wang

Name: Weizhong Wang
Title: Treasurer

Signature Page to Amendment No. 3 to Credit Agreement (New Jersey)


MIZUHO BANK, LTD.,
as Administrative Agent, Fronting Bank, Lender and Increasing Lender
By:  

/s/ Edward Sacks

Name:   Edward Sacks
Title:   Managing Director

COBANK, ACB,

as a Lender

By:  

/s/ David B. Willis

Name:   David B. Willis
Title:   Managing Director
JPMORGAN CHASE BANK, N.A., as a Lender and as a Fronting Bank
By:  

/s/ Khawaja Tariq

Name:   Khawaja Tariq
Title:   Vice President
CITIBANK, N.A., as a Lender and as a Fronting Bank
By:  

/s/ Richard Rivera

Name:   Richard Rivera
Title:   Vice President

PNC BANK, NATIONAL ASSOCIATION,

as a Lender and as Fronting Bank

By:  

/s/ Anna Bartholomew

Name:   Anne Bartholomew
Title:   Vice President

BARCLAYS BANK PLC,

as a Lender and as a

 

Signature Page to Amendment No. 3 to Credit Agreement (New Jersey)


Fronting Bank
By:  

/s/ Sydney G. Dennis

Name:   Sydney G. Dennis
Title:   Vice President

BANK OF AMERICA, N.A.,

as a Lender and as a Fronting Bank

By:  

/s/ John M. Eyerman

Name:   John M. Eyerman
Title:   Director

MORGAN STANLEY BANK, N.A.,

as a Lender

By:  

/s/ Michael King

Name:   Michael King
Title:   Authorized Signatory

MUFG BANK, LTD.,

as a Lender and as a Fronting Bank

By:  

/s/ Matthew Bly

Name:   Matthew Bly
Title:   Director

THE BANK OF NOVA SCOTIA,

as a Lender and as a Fronting Bank

By:  

/s/ David Dewar

Name:   David Dewar
Title:   Director
ROYAL BANK OF CANADA, as a Lender
By:  

/s/ Meg Donnelly

Name:   Meg Donnelly
Title:   Authorized Signatory


WELLS FARGO BANK, NATIONAL
ASSOCIATION, as a Lender and as a Fronting Bank
By:  

/s/ Patrick Engel

Name:   Patrick Engel
Title:   Managing Director
CREDIT AGRICOLE CORPORATE AND

INVESTMENT BANK,

as a Lender

By:  

/s/ Andrew Sidford

Name:   Andrew Sidford
Title:   Managing Director
By:  

/s/ Gordon Yip

Name:   Gordon Yip
Title:   Director
CANADIAN IMPERIAL BANK OF COMMERCE, NEW YORK BRANCH, as a Lender
By:  

/s/ Amit Vasani

Name:   Amit Vasani
Title:   Authorized Signatory

KEYBANK NATIONAL ASSOCIATION,

as a Lender

By:  

/s/ Renee M. Bonnell

Name:   Renee M. Bonnell
Title:   Senior Vice President
SUMITOMO MITSUI BANKING CORPORATION,
as a Lender


By:  

/s/ Alkesh Nanavaty

Name:   Alkesh Nanavaty
Title:   Executive Director

 

TD BANK, N.A., as a Lender
By:  

/s/ M. Bernadette Collins

Name:   Bernadette Collins
Title:   Senior Vice President
TRUIST BANK, as a Lender
By:  

/s/ Catherine Strickland

Name:   Catherine Strickland
Title:   Vice President

U.S. BANK NATIONAL ASSOCIATION,

as a Lender

By:  

/s/ Michael E. Temnick

Name:   Michael E. Temnick
Title:   Senior Vice President

THE BANK OF NEW YORK MELLON,

as a Lender

By:  

/s/ Molly H. Ross

Name:   Molly H. Ross
Title:   Director

THE HUNTINGTON NATIONAL BANK,

as a Lender

By:  

/s/ Nolan Woodbury

Name:   Nolan Woodbury
Title:   Assistant Vice President

 

FIRST NATIONAL BANK OF PENNSYLVANIA, as a Lender


By:  

/s/ Paul Wargo

Name:   Paul Wargo
Title:   Commercial RM


SCHEDULE I

List of Commitments and Lending Offices

 

Lender

  

Commitment

Amount

  

Lending Office

CoBank, ACB    $59,101,851.85   

6340 S. Fiddlers Green Circle

Greenwood Village, CO 80111

Attn: Loan Administration

 

Contact: Beth Johnson

Phone: (303) 740-4347

Email: loanadminnotices@cobank.com

loanadmin@cobank.com

JPMorgan Chase Bank, N.A.    $40,747,392.87   

GR. FLR., 1ST- 6TH FLR., PLATINA BLOCK-3,

KODBISANHAL, FLR. 04

Bengaluru, IN-KA, 560103, India

 

Contact: Vithal Giri

Phone: (+91-80) 67905186 ext. 75186

Email: vithal.giri@jpmorgan.com

Citibank, N.A.    $40,747,392.87   

388 Greenwich St.

New York, NY 10013

 

Contact: Ashwani Khubani

Phone: (212) 816-3690

Email: ashwani.khubani@citi.com


Mizuho Bank, Ltd.    $37,959,131.87   

1271 Avenue of the Americas

New York, NY 10020

 

Contact: Erik Kildal-Brandt; Leo Pau

Phone: (212) 282-4089; (212) 282-3418

Email: Erik.Kildal-Brandt@mizuhogroup.com; leo.pau@mizuhogroup.com; LAU_MGS@mizuhogroup.com

PNC Bank, National Association    $37,959,131.88   

300 Fifth Avenue

Pittsburgh, PA 15222

 

Contact: Montreal Phillips, Loan Support Analyst

Phone: (440) 546-9431

Email: Montreal.Phillips@pnc.com

Barclays Bank PLC    $37,959,131.88   

745 Seventh Avenue, 8th Floor

New York, NY 10019

 

Contact: Oksana Shtogrin

Phone: (212) 526 3441

Email: Oksana.shtogrin@barclays.com


Bank of America, N.A.    $37,959,131.88   

Bank of America Tower – Charlotte

NC1-030-24-02

620 S Tryon St

Charlotte, NC 2825

 

Contact: Holli Balzer

Phone: (704) 302-7836

Email: holli.deyerle@bofa.com

Morgan Stanley Bank, N.A.    $37,959,131.88   

1300 Thames Street Wharf, 4th Floor

Baltimore, MD 21231

 

Contact: Morgan Stanley Loan Servicing

Phone: (443) 627-6648

Email: msloanservicing@morganstanley.com

MUFG Bank, Ltd.    $37,959,131.88   

1251 Avenue of the Americas

New York, NY 10020-1104

 

Contact: Nadia Sleiman

Phone: (212) 782-6974

Email: CCD-docunit@us.mufg.jp

The Bank of Nova Scotia    $37,959,131.88   

250 Vesey Street, 23rd floor

New York, NY 10281

 

Contact: Sandy Dewar

Phone: (917) 439-2391

Email: sandy.dewar@scotiabank.com


Royal Bank of Canada    $37,959,131.88   

3 World Financial Center

200 Vesey St

New York, NY 10281

 

Contact: Frank Lambrinos

Phone: (212) 858-7374

Email: frank.lambrinos@rbccm.com

Wells Fargo Bank, National Association    $37,959,131.88   

550 S Tryon Street, 11th Floor

Charlotte, NC 28202

 

Contact: Patrick Engel

Phone: (704) 374-2385

Email: Patrick.D.Engel@wellsfargo.com

Credit Agricole Corporate and Investment Bank    $33,670,731.71   

1100 Louisiana St. Ste 4750

Houston, TX 77002

 

Contact: Dixon Schultz

Phone: (713) 890-8607

Email: dixon.schultz@ca-cib.com

Canadian Imperial Bank of Commerce, New York Branch    $29,863,479.41   

300 Madison Ave

New York, NY 10017

 

Contact: Anju Abraham

Phone: (212) 856-3769

Email: Anju.Abraham@cibc.com


KeyBank National Association    $29,863,479.41   

127 Public Square

Cleveland, OH 44114

 

Contact: Renee Bonnell

Phone: (216) 689-7729

Email: renee.bonnell@key.com KAS_servicing@keybank.com

Sumitomo Mitsui Banking Corporation    $29,863,479.41   

277 Park Avenue

New York, NY 10172

 

Contact: Emily Estevez

Phone: (212) 224-4177

Email: eestevez@smbc-Lf.com

TD Bank, N.A.    $29,863,479.41   

222 Bay Street, 15th Floor

Toronto, ON M5K 1A2

 

Contact: Diana Macecevic

Phone: (416) 350-9135

Email: TDBNANotices@tdsecurities.com

Truist Bank    $29,863,479.41   

3333 Peachtree Road NE

3rd Floor

Atlanta, GA 30326

 

Contact: Jackie Johnson

Email: TeammateA.gaccs.rightfax@suntrust.com

U.S. Bank National Association    $29,863,479.41   

400 City Center

Oshkosh, WI 54901

 

Contact: CLS Syndication Services

Phone: 920-237-7601

Email: CLSSyndicationServicesteam@usbank.com


The Bank of New York Mellon    $21,517,826.93   

500 Ross Street, Suite 154-0850

Pittsburgh, PA 15262-001

 

Contact: CBLA2

Phone: (315) 765-4822

Email: CBLA2@bny.com & BNYM@bnymobsnotices.com

The Huntington National Bank    $21,517,826.93   

41 South High St.

HCO520

Columbus, OH 43287

 

Contact: Debbie Cabungcal

Phone: (614) 480-1283

Email: Debbie.cabungcal@huntington.com

First National Bank of Pennsylvania    $11,883,913.47   

12 Federal Street

One Northshore Ctr., Suite 500

Pittsburgh PA 15212

 

Contact: Paul Wargo

Phone: (412) 445-1981

Email: wargop@fnb-corp.com

TOTAL    $750,000,000.00   


SCHEDULE II

List of L/C Fronting Bank Commitments

 

Fronting Bank

  

Fronting Bank Address

  

L/C Fronting Bank

Commitment

PNC Bank, National Association   

300 Fifth Avenue

Pittsburgh, PA 15222

Attention: Montreal Phillips, Loan Support Analyst

Phone: (440) 546-9431

   $35,000,000
Wells Fargo Bank, National Association   

550 S Tryon Street, 11th Floor

Charlotte, NC 28202

 

Contact: Patrick Engel

Phone: (704) 374-2385

Email: Patrick.D.Engel@wellsfargo.com

   $20,000,000
Mizuho Bank, Ltd.   

1271 Avenue of the Americas

New York, NY 10020

 

Contact: Erik Kildal-Brandt; Leo Pau

Phone: (212) 282-4089; (212) 282-3418

Email: Erik.Kildal-Brandt@mizuhogroup.com; leo.pau@mizuhogroup.com; LAU_MGS@mizuhogroup.com

   $15,000,000
Barclays Bank PLC   

745 Seventh Avenue, 8th Floor

New York, NY 10019

 

Attention: Nnamdi Otudoh

Phone: 212 526 8527

Email: xrabdmlcsupport@barclays.com

   $15,000,000
Bank of America, N.A.   

1 Fleet Way

Scranton, PA 18507

Attention: Scranton Standby

   $5,000,000


JPMorgan Chase Bank, N.A.   

10410 Highland Manor Drive-Floor 3, Tampa, FL 33610-9128

Attention: Global Trade Services

Phone: 800-634-1969

Email: GTS.Client.Services@jpmchase.com

   Solely with respect to the Existing Letters of Credit set forth on Schedule III

Exhibit 10.5

SERVICE AGREEMENT

This Service Agreement (“Agreement”) is entered into as of the 1st day of January, 2024, by and between each of the associate companies listed on the signature page hereto (each a “Client Company” and collectively the “Client Companies”), and FirstEnergy Service Company (“Service Company”), an Ohio corporation.

WHEREAS, Service Company is a direct wholly-owned subsidiary of FirstEnergy Corp. (“FirstEnergy”);

WHEREAS, Service Company provides corporate, administrative, management and other services to FirstEnergy and the Client Companies; and

WHEREAS, Client Company desires to purchase such corporate, administrative, management and other services from Service Company as Client Company may request or require in accordance with this Agreement and as required by the laws, rules, regulations, judgement, and orders of any federal or state regulatory body whose approval and regulation is, pursuant to the laws of said jurisdiction, necessary and a legal prerequisite to Client Company’s operations to accomplish Client Company’s business purpose (collectively, “Law”);

NOW, THEREFORE, in consideration of the mutual covenants contained herein and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

 

1.

DESCRIPTION AND PROVISION OF SERVICES.

(a) Service Company shall perform such corporate, administrative, management and other services for Client Company (the “Basic Operating Services”), including but not limited to, executive services, accounting and finance, internal auditing, risk management, human resources, corporate affairs, corporate communications, information technology, policy and compliance, records management, and legal services. Service Company shall provide such Basic Operating Services to Client Company until this Agreement terminates.

(b) In addition to Basic Operating Services, Service Company shall provide to Client Company such services as Client Company deems necessary to achieve Client Company’s business purpose or as required by Law (the “Additional Services”, and together with Basic Operating Services, the “Services”). Additional Services include but are not limited to, operations management, construction, maintenance, asset oversight, customer service, rates and regulatory affairs, environmental, corporate real estate, strategic planning and operations, flight operations, performance management, business development, and investment management. Service Company


shall provide such Additional Services until such time as Client Company indicates otherwise by written notice.

(c) Exhibit A hereto lists and describes all Services that are available from Service Company, as will be reviewed annually and updated as required by Law or when otherwise deemed appropriate by the parties hereto.

 

2.

PERSONNEL.

Service Company will employ such executive officers, accountants, financial advisers, technical advisers, attorneys and other persons with the qualifications to provide the Services, as appropriate and necessary. Service Company may, at its discretion, also arrange for the services of nonaffiliated experts, consultants, and attorneys in connection with the performance of any of the Services provided under this Agreement.

 

3.

COMPENSATION AND ALLOCATION.

 

  (A)

COMPENSATION.

As and to the extent permitted by Law,

(i) any Services provided by Service Company pursuant to this Agreement shall be at cost;

(ii) the costs for Services rendered by Service Company shall cover direct and indirect costs, plus any expenses and fees incurred by Service Company to provide such Services to Client Company (collectively, “Costs”); and

(iii) Client Company shall pay such Costs as appropriate.

 

  (B)

COST ALLOCATION METHODOLOGY.

The Costs of Services provided by Service Company pursuant to this Agreement shall be directly assigned, distributed, or allocated by activity, project, program, work order or other appropriate means, as follows:

(i) a direct charge, whereby Costs are assigned to the Client Company directly benefiting from the Service provided; and/or

(ii) an indirect charge, whereby the appropriate share of the Costs of Services provided by Service Company that are not directly charged to a Client Company will be allocated among Client Companies by utilizing the method that most accurately distributes such Costs. Applicable cost allocation factors, which are included in FirstEnergy’s cost allocation manual, will be reviewed annually and updated as required by Law or when otherwise deemed appropriate by the parties hereto.

 

2


4.

BILLING AND PAYMENT.

Billing and payment for Services provided by Service Company shall be by making appropriate accounting entries on the books of Client Company and Service Company. Monthly reports provided to Client Company will include details of Costs associated with Services provided by Service Company. Financial settlement for Services provided by Service Company will be made on a monthly basis, with billing to occur as soon as practicable after the close of the month, and financial settlement or accounting entries completed within thirty (30) days of billing. Any amount remaining unpaid by Client Company after thirty (30) days following billing shall bear interest thereon from the due date of billing until financial settlement at a rate equal to the prime rate on the due date.

 

5.

APPLICATION OF LAW.

This Agreement shall be subject to the approval of any state electric utility regulatory commission whose approval is, by the laws of the federal government or said state, a legal prerequisite to the execution and delivery or the performance of this Agreement.

 

6.

TERM AND TERMINATION.

 

  (A)

INITIAL TERM.

This Agreement shall commence as of the date first indicated above and shall continue thereafter for a period of five (5) years (the “Initial Term”), unless sooner terminated pursuant to this Section 6.

 

  (B)

RENEWAL TERM.

Upon expiration of the Initial Term, this Agreement shall automatically renew for successive five (5)-year terms unless either party provides written notice of nonrenewal no later than three hundred and sixty-five (365) days prior to the end of the then-current term (each a “Renewal Term” and together with the Initial Term, the “Term”). If the Term is renewed for one or more Renewal Term, the terms and conditions of this Agreement during each Renewal Term shall be the same as the terms and conditions in effect immediately prior to such renewal. If either party provides timely notice of nonrenewal, this Agreement shall terminate on the expiration of the then-current Term, unless sooner terminated in this Section 6.

 

  (C)

VOLUNTARY TERMINATION.

Any party to this Agreement may terminate this Agreement by providing one hundred eighty (180) days written notice of such termination to the other party.

 

  (D)

TERMINATION IN COMPLIANCE WITH LAW.

This Agreement is subject to termination or modification at any time to the extent its performance may conflict with any rule, regulation, requirement, or order of the state or federal electric utility regulatory commission with jurisdiction over the Client Company.

 

3


  (E)

AUTOMATIC TERMINATION.

This Agreement shall automatically terminate upon Client Company (i) ceasing to be an affiliate of Service Company; (ii) becoming insolvent or admitting its inability to pay its debt obligations as they come due; (iii) becoming subject, voluntarily or involuntarily, to any proceeding under any bankruptcy or insolvency law, which is not stayed within ten (10) business days or is not dismissed or vacated within thirty (30) business days after filing; (iv) being dissolved or liquidated or taking any corporate action for such purpose; (v) making a general assignment for the benefit of creditors; or (vi) having a receiver, trustee, custodian, or similar agent appointed by order of any court of competent jurisdiction to take charge of or sell any material portion of its property or business. In the event of a termination of this Agreement pursuant to this Section 6(E), there shall be a transition period not to exceed ninety (90) days for which the Service Company will continue to provide Services at cost to Client Company.

 

7.

GENERAL.

 

  (A)

ENTIRE AGREEMENT.

This Agreement, together with its exhibits, constitutes the entire understanding and agreement of the parties with respect to its subject matter, and effective upon the execution of this Agreement by the respective parties hereof, any and all prior agreements, understandings or representations with respect to this subject matter are hereby terminated and canceled in their entirety and are of no further force and effect, except to the extent transactions thereunder have taken place prior to such effective date, in which case such agreements will govern the terms of such transactions.

 

  (B)

ASSIGNMENT AND BINDING EFFECT.

No assignment of this Agreement or a party’s rights, interests or obligations hereunder may be made without the other party’s written consent, which shall not be unreasonably withheld, delayed, or conditioned. This Agreement shall inure to the benefit of and shall be binding upon the parties and their respective successors and assigns.

 

  (C)

NOTICE.

Where written notice is required by this Agreement, all notices, consents, certificates, or other communications hereunder shall be in writing and shall be deemed given to the persons and at the addresses identified below (or to such other person and address as a party may give in a notice given in accordance with the provisions hereof) only as follows: (i) if given by personal delivery, upon such personal delivery, (ii) if sent for next day delivery by United States registered, certified or express mail, or overnight delivery service, on the date of delivery as confirmed by written confirmation of delivery, or (iii) if sent by electronic mail, upon electronic confirmation of receipt, except that if such confirmation occurs on a day that is not a business day, then such notice or other communication will not be deemed effective or given until the next succeeding business day. Notices sent in any other manner will not be effective.

 

4


To Client Company:   c/o President

76 South Main St.

Akron, OH 44308

To Service Company:   c/o Vice President and Controller

76 South Main St.

Akron, OH 44308

jlisowski@firstenergycorp.com

 

  (D)

EXTENSION OF TIME; WAIVER.

A party may (i) extend the time for the performance of any of the obligations of the other party under this Agreement, and/or (ii) waive compliance with any of the agreements or conditions for the other party’s benefit contained herein. Any such extension or waiver will be valid only if set forth in a writing signed by the acting party. No waiver by a party of any default, misrepresentation, or breach hereunder, whether intentional or not, may be deemed to extend to any prior or subsequent default, misrepresentation, or breach hereunder or affect in any way any rights arising because of any prior or subsequent occurrence. No failure or delay of a party to exercise any right or remedy under this Agreement will operate as a waiver thereof, and no single or partial exercise of any right or remedy will preclude any other or further exercise of the same, or of any other, right or remedy.

 

  (E)

GOVERNING LAW.

This Agreement shall be governed by and construed in accordance with the laws of the State of Ohio, without regard to its conflict of law provisions.

 

  (F)

HEADINGS.

The headings contained in this Agreement are inserted for convenience only and will not affect in any way the meaning or interpretation of this Agreement.

 

  (G)

SEVERABILITY.

The provisions of this Agreement will be deemed severable, and the invalidity or unenforceability of any provision will not affect the validity or enforceability of the other provisions hereof.

 

  (H)

MODIFICATION.

This Agreement may not be amended or modified except by a writing signed by each of Service Company and Client Company.

 

  (I)

COUNTERPARTS.

This Agreement may be executed in two or more counterparts, each of which will be deemed an original but all of which together will constitute one and the same instrument. This Agreement will become effective when one or more counterparts have been signed by each party

 

5


and delivered to the other party, it being understood that the parties need not sign the same counterpart. The exchange of copies of this Agreement and of executed signature pages by electronic mail in “portable document format” (“.pdf”) or by a combination of such means, will constitute effective execution and delivery of this Agreement as to the parties and may be used in lieu of an original Agreement for all purposes. Signatures of the parties transmitted by electronic mail or by .pdf shall be deemed to be original signatures for all purposes.

 

  (J)

THIRD PARTY BENEFICIARIES.

Nothing in this Agreement shall be deemed to create any right in any creditor or other person or entity not a party hereto. This Agreement shall not be construed in any respect to be a contract in whole or in part for the benefit of any third party.

 

6


IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed effective as of date first above written.

 

FirstEnergy Service Company
By:   /s/ Steven R. Staub
Name:   Steven R. Staub
Title:   Vice President and Treasurer

 

Service Company Signature to Service Company Agreement


IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed effective as of date first above written.

 

FirstEnergy Transmission, LLC
By:   /s/ Steven R. Staub
Name:   Steven R. Staub
Title:   Vice President and Treasurer

 

Client Company Signature to Service Company Agreement


IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed effective as of date first above written.

 

American Transmission Systems, Incorporated
By:   /s/ Steven R. Staub
Name:   Steven R. Staub
Title:   Vice President and Treasurer

 

Client Company Signature to Service Company Agreement


IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed effective as of date first above written.

 

Trans-Allegheny Interstate Line Company
By:   /s/ Steven R. Staub
Name:   Steven R. Staub
Title:   Vice President and Treasurer

 

Client Company Signature to Service Company Agreement


IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed effective as of date first above written.

 

Mid-Atlantic Interstate Transmission, LLC
By:   /s/ Steven R. Staub
Name:   Steven R. Staub
Title:   Vice President and Treasurer

 

Client Company Signature to Service Company Agreement


IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed effective as of date first above written.

 

PATH-Allegheny Land Acquisition
By:   /s/ Steven R. Staub
Name:   Steven R. Staub
Title:   Vice President and Treasurer

 

Client Company Signature to Service Company Agreement


IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed effective as of date first above written.

 

PATH-Allegheny Maryland Transmission Company, LLC
By:   /s/ Steven R. Staub
Name:   Steven R. Staub
Title:   Vice President and Treasurer

 

Client Company Signature to Service Company Agreement


IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed effective as of date first above written.

 

PATH Allegheny Transmission Company, LLC
By:   /s/ Steven R. Staub
Name:   Steven R. Staub
Title:   Vice President and Treasurer

 

Client Company Signature to Service Company Agreement


IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed effective as of date first above written.

 

PATH Allegheny Virginia Transmission Corporation
By:   /s/ Steven R. Staub
Name:   Steven R. Staub
Title:   Vice President and Treasurer

 

Client Company Signature to Service Company Agreement


IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed effective as of date first above written.

 

AYE Series, Potomac-Appalachian Transmission Highline, LLC
By:   /s/ Steven R. Staub
Name:   Steven R. Staub
Title:   Vice President and Treasurer

 

Client Company Signature to Service Company Agreement


EXHIBIT A

DESCRIPTION OF SERVICES

 

Service

  

Description

Executive Management    Provide strategic, financial, and operational leadership for all aspects of the business.
Accounting and Tax Support    Various accounting and tax services, including but not limited to: financial reporting; utility reporting and billing; property, general, regulatory, and tax accounting; accounts payable; accounting research; utility and transmission business services; finance transformation; tax planning; federal, state, and local tax and rates; and return on Service Company assets.
Investor Relations, Corporate Responsibility and Communications Support    Various services, including but not limited to: investor relations; corporate responsibility and rating agencies; internal, external, and customer communications; and graphic and document production.
Treasury Support    Various treasury services, including but not limited to: pension and investment management; business development; and capital markets, cash, and e-commerce.
Risk Support    Various risk-related services, including but not limited to: insurance and credit risk; enterprise risk management and risk control; and operational risk management.
Rates and Regulatory Affairs Support    Various regulatory services, including but not limited to: load forecasting and rate initiatives; distribution and transmission rates; and state and federal regulatory affairs.
Strategy, Planning & Business Performance Support    Various services, including but not limited to: business planning and performance; and long- term planning.
Supply Chain Support    Various supply chain services, including but not limited to: supply chain solutions/standards; material operations; and strategic category management.
Human Support Resources & Corporate Services    Various services, including but not limited to: talent management; total rewards; pension and other post-employment benefits; labor/employee relations and corporate safety; diversity, equity, and inclusion; and HR technology.


Service

  

Description

Corporate Services    Various services, including but not limited to: administrative services; real estate; and flight operations.
Legal Support    Various services, including but not limited to: legal services; records and information compliance; claims; and corporate secretary.
Ethics & Compliance Support    Perform investigations and risk assessments on compliance matters; provide policy management and compliance training and communication.
Internal Auditing Support    Provide risk-based independent assurance and consulting internal audit services; evaluate risk management, control, and governance processes, and administer the program for management’s testing of internal controls.
Corporate Affairs and Community Involvement Support    Coordinate community partnerships and employee volunteer opportunities; administer contributions for charitable, social and community welfare programs.
Compliance & Regulated Services Support    Various regulatory compliance services, including but not limited to: regulated commodity sourcing; FERC and RTO technical support; NERC compliance; FERC and state compliance reporting; regulated settlements.
External Affairs Support    Various external affairs services; including but not limited to: regional external affairs; state and federal government affairs; and legislative and regulatory policy and administration.
Information Technology & Corporate Security    Various IT and security services, including but not limited to: IT innovation and enablement; cyber security and transmission security operations center; compliance field support and physical security; and physical security compliance and technology.
Transmission Support    Various transmission-related services, including but not limited to: operations; planning and protection; substation services; and assets and records control.
Utility Operations    Various utility-related services, including but not limited to: state executive management; engineering services; distribution engineering and customer accounts support; work management operations; and operational strategy and alignment.

 

ii


Service

  

Description

Safety & Human Performance    Various services, including but not limited to: human performance and governance; safety data analytics, training and work practices, and operations.
Operations Support    Various services, including but not limited to: regional workforce development; metering and support systems; central electric lab and BETA lab support; work management and process improvement; distribution system operations; vegetation management; emergency preparedness; and ADMS/GIS Project.
Utility Services    Various services, including but not limited to: environmental support; generation services; and fuels and generation commercial operations.
Construction & Design Services    Various services, including but not limited to: transmission and substation design; transmission project management; portfolio management; and transmission program support.
Transformation Support    Various services, including but not limited to: emerging technology programs and strategy; and transformation office and program.
Competitive Products & Services    Various services, including but not limited to: FirstEnergy sales; and consumer products and marketing.
Customer Engagement    Various customer-related services, including but not limited to: national accounts and customer support; economic development; energy efficiency implementation, compliance and reporting; and customer analytics and reporting.
Customer Care    Various customer services, including but not limited to: customer contact centers, management, and care support; and revenue operations.
Customer Policy & Solutions    Various customer-related services, including but not limited to: FEP operations; and customer policy, advocacy, and solutions.

 

iii

Exhibit 10.6

SECOND REVISED, AMENDED AND RESTATED

MUTUAL ASSISTANCE AGREEMENT

This Second Revised, Amended and Restated Mutual Assistance Agreement (“Mutual Assistance Agreement” or “Agreement”) is entered by and among the companies listed on the signature page hereto (each a “Company” and collectively the “Companies”).

WHEREAS, each Company is a subsidiary of FirstEnergy Corp. (“FirstEnergy”);

WHEREAS, FirstEnergy Service Company (“Service Company”) provides corporate, administrative, management and other services within the FirstEnergy holding company system under Service Company agreements;

WHEREAS, from time to time, the Companies may request and/or may require non-power goods and services from one or more of their affiliated companies (individually, “Affiliate” and collectively, “Affiliates”) within the FirstEnergy holding company system; and

WHEREAS, from time to time various opportunities arise for the Companies to effect economies of scale and better utilization of available resources through transfers of a broader range of goods and services by, between and among the Companies, such that the Companies desire to enter into this Mutual Assistance Agreement, which supersedes any other agreements that may have existed between the parties hereto related to the matters covered by this Mutual Assistance Agreement, as applicable, for providing goods and services between them;

NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows:

 

1.

DESCRIPTION AND PROVISION OF SERVICES.

 

  (A)

SERVICES.

As used herein, “Services” refers to the list of services set forth in Attachment I hereto, as will be reviewed annually and updated as required by law or when otherwise deemed appropriate by the parties hereto.

 

  (B)

GOODS.

As used herein, “Goods” refers to goods incidental to the Services, electric transmission, distribution, office, administrative and general plant materials, supplies and equipment not “in place” or “installed”. As contemplated hereunder, transactions in Goods may be, but need not be, incidental to the provision of Services.


  (C)

REQUESTS FOR GOODS AND SERVICES.

From time to time each Company, in its sole discretion, may determine, request or, upon the request of another Company, furnish to such other Company, upon the terms and conditions set forth herein, one or more of the Goods and Services (including, in the case of Goods, those which at the time are inadequate, obsolete, unfit, or unnecessary or unadapted for use in the operations of the Company to which such request is made).

 

2.

PRICING.

(a) All transactions carried out pursuant hereto shall be affected as follows:

(i) if a regulated Company furnishes Goods or Services to a regulated Affiliate, then such furnishing Company shall be paid for such Goods or Services at cost in the case of the performance of Services (including all applicable direct and indirect costs of the furnishing Company), or cost less accumulated depreciation in the case of the sale of Goods (including all applicable direct and indirect costs of the furnishing Company);

(ii) if a regulated Company furnishes Goods or Services to Service Company, the Company shall be paid for such Goods or Services at the higher of (A) cost in the case of the performance of Services (including all applicable direct and indirect costs of the furnishing Company), or cost less depreciation in the case of the sale of Goods (including all applicable direct and indirect costs of the furnishing Company) or (B) market price; and

(iii) (A) if a regulated Company furnishes Goods or Services to a non-regulated Affiliate, then the furnishing Company shall be paid for such Goods or Services at a price that is the higher of cost or market price; or (B) if a non-regulated Company furnishes Goods or Services to a regulated Company, then the furnishing Company shall be paid for such Goods or Services at a price that is, in the case of Goods, the lesser of cost less accumulated depreciation or market price, and, in the case of Services not made generally available to the public by the non-regulated Company, the lesser of fully allocated cost and market price.

(b) Costs include, as applicable, wages and salaries of employees and related fringe benefit expenses (such as health care, life insurance, payroll taxes, pensions, and other employee welfare expenses), equipment, tooling, materials, subcontract costs, overheads, cost of capital, and taxes.

 

3.

BILLING, PAYMENT, AND ACCOUNTING.

(a) Costs are accumulated within the Companies’ integrated accounting system related to the Services and Goods provided hereunder in order to support the inter-company billing, which shall be performed monthly by Service Company. Details supporting each transaction are contained within the integrated accounting system, in accordance with applicable FirstEnergy procedures and processes, as amended from time to time.

 

2


(b) Direct charges to a Company shall be made so far as charges can be identified and related to the particular transactions involved without excessive effort or expense. Whenever possible, charges for Services rendered hereunder between the Companies, including personnel and non-personnel costs and expenses and related costs and expenses that relate to a particular requesting Company, shall be billed by the providing Company directly to such requesting Company. For those charges that cannot be direct billed either because the Services giving rise to those charges are provided to, or on behalf of, more than one recipient Company or the charges themselves are not easily susceptible to precise identification with a particular or specific transaction, the providing Company shall allocate such costs in accordance with an allocation method recommended and provided by Service Company from among its approved allocation methods, as such methods may be amended from time to time as required by law or when otherwise deemed appropriate by the parties to the Service Company agreements.

(c) To the extent a Company is required to pay cost for Goods or Services, as provided in Section 2 of this Agreement, such costs:

(i) shall not exceed a fair and equitable allocation of expenses (including the price paid for goods) plus reasonable compensation for necessary capital procured through the issuance of capital stock (or similar securities);

(ii) for Services rendered by a providing Company, shall be determined and calculated based upon the time records of employees, and records of related expenses, including out-of-pocket expenses that are billed at cost;

(iii) may include taxes, interest, other overhead, and compensation for the use of capital procured by the issuance of capital stock (or similar securities), which shall be fairly and equitably allocated. Interest on borrowed capital and compensation for the use of capital shall represent a reasonable return on only the amount of capital reasonably necessary for the performance of services or construction for, or the selling of goods to, customers for whom transactions are performed at cost. Such amount shall not include the cost of assignment of, or any capitalization of, any service, sales, or construction contract; and

(iv) shall not include any expense (including the price paid for goods) incurred in a transaction with an affiliated Company of the providing Company, to the extent that it exceeds the cost of such transaction to such affiliated Company.

(d) Billing and payment for Goods and Services provided shall be by making appropriate accounting entries on the books of the affected Companies. Financial settlement for Goods and Services provided will be made on a monthly basis, with billing to occur as soon as practicable after the close of the month, and financial settlement or accounting entries completed within thirty (30) days of billing. Any amount remaining unpaid by a Company after thirty (30) days following billing shall bear interest thereon from the due date of billing until financial settlement at a rate equal to the prime rate on the due date.

 

3


(e) FirstEnergy’s Internal Auditing Department shall periodically audit inter-Company transactions and billings hereunder. The audits shall also include an evaluation of the work order process in order to assure that transactions and charges have been properly authorized, calculated, allocated (if applicable), invoiced, recorded, paid and tracked.

(f) The supporting records and details related to all inter-company billings, including direct charges and allocated charges, and applicable allocation methods (in order to enable testing with respect to cost allocations to and from affiliates), will be retained for auditing purposes in accordance with applicable law and regulation.

 

4.

WAIVER.

To the extent that the Goods and Services are furnished at cost, or cost less depreciation, if any pursuant to Section 2, and to facilitate the undertaking of this Mutual Assistance Agreement, each Company expressly waives any right it may have to recover from the other Companies for any losses, damages, penalties, liabilities, claims or expenses (including damage to its own property or liabilities to third parties) for any cause whatsoever including without limitation the negligence of the other Companies, its employees and agents in connection with the provision of Goods and Services that are furnished at cost.

 

5.

TERM AND TERMINATION.

 

  (A)

INITIAL TERM.

This Agreement shall commence as of the date first indicated above and shall continue thereafter for a period of five (5) years (the “Initial Term”), unless sooner terminated pursuant to this Section 5.

 

  (B)

RENEWAL TERM.

Upon expiration of the Initial Term, this Agreement shall automatically renew for successive five (5)-year terms unless either party provides written notice of nonrenewal no later than three hundred and sixty-five (365) days prior to the end of the then-current term (each a “Renewal Term” and together with the Initial Term, the “Term”). If the Term is renewed for one or more Renewal Term, the terms and conditions of this Agreement during each Renewal Term shall be the same as the terms and conditions in effect immediately prior to such renewal. If either party provides timely notice of nonrenewal, this Agreement shall terminate on the expiration of the then-current Term, unless sooner terminated pursuant to this Section 5.

 

  (C)

VOLUNTARY TERMINATION.

Any party to this Agreement may terminate this Agreement by providing one hundred eighty (180) days written notice of such termination to the other parties.

 

  (D)

AUTOMATIC TERMINATION OF A PARTY.

 

4


A Company’s rights and obligations as a party to this Agreement shall automatically terminate upon such Company (i) ceasing to be an Affiliate; (ii) becoming insolvent or admitting its inability to pay its debt obligations as they come due; (iii) becoming subject, voluntarily or involuntarily, to any proceeding under any bankruptcy or insolvency law, which is not stayed within ten (10) business days or is not dismissed or vacated within thirty (30) business days after filing; (iv) being dissolved or liquidated or taking any corporate action for such purpose; (v) making a general assignment for the benefit of creditors; or (vi) having a receiver, trustee, custodian, or similar agent appointed by order of any court of competent jurisdiction to take charge of or sell any material portion of its property or business. In the event of a termination of a party to this Agreement pursuant to this Section 5(E), there shall be a transition period not to exceed ninety (90) days for which the providing Company will continue to provide Goods and Services at cost to its Affiliates.

 

6.

NOTICE.

Where written notice is required by this Mutual Assistance Agreement, all notices, consents, certificates, or other communications hereunder shall be in writing and shall be deemed given to the persons and at the addresses identified on the signature pages (or to such other person and address as a party may give in a notice given in accordance with the provisions hereof) only as follows: (i) if given by personal delivery, upon such personal delivery, (ii) if sent for next day delivery by United States registered, certified or express mail, or overnight delivery service, on the date of delivery as confirmed by written confirmation of delivery, or (iii) if sent by electronic mail, upon electronic confirmation of receipt, except that if such confirmation occurs on a day that is not a business day, then such notice or other communication will not be deemed effective or given until the next succeeding business day. Notices sent in any other manner will not be effective.

 

7.

MODIFICATION OR AMENDMENT.

No amendment, change or modification to this Mutual Assistance Agreement shall be valid unless made in writing and signed by the parties hereto, and upon the receipt of any required regulatory approvals as described in Section 8 below. This Agreement is subject to modification at any time to the extent its performance may conflict with any rule, regulation, requirement, or order of the state or federal electric utility regulatory commission with jurisdiction over a Company.

 

8.

REGULATORY APPROVALS, STATE LAW.

This Agreement, and any amendments thereto, shall be subject to the approval of any state electric utility regulatory commission whose approval is, by the laws of the federal government or said state, a legal prerequisite to the execution and delivery or the performance of this Agreement; and any transactions hereunder shall be in compliance with applicable state laws and regulations.

 

5


9.

GOVERNING LAW.

For purposes of providing Goods or Services hereunder, in the case of each transaction hereunder, this Mutual Assistance Agreement shall be governed by, and construed under, the laws of the state in which the principal offices of the Company providing the Goods or Services hereunder are located, without regard to its conflict of laws provisions.

 

10.

ASSIGNMENT.

This Mutual Assistance Agreement shall inure to the benefit and shall be binding upon the undersigned parties and their respective successors and assigns. No assignment of this Agreement or of any party’s rights, interests or obligations hereunder, may be made without the other Parties’ consent, which shall not be unreasonably withheld, delayed or conditioned.

 

11.

ENTIRE AGREEMENT.

This Agreement, together with its exhibits, constitutes the entire understanding and agreement of the parties with respect to its subject matter, and effective upon the execution of this Agreement by the respective parties hereof, any and all prior agreements, understandings or representations with respect to this subject matter are hereby terminated and canceled in their entirety and are of no further force and effect, except to the extent transactions thereunder have taken place prior to such effective date, in which case such agreements will govern the terms of such transactions.

 

12.

LEGAL RESPONSIBILITY.

Nothing herein contained shall render any party liable for the obligations of any other party hereunder and the rights, obligations and liabilities of the parties are several in accordance with their respective obligations, and not joint.

 

13.

HEADINGS.

The headings contained in this Mutual Assistance Agreement are inserted for convenience only and will not affect in any way the meaning or interpretation of this Mutual Assistance Agreement.

 

14.

SEVERABILITY.

The provisions of this Mutual Assistance Agreement will be deemed severable, and the invalidity or unenforceability of any provision will not affect the validity or enforceability of the other provisions hereof.

 

6


15.

COUNTERPARTS.

This Agreement may be executed in two or more counterparts, each of which will be deemed an original but all of which together will constitute one and the same instrument. This Agreement will become effective when one or more counterparts have been signed by each party and delivered to the other party, it being understood that the parties need not sign the same counterpart. The exchange of copies of this Agreement and of executed signature pages by electronic mail in “portable document format” (“.pdf”) or by a combination of such means, will constitute effective execution and delivery of this Agreement as to the parties and may be used in lieu of an original Agreement for all purposes. Signatures of the parties transmitted by electronic mail or by .pdf shall be deemed to be original signatures for all purposes.

 

16.

THIRD PARTY BENEFICIARIES.

Nothing in this Mutual Assistance Agreement shall be deemed to create any right in any creditor or other person or entity not a party hereto. This Mutual Assistance Agreement shall not be construed in any respect to be a contract in whole or in part for the benefit of any third party.

 

7


IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed effective as of January 1, 2024.

 

AMERICAN TRANSMISSION     By:   /s/ Steven R. Staub

SYSTEMS, INCORPORATED

   

Name:

 

Steven R. Staub

    Title:  

Vice President and Treasurer

 

   

Notice:

 
    c/o President
    76 South Main Street
    Akron, OH 44308

 

ALLEGHENY ENERGY SUPPLY     By:   /s/ Steven R. Staub

COMPANY, LLC

   

Name:

 

Steven R. Staub

    Title:  

Vice President and Treasurer

 

   

Notice:

 
    c/o President
    76 South Main Street
    Akron, OH 44308

 

FIRSTENERGY PENNSYLVANIA     By:   /s/ Steven R. Staub

ELECTRIC COMPANY

   

Name:

 

Steven R. Staub

    Title:  

Vice President and Treasurer

 

   

Notice:

 
   

c/o President

    76 South Main Street
    Akron, OH 44308

 

Signature Pages to Mutual Assistance Agreement


FIRSTENERGY PROPERTIES, INC.     By:   /s/ Steven R. Staub
   

Name:

 

Steven R. Staub

    Title:  

Vice President and Treasurer

 

   

Notice:

 
    c/o President
    76 South Main Street
    Akron, OH 44308

 

FIRSTENERGY SERVICE COMPANY

    By:   /s/ Steven R. Staub
   

Name:

 

Steven R. Staub

    Title:  

Vice President and Treasurer

 

   

Notice:

 
    c/o President
    76 South Main Street
    Akron, OH 44308

 

FIRSTENERGY TRANSMISSION, LLC

    By:   /s/ Steven R. Staub
   

Name:

 

Steven R. Staub

    Title:  

Vice President and Treasurer

 

   

Notice:

 
   

c/o President

    76 South Main Street
    Akron, OH 44308

 

Signature Pages to Mutual Assistance Agreement


GPU NUCLEAR, INC.

    By:   /s/ Steven R. Staub
   

Name:

 

Steven R. Staub

    Title:  

Vice President and Treasurer

 

   

Notice:

 
    c/o President
    76 South Main Street
    Akron, OH 44308

 

KEYSTONE APPALACHIAN

    By:   /s/ Steven R. Staub

TRANSMISSION COMPANY

   

Name:

 

Steven R. Staub

    Title:  

Vice President and Treasurer

 

   

Notice:

 
    c/o President
    76 South Main Street
    Akron, OH 44308

 

MID-ATLANTIC INTERSTATE

    By:   /s/ Steven R. Staub

TRANSMISSION, LLC

   

Name:

 

Steven R. Staub

    Title:  

Vice President and Treasurer

 

   

Notice:

 
   

c/o President

    76 South Main Street
    Akron, OH 44308

 

Signature Pages to Mutual Assistance Agreement


OHIO EDISON COMPANY

    By:   /s/ Steven R. Staub
   

Name:

 

Steven R. Staub

    Title:  

Vice President and Treasurer

 

   

Notice:

 
    c/o President
    76 South Main Street
    Akron, OH 44308

 

SUVON, LLC

    By:   /s/ Steven R. Staub
   

Name:

 

Steven R. Staub

    Title:  

Vice President and Treasurer

 

   

Notice:

 
    c/o President
    76 South Main Street
    Akron, OH 44308

 

THE CLEVELAND ELECTRIC

    By:   /s/ Steven R. Staub

ILLUMINATING COMPANY

   

Name:

 

Steven R. Staub

    Title:  

Vice President and Treasurer

 

   

Notice:

 
   

c/o President

    76 South Main Street
    Akron, OH 44308

 

Signature Pages to Mutual Assistance Agreement


THE TOLEDO EDISON COMPANY

    By:   /s/ Steven R. Staub
   

Name:

 

Steven R. Staub

    Title:  

Vice President and Treasurer

 

   

Notice:

 
    c/o President
    76 South Main Street
    Akron, OH 44308

 

TRANS-ALLEGHENY INTERSTATE

    By:   /s/ Steven R. Staub

LINE COMPANY

   

Name:

 

Steven R. Staub

    Title:  

Vice President and Treasurer

 

   

Notice:

 
    c/o President
    76 South Main Street
    Akron, OH 44308

 

Signature Pages to Mutual Assistance Agreement


IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed effective as of July 29, 2024.

 

MONONGAHELA POWER COMPANY

    By:   /s/ Steven R. Staub
   

Name:

 

Steven R. Staub

    Title:  

Vice President and Treasurer

 

   

Notice:

 
    c/o President
    76 South Main Street
    Akron, OH 44308

 

THE POTOMAC EDISON COMPANY

    By:   /s/ Steven R. Staub
   

Name:

 

Steven R. Staub

    Title:  

Vice President and Treasurer

 

   

Notice:

 
    c/o President
    76 South Main Street
    Akron, OH 44308

 

Signature Pages to Mutual Assistance Agreement


ATTACHMENT I

DESCRIPTION OF SERVICES

 

Service

  

Description

Engineering, Operating Maintenance and Management Services    Design, engineering, commission, construction, operation, restoration, corrective and preventative maintenance, repair, testing and nonpower services incidental to transmission and distribution facilities (including substation and line maintenance), generation facilities operations and maintenance (including personnel to perform such services), and asset management services.
Engineering Support Services    Lab testing, research and development, engineering and support services for transmission and support services for transmission and distribution, construction and maintenance facilities, functions, and activities.
Use of Space    Use or lease of office, warehouse, storage and other space or facilities, and associated warehousing and storage services.
Regional Support Services    Utilize utility operations level experience to provide regional support related to utility operations functions including in connection with providing Engineering Services, Human Resources Services, Facilities Services, Regional Claims Services, Labor Contract Negotiations Services, Area Managers, and related utility operations functions.
Storm Support Services    Utilize utility operations level experience to provide storm support services including storm-related construction and reconstruction, operations, and line restoration services to address storm-related conditions.
Environmental Services    Provide services and assistance related to identifying, managing, and remediating environmental threats or risks.
Safety & Human Performance    Advising and implementation of safety related training, practices, and policies.
Communications/Software Services    Services include pagers, cell phones, computers, radios, IPads, laptops, software, and hardware.

 

(i)


Service

  

Description

Meter Services    Provide services related to maintenance, operation, engineering, testing, and repair of meters and related equipment.
Transportation and Garage Services    Provide services related to transportation maintenance practices and support.
Forestry and Vegetation Management Services    Provide services related to forestry and vegetation management such as routine pruning, controlling, or removing of vegetation as required to maintain line reliability, maintain access, make repairs, or restore service.
Microfilming Services    Provide services related to microfilm storage and retrieval.
Records Retention and Storage    Provide services related to records storage, retrieval, and planning.
Reprographic Services    Provide services related to production printing, document imaging, and graphic services.
Remittance Processing    Provide services related to processing customer payments and depositing funds.
Transmission and Distribution Skills Training    Develop and facilitate technical and safety training for workers associated with distribution activities, including line, substation, meter, fleet, warehouse, field engineering, and dispatch. Provide support through equipment evaluation, training analyses, job assessments, and project coordination.

 

(ii)

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the use in this Registration Statement on Form S-4 of Jersey Central Power & Light Company of our report dated April 1, 2025, relating to the financial statements of Jersey Central Power & Light Company, which appears in this Registration Statement. We also consent to the reference to us under the heading “Experts” in such Registration Statement.

/s/ PricewaterhouseCoopers LLP

Cleveland, Ohio

April 1, 2025

Exhibit 24.1

REGISTRATION STATEMENT ON FORM S-4

POWER OF ATTORNEY

KNOW ALL BY THESE PRESENTS, that each of the undersigned directors and officers of Jersey Central Power & Light Company, a New Jersey corporation (the “Company”), hereby constitutes and appoints James A. Arcuri, Associate General Counsel, as the true and lawful attorney-in-fact, with full power of substitution and resubstitution, for each of the undersigned and in the name, place and stead of each of the undersigned, to sign and file with the Securities and Exchange Commission under the Securities Act of 1933 (the “Securities Act”) one or more Registration Statements on Form S-4 relating to the registration of senior notes of the Company, with any and all amendments, supplements and exhibits thereto, including pre-effective and post-effective amendments or supplements and Registration Statements filed pursuant to Rule 462(b) of the Securities Act, with full power and authority to do and perform any and all acts and things whatsoever required, necessary or desirable to be done in the premises, hereby ratifying and approving the act of said attorney and any such substitute.

This Power of Attorney may be executed in multiple counterparts, each of which shall be deemed an original with respect to the person executing it.

Executed as of this 1st day of April, 2025.

 

/s/ W. Douglas Mokoid     /s/ Tracy M. Ashton
W. Douglas Mokoid     Tracy M. Ashton
President and Director     Controller
(Principal Executive Officer)     (Principal Financial Officer)
/s/ Teresa Reed     /s/ Linda Bowden
Teresa Reed     Linda Bowden
Vice President, State Finance and Regulatory     Director
(Principal Financial Officer)    
/s/ John E. Harmon     /s/ A. Wade Smith
John E. Harmon     A. Wade Smith
Director     Director
/s/ Toby Thomas    
Toby Thomas    
Director    

Exhibit 25.1

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM T-1

 

 

STATEMENT OF ELIGIBILITY

UNDER THE TRUST INDENTURE ACT OF 1939

OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE

 

CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2)    [  ]

 

 

THE BANK OF NEW YORK MELLON

TRUST COMPANY, N.A.

(Exact name of trustee as specified in its charter)

 

 

 

  95-3571558
(Jurisdiction of incorporation
if not a U.S. national bank)
  (I.R.S. employer identification no.)

333 South Hope Street
Suite 2525

Los Angeles, California

  90071
(Address of principal executive offices)   (Zip code)

 

 

JERSEY CENTRAL POWER & LIGHT COMPANY

(Exact name of obligor as specified in its charter)

 

 

 

New Jersey    21-0485010
(State or other jurisdiction of
incorporation or organization)
   (I.R.S. employer
identification no.)
300 Madison Avenue
Morristown, New Jersey
   07962
(Address of principal executive offices)
   (Zip code)

 

 

5.100% Senior Notes due 2035

(Title of the indenture securities)

 

 

 


1.

General information. Furnish the following information as to the trustee:

 

  (a)

Name and address of each examining or supervising authority to which it is subject.

 

Name

  

Address

Comptroller of the Currency

United States Department of the Treasury

   Washington, DC 20219
Federal Reserve Bank    San Francisco, CA 94105
Federal Deposit Insurance Corporation    Washington, DC 20429

 

  (b)

Whether it is authorized to exercise corporate trust powers.

Yes.

 

2.

Affiliations with Obligor.

If the obligor is an affiliate of the trustee, describe each such affiliation.

None.

 

16.

List of Exhibits.

Exhibits identified in parentheses below, on file with the Commission, are incorporated herein by reference as an exhibit hereto, pursuant to Rule 7a-29 under the Trust Indenture Act of 1939 (the “Act”).

 

  1.

A copy of the articles of association of The Bank of New York Mellon Trust Company, N.A., formerly known as The Bank of New York Trust Company, N.A. (Exhibit 1 to Form T-1 filed with Registration Statement No. 333-121948 and Exhibit 1 to Form T-1 filed with Registration Statement No. 333-152875).

 

  2.

A copy of certificate of authority of the trustee to commence business. (Exhibit 2 to Form T-1 filed with Registration Statement No.333-121948).

 

  3.

A copy of the authorization of the trustee to exercise corporate trust powers (Exhibit 3 to Form T-1 filed with Registration Statement No.333-152875).

 

2


  4.

A copy of the existing by-laws of the trustee (Exhibit 4 to Form T-1 filed with Registration Statement No. 333-229762).

 

  6.

The consent of the trustee required by Section 321(b) of the Act (Exhibit 6 to Form T-1 filed with Registration Statement No. 333-152875).

 

  7.

A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or examining authority.

 

3


SIGNATURE

Pursuant to the requirements of the Act, the trustee, The Bank of New York Mellon Trust Company, N.A., a banking association organized and existing under the laws of the United States of America, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Jacksonville, and State of Florida, on the 28th day of March, 2025.

 

THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A.
By:   /s/  Jennifer L. Gillis
  Name: Jennifer L. Gillis
  Title:  Vice President

 

4


EXHIBIT 7

Consolidated Report of Condition of

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.

of 333 South Hope Street, Suite 2525, Los Angeles, CA 90071

At the close of business December 31, 2024, published in accordance with Federal regulatory authority instructions.

 

            Dollar amounts
in thousands
 
ASSETS      

Cash a balances due from depository institutions:

     

Noninterest-bearing balances and currency and coin

        30,948  

Interest-bearing balances

        200,909  

Securities:

     

Held-to-maturity securities

        0  

Available-for-sale debt securities

        98,676  

Equity securities with readily determinable fair values not held for trading

        0  

Federal funds sold and securities purchased under agreements to resell:

     

Federal funds sold in domestic offices

        0  

Securities purchased under agreements to resell

        0  

Loans and lease financing receivables:

     

Loans and leases held for sale

     0     

Loans and leases held for investment

     0     

LESS: Allowance for credit losses on loans and leases

     0     

Loans and leases held for investment, net of allowance

     0     

Trading assets

        0  

Premises and fixed assets (including right-of-use assets)

        9,955  

Other real estate owned

        0  

Investments in unconsolidated subsidiaries and associated companies

        0  

Direct and indirect investments in real estate ventures

        0  

Intangible assets

        856,313  

Other assets

        105,148  
     

 

 

 

Total assets

      $ 1,301,949  
     

 

 

 

 

1


LIABILITIES      

Deposits:

     

In domestic offices

        967  

Noninterest-bearing

     967     

Interest-bearing

     0     

Federal funds purchased and securities sold under agreements to repurchase:

     

Federal funds purchased in domestic offices

        0  

Securities sold under agreements to repurchase

        0  

Trading liabilities

        0  

Other borrowed money:

     

(includes mortgage indebtedness)

        0  

Not applicable

     

Not applicable

     

Subordinated notes and debentures

        0  

Other liabilities

        264,082  

Total liabilities

        265,049  

Not applicable

     
EQUITY CAPITAL      

Perpetual preferred stock and related surplus

        0  

Common stock

        1,000  

Surplus (exclude all surplus related to preferred stock)

        107,246  

Not available

     

Retained earnings

        928,635  

Accumulated other comprehensive income

        19  

Other equity capital components

        0  

Not available

     

Total bank equity capital

        1,036,900  

Noncontrolling (minority) interests in consolidated subsidiaries

        0  

Total equity capital

        1,036,900  
     

 

 

 

Total liabilities and equity capital

        1,301,949  
     

 

 

 

I, Shana Quinn, CFO of the above-named bank do hereby declare that the Reports of Condition and Income (including the supporting schedules) for this report date have been prepared in conformance with the instructions issued by the appropriate Federal regulatory authority and are true to the best of my knowledge and belief.

Shana Quinn    )    CFO

We, the undersigned directors (trustees), attest to the correctness of the Report of Condition (including the supporting schedules) for this report date and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the appropriate Federal regulatory authority and is true and correct.

Kevin C. Weeks, President         )

Cathleen Sokolowski, Managing Director  )  Directors (Trustees)

Jon M. Pocchia, Senior Director      ) 

 

2

Exhibit 99.1

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt as to the action to be taken, you should immediately consult your broker, bank manager, lawyer, accountant, investment advisor or other professional adviser.

LETTER OF TRANSMITTAL

Relating to

JERSEY CENTRAL POWER & LIGHT COMPANY

Offer to Exchange

up to $700,000,000 5.100% Senior Notes due 2035 that have been registered under the Securities Act of 1933, as amended (the “Securities Act”) for any and all of our outstanding unregistered $700,000,000 5.100% Senior Notes due due 2035

Pursuant to the Prospectus, dated    , 2025

 

 

The exchange offer will expire at 5:00 p.m., New York City time, on    , 2025, unless extended (such date and time, as they may be extended, the “expiration date”). We do not currently intend to extend the expiration date. Tenders of Outstanding Notes may be withdrawn at any time prior to the expiration date.

 

 

The exchange agent for the exchange offer is:

The Bank of New York Mellon Trust Company, N.A.

By Mail or in Person:

The Bank of New York Mellon Trust Company, N.A.

c/o The Bank of New York Mellon

Corporate Trust Reorg Unit

Pittsburgh, PA 15262

Attn: Meera Thillai

By Email

(for eligible institutions only):

ct_reorg_unit_inquiries@bnymellon.com

For Information and to Confirm by Telephone:

615-381-1655

Delivery of this Letter of Transmittal to an Address Other Than as Set Forth Above Will Not Constitute a Valid Delivery.

This document relates to the exchange offer made by Jersey Central Power & Light Company whereby we are offering $700,000,000 5.100% Senior Notes due 2035 (the “New Notes”) in exchange for an equal amount of outstanding $700,000,000 5.100% Senior Notes due 2035 the “Outstanding Notes”).

The exchange offer is described in the Prospectus, dated  , 2025 (as it may be amended or supplemented from time to time, the “Prospectus”) and in this Letter of Transmittal. All terms and conditions contained, or otherwise referred to, in the Prospectus are deemed to be incorporated in, and form a part of, this Letter of Transmittal. Therefore, you are urged to read carefully the Prospectus and the items referred to in the Prospectus. The terms and conditions contained in the Prospectus, together with the terms and conditions governing this Letter of Transmittal and the instructions herein, are collectively referred to as the “terms and conditions of the exchange offer.”


Upon the satisfaction or waiver of the conditions to the acceptance of Outstanding Notes set forth in the Prospectus under “The Exchange Offer—Conditions to the Exchange Offer,” we will accept for settlement Outstanding Notes that have been validly tendered (and not subsequently validly withdrawn). We will deliver the New Notes on a date (the “settlement date”) promptly after the expiration date.

This Letter of Transmittal is to be used by a holder of Outstanding Notes either if certificates representing Outstanding Notes are to be physically delivered herewith, or delivery of Outstanding Notes is to be made by book-entry transfer to the account maintained by U.S. Bank National Association (the “Exchange Agent”) at The Depository Trust Company (“DTC”) pursuant to the procedures set forth in the Prospectus under the caption “The Exchange Offer—Procedures for Tendering Outstanding Notes through Brokers and Banks” and an “agent’s message” is not delivered or being transmitted through ATOP (defined below) as described in the Prospectus under the caption “The Exchange Offer—Procedures for Brokers and Custodian Banks; DTC ATOP Account.”

Tenders by book-entry transfer may also be made by delivering an agent’s message in lieu of this Letter of Transmittal pursuant to DTC’s Automated Tender Offer Program (“ATOP”). See procedures set forth in the Prospectus under the caption “The Exchange Offer—Procedures for Brokers and Custodian Banks; DTC ATOP Account.” You should allow sufficient time for completion of the ATOP procedure with DTC if used for tendering your Outstanding Notes prior to the expiration date. By using the ATOP procedures to exchange Outstanding Notes, you will not be required to deliver an executed copy of this Letter of Transmittal to the Exchange Agent. However, you will be bound by its terms just as if you had signed it.

Delivery of documents to DTC does not constitute delivery to the Exchange Agent.

The term “holder” with respect to the exchange offer for Outstanding Notes means any person in whose name such Outstanding Notes are registered on the books of the registrar for the Outstanding Notes, any person who holds such Outstanding Notes and has obtained a properly completed bond power from the registered holder or any participant in the DTC system whose name appears on a security position listing as the holder of such Outstanding Notes and who desires to deliver such Outstanding Notes by book-entry transfer at DTC.

Please read the entire Letter of Transmittal and the Prospectus carefully before checking any box below. The instructions included with this Letter of Transmittal must be followed. Questions and requests for assistance or for additional copies of the Prospectus and this Letter of Transmittal may be directed to the Exchange Agent.

List below the Outstanding Notes tendered under this Letter of Transmittal. If the space below is inadequate, list the registered numbers and principal amounts on a separate signed schedule and affix the list to this Letter of Transmittal.

Please note: You do not need to complete the below if your Outstanding Notes are to be tendered by book-entry transfer and an agent’s message is delivered in lieu hereof pursuant to DTC’s ATOP. Please see the section captioned “The Exchange Offer—Procedures for Brokers and Custodian Banks; DTC ATOP Account” in the Prospectus.

 

2


DESCRIPTION OF OUTSTANDING NOTES TENDERED

Name(s) and Address(es) of
the DTC Participant(s) or
Registered Holder(s) Exactly
as Name(s) Appear(s) on
Certificates Representing
Outstanding Notes (Please
Fill In, If Blank)

  

Outstanding Note(s) Tendered

  

Registered Certificate
Number(s)*

  

Series

  

Aggregate Principal
Amount Represented by
Note(s)

  

Principal Amount
Tendered**

   TOTAL         

 

*

Need not be completed by book-entry holders

**

Unless otherwise indicated, any tendering holder of Outstanding Notes will be deemed to have tendered the entire aggregate principal amount represented by such Outstanding Notes. All tenders must be in minimum principal amounts of $2,000 and integral multiples of $1,000 in excess thereof

 

CHECK HERE IF TENDERED OUTSTANDING NOTES ARE ENCLOSED HEREWITH.

 

CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.

 

Name:

   

Address:

   
   

 

Telephone/Facsimile No. for Notices:    

Boxes below to be Checked by Eligible Institutions (as defined in Instruction 4 below) Only

 

CHECK HERE AND COMPLETE THE FOLLOWING IF TENDERED OUTSTANDING NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC.

 

Name of Tendering Institution:    
DTC Account Number(s):    
Transaction Code Number(s)    

 

3


PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY

Ladies and Gentlemen:

Subject to the terms and conditions of the exchange offer, the undersigned hereby tenders Jersey Central Power & Light Company (the “Company”) for exchange the principal amount of Outstanding Notes indicated above. Subject to, and effective upon, the acceptance for exchange of the principal amount of Outstanding Notes tendered in accordance with this Letter of Transmittal, the undersigned hereby exchanges, assigns and transfers to, or upon the order of, the Company all right, title and interest in and to such Outstanding Notes tendered for exchange hereby.

The undersigned hereby irrevocably constitutes and appoints the Exchange Agent the true and lawful agent and attorney-in-fact for the undersigned (with full knowledge that said Exchange Agent also acts as the agent for the Company in connection with the exchange offer) with respect to the tendered Outstanding Notes with full power of substitution to:

 

   

deliver such Outstanding Notes, or transfer ownership of such Outstanding Notes on the account books maintained by DTC, to the Company, as applicable, and deliver all accompanying evidences of transfer and authenticity; and

 

   

present such Outstanding Notes for transfer on the books of the Company and receive all benefits and otherwise exercise all rights of beneficial ownership of such Outstanding Notes, all in accordance with the terms of the exchange offer.

The power of attorney granted in this paragraph shall be deemed to be irrevocable and coupled with an interest.

The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, exchange, assign and transfer the Outstanding Notes tendered hereby and to acquire the New Notes issuable upon the exchange of such tendered Outstanding Notes, and that the Company will acquire good and marketable title to the Outstanding Notes, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claim or right, when the same are accepted for exchange by the Company.

The undersigned acknowledges that the exchange offer is being made in reliance upon interpretations set forth in no-action letters issued to third parties by the staff of the Securities and Exchange Commission (the “SEC”), including Exxon Capital Holdings Corporation (available May 13, 1988), Morgan Stanley & Co. Incorporated (available June 5, 1991), Mary Kay Cosmetics, Inc. (available June 5, 1991), Shearman & Sterling (available July 2, 1993) and similar no-action letters (the “Prior No-Action Letters”), that the New Notes issued in exchange for the Outstanding Notes pursuant to the exchange offer may be offered for resale, resold and otherwise transferred by holders thereof (other than any holder that is a broker-dealer who purchased Outstanding Notes directly from the Company for resale and any holder that is an “affiliate” of the Company within the meaning of Rule 405 under the Securities Act), without compliance with the registration and prospectus delivery provisions of the Securities Act (except for prospectus delivery obligations applicable to certain broker-dealers), provided that such New Notes are acquired in the ordinary course of such holders’ business and such holders have no arrangement or understanding with any person or entity to participate in the distribution (within the meaning of the Securities Act) of such New Notes in violation of the Securities Act. The SEC has not, however, considered this exchange offer in the context of a no-action letter, and there can be no assurance that the staff of the SEC would make a similar determination with respect to the exchange offer as it has in other circumstances.

The undersigned hereby further represents to the Company that (i) any New Notes received will be acquired in the ordinary course of business of the undersigned; (ii) the undersigned does not have an arrangement or understanding with any person or entity to participate in the distribution (within the meaning of the Securities Act) of the New Notes in violation of the Securities Act; (iii) the undersigned is not an “affiliate” of the Company, within the meaning of Rule 405 of the Securities Act; (iv)(a) if the undersigned is not a broker-dealer,

 

4


the undersigned is not engaged in, and does not intend to engage in, a distribution (within the meaning of the Securities Act) of the New Notes; or (b) if the undersigned is a broker-dealer that will receive New Notes for its own account in exchange for Outstanding Notes that were acquired as a result of market-making activities or other trading activities, it acknowledges that it will deliver a prospectus in connection with any resale of the New Notes; provided, however, that by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act; and (v) the undersigned is not acting on behalf of any person or entity who could not truthfully make the statements set forth in (i) through (iv) above.

The undersigned acknowledges that if the undersigned is an “affiliate” of the Company (within the meaning of Rule 405 of the Securities Act) or is tendering Outstanding Notes in the exchange offer with the intention of participating in any manner in a distribution of the New Notes:

 

   

the undersigned cannot rely on the position of the staff of the SEC set forth in the Prior No-Action Letters and, in the absence of an exemption therefrom, must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction of the New Notes, in which case the registration statement must contain the selling security holder information required by Item 507 or Item 508, as applicable, of Regulation S-K under the Securities Act; and

 

   

failure to comply with such requirements in such instance could result in the undersigned incurring liability for which the undersigned will not be indemnified by the Company.

The undersigned will, upon request, execute and deliver any additional documents deemed by the Exchange Agent or the Company to be necessary or desirable to complete the exchange, assignment and transfer of the Outstanding Notes tendered hereby, including the transfer of such Outstanding Notes on the account books maintained by DTC.

For purposes of the exchange offer, the Company shall be deemed to have accepted for exchange validly tendered Outstanding Notes that have not been validly withdrawn when, and if, the Company gives oral or written notice of acceptance to the Exchange Agent. Any tendered Outstanding Notes that are not accepted for exchange pursuant to the exchange offer for any reason will be returned, without expense, to the undersigned promptly after the expiration date.

All authority conferred or agreed to be conferred by this Letter of Transmittal shall survive the death, incapacity or dissolution of the undersigned, and every obligation of the undersigned under this Letter of Transmittal shall be binding upon the undersigned’s successors, assigns, heirs, executors, administrators, personal representatives, trustees in bankruptcy and legal representatives. This tender may be withdrawn only in accordance with the procedures set forth in the Prospectus under the caption “The Exchange Offer—Withdrawal Rights.”

The undersigned acknowledges that the acceptance by the Company of properly tendered Outstanding Notes pursuant to the procedures described under the captions “The Exchange Offer—Procedures for Tendering Outstanding Notes through Brokers and Banks” and “The Exchange Offer—Procedures for Brokers and Custodian Banks; DTC ATOP Account” in the Prospectus and in the instructions hereto will constitute a binding agreement between the undersigned, on one hand, and the Company, on the other, upon the terms and subject to the conditions of the exchange offer. The representations, warranties and agreements of the undersigned contained in this Letter of Transmittal will be deemed to be repeated and reconfirmed on and as of the expiration date and the settlement date of the exchange offer, which will be promptly following the expiration date.

The exchange offer is subject to certain conditions set forth in the Prospectus under the caption “The Exchange Offer—Conditions to the Exchange Offer.” The undersigned recognizes that as a result of these conditions (which may be waived, in whole or in part, by the Company), the Company may not be required to exchange any of the Outstanding Notes tendered hereby.

 

5


Unless otherwise indicated under “Special Issuance Instructions,” the undersigned hereby directs that the New Notes be issued in the name(s) of the undersigned or, in the case of a book-entry tender of Outstanding Notes, that the New Notes be credited to the account indicated above maintained at DTC. Similarly, unless otherwise indicated under “Special Delivery Instructions,” the undersigned hereby directs that the New Notes (and any accompanying documents) be delivered to the address shown below the undersigned’s signature.

If the undersigned has (1) tendered any Outstanding Notes that are not exchanged in the exchange offer for any reason or (2) submitted certificates for more Outstanding Notes than the undersigned wishes to tender, unless otherwise indicated under “Special Issuance Instructions” or “Special Delivery Instructions,” the undersigned hereby directs that certificates for any Outstanding Notes that are not tendered or not exchanged should be issued in the name of the undersigned, if applicable, and delivered to the address shown below the undersigned’s signature(s) or, in the case of a book-entry transfer of Outstanding Notes, that Outstanding Notes that are not tendered or not exchanged be credited to the account indicated above maintained at DTC, in each case, at the Company’s expense, promptly following the expiration or termination of the exchange offer.

The undersigned recognizes that the Company has no obligation pursuant to the “Special Issuance Instructions” or “Special Delivery Instructions” to transfer any Outstanding Notes from the name of the registered holder(s) thereof if the Company does not accept for exchange any of the Outstanding Notes so tendered for exchange.

 

6


SPECIAL ISSUANCE INSTRUCTIONS

(SEE INSTRUCTIONS 4 AND 5)

 

To be completed ONLY if (i) Outstanding Notes in a principal amount not tendered, or New Notes issued in exchange for Outstanding Notes accepted for exchange, are to be issued in the name of someone other than the undersigned, or (ii) Outstanding Notes tendered by book-entry transfer that are not exchanged are to be returned by credit to an account maintained at DTC other than the DTC Account Number set forth above.

 

☐ Issue New Notes to:

☐ Issue Outstanding Notes to:

Name:                                            

Address:                                           

(include ZIP Code)

 

(Taxpayer Identification or Social Security Number)

(See Instruction 7 below.)
(Please Type or Print

SPECIAL DELIVERY INSTRUCTIONS

(SEE INSTRUCTIONS 4 AND 5)

To be completed ONLY if Outstanding Notes in a principal amount not tendered, or New Notes issued in exchange for Outstanding Notes accepted for exchange, are to be mailed or delivered to someone other than the undersigned, or to the undersigned at an address other than that shown below the undersigned’s signature.

☐ Mail or deliver New Notes to:

☐ Mail or deliver Outstanding Notes to:

Name:                                            

Address:                                           

(include ZIP Code)

 

(Taxpayer Identification or Social Security Number)

(See Instruction 7 below.)
(Please Type or Print

☐ Credit unexchanged Outstanding Notes delivered by book-entry transfer to the DTC account number set forth below:

DTC Account number:                                     

 

7


SIGNATURES MUST BE PROVIDED BELOW

PLEASE READ ACCOMPANYING INSTRUCTIONS

(complete accompanying IRS Form W-9 below)

 

 
 
(Signature(s) of Registered Holder(s) of Outstanding Notes)

Dated:

              

 

(The above lines must be signed by the registered holder(s) of Outstanding Notes as your/their name(s) appear(s) on the Outstanding Notes or on a security position listing, or by person(s) authorized to become registered holder(s) by a properly completed bond power from the registered holder(s), a copy of which must be transmitted with this Letter of Transmittal. If Outstanding Notes to which this Letter of Transmittal relate are held of record by two or more joint holders, then all such holders must sign this Letter of Transmittal. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, then such person must (i) set forth his or her full title below and (ii) unless waived by the Company, submit evidence satisfactory to the Company of such person’s authority to so act. See Instruction 4 regarding signatures on this Letter of Transmittal, printed below.)

 

Name(s):

    
  

(Please Type or Print)

 

Capacity (Full Title):

              

Address:

    
  

(Include ZIP Code)

 

Area Code and Telephone Number:

    

Taxpayer Identification:       

    

MEDALLION SIGNATURE GUARANTEE

(if required by Instruction 4)

Certain signatures must be guaranteed by an Eligible Institution (as defined in the instructions below). Please read Instruction 4 of this Letter of Transmittal to determine whether a signature guarantee is required for the tender of your Outstanding Notes.

Signature(s) Guaranteed by an Eligible Institution:

 
     
    (Authorized Signature)
     
    (Title)
     
    (Name of Firm)
     
    (Area Code and Telephone Number)

Dated:           

 

8


INSTRUCTIONS TO LETTER OF TRANSMITTAL

FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER

1.   Delivery of this Letter of Transmittal and Outstanding Notes or Agent’s Message and Book-Entry Confirmations. This Letter of Transmittal is to be completed by tendering holders of Outstanding Notes if (i) certificates for physically tendered Outstanding Notes are to be delivered or (ii) tenders are to be made pursuant to the procedures for delivery by book-entry transfer under DTC’s Automated Tender Offer Program (“ATOP”) set forth in the Prospectus under “The Exchange Offer—Procedures for Brokers and Custodian Banks; DTC ATOP Account” and an agent’s message, which is described further below, is not delivered.

Tenders by book-entry transfer may also be made by delivering an agent’s message in lieu of this Letter of Transmittal. The term “agent’s message” means a message, transmitted by DTC to and received by the Exchange Agent, which states that DTC has received an express acknowledgment from the tendering DTC participant, which acknowledgment states that such participant has received and agrees to be bound by the Letter of Transmittal and that the Company may enforce the Letter of Transmittal against such participant. Certificates for Outstanding Notes or a confirmation of a book-entry transfer to the Exchange Agent’s account at DTC of Outstanding Notes transferred by book-entry transfer (a “Book-Entry Confirmation”), as well as a properly completed and duly executed Letter of Transmittal (or facsimile hereof or, in the case of a book-entry transfer using ATOP, an agent’s message in lieu hereof) and any other documents required by this Letter of Transmittal, must be received by the Exchange Agent at the address set forth herein prior to the expiration date.

Holders who tender their Outstanding Notes through DTC’s ATOP procedures shall be bound by, but need not complete, this Letter of Transmittal; thus, a Letter of Transmittal need not accompany tenders effected through ATOP.

Any financial institution that is a participant in DTC may electronically transmit its acceptance of the exchange offer by causing DTC to transfer Outstanding Notes in accordance with DTC’s ATOP procedures for such transfer prior to the expiration date.

The method of delivery of the tendered Outstanding Notes, this Letter of Transmittal, and all other required documents to the Exchange Agent is at the election and risk of the holder and, except as otherwise provided below, the delivery will be deemed made only when actually received or confirmed by the Exchange Agent. Delivery of any such documents to DTC will not constitute valid delivery to the Exchange Agent. Instead of delivery by mail, it is recommended that the holder use an overnight or courier service, properly insured, with return receipt requested. In all cases, sufficient time should be allowed to assure delivery to the Exchange Agent before the expiration date. NO OUTSTANDING NOTES, LETTERS OF TRANSMITTAL, OR ANY OTHER REQUIRED DOCUMENTS SHOULD BE SENT TO THE COMPANY.

2.   Tender by Holder. Only a registered holder of Outstanding Notes may tender such Outstanding Notes in the exchange offer. Any beneficial holder of Outstanding Notes who is not the registered holder and who wishes to tender should arrange with the registered holder to execute and deliver this Letter of Transmittal on such beneficial holder’s behalf or must, prior to completing and executing this Letter of Transmittal and delivering such beneficial holder’s Outstanding Notes, either make appropriate arrangements to register ownership of the Outstanding Notes in such holder’s name or obtain a properly completed bond power from the registered holder.

3.   Partial Tenders. Tenders of Outstanding Notes will be accepted only in minimum principal amounts of $2,000 and integral multiples of $1,000 in excess thereof. If less than the entire principal amount of any Outstanding Notes is tendered, the tendering holder should fill in the principal amount tendered in the fourth column of the box entitled “Description of Outstanding Notes Tendered” above. The entire principal amount of Outstanding Notes delivered to the Exchange Agent will be deemed to have been tendered unless otherwise

 

9


indicated. If the entire principal amount of all Outstanding Notes is not tendered, then Outstanding Notes for the principal amount of Outstanding Notes not tendered and New Notes issued in exchange for any Outstanding Notes accepted will be returned to the holder promptly after the expiration or termination of the exchange offer.

4.   Signatures on this Letter of Transmittal; Bond Powers and Endorsements; Medallion Guarantee of Signatures. If this Letter of Transmittal (or facsimile hereof) is signed by the record holder(s) of the Outstanding Notes tendered hereby, the signature(s) must correspond exactly with the name(s) as written on the face of the Outstanding Notes without alteration, enlargement or any change whatsoever. If this Letter of Transmittal (or facsimile hereof) is signed by a participant in DTC, the signature must correspond with the name as it appears on the security position listing as the holder of the Outstanding Notes. If any tendered Outstanding Notes are owned of record by two or more joint owners, all of such owners must sign this Letter of Transmittal.

If this Letter of Transmittal (or facsimile hereof) is signed by the registered holder(s) of Outstanding Notes listed and tendered hereby and the New Notes issued in exchange therefor are to be issued (or any untendered principal amount of Outstanding Notes is to be reissued) to the registered holder(s), then said holder(s) need not and should not endorse any tendered Outstanding Notes, nor provide a separate bond power. In any other case, such holder(s) must either properly endorse the Outstanding Notes tendered or transmit a properly completed separate bond power with this Letter of Transmittal, with the signatures on the endorsement or bond power guaranteed by a firm that is a member of a registered national securities exchange or of the Financial Industry Regulatory Authority, Inc., a commercial bank or trust company having an office or correspondent in the United States or an “eligible guarantor institution” within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended, in each case that is a participant in the Securities Transfer Agents’ Medallion Program, the New York Stock Exchange Medallion Program or the Stock Exchanges’ Medallion Program approved by the Securities Transfer Association Inc. (each, an “Eligible Institution”).

If this Letter of Transmittal (or facsimile hereof) or any Outstanding Notes or bond powers are signed by one or more trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and, unless waived by the Company, evidence satisfactory to the Company of their authority to so act must be submitted with this Letter of Transmittal.

No signature guarantee is required if:

 

   

this Letter of Transmittal (or facsimile hereof) is signed by the registered holder(s) of the Outstanding Notes tendered herein (or by a participant in DTC whose name appears on a security position listing as the owner of the tendered Outstanding Notes) and the New Notes are to be issued directly to such registered holder(s) (or, if signed by a participant in DTC, deposited to such participant’s account at DTC) and neither the box entitled “Special Issuance Instructions” nor the box entitled “Special Delivery Instructions” has been completed; or

 

   

such Outstanding Notes are tendered for the account of an Eligible Institution.

In all other cases, all signatures on this Letter of Transmittal (or facsimile hereof) must be guaranteed by an Eligible Institution.

5.   Special Issuance and Delivery Instructions. Tendering holders should indicate, in the applicable box or boxes, the name and address to which New Notes or substitute Outstanding Notes for principal amounts not tendered or not accepted for exchange are to be issued or sent, if different from the name and address of the person signing this Letter of Transmittal. In the case of issuance in a different name, the taxpayer identification number (see Instruction 7 below) of the person named must also be indicated. Holders tendering Outstanding Notes by book-entry transfer may request that Outstanding Notes not exchanged be credited to such account maintained at DTC as such holder may designate hereon. If no such instructions are given, such Outstanding Notes not exchanged will be returned to the name and address (or account number) of the person signing this Letter of Transmittal.

 

10


6.   Transfer Taxes. The Company will pay or cause to be paid all transfer taxes, if any, applicable to the exchange of Outstanding Notes pursuant to the exchange offer. If, however, a transfer tax is imposed for any reason other than the exchange of Outstanding Notes pursuant to the exchange offer, including in the event that a tendering holder instructs the Company to register New Notes in the name of, or requests that Outstanding Notes not tendered or not accepted in the exchange offer be returned to, a person other than the registered tendering holder, then the amount of any such transfer taxes (whether imposed on the registered holder or any other persons) will be payable by the tendering holder. If satisfactory evidence of payment of such taxes or exemption therefrom is not submitted with this Letter of Transmittal, the amount of such transfer taxes will be billed directly to such tendering holder and the Exchange Agent will retain possession of an amount of New Notes with a face amount at least equal to the amount of such transfer taxes due by such tendering holder pending receipt by the Exchange Agent of the amount of such taxes.

7.   Taxpayer Identification Number. Federal income tax law requires that a holder of any Outstanding Notes or New Notes must provide the Company (as payer) with its correct taxpayer identification number (“TIN”), which, in the case of a holder who is an individual, is his or her social security number. If the Company is not provided with the correct TIN, the holder or payee may be subject to a $50 penalty imposed by the Internal Revenue Service and backup withholding, currently at a rate of 24%, on interest payments on the New Notes.

To prevent backup withholding, each tendering holder must provide such holder’s correct TIN by completing the IRS Form W-9 set forth herein, certifying that the TIN provided is correct (or that such holder is awaiting a TIN), that the holder is a U.S. person (including a U.S. resident alien), and that (i) the holder has not been notified by the Internal Revenue Service that such holder is subject to backup withholding as a result of failure to report all interest or dividends or (ii) the Internal Revenue Service has notified the holder that such holder is no longer subject to backup withholding. If the New Notes will be registered in more than one name or will not be in the name of the actual owner, consult the instructions to IRS Form W-9 for information on which TIN to report. If such holder does not have, but has applied or intends to apply for, a TIN, such holder should consult the instructions to IRS Form W-9. Backup withholding, currently at a rate of 24%, may apply to interest payments on the New Notes until a TIN is provided. Certain holders are not subject to the backup withholding and reporting requirements. These holders, which we refer to as exempt holders, include certain foreign persons (other than U.S. resident aliens) and persons listed in the instructions to IRS Form W-9 as payees exempt from backup withholding. Exempt holders (other than certain foreign persons) should indicate their exempt status on the IRS Form W-9. A foreign person (other than a U.S. resident alien) may qualify as an exempt holder by submitting to the Exchange Agent a properly completed Internal Revenue Service Form W-8BEN or W-8BEN-E or other applicable Form W-8, signed under penalties of perjury, attesting to that holder’s exempt status. The applicable IRS Form W-8 may be obtained from the Exchange Agent.

The Company reserves the right in its sole discretion to take whatever steps are necessary to comply with the Company’s obligations regarding backup withholding. Backup withholding is not an additional federal income tax. Rather, the federal income tax liability of a person subject to backup withholding will be reduced by the amount of tax withheld. If backup withholding results in an overpayment of taxes, a refund may be obtained provided that the required information is timely furnished to the IRS.

8.   Validity of Tenders. All questions as to the validity, form, eligibility, time of receipt, acceptance and withdrawal of tendered Outstanding Notes will be reasonably determined by the Company in its sole discretion, which determination will be final and binding. The Company reserves the absolute right to reject any and all Outstanding Notes not properly tendered or any Outstanding Notes the Company’s acceptance of which would, in the opinion of the Company’s counsel, be unlawful. The Company also reserves the absolute right to waive any conditions of the exchange offer or defects or irregularities of tender as to particular Outstanding Notes. The Company’s interpretation of the terms and conditions of the exchange offer shall be final and binding on all parties. Unless waived, all defects or irregularities in connection with tenders of Outstanding Notes must be cured within such time as the Company shall determine. None of the Company, the Exchange Agent or any other person shall be under any duty to give notification of defects or irregularities with respect to tenders of Outstanding Notes nor shall any of them incur any liability for failure to give such notification.

 

11


9.   Waiver of Conditions. The Company in its sole discretion reserves the absolute right to waive, in whole or part, any of the conditions to the exchange offer set forth in the Prospectus.

10.  No Conditional Tender. No alternative, conditional, irregular or contingent tender of Outstanding Notes will be accepted.

11.  Mutilated, Lost Wrongfully Taken or Destroyed Outstanding Notes. Any holder whose Outstanding Notes have been mutilated, lost, wrongfully taken or destroyed should contact the Exchange Agent at the address indicated above for further instructions. This Letter of Transmittal and related documents cannot be processed until the procedures for replacing mutilated, lost, wrongfully taken or destroyed Outstanding Notes have been followed.

12.  Requests for Assistance or Additional Copies. Requests for assistance or for additional copies of the Prospectus or this Letter of Transmittal may be directed to the Exchange Agent at the address or telephone number set forth on the cover page of this Letter of Transmittal. Holders may also contact their broker, dealer, commercial bank, trust company or other nominee for assistance concerning the exchange offer.

13.  Withdrawal. Tenders may be withdrawn only in accordance with the procedures set forth in the Prospectus under the caption “The Exchange Offer—Withdrawal Rights.”

IMPORTANT: This Letter of Transmittal or a manually signed facsimile hereof or, in the case of a book-entry transfer using ATOP, an agent’s message in lieu hereof (together with the Outstanding Notes delivered by book-entry transfer or in original hard copy form and all other required documents) must be received by the Exchange Agent prior to the expiration date.

ALL TENDERING HOLDERS MUST COMPLETE THE FOLLOWING IRS FORM W-9

 

12

Exhibit 99.2

LETTER TO CLIENTS

Relating to

JERSEY CENTRAL POWER & LIGHT COMPANY

Offer to Exchange

up to $700,000,000 5.100% Senior Notes due 2035 that have been registered under the Securities Act of 1933, as amended (the “Securities Act”)

for any and all of our outstanding unregistered $700,000,000 5.100% Senior Notes due 2035

Pursuant to the Prospectus, dated   , 2025

To Our Clients:

Enclosed for your consideration is a Prospectus, dated   , 2025 (as it may be amended or supplemented from time to time, the “Prospectus”), and the Letter of Transmittal relating to the exchange offer of Jersey Central Power & Light Company, a New Jersey corporation (the “Company”), whereby the Company is offering, upon the terms and subject to the conditions of the Prospectus, $700,000,000 5.100% Senior Notes due 2035 (the “New Notes”) in exchange for an equal amount of outstanding $700,000,000 5.100% Senior Notes due 2035 (collectively, the “Outstanding Notes”).

The exchange offer is intended to satisfy certain obligations of the Company contained in the Registration Rights Agreements, dated as of December 5, 2024, by and among the Company and the initial purchasers of the Outstanding Notes.

This material is being forwarded to you as the beneficial owner of the Outstanding Notes carried by us for your account but not registered in your name. A tender of such Outstanding Notes may only be made by us as the holder of record and pursuant to your instructions, unless you obtain a properly completed bond power from us or arrange to have the Outstanding Notes registered in your name.

Accordingly, we request instructions as to whether you wish us to tender on your behalf the Outstanding Notes held by us for your account, pursuant to the terms and conditions set forth in the enclosed Prospectus and Letter of Transmittal.

Please forward your instructions to us as promptly as possible in order to permit us to tender the Outstanding Notes on your behalf in accordance with the provisions of the exchange offer. The exchange offer will expire at 5:00 p.m., New York City time, on    , 2025, unless extended (such date and time, as they may be extended, the “expiration date”). The Company does not currently intend to extend the expiration date. Any Outstanding Notes tendered pursuant to the exchange offer may be withdrawn any time prior to the expiration date.

Your attention is directed to the following:

1.   The exchange offer is described in and subject to the terms and conditions set forth in the Prospectus and the Letter of Transmittal.

2.   The exchange offer is for any and all Outstanding Notes.

3.   The Company will be deemed to accept validly tendered Outstanding Notes when, and if, the Company gives oral or written notice of acceptance to the exchange agent. Subject to the terms and conditions of the exchange offer, delivery of the New Notes will be made by the exchange agent on the settlement date, which will be promptly after the expiration date of the exchange offer, following receipt of the Company’s notice of acceptance.


4.   Any transfer taxes incident to the transfer of Outstanding Notes from the holder to the Company will be paid by the Company, except as otherwise provided in Instruction 6 of the Letter of Transmittal.

5.   The exchange offer expires at 5:00 p.m., New York City time, on   , 2025, unless extended by the Company. The Company does not currently intend to extend the exchange offer.

If you wish to have us tender your Outstanding Notes, please instruct us to do so by completing, executing and returning to us the instruction form on the back of this letter.

The Letter of Transmittal is furnished to you for information only and may not be used directly by you to tender Outstanding Notes, unless you obtain a properly completed bond power from us or arrange to have the Outstanding Notes registered in your name.

 

2


INSTRUCTIONS WITH RESPECT TO THE EXCHANGE OFFER

The undersigned acknowledge(s) receipt of this letter and the enclosed materials referred to herein relating to the exchange offer made by the Company with respect to the Outstanding Notes.

This will instruct you to tender the Outstanding Notes held by you for the account of the undersigned, upon and subject to the terms and conditions set forth in the Prospectus and the related Letter of Transmittal.

 

Please tender the Outstanding Notes held by you for the account of the undersigned as indicated below:

 

  Aggregate Principal Amount of Outstanding Notes
5.100% Senior Notes due 2035    
   
  (must be in an amount equal to $2,000 principal amount or integral multiples of $1,000 in excess thereof)

 

Please do not tender any Outstanding Notes held by you for the account of the undersigned.

 

   
  Signature(s)
   
  Please print name(s) here
 

Dated:                     

  Address(es)
   
  Area Code(s) and Telephone Number(s)
   
  Tax Identification or Social Security No(s).

None of the Outstanding Notes held by us for your account will be tendered unless we receive written instructions from you to do so. Unless a specific contrary instruction is given in the space provided, your signature(s) hereon shall constitute an instruction to us to tender all the Outstanding Notes held by us for your account.

 

3

Exhibit 99.3

LETTER TO REGISTERED HOLDERS AND THE DEPOSITORY

TRUST COMPANY PARTICIPANTS

Relating to

JERSEY CENTRAL POWER & LIGHT COMPANY

Offer to Exchange

up to $700,000,000 5.100% Senior Notes due 2035 that have been registered under the Securities Act of 1933, as amended (the “Securities Act”)

for any and all of our outstanding unregistered $700,000,000 5.100% Senior Notes due 2035

 

 

Pursuant to the Prospectus, dated   , 2025

To Registered Holders and The Depository Trust Company Participants:

This document relates to the exchange offer made by Jersey Central Power & Light Company whereby we are offering $700,000,000 5.100% Senior Notes due 2035 in exchange for an equal amount of outstanding $700,000,000 5.100% Senior Notes due 2035 (the “Outstanding Notes”).

We are requesting that you contact your clients for whom you hold Outstanding Notes regarding the exchange offer. For your information and for forwarding to your clients for whom you hold Outstanding Notes registered in your name or in the name of your nominee, or who hold Outstanding Notes registered in their own names, we are enclosing the following documents:

1.   Prospectus, dated   , 2025;

2.   Letter of Transmittal, together with accompanying IRS Form W-9 and instructions thereto;

3.   A form of letter that may be sent to your clients for whose account you hold Outstanding Notes registered in your name or the name of your nominee, with space provided for obtaining such clients’ instructions with regard to the exchange offer.

Your prompt action is requested. The exchange offer will expire at 5:00 p.m., New York City time, on   , 2025, unless extended (such date and time, as they may be extended, the “expiration date”). We do not currently intend to extend the expiration date. Tenders of Outstanding Notes may be withdrawn at any time prior to the expiration date.

To participate in the exchange offer, a properly completed and duly executed Letter of Transmittal (or a facsimile thereof or, in the case of a book-entry transfer, an agent’s message in lieu thereof), with any required signature guarantees and any other required documents, must be sent to the exchange agent and certificates representing the Outstanding Notes must be delivered to the exchange agent (or book-entry transfer of the Outstanding Notes must be made into the exchange agent’s account at DTC), all in accordance with the instructions set forth in the Letter of Transmittal and the Prospectus.

Any inquiries you may have with respect to the exchange offer or requests for additional copies of the enclosed materials should be directed to the exchange agent at its address and telephone number set forth on the front of the Letter of Transmittal.

 

Very truly yours,

JERSEY CENTRAL POWER & LIGHT COMPANY


NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY OTHER PERSON AS AN AGENT OF JERSEY CENTRAL POWER & LIGHT COMPANY OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF EITHER OF THEM WITH RESPECT TO THE EXCHANGE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN THE PROSPECTUS OR THE LETTER OF TRANSMITTAL.

Exhibit 107

Calculation of Filing Fee Tables

Form S-4

(Form Type)

Jersey Central Power & Light Company

(Exact Name of Registrant as Specified in its Charter)

Table 1: Newly Registered and Carry Forward Securities

 

                         
     Security
Type
 

Security
Class

Title

 

Fee
Calculation

or Carry
Forward
Rule

 

Amount

Registered

 

Proposed

Maximum
Offering

Price per
Unit

 

Maximum

Aggregate

Offering

Price

 

Fee

Rate

 

Amount of

Registration
Fee

  Carry
Forward
Form
Type
  Carry
Forward
File
Number
  Carry
Forward
Initial
Effective
Date
  Filing Fee
Previously
Paid in
Connection
with Unsold
Securities to
be Carried
Forward
 
Newly Registered Securities
                         

Fees to Be

Paid

  Debt  

5.100%

Senior

Notes

due

2030

  Rule 457(f)    $700,000,000   100%   $700,000,000(1)   0.00015310   $107,170(2)          
                         

Fees

Previously

Paid

  —    —    —    —    —    —      —           
 
Carry Forward Securities
                         

Carry

Forward

Securities

  —    —    —    —            —    —    —    — 
                   
    Total Offering Amounts      $700,000,000     $107,170          
                   
    Total Fees Previously Paid          —           
                   
    Total Fee Offsets          —           
                   
    Net Fee Due                $107,170                

 

  (1)

Represents the aggregate principal amount of Jersey Central Power & Light Company’s 5.100% Senior Notes due 2035 to be offered in the exchange offer to which the registration statement relates.

  (2)

Calculated pursuant to Rule 457(f) under the Securities Act of 1933, as amended.