|
Exhibit
10.3
EXECUTION
COPY
GUARANTY, dated as of March 2, 2007,
made by FIRSTENERGY CORP., an Ohio corporation (the "
Guarantor "), in favor of the Lender (as defined in
the Credit Agreement referred to below).
PRELIMINARY
STATEMENT
FirstEnergy Solutions Corp., an Ohio
corporation (the " Borrower "), is party to a
Credit Agreement, dated as of the date hereof (as amended, amended
and restated, supplemented or otherwise modified from time to time,
the " Credit Agreement "; the capitalized terms
defined therein and not otherwise defined herein being used herein
as therein defined), with the Lender. The Guarantor shall receive,
directly or indirectly, all of the proceeds of the Loan under the
Credit Agreement and will derive substantial direct and indirect
benefits from the transactions contemplated by the Credit
Agreement. After the date hereof, the Borrower shall be required to
meet the debt to capitalization ratio financial covenant described
in Section 5.02 of the Credit Agreement only at such time as this
Guaranty shall no longer be in effect in accordance with the terms
hereof.
NOW, THEREFORE, in consideration of
the premises and in order to induce the Lender to make the Loan for
the account of the Borrower, the Guarantor hereby agrees as
follows:
SECTION 1.
Guaranty; Limitation of Liability.
The Guarantor hereby absolutely,
unconditionally and irrevocably guarantees the punctual payment
when due, whether at scheduled maturity or on any date of a
required prepayment or by acceleration, demand or otherwise, of the
Applicable Percentage (as defined below) of all payment,
performance and other obligations of the Borrower now or hereafter
existing under or in respect of the Loan Documents (including,
without limitation, any extensions, modifications, substitutions,
amendments or renewals of any or all of the foregoing obligations),
whether direct or indirect, absolute or contingent, and whether for
principal, interest, reimbursement obligations, premiums, fees,
indemnities, contract causes of action, costs, expenses or
otherwise, including, without limitation, (i) the obligation of the
Borrower to pay principal, interest, charges, expenses, fees,
attorneys’ fees and disbursements, indemnities and other
amounts payable by the Borrower under any Loan Document and (ii)
any liability of the Borrower on any claim, whether or not the
right of any creditor to payment in respect of such claim is
reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, disputed, undisputed, legal, equitable, secured or
unsecured, and whether or not such claim is discharged, stayed or
otherwise affected by any proceeding (such obligations being the "
Guaranteed Obligations "), and agrees to pay any
and all expenses (including, without limitation, fees and expenses
of counsel) incurred by the Lender in enforcing any rights under
this Guaranty or any other Loan Document. As used herein, "
Applicable Percentage " shall mean (i) 100%, at any
time that the Borrower has a Borrower’s Rating of less than
BBB- by S&P and Baa3 by Moody’s and (ii) 0%, at any time
that the Borrower has a Borrower’s Rating of at least BBB- by
S&P and Baa3 by Moody’s.
C-2
The Guarantor, and by its acceptance
of this Guaranty, the Lender hereby confirms that it is the
intention of all such Persons that this Guaranty and the Guaranteed
Obligations of the Guarantor hereunder not constitute a fraudulent
transfer or conveyance for purposes of Bankruptcy Law (as
hereinafter defined), the Uniform Fraudulent Conveyance Act, the
Uniform Fraudulent Transfer Act or any similar foreign, federal or
state law to the extent applicable to this Guaranty and the
Guaranteed Obligations. To effectuate the foregoing intention, the
Lender and the Guarantor hereby irrevocably agree that the
Guaranteed Obligations at any time shall be limited to the maximum
amount as will result in the Guaranteed Obligations not
constituting a fraudulent transfer or conveyance. For purposes
hereof, " Bankruptcy Law " means any proceeding of
the type referred to in Section 6.01(f) of the Credit Agreement or
Title 11, U.S. Code, or any similar foreign, federal or state law
for the relief of debtors.
SECTION 2.
Guaranty Absolute.
The Guarantor guarantees that the
Guaranteed Obligations will be paid strictly in accordance with the
terms of the Loan Documents, regardless of any law, regulation or
order now or hereafter in effect in any jurisdiction affecting any
of such terms or the rights of the Lender with respect thereto. The
obligations of the Guarantor under or in respect of this Guaranty
are independent of the Guaranteed Obligations or any other
obligations the Borrower under or in respect of the Loan Documents,
and a separate action or actions may be brought and prosecuted
against the Guarantor to enforce this Guaranty, irrespective of
whether any action is brought against the Borrower or whether the
Borrower is joined in any such action or actions. The liability of
the Guarantor under this Guaranty shall be irrevocable, absolute
and unconditional irrespective of, and the Guarantor hereby
irrevocably waives any defenses it may now have or hereafter
acquire in any way relating to, any or all of the
following:
(a) any lack of validity or enforceability of any Loan
Document or any agreement or instrument relating
thereto;
(b) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Guaranteed Obligations, or
any other amendment or waiver of or any consent to departure from
any Loan Document, including, without limitation, any increase in
the Guaranteed Obligations resulting from the extension of
additional credit to the Borrower;
(c) any taking, exchange, release or non-perfection of any
collateral, or any taking, release or amendment or waiver of, or
consent to departure from, any other guaranty, for all or any of
the Guaranteed Obligations;
(d) any manner of application of any collateral, or proceeds
thereof, to all or any of the Guaranteed Obligations, or any manner
of sale or other disposition of any collateral for all or any of
the Guaranteed Obligations or any other assets of the Borrower or
any of its Subsidiaries;
(e) any change, restructuring or termination of the corporate
structure or existence of the Borrower or any of its
Subsidiaries;
C-3
(f) any failure of the Lender to disclose to the Guarantor any
information relating to the business, condition (financial or
otherwise), operations, performance, properties or prospects of the
Borrower now or hereafter known to the Lender (the Guarantor
waiving any duty on the part of the Lender to disclose such
information);
(g) the failure of any other Person to execute or deliver this
Guaranty or any other guaranty or agreement or the release or
reduction of liability of the Guarantor or other guarantor or
surety with respect to the Guaranteed Obligations; or
(h) any other circumstance (including, without limitation, any
statute of limitations) or any existence of or reliance on any
representation by the Lender that might otherwise constitute a
defense available to, or a discharge of, the Guarantor or any other
guarantor or surety.
This Guaranty shall continue to be
effective or be reinstated, as the case may be, if at any time any
payment of any of the Guaranteed Obligations is rescinded or must
otherwise be returned by the Lender or any other Person upon the
insolvency, bankruptcy or reorganization of the Guarantor, the
Borrower or otherwise, all as though such payment had not been
made.
SECTION 3.
Waivers and Acknowledgments.
(a) The Guarantor hereby unconditionally and irrevocably
waives promptness, diligence, notice of acceptance, presentment,
demand for performance, notice of nonperformance, default,
acceleration, protest or dishonor and any other notice with respect
to any of the Guaranteed Obligations and this Guaranty and any
requirement that the Lender protect, secure, perfect or insure any
Lien or any property subject thereto or exhaust any right or take
any action against the Borrower or any other Person or any
collateral.
(b) The Guarantor hereby unconditionally and irrevocably
waives any right to revoke this Guaranty and acknowledges that this
Guaranty is continuing in nature and applies to all Guaranteed
Obligations, whether existing now or in the future.
(c) The Guarantor hereby unconditionally and irrevocably
waives (i) any defense arising by reason of any claim or defense
based upon an election of remedies by the Lender that in any manner
impairs, reduces, releases or otherwise adversely affects the
subrogation, reimbursement, exoneration, contribution or
indemnification rights of the Guarantor or other rights of the
Guarantor to proceed against the Borrower, any other guarantor or
any other Person or any collateral and (ii) any defense based on
any right of set-off or counterclaim against or in respect of the
Guaranteed Obligations.
(d) The Guarantor hereby unconditionally and irrevocably
waives any duty on the part of the Lender to disclose to the
Guarantor any matter, fact or thing relating to the business,
condition (financial or otherwise), operations, performance,
properties or prospects of the Borrower or any of its Subsidiaries
now or hereafter known by the Lender.
(e) The Guarantor acknowledges that it will receive
substantial direct and indirect benefits from the Loan and that the
waivers set forth in Section 2 and this Section 3 are knowingly
made in contemplation of such benefits.
C-4
SECTION 4.
Subrogation.
The Guarantor hereby unconditionally
and irrevocably agrees not to exercise any rights that it may now
have or hereafter acquire against the Borrower that arise from the
existence, payment, performance or enforcement of the Guaranteed
Obligations under or in respect of this Guaranty, including,
without limitation, any right of subrogation, reimbursement,
exoneration, contribution or indemnification and any right to
participate in any claim or remedy of the Lender against the
Borrower, whether or not such claim, remedy or right arises in
equity or under contract, statute or common law, including, without
limitation, the right to take or receive from the Borrower,
directly or indirectly, in cash or other property or by set-off or
in any other manner, payment or security on account of such claim,
remedy or right, unless and until all of the Guaranteed Obligations
and all other amounts payable under this Guaranty shall have been
paid in full in cash. If any amount shall be paid to the Guarantor
in violation of the immediately preceding sentence at any time
prior to the payment in full in cash of the Guaranteed Obligations
and all other amounts payable under this Guaranty, such amount
shall be received and held in trust for the benefit of the Lender,
shall be segregated from other property and funds of the Guarantor
and shall forthwith be paid or delivered to the Lender in the same
form as so received (with any necessary endorsement or assignment)
to be credited and applied to the Guaranteed Obligations and all
other amounts payable under this Guaranty, whether matured or
unmatured, in accordance with the terms of the Loan Documents, or
to be held as collateral for any Guaranteed Obligations or other
amounts payable under this Guaranty thereafter arising. If (i) the
Guarantor shall make payment to the Lender of all or any part of
the Guaranteed Obligations and (ii) all of the Guaranteed
Obligations and all other amounts payable under this Guaranty shall
have been paid in full in cash, the Lender will, at the
Guarantor’s request and expense, execute and deliver to the
Guarantor appropriate documents,
|
