<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 12, 1996
REGISTRATION NOS. 333-01489 AND 333-01489-01
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
<TABLE>
<S> <C>
OHIO EDISON FINANCING TRUST II OHIO EDISON COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED (EXACT NAME OF REGISTRANT AS
IN ITS CHARTER) SPECIFIED IN ITS CHARTER)
</TABLE>
------------------------
<TABLE>
<S> <C>
DELAWARE OHIO
(STATE OR OTHER JURISDICTION OF (STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION) INCORPORATION OR ORGANIZATION)
TO BE APPLIED FOR 34-0437786
(I.R.S. EMPLOYER IDENTIFICATION NO.) (I.R.S. EMPLOYER IDENTIFICATION NO.)
</TABLE>
76 SOUTH MAIN STREET, AKRON, OHIO 44308
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANTS' TELEPHONE NUMBER INCLUDING AREA CODE: (216) 384-5100
------------------------
N.C. ASHCOM
SECRETARY
76 SOUTH MAIN STREET
AKRON, OHIO 44308
(216) 384-5504
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
------------------------
THE COMMISSION IS REQUESTED TO MAIL SIGNED COPIES OF ALL ORDERS, NOTICES AND
COMMUNICATIONS TO:
<TABLE>
<S> <C>
MICHAEL F. CUSICK VINCENT PAGANO, JR.
WINTHROP, STIMSON, PUTNAM & ROBERTS SIMPSON THACHER & BARTLETT
ONE BATTERY PARK PLAZA 425 LEXINGTON AVENUE
NEW YORK, NY 10004-1490 NEW YORK, NY 10017-3954
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective and all other
conditions to the Exchange Offer (the "Offer") described in the enclosed
Prospectus have been satisfied or waived.
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: / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<S> <C> <C> <C> <C>
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</TABLE>
<TABLE>
<CAPTION>
MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER UNIT OFFERING PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
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Preferred Securities of Ohio Edison Financing
Trust II....................................... 3,600,000(1) $24.875(2) $89,550,000(3) $30,880
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Junior Subordinated Debentures of Ohio Edison
Company........................................ (4)
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Guarantee of the Preferred Securities by Ohio
Edison Company................................. (5)
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Back-up obligations of Ohio Edison Company in
connection with the Preferred Securities....... (6)
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Total............................................ 3,600,000 $24.875 $89,550,000 $30,880(7)
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</TABLE>
(1) Estimated maximum amount of each class of securities listed above issuable
by Ohio Edison Company and Ohio Edison Financing Trust II pursuant to the
Offer as described herein.
(2) Holders of shares of 7.75% Class A Preferred Stock, $25 par value, will
receive one Preferred Security for each share tendered and accepted.
(3) Calculated in accordance with Rule 457(f) under the Securities Act of 1933.
(4) The Junior Subordinated Debentures will be purchased by Ohio Edison
Financing Trust II with the shares of 7.75% Class A Preferred Stock
exchanged pursuant to the Offer. No separate consideration will be received
for the issuance of the Junior Subordinated Debentures. Pursuant to Rule
457(a) under the Securities Act of 1933, no separate fee is payable with
respect to the Junior Subordinated Debentures.
(5) No separate consideration will be received for the Ohio Edison Company
Guarantee. Pursuant to Rule 457(n) under the Securities Act of 1933, no fee
is payable with respect to the Guarantee.
(6) Includes the obligations of Ohio Edison Company under the Declaration for
Ohio Edison Financing Trust II, the Guarantee of the Preferred Securities by
Ohio Edison Company, the Junior Subordinated Debentures of Ohio Edison
Company purchased by Ohio Edison Financing Trust II and the related
Indenture, including Ohio Edison Company's agreement (under Section 4.2 of
the Declaration) to pay all fees, expenses, debts and obligations of Ohio
Edison Financing Trust II (other than with respect to the Preferred and
Common Securities thereof). No separate consideration will be received for
these obligations. Pursuant to Rule 457(a) under the Securities Act of 1933,
no separate fee is payable with respect to these obligations.
(7) Previously paid. ------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
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 OF 1933 OR UNTIL THIS 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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<PAGE> 2
CROSS REFERENCE SHEET
OHIO EDISON COMPANY
OHIO EDISON FINANCING TRUST II
CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K SHOWING
LOCATION IN PROSPECTUS OF ITEMS OF FORM S-4
<TABLE>
<CAPTION>
FORM S-4 ITEM NO. CAPTION IN PROSPECTUS
------------------------------------------- --------------------------------------------
<C> <S> <C>
1. Forepart of Registration Statement and
Outside Front Cover Page of Prospectus... Outside Front Cover Page; Inside Front Cover
Page
2. Inside Front and Outside Back Cover Pages
of Prospectus............................ Inside Front Cover Page; Available
Information; Incorporation of Certain
Documents by Reference; Table of Contents
</TABLE>
<TABLE>
<C> <S> <C>
3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information............ Prospectus Summary; Risk Factors; Ohio
Edison Company; Certain Consolidated
Financial Information of Ohio Edison; Ohio
Edison Financing Trust II
4. Terms of the Transaction................... Prospectus Summary; Comparison of Preferred
Securities and Class A Shares; Certain
Consolidated Financial Information of Ohio
Edison; The Offer; Description of the
Preferred Securities; Description of the
Preferred Securities Guarantee;
Description of the Subordinated
Debentures; Taxation
5. Pro Forma Financial Information............ Not Applicable
6. Material Contacts with the Company Being
Acquired................................. Not Applicable
7. Additional Information Required for
Reoffering by Persons and Parties Deemed
to be Underwriters....................... Not Applicable
8. Interests of Named Experts and Counsel..... Legal Matters
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities.............................. Not Applicable
10. Information with Respect to S-3
Registrants.............................. Incorporation of Certain Documents by
Reference
11. Incorporation of Certain Information by
Reference................................ Incorporation of Certain Documents by
Reference
12. Information with Respect to S-2 or S-3
Registrants.............................. Not Applicable
13. Incorporation of Certain Information by
Reference................................ Not Applicable
14. Information with Respect to Registrants
Other than S-3 or S-2 Registrants........ Not Applicable
15. Information with Respect to S-3
Companies................................ Not Applicable
16. Information with Respect to S-2 or S-3
Companies................................ Not Applicable
17. Information with Respect to Companies Other
Than S-3 or S-2 Companies................ Not Applicable
18. Information if Proxies, Consents or
Authorizations are to be Solicited....... Not Applicable
19. Information if Proxies, Consents or
Authorizations are not to be Solicited or
in
an Exchange Offer........................ Incorporation of Certain Documents by
Reference
</TABLE>
<PAGE> 3
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED APRIL 12, 1996
PROSPECTUS
- - - ----------
OHIO EDISON FINANCING TRUST II
OFFER TO EXCHANGE ITS
[ ]% TRUST ORIGINATED PREFERRED SECURITIES(SM) ("TOPRS(SM)")
(LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY AND
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY OHIO EDISON COMPANY)
FOR UP TO 3,600,000 OUTSTANDING SHARES OF
7.75% CLASS A PREFERRED STOCK, $25 PAR VALUE,
OF
OHIO EDISON COMPANY
THE OFFER, THE PRORATION PERIOD
AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON [ ], 1996,
UNLESS THE OFFER IS EXTENDED.
------------------------
Ohio Edison Financing Trust II, a Delaware statutory business trust (the
"Trust"), hereby offers, upon the terms and subject to the conditions set forth
in this Prospectus and the accompanying Letter of Transmittal (the "Letter of
Transmittal" which, together with this Prospectus, constitute the "Offer"), to
exchange its [ ]% Trust Originated Preferred SecuritiesSM ("TOPrSSM"),
representing preferred undivided beneficial interests in the assets of the Trust
(the "Preferred Securities"), for up to 3,600,000 of the outstanding shares of
7.75% Class A Preferred Stock, $25 par value, (the "Class A Shares") of Ohio
Edison Company, an Ohio corporation ("Ohio Edison"). Exchanges will be made on
the basis of one Preferred Security for each Class A Share validly tendered and
accepted for exchange in the Offer. As of the date of this Prospectus, there are
4,000,000 Class A Shares outstanding. Class A Shares not accepted for exchange
because of proration will be returned. Concurrent with the issuance of Preferred
Securities in exchange for Class A Shares validly tendered in the Offer, Ohio
Edison will deposit in the Trust as trust assets its [ ]% Junior Subordinated
Debentures Due 2016 (the "Subordinated Debentures"), having an aggregate
principal amount equal to the aggregate stated liquidation amount of the
Preferred Securities and the Common Securities to be issued by the Trust.
------------------------
SEE "RISK FACTORS" STARTING ON PAGE 18 FOR A DISCUSSION OF CERTAIN FACTORS
RELATING TO THE PREFERRED SECURITIES THAT SHOULD BE CONSIDERED BY INVESTORS,
INCLUDING THE PERIOD AND CIRCUMSTANCES DURING AND UNDER WHICH PAYMENTS ON
THE SUBORDINATED DEBENTURES AND THE PREFERRED SECURITIES MAY BE
DEFERRED AND THE RELATED UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES.
------------------------
APPLICATION WILL BE MADE TO HAVE THE PREFERRED SECURITIES APPROVED FOR LISTING,
SUBJECT TO OFFICIAL NOTICE OF ISSUANCE, ON THE NEW YORK STOCK EXCHANGE,
INC. (THE "NYSE"). IF SUCH APPROVAL IS RECEIVED, TRADING OF THE
PREFERRED SECURITIES ON THE NYSE IS EXPECTED TO COMMENCE WITHIN A
30-DAY PERIOD AFTER THE INITIAL DELIVERY OF THE PREFERRED
SECURITIES. SEE "LISTING AND TRADING OF PREFERRED SECURITIES
AND CLASS A SHARES."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR BY ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
------------------------
Merrill Lynch & Co., has been retained as Dealer Manager to solicit
exchanges of Class A Shares for Preferred Securities. See "The Offer -- Dealer
Manager; Soliciting Dealers." The Bank of New York has been retained as Exchange
Agent in connection with the Offer. Georgeson & Company Inc. has been retained
to act as Information Agent to assist in connection with the Offer.
------------------------
The Dealer Manager for the Offer is:
MERRILL LYNCH & CO.
------------------------
The date of this Prospectus is [ ], 1996.
SM "Trust Originated Preferred Securities" and "TOPrS" are service marks of
Merrill Lynch & Co.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
<PAGE> 4
NEITHER THE BOARD OF DIRECTORS OF OHIO EDISON, OHIO EDISON, THE TRUSTEES
NOR THE TRUST MAKES ANY RECOMMENDATION TO HOLDERS OF CLASS A SHARES AS TO
WHETHER TO TENDER OR REFRAIN FROM TENDERING IN THE OFFER. HOLDERS OF CLASS A
SHARES ARE URGED TO CONSULT THEIR FINANCIAL AND TAX ADVISORS IN MAKING THEIR
DECISIONS ON WHAT ACTION TO TAKE IN LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES.
IN ORDER TO PARTICIPATE IN THE OFFER, HOLDERS (AS DEFINED HEREIN) OF CLASS
A SHARES MUST SUBMIT A LETTER OF TRANSMITTAL AND COMPLY WITH THE OTHER
PROCEDURES FOR TENDERING IN ACCORDANCE WITH THE INSTRUCTIONS CONTAINED HEREIN
AND IN THE LETTER OF TRANSMITTAL PRIOR TO THE EXPIRATION DATE (AS DEFINED
HEREIN). SEE "THE OFFER -- PROCEDURES FOR TENDERING."
For a description of the other terms of the Offer, see "The Offer -- Terms
of the Offer", "-- Expiration Date; Extensions; Amendments; Termination",
"-- Withdrawal of Tenders" and "-- Acceptance of Shares and Proration."
Consummation of the Offer is conditioned on, among other things, receipt of at
least 1,200,000 validly tendered Class A Shares, which condition may be waived.
Application will be made to have the Preferred Securities approved for listing
on the NYSE under the symbol "[ ]", subject to official notice of issuance.
In order to satisfy the NYSE listing requirements, acceptance of Class A Shares
validly tendered in the Offer is subject to the condition that as of the
Expiration Date there be at least 400 record or beneficial holders of at least
1,000,000 Preferred Securities to be issued in exchange for such Class A Shares
(the "Minimum Distribution Condition"), which condition may not be waived. See
"The Offer -- Expiration Date; Extensions; Amendments; Termination" and
"-- Conditions to the Offer."
The Trust expressly reserves the right, in its sole discretion, subject to
applicable law, to (i) terminate the Offer, and not accept for exchange any
Class A Shares and promptly return all Class A Shares upon the failure of any of
the conditions specified above or in "The Offer -- Conditions to the Offer",
(ii) waive any condition to the Offer (other than the Minimum Distribution
Condition) and accept all Class A Shares previously tendered pursuant to the
Offer, (iii) extend the Expiration Date of the Offer and retain all Class A
Shares tendered pursuant to the Offer until the Expiration Date, subject,
however, to all withdrawal rights of holders, see "The Offer -- Withdrawal of
Tenders", (iv) amend the terms of the Offer or (v) modify the form of the
consideration to be paid pursuant to the Offer. Any amendment applicable to the
Offer will apply to all Class A Shares tendered pursuant to the Offer. The
minimum period during which the Offer must remain open following material
changes in the terms of the Offer or the information concerning the Offer, other
than a change in the percentage of securities sought or the price, depends upon
the facts and circumstances, including the relative materiality of such terms or
information. See "The Offer -- Expiration Date; Extensions; Amendments;
Termination."
Ohio Edison will own all of the securities representing common undivided
beneficial interests in the assets of the Trust (the "Common Securities" and,
together with the Preferred Securities, the "Trust Securities"). The Trust
exists for the exclusive purposes of (a) (i) issuing its Preferred Securities in
exchange for Class A Shares pursuant to the Offer and delivering such Class A
Shares to Ohio Edison in consideration for the deposit by Ohio Edison in the
Trust as trust assets of Subordinated Debentures having an aggregate principal
amount equal to the aggregate par value of such Class A Shares so delivered, and
(ii) issuing and selling its Common Securities to Ohio Edison for cash and using
the proceeds thereof to purchase as trust assets an equal aggregate principal
amount of Subordinated Debentures, and (b) engaging in such other activities as
are necessary, convenient or incidental thereto. The Subordinated Debentures
will be unsecured obligations of Ohio Edison and will be subordinate and junior
in right of payment to certain other indebtedness of Ohio Edison, as described
herein. Upon an event of default under the Declaration (as defined herein), the
holders of the Preferred Securities will have a preference over the holder of
the Common Securities with respect to payments in respect of distributions and
payments upon liquidation, redemption and otherwise. See "Prospectus
Summary -- Description of Preferred Securities and Subordinated Debentures."
Cash distributions on the Preferred Securities will be cumulative from the
first day following the Expiration Date (the "Accrual Date") at an annual rate
of [ ]% of the liquidation amount of $25 per
2
<PAGE> 5
Preferred Security, and will be payable quarterly in arrears on the last day of
March, June, September and December of each year, commencing on [ ], 1996
("distributions"). In addition, holders of the Preferred Securities will be
entitled to an additional cash distribution at the rate of 7.75% per annum of
the liquidation amount thereof from [ ], 1996 through the Expiration Date
("Pre-Issuance Accrued Distribution") in lieu of dividends accumulating and
unpaid after [ ], 1996 on their Class A Shares accepted for exchange, such
additional distribution to be made on [ ], 1996 to holders of the Preferred
Securities on the record date for such distribution.
The distribution payable on [ ], 1996, which will be calculated
at the above rate and based on a period that is shorter than a full quarter,
will be in the amount of $[ ] per Preferred Security. The distribution rate
and the distribution and other payment dates for the Preferred Securities will
correspond to the interest rate and interest and other payment dates on the
Subordinated Debentures, which will be the sole assets of the Trust. As a
result, if principal or interest is not paid on the Subordinated Debentures, no
amounts will be paid on the Preferred Securities. The payment of distributions
out of moneys held by the Trust, and payments on liquidation of the Trust or the
redemption of Preferred Securities, as set forth below, are guaranteed by Ohio
Edison (the "Preferred Securities Guarantee") if and to the extent the Trust has
funds available therefor. Ohio Edison's obligations under the Preferred
Securities Guarantee, taken together with its other obligations under the
Subordinated Debentures and the Indenture and its obligations under the
Declaration, including its obligation to pay all fees, expenses, debts and
obligations (other than with respect to the Trust Securities) related to the
Trust and the Offer, constitute a full and unconditional guarantee by Ohio
Edison of payments due on the Preferred Securities (collectively, the
obligations described in this sentence comprise the "Back-up Obligations"). See
"Effect of Obligations Under the Subordinated Debentures and the Preferred
Securities Guarantee" and "Description of the Preferred Securities Guarantee."
The obligations of Ohio Edison under the Preferred Securities Guarantee are
subordinate and junior in right of payment to all other liabilities of Ohio
Edison and will rank pari passu with the most senior preferred stock issued by
Ohio Edison from time to time and with any current or future guarantee entered
into by Ohio Edison in respect of any preferred stock of any subsidiary or
affiliate of Ohio Edison. If Ohio Edison does not make principal or interest
payments on the Subordinated Debentures, the Trust will not have sufficient
funds to redeem or make distributions on the Preferred Securities, in which
event the Preferred Securities Guarantee will not apply to such redemptions or
distributions until the Trust has sufficient funds available therefor. The
obligations of Ohio Edison under the Subordinated Debentures are subordinate and
junior in right of payment to all present and future Senior Indebtedness (as
defined herein) of Ohio Edison. As of December 31, 1995, Ohio Edison had
approximately $3.3 billion principal amount of indebtedness for borrowed money
constituting Senior Indebtedness on a consolidated basis.
Ohio Edison has the right to defer payments of interest on the Subordinated
Debentures by extending the interest payment period on the Subordinated
Debentures, at any time, for up to 20 consecutive quarters (each an "Extension
Period"). If interest payments are so deferred, distributions on the Preferred
Securities will also be deferred. Despite such deferral, during an Extension
Period distributions will continue to accrue with interest thereon (to the
extent permitted by applicable law) at an annual rate of [ ]% per annum, and
the interest so accrued at the end of each quarter and remaining unpaid will
itself bear interest (to the extent permitted by applicable law) thereafter
until paid on the same basis, and holders of Preferred Securities will be
required to include deferred interest income in their gross income for United
States federal income tax purposes in advance of receipt of the cash interest
payments attributable to such deferred income. There could be multiple Extension
Periods of varying lengths throughout the term of the Subordinated Debentures.
See "Description of the Subordinated Debentures -- Option to Extend Interest
Payment Period," "Risk Factors -- Option to Extend Interest Payment Period" and
"Taxation -- Original Issue Discount" and "-- Potential Extension of Payment
Period on the Subordinated Debentures." In the event of any such deferral, the
holders of the Preferred Securities do not have the right to appoint a special
representative or trustee or otherwise act to protect their interests.
The Subordinated Debentures are redeemable by Ohio Edison (in whole or in
part) from time to time, after April 1, 1998, or at any time in certain
circumstances upon the occurrence of a Tax Event (as defined herein). If Ohio
Edison redeems Subordinated Debentures, the Trust must redeem Trust Securities
having an
3
<PAGE> 6
aggregate liquidation amount equal to the aggregate principal amount of the
Subordinated Debentures so redeemed at $25 per Trust Security plus accrued and
unpaid distributions thereon (the "Redemption Price") to the date fixed for
redemption. See "Description of the Preferred Securities -- Mandatory
Redemption." The Preferred Securities will be redeemed upon maturity of the
Subordinated Debentures. The Subordinated Debentures mature on [ ],
2016. In addition, upon the occurrence of a Special Event (as defined herein)
arising from a change in law or a change in legal interpretation, unless the
Subordinated Debentures are redeemed in the limited circumstances described
below, the Trust shall be terminated with the result that the Subordinated
Debentures will be distributed to the holders of the Trust Securities, on a pro
rata basis, in lieu of any cash distribution. In the case of the occurrence of a
Special Event that is a Tax Event, Ohio Edison will have the right in certain
circumstances to redeem the Subordinated Debentures, which would result in the
redemption by the Trust of the Trust Securities in the same amount on a pro rata
basis. If the Subordinated Debentures are distributed to the holders of the
Preferred Securities, Ohio Edison will use its best efforts to have the
Subordinated Debentures listed on the NYSE or on such other exchange as the
Preferred Securities are then listed. See "Description of the Preferred
Securities -- Special Event Redemption or Distribution" and "Description of the
Subordinated Debentures."
In the event of the voluntary or involuntary dissolution, winding-up or
termination of the Trust, the holders of the Preferred Securities will be
entitled to receive, for each Preferred Security, a liquidation amount of $25
plus accrued and unpaid distributions thereon (including interest, if any,
thereon) to the date of payment, unless in connection with such dissolution,
winding-up or termination the Subordinated Debentures are distributed to the
holders of the Preferred Securities. See "Description of the Preferred
Securities -- Liquidation Distribution Upon Termination."
Ohio Edison will be the sole obligor under the Subordinated Debentures and
the Preferred Securities Guarantee and with respect to the other obligations of
Ohio Edison described herein.
The Class A Shares are listed and principally traded on the NYSE and the
Chicago Stock Exchange under the symbol "OECPrM". On [ ], 1996, the
last full day of trading prior to the first public announcement of the Offer,
the closing sales price per Class A Share on the NYSE as reported on the
Composite Tape was $[ ]. HOLDERS ARE URGED TO OBTAIN CURRENT MARKET
QUOTATIONS FOR THE CLASS A SHARES. To the extent that Class A Shares are
tendered and accepted in the Offer, the terms on which untendered Class A Shares
could subsequently be sold could be adversely affected. See "Listing and Trading
of Preferred Securities and Class A Shares."
Ohio Edison will pay to Soliciting Dealers (as defined herein) designated
by the record or beneficial owner, as appropriate, of Class A Shares a
solicitation fee of $[ ] per Class A Share validly tendered and accepted for
exchange pursuant to the Offer, subject to certain conditions. Soliciting
Dealers are not entitled to a solicitation fee for Class A Shares beneficially
owned by such Soliciting Dealer. See "The Offer -- Dealer Manager; Soliciting
Dealers."
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS SHOULD NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY OHIO EDISON, THE TRUST, THE TRUSTEES OR
THE DEALER MANAGER. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY EXCHANGE
MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF OHIO EDISON OR THE TRUST SINCE THE
RESPECTIVE DATES AS OF WHICH INFORMATION IS GIVEN HEREIN. THE OFFER IS NOT BEING
MADE TO (NOR WILL TENDERS BE ACCEPTED FROM OR ON BEHALF OF) HOLDERS OF CLASS A
SHARES IN ANY JURISDICTION IN WHICH THE MAKING OF THE OFFER OR THE ACCEPTANCE
THEREOF WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION. HOWEVER,
OHIO EDISON AND THE TRUST MAY, AT THEIR DISCRETION, TAKE SUCH ACTION AS THEY MAY
DEEM NECESSARY TO MAKE THE OFFER IN ANY SUCH JURISDICTION AND EXTEND THE OFFER
TO HOLDERS OF CLASS A SHARES IN SUCH
4
<PAGE> 7
JURISDICTION. IN ANY JURISDICTION THE SECURITIES LAWS OR BLUE SKY LAWS OF WHICH
REQUIRE THE OFFER TO BE MADE BY A LICENSED BROKER OR DEALER, THE OFFER IS BEING
MADE ON BEHALF OF THE TRUST BY THE DEALER MANAGER OR ONE OR MORE REGISTERED
BROKERS OR DEALERS WHICH ARE LICENSED UNDER THE LAWS OF SUCH JURISDICTION.
AVAILABLE INFORMATION
Ohio Edison is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by Ohio Edison may be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's
Regional Offices located at 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661, and 7 World Trade Center, New York, New York 10048. Copies of
such materials can be obtained by mail from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. In addition, such material may also be inspected and copied at the
offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New
York 10005, on which certain of Ohio Edison's securities are listed.
Ohio Edison and the Trust have filed with the Commission a registration
statement on Form S-4 (herein, together with all amendments and exhibits,
referred to as the "Registration Statement") under the Securities Act of 1933,
as amended (the "Act"). This Prospectus does not contain all of the information
set forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information, reference is hereby made to the Registration Statement.
No separate financial statements of the Trust are included herein. Ohio
Edison considers that such financial statements would not be material to holders
of the Preferred Securities because (i) all of the Common Securities of the
Trust are owned by Ohio Edison, a reporting company under the Exchange Act; (ii)
the Trust has no independent operations, but exists for the sole purpose of
issuing securities representing undivided beneficial interests in the assets of
the Trust and investing the proceeds thereof in the Subordinated Debentures (and
engaging in those activities necessary, convenient or incidental thereto); and
(iii) the obligations of the Trust under the securities issued thereby, to the
extent funds are available therefor, are fully and unconditionally guaranteed to
the extent set forth herein by Ohio Edison.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following document filed by Ohio Edison with the Commission pursuant to
the Exchange Act is incorporated herein by reference:
-- Ohio Edison's Annual Report on Form 10-K for the year ended December 31,
1995.
All other documents filed by Ohio Edison pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the Expiration Date shall be deemed to be incorporated by reference
into this Prospectus and to be a part hereof from the respective dates of the
filing of such documents. Any statement contained herein or in a document all or
a portion of which is incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
Ohio Edison will provide without charge to each person, including a
beneficial owner, to whom a copy of this Prospectus has been delivered, upon the
written or oral request of any such person, a copy of any and all of the
documents which are incorporated herein by reference, other than exhibits to
such information (unless
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<PAGE> 8
such exhibits are specifically incorporated by reference into such documents).
Requests for such copies should be directed to Ohio Edison Company, Investor
Services, 76 South Main Street, Akron, Ohio 44308, telephone number
1-800-736-3402. The information relating to Ohio Edison contained in this
document does not purport to be comprehensive and should be read together with
the information contained in the incorporated documents.
In order to assure timely delivery of the documents, any request should be
made not later than five business days prior to the Expiration Date.
------------------------
THIS PROSPECTUS CONTAINS BRIEF SUMMARIES OF CERTAIN MORE DETAILED
INFORMATION CONTAINED IN DOCUMENTS INCORPORATED HEREIN BY REFERENCE. SUCH
SUMMARIES ARE QUALIFIED IN THEIR ENTIRETY BY THE DETAILED INFORMATION CONTAINED
IN THE INCORPORATED DOCUMENTS.
------------------------
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................................................................ 5
Incorporation of Certain Documents by Reference...................................... 5
Prospectus Summary................................................................... 8
Risk Factors......................................................................... 18
Comparison of Preferred Securities and Class A Shares................................ 23
Ohio Edison Company.................................................................. 27
Certain Consolidated Financial Information of Ohio Edison............................ 28
Ohio Edison Financing Trust II....................................................... 29
The Offer............................................................................ 32
Listing and Trading of Preferred Securities and Class A Shares....................... 39
Transactions and Arrangements Concerning the Offer................................... 40
Fees and Expenses; Transfer Taxes.................................................... 40
Price Range of Class A Shares........................................................ 40
Description of the Preferred Securities.............................................. 41
Description of the Preferred Securities Guarantee.................................... 52
Description of the Subordinated Debentures........................................... 54
Effect of Obligations Under the Subordinated Debentures and the Preferred Securities
Guarantee.......................................................................... 61
Description of the Class A Shares.................................................... 62
Taxation............................................................................. 65
Legal Matters........................................................................ 68
Experts.............................................................................. 69
ERISA Considerations................................................................. 69
</TABLE>
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<PAGE> 10
PROSPECTUS SUMMARY
The following summary does not purport to be complete and is qualified in
its entirety by the detailed information contained elsewhere in, or incorporated
by reference in, this Prospectus.
OHIO EDISON FINANCING TRUST II
The Trust is a statutory business trust formed under the Delaware Business
Trust Act, as amended (the "Business Trust Act"), on March 5, 1996. The Trust's
business is defined in a Declaration of Trust which will be amended and restated
in its entirety as of the date the Trust accepts Class A Shares in the Offer
(see "The Offer -- Terms of the Offer") (as so amended and restated, the
"Declaration") substantially in the form filed as an exhibit to the Registration
Statement of which this Prospectus forms a part. The Declaration will be
qualified as an indenture under the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act"). Upon issuance of the Preferred Securities, the holders
thereof will own all of the issued and outstanding Preferred Securities. See
"Description of the Preferred Securities -- Book-Entry; Delivery and Form." Ohio
Edison will acquire all of the Common Securities in an aggregate liquidation
amount equal to 3% of the total capital of the Trust. The Trust exists for the
exclusive purposes of (a) (i) issuing its Preferred Securities in exchange for
Class A Shares pursuant to the Offer and delivering such Class A Shares to Ohio
Edison in consideration of the deposit by Ohio Edison in the Trust as trust
assets of Subordinated Debentures having an aggregate principal amount equal to
the aggregate par value of such Class A Shares so delivered, and (ii) issuing
and selling its Common Securities to Ohio Edison for cash and using the proceeds
thereof to purchase as trust assets an equal aggregate principal amount of
Subordinated Debentures and (b) engaging in such other activities as are
necessary, convenient or incidental thereto. The rights of the holders of the
Preferred Securities, including economic rights, rights to information and
voting rights, are set forth in the Declaration, the Business Trust Act and the
Trust Indenture Act. See "Description of the Preferred Securities."
The Trust's business and affairs will be conducted by the trustees (the
"Company Trustees") appointed by Ohio Edison, as holder of the Common
Securities. The duties and obligations of the Company Trustees shall be governed
by the Declaration and the Business Trust Act and, in the case of the Property
Trustee (as defined below), the Trust Indenture Act. Pursuant to the
Declaration, the number of Company Trustees will initially be four. Two of the
Company Trustees (the "Regular Trustees") will be persons who are employees or
officers of, or affiliated with, Ohio Edison. A third trustee will be a
financial institution unaffiliated with Ohio Edison that will serve as property
trustee (the "Property Trustee") under the Declaration and as indenture trustee
for purposes of the Trust Indenture Act. The Bank of New York will act as the
Property Trustee until removed or replaced by the holder of the Common
Securities. The Bank of New York will also act as indenture trustee under the
Preferred Securities Guarantee (the "Preferred Guarantee Trustee"). See
"Description of the Preferred Securities Guarantee." The fourth trustee of the
Trust will be a financial institution or an affiliate thereof which maintains a
principal place of business in the State of Delaware (the "Delaware Trustee").
The Bank of New York (Delaware) will act as the Delaware Trustee.
The Property Trustee will hold title to the Subordinated Debentures for the
benefit of the Trust and holders of the Trust Securities and will have the power
to exercise all rights, powers and privileges under the Indenture (as defined
herein) as the holder of the Subordinated Debentures. In addition, the Property
Trustee will maintain exclusive control of a segregated non-interest bearing
trust account (the "Property Account") to hold all payments made in respect of
the Subordinated Debentures for the benefit of the Trust and holders of the
Trust Securities. The Property Trustee will make payments of distributions and
payments on liquidation, redemption and otherwise to the holders of the Trust
Securities out of funds from the Property Account. The Preferred Guarantee
Trustee will hold the Preferred Securities Guarantee for the benefit of the
holders of the Preferred Securities. Ohio Edison, as the holder of all the
Common Securities, will have the right to appoint, remove or replace any Company
Trustee and to increase or decrease the number of Company Trustees, provided
that the number of Company Trustees shall be at least three if the Property
Trustee is not also the Delaware Trustee. The Declaration provides that Ohio
Edison will pay all fees, expenses, debts and obligations (other than with
respect to the Trust Securities) related to the Trust and the offering of the
Trust Securities.
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<PAGE> 11
CERTAIN POTENTIAL BENEFITS AND RISKS TO INVESTORS
Prospective exchanging holders of Class A Shares who plan to participate in
the Offer should carefully review the information contained elsewhere in this
Prospectus prior to making a decision regarding the Offer and should
particularly consider the following matters:
POTENTIAL BENEFITS TO EXCHANGING HOLDERS
- The cash distributions rate on the Preferred Securities will be [ ]
basis points greater than the dividend rate on the Class A Shares. See
"Comparison of Preferred Securities and Class A Shares."
- Although the obligations of Ohio Edison under the Subordinated Debentures
and the Preferred Securities Guarantee are unsecured and will be subordinated
and junior in right of payment to all Senior Indebtedness (as herein defined) of
Ohio Edison, they will be senior to all capital stock of Ohio Edison now or
hereafter issued by Ohio Edison (including the Class A Shares), except that Ohio
Edison's obligations under the Preferred Securities Guarantee will rank pari
passu with the most senior preferred or preference stock issued by Ohio Edison
from time to time and with any current or future guarantee by Ohio Edison in
respect of any preferred or preference stock of any subsidiary or affiliate of
Ohio Edison.
- While no dividends are required to be paid with respect to the Class A
Shares, interest payments on the Subordinated Debentures and therefore
distributions on the Preferred Securities may not be deferred for more than 20
consecutive quarterly interest periods. Any Extension Period with respect to
payment of interest on the Subordinated Debentures will also apply to
distributions with respect to the Preferred Securities. Moreover, Ohio Edison
may defer interest payments on the Subordinated Debentures only if it does not
declare or pay dividends on, or redeem, purchase or make a distribution or
liquidation payment with respect to, any of its capital stock (except under
certain circumstances). See "Description of the Preferred Securities." However,
to date, Ohio Edison has made each quarterly dividend payment with respect to
the Class A Shares on the scheduled dividend payment date. In addition, such
dividends accrue whether or not they are declared. See "Description of the Class
A Shares -- Dividends."
- The Offer will allow Ohio Edison to achieve certain tax efficiencies
because, in contrast to dividend payments with respect to the Class A Shares
which are not deductible by Ohio Edison, Ohio Edison will be able to deduct
interest payments on the Subordinated Debentures for United States federal
income tax purposes. See "The Offer -- Purpose of the Offer."
- So long as payments of interest and other payments are made when due on
the Subordinated Debentures, such payments will be sufficient to cover cash
distributions and other payments made on the Trust Securities because (i) the
aggregate principal amount of Subordinated Debentures will be equal to the sum
of (x) the aggregate stated liquidation amount of the Preferred Securities
issued by the Trust in exchange for the Class A Shares accepted in the Offer and
(y) the amount of proceeds received by the Trust from the issuance of the Common
Securities to Ohio Edison, which proceeds will be used by the Trust to purchase
an equal principal amount of Subordinated Debentures, (ii) the interest rate and
interest and other payment dates on the Subordinated Debentures will match the
distribution rate and distribution and other payment dates for the Trust
Securities, (iii) Ohio Edison is obligated under the Declaration to pay for all
costs, expenses, debts and obligations of the Trust (other than with respect to
the Trust Securities), and (iv) the Declaration further provides that the
Regular Trustees shall not take any action that is inconsistent with the
purposes of the Trust. See "Ohio Edison Financing Trust II," "Description of the
Preferred Securities," "Description of the Subordinated Debentures" and "Effect
of Obligations Under the Subordinated Debentures and the Preferred Securities
Guarantee."
- The Trust will have no independent operations and will exist for the sole
purposes of effecting the Offer and issuing the Trust Securities as described
herein and owning and holding the Subordinated Debentures. See "Ohio Edison
Financing Trust II."
- The Property Trustee will have the power to exercise all rights, powers
and privileges under the Indenture (as defined herein) as the holder of the
Subordinated Debentures, including its rights to enforce Ohio Edison's
obligations under the Subordinated Debentures upon the occurrence of an
Indenture Event of
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<PAGE> 12
Default (as defined herein). Upon the occurrence of an Event of Default under
the Preferred Securities Guarantee, the Preferred Guarantee Trustee shall
enforce the Preferred Securities Guarantee on behalf of the holders of the
Preferred Securities. In addition, the holders of the Preferred Securities will
have certain rights to direct the Property Trustee and the Preferred Guarantee
Trustee with respect to certain matters under the Declaration and the Preferred
Securities Guarantee, respectively. If the Preferred Guarantee Trustee fails to
enforce the Preferred Securities Guarantee, any holder of Preferred Securities
may institute a legal proceeding against Ohio Edison to enforce the Preferred
Securities Guarantee. See "Description of the Preferred Securities" and
"Description of the Preferred Securities Guarantee."
POTENTIAL RISKS TO EXCHANGING HOLDERS
- Participation in the Offer will be a taxable event for holders of Class A
Shares. See "Risk Factors -- Exchange of Class A Shares for Preferred Securities
Is a Taxable Event."
- The obligations of Ohio Edison under (i) the Subordinated Debentures and
the Preferred Securities Guarantee are subordinate in right of payment to all
Senior Indebtedness (as defined herein) of Ohio Edison, and (ii) the Preferred
Securities Guarantee is also subordinate in right of payment to the Subordinated
Debentures. See "Risk Factors -- Ranking of Subordinated Obligations Under
Preferred Securities Guarantee and Subordinated Debentures"; and "-- Trust
Distributions Dependent on Ohio Edison's Payments on Subordinated Debentures."
- If Ohio Edison were to default in its obligation to pay amounts payable
on the Subordinated Debentures, the Trust would lack available funds for the
payment of distributions or amounts payable on redemption of the Preferred
Securities or otherwise. In addition, the interest payment period on the
Subordinated Debentures may be extended from time to time under certain
circumstances by Ohio Edison, in its sole discretion, for up to 20 consecutive
quarterly interest periods. See "Risk Factors -- Ranking of Subordinated
Obligations Under Preferred Securities Guarantee and Subordinated Debentures";
"-- Rights Under the Preferred Securities Guarantee"; "-- Enforcement of Certain
Rights by Holders of Preferred Securities"; "-- Option to Extend Interest
Payment Period"; and "-- Trading Price of Preferred Securities."
- Should Ohio Edison not make interest or other payments on the
Subordinated Debentures for any reason, including as a result of Ohio Edison's
election to defer payments of interest on the Subordinated Debentures by
extending the interest payment period on the Subordinated Debentures, the Trust
will not make distributions or other payments on the Trust Securities. In such
an event, holders of the Preferred Securities would not be able to rely on the
Preferred Securities Guarantee since the Preferred Securities Guarantee covers
distributions and other payments on the Preferred Securities only if and to the
extent that Ohio Edison has made a payment to the Trust of interest or principal
on the Subordinated Debentures deposited in the Trust as trust assets. See "Risk
Factors -- Rights Under the Preferred Securities Guarantee"; and "-- Enforcement
of Certain Rights by Holders of Preferred Securities."
- If Ohio Edison elects to defer payments of interest on the Subordinated
Debentures by extending the interest period on the Subordinated Debentures,
distributions on the Preferred Securities would also be deferred but the Trust
would continue to accrue interest income (as original issue discount) in respect
of such Subordinated Debentures which would be taxable to beneficial owners of
Preferred Securities. As a result, beneficial owners of Preferred Securities
during an Extension Period would include their pro rata share of the interest in
gross income in advance of the receipt of cash. See "Risk Factors -- Option to
Extend Interest Payment Period"; and "Taxation -- Original Issue Discount."
- Holders of Preferred Securities will have limited voting rights and will
not be entitled to vote to appoint, remove or replace, or to increase or
decrease the number of, Company Trustees, which voting rights are vested
exclusively in the holder of the Common Securities. See "Risk Factors -- Limited
Voting Rights" and "Description of the Preferred Securities -- Voting Rights."
Holders of Class A Shares also have limited voting rights. However, if four
quarterly dividends payable on the Class A Shares or any series of Ohio Edison's
Preferred Stock, $100 Par Value (the "$100 Preferred Stock") shall be in
default, in whole or in part, and thereafter until all defaults have been cured,
the holders of the Class A Shares and the $100 Preferred Stock shall have the
exclusive right, voting separately and as a single class, each share of $100
Preferred Stock
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<PAGE> 13
being counted as one and each Class A Share being counted as one-quarter, (i) to
elect the smallest number of directors which shall constitute a majority of the
directors of Ohio Edison, and (ii) to vote in all matters with respect to the
governing of the affairs of Ohio Edison other than the election of directors.
See "Risk Factors -- Limited Voting Rights."
- While the Class A Shares are not redeemable on or prior to April 1, 1998,
the Subordinated Debentures (and thus the Preferred Securities), though
generally not redeemable on or prior to April 1, 1998 as well, in certain
circumstances will be redeemable at any time prior to their maturity upon the
occurrence of a Tax Event (as defined herein). See "Risk Factors -- Special
Event Redemption or Distribution."
- While dividends with respect to Class A Shares are eligible for the
dividends received deduction for corporate holders, distributions on the
Preferred Securities are not eligible for the dividends received deduction for
corporate holders.
- While the Preferred Securities are expected to be approved for listing on
the NYSE, subject to official notice of issuance, the Preferred Securities are a
new issue of securities with no established trading market. In addition,
liquidity of the Preferred Securities will be affected by the number of Class A
Shares exchanged in the Offer. See "Risk Factors -- Lack of Established Trading
Market for Preferred Securities."
- Under certain circumstances, Subordinated Debentures could be distributed
to holders of Trust Securities. In such event, the Trust would be dissolved and
the holders would become holders of Subordinated Debentures. While Ohio Edison
will use its best efforts in such a situation to have the Subordinated
Debentures listed on the NYSE, there is no guarantee that such listing will take
place or that a market will exist for such Subordinated Debentures. See "Risk
Factors -- Special Event Redemption or Distribution."
POTENTIAL RISKS TO NON-EXCHANGING HOLDERS
- The liquidity and trading market for untendered Class A Shares could be
adversely affected to the extent Class A Shares are tendered and accepted in the
Offer. See "Risk Factors -- Reduced Trading Market for Class A Shares."
- The Subordinated Debentures will rank senior in right of payment to the
untendered Class A Shares. See "Risk Factors -- Ranking of Subordinated
Obligations Under Preferred Securities Guarantee and Subordinated Debentures."
THE OFFER
PURPOSE OF THE OFFER
The purpose of the Offer is to refinance the Class A Shares with the
Preferred Securities to achieve certain tax efficiencies while preserving Ohio
Edison's flexibility with respect to future financings. This refinancing will
permit Ohio Edison to deduct interest payable on the Subordinated Debentures for
United States federal income tax purposes; dividends payable on the Class A
Shares are not deductible. See "The Offer -- Purpose of the Offer."
TERMS OF THE OFFER
Upon the terms and subject to the conditions set forth herein and in the
Letter of Transmittal, the Trust hereby offers to exchange its Preferred
Securities for up to 3,600,000 of the outstanding Class A Shares of Ohio Edison.
Exchanges will be made on the basis of one Preferred Security for each Class A
Share validly tendered and accepted for exchange in the Offer. See "The
Offer -- Terms of the Offer."
EXPIRATION DATE; WITHDRAWALS
Upon the terms and conditions of the Offer, including the provisions
relating to proration described herein, the Trust will accept for exchange up to
3,600,000 Class A Shares validly tendered and not withdrawn prior to 12:00
Midnight, New York City time, on [ ], 1996, or if the Offer is
extended by the Trust,
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<PAGE> 14
in its sole discretion, the latest date and time to which the Offer has been
extended (the "Expiration Date"). Tenders of Class A Shares pursuant to the
Offer may be withdrawn at any time prior to the Expiration Date and, unless
accepted for exchange by the Trust, may be withdrawn at any time after 40
Business Days (as defined herein) after the date of this Prospectus. Class A
Shares not accepted because of proration will be returned to the tendering
holders at the Trust's expense as promptly as practicable following the
Expiration Date. A "Business Day" shall mean any day other than a day on which
banking institutions in The City of New York are authorized or required by law
to close. See "The Offer -- Expiration Date; Extensions; Amendments;
Termination", "-- Withdrawal of Tenders" and "-- Acceptance of Shares and
Proration." Tenders must be made to the Exchange Agent in order to be valid.
CONDITIONS TO THE OFFER; EXTENSIONS; AMENDMENTS; TERMINATION
Consummation of the Offer is conditioned on, among other things, (i)
receipt of at least 1,200,000 validly tendered Class A Shares, which condition
may be waived by the Trust, and (ii) tenders by a sufficient number of holders
of Class A Shares to meet the Minimum Distribution Condition, which condition
may not be waived. See "The Offer -- Conditions to the Offer" and "-- Expiration
Date; Extensions; Amendments; Termination."
The Trust expressly reserves the right, in its sole discretion, subject to
applicable law, to (i) terminate the Offer, and not accept for exchange any
Class A Shares and promptly return all Class A Shares, upon the failure of any
of the conditions referred to above, (ii) waive any condition to the Offer
(other than the Minimum Distribution Condition) and accept all Class A Shares
previously tendered pursuant to the Offer, (iii) extend the Expiration Date of
the Offer and retain all Class A Shares tendered pursuant to the Offer until the
Expiration Date, subject, however, to all withdrawal rights of holders, see "The
Offer -- Withdrawal of Tenders", (iv) amend the terms of the Offer or (v) modify
the form of the consideration to be paid pursuant to the Offer. Any amendment
applicable to the Offer will apply to all Class A Shares tendered pursuant to
the Offer. The minimum period during which the Offer must remain open following
material changes in the terms of the Offer or the information concerning the
Offer, other than a change in the percentage of securities sought or the price,
depends upon the facts and circumstances, including the relative materiality of
such terms or information. See "The Offer -- Conditions to the Offer" and
"-- Expiration Date; Extensions; Amendments; Termination."
PROCEDURES FOR TENDERING
Each holder of Class A Shares wishing to participate in the Offer must (i)
properly complete and sign the Letter of Transmittal or a facsimile thereof (all
references in this Prospectus to the Letter of Transmittal shall be deemed to
include a facsimile thereof) in accordance with the instructions contained
herein and in the Letter of Transmittal, together with any required signature
guarantees, and deliver the same to The Bank of New York, as Exchange Agent, at
one of its addresses set forth on the back cover page hereof, prior to the
Expiration Date and either (a) certificates for the Class A Shares must be
received by the Exchange Agent at such address or (b) such Class A Shares must
be transferred pursuant to the procedures for book-entry transfer described
herein and a confirmation of such book-entry transfer must be received by the
Exchange Agent, in each case prior to the Expiration Date, or (ii) comply with
the guaranteed delivery procedures described herein. See "The
Offer -- Procedures for Tendering."
IN ORDER TO PARTICIPATE IN THE OFFER, HOLDERS OF CLASS A SHARES MUST SUBMIT
A LETTER OF TRANSMITTAL AND COMPLY WITH THE OTHER PROCEDURES FOR TENDERING IN
ACCORDANCE WITH THE INSTRUCTIONS CONTAINED HEREIN AND IN THE LETTER OF
TRANSMITTAL PRIOR TO THE EXPIRATION DATE.
LETTERS OF TRANSMITTAL, CLASS A SHARES AND ANY OTHER REQUIRED DOCUMENTS
SHOULD BE SENT ONLY TO THE EXCHANGE AGENT -- NOT TO OHIO EDISON, THE TRUST, THE
TRUSTEES, THE DEALER MANAGER OR THE INFORMATION AGENT.
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<PAGE> 15
SPECIAL PROCEDURE FOR BENEFICIAL OWNERS
Any beneficial owner whose Class A Shares are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender such Class A Shares should contact such registered holder promptly and
instruct such registered holder to tender on such beneficial owner's behalf. If
such beneficial owner wishes to tender on its own behalf, such owner must, prior
to completing and executing a Letter of Transmittal and delivering its Class A
Shares, either make appropriate arrangements to register ownership of the Class
A Shares in such owner's name or obtain a properly completed stock power from
the registered holder. The transfer of registered ownership may take
considerable time and may not be able to be completed prior to the Expiration
Date. See "The Offer -- Procedures for Tendering -- Special Procedure for
Beneficial Owners."
GUARANTEED DELIVERY PROCEDURES
If a holder of Class A Shares desires to accept the Offer and time will not
permit a Letter of Transmittal or Class A Shares to reach the Exchange Agent
before the Expiration Date or the procedure for book-entry transfer cannot be
completed on a timely basis, a tender may be effected in accordance with the
guaranteed delivery procedures set forth in "The Offer -- Procedures for
Tendering -- Guaranteed Delivery."
ACCEPTANCE OF SHARES AND PRORATION
Upon the terms and subject to the conditions of the Offer, including the
Minimum Distribution Condition, if 3,600,000 or fewer Class A Shares have been
validly tendered and not withdrawn prior to the Expiration Date, the Trust will
accept for exchange all such Class A Shares. Upon the terms and subject to the
conditions of the Offer, if more than 3,600,000 Class A Shares (or, if decreased
as described herein, such lesser number as the Trust may elect to purchase
pursuant to the Offer) have been validly tendered and not withdrawn prior to the
Expiration Date, the Trust will accept for exchange Class A Shares from each
tendering holder on a pro rata basis, subject to adjustment to avoid the
acceptance for exchange of fractional shares.
If the Trust decides, in its sole discretion, to increase or decrease the
number of Class A Shares sought in the Offer or to increase or decrease the
consideration offered to holders of Class A Shares, and if the Offer is
scheduled to expire less than ten Business Days from and including the date that
notice of such increase or decrease is first published, sent or given in the
manner specified in "The Offer -- Terms of the Offer" and "-- Expiration Date;
Extensions; Amendments; Termination," then the Offer will remain open for a
minimum of ten Business Days from and including the date of such notice.
All Class A Shares not accepted pursuant to the Offer, including shares not
purchased because of proration, will be returned to the tendering holders at the
Trust's expense as promptly as practicable following the Expiration Date.
DELIVERY OF PREFERRED SECURITIES
Subject to the terms and conditions of the Offer, the delivery of the
Preferred Securities to be issued pursuant to the Offer will occur as promptly
as practicable following the Expiration Date. See "The Offer -- Terms of the
Offer" and "-- Expiration Date; Extensions; Amendments; Termination."
If proration of tendered Class A Shares is required, because of the
difficulty in determining the number of Class A Shares validly tendered
(including shares tendered by the guaranteed delivery procedures described in
"The Offer -- Procedures for Tendering"), the Trust does not expect that it
would be able to announce the final proration factor or to commence the exchange
for any shares of Class A Shares pursuant to the Offer until approximately five
Business Days after the Expiration Date. Preliminary results of the proration
will be announced by press release as promptly as practicable after the
Expiration Date. Holders of Class A Shares may obtain such preliminary
information from the Dealer Manager or the Information Agent and may also be
able to obtain such information from their brokers.
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<PAGE> 16
Until the final proration factors are known, the Trust will not issue any
Preferred Securities in exchange for any Class A Shares accepted for exchange
pursuant to the Offer or return Class A Shares delivered to the Exchange Agent
but not tendered or return Class A Shares tendered but not accepted for exchange
because of proration.
DESCRIPTION OF PREFERRED SECURITIES AND
SUBORDINATED DEBENTURES
PREFERRED SECURITIES OFFERED
3,600,000 [ ]% Trust Originated Preferred Securities evidencing
preferred undivided beneficial interests in the assets of the Trust are offered
hereby. Holders of the Preferred Securities are entitled to receive cumulative
cash distributions at an annual rate of [ ]% of the liquidation amount of
$25 per Preferred Security, accruing from [ ], 1996 and payable
quarterly in arrears on March 31, June 30, September 30 and December 31 of each
year, commencing on [ ], 1996. [The distribution payable on
[ ], 1996, which will be calculated at the above rate and based on a
period that is shorter than a full quarter, will be in the amount of
$[ ] per Preferred Security.] In addition, holders of Preferred
Securities will be entitled to an additional cash distribution at the rate of
7.75% per annum of the liquidation amount thereof from [ ], 1996
through the Expiration Date in lieu of dividends accumulating and unpaid after
[ ], 1996 on their Class A Shares accepted for exchange, such
additional distribution to be made on [ ], 1996 to holders of the
Preferred Securities on the record date for such distribution. The distribution
rate and the distribution and other payment dates for the Preferred Securities
will correspond to the interest rate and interest and other payment dates on the
Subordinated Debentures, which will be the sole assets of the Trust. As a
result, if principal or interest is not paid on the Subordinated Debentures, no
amounts will be paid on the Preferred Securities. See "Description of the
Preferred Securities."
SUBORDINATED DEBENTURES
There will be deposited in the Trust as trust assets (i) Subordinated
Debentures having an aggregate principal amount equal to the aggregate stated
liquidation amount of the Preferred Securities issued by the Trust in exchange
for the Class A Shares accepted in the Offer and (ii) Subordinated Debentures
having an aggregate principal amount equal to the amount of proceeds received by
the Trust from the sale of the Common Securities to Ohio Edison. The
Subordinated Debentures will be subordinate and junior in right of payment to
all Senior Indebtedness of Ohio Edison. See "Description of the Subordinated
Debentures -- Subordination."
PREFERRED SECURITIES GUARANTEE
Payment of distributions out of moneys held by the Trust, and payments on
liquidation of the Trust or the redemption of Preferred Securities, are
guaranteed by Ohio Edison if and to the extent the Trust has funds available
therefor. If Ohio Edison does not make principal or interest payments on the
Subordinated Debentures, the Trust will not have sufficient funds to redeem or
make distributions on the Preferred Securities, in which event the Preferred
Securities Guarantee will not apply to such redemptions or distributions until
the Trust has sufficient funds available therefor. Ohio Edison's obligations
under the Preferred Securities Guarantee, together with the other Back-up
Obligations, constitute a full and unconditional guarantee by Ohio Edison of
payments due on the Preferred Securities. See "Effect of Obligations Under the
Subordinated Debentures and the Preferred Securities Guarantee" and "Description
of the Preferred Securities Guarantee." The obligations of Ohio Edison under the
Preferred Securities Guarantee are subordinate and junior in right of payment to
all other liabilities of Ohio Edison and will rank pari passu with the most
senior preferred stock issued by Ohio Edison from time to time and with any
guarantee that may be entered into by Ohio Edison in respect of any preferred
stock of any subsidiary or affiliate of Ohio Edison. See "Risk
Factors -- Ranking of Obligations Under the Preferred Securities Guarantee and
the Subordinated
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<PAGE> 17
Debentures" and "-- Rights under the Preferred Securities Guarantee" and
"Description of the Preferred Securities Guarantee."
INTEREST DEFERRAL
Ohio Edison has the right to defer payments of interest on the Subordinated
Debentures by extending the interest payment period on the Subordinated
Debentures, at any time and from time to time, for up to 20 consecutive
quarters. If interest payments on the Subordinated Debentures are so deferred,
distributions on the Preferred Securities will also be deferred. However, the
right to defer payments of interest will not apply to Pre-Issuance Accrued
Distribution. During any deferral, distributions will continue to accrue
interest at the rate per annum of [ ]% and the interest so accrued at the
end of each quarter and remaining unpaid will itself bear interest (to the
extent permitted by law) thereafter until paid on the same basis. There could be
multiple Extension Periods of varying lengths throughout the term of the
Subordinated Debentures. During an Extension Period, holders of Preferred
Securities will be required to include deferred interest income in their gross
income in advance of receipt of the cash interest payments attributable thereto.
See "Description of the Preferred Securities -- Voting Rights," "Description of
the Subordinated Debentures -- Option to Extend Interest Payment Period" and
"Taxation -- Original Issue Discount."
MANDATORY REDEMPTION OF PREFERRED SECURITIES
Unless previously redeemed pursuant to the optional or special redemption
provisions described below, each of the outstanding Preferred Securities will be
redeemed by the Trust, in cash, on [ ], 2016, which is the maturity
date of the Subordinated Debentures, at the Redemption Price, which is equal to
(a) $25 per Preferred Security plus (b) accrued and unpaid distributions thereon
to the date of redemption. See "Description of the Preferred
Securities -- Mandatory Redemption."
OPTIONAL AND SPECIAL REDEMPTION
The Subordinated Debentures are redeemable by Ohio Edison in whole or in
part, from time to time, after April 1, 1998, or at any time in certain
circumstances upon the occurrence of a Tax Event, in each case at a price equal
to (a) 100% of the principal amount of Subordinated Debentures to be redeemed
plus (b) accrued and unpaid interest thereon to the date of redemption. If Ohio
Edison redeems Subordinated Debentures, the Trust must redeem Trust Securities,
including the Preferred Securities, having an aggregate liquidation amount equal
to the aggregate principal amount of the Subordinated Debentures so redeemed at
the Redemption Price. See "Description of the Preferred Securities -- Mandatory
Redemption" and "-- Special Event Redemption or Distribution."
VOTING RIGHTS
Holders of Preferred Securities will have limited voting rights and will
not be entitled to vote to appoint, remove or replace, or to increase or
decrease the number of, Company Trustees, which voting rights are vested
exclusively in the holder of the Common Securities. See "Description of the
Preferred Securities -- Voting Rights."
LISTING
Application has been made to have the Preferred Securities approved for
listing, subject to official notice of issuance, on the NYSE under the symbol
"[ ]." Trading of the Preferred Securities on the NYSE is expected to
commence within a 30-day period after the initial delivery of the Preferred
Securities.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The exchange of Class A Shares for Preferred Securities pursuant to the
Offer will be a taxable event. Generally, gain or loss will be recognized by an
exchanging holder in an amount equal to the difference between the fair market
value on the Expiration Date of the Preferred Securities received in the
exchange
15
<PAGE> 18
(which will reflect the Pre-Issuance Accrued Distribution) and the holder's tax
basis in the Class A Shares exchanged therefor. See "Taxation -- Exchange of
Class A Shares for Preferred Securities."
The Subordinated Debentures will be treated as having been issued with
"original issue discount" ("OID") for United States federal income tax purposes.
Because the Trust will be classified as a grantor trust for United States
federal income tax purposes, each holder will be considered the owner of a pro
rata portion of the Subordinated Debentures held by the Trust. As a result,
holders of Preferred Securities will be required to include their pro rata share
of OID in gross income as it accrues on the Subordinated Debentures in advance
of the receipt of cash. Generally, all of a holder's taxable interest income
with respect to the Subordinated Debentures will be accounted for as OID and
actual distributions of stated interest will not be separately reported as
taxable income. See "Taxation -- Classification of the Trust," "-- Original
Issue Discount" and "-- Potential Extension of Payment Period on the
Subordinated Debentures."
While dividends on the Class A Shares are eligible for the
dividends-received deduction for corporate holders, distributions on the
Preferred Securities are not eligible for the dividends-received deduction for
corporate holders.
The Preferred Securities may trade at a price that does not fully reflect
the value of accrued but unpaid interest with respect to the underlying
Subordinated Debentures. A holder who disposes of Preferred Securities between
record dates for payments of distributions thereon (and consequently does not
receive a cash distribution from the Trust for the period prior to such
disposition) will nevertheless be required to include as ordinary income accrued
but unpaid interest on the Subordinated Debentures through the date of
disposition and to add such amount to such holder's adjusted tax basis in the
Preferred Securities disposed of. Accordingly, such a holder will recognize a
capital loss to the extent the selling price of the Preferred Securities (which
may not fully reflect the amount of accrued but unpaid interest) is less than
the holder's adjusted tax basis in the Preferred Securities (which will reflect
accrued but unpaid interest). Subject to certain limited exceptions, capital
losses cannot be applied to offset ordinary income for United States federal
income tax purposes. See "Taxation -- Original Issue Discount" and
"-- Disposition of the Preferred Securities."
ACCOUNTING TREATMENT FOR PREFERRED SECURITIES
The financial statements of the Trust will be included in the consolidated
financial statements of Ohio Edison. The Preferred Securities will be disclosed
in Ohio Edison's consolidated balance sheet between the liabilities and
stockholders' equity sections as "Company obligated mandatorily redeemable
preferred securities of subsidiary trusts holding solely Company subordinated
debentures", and supplemented by certain disclosures in Ohio Edison's notes to
the financial statements.
UNTENDERED SHARES
Holders of Class A Shares who do not tender their Class A Shares in the
Offer or whose Class A Shares are not accepted for exchange will continue to
hold such Class A Shares and will be entitled to all the rights and preferences,
and will be subject to all of the limitations, applicable thereto.
To the extent that Class A Shares are tendered and accepted in the Offer,
the terms on which untendered Class A Shares could subsequently be sold could be
adversely affected. See "Risk Factors -- Reduced Trading Market for Class A
Shares."
EXCHANGE AGENT AND INFORMATION AGENT
The Bank of New York has been appointed as Exchange Agent in connection
with the Offer. Questions and requests for assistance, requests for additional
copies of this Prospectus or of the Letter of Transmittal and requests for
Notices of Guaranteed Delivery should be directed to Georgeson & Company Inc.,
which has been retained by Ohio Edison and the Trust to act as Information Agent
for the Offer. The addresses and
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<PAGE> 19
telephone numbers of the Exchange Agent and the Information Agent are set forth
in "The Offer -- Exchange Agent and Information Agent" and on the outside back
cover of this Prospectus.
DEALER MANAGER
Merrill Lynch & Co. has been retained as Dealer Manager in connection with
the Offer. For information regarding fees payable to the Dealer Manager and
Soliciting Dealers (as defined herein), see "The Offer -- Dealer Manager;
Soliciting Dealers."
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<PAGE> 20
RISK FACTORS
Prospective exchanging holders of Class A Shares who plan to participate in
the Offer should carefully consider, in addition to the other information set
forth elsewhere in this Prospectus, the following:
RANKING OF OBLIGATIONS UNDER THE PREFERRED SECURITIES GUARANTEE AND THE
SUBORDINATED DEBENTURES
Ohio Edison's obligations under the Preferred Securities Guarantee are
subordinate and junior in right of payment to all liabilities of Ohio Edison and
pari passu with the most senior preferred stock issued by Ohio Edison from time
to time and with any current or future guarantee entered into by Ohio Edison in
respect of any preferred stock of any subsidiary or affiliate of Ohio Edison.
The obligations of Ohio Edison under the Subordinated Debentures are subordinate
and junior in right of payment to all present and future Senior Indebtedness (as
defined herein) of Ohio Edison but senior to all of Ohio Edison's capital stock
(including the Class A Shares). No payment of principal of (including redemption
payments), premium, if any, or interest on the Subordinated Debentures may be
made if (a) any Senior Indebtedness of Ohio Edison is not paid when due and any
applicable grace period with respect to such default has ended with such default
not being cured or waived or ceasing to exist, or (b) the maturity of any Senior
Indebtedness has been accelerated because of a default. At December 31, 1995,
Ohio Edison had approximately $3.3 billion principal amount of indebtedness for
borrowed money constituting Senior Indebtedness on a consolidated basis. There
are no terms in the Preferred Securities, the Subordinated Debentures or the
Preferred Securities Guarantee that limit Ohio Edison's ability to incur
additional indebtedness, including indebtedness that ranks senior to the
Subordinated Debentures or the Preferred Securities Guarantee. See "Description
of the Preferred Securities Guarantee" and "Description of the Subordinated
Debentures -- Subordination."
RIGHTS UNDER THE PREFERRED SECURITIES GUARANTEE
The Preferred Securities Guarantee guarantees to the holders of the
Preferred Securities the payment of (i) any accrued and unpaid distributions
which are required to be paid on the Preferred Securities, to the extent the
Trust shall have funds available therefor, (ii) the Redemption Price, which
includes all accrued and unpaid distributions to the date of the redemption, to
the extent the Trust has funds available therefor, with respect to any Preferred
Securities called for redemption by the Trust and (iii) upon a voluntary or
involuntary dissolution, winding-up or termination of the Trust (other than in
connection with the distribution of Subordinated Debentures to the holders of
Preferred Securities), the lesser of (a) the aggregate of the liquidation amount
and all accrued and unpaid distributions on the Preferred Securities to the date
of payment thereof, to the extent the Trust has funds available therefor, and
(b) the amount of assets of the Trust remaining available for distribution to
holders of Preferred Securities in liquidation of the Trust. Holders of the
Preferred Securities have the right to proceed directly against Ohio Edison to
enforce Ohio Edison's obligations to make payments under the Preferred
Securities Guarantee, without first instituting a legal proceeding against the
Trust, the Preferred Guarantee Trustee or any other person or entity. If Ohio
Edison were to default in its obligation to pay amounts payable on the
Subordinated Debentures, the Trust would lack available funds for the payment of
distributions or amounts payable on redemption of the Preferred Securities or
otherwise, and in such event holders of the Preferred Securities would not be
able to rely upon the Preferred Securities Guarantee for payment of such
amounts. Instead, a holder of Preferred Securities could either rely on the
enforcement by the Property Trustee of its rights as registered holder of the
Subordinated Debentures against Ohio Edison, pursuant to the terms of the
Subordinated Debentures, or institute a legal proceeding directly against Ohio
Edison in respect of such amounts due it. See "Description of the Preferred
Securities Guarantee -- Status of the Preferred Securities Guarantee" and
"Description of the Subordinated Debentures -- Subordination." The Declaration
provides that each holder of Preferred Securities by acceptance thereof agrees
to the provisions of the Preferred Securities Guarantee and the Indenture (as
defined herein).
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If a Declaration Event of Default (as defined herein) occurs and is
continuing, then the holders of Preferred Securities would rely on the
enforcement by the Property Trustee of its rights as the holder of the
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<PAGE> 21
Subordinated Debentures against Ohio Edison. In addition, the holders of a
majority in aggregate liquidation amount of the Preferred Securities will have
the right to direct the time, method and place of conducting any proceeding for
any remedy available to the Property Trustee or to direct the exercise of any
trust or power conferred upon the Property Trustee under the Declaration,
including the right to direct the Property Trustee to exercise the remedies
available to it as a holder of the Subordinated Debentures. If a Declaration
Event of Default occurs that results from the failure of Ohio Edison to pay
principal of or interest on the Subordinated Debentures when due, during the
continuance of such an event of default a holder of Preferred Securities may
institute a legal proceeding directly against Ohio Edison to obtain payment of
such principal or interest on Subordinated Debentures having a principal amount
equal to the aggregate liquidation amount of the Preferred Securities owned of
record by such holder. The holders of Preferred Securities will not be able to
exercise directly against Ohio Edison any other remedy available to the Property
Trustee unless the Property Trustee first fails to do so. See "Description of
the Preferred Securities -- Voting Rights."
OPTION TO EXTEND INTEREST PAYMENT PERIOD
Ohio Edison has the right under the Indenture (as defined herein) to defer
payments of interest on the Subordinated Debentures by extending the interest
payment period at any time, and from time to time, on the Subordinated
Debentures. As a consequence of such an extension, quarterly distributions on
the Preferred Securities would be deferred (but despite such deferral would
continue to accrue with interest, and the interest so accrued at the end of each
quarter and remaining unpaid would itself bear interest (to the extent permitted
by applicable law) thereafter until paid on the same basis) by the Trust during
any such Extension Period. Such right to extend the interest payment period for
the Subordinated Debentures is limited to a period not exceeding 20 consecutive
quarters for any such extension. In the event that Ohio Edison exercises this
right to defer payments of interest, then during such Extension Period (a) Ohio
Edison shall not declare or pay any dividend on, make any distributions with
respect to, or redeem, purchase or make a liquidation payment with respect to,
any of its capital stock, (b) Ohio Edison shall not make any payment of
interest, principal or premium, if any, on or repay, repurchase or redeem any
debt securities issued by Ohio Edison which rank pari passu with or junior to
the Subordinated Debentures and (c) Ohio Edison shall not make any guarantee
payments (other than pursuant to the Preferred Securities Guarantee) with
respect to the foregoing; provided, however, that the foregoing restriction (a)
does not apply to any stock dividends paid by Ohio Edison where the dividend
stock is the same as that on which the dividend is paid. Prior to the
termination of any such Extension Period, Ohio Edison may further defer payments
of interest by further extending the interest payment period, provided that such
Extension Period, together with all such previous and further extensions
thereof, may not exceed 20 consecutive quarters or extend beyond the maturity of
the Subordinated Debentures. Upon the termination of any Extension Period and
the payment of all amounts then due, Ohio Edison may select a new Extension
Period, as if no Extension Period had previously been declared, subject to the
above requirements. See "Description of the Preferred
Securities -- Distributions" and "-- Voting Rights" and "Description of the
Subordinated Debentures -- Option to Extend Interest Payment Period."
Should Ohio Edison exercise its right to defer payments of interest by
extending the interest payment period, each holder of Preferred Securities will
continue to accrue interest income (as OID) for United States federal income tax
purposes in respect of the deferred interest allocable to its Preferred
Securities, which deferred interest will be allocated, but not distributed, to
holders of record of Preferred Securities. As a result, holders of Preferred
Securities will recognize income for United States federal income tax purposes
in advance of the receipt of cash and will not receive cash from the Trust
related to such income if such holder disposes of its Preferred Securities prior
to the record date for the date on which distributions of such amounts are made.
See "Taxation -- Original Issue Discount." Ohio Edison has no current intention
of exercising its right to defer payments of interest by extending the interest
payment period on the Subordinated Debentures. However, should Ohio Edison
determine to exercise such right in the future, the market price of the
Preferred Securities is likely to be affected. A holder that disposes of its
Preferred Securities during an Extension Period, therefore, might not receive
the same return on its investment as a holder that continues to hold its
Preferred Securities. In addition, as a result of the existence of Ohio Edison's
right to defer interest payments, the market price of the Preferred Securities
(which represent a preferred undivided beneficial interest in the
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<PAGE> 22
Subordinated Debentures) may be more volatile than other securities on which OID
accrues that are not subject to such right.
SPECIAL EVENT REDEMPTION OR DISTRIBUTION
Upon the occurrence of a Special Event, the Trust will be terminated,
except in the limited circumstances described below, with the result that the
Subordinated Debentures would be distributed to the holders of the Trust
Securities in connection with the liquidation of the Trust. In the case of a
Special Event that is a Tax Event, in certain circumstances Ohio Edison shall
have the right to redeem the Subordinated Debentures, in whole or in part, in
which event the Trust will redeem the Trust Securities on a pro rata basis to
the same extent as the Subordinated Debentures are redeemed. See "Description of
the Preferred Securities -- Special Event Redemption or Distribution" and
"Taxation."
Under current United States federal income tax law, a distribution of the
Subordinated Debentures upon the termination of the Trust would not be a taxable
event to holders of the Preferred Securities. However, a termination of the
Trust in which holders of the Preferred Securities received cash would be a
taxable event to such holders. See "Taxation -- Receipt of Subordinated
Debentures or Cash upon Liquidation of the Trust."
If Subordinated Debentures are distributed to the holders of the Preferred
Securities, Ohio Edison will use its best efforts to have the Subordinated
Debentures listed on the NYSE or on such other exchange as the Preferred
Securities are then listed.
There can be no assurance as to the market prices for the Preferred
Securities, nor for the Subordinated Debentures that may be distributed in
exchange for Preferred Securities if a termination of the Trust were to occur.
Accordingly, the Preferred Securities that an investor may purchase, or the
Subordinated Debentures that the investor may receive on dissolution and
liquidation of the Trust, may trade at a discount to the price of the Class A
Shares exchanged. Because holders of Preferred Securities may receive
Subordinated Debentures upon the occurrence of a Special Event, prospective
exchanging holders of Class A Shares who plan to participate in the Offer of
Preferred Securities are also making an investment decision with regard to the
Subordinated Debentures and should carefully review all the information
regarding the Subordinated Debentures and Ohio Edison contained herein. See
"Description of the Preferred Securities -- Special Event Redemption or
Distribution" and "Description of the Subordinated Debentures."
PROPOSED TAX LAW CHANGES
On March 19, 1996, President Clinton announced a 1997 balanced budget
proposal containing, among other things, an amendment that would classify a debt
instrument issued on or after December 7, 1995 as equity if the instrument had a
maximum term exceeding 20 years and was not classified as indebtedness on the
issuer's applicable balance sheet. On March 29, 1996, Senate Finance Committee
Chairman William V. Roth, Jr. and House Ways and Means Committee Chairman Bill
Archer issued a joint statement indicating their intent that certain legislative
proposals initiated by President Clinton, including the 1997 balanced budget
proposal, that may be adopted by either of the tax-writing committees of
Congress would have an effective date that is no earlier than the date of
"appropriate Congressional action." Because the Subordinated Debentures will
have a maximum term not exceeding 20 years, the provisions of the proposed
amendment are not applicable to the Subordinated Debentures. Ohio Edison cannot
predict whether this proposed amendment may be modified or other legislation may
be enacted that might affect the character or treatment for United States
federal income tax purposes of the Subordinated Debentures or otherwise affect
the Preferred Securities offered hereby. If legislation were enacted limiting,
in whole or in part, the deductibility by Ohio Edison of interest on the
Subordinated Debentures for United States federal income tax purposes, such
enactment would be a Tax Event. Depending upon the circumstances following a Tax
Event, Ohio Edison could either cause the Trust to be dissolved and the
Subordinated Debentures to be distributed to the holders of Preferred
Securities, or cause the Subordinated Debentures to be redeemed, which would
result in a redemption by the Trust of the Preferred Securities. See
"Description of the Preferred Securities -- Special Event Redemption or
Distribution." It is expected that the 1997 balanced budget proposal, even if
enacted in a manner that would affect the Subordinated Debentures, would not
alter the United States federal income tax
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<PAGE> 23
consequences of the exchange of Class A Shares for Preferred Securities and the
ownership and disposition of Preferred Securities. See "Taxation."
LIMITED VOTING RIGHTS
Holders of Preferred Securities will have limited voting rights, primarily
in connection with directing the activities of the Property Trustee as the
holder of the Subordinated Debentures. Such holders will not be entitled to vote
to appoint, remove or replace, or to increase or decrease the number of, Company
Trustees, which voting rights are vested exclusively in Ohio Edison as the
holder of the Common Securities. See "Description of the Preferred
Securities -- Voting Rights." Holders of Class A Shares also have limited voting
rights. However, if four quarterly dividends payable on the $100 Preferred Stock
shall be in default, in whole or in part, and thereafter until all defaults have
been cured, the holders of the Class A Shares and the $100 Preferred Stock shall
have the exclusive right, voting separately and as a single class, each share of
$100 Preferred Stock being counted as one and each Class A Share being counted
as one-quarter, (i) to elect the smallest number of directors which shall
constitute a majority of the directors of Ohio Edison, and (ii) to vote in all
matters with respect to the governing of the affairs of Ohio Edison other than
the election of directors. In addition, certain actions may not be effected
without the consent or vote of a specified percentage of the Class A Shares and
the $100 Preferred Stock, voting as a single class and calculating votes as
described above. See "Description of the Class A Shares -- Voting Rights."
TRADING PRICE OF PREFERRED SECURITIES
The Preferred Securities may trade at a price that does not fully reflect
the value of accrued but unpaid interest with respect to the underlying
Subordinated Debentures. A holder who disposes of Preferred Securities between
record dates for payments of distributions thereon (and consequently does not
receive a cash distribution from the Trust for the period prior to such
disposition) will nevertheless be required to include as ordinary income accrued
but unpaid interest on the Subordinated Debentures through the date of
disposition and to add such amount to such holder's adjusted tax basis in the
Preferred Securities disposed of. Accordingly, such a holder will recognize a
capital loss to the extent the selling price of the Preferred Securities (which
may not fully reflect the amount of accrued but unpaid interest) is less than
the holder's adjusted tax basis in the Preferred Securities (which will reflect
accrued but unpaid interest). Subject to certain limited exceptions, capital
losses cannot be applied to offset ordinary income for United States federal
income tax purposes. See "Taxation -- Original Issue Discount" and
"-- Disposition of the Preferred Securities."
LACK OF ESTABLISHED TRADING MARKET FOR PREFERRED SECURITIES
The Preferred Securities constitute a new issue of securities of the Trust
with no established trading market. While the Preferred Securities are expected
to be approved for listing on the NYSE, subject to official notice of issuance,
there can be no assurance that an active market for the Preferred Securities
will develop or be sustained in the future on such exchange. Although the Dealer
Manager has indicated to Ohio Edison and the Trust that it intends to make a
market in the Preferred Securities following the Expiration Date, as permitted
by applicable laws and regulations prior to the commencement of trading on the
NYSE, it is not obligated to do so and may discontinue any such market-making at
any time without notice. Accordingly, no assurance can be given as to the
liquidity of, or trading markets for, the Preferred Securities. In order to
satisfy the NYSE listing requirements, acceptance of Class A Shares validly
tendered in the Offer is subject to the Minimum Distribution Condition, which
condition may not be waived by Ohio Edison or the Trust. In addition, liquidity
of the Preferred Securities will be affected by the number of Class A Shares
exchanged in the Offer. See "Listing and Trading of Preferred Securities and
Class A Shares."
REDUCED TRADING MARKET FOR CLASS A SHARES
To the extent Class A Shares are tendered and accepted in the Offer, the
liquidity and trading market for the Class A Shares to be outstanding following
the Offer, and the terms upon which such Class A Shares could be sold, could be
adversely affected. In addition, if the Offer is substantially subscribed or
oversub-
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<PAGE> 24
scribed, there would be a significant risk that round lot holdings of Class A
Shares outstanding following the Offer would be limited. In addition, liquidity
of the Preferred Securities will be affected by the number of Class A Shares
exchanged in the Offer. See "Listing and Trading of Preferred Securities and
Class A Shares."
The Offer is for up to 3,600,000 Class A Shares (or 90% of the 4,000,000
Class A Shares outstanding), rather than for all the outstanding Class A Shares,
to reduce the risk that the Class A Shares would be subject to delisting
following consummation of the Offer.
Under the rules of the NYSE, preferred securities such as the Class A
Shares are subject to delisting if (i) the aggregate value of publicly-held
shares is less than $2 million and (ii) the number of publicly-held shares is
less than 100,000. Since at least 400,000 Class A Shares will remain outstanding
following consummation of the Offer, the number of outstanding Class A Shares
will exceed the delisting criteria set forth in clause (ii) above. In addition,
based on the market price of the Class A Shares on the NYSE ($[ ] on
[ ], the closing sales price of the Class A Shares on the NYSE on the
last full trading day immediately prior to Ohio Edison's first public
announcement of the Offer, and $[ ] on [ ]), Ohio Edison
believes that the aggregate value of the minimum number (400,000) of Class A
Shares which will be outstanding following consummation of the Offer should
exceed the delisting criteria set forth in clause (i) above. See "Price Range of
Class A Shares." If less than 3,600,000 Class A Shares are validly tendered,
then the number of Class A Shares remaining outstanding, and the market value
thereof, will be even greater.
EXCHANGE OF CLASS A SHARES FOR PREFERRED SECURITIES IS A TAXABLE EVENT
The exchange of Class A Shares for Preferred Securities pursuant to the
Offer will be a taxable event. Generally, gain or loss will be recognized by an
exchanging holder in an amount equal to the difference between the fair market
value on the Expiration Date of the holder's Preferred Securities received in
the exchange (which will reflect the Pre-Issuance Accrued Distribution) and the
holder's tax basis in the Class A Shares exchanged therefor. See
"Taxation -- Exchange of Class A Shares for Preferred Securities." All holders
of Class A Shares are advised to consult their tax advisors regarding the United
States federal, state, local and foreign tax consequences of the exchange of
Class A Shares for Preferred Securities and the ownership and disposition of
Preferred Securities.
CORPORATE HOLDERS OF PREFERRED SECURITIES NOT ENTITLED TO DIVIDENDS RECEIVED
DEDUCTION
While dividends with respect to the Class A Shares are eligible for the
dividends-received deduction for corporate holders, distributions on the
Preferred Securities are not eligible for the dividends-received deduction for
corporate holders.
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<PAGE> 25
COMPARISON OF PREFERRED SECURITIES AND
CLASS A SHARES
The following is a brief summary of certain terms of the Preferred
Securities and the Class A Shares. For a more complete description of the
Preferred Securities, see "Description of the Preferred Securities." For a
description of the Subordinated Debentures which will be deposited in the Trust
as trust assets and will represent the sole source for the payment of
distributions and other payments on the Preferred Securities, see "Description
of the Subordinated Debentures." For a description of Class A Shares, see
"Description of the Class A Shares."
Ohio Edison's $100 Preferred Stock and Class A Shares are herein
collectively referred to as the "Preferred Stock."
<TABLE>
<CAPTION>
PREFERRED SECURITIES CLASS A SHARES
---------------------------------------- ----------------------------
<S> <C> <C>
Issuer................. The Trust. Payment of distributions and Ohio Edison
on liquidation or redemption is
guaranteed on a subordinated basis, as
and to the extent described herein, by
Ohio Edison.
Distribution/Dividend
Rate................. [ ]% per annum distribution payable 7.75% per annum dividend
quarterly in arrears on the last day of payable on the first day of
March, June, September and December of January, April, July and
each year, commencing [ ], October of each year, when
1996, from and including the Accrual and as declared by Ohio
Date, but only if, and to the extent Edison's Board of Directors
that, interest payments are made in out of funds legally
respect of the Subordinated Debentures available therefor.
held by the Trust. During any Extension Dividends must be paid on
Period on the Subordinated Debentures, all shares of Preferred
distribution payments on the Preferred Stock if paid on the shares
Securities will not be made but would of any series of Preferred
continue to accrue, and, in the case of Stock. Dividends are
distributions in arrears, would bear cumulative whether or not
interest at the rate of [ ]% per there are funds legally
annum, with the interest so accrued at available for the payment of
the end of each quarter and remaining such dividends.
unpaid itself bearing interest (to the Accumulations of dividends
extent permitted by applicable law) do not bear interest. Ohio
thereafter until paid on the same basis. Edison has made each
quarterly dividend payment
with respect to the Class A
Shares on the scheduled
dividend payment date.
Maturity/Mandatory and
Optional
Redemption........... The Preferred Securities will be No maturity or mandatory
redeemed upon the maturity or earlier redemption. The Class A
redemption of the Subordinated Shares are redeemable at the
Debentures, at a redemption price equal option of Ohio Edison after
to $25 per Preferred Security to be April 1, 1998, in whole or
redeemed, plus accrued and unpaid in part, at a redemption
distributions, if any, to the redemption price of $25 per share plus
date, including distributions accrued as accumulated and unpaid
a result of Ohio Edison's election to dividends
defer payments of interest on the
Subordinated Debentures. The
Subordinated Debentures are redeemable
at the option of Ohio Edison, in whole
or in part, after April 1, 1998, at a
redemption price equivalent to $25 per
Subordinated Debenture to be redeemed,
plus accrued and unpaid interest
thereon, to the redemption date. In
</TABLE>
23
<PAGE> 26
<TABLE>
<S> <C> <C>
the event that the Subordinated
Debentures are redeemed, upon the
repayment of the Subordinated
Debentures, upon maturity, upon
redemption or otherwise, the proceeds
thereof will be promptly applied to
redeem the Preferred Securities and the
Common Securities. The Subordinated
Debentures have a final maturity of
[ ], 2016. See "Description
of the Preferred Securities -- Special
Event Redemption or Distribution" and
"-- Mandatory Redemption." See
"Prospectus Summary -- Potential Risk to
Non-Exchanging Holders." Holders of
Preferred Securities have no right to
require Ohio Edison to redeem the
Preferred Securities at the option of
the holders.
Subordination.......... Subordinated to claims of creditors of As capital stock, the Class
the Trust, if any. The Common Securities A Shares are junior to all
rank pari passu, and payments will be of the debt of Ohio Edison,
made thereon on a pro rata basis with including the claims of
the Preferred Securities, except that creditors of Ohio Edison and
(i) if an Event of Default under the the Subordinated Debentures,
Declaration occurs and is continuing, but senior to the common
the holders of Preferred Securities will stock of Ohio Edison and
have a priority over holders of the pari passu with all other
Common Securities with respect to outstanding series of
payments in respect of distributions and preferred stock of Ohio
payments upon liquidation, redemption or Edison.
otherwise and (ii) holders of Common
Securities have the exclusive right to
appoint, remove or replace any Company
Trustee and to increase or decrease (to
a minimum of three, unless the Property
Trustee and the Delaware Trustee are the
same entity) the number of Company
Trustees. The Trust is not permitted to
incur any indebtedness for borrowed
money. The Declaration provides that
Ohio Edison shall pay for all debts and
other obligations (other than with
respect to the Trust Securities) and all
costs and expenses of the Trust,
including any income taxes, duties and
other governmental charges, and all
costs and expenses with respect thereto,
to which the Trust may become subject,
except for United States withholding
taxes.
The Subordinated Debentures will rank
subordinate and junior to all Senior
Indebtedness (as defined herein) of Ohio
Edison and senior to all capital stock
now or hereafter issued by Ohio Edison.
Ohio Edison's obligations under the
Preferred Securities Guarantee will rank
(i) subordinate and junior in right of
payment to all other liabilities of Ohio
Edison, including the Subordinated
Debentures, (ii) pari passu with the
most senior preferred or preference
stock
</TABLE>
24
<PAGE> 27
<TABLE>
<S> <C> <C>
issued from time to time by Ohio Edison
and with any guarantee now or hereafter
entered into by Ohio Edison in respect
of any preferred or preference stock of
any subsidiary or affiliate of Ohio
Edison and (iii) senior to Ohio Edison's
common stock.
At December 31, 1995, Ohio Edison had
approximately $3.3 billion principal
amount of indebtedness for borrowed
money constituting Senior Indebtedness
on a consolidated basis. Assuming
3,600,000 Class A Shares are tendered,
there will be $[ ] in
Subordinated Debentures senior to the
Preferred Securities Guarantee in
addition to the other obligations of
Ohio Edison set forth above.
Listing................ The Preferred Securities are expected to The Class A Shares are
be approved for listing on the NYSE, listed on the NYSE and the
subject to official notice of issuance, Chicago Stock Exchange under
under the symbol "[ ]." In the symbol "OECPrM."
order to satisfy the NYSE listing
requirements, acceptance of Class A
Shares validly tendered in the Offer is
subject to the Minimum Distribution
Condition, which condition may not be
waived.
Dividends Received
Deduction............ Distributions on the Preferred Dividends are eligible for
Securities are not eligible for the the dividends received
dividends received deduction for deduction for corporate
corporate holders. holders.
Voting
Rights/Enforcement... Holders of Preferred Securities have no Whenever and as often as
voting rights other than as provided four quarterly dividends
under the Business Trust Act or the payable on the Preferred
Trust Indenture Act, except in the Stock of any series shall be
limited circumstances discussed below. in default, in whole or in
The Property Trustee has the power to part, and thereafter until
exercise all rights under the Indenture all defaults have been
with respect to the Subordinated cured, the holders of
Debentures and is also authorized to Preferred Stock shall have
enforce the Preferred Securities the exclusive right, voting
Guarantee on behalf of holders of the separately and as a single
Preferred Securities. If the Trust's class, each share of $100
failure to make distributions is a Preferred Stock being
consequence of Ohio Edison's exercise of counted as one and each
its right to extend the interest payment Class A Share being counted
period for the Subordinated Debentures as one-quarter, (i) to elect
as described under the smallest number of
"Distribution/Dividend Rate", the directors which shall
Property Trustee will have no right to constitute a majority of the
enforce the payment of distributions directors of Ohio Edison,
until an Event of Default under the and (ii) to vote in all
Declaration shall have occurred. The matters with respect to the
holders of at least a majority in governing of the affairs of
liquidation amount of the Preferred Ohio Edison other than the
Securities will have the right to direct election of directors. In
the Property Trustee with respect to addition, certain actions
certain matters under the Preferred may not be effected without
Securities Guarantee and, upon a the consent or vote of a
Declaration Event of Default, the specified percentage of the
Declaration. If the Property Trustee Preferred Stock, voting as a
fails to enforce the Preferred single class and calculating
Securities Guarantee, votes
</TABLE>
25
<PAGE> 28
<TABLE>
<S> <C> <C>
any holder of Preferred Securities may as described above.
institute a legal proceeding against
Ohio Edison to enforce the Preferred
Securities Guarantee. In addition, any
record holder of Preferred Securities
will have the right, which is absolute
and unconditional, to proceed directly
against Ohio Edison to obtain Guarantee
Payments, without first waiting to
determine if the Preferred Guarantee
Trustee has enforced the Preferred
Securities Guarantee or instituting a
legal proceeding against the Trust, the
Preferred Guarantee Trustee or any other
person or entity. See "Description of
the Preferred Securities" and
"Description of the Preferred Securities
Guarantee."
</TABLE>
26
<PAGE> 29
OHIO EDISON COMPANY
Ohio Edison was organized under the laws of the State of Ohio in 1930 and
owns property and does business as an electric public utility in that state.
Ohio Edison also has ownership interests in certain facilities located in the
Commonwealth of Pennsylvania. Ohio Edison's principal executive offices are
located at 76 South Main Street, Akron, Ohio 44308, telephone number
1-800-736-3402.
Ohio Edison furnishes electric service to communities in a 7,500 square
mile area of central and northeastern Ohio. It also provides transmission
services and electric energy for resale to certain municipalities in the
Company's service area and transmission services to certain rural cooperatives.
Ohio Edison also engages in the sale, purchase and interchange of electric
energy with other electric companies. The area it serves has a population of
approximately 2,530,000.
Ohio Edison owns all of the outstanding common stock of Pennsylvania Power
Company ("Penn Power"), a Pennsylvania corporation, which furnishes electric
service to communities in a 1,500 square mile area of western Pennsylvania. Penn
Power also provides transmission services and electric energy for resale to
certain municipalities in Pennsylvania. The area served by Penn Power has a
population of approximately 342,000.
Sources of generation for Ohio Edison and Penn Power (the "Companies")
during the twelve months ended December 31, 1995 were 74.0% coal and 26.0%
nuclear.
27
<PAGE> 30
CERTAIN CONSOLIDATED FINANCIAL INFORMATION OF OHIO EDISON
(THOUSANDS, EXCEPT PER SHARE AMOUNTS, RATIOS AND PERCENTAGES)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,(1)
--------------------------------------------------------------
1991 1992 1993(2) 1994 1995
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Income Summary:
Operating Revenues................. $2,358,946 $2,332,378 $2,369,940 $2,368,191 $2,465,846
Net Income......................... $ 264,823 $ 276,986 $ 82,724 $ 303,531 $ 317,241
Earnings on Common Stock........... $ 240,069 $ 253,060 $ 59,017 $ 281,852 $ 294,747
Earnings per share of Common
Stock........................... $ 1.60 $ 1.70 $ .39 $ 1.97 $ 2.05
Ratio of Earnings to Fixed
Charges(3)...................... 1.95 2.01 1.12 2.24 2.32
Ratio of Earnings to Fixed Charges
plus Preferred and Preference
Stock Dividend Requirements
(pre-income tax basis)(3)....... 1.79 1.85 0.99(4) 2.06 2.12
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1995
-------------------------------------------------------------------
AS ADJUSTED(5)
-------------------------------------------
ACTUAL MAXIMUM MINIMUM
------------------- ------------------- -------------------
OUTSTANDING RATIO OUTSTANDING RATIO OUTSTANDING RATIO
----------- ----- ----------- ----- ----------- -----
<S> <C> <C> <C> <C> <C> <C>
Capitalization Summary:
Common Stockholders' Equity...... $ 2,407,871 43.3% $ 2,407,871 43.3% $ 2,407,871 43.3%
Preferred Stock Not Subject to
Mandatory Redemption.......... 211,870 3.8% 121,870 2.2% 181,870 3.3%
Preferred Stock Subject to
Mandatory Redemption.......... 40,000 0.7% 40,000 0.7% 40,000 0.7%
Company obligated mandatorily
redeemable preferred
securities of subsidiary
trusts holding solely Company
subordinated debentures(6).... 120,000 2.2% 210,000 3.8% 150,000 2.7%
Long-Term Debt(7)................ 2,786,256 50.0% 2,786,256 50.0% 2,786,256 50.0%
---------- ----- ---------- ----- ---------- -----
Total Capitalization............... $ 5,565,997 100.0% $ 5,565,997 100.0% $ 5,565,997 100.0%
========== ===== ========== ===== ========== =====
</TABLE>
- - - ---------------
(1) Derived from audited financial information.
(2) Includes net after tax charges of $218,377,000 ($1.43 per share) relating
primarily to the termination of Perry Unit 2, partially offset by the
cumulative effect of a change in accounting for unbilled revenues.
(3) "Earnings" for purposes of these calculations have been computed by adding
to "income before extraordinary items" all taxes based on income or profits,
total interest charges and the estimated interest element of rentals charged
to income. "Fixed charges" include total interest charges, the estimated
interest element of rentals and subsidiaries' preferred stock dividend
requirements, determined on a "pre-income tax" basis (computed, where
applicable, at the effective income tax rates for the applicable periods).
These ratios exclude fixed charges applicable to the guarantee of the debt
of a coal supplier aggregating $13,298,000, $9,762,000, $8,565,000,
$7,424,000 and $6,315,000 for each of the five years in the period ended
December 31, 1995, respectively.
(4) Earnings, as defined, were deficient in 1993 by $5,018,000 to cover fixed
charges plus preferred stock dividend requirements (pre-income tax basis).
(5) The maximum and minimum "As Adjusted" capitalization columns described in
the table below assume that holders of a maximum of 3,600,000 Class A Shares
and a minimum of 1,200,000 Class A Shares (which minimum condition may be
waived by the Trust), respectively, elect to participate in the Offer. To
the extent a different number of holders of Class A Shares elect to
participate in the Offer, Preferred Securities of the Trust and Class A
Shares would be increased or decreased, as the case may be, by equal and
offsetting amounts.
(6) As described in this Prospectus, all of the assets of the Trust will be the
[ ]% Junior Subordinated Debentures Due 2016 of Ohio Edison. Assuming
3,600,000 Preferred Securities are issued in the Offer, the Trust will hold
approximately $92,800,000 principal amount of Subordinated Debentures. All
of the assets of Ohio Edison Financing Trust are approximately $124,000,000
principal amount of 9% Junior Subordinated Debentures, Series A, Due 2025 of
Ohio Edison.
(7) Excludes $376,716,000 of long-term debt due to be repaid or subject to put
options within one year.
28
<PAGE> 31
OHIO EDISON FINANCING TRUST II
The Trust is a statutory business trust formed under the Business Trust Act
pursuant to the filing of a certificate of trust dated March 1, 1996, filed with
the Delaware Secretary of State on March 5, 1996. The Trust's business is
defined in a Declaration of Trust, dated as of March 1, 1996, executed by Ohio
Edison, as sponsor (the "Sponsor"), and the Company Trustees as of that date.
The Declaration of Trust will be amended and restated in its entirety as of the
date the Trust accepts Class A Shares in the Offer (see "The Offer -- Terms of
the Offer") (as so amended and restated, the "Declaration") substantially in the
form filed as an exhibit to the Registration Statement of which this Prospectus
forms a part. The Declaration will be qualified as an indenture under the Trust
Indenture Act. Upon issuance of the Preferred Securities, the holders thereof
will own all of the issued and outstanding Preferred Securities. See
"Description of the Preferred Securities -- Book-Entry; Delivery and Form." Ohio
Edison will acquire all of the Common Securities in an aggregate liquidation
amount equal to 3% of the total capital of the Trust. The Preferred Securities
and the Common Securities will have equivalent terms; provided that (i) if an
Event of Default under the Declaration occurs and is continuing, the holders of
Preferred Securities will have a priority over holders of the Common Securities
with respect to payments in respect of distributions and payments upon
liquidation, redemption or otherwise and (ii) holders of Common Securities have
the exclusive right (subject to the terms of the Declaration) to appoint, remove
or replace Company Trustees and to increase or decrease the number of Company
Trustees. The Common Securities will not be transferable by Ohio Edison except
under certain circumstances to related parties, as defined in the Declaration.
The Trust exists for the exclusive purposes of (a)(i) issuing its Preferred
Securities in exchange for Class A Shares pursuant to the Offer and delivering
such Class A Shares to Ohio Edison in consideration of the deposit by Ohio
Edison in the Trust as trust assets of Subordinated Debentures having an
aggregate principal amount equal to the aggregate par value of such Class A
Shares so delivered, and (ii) issuing and selling its Common Securities to Ohio
Edison for cash and using the proceeds thereof to purchase as trust assets an
equal aggregate principal amount of Subordinated Debentures and (b) engaging in
such other activities as are necessary, convenient or incidental thereto. The
Trust has a term of approximately 55 years, but may terminate earlier as
provided in the Declaration. The rights of the holders of the Preferred
Securities, including economic rights, rights to information and voting rights,
are set forth in the Declaration, the Business Trust Act and the Trust Indenture
Act. See "Description of the Preferred Securities."
The Trust's business and affairs will be conducted by the Company Trustees
appointed by Ohio Edison, as holder of the Common Securities. The duties and
obligations of the Company Trustees shall be governed by the Declaration and the
Business Trust Act and, in the case of the Property Trustee, the Trust Indenture
Act. Pursuant to the Declaration, the number of Company Trustees will initially
be four. Two of the Company Trustees, the Regular Trustees, will be persons who
are employees or officers of, or affiliated with, Ohio Edison. A third trustee
will be a financial institution unaffiliated with Ohio Edison that will serve as
the Property Trustee under the Declaration and as indenture trustee for purposes
of the Trust Indenture Act. The Bank of New York will act as the Property
Trustee until removed or replaced by the holder of the Common Securities. The
Bank of New York will also act as Preferred Guarantee Trustee under the
Preferred Securities Guarantee. See "Description of the Preferred Securities
Guarantee." The fourth trustee, the Delaware Trustee, will be a financial
institution or an affiliate thereof which maintains a principal place of
business or residence in the State of Delaware. The Bank of New York (Delaware)
will act as the Delaware Trustee.
The Property Trustee will hold title to the Subordinated Debentures for the
benefit of the Trust and holders of the Trust Securities and will have the power
to exercise all rights, powers and privileges under the Indenture (as defined
herein) as the holder of the Subordinated Debentures. In addition, the Property
Trustee will maintain exclusive control of the Property Account to hold all
payments made in respect of the Subordinated Debentures for the benefit of the
Trust and holders of the Trust Securities. The Property Trustee will make
payments of distributions and payments on liquidation, redemption and otherwise
to the holders of the Trust Securities out of funds from the Property Account.
The Preferred Guarantee Trustee will hold the Preferred Securities Guarantee for
the benefit of the holders of the Preferred Securities. Ohio Edison, as the
holder of all the Common Securities, will have the right to appoint, remove or
replace any Company
29
<PAGE> 32
Trustee and to increase or decrease the number of Company Trustees, provided
that the number of Company Trustees shall be at least three if the Property
Trustee is not also the Delaware Trustee.
Under the Declaration, the Trust shall not, and the Company Trustees
(including the Property Trustee) shall cause the Trust not to, engage in any
activity other than in connection with the purposes of the Trust or other than
as required or authorized by the Declaration. In particular, the Trust shall not
and the Company Trustees (including the Property Trustee) shall not (a) invest
any proceeds received by the Trust from holding the Subordinated Debentures but
shall promptly distribute all such proceeds to holders of Trust Securities
pursuant to the terms of the Declaration and of the Trust Securities; (b)
acquire any assets other than as expressly provided in the Declaration; (c)
possess Trust property for other than a Trust purpose; (d) make any investments,
other than investments represented by the Subordinated Debentures; (e) possess
any power or otherwise act in such a way as to vary the Trust assets or the
terms of the Trust Securities in any way whatsoever; (f) issue any securities or
other evidences of beneficial ownership of, or beneficial interests in, the
Trust other than the Trust Securities; (g) incur any indebtedness for borrowed
money or (h)(1) direct the time, method and place of exercising any trust or
power conferred upon the Indenture Trustee with respect to the Subordinated
Debentures, (2) waive any past default that is waivable under Section 6.04 of
the Indenture, (3) exercise any right to rescind or annul any declaration that
the principal of all of the Subordinated Debentures shall be due and payable or
(4) consent to any amendment, modification or termination of the Indenture or
the Subordinated Debentures where such consent shall be required unless the
Trust shall have received an opinion of counsel to the effect that such
modification or amendment will not cause more than an insubstantial risk that
for United States federal income tax purposes the Trust will not be classified
as a grantor trust.
The books and records of the Trust will be maintained at the principal
office of the Trust and will be open for inspection by a holder of Preferred
Securities or the duly authorized representative of such holder for any purpose
reasonably related to its interest in the Trust during normal business hours.
The Trust anticipates that it will not be required to file with the Commission
or distribute to holders of Preferred Securities periodic reports regarding the
Trust.
Except as provided below or under the Business Trust Act and the Trust
Indenture Act, holders of Preferred Securities will have no voting rights. See
"Description of the Preferred Securities -- Voting Rights".
The Property Trustee, for the benefit of the holders of the Trust
Securities, is authorized under the Declaration to exercise all rights under the
Indenture with respect to the Subordinated Debentures and to enforce Ohio
Edison's obligations under the Subordinated Debentures upon the occurrence of an
Indenture Event of Default. The Property Trustee, as the Guarantee Trustee,
shall also be authorized to enforce the rights of holders of Preferred
Securities under the Preferred Securities Guarantee. If the Trust's failure to
make distributions on the Preferred Securities is a consequence of Ohio Edison's
exercise of its right to extend the interest payment period for the Subordinated
Debentures, the Property Trustee will have no right to enforce the payment of
distributions on the Preferred Securities until an Event of Default shall have
occurred. Holders of at least a majority in liquidation amount of the Preferred
Securities will have the right to direct the Property Trustee with respect to
certain matters under the Declaration and the Preferred Securities Guarantee.
Any holder of Preferred Securities may institute a legal proceeding against Ohio
Edison to enforce the Preferred Securities Guarantee. See "Description of the
Preferred Securities -- Voting Rights".
If an Indenture Event of Default occurs and is continuing with respect to
Subordinated Debentures, an Event of Default under the Declaration will occur
and be continuing with respect to the Trust Securities. In such event, the
Declaration provides that the holders of Common Securities will be deemed to
have waived any such Event of Default with respect to the Common Securities
until all Events of Default with respect to the Preferred Securities have been
cured or waived. Until all such Events of Default with respect to the Preferred
Securities have been so cured or waived, the Property Trustee will be deemed to
be acting solely on behalf of the holders of the Preferred Securities and only
the holders of the Preferred Securities will have the right to direct the
Property Trustee with respect to certain matters under the Declaration and
consequently under the Indenture. If any Event of Default with respect to the
Preferred Securities is waived by the holders of the Preferred Securities as
provided in the Declaration, the holders of Common Securities pursuant to the
30
<PAGE> 33
Declaration have agreed that such waiver also constitutes a waiver of such Event
of Default with respect to the Common Securities for all purposes under the
Declaration without any further act, vote or consent of the holders of the
Common Securities. See "Description of the Preferred Securities".
The Declaration provides that the Company Trustees may treat the person in
whose name a Preferred Security is registered on the books and records of the
Trust as the sole holder thereof and of the Preferred Securities represented
thereby for purposes of receiving distributions and for all other purposes and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such certificate or in the Preferred Securities represented thereby
on the part of any person, whether or not the Trust shall have actual or other
notice thereof. Preferred Securities will be issued in fully registered form.
Investors may elect to hold their Preferred Securities directly or, subject to
the rules and procedures of The Depository Trust Company and Philadelphia
Depository Trust Company (each a "Depository Institution") described under
"Description of the Preferred Securities -- Book-Entry; Delivery and Form", hold
interests in a global certificate registered on the books and records of the
Trust in the name of a Depository Institution or its nominee. Under the
Declaration:
(i) the Trust and the Company Trustees shall be entitled to deal with a
Depository Institution (or any successor depositary) for all purposes, including
the payment of distributions and receiving approvals, votes or consents under
the Declaration, and except as set forth in the Declaration, shall have no
obligation to persons owning Preferred Securities ("Preferred Security
Beneficial Owners") registered in the name of and held by a Depository
Institution or its nominee; and
(ii) the rights of Preferred Security Beneficial Owners shall be exercised
only through a Depository Institution (or any successor depository) and shall be
limited to those established by law and agreements between such Preferred
Security Beneficial Owners and a Depository Institution and/or its participants.
See "Description of the Preferred Securities -- Book-Entry; Delivery and Form".
With respect to Preferred Securities registered in the name of and held by a
Depository Institution or its nominee, all notices and other communications
required under the Declaration shall be given to, and all distributions on such
Preferred Securities shall be given or made to, a Depository Institution (or its
successor).
In the Declaration, Ohio Edison has agreed to pay for all debts and
obligations (other than with respect to the Trust Securities) and all costs and
expenses of the Trust, including the fees and expenses of the Company Trustees
and any taxes and all costs and expenses with respect thereto, to which the
Trust may become subject, except for United States withholding taxes. See "Risk
Factors -- Trust Distributions Dependent on Ohio Edison's Payments on
Subordinated Debentures". The foregoing obligations of Ohio Edison under the
Declaration, which are a part of the Back-up Obligations, are for the benefit
of, and shall be enforceable by, any person to whom any such debts, obligations,
costs, expenses and taxes are owed (a "Creditor") whether or not such Creditor
has received notice thereof. Any such Creditor may enforce such obligations of
Ohio Edison directly against Ohio Edison and Ohio Edison has irrevocably waived
any right or remedy to require that any such Creditor take any action against
the Trust or any other person before proceeding against Ohio Edison. Ohio Edison
has agreed in the Declaration to execute such additional agreements as may be
necessary or desirable in order to give full effect to the foregoing.
THE FOREGOING SUMMARY OF CERTAIN PROVISIONS OF THE DECLARATION IS A
DISCUSSION OF ALL MATERIAL TERMS OF THE DECLARATION, BUT DOES NOT PURPORT TO BE
COMPLETE AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE DECLARATION WHICH
HAS BEEN FILED AS AN EXHIBIT TO THE REGISTRATION STATEMENT OF WHICH THIS
PROSPECTUS IS A PART.
The principal place of business of the Trust shall be c/o Ohio Edison
Company, 76 South Main Street, Akron, Ohio 44308, telephone number (330)
384-5100.
31
<PAGE> 34
THE OFFER
PURPOSE OF THE OFFER
The purpose of the Offer is to refinance the Class A Shares with the
Preferred Securities and to achieve certain tax efficiencies while preserving
Ohio Edison's flexibility with respect to future financings. This refinancing
will permit Ohio Edison to deduct interest payable on the Subordinated
Debentures for United States federal income tax purposes; dividends payable with
regard to the Class A Shares are not deductible.
GENERAL
PARTICIPATION IN THE OFFER IS VOLUNTARY AND HOLDERS OF CLASS A SHARES
SHOULD CAREFULLY CONSIDER WHETHER TO ACCEPT. NEITHER THE BOARD OF DIRECTORS OF
OHIO EDISON, OHIO EDISON, THE TRUSTEES NOR THE TRUST MAKES ANY RECOMMENDATION TO
HOLDERS AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING IN THE OFFER. HOLDERS
OF CLASS A SHARES ARE URGED TO CONSULT THEIR FINANCIAL AND TAX ADVISORS IN
MAKING THEIR DECISIONS ON WHAT ACTION TO TAKE IN LIGHT OF THEIR OWN PARTICULAR
CIRCUMSTANCES. SEE "PRICE RANGE OF CLASS A SHARES."
Unless the context requires otherwise, the term "Holder" with respect to
the Offer means (i) any person in whose name any Class A Shares are registered
on the books of Ohio Edison or (ii) any other person who has obtained a properly
completed stock power from the registered holder, or (iii) any person whose
Class A Shares are held of record by a Depository Institution.
TERMS OF THE OFFER
Upon the terms and subject to the conditions set forth herein and in the
Letter of Transmittal, the Trust will exchange its Preferred Securities for up
to 3,600,000 of the outstanding Class A Shares. The Offer will be effected on a
basis of one Preferred Security for each Class A Share validly tendered and
accepted for exchange. See "-- Procedures for Tendering." Upon the terms and
subject to the conditions set forth herein and in the Letter of Transmittal, the
Trust will accept up to 3,600,000 Class A Shares validly tendered and not
withdrawn prior to the Expiration Date and, unless the Offer has been withdrawn
or terminated, will deliver Preferred Securities in exchange therefor to
tendering Holders of Class A Shares as promptly as practicable following the
Expiration Date. The Trust expressly reserves the right, in its sole discretion,
to delay acceptance for exchange of Class A Shares tendered under the Offer and
the delivery of the Preferred Securities with respect to the Class A Shares
accepted for exchange (subject to Rules 13e-4 and 14e-1 under the Exchange Act,
which require that the Trust consummate the Offer or return the Class A Shares
deposited by or on behalf of the Holders thereof promptly after the termination
or withdrawal of the Offer), or to amend, withdraw or terminate the Offer at any
time prior to the Expiration Date for any of the reasons set forth in "--
Conditions to the Offer" and "-- Expiration Date; Extensions; Amendments;
Termination."
In all cases, except to the extent waived by the Trust, delivery of
Preferred Securities issued with respect to the Class A Shares accepted for
exchange pursuant to the Offer will be made only after timely receipt by the
Exchange Agent of Class A Shares (or confirmation of book-entry transfer
thereof), a properly completed and duly executed Letter of Transmittal and any
other documents required thereby.
As of the date of this Prospectus, there are 4,000,000 Class A Shares
outstanding. This Prospectus, together with the Letter of Transmittal, is being
sent to all registered Holders commencing on or about the date of this
Prospectus.
The Trust shall be deemed to have accepted validly tendered Class A Shares
(or defectively tendered Class A Shares with respect to which the Trust has
waived such defect) when, as and if the Trust has given oral or written notice
thereof to the Exchange Agent. The Exchange Agent will act as agent for the
tendering Holders for the purpose of receiving Class A Shares from, and
remitting Preferred Securities to, tendering
32
<PAGE> 35
Holders who are participating in the Offer. Upon the terms and subject to the
conditions of the Offer, delivery of Preferred Securities to tendering Holders
will be made as promptly as practicable following the Expiration Date.
If proration of tendered Class A Shares is required, because of the
difficulty in determining the number of Class A Shares validly tendered
(including shares tendered by the guaranteed delivery procedures described in
"-- Procedures for Tendering"), the Trust does not expect that it would be able
to announce the final proration factor or to commence the exchange for any Class
A Shares pursuant to the Offer until approximately five Business Days after the
Expiration Date. Preliminary results of the proration will be announced by press
release as promptly as practicable after the Expiration Date. Holders of Class A
Shares may obtain such preliminary information from the Dealer Manager, the
Information Agent or the Exchange Agent and may also be able to obtain such
information from their brokers.
Until the final proration factors are known, the Trust will not issue any
Preferred Securities in exchange for any Class A Shares accepted for exchange
pursuant to the Offer or return Class A Shares delivered to the Exchange Agent
but not tendered or return Class A Shares tendered but not accepted for exchange
because of proration.
If any tendered Class A Shares are not accepted for exchange because of an
invalid tender, proration, the occurrence of certain other events set forth
herein or otherwise, unless otherwise requested by the Holder under "Special
Delivery Instructions" in the Letter of Transmittal, such Class A Shares will be
returned, without expense, to the tendering Holder thereof (or in the case of
Class A Shares tendered by book-entry transfer into the Exchange Agent's account
at a Depository Institution, such Class A Shares will be credited to an account
maintained at the Depository Institution designated by the participant therein
who so delivered such Class A Shares), as promptly as practicable after the
Expiration Date or the withdrawal or termination of the Offer.
Holders of Class A Shares will not have any appraisal or dissenters' rights
under the Ohio General Corporation Law in connection with the Offer. The Trust
intends to conduct the Offer in accordance with the applicable requirements of
the Exchange Act and the rules and regulations of the Commission thereunder.
Holders who tender Class A Shares in the Offer will not be required to pay
brokerage commissions or fees or, subject to the instructions in the Letter of
Transmittal, transfer taxes with respect to the exchange of Class A Shares
pursuant to the Offer. See "Fees and Expenses; Transfer Taxes."
Holders tendering Class A Shares held in global form shall receive
Preferred Securities in global form and holders tendering Class A Shares held
directly in certificated form shall receive Preferred Securities in certificated
form, in each case unless otherwise specified in the Letter of Transmittal. See
"-- Procedures for Tendering."
CONDITIONS TO THE OFFER
Notwithstanding any other provisions of the Offer, or any extension of the
Offer, the Trust will not be required to deliver Preferred Securities in respect
of any properly tendered Class A Shares and may terminate the Offer by oral or
written notice to the Exchange Agent and the holders of Class A Shares, or, at
its option, may modify or otherwise amend the Offer (other than with respect to
the Minimum Distribution Condition) with respect to such Class A Shares if any
of the following conditions are not satisfied at or prior to the Expiration Date
in the case of clauses (a) and (b) below or if any of the events specified in
clauses (c) through (e) occurs at or prior to the exchange date for the Class A
Shares:
(a) receipt of at least 1,200,000 validly tendered Class A Shares in
the Offer;
(b) tenders by a sufficient number of holders of Class A Shares to
satisfy the Minimum Distribution Condition;
(c) any action has been taken or threatened, or any statute, rule,
regulation, judgment, order, stay, decree or injunction has been
promulgated, enacted, entered, enforced or deemed applicable to the Offer,
by or before any court or governmental regulatory or administrative agency
or authority or tribunal,
33
<PAGE> 36
domestic or foreign, which (i) challenges the making of the Offer, or might
directly or indirectly prohibit, prevent, restrict or delay consummation of
the Offer, or otherwise and adversely affect in any material manner the
Offer or (ii) could materially adversely affect the business, condition
(financial or otherwise), income, operations, properties, assets,
liabilities or prospects of Ohio Edison and its subsidiaries, taken as a
whole or materially impair the contemplated benefits of the Offer to Ohio
Edison;
(d) any event has occurred or is likely to occur affecting the
business or financial affairs of Ohio Edison that would or might prohibit,
prevent, restrict or delay consummation of the Offer or that will, or is
reasonably likely to, materially impair the contemplated benefits of the
Offer or might be material to holders of Class A Shares in deciding whether
to accept the Offer; and
(e) any of the following events shall have occurred (i) any general
suspension of or limitation on trading in securities on the NYSE or in the
over-the-counter market (whether or not mandatory), (ii) any significant
adverse change in the price of the Class A Shares or in the United States
securities or financial markets, (iii) a material impairment in the trading
market for debt or equity securities, (iv) a declaration of a banking
moratorium or any suspension of payments in respect of banks by federal or
state authorities in the United States (whether or not mandatory), (v) a
commencement of a war, armed hostilities or other national or international
crisis directly or indirectly relating to the United States, (vi) any
limitation (whether or not mandatory) by any governmental authority on, or
other event having a reasonable likelihood of affecting, the extension of
credit by banks or other lending institutions in the United States, (vii)
any significant adverse change in United States securities or financial
markets generally or in the case of any of the foregoing existing at the
time of the commencement of the Offer, a material acceleration or worsening
thereof.
The foregoing conditions are for the sole benefit of the Trust and Ohio
Edison and, except for the Minimum Distribution Condition, may be waived by the
Trust and Ohio Edison, in whole or in part, in their sole discretion. Any
determination made by Ohio Edison or the Trust concerning an event, development
or circumstance described or referred to above will be final and binding on all
parties.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS; TERMINATION
The Offer will expire on the Expiration Date. The Trust expressly reserves
the right, in its sole discretion, subject to applicable law, to (i) terminate
the Offer, and not accept for exchange any Class A Shares and promptly return
all Class A Shares upon the failure of any of the conditions specified above in
"-- Conditions to the Offer", (ii) waive any condition to the Offer (other than
the Minimum Distribution Condition) and accept all Class A Shares previously
tendered pursuant to the Offer, (iii) extend the Expiration Date of the Offer
and retain all Class A Shares tendered pursuant to the Offer until the
Expiration Date, subject, however, to all withdrawal rights of holders, see
"-- Withdrawal of Tenders," (iv) amend the terms of the Offer or (v) modify the
form of the consideration to be paid pursuant to the Offer. Any amendment
applicable to the Offer will apply to all Class A Shares tendered pursuant to
the Offer. During any extension of the Offer, all Class A Shares previously
tendered pursuant to the Offer and not withdrawn will remain subject to the
Offer.
If the Trust makes a material change in the terms of the Offer, the Trust
will extend the Offer. The minimum period for which the Offer will be extended
following a material change, other than a change in the amount of Class A Shares
sought for exchange or an increase or decrease in the consideration offered to
Holders of Class A Shares, will depend upon the facts and circumstances,
including the relative materiality of the change. With respect to an increase or
decrease in the number of Class A Shares sought in the Offer or an increase or
decrease in the consideration offered to Holders of Class A Shares, if required,
the Offer will remain open for a minimum of ten Business Days following public
announcement of such change. In the case of any amendment, withdrawal or
termination of the Offer, a public announcement will be issued no later than
9:00 a.m., New York City time, on the next business day after the previously
scheduled Expiration Date of the Offer subject to such extension. If the Trust
withdraws or terminates the Offer, it will give immediate notice to the Exchange
Agent, and all Class A Shares theretofore tendered pursuant to the Offer will be
returned promptly to the tendering Holders thereof. See "-- Withdrawal of
Tenders." In order to satisfy the
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<PAGE> 37
NYSE listing requirements, acceptance of Class A Shares validly tendered in the
Offer is subject to the Minimum Distribution Condition, which condition may not
be waived.
PROCEDURES FOR TENDERING
The tender of Class A Shares by a Holder thereof pursuant to one of the
procedures set forth below will constitute an agreement between such Holder and
the Trust in accordance with the terms and subject to the conditions set forth
herein and in the Letter of Transmittal.
Each Holder of Class A Shares wishing to participate in the Offer must (i)
properly complete and sign the Letter of Transmittal in accordance with the
instructions contained herein and in the Letter of Transmittal, together with
any required signature guarantees, and deliver the same to the Exchange Agent,
at one of its addresses set forth on the back cover page hereof prior to the
Expiration Date and either (a) certificates for the Class A Shares must be
received by the Exchange Agent at such address or (b) such Class A Shares must
be transferred pursuant to the procedures for book-entry transfer described
below and a confirmation of such book-entry transfer must be received by the
Exchange Agent, in each case prior to the Expiration Date, or (ii) comply with
the guaranteed delivery procedures described below.
IN ORDER TO PARTICIPATE IN THE OFFER, HOLDERS OF CLASS A SHARES MUST SUBMIT
A LETTER OF TRANSMITTAL AND COMPLY WITH THE OTHER PROCEDURES FOR TENDERING IN
ACCORDANCE WITH THE INSTRUCTIONS CONTAINED HEREIN AND IN THE LETTER OF
TRANSMITTAL PRIOR TO THE EXPIRATION DATE. LETTERS OF TRANSMITTAL, CLASS A SHARES
AND ANY OTHER REQUIRED DOCUMENTS SHOULD BE SENT ONLY TO THE EXCHANGE
AGENT -- NOT TO THE TRUST, OHIO EDISON, THE DEALER MANAGER OR THE INFORMATION
AGENT.
Special Procedure for Beneficial Owners. Any beneficial owner whose Class
A Shares are registered in the name of a broker, dealer, commercial bank, trust
company or other nominee and who wishes to tender should contact such registered
Holder promptly and instruct such registered Holder to tender on such beneficial
owner's behalf. If such beneficial owner wishes to tender on its own behalf,
such owner must, prior to completing and executing the Letter of Transmittal and
delivering its Class A Shares, either make appropriate arrangements to register
ownership of the Class A Shares in such owner's name or obtain a properly
completed stock power from the registered Holder. The transfer of registered
ownership may take considerable time and may not be able to be completed prior
to the Expiration Date.
THE METHOD OF DELIVERY OF CLASS A SHARES AND ALL OTHER DOCUMENTS IS AT THE
ELECTION AND RISK OF THE HOLDER. IF SENT BY MAIL, IT IS RECOMMENDED THAT
REGISTERED MAIL, RETURN RECEIPT REQUESTED, BE USED, INSURANCE BE OBTAINED, AND
THE MAILING BE MADE SUFFICIENTLY IN ADVANCE OF THE EXPIRATION DATE TO PERMIT
DELIVERY TO THE EXCHANGE AGENT ON OR BEFORE THE EXPIRATION DATE.
Signature Guarantees. If tendered Class A Shares are registered in the
name of the signer of the Letter of Transmittal and the Preferred Securities to
be issued in exchange therefor are to be issued (and any untendered Class A
Shares are to be reissued) in the name of the registered Holder, the signature
of such signer need not be guaranteed. If the tendered Class A Shares are
registered in the name of someone other than the signer of the Letter of
Transmittal, or if Preferred Securities issued in exchange therefor are to be
issued in the name of any person other than the signer of the Letter of
Transmittal, such tendered Class A Shares must be endorsed or accompanied by
written instruments of transfer in form satisfactory to the Trust and duly
executed by the registered Holder, and the signature on the endorsement or
instrument of transfer must be guaranteed by a financial institution (including
most banks, savings and loans associations and brokerage houses) that is a
participant in the Security Transfer Agents Medallion Program or the Stock
Exchange Medallion Program (any of the foregoing hereinafter referred to as an
"Eligible Institution"). If the Preferred Securities (and/or any tendered Class
A Shares not exchanged) are to be delivered to an address other than that of the
registered Holder appearing on the register for the Class A Shares, the
signature in the Letter of Transmittal must be guaranteed by an Eligible
Institution.
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<PAGE> 38
Book-Entry Transfer. The Trust understands that the Exchange Agent will
make a request promptly after the date of this Prospectus to establish accounts
with respect to the Class A Shares at a Depository Institution for the purpose
of facilitating the Offer, and subject to the establishment thereof, any
financial institution that is a participant in a Depository Institution's system
may make book-entry delivery of Class A Shares by causing the Depository
Institution to transfer such Class A Shares into the Exchange Agent's account
with respect to the Class A Shares in accordance with such Depository
Institution's Automated Tender Offer Program ("ATOP") procedures for such
book-entry transfers. However, the exchange for the Class A Shares so tendered
will only be made after timely confirmation (a "Book-Entry Confirmation") of
such Book-Entry Transfer of Class A Shares into the Exchange Agent's account,
and timely receipt by the Exchange Agent of an Agent's Message (as such term is
defined in the next sentence) and any other documents required by the Letter of
Transmittal. The term "Agent's Message" means a message, transmitted by a
Depository Institution and received by the Exchange Agent and forming a part of
a Book-Entry Confirmation, which states that such Depository Institution has
received an express acknowledgment from a participant tendering Class A Shares
that is the subject of such Book-Entry Confirmation, that such participant has
received and agrees to be bound by the terms of the Letter of Transmittal, and
that the Trust may enforce such agreement against such participant.
Guaranteed Delivery. If a Holder desires to participate in the Offer and
time will not permit a Letter of Transmittal or Class A Shares to reach the
Exchange Agent before the Expiration Date or the procedure for book-entry
transfer cannot be completed on a timely basis, a tender may be effected if the
Exchange Agent has received at one of its addresses on the back cover page
hereof prior to the Expiration Date, a letter, telegram or facsimile
transmission from an Eligible Institution setting forth the name and address of
the tendering Holder, the name(s) in which the Class A Shares are registered
and, if the Class A Shares are held in certificated form, the certificate
numbers of the Class A Shares to be tendered, and stating that the tender is
being made thereby and guaranteeing that within three NYSE trading days after
the date of execution of such letter, telegram or facsimile transmission by the
Eligible Institution, the Class A Shares in proper form for transfer together
with a properly completed and duly executed Letter of Transmittal (and any other
required documents), or a confirmation of book-entry transfer of such Class A
Shares into the Exchange Agent's account at a Depository Institution, will be
delivered by such Eligible Institution. Unless the Class A Shares being tendered
by the above-described method are deposited with the Exchange Agent within the
time period set forth above (accompanied or preceded by a properly completed
Letter of Transmittal and any other required documents) or a confirmation of
book-entry transfer of such Class A Shares into the Exchange Agent's account at
the Depository Institution in accordance with such Depository Institution's ATOP
procedures is received, the Trust may, at its option, reject the tender. In
addition to the copy being transmitted herewith, copies of a Notice of
Guaranteed Delivery which may be used by Eligible Institutions for the purposes
described in this paragraph are available from the Exchange Agent and the
Information Agent.
Miscellaneous. All questions as to the validity, form, eligibility
(including time of receipt) and acceptance for exchange of any tender of Class A
Shares will be determined by the Trust, whose determination will be final and
binding. The Trust reserves the absolute right to reject any or all tenders not
in proper form or the acceptance for exchange of which may, in the opinion of
the Trust's counsel, be unlawful. The Trust also reserves the absolute right to
waive any defect or irregularity in the tender of any Class A Shares, and the
Trust's interpretation of the terms and conditions of the Offer (including the
instructions in the Letter of Transmittal) will be final and binding. None of
the Trust, the Exchange Agent, the Dealer Manager, the Information Agent or any
other person will be under any duty to give notification of any defects or
irregularities in tenders or incur any liability for failure to give any such
notification.
Tenders of Class A Shares involving any irregularities will not be deemed
to have been made until such irregularities have been cured or waived. Class A
Shares received by the Exchange Agent that are not validly tendered and as to
which the irregularities have not been cured or waived will be returned by the
Exchange Agent to the tendering Holder (or in the case of Class A Shares
tendered by book-entry transfer into the Exchange Agent's account at a
Depository Institution, such Class A Shares will be credited to an account
maintained at the Depository Institution designated by the participant therein
who so delivered such Class A
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<PAGE> 39
Shares), unless otherwise requested by the Holder in the Letter of Transmittal,
as promptly as practicable after the Expiration Date or the withdrawal or
termination of the Offer.
LETTER OF TRANSMITTAL
The Letter of Transmittal contains, among other things, the following terms
and conditions, which are part of the Offer.
The party tendering Class A Shares for exchange (the "Transferor")
exchanges, assigns and transfers the Class A Shares to the Trust, and
irrevocably constitutes and appoints the Exchange Agent as the Transferor's
agent and attorney-in-fact to cause the Class A Shares to be assigned,
transferred and exchanged. The Transferor represents and warrants that it has
full power and authority to tender, exchange, assign and transfer the Class A
Shares and to acquire Preferred Securities issuable upon the exchange of such
tendered Class A Shares and that, when such Transferor's Class A Shares are
accepted for exchange, the Trust will acquire good and unencumbered title to
such tendered Class A Shares, free and clear of all liens, restrictions, charges
and encumbrances and not subject to any adverse claim. The Transferor also
warrants that it will, upon request, execute and deliver any additional
documents deemed by the Trust to be necessary or desirable to complete the
exchange, assignment and transfer of tendered Class A Shares or transfer
ownership of such Class A Shares on the account books maintained by the
Depository Institution. All authority conferred by the Transferor will survive
the death, bankruptcy or incapacity of the Transferor and every obligation of
the Transferor shall be binding upon the heirs, legal representatives,
successors, assigns, executors and administrators of such Transferor.
WITHDRAWAL OF TENDERS
Tenders of Class A Shares pursuant to the Offer may be withdrawn at any
time prior to the Expiration Date and, unless accepted for exchange by the
Trust, may be withdrawn at any time after 40 Business Days after the date of
this Prospectus.
To be effective, a written notice of withdrawal delivered by mail, hand
delivery or facsimile transmission must be timely received by the Exchange Agent
at one of its addresses set forth on the back cover page hereof. The method of
notification is at the risk and election of the Holder. Any such notice of
withdrawal must specify (i) the Holder named in the Letter of Transmittal as
having tendered Class A Shares to be withdrawn, (ii) if the Class A Shares are
held in certificated form, the certificate numbers of the Class A Shares to be
withdrawn, (iii) that such Holder is withdrawing his election to have such Class
A Shares exchanged and (iv) the name of the registered Holder of such Class A
Shares, and must be signed by the Holder in the same manner as the original
signature on the Letter of Transmittal (including any required signature
guarantees) or be accompanied by evidence satisfactory to the Trust that the
person withdrawing the tender has succeeded to the beneficial ownership of the
Class A Shares being withdrawn. The Exchange Agent will return the properly
withdrawn Class A Shares promptly following receipt of notice of withdrawal. If
Class A Shares have been tendered pursuant to the procedure for book-entry
transfer, any notice of withdrawal must specify the name and number of the
account at a Depository Institution to be credited with the withdrawn Class A
Shares and otherwise comply with such Depository Institution procedures. All
questions as to the validity of notice of withdrawal, including time of receipt,
will be determined by the Trust, and such determination will be final and
binding on all parties. Withdrawals of tenders of Class A Shares may not be
rescinded and any Class A Shares withdrawn will thereafter be deemed not validly
tendered for purposes of the Offer. Properly withdrawn Class A Shares, however,
may be retendered by following the procedures therefor described elsewhere
herein at any time prior to the Expiration Date. See "-- Procedures for
Tendering."
ACCEPTANCE OF SHARES AND PRORATION
Upon the terms and subject to the conditions of the Offer, including the
Minimum Distribution Condition, if 3,600,000 or fewer Class A Shares have been
validly tendered and not withdrawn prior to the Expiration Date, the Trust will
accept for exchange all such Class A Shares. Upon the terms and subject to the
conditions of the Offer, if more than 3,600,000 Class A Shares have been validly
tendered and not
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<PAGE> 40
withdrawn prior to the Expiration Date, the Trust will accept for exchange Class
A Shares from each tendering Holder on a pro rata basis, subject to adjustment
to avoid the acceptance for exchange of fractional shares.
If the Trust decides, in its sole discretion, to increase or decrease the
number of Class A Shares sought in the Offer or to increase or decrease the
consideration offered to Holders of Class A Shares, and if the Offer is
scheduled to expire less than ten Business Days from and including the date that
notice of such increase or decrease is first published, sent or given in the
manner specified in "-- Expiration Date; Extensions; Amendments; Termination",
then the Offer will be extended for a minimum of ten Business Days from and
including the date of such notice.
All Class A Shares not accepted pursuant to the Offer, including shares not
accepted because of proration, will be returned to the tendering Holders at the
Trust's expense as promptly as practicable following the Expiration Date.
EXCHANGE AGENT AND INFORMATION AGENT
The Bank of New York has been appointed as Exchange Agent for the Offer.
The Exchange Agent Is:
THE BANK OF NEW YORK
101 Barclay Street
New York, New York 10286
(800) 507-9357
Georgeson & Company Inc. has been retained as the Information Agent to
assist in connection with the Offer. Questions and requests for assistance
regarding the Offer, requests for additional copies of this Prospectus, the
Letter of Transmittal and requests for Notice of Guaranteed Delivery may be
directed to the Information Agent.
The Information Agent Is:
(LOGO)
Wall Street Plaza
New York, New York 10005
(800) 223-2064 (Toll-Free)
Banks and Brokers Call Collect:
(212) 440-9800
Ohio Edison will pay the Exchange Agent and Information Agent reasonable
and customary fees for their services and will reimburse them for all their
reasonable out-of-pocket expenses in connection therewith.
DEALER MANAGER; SOLICITING DEALERS
Merrill Lynch & Co., as Dealer Manager, has agreed to solicit exchanges of
Class A Shares for Preferred Securities. Ohio Edison will pay the Dealer Manager
a fee of $[ ] per Class A Share accepted pursuant to the Offer. The
maximum fee payable to the Dealer Manager is approximately $[ ] plus
any amount that the Dealer Manager may be entitled to pursuant to the next
paragraph. Ohio Edison will also reimburse the Dealer Manager for certain
reasonable out-of-pocket expenses in connection with the Offer and will
indemnify the Dealer Manager against certain liabilities, including liabilities
under the Securities Act. The Dealer Manager engages in transactions with, and
from time to time has performed services for, Ohio Edison.
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<PAGE> 41
Ohio Edison will pay to a Soliciting Dealer a solicitation fee of
$[ ] per Class A Share validly tendered and accepted for exchange
pursuant to the Offer. As used in this Prospectus, "Soliciting Dealer" includes
(i) any broker or dealer in securities, including the Dealer Manager in its
capacity as a broker or dealer, who is a member of any national securities
exchange or of the National Association of Securities Dealers, Inc. (the
"NASD"), (ii) any foreign broker or dealer not eligible for membership in the
NASD who agrees to conform to the NASD's Rules of Fair Practice in soliciting
tenders outside the United States to the same extent as though it were an NASD
member, or (iii) any bank or trust company, any one of whom has solicited and
obtained a tender pursuant to the Offer. No solicitation fee shall be payable to
a Soliciting Dealer with respect to the tender of Class A Shares by a Holder
unless the Letter of Transmittal accompanying such tender designates such
Soliciting Dealer as such in the box captioned "Solicited Tenders."
If tendered Class A Shares are being delivered by book-entry transfer made
to an account maintained by the Exchange Agent with Depository Institutions, the
Soliciting Dealer must return a Notice of Solicited Tenders (included in the
materials provided to brokers and dealers) to the Exchange Agent within three
trading days after the Expiration Date in order to receive a solicitation fee.
No solicitation fee shall be payable to a Soliciting Dealer in respect of Class
A Shares (i) beneficially owned by such Soliciting Dealer or (ii) registered in
the name of such Soliciting Dealer unless such Class A Shares are held by such
Soliciting Dealer as nominee and such Class A Shares are being tendered for the
benefit of one or more beneficial owners identified on the Letter of Transmittal
or the Notice of Solicited Tenders. No solicitation fee shall be payable to the
Soliciting Dealer with respect to the tender of Class A Shares by the Holder of
record, for the benefit of the beneficial owner, unless the beneficial owner has
designated such Soliciting Dealer.
No solicitation fee shall be payable to a Soliciting Dealer if such
Soliciting Dealer is required for any reason to transfer any portion of such fee
to a tendering Holder (other than itself). No broker, dealer, bank, trust
company or fiduciary shall be deemed to be the agent of Ohio Edison, the Trust,
the trustees, the Exchange Agent, the Information Agent or the Dealer Manager
for purposes of the Offer.
Other than as described above, Ohio Edison will not pay any solicitation
fees to any broker, dealer, bank, trust company or other person for any Class A
Shares exchanged in connection with the Offer. Ohio Edison will reimburse such
persons for customary handling and mailing expenses incurred in connection with
the Offer.
Additional solicitations may be made by telephone, in person or otherwise
by officers and regular employees of Ohio Edison and its affiliates. No
additional compensation will be paid to any such officers and employees who
engage in soliciting tenders.
LISTING AND TRADING OF PREFERRED SECURITIES AND CLASS A SHARES
The Preferred Securities constitute a new issue of securities with no
established trading market. While the Preferred Securities are expected to be
approved for listing on the NYSE, subject to official notice of issuance, there
can be no assurance that an active market for the Preferred Securities will
develop or be sustained in the future on such exchange. Although the Dealer
Manager has indicated to the Trust that it intends to make a market in the
Preferred Securities following the Expiration Date as permitted by applicable
laws and regulations prior to the commencement of trading on the NYSE, it is not
obligated to do so and may discontinue any such market-making at any time
without notice. Accordingly, no assurance can be given as to the liquidity of,
or trading markets for, the Preferred Securities. In order to satisfy the NYSE
listing requirements, acceptance of Class A Shares validly tendered in the Offer
is subject to the Minimum Distribution Condition, which condition may not be
waived.
To the extent that Class A Shares are tendered and accepted in the Offer,
the terms on which untendered Class A Shares could subsequently be sold could be
adversely affected. In addition, if the Offer is substantially subscribed or
oversubscribed, there would be a significant risk that round lot holdings of
Class A Shares outstanding following the Offer would be limited. See "Risk
Factors -- Lack of Established Trading Market for Preferred Securities" and
"-- Reduced Trading Market for Class A Shares."
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<PAGE> 42
TRANSACTIONS AND ARRANGEMENTS CONCERNING THE OFFER
Except as described herein, there are no contracts, arrangements,
understandings or relationships in connection with the Offer between Ohio Edison
or any of its directors or executive officers, the Trust or the Trustees and any
person with respect to any securities of Ohio Edison or the Trust, including the
Subordinated Debentures, the Class A Shares and the Preferred Securities.
FEES AND EXPENSES; TRANSFER TAXES
The expenses of soliciting tenders of the Class A Shares will be borne by
Ohio Edison. For compensation to be paid to the Dealer Manager and Soliciting
Dealers, see "The Offer -- Dealer Manager; Soliciting Dealers." The total cash
expenditures to be incurred by Ohio Edison in connection with the Offer, other
than fees payable to the Dealer Manager and Soliciting Dealers, but including
the expenses of the Dealer Manager, printing, accounting and legal fees, and the
fees and expenses of the Exchange Agent, the Information Agent, the Property
Trustee, the Delaware Trustee and the Indenture Trustee, are estimated to be
approximately [ ].
Ohio Edison will pay all transfer taxes, if any, applicable to the exchange
of Class A Shares pursuant to the Offer. If, however, certificates representing
Preferred Securities or Class A Shares not tendered or accepted for exchange,
are to be delivered to, or are to be issued in the name of, any person other
than the registered Holder of the Class A Shares tendered or if a transfer tax
is imposed for any reason other than the exchange of Class A Shares pursuant to
the Offer, 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 the Letter of Transmittal, the amount of such transfer taxes will
be billed directly to such tendering Holder.
PRICE RANGE OF CLASS A SHARES
The Class A Shares are listed and principally traded on the NYSE and the
Chicago Stock Exchange. The following table sets forth, for each period shown,
the high and low closing sales prices of the Class A Shares as reported on the
NYSE Composite Tape.
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
Year Ended December 31, 1993
1st Quarter.............................................. -- --
2nd Quarter.............................................. 25.750 24.500
3rd Quarter.............................................. 26.500 25.375
4th Quarter.............................................. 26.375 24.750
Year Ended December 31, 1994
1st Quarter.............................................. 25.625 22.750
2nd Quarter.............................................. 23.250 21.875
3rd Quarter.............................................. 23.000 21.250
4th Quarter.............................................. 22.000 19.750
Year Ending December 31, 1995
1st Quarter.............................................. 23.500 21.250
2nd Quarter.............................................. 25.250 22.875
3rd Quarter.............................................. 24.875 24.125
4th Quarter.............................................. 26.125 24.875
Year Ending December 31, 1996
1st Quarter.............................................. 25.625 24.000
</TABLE>
On [ ], 1996, the last full day of trading prior to the first
public announcement of the Offer, the closing sales price of Class A Shares on
the NYSE as reported on the Composite Tape was $[ ] per share.
Stockholders are urged to obtain a current market quotation for Class A Shares.
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<PAGE> 43
DESCRIPTION OF THE PREFERRED SECURITIES
The Preferred Securities will be issued pursuant to the terms of the
Declaration. The Declaration will be qualified as an indenture under the Trust
Indenture Act. The Property Trustee will act as the indenture trustee for
purposes of compliance with the provisions of the Trust Indenture Act. The terms
of the Preferred Securities will include those stated in the Declaration and
those made part of the Declaration by the Business Trust Act and the Trust
Indenture Act. The following summary of the principal terms and provisions of
the Preferred Securities does not purport to be complete and is subject to, and
qualified in its entirety by reference to, the Declaration (a copy of which is
filed as an exhibit to the Registration Statement, of which this Prospectus
forms a part), the Business Trust Act and the Trust Indenture Act.
GENERAL
The Declaration authorizes the Regular Trustees, on behalf of the Trust, to
issue the Preferred Securities, which represent preferred undivided beneficial
interests in the assets of the Trust, and the Common Securities, which represent
common undivided beneficial interests in the assets of the Trust. Upon issuance
of the Preferred Securities, the holders thereof will own all of the issued and
outstanding Preferred Securities. All of the Common Securities will be owned by
Ohio Edison. The Common Securities rank pari passu, and payments will be made
thereon on a pro rata basis with the Preferred Securities, except that upon the
occurrence and during the continuation of a Declaration Event of Default, the
rights of the holders of the Common Securities to receive payment of periodic
distributions and payments upon liquidation, redemption and otherwise will be
subordinated to the rights to payment of the holders of the Preferred
Securities. The Declaration does not permit the issuance by the Trust of any
securities other than the Trust Securities or the incurrence of any indebtedness
by the Trust. Pursuant to the Declaration, the Property Trustee will own and
hold the Subordinated Debentures for the benefit of the Trust and the holders of
the Trust Securities. The payment of distributions out of money held by the
Trust, and payments upon redemption of the Preferred Securities or liquidation
of the Trust, are guaranteed by Ohio Edison to the extent described under
"Description of the Preferred Securities Guarantee."
The Preferred Guarantee Trustee will hold the Preferred Securities
Guarantee for the benefit of the holders of the Preferred Securities. The
Preferred Securities Guarantee does not cover payment of distributions on the
Preferred Securities when the Trust does not have sufficient available funds in
the Property Account to make such distributions.
DISTRIBUTIONS
Distributions on the Preferred Securities will be fixed at a rate per annum
of [ ]% of the stated liquidation amount of $25 per Preferred Security
(equivalent to $[ ] per Preferred Security). Distributions in arrears for
more than one quarter will accrue interest at the rate of [ ]% per annum and
the interest so accrued at the end of each quarter and remaining unpaid will
itself bear interest (to the extent permitted by applicable law) thereafter
until paid on the same basis. The term "distributions" as used herein includes
any such interest payable unless otherwise stated.
Distributions on the Preferred Securities will be cumulative, will accrue
from [ ], 1996, and will be payable quarterly in arrears on March 31,
June 30, September 30 and December 31 of each year, commencing [ ],
1996, to the holders of record on the applicable record date, which will be 15
calendar days prior to the relevant distribution payment date when, as and if
available for payment by the Property Trustee, except as otherwise described
below. The amount of distributions payable for any full quarterly period will be
computed on the basis of a 360-day year of twelve 30-day months, and for any
period shorter than a full quarter, on the basis of the actual number of days
elapsed in such a 90-day quarter. The initial distribution, payable on
[ ], 1996, will be based on a period shorter than a full quarter
([ ] to [ ], 1996) and will be in the amount of
$[ ] per Preferred Security. In addition, holders of Preferred
Securities will be entitled to an additional cash distribution at the rate 7.75%
per annum of the liquidation amount thereof from [ ], 1996 through
the Expiration Date in lieu of dividends accumulating after [ ], 1996
on their Class A Shares accepted for exchange, such
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additional distribution to be made on [ ], 1996 to holders of the
Preferred Securities on the record date for such distribution.
Ohio Edison has the right under the Indenture to defer payments of interest
on the Subordinated Debentures by extending the interest payment period from
time to time on the Subordinated Debentures which, if exercised, would defer
quarterly distributions on the Preferred Securities (though such distributions
would continue to accrue interest since interest would continue to accrue on the
Subordinated Debentures) during any such extended interest payment period. In
the event that Ohio Edison exercises this right, then (a) Ohio Edison shall not
declare or pay any dividend on, make any distributions with respect to, or
redeem, purchase or make a liquidation payment with respect to, any of its
capital stock, (b) Ohio Edison shall not make any payment of interest, principal
or premium, if any, on or repay, repurchase or redeem any debt securities issued
by Ohio Edison which rank pari passu with or junior to the Subordinated
Debentures, and (c) Ohio Edison shall not make any guarantee payments (other
than pursuant to the Preferred Securities Guarantee) with respect to the
foregoing; provided, however, that the foregoing restriction (a) does not apply
to any stock dividends paid by Ohio Edison where the dividend stock is the same
as that on which the dividend is paid. Prior to the termination of any such
Extension Period, Ohio Edison may further extend the interest payment period,
provided that such Extension Period, together with all such previous and further
extensions thereof, may not exceed 20 consecutive quarters or extend beyond the
maturity of the Subordinated Debentures. Upon the termination of any Extension
Period and the payment of all amounts then due, Ohio Edison may select a new
Extension Period as if no Extension Period had previously been declared, subject
to the above requirements. See "-- Voting Rights" below and "Description of the
Subordinated Debentures -- Interest" and "-- Option to Extend Interest Payment
Period." If distributions are deferred, the deferred distributions and accrued
interest thereon shall be paid to holders of record of the Preferred Securities,
if funds are available therefor, as they appear on the books and records of the
Trust on the record date next following the termination of such Extension
Period.
Distributions on the Preferred Securities must be paid on the dates payable
to the extent that the Trust has funds available for the payment of such
distributions in the Property Account. The Trust's funds available for
distribution to the holders of the Preferred Securities will be limited to
payments received under the Subordinated Debentures. See "Description of the
Subordinated Debentures." The payment of distributions out of moneys held by the
Trust is guaranteed by Ohio Edison to the extent set forth under "Description of
the Preferred Securities Guarantee."
Distributions on the Preferred Securities will be payable to the holders
thereof as they appear on the books and records of the Trust on the relevant
record dates, which will be 15 calendar days prior to the relevant distribution
payment date, which record dates and payment dates correspond to the record
dates and interest payment dates on the Subordinated Debentures. Such
distributions will be paid through the Property Trustee, who will hold amounts
received in respect of the Subordinated Debentures in the Property Account for
the benefit of the Trust and the holders of the Trust Securities. Subject to any
applicable laws and regulations and the provisions of the Declaration, each such
payment will be made at the office or agency maintained therefore pursuant to
the provisions of the Declaration; provided that payment of Distributions may be
made at the option of the Regular Trustees on behalf of the Trust by check
mailed to the address of the persons entitled thereto. In the event that any
date on which distributions are to be made on the Preferred Securities is not a
Business Day, then payment of the distributions payable on such date will be
made on the next succeeding day which is a Business Day (and without any
interest or other payment in respect of any such delay) except that if such
Business Day is in the next succeeding calendar year, such payment shall be made
on the immediately preceding Business Day, in each case with the same force and
effect as if made on such date. A "Business Day" shall mean any day other than a
Saturday, Sunday or other day on which banking institutions in New York, New
York are authorized or required by law to close.
MANDATORY REDEMPTION
The Subordinated Debentures will mature on [ ], 2016 and may be
redeemed, in whole or in part, at any time after April 1, 1998, or at any time
in certain circumstances upon the occurrence of a Tax Event. Upon the repayment
of the Subordinated Debentures, whether at maturity or upon acceleration,
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redemption or otherwise, the proceeds from such repayment or payment shall
simultaneously be applied to redeem Trust Securities having an aggregate
liquidation amount equal to the aggregate principal amount of the Subordinated
Debentures so repaid or redeemed at the Redemption Price; provided, that except
in the case of payments upon maturity, holders of Trust Securities shall be
given not less than 30 nor more than 60 days' notice of such redemption. See
"Description of the Subordinated Debentures." In the event that fewer than all
of the outstanding Preferred Securities are to be redeemed, the Preferred
Securities will be redeemed pro rata from each holder of Trust Securities.
SPECIAL EVENT REDEMPTION OR DISTRIBUTION
A "Tax Event" means the receipt by the Regular Trustees of an opinion of a
nationally recognized independent tax counsel experienced in such matters (a
"Dissolution Tax Opinion") to the effect that, on or after the date of this
Prospectus, as a result of (a) any amendment to, or change (including any
announced prospective change) in, the laws (or any regulations thereunder) of
the United States or any political subdivision or taxing authority thereof or
therein or (b) any amendment to, or change in, an interpretation or application
of such laws or regulations by any legislative body, court, governmental agency
or regulatory authority, in each case which amendment or change is enacted,
promulgated, issued or announced on or after the date of this Prospectus, there
is more than an insubstantial risk that (i) the Trust is or will be, within 90
days of the date thereof, subject to United States federal income tax with
respect to interest accrued or received on the Subordinated Debentures, (ii)
interest payable by Ohio Edison to the Trust on the Subordinated Debentures is
not or, within 90 days of the date thereof, will not be deductible, in whole or
in part, by Ohio Edison for United States federal income tax purposes, or (iii)
the Trust is or will be, within 90 days of the date thereof, subject to more
than a de minimis amount of taxes, duties or other governmental charges.
An "Investment Company Event" means that the Regular Trustees shall have
received an opinion of a nationally recognized independent counsel experienced
in practice under the 1940 Act (as hereinafter defined) (an "Investment Company
Event Opinion") to the effect that, as a result of the occurrence of a change in
law or regulation or a written change in interpretation or application of law or
regulation by any legislative body, court, governmental agency or regulatory
authority (a "Change in 1940 Act Law"), there is more than an insubstantial risk
that the Trust is or will be considered an "investment company" which is
required to be registered under the Investment Company Act of 1940, as amended
(the "1940 Act"), which Change in 1940 Act Law becomes effective on or after the
date of this Prospectus.
If, at any time, a Tax Event or an Investment Company Event (each, as
defined above, a "Special Event") shall occur and be continuing, the Regular
Trustees shall, except in the circumstances described below, dissolve the Trust
and, after satisfaction of creditors, cause Subordinated Debentures, having an
aggregate principal amount equal to the aggregate stated liquidation amount of,
with an interest rate identical to the distribution rate of, and accrued and
unpaid interest equal to accrued and unpaid distributions on, and having the
same record date for payment as, the Trust Securities, to be distributed to the
holders of the Trust Securities, in liquidation of such holders' interests in
the Trust on a pro rata basis, within 90 days following the occurrence of such
Special Event; provided, however, that in the case of the occurrence of a Tax
Event, as a condition of such dissolution and distribution, the Regular Trustees
shall have received an opinion of a nationally recognized independent tax
counsel experienced in such matters (a "No Recognition Opinion"), which opinion
may rely on published revenue rulings of the Internal Revenue Service, to the
effect that neither the Trust nor the holders of the Preferred Securities will
recognize any gain or loss for United States federal income tax purposes as a
result of the dissolution of the Trust and the distribution of the Subordinated
Debentures; and, provided, further, that, if at the time there is available to
the Trust the opportunity to eliminate, within such 90-day period, the Special
Event by taking some ministerial action, such as filing a form or making an
election, or pursuing some other similar reasonable measure that has no adverse
effect on the Trust, Ohio Edison or the holders of the Preferred Securities, the
Trust will pursue such measure in lieu of dissolution. Furthermore, if in the
case of the occurrence of a Tax Event (i) Ohio Edison has received an opinion of
a nationally recognized independent tax counsel experienced in such matters (a
"Redemption Tax Opinion") that, as a result of a Tax Event, there is more than
an insubstantial risk that Ohio Edison would be
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precluded from deducting the interest on the Subordinated Debentures for United
States federal income tax purposes even if the Subordinated Debentures were
distributed to the holders of Preferred Securities in liquidation of such
holders' interests in the Trust as described above, or (ii) in the event of any
Special Event, after receipt of a Dissolution Tax Opinion or Investment Company
Event Opinion, as the case may be, the Regular Trustees shall have been informed
by such tax counsel that a No Recognition Opinion cannot be delivered, Ohio
Edison shall have the right at any time, upon not less than 30 nor more than 60
days' notice, to redeem the Subordinated Debentures in whole or in part for cash
within 90 days following the occurrence of such Special Event, and, following
such redemption, Trust Securities with an aggregate liquidation amount equal to
the aggregate principal amount of the Subordinated Debentures so redeemed shall
be redeemed by the Trust at the Redemption Price on a pro rata basis; provided,
however, that, if there is available to the Trust the opportunity to eliminate,
within such 90-day period, the Special Event by taking some ministerial action,
such as filing a form or making an election, or pursuing some other similar
reasonable measure that has no adverse effect on the Trust, Ohio Edison or the
holders of the Preferred Securities, Ohio Edison or the Trust will pursue such
measure in lieu of redemption.
If Subordinated Debentures are distributed to the holders of the Preferred
Securities, Ohio Edison will use its best efforts to have the Subordinated
Debentures listed on the NYSE or on such other exchange as the Preferred
Securities are then listed.
After the date for any distribution of Subordinated Debentures upon
dissolution of the Trust, (i) the Preferred Securities and Preferred Securities
Guarantee will no longer be deemed to be outstanding and (ii) any certificates
representing Preferred Securities and the Preferred Securities Guarantee will be
deemed to represent Subordinated Debentures having an aggregate principal amount
equal to the aggregate stated liquidation amount of, with an interest rate
identical to the distribution rate of, and accrued and unpaid interest equal to
accrued and unpaid distributions on, such Preferred Securities, until such
certificates are presented to Ohio Edison or its agent for transfer or reissue.
There can be no assurance as to the market prices for the Preferred
Securities or the Subordinated Debentures that may be distributed in exchange
for the Preferred Securities if a termination and liquidation of the Trust were
to occur. Accordingly, the Preferred Securities that an investor may purchase,
whether pursuant to the offer hereby or in the secondary market, or the
Subordinated Debentures that the investor may receive on termination and
liquidation of the Trust, may trade at a discount to the price that the investor
paid to purchase the Preferred Securities offered hereby.
On May 19, 1996, President Clinton announced a 1997 balanced budget
proposal containing, among other things, an amendment that would classify a debt
instrument issued on or after December 7, 1995 as equity if the instrument had a
maximum term exceeding 20 years and was not classified as indebtedness on the
issuer's applicable balance sheet. On March 29, 1996, Senate Finance Committee
Chairman William V. Roth, Jr. and House Ways and Means Committee Chairman Bill
Archer issued a joint statement indicating their intent that certain legislative
proposals initiated by President Clinton, including the 1997 balanced budget
proposal, that may be adopted by either of the tax-writing committees of
Congress would have an effective date that is no earlier than the date of
"appropriate Congressional action." Because the Subordinated Debentures will
have a maximum term not exceeding 20 years, the provisions of the proposed
amendment are not applicable to the Subordinated Debentures. Ohio Edison cannot
predict whether this proposed amendment may be modified or other legislation may
be enacted that might affect the character or treatment for United States
federal income tax purposes of the Subordinated Debentures or otherwise affect
the Preferred Securities offered hereby. If legislation were enacted limiting,
in whole or in part, the deductibility by Ohio Edison of interest on the
Subordinated Debentures for United States federal income tax purposes, such
enactment would be a Tax Event. Depending upon the circumstances following a Tax
Event, Ohio Edison could either cause the Trust to be dissolved and the
Subordinated Debentures to be distributed to the holders of Preferred
Securities, or cause the Subordinated Debentures to be redeemed, which would
result in a redemption by the Trust of the Preferred Securities. It is expected
that the 1997 balanced budget proposal, even if enacted in a manner that would
affect the Subordinated Debentures, would not alter the United States federal
income tax
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consequences of the exchange of Class A Shares for Preferred Securities and the
ownership and disposition of Preferred Securities. See "Taxation."
REDEMPTION PROCEDURES
The Trust may not redeem fewer than all of the outstanding Preferred
Securities unless all accrued and unpaid distributions have been paid on all
Trust Securities for all quarterly distribution periods terminating on or prior
to the date of redemption.
If the Trust gives a notice of redemption in respect of Preferred
Securities (which notice will be irrevocable), then immediately prior to the
close of business on the redemption date, provided that Ohio Edison has paid to
the Trust a sufficient amount of cash in connection with the related redemption
or maturity of the Subordinated Debentures, distributions will cease to accrue
on the Preferred Securities called for redemption, such Preferred Securities
shall no longer be deemed to be outstanding and all rights of holders of such
Preferred Securities so called for redemption will cease, except the right of
the holders of such Preferred Securities to receive the Redemption Price, but
without interest on such Redemption Price. Neither the Company Trustees nor the
Trust shall be required to register or cause to be registered the transfer of
any Preferred Securities which have been so called for redemption or during the
15-day period prior to the mailing of notice of redemption in respect thereof.
If any date fixed for redemption of Preferred Securities is not a Business Day,
then payment of the Redemption Price payable on such date will be made on the
next succeeding day that is a Business Day (and without any interest or other
payment in respect of any such delay) except that, if such Business Day falls in
the next calendar year, such payment will be made on the immediately preceding
Business Day, in each case with the same force and effect as if made on such
date fixed for redemption. If Ohio Edison fails to repay Subordinated Debentures
on maturity or on the date fixed for a redemption or if payment of the
Redemption Price in respect of Preferred Securities is improperly withheld or
refused and not paid by the Trust or by Ohio Edison pursuant to the Preferred
Securities Guarantee described under "Description of the Preferred Securities
Guarantee", distributions on such Preferred Securities will continue to accrue
from the original redemption date of the Preferred Securities to the date of
payment in which case the actual payment date will be considered the date fixed
for redemption for purposes of calculating the Redemption Price.
In the event that fewer than all of the outstanding Preferred Securities
are to be redeemed, the Preferred Securities will be redeemed pro rata as
described under "-- Book-Entry; Delivery and Form" below.
Subject to the foregoing and to applicable law (including, without
limitation, United States federal securities laws), Ohio Edison or its
affiliates may, at any time and from time to time, purchase outstanding
Preferred Securities by tender, in the open market or by private agreement.
LIQUIDATION DISTRIBUTION UPON TERMINATION
In the event of any voluntary or involuntary termination, dissolution or
winding-up of the Trust, the holders of the Preferred Securities at that time
will be entitled to receive out of the assets of the Trust, after satisfaction
of liabilities to creditors, distributions in an amount equal to the aggregate
of the stated liquidation amount of $25 per Preferred Security plus accrued and
unpaid distributions thereon to the date of payment (the "Liquidation
Distribution"), unless, in connection with such termination, dissolution or
winding-up Subordinated Debentures in an aggregate principal amount equal to the
aggregate stated liquidation amount of, with an interest rate identical to the
distribution rate of, and accrued and unpaid interest equal to accrued and
unpaid distributions on, the Preferred Securities, have been distributed on a
pro rata basis to the holders of Preferred Securities in exchange for such
Preferred Securities.
If, upon any such termination, dissolution or winding-up the Liquidation
Distribution can be paid only in part because the Trust has insufficient assets
available to pay in full the aggregate Liquidation Distribution, then the
amounts payable directly by the Trust on the Preferred Securities shall be paid
on a pro rata basis. The holders of the Common Securities will be entitled to
receive distributions upon any such dissolution pro rata with the holders of the
Preferred Securities, except that if a Declaration Event of Default has occurred
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and is continuing, the Preferred Securities shall have a preference over the
Common Securities with regard to such distributions.
Pursuant to the Declaration, the Trust shall terminate (i) on March 5,
2025, the expiration of the term of the Trust, (ii) upon the bankruptcy of Ohio
Edison or the holder of the Common Securities, (iii) upon the filing of a
certificate of dissolution or its equivalent with respect to Ohio Edison or the
holder of the Common Securities, the filing of a certificate of cancellation
with respect to the Trust, or the revocation of the charter of Ohio Edison or
the holder of the Common Securities and the expiration of 90 days after the date
of revocation without a reinstatement thereof, (iv) upon the distribution of the
Subordinated Debentures following the occurrence of a Special Event, (v) upon
the entry of a decree of a judicial dissolution of Ohio Edison or the holder of
the Common Securities or the Trust, (vi) upon the redemption of all of the Trust
Securities or (vii) before the issuance of any Trust Securities, with the
consent of all of the Regular Trustees and the Sponsor.
DECLARATION EVENTS OF DEFAULT
An event of default under the Indenture (an "Indenture Event of Default")
(see "Description of the Subordinated Debentures -- Indenture Events of
Default") constitutes an event of default under the Declaration with respect to
the Trust Securities (a "Declaration Event of Default"); provided, that pursuant
to the Declaration, the holder of the Common Securities will be deemed to have
waived any Declaration Event of Default with respect to the Common Securities or
its consequences until all Declaration Events of Default with respect to the
Preferred Securities have been cured, waived or otherwise eliminated. Until such
Declaration Events of Default with respect to the Preferred Securities have been
so cured, waived or otherwise eliminated, the Property Trustee will be deemed to
be acting solely on behalf of the holders of the Preferred Securities and only
the holders of the Preferred Securities will have the right to direct the
Property Trustee with respect to certain matters under the Declaration, and
therefore the Indenture.
Upon the occurrence of a Declaration Event of Default, the Property
Trustee, as the sole holder of the Subordinated Debentures, will have the right
under the Indenture to declare the principal of, and interest on, the
Subordinated Debentures to be immediately due and payable.
If a Declaration Event of Default occurs that results from the failure of
Ohio Edison to pay principal of or interest on the Subordinated Debentures when
due, during the continuance of such an event of default a holder of Preferred
Securities may institute a legal proceeding directly against Ohio Edison to
obtain payment of such principal or interest on Subordinated Debentures having a
principal amount equal to the aggregate liquidation amount of the Preferred
Securities owned of record by such holder. The holders of Preferred Securities
will not be able to exercise directly against Ohio Edison any other remedy
available to the Property Trustee unless the Property Trustee first fails to do
so. See "-- Voting Rights."
VOTING RIGHTS
Except as provided below and except as provided under the Business Trust
Act, the Trust Indenture Act and under "Description of the Preferred Securities
Guarantee -- Amendments and Assignment" below, and except as otherwise required
by law and the Declaration, the holders of the Preferred Securities will have no
voting rights. In the event that Ohio Edison elects to defer payments of
interest on the Subordinated Debentures as described above under
"-- Distributions," the holders of the Preferred Securities do not have the
right to appoint a special representative or trustee or otherwise act to protect
their interests.
Subject to the requirement of the Property Trustee obtaining a tax opinion
as set forth in the last sentence of this paragraph, the holders of a majority
in aggregate liquidation amount of the Preferred Securities have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Property Trustee, or to direct the exercise of any trust or
power conferred upon the Property Trustee under the Declaration, including to
(i) direct the time, method and place of conducting any proceeding for any
remedy available to the Debenture Trustee (as hereinafter defined) under the
Indenture with respect to the Subordinated Debentures or exercising any trust or
power conferred on the Debenture Trustee, (ii) waive any past Indenture Event of
Default which is waivable under the Indenture, (iii) exercise any right to
rescind or
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annul a declaration that the principal of all the Subordinated Debentures shall
be due and payable, or (iv) consent to any amendment, modification or
termination of the Indenture or the Subordinated Debentures, where such consent
shall be required, provided that where a consent under the Indenture would
require the consent of the holders of greater than a majority in principal
amount of Subordinated Debentures affected thereby (a "Super-Majority"), only
the holders of at least the proportion in liquidation amount of the Preferred
Securities which the relevant Super-Majority represents of the aggregate
principal amount of the Subordinated Debentures may direct the Property Trustee
to give such consent. If the Property Trustee fails to enforce its rights under
the Declaration (including, without limitation, its rights, powers and
privileges as the holder of the Subordinated Debentures under the Indenture), a
holder of Preferred Securities may, to the extent permitted by law, institute a
legal proceeding directly against any person to enforce the Property Trustee's
rights under the Declaration without first instituting any legal proceeding
against the Property Trustee or any other person or entity. Following and during
the continuance of a Declaration Event of Default that results from the failure
of Ohio Edison to pay principal of or interest on the Subordinated Debentures
when due, a holder may also proceed directly against Ohio Edison, without first
waiting to determine if the Property Trustee has enforced its rights under the
Indenture, to obtain payment of such principal or interest on Subordinated
Debentures having a principal amount equal to the aggregate liquidation amount
of the Preferred Securities owned of record by such holder. The Property Trustee
shall notify all holders of the Preferred Securities of any notice of default
received from the Debenture Trustee with respect to the Subordinated Debentures.
Such notice shall state that such Indenture Event of Default also constitutes a
Declaration Event of Default. The Property Trustee shall not take any action
described in clause (ii), (iii) or (iv) above unless the Property Trustee has
obtained an opinion of independent tax counsel to the effect that, as a result
of such action, the Trust will not be classified as other than a grantor trust
for United States federal income tax purposes.
In the event the consent of the Property Trustee, as the holder of the
Subordinated Debentures, is required under the Indenture with respect to any
amendment, modification or termination of the Indenture, the Property Trustee
shall request the direction of the holders of the Trust Securities with respect
to such amendment, modification or termination. The Property Trustee shall vote
with respect to such amendment, modification or termination as directed by a
majority in liquidation amount of the Preferred Securities and, if no
Declaration Event of Default has occurred and is continuing, a majority in
liquidation amount of the Common Securities, voting together as a single class,
provided that where a consent under the Indenture would require the consent of a
Super-Majority, the Property Trustee may only give such consent at the direction
of the holders of at least the proportion in liquidation amount of the Preferred
Securities and Common Securities, respectively, which the relevant
Super-Majority represents of the aggregate principal amount of the Subordinated
Debentures outstanding. The Property Trustee shall not take any such action in
accordance with the directions of the holders of the Trust Securities unless the
Property Trustee has obtained an opinion of independent tax counsel to the
effect that, as a result of such action, the Trust will not be classified as
other than a grantor trust for United States federal income tax purposes.
A waiver of an Indenture Event of Default will constitute a waiver of the
corresponding Declaration Event of Default.
Any required approval or direction of holders of Preferred Securities may
be given at a separate meeting of holders of Preferred Securities convened for
such purpose, at a meeting of all of the holders of Trust Securities or pursuant
to written consent. The Regular Trustees will cause a notice of any meeting at
which holders of Preferred Securities are entitled to vote, or of any matter
upon which action by written consent of such holders is to be taken, to be
mailed to each holder of record of Preferred Securities. Each such notice will
include a statement setting forth (i) the date of such meeting or the date by
which such action is to be taken, (ii) a description of any resolution proposed
for adoption at such meeting on which such holders are entitled to vote or of
such matter upon which written consent is sought and (iii) instructions for the
delivery of proxies or consents. No vote or consent of the holders of Preferred
Securities will be required for the Trust to redeem and cancel Preferred
Securities or distribute Subordinated Debentures in accordance with the
Declaration.
Notwithstanding that holders of Preferred Securities are entitled to vote
or consent under any of the circumstances described above, any of the Preferred
Securities that are owned at such time by Ohio Edison or
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any entity directly or indirectly controlling or controlled by, or under direct
or indirect common control with, Ohio Edison, shall not be entitled to vote or
consent and shall, for purposes of such vote or consent, be treated as if they
were not outstanding.
The procedures by which holders of Preferred Securities registered in the
name of and held by a Depository Institution or its nominee may exercise their
voting rights are described below. See "-- Book-Entry; Delivery and Form."
Holders of the Preferred Securities will have no rights to appoint or
remove the Company Trustees, who may be appointed, removed or replaced solely by
Ohio Edison, as the holder of all the Common Securities.
MODIFICATION OF THE DECLARATION
The Declaration may be amended or modified if approved and executed by a
majority of the Regular Trustees, provided that if any proposed amendment
provides for, or the Regular Trustees otherwise propose to effect, (i) any
action that would adversely affect the powers, preferences or special rights of
the Trust Securities, whether by way of amendment to the Declaration or
otherwise or (ii) the dissolution, winding-up or termination of the Trust other
than pursuant to the terms of the Declaration, then the holders of the Trust
Securities as a single class will be entitled to vote on such amendment or
proposal and such amendment or proposal shall not be effective except with the
approval of at least a majority in liquidation amount of the Trust Securities
affected thereby. In the event any amendment or proposal referred to in clause
(i) above would adversely affect only the Preferred Securities or the Common
Securities, then only the affected class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of a majority in liquidation amount of such class of
Trust Securities.
Notwithstanding the foregoing, no amendment or modification may be made to
the Declaration if such amendment or modification would (i) cause the Trust to
be classified for purposes of United States federal income taxation as other
than a grantor trust, (ii) reduce or otherwise adversely affect the powers of
the Property Trustee or (iii) cause the Trust to be deemed to be an "investment
company" which is required to be registered under the 1940 Act.
EXPENSES AND TAXES
In the Declaration, Ohio Edison has agreed to pay for all debts and other
obligations (other than with respect to the Trust Securities) and all costs and
expenses of the Trust (including costs and expenses relating to the organization
of the Trust, the fees and expenses of the Company Trustees and the costs and
expenses relating to the operation of the Trust) and to pay any and all taxes
and all costs and expenses with respect thereto (other than United States
withholding taxes) to which the Trust might become subject. The foregoing
obligations of the Trust under the Declaration, which are a part of the Back-up
Obligations, are for the benefit of, and shall be enforceable by, the Property
Trustee and any person to whom any such debts, obligations, costs, expenses and
taxes are owed (a "Creditor") whether or not such Creditor has received notice
thereof. The Property Trustee and any such Creditor may enforce such obligations
of the Trust directly against Ohio Edison, and Ohio Edison has irrevocably
waived any right or remedy to require that the Property Trustee or any such
Creditor take any action against the Trust or any other person before proceeding
against Ohio Edison. Ohio Edison has also agreed in the Declaration to execute
such additional agreements as may be necessary or desirable to give full effect
to the foregoing agreement of Ohio Edison.
MERGERS, CONSOLIDATIONS OR AMALGAMATIONS
The Trust may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other body, except as
described below. The Trust may, with the consent of a majority of the Regular
Trustees and without the consent of the holders of the Trust Securities,
consolidate, amalgamate, merge with or into, or be replaced by a trust organized
as such under the laws of any State; provided, that (i) such successor entity
either (x) expressly assumes all of the obligations of the Trust with respect to
the Trust Securities or (y) substitutes for the Trust Securities other
securities having substantially the same terms as the Trust Securities (the
"Successor
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Securities") so long as the Successor Securities rank the same as the Trust
Securities rank in priority with respect to distributions and payments upon
termination, liquidation, redemption, maturity and otherwise, (ii) Ohio Edison
expressly acknowledges a trustee of such successor entity which possesses the
same powers and duties as the Property Trustee as the holder of the Subordinated
Debentures, (iii) the Preferred Securities or any Successor Securities are
listed, or any Successor Securities will be listed upon notification of
issuance, on any national securities exchange or other organization on which the
Preferred Securities are then listed, (iv) such merger, consolidation,
amalgamation or replacement does not cause the Preferred Securities (including
any Successor Securities) to be downgraded by any nationally recognized
statistical rating organization, (v) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights, preferences and privileges of
the holders of the Trust Securities (including any Successor Securities) in any
material respect (other than with respect to any dilution of the holders'
interest in the new entity), (vi) such successor entity has a purpose identical
to that of the Trust, (vii) prior to such merger, consolidation, amalgamation or
replacement, Ohio Edison has received an opinion from independent counsel to the
Trust experienced in such matters to the effect that (A) such merger,
consolidation, amalgamation or replacement does not adversely affect the rights,
preferences and privileges of the holders of the Trust Securities (including any
Successor Securities) in any material respect (other than with respect to any
dilution of the holders' interest in the new entity), and (B) following such
merger, consolidation, amalgamation or replacement, neither the Trust nor such
successor entity will be required to register as an investment company under the
1940 Act and (viii) Ohio Edison guarantees the obligations of such successor
entity under the Successor Securities at least to the extent provided by the
Preferred Securities Guarantee. Notwithstanding the foregoing, the Trust shall
not, except with the consent of holders of 100% in liquidation amount of the
Trust Securities, consolidate, amalgamate, merge with or into, or be replaced by
any other entity or permit any other entity to consolidate, amalgamate, merge
with or into, or replace it if such consolidation, amalgamation, merger or
replacement would cause the Trust or the successor entity to be classified for
United States federal income tax purposes as other than a grantor trust.
BOOK-ENTRY; DELIVERY AND FORM
Preferred Securities will be issued in fully registered form. Investors may
elect to hold their Preferred Securities directly or, subject to the rules and
procedures of a Depository Institution described below, hold interests in a
global certificate (the "Preferred Securities Global Certificate") registered in
the name of a Depository Institution or its nominee. However, tendering holders
of Depositary Shares held in global form shall initially receive an interest in
the Preferred Securities Global Certificate and tendering holders of Depositary
Shares held directly in certificated form shall initially receive Preferred
Securities in certificated form, in each case unless otherwise specified in the
Letter of Transmittal. See "The Offer -- Procedures for Tendering".
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. Such laws
may impair the ability to transfer beneficial interests in a global Preferred
Security. A Depository Institution holds securities that its participants
("Participants") deposit with the Depository Institution. A Depository
Institution also facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in Participants' accounts, thereby
eliminating the need for physical movement of securities certificates. Direct
Participants include securities brokers and dealers, banks, trust companies,
clearing corporations, and certain other organizations ("Direct Participants").
A Depository Institution is owned by a number of its Direct Participants and by
the NYSE, the American Stock Exchange, Inc., and the National Association of
Securities Dealers, Inc. Access to the Depository Institution's system is also
available to others such as securities brokers and dealers, banks and trust
companies that clear through or maintain a custodial relationship with a Direct
Participant, either directly or indirectly ("Indirect Participants"). The rules
applicable to a Depository Institution and its Participants are on file with the
Commission.
Upon issuance of a Preferred Securities Global Certificate, the Depository
Institution will credit on its book-entry registration and transfer system the
number of Preferred Securities represented by such Preferred Securities Global
Certificate to the accounts of institutions that have accounts with the
Depository Institution.
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Ownership of beneficial interests in a Preferred Securities Global Certificate
will be limited to Participants or persons that may hold interests through
Participants. The ownership interest of each actual purchaser of each Preferred
Security ("Beneficial Owner") is in turn to be recorded on the Direct and
Indirect Participants' records. Beneficial Owners will not receive written
confirmation from the Depository Institution of their purchases, but Beneficial
Owners are expected to receive written confirmations providing details of the
transactions, as well as periodic statements of their holdings, from the Direct
or Indirect Participants through which the Beneficial Owners purchased Preferred
Securities. Transfers of ownership interests in the Preferred Securities are to
be accomplished by entries made on the books of Participants acting on behalf of
Beneficial Owners.
A Depository Institution has no knowledge of the actual Beneficial Owners
of the Preferred Securities; a Depository Institution's records reflect only the
identity of the Direct Participants to whose accounts such Preferred Securities
are credited, which may or may not be the Beneficial Owners. The Participants
will remain responsible for keeping account of their holdings on behalf of their
customers. So long as a Depository Institution, or its nominee, is the owner of
a Preferred Securities Global Certificate, a Depository Institution or such
nominee, as the case may be, will be considered the sole owner and holder of
record of the Preferred Securities represented by such Preferred Securities
Global Certificate for all purposes.
Conveyance of notices and other communications by a Depository Institution
to Direct Participants, by Direct Participants to Indirect Participants, and by
Direct Participants and Indirect Participants to Beneficial Owners will be
governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Redemption notices shall be sent to the Depository Institution. If less
than all of the Preferred Securities are being redeemed, the Depository
Institution will reduce pro rata (subject to adjustment to eliminate fractional
Preferred Securities) the amount of interest of each Direct Participant in the
Preferred Securities to be redeemed.
Although voting with respect to the Preferred Securities is limited, in
those instances in which a vote is required, the Depository Institution will not
consent or vote with respect to Preferred Securities. Under its usual
procedures, the Depository Institution would mail an Omnibus Proxy to the Trust
as soon as possible after the record date. The Omnibus Proxy assigns the
Depository Institution's consenting or voting rights to those Direct
Participants to whose accounts the Preferred Securities are credited on the
record date (identified in a listing attached to the Omnibus Proxy).
Distribution payments on the Preferred Securities represented by a
Preferred Securities Global Certificate will be made by the Trust to the
Depository Institution. The Depository Institution's practice is to credit
Direct Participants' accounts on the relevant payment date in accordance with
their respective holdings shown on a Depository Institution's records unless the
Depository Institution has reason to believe that it will not receive payments
on such payment date. Payments by Participants to Beneficial Owners will be
governed by standing instructions and customary practices and will be the
responsibility of such Participants and not of a Depository Institution, the
Trust or Ohio Edison, subject to any statutory or regulatory requirements as may
be in effect from time to time. Payment of distributions to a Depository
Institution is the responsibility of the Trust, disbursement of such payments to
Direct Participants is the responsibility of the Depository Institution, and
disbursement of such payments to the Beneficial Owners is the responsibility of
Direct and Indirect Participants.
A Depository Institution may discontinue providing its services as
securities depository with respect to the Preferred Securities at any time by
giving reasonable notice to the Trust. Under such circumstances, if a successor
securities depository is not obtained, Preferred Security certificates will be
required to be printed and delivered. Additionally, the Trust may decide to
discontinue use of the system of book-entry transfers through the Depository
Institution (or a successor depository). In that event, certificates for the
Preferred Securities will be printed and delivered.
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The information in this section concerning the Depository Institution and
the Depository Institution's book-entry system has been obtained from sources
that the Trust and Ohio Edison believe to be reliable, but the Trust and Ohio
Edison take no responsibility for the accuracy thereof.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, prior to the occurrence of a default with respect to
the Trust Securities and after the curing of all such defaults that may have
occurred, undertakes to perform only such duties as are specifically set forth
in the Declaration and, after default, shall exercise the same degree of care as
a prudent individual would exercise in the conduct of his or her own affairs.
Subject to such provisions, the Property Trustee is under no obligation to
exercise any of the powers vested in it by the Declaration at the request of any
holder of Preferred Securities, unless offered reasonable indemnity by such
holder against the costs, expenses and liabilities which might be incurred
thereby; but the foregoing shall not relieve the Property Trustee, upon the
occurrence of a Declaration Event of Default, from exercising the rights and
powers vested in it by the Declaration. The Property Trustee also serves as the
Debenture Trustee under the Indenture and as the Preferred Guarantee Trustee
under the Preferred Securities Guarantee.
Ohio Edison and certain of its subsidiaries maintain deposit accounts and
conduct other banking transactions with the Property Trustee in the ordinary
course of their businesses. The Property Trustee also acts as trustee under
certain indentures relating to borrowings by or for the benefit of the lessors
to finance their acquisition of Ohio Edison's interest in the Perry Nuclear
Power Plant and Beaver Valley Power Station in connection with the sale and
leaseback of certain undivided interests in those plants. Under the
sale/leaseback documents, Ohio Edison is ultimately responsible for the payment
of this indebtedness. The Property Trustee also acts as trustee under the trust
agreement, guarantee and indenture relating to a series of preferred securities
issued by another Ohio Edison trust subsidiary.
REGISTRAR AND TRANSFER AGENT
The Property Trustee will act as initial paying agent and initial transfer
agent and registrar and may designate an additional paying agent at any time.
The Regular Trustees have the right to appoint and replace any paying agent or
transfer agent and registrar. Registration of transfers of Preferred Securities
will be effected without charge by or on behalf of the Trust, but upon payment
(with the giving of such indemnity as the Regular Trustees may require) in
respect of any tax or other government charges which may be imposed in relation
to it. The Trust will not be required to register or cause to be registered the
transfer of Preferred Securities after such Preferred Securities have been
called for redemption.
GOVERNING LAW
The Declaration and the Preferred Securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware.
MISCELLANEOUS
The Regular Trustees are authorized and directed to operate the Trust in
such a way so that the Trust will not be deemed to be an "investment company"
required to be registered under the 1940 Act or characterized for United States
federal income tax purposes as other than a grantor trust. Ohio Edison is
authorized and directed to conduct its affairs so that the Subordinated
Debentures will be treated as indebtedness of Ohio Edison for United States
federal income tax purposes. In this connection, the Regular Trustees and Ohio
Edison are authorized to take any action, not inconsistent with applicable law,
the Declaration or the Restated Articles of Incorporation of Ohio Edison, that
each of the Regular Trustees and Ohio Edison determines in their discretion to
be necessary or desirable for such purposes, as long as such action does not
materially and adversely affect the interests of the holders of the Preferred
Securities.
Holders of the Preferred Securities will have no preemptive rights.
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DESCRIPTION OF THE PREFERRED SECURITIES GUARANTEE
Set forth below is a summary of information concerning the Preferred
Securities Guarantee that will be executed and delivered by Ohio Edison for the
benefit of the holders from time to time of the Preferred Securities. The
Preferred Securities Guarantee will be qualified as an indenture under the Trust
Indenture Act. The Bank of New York will act as the Preferred Guarantee Trustee.
The terms of the Preferred Securities Guarantee will be those set forth therein
and those made part thereof by the Trust Indenture Act. The following summary
does not purport to be complete and is subject in all respects to the provisions
of, and is qualified in its entirety by reference to, the Preferred Securities
Guarantee (which is filed as an exhibit to the Registration Statement of which
this Prospectus forms a part) and the Trust Indenture Act. The Preferred
Securities will be held by the Preferred Guarantee Trustee for the benefit of
the holders of the Preferred Securities.
GENERAL
Pursuant to the Preferred Securities Guarantee, Ohio Edison will
irrevocably and unconditionally agree, to the extent set forth therein, to pay
in full to the holders of the Preferred Securities the Guarantee Payments (as
defined herein) (without duplication of amounts theretofore paid by the Trust),
to the extent not paid by the Trust, regardless of any defense, right of set-off
or counterclaim that the Trust may have or assert. The following payments or
distributions with respect to the Preferred Securities to the extent not paid or
made by the Trust (the "Guarantee Payments") will be subject to the Preferred
Securities Guarantee (without duplication): (i) any accrued and unpaid
distributions that are required to be paid on the Preferred Securities, to the
extent the Trust has funds available therefor, (ii) the Redemption Price, which
includes all accrued and unpaid distributions to the date of the redemption, to
the extent the Trust has funds available therefor, with respect to any Preferred
Securities called for redemption by the Trust and (iii) upon a voluntary or
involuntary termination, dissolution or winding-up of the Trust (other than in
connection with the distribution of Subordinated Debentures to the holders of
Preferred Securities in exchange for Preferred Securities), the lesser of (a)
the aggregate of the liquidation amount and all accrued and unpaid distributions
on the Preferred Securities to the date of payment, to the extent the Trust has
funds available therefor, and (b) the amount of assets of the Trust remaining
available for distribution to holders of Preferred Securities in liquidation of
the Trust. Ohio Edison's obligation to make a Guarantee Payment may be satisfied
by direct payment of the required amounts by Ohio Edison to the holders of
Preferred Securities or by causing the Trust to pay such amounts to such
holders.
The Preferred Securities Guarantee will be a full and unconditional
guarantee of the Guarantee Payments with respect to the Preferred Securities
from the time of issuance of the Preferred Securities, but will not apply to the
payment of distributions and other payments on the Preferred Securities when the
Property Trustee does not have sufficient funds in the Property Account to make
such distributions or other payments. If Ohio Edison does not make interest
payments on the Subordinated Debentures held by the Property Trustee, the Trust
will not make distributions on the Preferred Securities issued by the Trust and
will not have funds available therefor. See "Risk Factors -- Rights Under the
Preferred Securities Guarantee" and "Description of the Subordinated
Debentures -- Certain Covenants."
Ohio Edison has also agreed separately to guarantee the obligations of the
Trust with respect to the Common Securities (the "Common Securities Guarantee")
to the same extent as the Preferred Securities Guarantee, except that upon the
occurrence and during the continuation of an Indenture Event of Default, holders
of Preferred Securities shall have priority over holders of Common Securities
with respect to distributions and payments on liquidation, redemption or
otherwise.
CERTAIN COVENANTS OF OHIO EDISON
In the Preferred Securities Guarantee, Ohio Edison will covenant that, so
long as the Preferred Securities remain outstanding, if there shall have
occurred and is continuing any event that would constitute an event of default
under the Preferred Securities Guarantee or the Declaration, then (a) Ohio
Edison shall not declare or pay any dividend on, or make any distribution with
respect to, or redeem, purchase, acquire or make a
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liquidation payment with respect to, any of its capital stock, (b) Ohio Edison
shall not make any payment of interest, principal or premium, if any, on or
repay, repurchase or redeem any debt securities issued by Ohio Edison which rank
pari passu with or junior to the Subordinated Debentures and (c) Ohio Edison
shall not make any guarantee payments (other than pursuant to the Preferred
Securities Guarantee) with respect to the foregoing. However, neither the
foregoing restriction (a) nor any other language in the Preferred Securities
Guarantee shall prevent Ohio Edison from paying stock dividends where the
dividend stock is the same as that on which the dividend is paid.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes which do not materially adversely affect
the rights of holders of Preferred Securities (in which case no vote will be
required), the Preferred Securities Guarantee may be amended only with the prior
approval of the holders of not less than a majority in liquidation amount of the
outstanding Preferred Securities. The manner of obtaining any such approval of
holders of the Preferred Securities is set forth under "Description of the
Preferred Securities -- Voting Rights." All guarantees and agreements contained
in the Preferred Securities Guarantee shall bind the successors, assigns,
receivers, trustees and representatives of Ohio Edison and shall inure to the
benefit of the Preferred Guarantee Trustee and the holders of the Preferred
Securities then outstanding.
TERMINATION OF THE PREFERRED SECURITIES GUARANTEE
The Preferred Securities Guarantee will terminate and be of no further
force and effect as to the Preferred Securities upon full payment of the
Redemption Price of all Preferred Securities, or upon distribution of the
Subordinated Debentures to the holders of the Preferred Securities, and will
terminate completely upon full payment of the amounts payable upon liquidation
of the Trust. The Preferred Securities Guarantee will continue to be effective
or will be reinstated, as the case may be, if at any time any holder of
Preferred Securities must repay to the Trust or Ohio Edison, or their
successors, any sums paid to them under such Preferred Securities or the
Preferred Securities Guarantee.
EVENTS OF DEFAULT
An event of default under the Preferred Securities Guarantee will occur
upon the failure of Ohio Edison to perform any of its payment or other
obligations thereunder.
The holders of a majority in liquidation amount of the Preferred Securities
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Preferred Guarantee Trustee in respect of the
Preferred Securities Guarantee or to direct the exercise of any trust or power
conferred upon the Preferred Guarantee Trustee under the Preferred Securities
Guarantee. If the Preferred Guarantee Trustee fails to enforce the Preferred
Securities Guarantee, any holder of Preferred Securities may institute a legal
proceeding directly against Ohio Edison to enforce the Preferred Guarantee
Trustee's rights under the Preferred Securities Guarantee, without first
instituting a legal proceeding against the Trust, the Preferred Guarantee
Trustee or any other person or entity. In addition, any record holder of
Preferred Securities shall have the right, which is absolute and unconditional,
to proceed directly against Ohio Edison to obtain Guarantee Payments, without
first waiting to determine if the Preferred Guarantee Trustee has enforced the
Preferred Securities Guarantee or instituting a legal proceeding against the
Trust, the Preferred Guarantee Trustee or any other person or entity.
STATUS OF THE PREFERRED SECURITIES GUARANTEE
Ohio Edison's obligations under the Preferred Securities Guarantee to make
the Guarantee Payments will constitute an unsecured obligation of Ohio Edison
and will rank (i) subordinate and junior in right of payment to all other
liabilities of Ohio Edison, including the Subordinated Debentures, (ii) pari
passu with the most senior preferred or preference stock issued from time to
time by Ohio Edison and with any current or future guarantee entered into by
Ohio Edison in respect of any preferred or preference stock of any subsidiary or
affiliate of Ohio Edison and (iii) senior to Ohio Edison's common stock. The
terms of the Preferred
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Securities provide that each holder of Preferred Securities by acceptance
thereof agrees to the subordination provisions and other terms of the Preferred
Securities Guarantee.
The Preferred Securities Guarantee will constitute a guarantee of payment
and not of collection (that is, the guaranteed party may institute a legal
proceeding directly against the guarantor to enforce its rights under the
guarantee without instituting a legal proceeding against any other person or
entity). The Preferred Securities Guarantee will be deposited with the Preferred
Guarantee Trustee to be held for the benefit of the holders of the Preferred
Securities. Except as otherwise noted herein, the Preferred Guarantee Trustee
has the right to enforce the Preferred Securities Guarantee on behalf of the
holders of the Preferred Securities. The Preferred Securities Guarantee will not
be discharged except by payment of the Guarantee Payments in full (without
duplication of amounts theretofore paid by the Trust).
Ohio Edison's obligations under the Preferred Securities Guarantee,
together with the other Back-up Obligations, in the aggregate provide a full and
unconditional guarantee by Ohio Edison of payments due on the Preferred
Securities.
INFORMATION CONCERNING THE PREFERRED GUARANTEE TRUSTEE
The Preferred Guarantee Trustee, prior to the occurrence of a default with
respect to the Preferred Securities Guarantee and after the curing of all such
defaults that may have occurred, undertakes to perform only such duties as are
specifically set forth in the Preferred Securities Guarantee and, after default,
shall exercise the same degree of care as a prudent individual would exercise in
the conduct of his or her own affairs. Subject to such provisions, the Preferred
Guarantee Trustee is under no obligation to exercise any of the powers vested in
it by the Preferred Securities Guarantee at the request of any holder of
Preferred Securities, unless offered reasonable indemnity against the costs,
expenses and liabilities which might be incurred thereby; but the foregoing
shall not relieve the Preferred Guarantee Trustee, upon the occurrence of an
event of default under the Preferred Securities Guarantee, from exercising the
rights and powers vested in it by the Preferred Securities Guarantee. The
Preferred Guarantee Trustee also serves as Property Trustee under the
Declaration and as Debenture Trustee under the Indenture.
GOVERNING LAW
The Preferred Securities Guarantee will be governed by, and construed in
accordance with, the internal laws of the State of New York.
DESCRIPTION OF THE SUBORDINATED DEBENTURES
Set forth below is a description of the terms of the Subordinated
Debentures. The following description does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, the Indenture, to
be dated as of [ ], 1996, as supplemented by a First Supplemental
Indenture (as so supplemented, the "Indenture"), between Ohio Edison and The
Bank of New York, as Trustee (the "Debenture Trustee"), the form of which is
filed as an exhibit to the Registration Statement of which this Prospectus forms
a part. The terms of the Subordinated Debentures will include those stated in
the Indenture and those made a part of the Indenture by reference to the Trust
Indenture Act. Certain capitalized terms used herein are defined in the
Indenture.
Under certain circumstances involving the termination of the Trust
following the occurrence of a Special Event, Subordinated Debentures may be
distributed to the holders of Trust Securities in liquidation of the Trust. See
"Description of the Preferred Securities -- Special Event Redemption or
Distribution."
If the Subordinated Debentures are distributed to the holders of the Trust
Securities, Ohio Edison will use its best efforts to have the Subordinated
Debentures listed on the NYSE or on such other exchange as the Preferred
Securities are then listed.
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GENERAL
The Subordinated Debentures will be issued as unsecured subordinated debt
securities under the Indenture. The Subordinated Debentures will be limited in
aggregate principal amount to (i) the aggregate liquidation preference of the
Preferred Securities issued by the Trust in the Offer and (ii) the proceeds
received by the Trust upon issuance of the Common Securities to Ohio Edison
(which proceeds will be used to purchase an equal principal amount of
Subordinated Debentures).
The Subordinated Debentures are not subject to any sinking fund provision.
The entire principal amount of the Subordinated Debentures will mature and
become due and payable, together with any accrued and unpaid interest thereon,
including Additional Interest (as defined herein), if any, on [ ],
2016.
If Subordinated Debentures are distributed to holders of Trust Securities
in dissolution of the Trust, such Subordinated Debentures will be so issued in
fully registered certificated form without coupons in denominations of $25 and
integral multiples thereof and may be transferred or exchanged at the offices
described below.
Payments of principal and interest on Subordinated Debentures will be
payable, the transfer of the Subordinated Debentures will be registrable, and
Subordinated Debentures will be exchangeable for Subordinated Debentures of
other denominations of a like aggregate principal amount, at the corporate trust
office of the Debenture Trustee in The City of New York; provided that payments
of interest may be made at the option of Ohio Edison by check mailed to the
address of the persons entitled thereto and that the payment of principal with
respect to any Subordinated Debenture will be made only upon surrender of such
Subordinated Debenture to the Indenture Trustee.
The Indenture does not contain provisions that afford holders of the
Subordinated Debentures protection in the event of a highly leveraged
transaction involving Ohio Edison or a decline in the credit quality of Ohio
Edison resulting from a change of control transaction.
SUBORDINATION
The Indenture provides that the Subordinated Debentures are subordinated
and junior in right of payment to all Senior Indebtedness of Ohio Edison,
whether now existing or hereafter incurred. No payment of principal of
(including redemption payments, if any), premium, if any, or interest on, the
Subordinated Debentures may be made if (a) any Senior Indebtedness of Ohio
Edison is not paid when due and any applicable grace period with respect to such
default has ended with such default not being cured or waived or ceasing to
exist, or (b) the maturity of any Senior Indebtedness has been accelerated
because of a default. Upon any distribution of assets of Ohio Edison to
creditors upon any dissolution, winding-up, liquidation or reorganization,
whether voluntary or involuntary, or in bankruptcy, insolvency, receivership or
other proceedings, all principal of, premium, if any, and interest due or to
become due on, all Senior Indebtedness must be paid in full before the holders
of the Subordinated Debentures are entitled to receive or retain any payment.
Subject to the payment in full of all Senior Indebtedness, the rights of the
holders of the Subordinated Debentures will be subrogated to the rights of the
holders of Senior Indebtedness to receive payments or distributions applicable
to such Senior Indebtedness until all amounts owing on the Subordinated
Debentures are paid in full.
The term "Senior Indebtedness" shall mean the principal of, premium, if
any, interest on and any other payment due pursuant to any of the following,
whether outstanding at the date of execution of the Indenture or thereafter
incurred, created or assumed:
(a) all indebtedness of Ohio Edison on a consolidated basis (other
than any obligations to trade creditors) evidenced by notes, debentures,
bonds, other securities or other instruments issued by Ohio Edison for
money borrowed and capitalized lease obligations;
(b) all indebtedness of others of the kinds described in the preceding
clause (a) assumed or guaranteed in any manner by Ohio Edison or in effect
guaranteed by Ohio Edison; and
(c) all renewals, extensions or refundings of indebtedness of the
kinds described in either of the preceding clauses (a) or (b), unless, in
the case of any particular indebtedness, renewal, extension or
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refunding, the instrument creating or evidencing the same or the assumption
or guarantee of the same expressly provides that such indebtedness,
renewal, extension or refunding is not superior in right of payment to or
is pari passu with the Subordinated Debentures.
The Indenture does not limit the aggregate amount of Senior Indebtedness
that may be issued. At December 31, 1995, Ohio Edison had approximately $3.3
billion principal amount of indebtedness for borrowed money constituting Senior
Indebtedness on a consolidated basis.
CERTAIN COVENANTS
If (i) there shall have occurred any event that would constitute an
Indenture Event of Default or (ii) Ohio Edison shall be in default with respect
to its payment of any obligations under the Preferred Securities Guarantee, then
(a) Ohio Edison shall not declare or pay any dividend on, make any distributions
with respect to, or redeem, purchase or make a liquidation payment with respect
to, any of its capital stock, (b) Ohio Edison shall not make any payment of
interest, principal or premium, if any, on or repay, repurchase or redeem any
debt securities issued by Ohio Edison which rank pari passu with or junior to
the Subordinated Debentures and (c) Ohio Edison shall not make any guarantee
payments (other than pursuant to the Preferred Securities Guarantee) with
respect to the foregoing.
If Ohio Edison shall have given notice of its election of an Extension
Period as provided in the Indenture and such period, or any extension thereof,
shall be continuing, then (a) Ohio Edison shall not declare or pay any dividend
on, make any distributions with respect to, or redeem, purchase or make a
liquidation payment with respect to, any of its capital stock, (b) Ohio Edison
shall not make any payment of interest, principal or premium, if any, on or
repay, repurchase or redeem any debt securities issued by Ohio Edison which rank
pari passu with or junior to the Subordinated Debentures and (c) Ohio Edison
shall not make any guarantee payments (other than pursuant to the Preferred
Securities Guarantee) with respect to the foregoing.
Notwithstanding the foregoing restrictions, Ohio Edison will be permitted,
in any event, to pay any stock dividend where the dividend stock is the same as
that on which the dividend is paid.
For so long as the Trust Securities remain outstanding, Ohio Edison will
covenant (i) to directly or indirectly maintain 100% direct or indirect
ownership of the Common Securities of the Trust; provided, however, that any
permitted successor of Ohio Edison under the Indenture may succeed to Ohio
Edison's ownership of such Common Securities, (ii) not to cause, as sponsor of
the Trust, or to permit, as holder of the Common Securities, the termination,
dissolution or winding-up of the Trust, except in connection with a distribution
of the Subordinated Debentures as provided in the Declaration and in connection
with certain mergers, consolidations or amalgamations, (iii) to use its
reasonable efforts to cause the Trust (a) to remain a statutory business trust,
except in connection with the distribution of Subordinated Debentures to the
holders of Trust Securities in liquidation of the Trust, the redemption of all
of the Trust Securities of the Trust, or certain mergers, consolidations or
amalgamations, each as permitted by the Declaration, and (b) to otherwise
continue to be classified as a grantor trust for United States federal income
tax purposes and (iv) to use reasonable efforts to cause each holder of Trust
Securities to be treated as owning an undivided beneficial interest in the
Subordinated Debentures.
OPTIONAL REDEMPTION
Ohio Edison shall have the right to redeem the Subordinated Debentures, in
whole or in part, from time to time, after April 1, 1998, or at any time in
certain circumstances upon the occurrence of a Tax Event as described under
"Description of the Preferred Securities -- Special Event Redemption or
Distribution," upon not less than 30 nor more than 60 days' notice, at a
redemption price equal to 100% of the principal amount to be redeemed plus any
accrued and unpaid interest, including Additional Interest, if any, to the
redemption date. If a partial redemption of the Preferred Securities resulting
from a partial redemption of the Subordinated Debentures would result in the
delisting of the Preferred Securities, Ohio Edison may only redeem the
Subordinated Debentures in whole.
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INTEREST
Each Subordinated Debt Security shall bear interest at the rate of [ ]%
per annum from [ ], 1996, payable quarterly in arrears on March 31,
June 30, September 30, December 31 of each year (each, an "Interest Payment
Date"), commencing [ ], 1996, to the person in whose name such
Subordinated Debenture is registered on the relevant record date, which shall be
fifteen calendar days prior to each Interest Payment Date. In addition, holders
of the Subordinated Debentures will be entitled to Pre-Issuance Accrued
Distribution at the rate of 7.75% per annum of the principal amount thereof from
[ ], 1996 through the Expiration Date, payable on [ ], 1996
to holders of the Preferred Securities on the record date for such
distributions.
The amount of interest payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months. The amount of interest payable for
any period shorter than a full quarterly period will be computed on the basis of
the actual number of days elapsed in such 90-day quarter. In the event that any
date on which interest is payable on the Subordinated Debentures is not a
Business Day, then payment of the interest payable on such date will be made on
the next succeeding day which is a Business Day (and without any interest or
other payment in respect of any such delay), except that, if such Business Day
is in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on such date.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
Ohio Edison shall have the right at any time, and from time to time, during
the term of the Subordinated Debentures to defer payments of interest by
extending the interest payment period for a period not exceeding 20 consecutive
quarters, at the end of which Extension Period Ohio Edison shall pay all
interest then accrued and unpaid (including any Additional Interest), together
with interest thereon at the rate specified for the Subordinated Debentures to
the extent permitted by applicable law; provided, that, during any such
Extension Period, (a) Ohio Edison shall not declare or pay any dividend on, make
any distributions with respect to, or redeem, purchase or make a liquidation
payment with respect to, any of its capital stock, (b) Ohio Edison shall not
make any payment of interest, principal or premium, if any, on or repay,
repurchase or redeem any debt securities issued by Ohio Edison which rank pari
passu with or junior to the Subordinated Debentures and (c) Ohio Edison shall
not make any guarantee payments (other than pursuant to the Preferred Securities
Guarantee) with respect to the foregoing; provided, however, the foregoing
restrictions will not prevent Ohio Edison, in any event, from paying any stock
dividend where the dividend stock is the same as that on which the dividend is
paid. Prior to the termination of any such Extension Period, Ohio Edison may
further defer payments of interest by extending the interest payment period,
provided that such Extension Period together with all such previous and further
extensions thereof may not exceed 20 consecutive quarters or extend beyond the
maturity of the Subordinated Debentures. Upon the termination of any Extension
Period and the payment of all amounts then due, Ohio Edison may select a new
Extension Period, as if no Extension Period had previously been declared,
subject to the above requirements. No interest during an Extension Period,
except at the end thereof, shall be due and payable. Ohio Edison has no present
intention of exercising its rights to defer payments of interest by extending
the interest payment period on the Subordinated Debentures. The right to defer
payments of interest will not apply to the Pre-Issuance Accrued Distribution. If
the Property Trustee shall be the sole holder of the Subordinated Debentures,
Ohio Edison shall give the Regular Trustees and the Property Trustee notice of
its selection of an Extension Period one Business Day prior to the earlier of
(i) the next succeeding date on which distributions on the Preferred Securities
are payable or (ii) the date the Trust is required to give notice to the NYSE or
other applicable self-regulatory organization or to holders of the Preferred
Securities of the record date or the date such distribution is payable, but in
any event not less than one Business Day prior to such record date. The Regular
Trustees shall give notice of Ohio Edison's selection of such Extension Period
to the holders of the Preferred Securities. If the Property Trustee shall not be
the sole holder of the Subordinated Debentures, Ohio Edison shall give the
holders of the Subordinated Debentures notice of its selection of such Extension
Period ten Business Days prior to the earlier of (i) the relevant Interest
Payment Date or (ii) the date Ohio Edison is required to give notice to the NYSE
or other
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applicable self-regulatory organization or to holders of the Subordinated
Debentures of the record or payment date of such related interest payment.
ADDITIONAL INTEREST
If at any time the Trust shall be required to pay any taxes, duties,
assessments or governmental charges of whatever nature (other than withholding
taxes) imposed by the United States, or any other taxing authority, then, in any
such case, Ohio Edison will pay as additional interest ("Additional Interest")
such additional amounts as shall be required so that the net amounts received
and retained by the Trust after paying such taxes, duties, assessments or other
governmental charges will be equal to the amounts the Trust would have received
had no such taxes, duties, assessments or other governmental charges been
imposed.
INDENTURE EVENTS OF DEFAULT
In case any Indenture Event of Default shall occur and be continuing, the
Property Trustee, as the holder of the Subordinated Debentures, may declare the
principal of and the interest on the Subordinated Debentures (including
Additional Interest, if any) to be forthwith due and payable and to enforce its
other rights as a creditor with respect to the Subordinated Debentures.
The Indenture provides that any one or more of the following described
events constitutes an "Event of Default" with respect to the Subordinated
Debentures:
(a) failure for 30 days to pay interest on the Subordinated
Debentures, including any Additional Interest in respect thereof, when due;
provided, however, that a valid extension of the interest payment period by
Ohio Edison shall not constitute a default in the payment of interest for
this purpose; or
(b) failure to pay principal on the Subordinated Debentures when due
whether at maturity, upon earlier redemption or otherwise; or
(c) failure to comply with any of its other agreements (other than
those specifically relating to another series of subordinated debt
securities) contained in the Indenture for 90 days after written notice to
Ohio Edison from the Debenture Trustee or the holders of at least 25% in
aggregate principal amount of the outstanding Subordinated Debentures; or
(d) certain events of bankruptcy, insolvency or reorganization of Ohio
Edison; or
(e) the voluntary or involuntary dissolution, winding-up or
termination of the Trust, except in connection with the distribution of
Subordinated Debentures to holders of Preferred Securities in liquidation
or redemption of their interests in the Trust, the redemption of all
outstanding Preferred Securities or certain mergers, consolidations or
amalgamations permitted by the Declaration.
The holders of a majority in aggregate outstanding principal amount of the
Subordinated Debentures may direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee. The Debenture
Trustee or the holders of not less than 25% in aggregate outstanding principal
amount of the Subordinated Debentures may declare the principal due and payable
immediately on default, but the holders of a majority in aggregate outstanding
principal amount may rescind such acceleration if all existing Events of Default
(other than the non-payment of the principal of and accrued interest, if any,
due solely by such acceleration) have been cured or waived and if the rescission
would not conflict with any judgment or decree.
The holders of a majority in aggregate outstanding principal amount of the
Subordinated Debentures may, on behalf of the holders of all the Subordinated
Debentures, waive certain past defaults, which shall not include (i) a default
in the payment of principal of or accrued interest on the Subordinated
Debentures (unless a sum sufficient to pay all matured installments of interest
and principal due otherwise than by acceleration has been deposited with the
Debenture Trustee), or (ii) a default that arises out of a breach by Ohio Edison
of any of the covenants described in the first two paragraphs of "-- Certain
Covenants," above. An Indenture Event of Default also constitutes a Declaration
Event of Default. The holders of Preferred Securities in certain circumstances
have the right to direct the Property Trustee to exercise its rights as the
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holder of the Subordinated Debentures. See "Description of the Preferred
Securities -- Declaration Events of Default" and "-- Voting Rights."
In addition, if an Indenture Event of Default results from the failure of
Ohio Edison to pay principal of or interest on the Subordinated Debentures when
due, during the continuance of such an event of default a holder of Preferred
Securities may directly institute proceedings against Ohio Edison, without first
waiting to determine if the Property Trustee has enforced its rights under the
Indenture, to obtain payment of such principal or interest on Subordinated
Debentures having a principal amount equal to the aggregate liquidation amount
of the Preferred Securities owned by such holder.
BOOK-ENTRY AND SETTLEMENT
If any Subordinated Debentures are distributed to holders of Trust
Securities (see "Description of the Preferred Securities"), such Subordinated
Debentures will be issued in fully registered form without coupons. In such
event, investors may elect to hold their Subordinated Debentures directly or,
subject to the rules and procedures of a Depository Institution, hold interests
in a book-entry certificate registered in the name of a Depository Institution
or its nominee.
For a description of a Depository Institution's book-entry system, see
"Description of the Preferred Securities -- Book-Entry; Delivery and Form." As
of the date of this Prospectus, the description herein of a Depository
Institution's book-entry system and a Depository Institution's practices as they
relate to purchases, transfers, notices and payments with respect to the
Preferred Securities apply in all material respects to any Subordinated
Debentures registered in the name of and held by a Depository Institution or its
nominee.
PAYMENT AND PAYING AGENTS
Payment of principal of and premium, if any, on the Subordinated Debentures
will be made only against surrender to the Paying Agent (as defined in the
Indenture) of the Subordinated Debentures. Principal of and premium, if any, and
interest on Subordinated Debentures will be payable, subject to any applicable
laws and regulations, at the office of the Paying Agent (as defined in the
Indenture) or such additional paying agents as Ohio Edison may designate, except
that (i) at the option of Ohio Edison payment of any interest may be made by
check mailed to the address of the person entitled thereto as such address shall
appear in the security register with respect to the Subordinated Debentures and
(ii) so long as the registered Holder (as defined in the Indenture) of any
Subordinated Debentures is the Property Trustee, the payment of the principal of
and interest (including Additional Interest, if any) on such Subordinated
Debentures will be made at such place and to such account as the Property
Trustee may designate. Payment of interest on the Subordinated Debentures on any
Interest Payment Date will be made to the person in whose name the Subordinated
Debenture (or predecessor security) is registered at the close of business on
the relevant record date for such interest payment.
The Debenture Trustee will initially act as Paying Agent with respect to
the Subordinated Debentures. Ohio Edison may at any time have one or more
additional paying agents, except that if Ohio Edison fails to maintain a Paying
Agent, the Debenture Trustee shall act as such.
The Debenture Trustee and the Paying Agent shall pay to Ohio Edison upon
written request any money or securities held by them for the payment of
principal or interest, if any, that remains unclaimed for two years. After that,
Holders entitled to the money or securities must look to Ohio Edison for payment
unless an applicable abandoned property law dictates otherwise.
MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting Ohio Edison and the Debenture
Trustee, with the consent of the holders of not less than a majority in
principal amount of the Subordinated Debentures, to amend, supplement or waive
compliance with any provision of the Indenture or any supplemental indenture
affecting that series or the rights of the holders of the Subordinated
Debentures; provided that no such amendment, supplement or waiver may, without
the consent of the holder of each outstanding Subordinated Debenture
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affected thereby, (i) extend the fixed maturity of the Subordinated Debentures,
or reduce the principal amount thereof, or reduce the rate or extend the time of
payment of interest thereon, or reduce any premium payable upon the redemption
thereof, (ii) waive a default in the payment of the principal of, or interest,
if any, on any Subordinated Debenture, unless Ohio Edison has paid or deposited
with the Debenture Trustee a sum sufficient to pay all matured installments of
interest upon all of the Subordinated Debentures and the principal of the
Subordinated Debentures that shall have become due otherwise than by
acceleration, (iii) make any Subordinated Debenture payable in money or
securities other than that stated in the terms thereof, or (iv) reduce the
percentage of Subordinated Debentures the holders of which are required to
consent to any such amendment, supplement or waiver.
In addition, Ohio Edison and the Debenture Trustee may execute, without the
consent of or notice to holders of the Subordinated Debentures, any amendment or
supplemental indenture for certain other usual purposes including the creation
of any new series of subordinated debt securities.
SUCCESSOR CORPORATION
Ohio Edison may not consolidate with or merge into, or transfer its
properties and assets substantially as an entirety to, another corporation
unless (i) the successor corporation, which shall be a corporation organized and
existing under the laws of the United States or a State thereof, assumes by
supplemental indenture all the obligations of Ohio Edison under the Subordinated
Debentures and the Indenture, and (ii) immediately after giving effect to such
transaction, no Indenture Event of Default shall have occurred and be
continuing. The Indenture does not otherwise contain any covenant which
restricts the ability of Ohio Edison to merge or consolidate with or into any
other corporation, sell or convey all or substantially all of its assets to any
person, firm or corporation or otherwise engage in restructuring transactions.
DEFEASANCE AND DISCHARGE
Under the terms of the Indenture, Ohio Edison will be discharged from any
and all obligations in respect of the Subordinated Debentures (except in each
case for certain obligations with respect to provisions for payment of the
Subordinated Debentures and obligations to maintain records, register the
transfer or exchange of Subordinated Debentures, replace stolen, lost or
mutilated Subordinated Debentures, maintain paying agencies, compensate and
indemnify the Debenture Trustee, and replace the Debenture Trustee under certain
circumstances) if Ohio Edison (i) irrevocably deposits with the Debenture
Trustee, in trust, moneys or U.S. Government Obligations (as defined in the
Indenture) sufficient to pay the principal of, and interest on, all Subordinated
Debentures not theretofore cancelled, replaced or paid, all in accordance with
their terms and (ii) delivers to the Debenture Trustee an opinion of counsel to
the effect that, based upon Ohio Edison's receipt from, or the publication by,
the Internal Revenue Service of a ruling or a change in law, the holders of the
Subordinated Debentures will not recognize income, gain or loss for United
States federal income tax purposes as a result of the deposit, defeasance and
discharge and will be subject to United States federal income tax on the same
amount and in the same manner and at the same times as would have been the case
if such deposit, defeasance or discharge had not occurred.
GOVERNING LAW
The Indenture (for all purposes relating to the Subordinated Debentures)
and the Subordinated Debentures will be governed by, and construed in accordance
with, the internal laws of the State of New York.
INFORMATION CONCERNING THE DEBENTURE TRUSTEE
The Debenture Trustee, prior to default, undertakes to perform only such
duties as are specifically set forth in the Indenture and the Trust Indenture
Act and, after default, shall exercise the same degree of care and skill as a
prudent individual would exercise under the circumstances in the conduct of his
or her own affairs. Subject to such provision, the Debenture Trustee is under no
obligation to perform any duty or exercise any right or power, unless it
receives indemnity satisfactory to it against any loss, liability or expense.
The
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Debenture Trustee also serves as Property Trustee under the Declaration and as
the Preferred Guarantee Trustee under the Preferred Securities Guarantee.
Ohio Edison and certain of its subsidiaries maintain deposit accounts and
conduct other banking transactions with the Debenture Trustee in the ordinary
course of their businesses. The Debenture Trustee also acts as trustee under
certain indentures relating to borrowings by or for the benefit of the lessors
to finance their acquisition of Ohio Edison's interest in the Perry Nuclear
Power Plant and Beaver Valley Power Station in connection with the sale and
leaseback of certain undivided interests in those plants. Under the
sale/leaseback documents, Ohio Edison is ultimately responsible for the payment
of this indebtedness. The Debenture Trustee also acts as trustee under the trust
agreement, guarantee and indenture relating to a series of preferred securities
issued by another Ohio Edison trust subsidiary.
MISCELLANEOUS
Ohio Edison will have the right at all times to assign any of its rights or
obligations under the Indenture to a direct or indirect wholly owned subsidiary
of Ohio Edison; provided, that in the event of any such assignment, Ohio Edison
will remain liable for all such obligations. Subject to the foregoing, the
Indenture will be binding upon the parties thereto and their respective
successors.
The Indenture provides that Ohio Edison will pay all costs and expenses of
the Trust.
EFFECT OF OBLIGATIONS UNDER THE SUBORDINATED DEBENTURES
AND THE PREFERRED SECURITIES GUARANTEE
As set forth in the Declaration, the Trust exists for the purpose of (a)
issuing (i) its Preferred Securities in exchange for Class A Shares validly
tendered in the Offer and delivering such Class A Shares to Ohio Edison in
consideration of the deposit by Ohio Edison in the Trust, as Trust assets, of
Subordinated Debentures having an aggregate stated principal amount equal to the
aggregate stated liquidation amount of such Preferred Securities, and (ii) its
Common Securities to Ohio Edison in exchange for cash and investing the proceeds
thereof in an equivalent amount of Subordinated Debentures and (b) engaging in
such other activities as are necessary, convenient or incidental thereto.
As long as payments of interest and other payments are made when due on the
Subordinated Debentures, such payments will be sufficient to cover distributions
and payments due on the Trust Securities primarily because (i) the aggregate
principal amount of the Subordinated Debentures will be equal to the aggregate
stated liquidation amount of the Trust Securities; (ii) the interest rate and
interest and other payment dates on the Subordinated Debentures will match the
distribution rate and distribution and other payment dates for the Preferred
Securities; (iii) Ohio Edison is obligated under the Declaration to pay for all
costs, expenses, debts and obligations of the Trust (other than with respect to
the Trust Securities), which obligation is one of the Back-up Obligations; and
(iv) the Declaration provides that Ohio Edison Trustees shall not cause or
permit the Trust to, among other things, engage in any activity that is not
consistent with the purposes of the Trust.
Payments of distributions (to the extent funds therefor are available) and
other payments due on the Preferred Securities (to the extent funds therefor are
available) are guaranteed by Ohio Edison as and to the extent set forth under
"Description of the Preferred Securities Guarantee." If Ohio Edison does not
make interest payments on the Subordinated Debentures purchased by the Trust, it
is expected that the Trust will not have sufficient funds to pay distributions
on the Preferred Securities. The Preferred Securities Guarantee does not apply
to any payment of distributions unless and until the Trust has sufficient funds
for the payment of such distributions.
If Ohio Edison fails to make interest or other payments on the Subordinated
Debentures when due (taking into account any Extension Period), the Declaration
provides a mechanism whereby the holders of the Preferred Securities, using the
procedures described in "Description of the Preferred Securities -- Voting
Rights," may direct the Property Trustee to enforce its rights under the
Subordinated Debentures or may proceed directly against Ohio Edison to enforce
the Subordinated Debentures. If the Property Trustee fails to enforce its rights
under the Declaration, a holder of Preferred Securities may institute a legal
proceeding
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directly against Ohio Edison to enforce the Property Trustee's rights under the
Declaration without first instituting any legal proceeding against the Property
Trustee or any other person or entity, including the Trust. In addition, during
the continuance of a Declaration Event of Default that results from the failure
of Ohio Edison to pay principal of or interest on the Subordinated Debentures
when due, a holder may proceed directly against Ohio Edison, without first
waiting to determine if the Property Trustee has enforced its rights under the
Indenture, to obtain payment of such principal or interest on Subordinated
Debentures having a principal amount equal to the aggregate liquidation amount
of the Preferred Securities owned of record by such holder.
If Ohio Edison fails to make payments under the Preferred Securities
Guarantee, the Preferred Securities Guarantee provides a mechanism whereby the
holders of a majority in liquidation amount of the Preferred Securities may
direct the Preferred Guarantee Trustee to enforce its rights thereunder. If the
Preferred Guarantee Trustee fails to enforce the Preferred Securities Guarantee,
any holder of Preferred Securities may institute a legal proceeding directly
against Ohio Edison to enforce the Preferred Guarantee Trustee's rights under
the Preferred Securities Guarantee, without first instituting a legal proceeding
against the Trust, the Preferred Guarantee Trustee or any other person or
entity. In addition, any record holder of Preferred Securities shall have the
right, which is absolute and unconditional, to proceed directly against Ohio
Edison to obtain Guarantee Payments, without first waiting to determine if the
Preferred Guarantee Trustee has enforced the Preferred Security Guarantee or
instituting a legal proceeding against the Trust, the Preferred Guarantee
Trustee or any other person or entity.
Ohio Edison's obligations under the Preferred Securities Guarantee and the
Subordinated Debentures, together with the other Back-up Obligations, in the
aggregate, provide a full and unconditional guarantee by Ohio Edison of payments
due on the Preferred Securities.
DESCRIPTION OF THE CLASS A SHARES
The description set forth below of certain provisions of the Preferred
Stock and Ohio Edison's Amended Articles of Incorporation, as amended (the
"Amended Articles of Incorporation"), do not purport to be complete and are
subject to and qualified in their entirety by reference to the Amended Articles
of Incorporation and do not relate or give effect to provisions of statutory or
common law. Unless otherwise indicated, whenever particular headings or
paragraph designations are referred to, they are headings and paragraph
designations in Article Fourth of the Amended Articles of Incorporation. Ohio
Edison's Preferred Stock, $100 Par Value (the "$100 Preferred Stock"), and Class
A Shares are herein collectively referred to as the "Preferred Stock."
GENERAL
The Preferred Stock is issuable in series of equal rank except that shares
of different series may vary in certain respects, which will be determined by
the Board of Directors of Ohio Edison and set forth in an amendment to the
Amended Articles of Incorporation prior to the issuance such stock. The
currently authorized Preferred Stock consists of 6,000,000 shares of Preferred
Stock, $100 Par Value ("$100 Preferred Stock"), of which 859,650 shares were
issued and outstanding as of December 31, 1995 as shares of various series
heretofore established and 8,000,000 shares of Class A Preferred Stock, $25 Par
Value ("Class A Preferred Stock"), of which 4,000,000 shares are issued and
outstanding.
DIVIDENDS
Holders of Class A Shares, pari passu with each other series of the
Preferred Stock, will be entitled to receive, when and as declared by the Board
of Directors out of funds legally available therefor, in preference to the
common stock and any other stock which by its terms is junior to the Preferred
Stock, to cumulative dividends at the rate of 7.75% per annum, payable quarterly
on January 1, April 1, July 1 and October 1 of each year. Dividends must be paid
on all shares of Preferred Stock if paid on the shares of any series of
Preferred Stock. After payment in full of all dividends accrued on the Preferred
Stock, dividends on the
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Common Stock or any other junior stock of Ohio Edison may be declared and paid
as the Board of Directors may determine, subject to certain conditions. (General
Provisions (A) and (B).)
REDEMPTION
The Class A Shares are not redeemable on or before April 1, 1998. However,
a redemption price of $25 per share plus an amount equal to accumulated and
unpaid dividends would be applicable during this period in the event of a
voluntary liquidation, dissolution or winding up of Ohio Edison, as described in
the first sentence under "-- Liquidation." After April 1, 1998, Ohio Edison may
redeem the Class A Shares in whole or in part upon not less than 30 days' notice
at a price of $25 per share plus an amount equal to the accumulated and unpaid
dividends thereon, if any, to the date set for redemption.
The Class A Shares are not subject to a sinking fund.
LIQUIDATION
Upon any dissolution, liquidation or winding up of Ohio Edison, whether
voluntary or involuntary, the holders of Preferred Stock are entitled to receive
the par value of their particular series, plus dividends accrued to the date of
distribution, before any distribution shall be made to holders of Common Stock
or any other class of stock of Ohio Edison which is junior to the Preferred
Stock by its terms. Distributions of assets on liquidation must be pro rata in
proportion to the amount fixed for each series of Preferred Stock, if the
available assets are insufficient to provide for the full payment of such
amount. After payment of the full distributive amount to which they are
entitled, the holders of such series of the Preferred Stock will have no right
or claim to any of the remaining assets of Ohio Edison. Neither the sale of all
or substantially all of the property of Ohio Edison nor the merger or
consolidation of Ohio Edison into or with any other corporation shall be deemed
to be a dissolution, liquidation or winding up of Ohio Edison.
VOTING RIGHTS
The Amended Articles of Incorporation provides that at all elections of
directors of Ohio Edison, and on all other matters, except as otherwise required
by the Amended Articles of Incorporation or by the laws of the State of Ohio,
the holders of Common Stock shall have the exclusive right to vote; provided,
however, that whenever and as often as four quarterly dividends payable on the
Preferred Stock of any series shall be in default, in whole or in part, and
thereafter until all defaults have been cured, the holders of Preferred Stock
shall have the exclusive right, voting separately and as a single class, each
share of $100 Preferred Stock being counted as one and each Class A Share being
counted as one-quarter, to elect the smallest number of directors which shall
constitute a majority of the directors of Ohio Edison, and, in all matters with
respect to the governing of the affairs of Ohio Edison other than the election
of directors, each share of the $100 Preferred Stock shall be counted as one and
each Class A Share shall be counted as one-quarter so that each holder of $100
Preferred Stock shall be entitled to one vote for each share of such stock held,
and each holder of Class A Shares shall be entitled to one-quarter vote for each
share of such stock held. In the event of defaults entitling the holders of
Preferred Stock to vote, the holders of the Common Stock, subject to the rights,
if any, existing at the time of the holders of Ohio Edison's Preference Stock,
shall have the exclusive right, voting separately and as a class, to elect the
greatest number of directors which shall constitute a minority of the directors
of Ohio Edison, and, on all other matters, each holder of Common Stock shall be
entitled to one vote for each such share of stock held. At all elections of
directors of Ohio Edison, each stockholder entitled to vote may cast the whole
number of his votes for one candidate or distribute them among two or more
candidates as he may prefer. (Voting Powers and Other Rights.) The Amended
Articles of Incorporation also provides that certain actions may not be effected
without the consent or vote of a specified percentage of the Preferred Stock,
voting as a single class; in each such instance, for the purpose of determining
the total number of outstanding shares of Preferred Stock (as well as the number
of shares voted for or against the questions presented), each share of $100
Preferred Stock shall be counted as one share and each Class A Share shall be
counted as one-quarter share.
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RESTRICTIONS ON ISSUANCE OF PRIOR PREFERRED STOCK AND ALTERING TERMS OF
PREFERRED STOCK
The Amended Articles of Incorporation requires the affirmative vote of
holders of 66 2/3% of outstanding shares of the Preferred Stock voting as a
single class (1) before any substantially prejudicial change of any rights or
preferences of any outstanding shares of the Preferred Stock, (2) before the
creation or authorization of shares of stock preferred as to dividends or assets
over the Preferred Stock, and (3) within 180 days before the issuance of any
such shares so preferred or any securities convertible into such shares.
(General Provisions (E).)
RESTRICTIONS ON MERGER OR SALE OF ASSETS, ISSUE OF UNSECURED DEBT AND SALE OF
ADDITIONAL PREFERRED STOCK
The Amended Articles of Incorporation requires the affirmative vote of the
holders of a majority of outstanding shares of the Preferred Stock, voting as a
single class, each share of $100 Preferred Stock being counted as one share and
each share of Class A Preferred Stock being counted as one-quarter share, for
the following corporate actions.
(1) Merger, consolidation, or any disposition of substantially all of
Ohio Edison's property, unless such action has been approved or directed by
a Federal regulatory authority.
(2) The issue or assumption of unsecured indebtedness in excess of 20%
of capital, surplus and secured indebtedness (not counting certain
long-term unsecured indebtedness not in excess of 20% of capital, surplus
and secured indebtedness), except to redeem all outstanding shares of
[$100] Preferred Stock or to refund or retire indebtedness.
(3) The issue or other disposition of shares of Preferred Stock (a)
when current gross income available for payment of interest, as defined, is
less than one and one-half times the aggregate of the annual dividend
requirements on all shares of the Preferred Stock and of all classes of
senior or equal ranking stock thereupon to be outstanding and annual
interest requirements on all indebtedness of Ohio Edison or (b) when the
aggregate of capital applicable to common stock and of surplus is less than
the amount payable on involuntary liquidation to all shares of the
Preferred Stock and of all classes of senior or equal ranking stock
thereupon to be outstanding. (General Provisions (E).)
The issue or other disposition of shares of the Preferred Stock when
current net income available for payment of dividends, as defined, is less than
twice the annual dividend requirements on all shares of Preferred Stock and of
all classes of senior or equal ranking stock thereupon to be outstanding is
prohibited without amendment of the Amended Articles of Incorporation, so long
as any shares of the 4.40% Preferred Stock, $100 Par Value ("4.40% Preferred
Stock") or of the 3.90% Preferred Stock, $100 Par Value ("3.90% Preferred
Stock"), are outstanding, but when no such shares are outstanding, such an issue
or disposition would be permitted if approved by the affirmative vote of the
holders of at least a majority of the outstanding shares of the Preferred Stock,
voting as a single class, each share of $100 Preferred Stock being counted as
one share and each share of Class A Preferred Stock being counted as one-quarter
share. The issue or disposition of shares of the Preferred Stock, so long as any
shares of the 4.40% Preferred Stock or of the 3.90% Preferred Stock are
outstanding, is prohibited unless the par or stated value of outstanding Common
Stock exceeds $14,366,776 by an amount at least equal to $75 times the number of
shares of $100 Preferred Stock, and $18.75 times the number of Class A Shares,
thereupon to be outstanding in excess of 200,000 shares thereof (such number of
shares to be calculated on the basis of each share of $100 Preferred Stock being
counted as one share and each share of Class A Preferred Stock being counted as
one-quarter share). No provision is made by which either of the foregoing
prohibitions can be waived (without amendments to the Amended Articles of
Incorporation) by any vote of holders of shares of the Preferred Stock. (General
Provisions (E) and (F).)
PREEMPTIVE RIGHTS
The holders of the Preferred Stock do not have any preemptive rights.
(Article Twelfth.)
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<PAGE> 67
LISTING
The Class A Shares are listed on the NYSE and the Chicago Stock Exchange
under the symbol "OECPrM".
TRANSFER AGENT AND REGISTRAR
Ohio Edison, is the transfer agent and registrar for the Class A Shares.
TAXATION
The following discussion describes certain United States federal income tax
consequences of the acquisition, ownership and disposition of Preferred
Securities as of the date hereof and represents the opinion of Winthrop,
Stimson, Putnam & Roberts, counsel to Ohio Edison, insofar as it relates to
matters of law or legal conclusions. Except where noted, it addresses only
Preferred Securities held as capital assets and acquired pursuant to the Offer
and does not address special situations, such as those of dealers in securities
or currencies, financial institutions, life insurance companies, persons holding
Preferred Securities as part of a hedging or conversion transaction or a
straddle, or United States Holders (as defined below) whose "functional
currency" is not the United States dollar. The following discussion is based
upon the provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), Treasury Regulations promulgated thereunder, rulings and judicial
decisions as of the date hereof, which authorities may be repealed, revoked or
modified (possibly on a retroactive basis) so as to result in United States
federal tax consequences different from those discussed below.
ALL HOLDERS OF CLASS A SHARES ARE ADVISED TO CONSULT THEIR TAX ADVISORS AS
TO THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE OF CLASS A
SHARES FOR PREFERRED SECURITIES AND OF THE OWNERSHIP AND DISPOSITION OF
PREFERRED SECURITIES IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES, AS WELL AS THE
EFFECT OF ANY STATE, LOCAL OR OTHER TAX LAWS.
UNITED STATES HOLDERS
As used herein, a "United States Holder" is a holder that is a citizen or
resident of the United States, a corporation, partnership or other entity
created or organized in or under the law of the United States or any state, or
an estate or trust the income of which is subject to United States federal
income taxation regardless of its source. A "Non-United States Holder" is a
holder that is not a United States Holder.
EXCHANGE OF CLASS A SHARES FOR PREFERRED SECURITIES
The exchange of Class A Shares for Preferred Securities pursuant to the
Offer will be a taxable transaction. In the case of a United States Holder who
owns (actually or constructively) solely Class A Shares, or not more than one
percent of the Class A Shares outstanding and not more than one percent of any
other class of Ohio Edison stock, gain or loss will be recognized in an amount
equal to the difference between the fair market value on the Expiration Date of
the Preferred Securities received in the exchange (which will reflect the
Pre-Issuance Accrued Distribution) and the exchanging holder's tax basis in the
Class A Shares exchanged therefor, and such gain or loss will be long-term
capital gain or loss if the Class A Shares have been held for more than one year
as of such date. Ohio Edison will furnish to the Exchange Agent the fair market
value per security on the Expiration Date of the Preferred Securities. The
Exchange Agent will in turn furnish such information to the relevant Depository
Institutions. Such information will be furnished to tendering Holders of
certificates representing Class A Shares by the Exchange Agent, and to tendering
beneficial owners of Class A Shares held in book-entry form by the relevant
Depository Institution through the appropriate Direct or Indirect Participant.
65
<PAGE> 68
Holders of Class A Shares who own (actually or constructively) more than
one percent of any class of Ohio Edison stock are advised to consult their tax
advisors as to the income tax consequences of exchanging Class A Shares for
Preferred Securities.
CLASSIFICATION OF THE TRUST
In the opinion of Winthrop, Stimson, Putnam & Roberts, under current law
and assuming full compliance with the terms of the Declaration, the Trust will
be classified for United States federal income tax purposes as a grantor trust
and not as an association taxable as a corporation. Accordingly, each holder
will be considered the owner of a pro rata portion of the Subordinated
Debentures held by the Trust and will be required to include in gross income his
or her pro rata share of the income accrued on the Subordinated Debentures.
ORIGINAL ISSUE DISCOUNT
Under the terms of the Subordinated Debentures, Ohio Edison has the right
to defer payments of interest for up to 20 consecutive quarterly interest
payment periods. This option to defer interest payments will cause the
Subordinated Debentures to be treated as having been issued with OID. As a
result, United States Holders will be required to accrue their pro rata share of
OID (as interest income) on an economic accrual basis over the term of the
Subordinated Debentures regardless of whether they receive a cash payment with
respect to the period to which such income is attributable and even if they use
the cash method of accounting, and actual distributions on the Preferred
Securities will not be separately reported as taxable income. The amount of OID
will be increased or decreased if the "issue price" of a Preferred Security (the
fair market value on the Expiration Date, which will reflect the Pre-Issuance
Accrued Distribution) is less than or greater than $25. In the event that the
issue price of a Preferred Security is less than $25, the Treasury Regulations
may require a recalculation of the amount of OID for each period that Ohio
Edison does not exercise its right to defer payments of interest. This
recalculation could result in minor adjustments to the amount of OID taxable to
holders for such period.
POTENTIAL EXTENSION OF PAYMENT PERIOD ON THE SUBORDINATED DEBENTURES
In the event that Ohio Edison elects to defer interest payments, a United
States Holder will continue to accrue OID during an Extension Period, and any
Holders who dispose of Preferred Securities prior to the record date for the
payment of interest following such extended interest payment period will not
receive from the Trust any cash related thereto. See "-- Disposition of the
Preferred Securities."
RECEIPT OF SUBORDINATED DEBENTURES OR CASH UPON LIQUIDATION OF THE TRUST
Under current law, a distribution of the Subordinated Debentures as
described under the caption "Description of the Preferred Securities -- Special
Event Redemption or Distribution" would be a non-taxable event to holders for
United States federal income tax purposes. In the event of such a distribution,
a holder would receive an aggregate tax basis and a holding period in the
Subordinated Debentures equal to the adjusted tax basis and holding period such
holder had in his or her Preferred Securities.
Under current law, a redemption of the Subordinated Debentures for cash as
described under the caption "Description of the Preferred Securities -- Special
Event Redemption or Distribution" would be a taxable event to holders for United
States federal income tax purposes. In the event of such a redemption, a holder
would recognize gain or loss as if he or she had sold such redeemed Preferred
Securities for cash. See "-- Disposition of the Preferred Securities."
MARKET DISCOUNT AND BOND PREMIUM
Holders other than holders who acquire Preferred Securities pursuant to the
Offer may be considered to have acquired their Preferred Securities with market
discount, acquisition premium or amortizable bond premium. Such holders are
advised to consult their tax advisors as to the tax consequences of the
acquisition, ownership and disposition of Preferred Securities.
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<PAGE> 69
DISPOSITION OF THE PREFERRED SECURITIES
Upon a sale, exchange or other disposition of Preferred Securities
(including a redemption for cash, but excluding a distribution of Subordinated
Debentures), a holder will recognize gain or loss equal to the difference
between the amount realized and the holder's adjusted tax basis in his or her
Preferred Securities. A holder's adjusted tax basis in his or her Preferred
Securities will generally equal the holder's initial tax basis (the fair market
value on the Expiration Date, which will reflect the Pre-Issuance Accrued
Distribution) increased by accrued OID and decreased by the amount of cash
distributions. Gain or loss will be capital gain or loss and will be long-term
capital gain or loss if, at the time of the sale, exchange or other disposition,
the Preferred Securities have been held for more than one year.
The Preferred Securities may trade at a price that does not fully reflect
the value of accrued but unpaid interest with respect to the underlying
Subordinated Debentures. In such event, a holder who disposes of Preferred
Securities between record dates for payments of distributions thereon (and
consequently does not receive a cash distribution from the Trust for the period
prior to such disposition) will nevertheless be required to include as ordinary
income accrued but unpaid interest on the Subordinated Debentures through the
date of disposition and to add such amount to such holder's adjusted tax basis
in the Preferred Securities disposed of. Accordingly, such a holder will
recognize a capital loss to the extent the selling price of the Preferred
Securities (which may not fully reflect the amount of accrued but unpaid
interest) is less than the holder's adjusted tax basis in the Preferred
Securities (which will reflect accrued but unpaid interest). Subject to certain
limited exceptions, capital losses cannot be applied to offset ordinary income
for United States federal income tax purposes.
NON-UNITED STATES HOLDERS
Under present United States federal income tax law, and subject to the
discussion below concerning backup withholding:
(i) no withholding of United States federal income tax will be
required with respect to a Non-United States Holder upon the exchange of
Class A Shares for Preferred Securities pursuant to the Offer, provided
such holder certifies to Ohio Edison or its agents, that such holder owns
(actually or constructively) solely Class A Shares, or not more than one
percent of the Class A Shares outstanding and not more than one percent of
any other class of Ohio Edison stock, or that the exchange of Class A
Shares for Preferred Securities otherwise qualifies as a sale or exchange
for United States federal income tax purposes. If a Non-United States
Holder does not provide the certification described in the preceding
sentence, Ohio Edison will withhold federal income tax at a rate of 30% of
the gross proceeds paid to such holder pursuant to the Offer;
(ii) payments by the Trust or any of its paying agents to any
Non-United States Holder will not be subject to United States federal
withholding tax, provided that (a) the beneficial owner of the Preferred
Security does not actually or constructively own 10% or more of the total
combined voting power of all classes of stock of Ohio Edison entitled to
vote, (b) the beneficial owner of the Preferred Security is not a
controlled foreign corporation that is related to Ohio Edison through stock
ownership, and (c) either (A) the beneficial owner of the Preferred
Security certifies to the Trust or its agent, under penalties of perjury,
that it is not a United States Holder and provides its name and address or
(B) a securities clearing organization, bank or other financial institution
that holds customers' securities in the ordinary course of its trade or
business (a "Financial Institution") and holds the Preferred Security in
such capacity certifies to the Trust or its agent, under penalties of
perjury, that such statement has been received from the beneficial owner by
it, or by a Financial Institution between it and the beneficial owner, and
furnishes the Trust or its agent with a copy thereof; and
(iii) a Non-United States Holder will generally not be subject to
United States federal income or withholding tax on any gain realized upon
the sale or other disposition of a Preferred Security, except that a
Non-United States Holder will be subject to United States federal income
tax on any gain if such holder (a) is engaged in a trade or business in the
United States and such gain is effectively connected
67
<PAGE> 70
with the conduct of such trade or business or (b) is an individual present
in the United States for 183 days or more during the taxable year, and
certain other conditions are met.
INFORMATION REPORTING TO HOLDERS
The Property Trustee will report the OID that accrued during the year with
respect to the Subordinated Debentures, and any gross proceeds received by the
Trust from the retirement or redemption of the Subordinated Debentures, annually
to the holders of record of the Preferred Securities and the Internal Revenue
Service. The Property Trustee currently intends to deliver such reports to
holders of record prior to January 31 following each calendar year. It is
anticipated that persons who hold Preferred Securities as nominees for
beneficial holders will report the required tax information to beneficial
holders on Form 1099.
BACKUP WITHHOLDING
Payments made in respect of, and proceeds from the sale of, Preferred
Securities, or Subordinated Debentures distributed to holders of Preferred
Securities, may be subject to a "backup" withholding tax of 31% unless the
holder complies with certain identification requirements. Any withheld amounts
will generally be allowed as a credit against the holder's federal income tax
liability, provided the required information is timely provided to the Internal
Revenue Service.
PROPOSED TAX LAW CHANGES
On March 19, 1996, President Clinton announced a 1997 balanced budget
proposal containing, among other things, an amendment that would classify a debt
instrument issued on or after December 7, 1995 as equity if the instrument had a
maximum term exceeding 20 years and was not classified as indebtedness on the
issuer's applicable balance sheet. On March 29, 1996, Senate Finance Committee
Chairman William V. Roth, Jr. and House Ways and Means Committee Chairman Bill
Archer issued a joint statement indicating their intent that certain legislative
proposals initiated by President Clinton, including the 1997 balanced budget
proposal, that may be adopted by either of the tax-writing committees of
Congress would have an effective date that is no earlier than the date of
"appropriate Congressional action." Because the Subordinated Debentures will
have a maximum term not exceeding 20 years, the provisions of the proposed
amendment are not applicable to the Subordinated Debentures. Ohio Edison cannot
predict whether this proposed amendment may be modified or other legislation may
be enacted that might affect the character or treatment for United States
federal income tax purposes of the Subordinated Debentures or otherwise affect
the Preferred Securities offered hereby. If legislation were enacted limiting,
in whole or in part, the deductibility by Ohio Edison of interest on the
Subordinated Debentures for United States federal income tax purposes, such
enactment would be a Tax Event. Depending upon the circumstances following a Tax
Event, Ohio Edison could either cause the Trust to be dissolved and the
Subordinated Debentures to be distributed to the holders of Preferred
Securities, or cause the Subordinated Debentures to be redeemed, which would
result in a redemption by the Trust of the Preferred Securities. See
"Description of the Preferred Securities -- Special Event Redemption or
Distribution." It is expected that the 1997 balanced budget proposal, even if
enacted in a manner that would affect the Subordinated Debentures, would not
alter the United States federal income tax consequences of the exchange of Class
A Shares for Preferred Securities and the ownership and disposition of Preferred
Securities.
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the Preferred
Securities will be passed upon for the Trust by Richards, Layton & Finger,
special Delaware counsel to the Trust. The validity of the Preferred Securities
Guarantee and the Subordinated Debentures, and certain legal matters in
connection with the Preferred Securities, the Preferred Securities Guarantee and
the Subordinated Debentures, will be passed upon for the Trust and Ohio Edison
by Anthony J. Alexander, Esq., Akron, Ohio, who is Senior Vice President and
General Counsel of Ohio Edison, and Winthrop, Stimson, Putnam & Roberts, New
York, New York, counsel to Ohio Edison and the Trust. Any tax matters with
respect to the Preferred Securities, the
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<PAGE> 71
Subordinated Debentures, and the Preferred Securities Guarantee will be passed
on for Ohio Edison and the Trust by Winthrop, Stimson, Putnam & Roberts, New
York, New York, counsel to Ohio Edison and the Trust. Certain legal matters in
connection with the Preferred Securities will be passed upon for the Dealer
Manager by Simpson Thacher & Bartlett (a partnership which includes professional
corporations), New York, New York.
EXPERTS
The consolidated financial statements and related schedule incorporated by
reference or included in Ohio Edison's Annual Report on Form 10-K for the year
ended December 31, 1995, incorporated by reference in this Prospectus, have been
audited by Arthur Andersen LLP, independent public accountants, as indicated in
their report dated February 8, 1996 with respect thereto, and are incorporated
by reference herein in reliance upon the authority of said firm as experts in
accounting and auditing in giving said reports. Reference is made to said
reports which include an explanatory paragraph with respect to certain changes
in accounting methods as discussed in the Notes to the consolidated financial
statements.
ERISA CONSIDERATIONS
Generally, employee benefit plans that are subject to the Employee
Retirement Income Security Act of 1974 ("ERISA"), or Section 4975 of the Code
("Plans"), may purchase Preferred Securities, subject to the investing
fiduciary's determination that the investment in Preferred Securities satisfies
ERISA's fiduciary standards and other requirements applicable to investments by
the Plan.
In any case, Ohio Edison and/or any of its affiliates may be considered a
"party in interest" (within the meaning of ERISA) or a "disqualified person"
(within the meaning of Section 4975 of the Code) with respect to certain plans
(generally, Plans maintained or sponsored by, or contributed to by Ohio Edison
or any of its affiliates). The acquisition and ownership of Preferred Securities
by a Plan (or by an individual retirement arrangement or other Plans described
in Section 4975(e)(1) of the Code) with respect to which Ohio Edison or any of
its affiliates is considered a party in interest or a disqualified person, may
constitute or result in a prohibited transaction under ERISA or Section 4975 of
the Code, unless such Preferred Securities are acquired pursuant to and in
accordance with an applicable exemption.
As a result, Plans with respect to which Ohio Edison or any of its
affiliates is a party in interest or a disqualified person should not acquire
Preferred Securities. Any other Plans or other entities whose assets include
Plan assets subject to ERISA proposing to acquire Preferred Securities should
consult with their own ERISA counsel.
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<PAGE> 72
Facsimile copies of the Letter of Transmittal will be accepted. Letters of
Transmittal, certificates representing Class A Shares and any other required
documents should be sent by each Holder of Class A Shares or his broker, dealer,
commercial bank, trust company or other nominee to the Exchange Agent at one of
the addresses as set forth below:
THE EXCHANGE AGENT IS:
THE BANK OF NEW YORK
<TABLE>
<S> <C>
By Mail: By Hand or By Overnight Courier:
Tender and Exchange Department Tender & Exchange Department
P.O. Box 11248 101 Barclay Street
Church Street Station Receive and Deliver Window
New York, NY 10286-1248 New York, New York 10286
</TABLE>
By Facsimile Transmission:
(For Eligible Institutions Only)
(212) 815-6213
Confirm by Telephone:
(800) 507-9357
The Information Agent Is:
(LOGO)
Wall Street Plaza
New York, New York 10005
(800) 223-2064 (Toll-Free)
Banks and Brokers Call Collect:
(212) 440-9800
Any questions or requests for assistance or additional copies of this
Prospectus, the Letter of Transmittal or for copies of the Notice of Guaranteed
Delivery may be directed to the Information Agent at its telephone number and
location set forth above. You may also contact your broker, dealer, commercial
bank or trust company or other nominee for assistance concerning the Offer.
The Dealer Manager for the Offer Is:
MERRILL LYNCH & CO.
World Financial Center
North Tower -- Seventh Floor
New York, New York 10281
(212) 236-4565 (Collect)
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<PAGE> 73
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 21. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT NO.
- - - -----------
<C> <C> <S>
1 -- Form of Dealer Manager Agreement
4.1 -- Form of Indenture between Ohio Edison and The Bank of New York, as Trustee*
4.2 -- Form of First Supplemental Indenture to Indenture*
4.3 -- Declaration of Trust of Ohio Edison Financing Trust II*
4.4 -- Certificate of Trust of Ohio Edison Financing Trust II*
4.5 -- Form of Amended and Restated Declaration of Trust of Ohio Edison Financing Trust
II*
4.6 -- Form of Preferred Security (included in Exhibit 4.5 above)
4.7 -- Form of Junior Subordinated Debenture (included in Exhibit 4.2 above)
4.8 -- Form of Guarantee Agreement with respect to Preferred Securities*
5.1 -- Opinion of Anthony J. Alexander, Esq., Senior Vice President and General Counsel
of Ohio Edison Company*
5.2 -- Opinion of Richards, Layton & Finger*
8 -- Tax Opinion of Winthrop, Stimson, Putnam & Roberts
12 -- Ohio Edison Company Computations of Ratio of Earnings to Fixed Charges and Ratio
of Earnings to Fixed Charges Plus Preferred and Preference Stock Dividend
Requirements (Pre-Income Tax Basis)*
15 -- Deleted
23.1 -- Consent of Arthur Andersen LLP
23.2 -- Consents of Anthony J. Alexander, Esq. and Winthrop, Stimson, Putnam & Roberts
(included in Exhibits 5.1 and 8 above, respectively)
23.3 -- Consent of Richards, Layton & Finger (included in Exhibit 5.2 above)
24.1 -- Powers of Attorney for Ohio Edison Company*
24.2 -- Power of Attorney for Ohio Edison Company, as sponsor, to sign this Registration
Statement on behalf of Ohio Edison Financing Trust II (included in Exhibit 4.3
above)
25.1 -- Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of
The Bank of New York, as Trustee under the Indenture*
25.2 -- Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of
The Bank of New York, as Property Trustee, under the Amended and Restated
Declaration of Trust*
25.3 -- Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of
The Bank of New York, as Trustee, under the Preferred Securities Guarantee*
99.1 -- Form of Letter of Transmittal*
99.2 -- Form of Notice of Guaranteed Delivery*
99.3 -- Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees*
99.4 -- Form of Letter to Clients*
99.5 -- Form of Exchange Agent Agreement*
99.6 -- Form of Information Agent Agreement*
99.7 -- Form of Newspaper Announcement*
99.8 -- Form of Ohio Edison Company Letter to Holders of 7.75% Class A Preferred Stock*
99.9 -- Questions and Answers Regarding Preferred Securities*
99.10 -- Form of Designation of Soliciting Dealers*
</TABLE>
- - - ---------------
* Previously filed.
II-1
<PAGE> 74
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Ohio Edison
Company certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-4 and has duly caused this Amendment No. 1
to the Registration Statement to be signed on its behalf by the undersigned
thereunto duly authorized, in The City of Akron and State of Ohio on the 12th
day of April, 1996.
OHIO EDISON COMPANY
By: W. R. HOLLAND
--------------------------------------
W.R. Holland
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
- - - ------------------------------------- -------------------------------- -----------------
<C> <S> <C>
W. R. HOLLAND President and Chief Executive April 12, 1996
- - - ------------------------------------- Officer and Director (Principal
(W.R. Holland) Executive Officer)
H.P. BURG* Senior Vice President and April 12, 1996
- - - ------------------------------------- Director (Principal Financial
(H.P. Burg) Officer and Principal Accounting
Officer)
DONALD C. BLASIUS* Director April 12, 1996
- - - -------------------------------------
(Donald C. Blasius)
ROBERT H. CARLSON* Director April 12, 1996
- - - -------------------------------------
(Robert H. Carlson)
ROBERT M. CARTER* Director April 12, 1996
- - - -------------------------------------
(Robert M. Carter)
CAROL A. CARTWRIGHT* Director April 12, 1996
- - - -------------------------------------
(Carol A. Cartwright)
R.L. LOUGHHEAD* Director April 12, 1996
- - - -------------------------------------
(R.L. Loughhead)
RUSSELL W. MAIER* Director April 12, 1996
- - - -------------------------------------
(Russell W. Maier)
</TABLE>
II-2
<PAGE> 75
<TABLE>
<CAPTION>
NAME TITLE DATE
- - - ------------------------------------- -------------------------------- -----------------
<C> <S> <C>
GLENN H. MEADOWS* Director April 12, 1996
- - - -------------------------------------
(Glenn H. Meadows)
PAUL J. POWERS* Director April 12, 1996
- - - -------------------------------------
(Paul J. Powers)
CHARLES W. RAINGER* Director April 12, 1996
- - - -------------------------------------
(Charles W. Rainger)
GEORGE M. SMART* Director April 12, 1996
- - - -------------------------------------
(George M. Smart)
JESSE T. WILLIAMS, SR.* Director April 12, 1996
- - - -------------------------------------
(Jesse T. Williams, Sr.)
*By: JOHN H. BYINGTON,
JR.
- - - -------------------------------------
(Attorney-in-fact)
April 12, 1996
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, Ohio Edison
Financing Trust II certifies that it has reasonable grounds to believe that it
meets all of the requirement for filing on Form S-4 and has duly caused this
Amendment No. 1 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in The City of Akron and State of Ohio
on the 12th day of April, 1996.
OHIO EDISON FINANCING TRUST II
By: Ohio Edison Company, as Sponsor
By: T.F. STRUCK, II
----------------------------------
T.F. Struck, II
Assistant Treasurer
II-3
<PAGE> 76
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DOCUMENT
- - - ----------- ------------------------------------------------------------------------------
<C> <C> <S>
1 -- Form of Dealer Manager Agreement
4.1 -- Form of Indenture between Ohio Edison and The Bank of New York, as Trustee*
4.2 -- Form of First Supplemental Indenture to Indenture*
4.3 -- Declaration of Trust of Ohio Edison Financing Trust II*
4.4 -- Certificate of Trust of Ohio Edison Financing Trust II*
4.5 -- Form of Amended and Restated Declaration of Trust of Ohio Edison Financing
Trust II*
4.6 -- Form of Preferred Security (included in Exhibit 4.5 above)
4.7 -- Form of Junior Subordinated Debenture (included in Exhibit 4.2 above)
4.8 -- Form of Guarantee Agreement with respect to Preferred Securities*
5.1 -- Opinion of Anthony J. Alexander, Esq., Senior Vice President and General
Counsel of Ohio Edison Company*
5.2 -- Opinion of Richards, Layton & Finger*
8 -- Tax Opinion of Winthrop, Stimson, Putnam & Roberts
12 -- Ohio Edison Company Computations of Ratio of Earnings to Fixed Charges and
Ratio of Earnings to Fixed Charges Plus Preferred and Preference Stock
Dividend Requirements (Pre-Income Tax Basis)*
15 -- Deleted
23.1 -- Consent of Arthur Andersen LLP
23.2 -- Consents of Anthony J. Alexander, Esq. and Winthrop, Stimson, Putnam & Roberts
(included in Exhibits 5.1 and 8 above, respectively)
23.3 -- Consent of Richards, Layton & Finger (included in Exhibit 5.2 above)
24.1 -- Powers of Attorney for Ohio Edison Company*
24.2 -- Power of Attorney for Ohio Edison Company, as sponsor, to sign this
Registration Statement on behalf of Ohio Edison Financing Trust II (included
in Exhibit 4.3 above)
25.1 -- Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of
The Bank of New York, as Trustee under the Indenture*
25.2 -- Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of
The Bank of New York, as Property Trustee, under the Amended and Restated
Declaration of Trust*
25.3 -- Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of
The Bank of New York, as Trustee, under the Preferred Securities Guarantee*
99.1 -- Form of Letter of Transmittal*
99.2 -- Form of Notice of Guaranteed Delivery*
99.3 -- Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees*
99.4 -- Form of Letter to Clients*
99.5 -- Form of Exchange Agent Agreement*
99.6 -- Form of Information Agent Agreement*
99.7 -- Form of Newspaper Announcement*
99.8 -- Form of Ohio Edison Company Letter to Holders of 7.75% Class A Preferred
Stock*
99.9 -- Questions and Answers Regarding Preferred Securities*
99.10 -- Form of Designation of Soliciting Dealers*
</TABLE>
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*Previously filed.
<PAGE> 77
REGISTRATION STATEMENT NOS. 33-333-01489 AND 333-01489-01
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
------------------------
EXHIBITS
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
OHIO EDISON FINANCING TRUST II
OHIO EDISON COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
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- - - --------------------------------------------------------------------------------
<PAGE> 1
EXHIBIT 1
DEALER MANAGER AGREEMENT
__________ __, 1996
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York 10281-1329
Ladies and Gentlemen:
Ohio Edison Financing Trust II (the "Trust"), a statutory business trust
organized under the Business Trust Act (the "Delaware Act") of the State of
Delaware (Chapter 38, Title 12, of the Delaware Code, 12 Del. C. Section 3801
et seq.) all of whose trust interests represented by common securities (the
"Common Securities") are held by Ohio Edison Company, an Ohio corporation (the
"Company"), proposes to issue its ___% Trust Originated Preferred Securities
("TOPrS") representing preferred undivided beneficial interests in the assets
of the Trust (the "Preferred Securities") in exchange for up to 3,600,000
shares of the Company's 7.75% Class A Preferred Stock, $25 Par Value (the
"Target Securities"). The Preferred Securities shall have the designation,
preferences, rights, powers and restrictions set forth in the Trust's Amended
and Restated Declaration of Trust (the "Declaration"). The Preferred
Securities will be guaranteed by the Company to the extent described in the
Prospectus (as hereinafter defined) and as set forth in the Preferred
Securities Guarantee Agreement to be dated as of __________ ___, 1996 (the
"Guarantee"), between the Company and The Bank of New York, as trustee (the
"Guarantee Trustee"). The offer to exchange securities described above is
herein referred to as the "Exchange Offer" and any exchange of Preferred
Securities for Target Securities pursuant to the Exchange Offer is herein
referred to as an "Exchange". In connection with the Exchange Offer, the
Company will deposit in the Trust as trust assets its Junior Subordinated
Debentures due _________ __, 1996 (the "Debentures") to be issued pursuant to
an Indenture dated as of _________ __, 1996 (the "Indenture") between the
Company and the Bank of New York, as trustee (the "Debenture Trustee"), and as
set forth in the Prospectus.
Each of the Company and the Trust hereby confirms its agreement with Merrill
Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch" or the "Dealer
Manager") as follows:
1. REGISTRATION STATEMENT, PROSPECTUS AND OFFERING MATERIALS. The Company
and the Trust have prepared and filed with the Securities and Exchange
Commission (the "Commission"), under the Securities Act of 1933, as amended,
and the rules and regulations of the Commission promulgated thereunder
<PAGE> 2
2
(collectively, the "Securities Act"), a registration statement on Form S-4
covering the registration of the Preferred Securities, the Guarantee and the
Debentures (the "prospectus"), and will prepare and file with, or
electronically transmit for filing to, the Commission, on or prior to the
effective date of such registration statement, amendments to such registration
statement, including a final prospectus. Such registration statement,
including the exhibits thereto and any documents incorporated by reference
therein, as amended at the time it becomes effective or as thereafter amended
or supplemented from time to time, is herein called the "Registration
Statement". The final prospectus included in the Registration Statement
(including any documents incorporated in the prospectus by reference) is herein
called the "Prospectus", except that if the final prospectus furnished to the
Dealer Manager for use in connection with the Exchange Offer differs from the
prospectus set forth in the Registration Statement (whether or not such
prospectus is required to be filed pursuant to Rule 424 (b)), the term
"Prospectus" shall refer to the final prospectus furnished to the Dealer
Manager for such use. The terms "supplement" and "amendment" or "amend" as
used herein with respect to the Prospectus shall include all documents deemed
to be incorporated by reference in the Prospectus that are filed with the
Commission subsequent to the date of the Prospectus and prior to the
termination of the Exchange Offer by the Company pursuant to the Securities
Exchange Act of 1934, as amended, and the rules and regulations of the
Commission promulgated thereunder (collectively, the "Exchange Act").
The Registration Statement, Prospectus and the related letters from the
Dealer Manager to securities brokers, dealers, commercial banks, trust
companies and other nominees, letters to beneficial owners of Target
Securities, letters of transmittal (the "Letters of Transmittal"), notices of
guaranteed delivery (the "Notices of Guaranteed Delivery") and any newspaper
announcements, press releases and other offering materials and information the
Company may use or prepare, approve or authorize for use in connection with the
Exchange Offer, as amended or supplemented from time to time, are herein
collectively referred to as the "Offering Materials".
2. EXCHANGE OFFER; AGREEMENT TO ACT AS DEALER MANAGER.
(a) The Company and the Trust intend to commence the Exchange Offer as soon
as practicable after the Registration Statement becomes effective under the
Securities Act by publicly announcing its commencement and by mailing, or
causing to be mailed on its behalf, copies of the Prospectus, the related
Letters of Transmittal and such of the other Offering Materials as is
required or as the Company elects to each holder of Target Securities (the
date of the commencement of such distribution being herein called the
"Commencement Date").
<PAGE> 3
3
(b) The Company and the Trust hereby retain the Dealer Manager to advise
them with respect to the terms and timing of the Exchange Offer and to assist
them in the preparation of the Offering Materials and retain and authorize
the Dealer Manager to act as dealer manager and to assist the Company and the
Trust with the solicitation of Exchanges (each a "Solicitation" and
collectively the "Solicitations"). On the basis of the representations and
warranties and agreements of the Company and the Trust herein contained and
subject to and in accordance with the terms and conditions hereof and of the
Offering Materials, the Dealer Manager agrees to advise the Company and the
Trust with respect to the terms and timing of the Exchange Offer and to act
as Dealer Manager in connection with the Exchange Offer and to assist the
Company and the Trust with the Solicitations. The Dealer Manager agrees to
use its reasonable best efforts to solicit Exchanges.
(c) The Company shall furnish the Dealer Manager, or cause the transfer
agent or registrar for the Target Securities (respectively, the "Transfer
Agent" and "Registrar") to furnish the Dealer Manager, as soon as practicable
after the date hereof (to the extent not previously furnished), with cards or
lists in reasonable quantities or copies thereof showing the names of persons
who were the holders of record or, to the extent available to the Company,
the beneficial owners of the Target Securities as of a recent date, together
with their addresses, and the number of shares of Target Securities held by
them. Additionally, the Company shall use its best efforts to update, or to
cause the Transfer Agent or Registrar to update, such information from time
to time during the term of this Agreement as may be reasonably requested by
the Dealer Manager. Except as otherwise provided herein, the Dealer Manager
agrees to use such information only in connection with the Solicitations.
The Dealer Manager shall act hereunder as an independent contractor and
nothing herein contained shall make the Dealer Manager an agent of the Trust,
the Company or any of its subsidiaries in connection with any Solicitation.
Nothing contained in this Agreement shall constitute the Dealer Manager to be
a partner of or joint venturer with the Trust, the Company or any of its
subsidiaries.
(d) The Trust and the Company authorize the Dealer Manager to use the
Offering Materials in connection with the Solicitations and for such period
of time as any Offering Materials are required by law to be delivered in
connection therewith. The Dealer Manager shall not have any obligation to
cause any Offering Materials to be transmitted generally to the holders of
the Target Securities. The Dealer Manager agrees not to give any written
information and not to make any representations to holders of the Target
Securities in
<PAGE> 4
4
connection with any Solicitation other than as contained in the Offering
Materials.
(e) The Trust and the Company authorize the Dealer Manager to communicate
with any information agent (the "Information Agent") or exchange agent (the
"Exchange Agent") appointed by the Company to act in such capacity in
connection with the Exchange Offer with respect to matters relating to the
Exchange Offer.
(f) The Trust and the Company agree that any reference to the Dealer
Manager in any Offering Materials or in any newspaper announcement or press
release or other document or communication is subject to the Dealer Manager's
prior consent, which consent shall not be unreasonably withheld.
3. COMPENSATION.
(a) The Company hereby agrees to pay to the Dealer Manager for services
rendered and to be rendered by them in connection with the Exchange Offer a
fee (the "Management Fee") equal to $__ per share of Target Securities
accepted in the Exchange Offer. The Management Fee shall be paid only if the
Exchange Offer is consummated, and shall be paid within one week of the
consummation of the Exchange Offer. In addition, the Company agrees to
reimburse the Dealer Manager directly for all of its reasonable out-of-pocket
expenses, including, without limitation, the reasonable fees and expenses of
the law firm acting as legal counsel for the Dealer Manager.
(b) The Company agrees to pay, or cause to be paid to, each soliciting
dealer (including the Dealer Manager acting as a soliciting dealer) whose
name has been inserted in the space provided in the Letter of Transmittal for
that purpose a fee (the "Soliciting Dealer Fee") equal to $__ per share of
Target Securities validly tendered, accepted by the Company and exchanged for
Preferred Securities pursuant to the Exchange Offer; PROVIDED, HOWEVER, that
no such fee shall be paid with respect to Target Securities tendered,
directly or indirectly, by soliciting dealers for their own account and such
fee shall not be remitted, in whole or in part, to the beneficial owner of
such Target Securities. The Soliciting Dealer Fee shall be payable to the
soliciting dealers within one week of the consummation of the Exchange Offer.
4. CERTAIN COVENANTS OF THE TRUST AND THE COMPANY. Each of the Company and
the Trust jointly and severally covenants with the Dealer Manager:
(a) To use its best efforts to cause the Registration Statement, including
any post-effective amendment thereto, to become effective and to notify the
Dealer Manager
<PAGE> 5
5
immediately and, if requested by the Dealer Manager, to confirm the notice in
writing, (i) when any post-effective amendment to the Registration Statement
shall have become effective, or any supplement to the Prospectus or any
amended Prospectus or any amended or additional Offering Materials shall have
been filed, (ii) of the receipt of any comments from the Commission relating
to the Exchange Offer, (iii) of any request by the Commission to amend the
Registration Statement or amend or supplement the Prospectus or the other
Offering Materials or for additional information relating to the Exchange
Offer and (iv) of (A) the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or (B) the
issuance by the Commission of any order preventing or suspending the use of
any of the Offering Materials or (C) the suspension of the qualification of
the Preferred Securities for offering or sale in connection with the Exchange
Offer in any jurisdiction, (D) the institution or threatening of any
proceedings for any of such purposes or (E) the occurrence of any event which
could cause the Company to withdraw, rescind, terminate or modify the
Exchange Offer or would permit the Company to exercise any right not to
accept the Target Securities tendered pursuant to the Exchange Offer. The
Company and the Trust will make every reasonable effort to prevent the
issuance of any such stop order, the issuance of any order preventing or
suspending such use and the suspension of any such qualification and, if any
such order is issued or qualification suspended, to obtain the lifting of
such order or suspension at the earliest practicable time.
(b) Prior to the termination of the Exchange Offer, before amending or
supplementing the Registration Statement or the Prospectus, to furnish copies
of such proposed amendments or supplements to the Dealer Manager and its
counsel within a reasonable time in advance of filing with the Commission of
any such amendment or supplement to the Registration Statement, the
Prospectus or the other Offering Materials.
(c) To furnish promptly to the Dealer Manager, without charge, one signed
copy of the Registration Statement, all amendments thereto and any other
filing with the Commission in connection with the Exchange Offer, whether
filed before or after the Registration Statement becomes effective.
(d) To furnish promptly to the Dealer Manager, without charge, as soon as
the Registration Statement shall have become effective and during the period
mentioned in the second sentence of paragraph (e) below such number of copies
of the Prospectus and the other Offering Materials (as supplement or amended)
as the Dealer Manager may reasonably request and to cause all amendments and
supplements filed with the Commission to be distributed to holders of the
<PAGE> 6
6
Target Securities as may be required by the Securities Act and the Exchange
Act.
(e) To comply in all material respects with the Securities Act, the
Exchange Act and the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"), in connection with the Offering Materials, the Exchange
Offer and the transactions contemplated hereby and thereby, as applicable.
If at any time when the Prospectus is required by the Securities Act or
Exchange Act to be delivered in connection with any Solicitation or Exchange
any event shall occur or condition shall exist as a result of which it is
necessary to amend the Registration Statement or amend or supplement the
Prospectus or any other Offering Materials in order that the Prospectus or
such other Offering Materials will not include an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements in the Prospectus or such other Offering Materials, in the light
of the circumstances under which they were made, not misleading or if it
shall be necessary to amend the Registration Statement or amend or supplement
the Prospectus or any other Offering Materials to comply with the
requirements of the Securities Act or Exchange Act, the Trust will promptly
prepare, file with or electronically transmit for filing to, the Commission,
subject to Section 4(b) of this Agreement, and furnish, at its own expense,
to the Dealer Manager and to the dealers (whose names and address will be
furnished to the Company by the Dealer Manager) to which Preferred Securities
may have been exchanged, such amendment or supplement as may be necessary to
correct such untrue statement or omission or to make the Registration
Statement or the Prospectus or such other Offering Materials comply with such
requirements.
(f) To endeavor, in cooperation with the Dealer Manager, to qualify the
Preferred Securities for offering and sale in connection with the Exchange
Offer under the applicable securities or Blue Sky laws of such jurisdictions
as the Company and the Trust may elect and to maintain such qualifications in
effect for such time as may be required for the consummation of the Exchange
Offer; PROVIDED, HOWEVER, that neither the Company nor the Trust shall be
obligated to file any general consent to service of process or to qualify as
a foreign corporation or as a dealer in securities in any jurisdiction in
which it is not so qualified or to subject itself to taxation in respect of
doing business in any jurisdiction in which it is not otherwise so subject.
The Company and the Trust will file such statements and reports as may be
required by the laws of each jurisdiction in which the Preferred Securities
have been qualified as above provided.
(g) To make generally available to its security holders and to the Dealer
Manager as soon as practicable an
<PAGE> 7
7
earning statement covering a twelve-month period beginning on the first day
of the first full fiscal quarter after the date of this Agreement, which
earning statement shall satisfy the provisions of Section 11(a) of the
Securities Act.
(h) To use its best efforts to effect the listing of the Preferred
Securities on the New York Stock Exchange ("NYSE"), subject to official
notice of issuance, as soon as practicable after the date hereof.
(i) To pay all costs and expenses incurred in connection with the
performance of its obligations in connection with this Agreement and the
Solicitations including, without limitation, (i) the preparation, printing
and filing of the Registration Statement (including financial statements and
exhibits), as originally filed and as amended, the Prospectus and the other
Offering Materials and any amendments or supplements to any of the foregoing,
and the cost of furnishing copies thereof to the Dealer Manager, (ii) the
preparation and distribution of this Agreement, certificates for the
Preferred Securities and any Blue Sky surveys, (iii) the distribution of the
Offering Materials to the holders of the Target Securities, (iv) the fees and
disbursements of counsel to the Company and the Trust, counsel to the Dealer
Manager and the Company's and the Trust's accountants, (v) the qualification
of the Preferred Securities under the applicable securities laws in
accordance with Section 4(f) and any filing for review of the Exchange Offer
with the NASD (including filing fees and fees and disbursements of counsel
for the Dealer Manager in connection with such filing with the NASD), (vi)
the fees and expenses of the Transfer Agent, the Registrar, the Trustees of
the Trust (the "Trustees"), the Indenture Trustee (as defined herein), the
Information Agent and the Exchange Agent and (vii) all other costs and
expenses incident to the Solicitations incurred by the Trust and the Company
and its subsidiaries. The Company agrees to pay all of the aforementioned
costs and expenses whether or not the Exchange Offer is consummated.
(j) To advise or cause the Exchange Agent to advise the Dealer Manager at
5:00 P.M., New York City time, or as promptly as practicable thereafter,
daily (or more frequently if requested), by telephone or facsimile
transmission, as of 4:00 P.M on such day with respect to Target Securities
tendered as follows:
(i) the number of shares of Target Securities validly tendered
represented by certificates physically held by the Exchange Agent (or
for which the Exchange Agent has received confirmation or receipt of
book-entry transfer of such Target Securities into the Exchange
Agent's account at a Book-Entry Transfer
<PAGE> 8
8
Facility (as defined in the Prospectus) pursuant to the procedures set
forth in the Exchange Offer) on such day; (ii) the number of shares of
Target Securities represented by Notices of Guaranteed Delivery on
such day; (iii) the number of shares of Target Securities properly
withdrawn on such day; and (iv) the cumulative number of shares of
Target Securities in categories (i) through (iii) above.
On the day following such oral communication, the Company shall furnish or
cause the Exchange Agent to furnish to the Dealer Manager a written report
confirming the above information which has been communicated orally. The
Company shall furnish or cause the Exchange Agent to furnish to the Dealer
Manager such reasonable information on the tendering holders of Targeted
Securities as may be requested from time to time.
(k) To give the Dealer Manager notice of any change of the expiration time
of the Exchange Offer (the "Expiration Time").
(l) During the period beginning on the date of this Agreement and
continuing to and including the Exchange Date, not to offer, sell, contract
to sell or otherwise dispose of any (A) securities of the Company or the
Trust substantially similar to the Debentures or the Preferred Securities or
(B) other beneficial interests of the Trust, in each case without the consent
of the Dealer Manager.
(m) In the case of the Company, to issue the Guarantee concurrently with
the transfer of the Preferred Securities as contemplated herein.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE TRUST. Each of the
Company and the Trust jointly and severally represents and warrants to and
agrees with the Dealer Manager that:
(a) Each preliminary prospectus filed as part of the Registration Statement
as originally filed or as part of any amendment thereto, or filed pursuant to
Rule 424 of the Securities Act, will comply when so filed, in all material
respects, as to form with the Securities Act and the Exchange Act; the
Registration Statement at the time it becomes effective and the Prospectus
and any other Offering Materials, on the Commencement Date and on the date on
which the Company commences delivery of the Preferred Securities for exchange
of the Target Securities pursuant to the Exchange Offer (such date, the
"Exchange Date"), will comply, in all material respects, as to form with the
Securities Act and the Exchange Act; each part of the Registration Statement
when such part becomes effective will not contain and each such part, as
amended, if applicable,
<PAGE> 9
9
will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; and as of the Commencement Date and
Exchange Date, none of the Prospectus or the other Offering Materials or any
amendments or supplements to such Offering Materials will contain any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, except that the representations and
warranties set forth in this Section 5(a) do not apply (A) to statements or
omissions made based upon and in conformity with information supplied in
writing by the Dealer Manager expressly for use in the Registration
Statement, Prospectus, any other Offering Materials or any amendments or
supplements to any of the foregoing or (B) to that part of the Registration
Statement that constitutes the Statements of Eligibility and Qualification on
Form T-1 (the "Forms T-1") under the Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act").
(b) The Company has the corporate power and authority to execute, deliver
and perform its obligations under this Agreement, the Declaration, the
Indenture and the Guarantee; and this Agreement has been duly authorized,
executed and delivered by the Company. The Trust has the business trust
power and authority to execute, deliver and perform its obligations under
this Agreement; and this Agreement has been duly authorized, executed and
delivered by the Trust.
(c) The Preferred Securities to be issued pursuant to the Exchange Offer
will be duly authorized by the Declaration and, when issued in exchange for
Target Securities pursuant to the Exchange Offer, will be validly issued and
(subject to the terms of the Declaration) fully paid and non-assessable
undivided beneficial interests in the assets of the Trust, not subject to any
preemptive or similar rights, and will conform to all statements relating
thereto contained in the Prospectus. Holders of Preferred Securities will be
entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit.
(d) The Declaration and the Guarantee have been duly authorized by the
Company and, as of the Exchange Date, will have been duly executed and
delivered by the Company. Assuming due authorization, execution and delivery
of the Declaration by the Trustees thereunder, the Declaration will, as of
the Exchange Date, be a valid and binding obligation of the Company and the
Trustees, enforceable against the Company and the Trustees in accordance with
its terms, subject to the effect of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to or
affecting the enforcement of
<PAGE> 10
10
creditors' rights generally, by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at
law) and by an implied covenant of good faith and fair dealing. As of the
Exchange Date, the Guarantee will be a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms,
subject to the effect of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
the enforcement of creditors' rights generally, by general equitable
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law) and by an implied covenant of good faith and
fair dealing.
(e) The Indenture will be duly qualified under the Trust Indenture Act and,
assuming due authorization, execution and delivery of the Indenture by the
Debenture Trustee and upon execution and delivery by the Company, will be
enforceable against the Company in accordance with its terms, subject to the
effect of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting the enforcement of
creditors' rights generally, by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at
law) and by an implied covenant of good faith and fair dealing.
(f) The Debentures to be deposited in the Trust as trust assets in
connection with the Exchange Offer have been duly and validly authorized,
and, assuming due authorization, execution and delivery of the Indenture by
the Indenture Trustee, when executed and authenticated in accordance with the
provisions of the Indenture and delivered to the Trust pursuant to the terms
of the Exchange Offer will be entitled to the benefits of the Indenture and
will be valid and binding obligations of the Company enforceable against the
Company in accordance with their terms, subject to the effect of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting the enforcement of creditors' rights
generally, by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and by an
implied covenant of good faith and fair dealing.
(g) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Ohio and has
corporate power and authority to conduct its business as described in the
Prospectus.
(h) The Trust has been duly created and is validly existing in good standing
as a business trust under the Delaware Act, is and will be treated as a
"grantor trust"
<PAGE> 11
11
for federal income tax purposes under existing law, has the business trust
power and authority to conduct its business as presently conducted and as
described in the Prospectus, and is not required to be authorized to do
business in any other jurisdiction.
6. INDEMNIFICATION AND CONTRIBUTION.
(a) Each of the Company and the Trust agrees jointly and severally: (A) to
indemnify and hold the Dealer Manager harmless against any loss, damage,
expense, liability or claim (i) which is caused by any untrue statement or
alleged untrue statement of a material fact contained in the Offering
Materials (including documents incorporated by reference therein), or caused
by any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, except insofar as such loss damage, expense, liability or claim
is caused by any such untrue statement or omission or alleged untrue
statement or omission based upon the information furnished in writing to the
Company or the Trust by the Dealer Manager expressly for use therein;
provided, however, that the foregoing indemnification with respect to any
preliminary prospectus shall not inure to the benefit of the Dealer Manager,
if a copy of the Prospectus (other than documents incorporated by reference
therein) as then amended or supplemented or modified (if the Company shall
have furnished any amendments, supplements or modifications thereto) had not
been sent or given by or on behalf of the Dealer Manager to the person
asserting any such loss, damage, expense, liability or claim at or prior to
the written confirmation to such person of the acceptance for exchange of
such person's Target Securities, or (ii) which arises out of or is based upon
a withdrawal, rescission or modification of or a failure to make or
consummate the Exchange Offer; and (B) to indemnify and hold the Dealer
Manager harmless against any other loss, damage, expense, liability or claim
which otherwise arises out of or is related to this Agreement or the Exchange
Offer or the services provided by the Dealer Manager in connection with this
Agreement or the Exchange Offer, except to the extent any such loss, damage,
expense, liability or claim referred to in this clause (B) is found by a
final judgment of a court of competent jurisdiction to have resulted from the
Dealer Manager's gross negligence, bad faith or willful misconduct. The
Company and the Trust each jointly and severally agrees to indemnify and hold
the Dealer Manager harmless against and reimburse the Dealer Manager for any
and all reasonable expenses (including reasonable legal fees and expenses) as
such expenses are incurred by the Dealer Manager in connection with
investigating, preparing for or defending against any such loss, damage,
expense, liability or claim, whether or not resulting in any liability,
whether
<PAGE> 12
12
or not the Dealer Manager is a named party in connection therewith and
whether or not such loss, damage, expense, liability or claim results from
action initiated or brought by or on behalf of the Company or the Trust, and
any amount paid in settlement of any litigation, commenced or threatened, or
of any claim whatsoever as set forth herein if such settlement is effected
with the prior written consent of the Company and the Trust; PROVIDED,
HOWEVER, with respect to clause (B) above, that neither the Company nor the
Trust shall be liable for any of the foregoing expenses and any amounts
previously paid shall be promptly repaid to the extent that any loss, damage,
liability or claim is found by a final judgment of a court of competent
jurisdiction to have resulted from the Dealer Manager's gross negligence, bad
faith or willful misconduct. The Company and the Trust also agree that the
Dealer Manager shall not have any liability (whether direct or indirect, in
tort, contract or otherwise) to the Company or the Trust or its or their
security holders or creditors related to or arising out of this Agreement or
the Exchange Offer or the services provided by the Dealer Manager in
connection with this Agreement or the Exchange Offer, except to the extent
such liability is found by a final judgment of a court of competent
jurisdiction to have resulted from the Dealer Manager's gross negligence, bad
faith or willful misconduct and except as expressly provided in the next
succeeding paragraph.
The Dealer Manager agrees to indemnify and hold harmless the Company and the
Trust to the same extent as the foregoing indemnity from the Company and the
Trust to the Dealer Manager contained in Section 6(a)(A)(i) above, but only
with reference to information relating to the Dealer Manager furnished to the
Company in writing by the Dealer Manager expressly for use in the Offering
Materials.
(b) Promptly after receipt by a person indemnified under this Section 6 of
notice of any suit, action, proceeding or investigation with respect to which
an indemnified party may be entitled to indemnification hereunder, such
indemnified person shall notify the person against whom such indemnity may be
sought in writing of the commencement or the written assertion thereof.
Following such notification, such indemnifying person may elect in writing to
assume the defense of such suit, action, proceeding or investigation and,
upon such election, such indemnifying person shall not be liable for any
legal costs subsequently incurred by such indemnified person (other than
reasonable costs of investigation and providing evidence) in connection
therewith, unless (i) such indemnifying person has failed to provide counsel
reasonably satisfactory to such indemnified person in a timely manner, (ii)
counsel which has been provided by such indemnifying person reasonably
determines that its representation of such
<PAGE> 13
13
indemnified person would present it with a conflict of interest or (iii) the
named parties to such suit, action, proceeding or investigation (including
any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel
would be inappropriate due to a conflict of interest between them. In the
event of a determination pursuant to clause (i), (ii) or (iii) above, such
indemnifying person may not assume such defense and such indemnified person
shall be entitled to retain separate counsel of their choice and the fees and
expenses of such separate counsel shall be borne by such indemnifying person.
Whether or not such indemnifying person shall have assumed the defense of any
suit, action, proceeding or investigation, the Company, the Trust and the
Dealer Manager agree to cooperate in the defense thereof and shall furnish
such records, information, testimony, and attend such conferences, discovery
proceedings, hearings, trials and appeals, as may be reasonably requested in
connection therewith.
(c) If the indemnification provided for in this Section 6 is unavailable to
or insufficient to hold harmless an indemnified party under paragraph (a)
hereof in respect to any losses, claims, damages or liabilities referred to
therein, then each indemnifying party in lieu of indemnifying such
indemnified party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities
in such proportion as is appropriate to reflect the relative fault of the
Company and the Trust on the one hand and of the Dealer Manager on the other
in connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations, including relative benefit. The relative fault of the
Company and the Trust on the one hand and of the Dealer Manager on the other
(i) in the case of any untrue or alleged untrue statement of a material fact,
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 and the Trust or by the Dealer Manager and the parties' relevant
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission and (ii) in the case of any other action
or omission, shall be determined by reference to, among other things, whether
such action or omission was taken or omitted to be taken by the Company or
the Trust or their affiliates or by the Dealer Manager, and the parties'
relative intent, knowledge, access to information and opportunity to correct
or prevent such action or omission. The Company and the Trust and the Dealer
Manager agree that it would not be just and equitable if contribution
pursuant to this Section 6
<PAGE> 14
14
were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to in
this paragraph (c). The amount paid or payable by an indemnified party as a
result of the losses, claims, damages and liabilities referred to in this
Section 6 shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
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.
7. CONDITIONS TO DEALER MANAGER'S OBLIGATIONS. The obligations of the
Dealer Manager hereunder are subject as of the Commencement Date and as of the
Exchange Date to the accuracy of the representations and warranties of the
Company and the Trust contained herein or in certificates of any officer of the
Company or the Trust delivered pursuant to the provisions hereof, to the
performance, in all material respects, by the Company and the Trust of their
obligations hereunder to be performed, and the following additional conditions:
(a) On the Commencement Date and the Exchange Date, the Registration
Statement shall have become effective under the Securities Act; no stop order
suspending the effectiveness of the Registration Statement shall be in
effect, and no proceedings for such purpose shall be pending before or, to
the Company's or the Trust's knowledge, threatened by the Commission.
(b) On the Commencement Date and the Exchange Date, since the respective
dates as of which information is given in the Prospectus as amended or
supplemented, there shall not have occurred (i) any change, or any
development involving a prospective change, in the condition, financial or
other, or in the earnings, business or operations, of the Company and its
subsidiaries taken as a whole, from that set forth in the Registration
Statement, that in the Dealer Manager's judgment is material and adverse and
which makes it, in the Dealer Manager's judgment, impracticable to solicit
Exchanges; or (ii) any downgrading in the rating accorded any of the
Company's securities by any "nationally recognized statistical rating
organization" as such term is defined for purposes of Rule 436 (g)(2) under
the Securities Act (a "Rating"); and subsequent to the execution and delivery
of this Agreement and prior to the Exchange Date, no notice shall have been
given of an intended or potential downgrading of the Rating of any of the
Company's securities.
<PAGE> 15
15
(c) On the Commencement Date and the Exchange Date, the Dealer Manager
shall have received a certificate, dated such date and signed by an
executive officer of the Company, to the effect set forth in clause (b) above
and to the effect that the representations and warranties of the Company
contained in this Agreement are true and correct in all material respects as
of such date and that the Company has complied in all material respects with
all of the agreements and satisfied in all material respects all of the
conditions on its part to be performed or satisfied on or before such date.
The officer signing and delivering such certificate may rely upon the best of
such officer's knowledge as to proceedings threatened.
(d) On the Commencement Date and the Exchange Date, there shall not have
been since the respective dates as of which information is given in the
Registration Statement any material adverse change, or any development
involving a prospective material adverse change, in the financial condition
or results of operations of the Trust;
(e) On the Commencement Date and the Exchange Date, the Dealer Manager
shall have received a certificate, dated such date and signed by an
Administrative Trustee (as defined in the Declaration) to the effect set
forth in clause (d) above and to the effect that the representations and
warranties of the Trust contained in this Agreement are true and correct in
all material respects as of such date and that the Trust has complied in all
material respects with all of the agreements and satisfied in all material
respects all of the conditions on its part to be performed or satisfied on or
before such date. The officer signing and delivering such certificate may
rely upon the best of such officer's knowledge as to proceedings threatened.
(f) On the Commencement Date and the Exchange Date, the Dealer Manager
shall have received a signed opinion of Anthony J. Alexander, Esq., Senior
Vice President and General Counsel of the Company, dated as of such date, to
the effect that:
(i) The Company was duly organized and is validly existing under
the laws of the State of Ohio, is duly qualified to do business
in the Commonwealth of Pennsylvania as a foreign corporation, and has
due corporate authority to carry on the public utility business in
which it is engaged and to own and operate the properties owned and
used by it in such business;
(ii) The Trust was duly created and is validly existing in
good standing as a business trust under the Delaware Act, and under the
Delaware Act and the Declaration, has the power and authority to own
<PAGE> 16
16
property and conduct its business as described in the Prospectus;
(iii) The summary of the terms of the Preferred Securities and
the Debentures contained in the Prospectus fairly describes the
provisions thereof required to be described by the registration
statement form;
(iv) The Preferred Securities have been duly authorized by the
Declaration, and, when issued and delivered in exchange for Target
Securities pursuant to the Exchange Offer, will be validly issued,
and subject to the qualifications set forth in such opinion,
fully paid and nonassessable undivided beneficial interests in the
assets of the Trust, not subject to any preemptive or similar rights;
the certificates for the Preferred Securities are in due and proper
form; neither the Company as holder of the Common Securities nor any
holder of outstanding shares of capital stock of the Company is
entitled to preemptive or other rights to subscribe for the Preferred
Securities;
(v) The Debentures have been duly authorized, executed,
authenticated and delivered and constitute valid and binding
obligations of the Company enforceable against the Company in
accordance with the terms thereof, subject to the effect of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting the enforcement of creditors'
rights generally, by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or
at law) and by an implied covenant of good faith and fair dealing;
(vi) All legally required proceedings in connection with the
authorization, issue and validity of the Preferred Securities and the
Debentures and the Exchange of the Preferred Securities by the Trust
and the sale of the Debentures by the Company to the Trust in
accordance with this Agreement have been taken and all legally required
orders, consents or other authorizations or approvals of the
Commission, of the Public Utilities Commission of Ohio and of any other
public boards or bodies (other than in connection with or in compliance
with the provisions of the securities or Blue Sky laws of any
jurisdiction, as to which such counsel need not express an opinion)
have been obtained;
(vii) The Indenture, the Declaration and the Guarantee have
been duly qualified under the Trust Indenture Act; the Registration
Statement has become
<PAGE> 17
17
effective under the Securities Act, and, to the best of the knowledge
of such counsel, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or are pending or contemplated under
the Securities Act;
(viii) This Agreement has been duly authorized, executed and
delivered by the Company and the Trust;
(ix) The execution, delivery and performance by the Company of
the Declaration, the Indenture and the Guarantee have been duly
authorized by all necessary corporate action on the part of the
Company; the Declaration, the Indenture and the Guarantee have been
duly executed and delivered by the Company and constitute valid and
legally binding instruments of the Company, enforceable against the
Company in accordance with the terms thereof, subject to the effect of
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting the
enforcement of creditors' rights generally, by general equitable
principles (regardless of whether such enforceability is considered in
a proceeding in equity or at law) and by an implied covenant of good
faith and fair dealing;
(x) The Registration Statement, the Prospectus and any
supplements or amendments thereto (except for the financial statements
and other financial and statistical data therein, as to which such
counsel need not express an opinion), as of their respective effective
or issue dates, complied as to form in all material respects with the
requirements of the Securities Act and the Trust Indenture Act and the
applicable rules and regulations of the Commission thereunder;
(xi) Each document incorporated by reference in the Prospectus,
as such document was originally filed pursuant to the Securities Act
or the Exchange Act (except for the financial statements and other
financial and statistical data therein, as to which such counsel need
not express an opinion), complied as to form when so filed in all
material respects with the requirements of the Securities Act or the
Exchange Act pursuant to which it was filed and the applicable rules
and regulations of the Commission thereunder;
(xii) To the best knowledge of such counsel, no order directed
to the adequacy of any document incorporated by reference in the
Prospectus has been issued by the Commission, and no challenge by the
<PAGE> 18
18
Commission has been made to the adequacy of any such document; and
(xiii) The descriptions in the Registration Statement and
Prospectus of franchises, regulations, statutes, legal and governmental
proceedings and contracts and other documents are accurate as to legal
matters, and such counsel does not know of any legal or governmental
proceedings required to be described in the Registration Statement or
the Prospectus which are not so described (or the descriptions of which
are not incorporated by reference therein) as required, nor of any
contracts or documents of a character required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to
the Registration Statement which are not so described (or the
descriptions of which are not incorporated by reference therein) or
filed as required.
In rendering such opinion, such counsel may (i) rely as to matters of
Pennsylvania law upon the opinion of Robert P. Wushinske, Esq., Vice
President, Secretary and General Counsel of the Company's subsidiary, or of
such other member or members of the bar of the Commonwealth of Pennsylvania
who may be designated for that purpose by the Company and who shall not be
unsatisfactory to counsel for the Dealer Manager and (ii) rely as to matters
of Delaware law upon the opinion referred to in paragraph (h) of this Section
7. In addition, such counsel shall state that nothing has come to the
attention of such counsel which would lead such counsel to believe that the
Registration Statement or any post-effective amendment thereto (except for
the financial and statements and other financial and statistical data
included therein, as to which such counsel need express no opinion), at the
time such Registration Statement or any amendment became effective, contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading or that the Prospectus, as amended or supplemented or modified by
the filing of a document incorporated by reference therein (except for the
financial statements and other financial and statistical data therein, as to
which such counsel need express no opinion), contains any untrue statement of
a material fact or omits to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading.
(g) On the Commencement Date and the Exchange Date, the Dealer Manager
shall have received the favorable opinion of Winthrop, Stimson, Putnam &
Roberts, counsel for the Company and the Trust, covering the matters in
paragraph (f) of this Section 7, except subdivision (xiii) thereof and
stating that the Trust will not be classified as an
<PAGE> 19
19
association taxable as a corporation for Federal income tax purposes. In
rendering such opinion, such counsel may (i) rely as to all matters of Ohio
and Pennsylvania law upon the opinion referred to in paragraph (f) of this
Section 7 and (ii) rely as to all matters of Delaware law upon the opinion
provided in paragraph (h) of this Section 7. In addition, such counsel shall
state that nothing has come to the attention of such counsel which would lead
such counsel to believe that the Registration Statement or any post-effective
amendment thereto (except for the financial statements and other financial
and statistical data therein, as to which such counsel need express no
opinion), at the time such Registration Statement or any amendment became
effective, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus, as amended or
supplemented or modified by the filing of a document incorporated by
reference therein (except for the financial statements and other financial
and statistical data therein, as to which such counsel need express no
opinion), contains any untrue statement of a material fact or omits to state
a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(h) On the Commencement Date and the Exchange Date, the Dealer Manager
shall have received the favorable opinion of Richards, Layton & Finger,
Delaware counsel to the Company and the Trust, to the effect that (i) the
Trust was duly created and is validly existing in good standing as a business
trust under the Delaware Act, and under the Delaware Act and the Declaration,
has the business trust power and authority to own property and conduct its
business as described in the Prospectus; (ii) the Preferred Securities have
been duly authorized by the Declaration and, when issued and delivered
against payment therefor as provided herein, will be validly issued, and
subject to the qualifications set forth in such opinion and described below,
fully paid and nonassessable undivided beneficial interests in the assets of
the Trust, not subject to any preemptive rights; certificates for the
Preferred Securities are in due and proper form; (iii) this Agreement has
been duly authorized by the Trust; and (iv) no authorization, approval,
consent or order of any Delaware court or governmental authority or agency is
required to be obtained by the Trust solely in connection with the issuance
and Exchange of the Preferred Securities. Such counsel may note that the
holders of the Preferred Securities, as beneficial owners of the Trust, will
be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware. Such counsel may also note that
the holders of the Preferred Securities may
<PAGE> 20
20
be obligated, pursuant to the Declaration, to (i) provide indemnity and/or
security in connection with and pay taxes or governmental charges arising
from transfers or exchanges of Preferred Security Certificates and the
issuance of replacement Preferred Security Certificates, and (ii) provide
security and indemnity in connection with requests of or directions to the
Property Trustee to exercise its rights and remedies under the Declaration.
(i) On the Commencement Date and the Exchange Date, the Dealer Manager
shall have received the favorable opinion of Simpson Thacher & Bartlett,
counsel for the Dealer Manager, with respect to the issue and exchange of the
Preferred Securities. In rendering such opinion, such counsel may (i) rely
as to all matters of Ohio and Pennsylvania law upon the opinion referred to
in paragraph (f) of this Section 7 and (ii) rely as to all matters of
Delaware law upon the opinion provided in paragraph (h) of this Section 7.
In addition, such counsel shall state that nothing has come to the attention
of such counsel which would lead such counsel to believe that the
Registration Statement or any post-effective amendment thereto (except for
the financial statements or other financial data therein, as to which such
counsel need express no opinion), at the time such Registration Statement or
any amendment became effective, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or that the
Prospectus, as amended or supplemented or modified by the filing of a
document incorporated by reference therein (except for the financial
statements and other financial data therein, as to which such counsel need
express no opinion), contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(j) On the Commencement Date and the Exchange Date, the Dealer Manager
shall have received from Arthur Andersen LLP, independent public accountants,
in form and substance satisfactory to the Dealer Manager and dated as of such
date, containing statements and information of the type ordinarily included
in accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in or
incorporated by reference into the Registration Statement or Prospectus.
(k) By the Exchange Date, the Company shall have entered into appropriate
agreements with the Information Agent and the Exchange Agent for purposes of
the Exchange Offer.
<PAGE> 21
21
(l) On the Commencement Date and the Exchange Date, the joint and several
obligations of the Company and the Trust and the obligations of the Dealer
Manager hereunder are subject to the condition that the order or orders of
the Public Utilities Commission of Ohio permitting the issuance and Exchange
of the Preferred Securities as contemplated hereby and containing no
provision unacceptable to the Dealer Manager (it being understood that no
order known to the Dealer Manager and in effect on the date hereof contains
any such unacceptable provision) shall have been entered not later than the
close of business on the day when the public offering price shall be
determined and shall be in full force and effect as of the Exchange Date.
8. TERMINATION. (a) This Agreement shall terminate upon the earliest to
occur of (i) the Exchange Date, (ii) the date on which the Dealer Manager give
notice to the Company and the Trust that any of the conditions specified in
Section 7 have not been fulfilled as of any date such conditions are required
to be fulfilled pursuant to Section 7 or (iii) the date on which the Company
terminates or withdraws the Exchange Offer for any reason (the earliest to
occur of clauses (i), (ii) or (iii) being referred to as the "Termination
Date").
(b) Notwithstanding termination of this Agreement pursuant to subsection
(a) of this Section 8, the obligations of the Company to compensate the Dealer
Manager pursuant to Section 3, the representations and warranties contained in
Section 5 and the provisions of Section 6 shall survive any termination of this
Agreement.
9. NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered, mailed or
transmitted by any standard form of telecommunication. Notices to the Dealer
Manager shall be directed to Merrill Lynch & Co., World Financial Center, North
Tower, New York, New York 10281-1307, attention: Mr. Richard Vaccari, with a
copy to Vincent Pagano Jr., Esq., Simpson Thacher & Bartlett, 425 Lexington
Avenue, New York, New York 10017, and notices to the Company and the Trust
shall be directed to either of them c/o Ohio Edison Company, 76 South Main
Street, Akron, Ohio 44308, attention: Treasurer or Trustees (as the case may
be). Any notice under Section 6 hereof may be made by telex or telephone, but
if so made, shall be subsequently confirmed promptly in writing.
10. TOMBSTONE. The Company and the Trust acknowledge that the Dealer
Manager may, with the prior review and approval of the Company, which approval
shall not be unreasonably withheld, place an announcement in such newspapers
and periodicals as the Dealer Manager may choose, stating that the Dealer
Manager is or was acting as Dealer Manager and financial advisor to the Company
and the Trust in connection with the
<PAGE> 22
22
Exchange Offer. The costs relating to any such tombstone shall be borne by the
Dealer Manager.
11. SURVIVAL OF CERTAIN PROVISIONS. The representations, warranties,
indemnities and agreements of the Company and the Trust will remain operative
and in full force and effect regardless of any investigation made by or on
behalf of any Dealer Manager or any affiliate or controlling person thereof
and, subject to Section 8(b), will survive the consummation of the Exchange
Offer.
12. GOVERNING LAW. This Agreement shall be construed in accordance with
and governed by the laws of the State of New York, without giving effect to
principles of conflicts of laws.
13. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by different parties hereto on separate counterparts, each of
which counterparts, when so executed and delivered, shall be deemed to be an
original and all of which counterparts, taken together, shall constitute one
and the same Agreement.
14. SUCCESSORS. This Agreement is made solely for the benefit of the
Dealer Manager, the Company and the Trust, and to the extent expressed, the
parties indemnified pursuant to Section 6, and no other persons shall acquire
or have any right under or by virtue of this Agreement. Nothing in this
Agreement, expressed or implied, is intended to confer on any person other than
the parties hereto or their respective successors and assigns, and, to the
extent expressly set forth herein, the parties indemnified pursuant to Section
6 hereof, any rights or remedies under or by reason of this Agreement. Without
limiting the generality of the foregoing, the parties acknowledge that nothing
in this Agreement, expressed or implied, is intended to confer on holders of
the securities of the Trust, the Company or any of its subsidiaries or
creditors of the Company or any of its subsidiaries or the respective
successors and assigns of such creditors, any rights or remedies under or by
reason of this Agreement.
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us a counterpart hereof, whereupon this instrument
will become a
<PAGE> 23
23
binding agreement among the Company, the Trust and the Dealer Manager in
accordance with its terms.
Very truly yours,
OHIO EDISON COMPANY
By: _____________________________
Name:
Title:
OHIO EDISON FINANCING TRUST II
By: Ohio Edison Company,
as Sponsor
By: ____________________________
Name:
Title:
Confirmed and accepted as of
the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER
& SMITH INCORPORATED
By: _______________________________
Name:
Title:
<PAGE> 1
EXHIBIT 8
April 12, 1996
Ohio Edison Company
76 South Main Street
Akron, Ohio 44308
Ohio Edison Financing Trust II
c/o Ohio Edison Company
76 South Main Street
Akron, Ohio 44308
Re: Ohio Edison Financing Trust II
___% Trust Originated Preferred Securities
Ladies and Gentlemen:
As counsel to Ohio Edison Company (the "Company") and Ohio Edison
Financing Trust II (the "Issuer"), we have assisted in the preparation of the
prospectus (the "Prospectus") that forms a part of the registration statement on
Form S-4 (File No. 333-01489 and 333-01489-01) under the Securities Act of 1933
(the "Act"), as amended by Amendment No. 1 thereto, as filed with the Securities
and Exchange Commission on the date hereof (as so amended, the "Registration
Statement"), in connection with the Issuer's offer (the "Offer") to exchange up
to 3,600,000 of its __% Trust Originated Preferred Securities (the "Preferred
Securities") for a like number of shares of its outstanding 7.75% Class A
Preferred Stock, $25 par value (the "Class A Shares"), and the issuance of a
like aggregate principal amount of ___% Junior Subordinated Debentures Due 2016,
by the Company to the Issuer. Unless otherwise defined herein, all terms used
herein shall have the meanings ascribed to them in the Prospectus.
We have examined and relied upon the Registration Statement and, in
each case as filed as an exhibit to the Registration Statement, (i) the form of
Amended and Restated Declaration of Trust among the Company, as Sponsor, and
the several trustees named therein, (ii) the form of Indenture between the
Company and The Bank of New York, as Trustee, and (iii) the form of Preferred
Securities Guarantee Agreement
<PAGE> 2
between the Company, as Guarantor, and The Bank of New York, as Preferred
Guarantee Trustee.
Based on the foregoing and on our consideration of such other
information as we have deemed necessary and appropriate, we hereby confirm,
subject to the qualifications contained therein, our opinion as set forth in
the Prospectus under the caption "Taxation."
We hereby consent to the filing of this opinion as an exhibit to
the Registration Statement and to the reference to our firm under the heading
"Taxation" in the Prospectus. In giving such consent, we do not thereby admit
that we are included in the category of persons whose consent is required under
Section 7 of the Act.
Very truly yours,
Winthrop, Stimson, Putnam & Roberts
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement of our report dated February 8, 1996,
incorporated by reference or included in Ohio Edison Company's Annual Report on
Form 10-K for the year ended December 31, 1995, and to all references to our
Firm included in this Registration Statement.
ARTHUR ANDERSEN LLP
Cleveland, Ohio
April 12, 1996
