SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
[FEE REQUIRED]
For the fiscal year ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
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Commission File Number 1-2578
OHIO EDISON COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
OHIO 34-0437786
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
76 SOUTH MAIN STREET, AKRON, OHIO 44308
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 1-800-736-3402
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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Each registered on
Common Stock, $9 par value New York Stock Exchange
Rights to Purchase Common Stock and
Chicago Stock Exchange
Cumulative Preferred Stock, $100 par value
3.90% Series
4.40% Series All series registered on
4.44% Series New York Stock Exchange
4.56% Series and
Chicago Stock Exchange
Cumulative Preferred Stock, $25 par value Registered on
7.75% Series New York Stock Exchange
and
Chicago Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. X
---
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days:
Yes X No
--- ---
State the aggregate market value of the voting stock held by non-
affiliates of the registrant: $3,659,897,712 as of March 7, 1996.
Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of the latest practicable
date:
CLASS OUTSTANDING AT MARCH 19, 1996
----- -----------------------------
Common Stock, $9 par value 152,569,437
Documents incorporated by reference (to the extent indicated
herein):
PART OF FORM 10-K INTO WHICH
DOCUMENT DOCUMENT IS INCORPORATED
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Annual Report to Stockholders for the
fiscal year ended December 31, 1995
(Pages 13-30) Part II
Proxy Statement for 1996 Annual Meeting
of Stockholders to be held April 25, 1996 Part III
TABLE OF CONTENTS
Page
----
Part I
Item 1. Business............................................ 1
The Company....................................... 1
Central Area Power Coordination Group............. 1
Capital Requirements.............................. 2
Utility Regulation................................ 3
PUCO Rate Matters............................... 3
PPUC Rate Matters............................... 4
FERC Rate Matters............................... 4
Ohio Fuel Recovery Procedures................... 4
Nuclear Regulation................................ 5
Nuclear Insurance................................. 5
Environmental Matters............................. 6
Air Regulation.................................. 6
Water Regulation................................ 7
Waste Disposal.................................. 7
Summary......................................... 7
Fuel Supply....................................... 8
Nuclear Fuel.................................... 8
System Capacity and Reserves...................... 9
Regional Reliability.............................. 9
Competition....................................... 9
Research and Development.......................... 10
Executive Officers................................ 11
Item 2. Properties.......................................... 11
Item 3. Legal Proceedings................................... 13
Item 4. Submission of Matters to a Vote of Security
Holders........................................... 13
Part II
Item 5. Market for Registrant's Common Equity and
Related Stockholder Matters....................... 13
Item 6. Selected Financial Data............................. 13
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations..... 13
Item 8. Financial Statements and Supplementary Data......... 13
Item 9. Changes In and Disagreements with Accountants
on Accounting and Financial Disclosure............ 13
Part III
Item 10. Directors and Executive Officers of the
Registrant....................................... 13
Item 11. Executive Compensation............................. 13
Item 12. Security Ownership of Certain Beneficial
Owners and Management............................ 13
Item 13. Certain Relationships and Related Transactions..... 14
Part IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K.............................. 14
PART I
ITEM 1. BUSINESS
The Company
Ohio Edison Company (Company) 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. The Company also has
ownership interests in certain generating facilities located in the
Commonwealth of Pennsylvania.
The Company 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. The Company
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.
The Company 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.
Central Area Power Coordination Group (CAPCO)
In September 1967, the CAPCO companies, consisting of the
Company, Penn Power, The Cleveland Electric Illuminating Company
(CEI), Duquesne Light Company (Duquesne) and The Toledo Edison
Company (Toledo), announced a program for joint development of
power generation and transmission facilities. Included in the
program are Unit 7 at the W. H. Sammis Plant, Units 1, 2 and 3 at
the Bruce Mansfield Plant, Units 1 and 2 at the Beaver Valley Power
Station and the Perry Nuclear Power Plant, each now in service.
The present CAPCO Basic Operating Agreement provides, among
other things, for coordinated maintenance responsibilities among
the CAPCO companies, a limited and qualified mutual backup
arrangement in the event of outage of CAPCO units and certain
capacity and energy transactions among the CAPCO companies.
The agreements among the CAPCO companies generally treat the
Company and Penn Power (Companies) as a single system as between
them and the other three CAPCO companies, but, in agreements
between the CAPCO companies and others, all five companies are
treated as separate entities. Subject to any rights that might
arise among the CAPCO companies as such, each member company,
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severally and not jointly, is obligated to pay only its
proportionate share of the costs associated with the facilities and
the cost of required fuel. The CAPCO companies have agreed that any
modification of their arrangements or of their agreed-upon programs
requires their unanimous consent. Should any member become unable
to continue to pay its share of the costs associated with a CAPCO
facility, each of the other CAPCO companies could be adversely
affected in varying degrees because it may become necessary for the
remaining members to assume such costs for the account of the
defaulting member.
Under the agreements governing the construction and operation
of CAPCO generating units, the responsibility is assigned to a
specific CAPCO company. CEI has such responsibilities for Perry,
and Duquesne is responsible for Beaver Valley Units 1 and 2. The
Company monitors activities in connection with these units but must
rely to a significant degree on the operating company for necessary
information. The Company in its oversight role as a practical
matter cannot be privy to every detail; it is the operating company
that must directly supervise activities and then exercise its
reporting responsibilities to the co-owners. The Company critically
reviews the information given to it by the operating company, but
it cannot be absolutely certain that things it would have
considered significant have been reported or that it always would
have reached exactly the same conclusion about matters that are
reported. In addition, the time that is necessarily part of the
compiling and analyzing process creates a lag between the
occurrence of events and the time the Company becomes aware of
their significance. The Companies have similar responsibilities to
the other CAPCO companies with respect to W.H. Sammis Unit 7 and
Bruce Mansfield Units 1, 2 and 3.
Capital Requirements
The Companies' total construction costs, excluding nuclear
fuel, amounted to approximately $166,000,000 in 1995. Such costs
included expenditures for the betterment of existing facilities and
for the construction of transmission lines, distribution lines,
substations and other additions. For the years 1996-2000, such
construction costs are estimated to be approximately $650,000,000,
of which approximately $160,000,000 is applicable to 1996. See
"Environmental Matters" below with regard to possible environment-
related expenditures not included in this estimate.
During the 1996-2000 period, maturities of, and sinking fund
requirements for, long-term debt and preferred stock will require
expenditures by the Companies of over $1,300,000,000, of which
approximately $264,000,000 is applicable to 1996. In addition, the
Companies optionally redeemed approximately $40,000,000 of long-
term debt in February and March 1996.
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Nuclear fuel purchases are financed through OES Fuel (a
wholly owned subsidiary of the Company) commercial paper and loans,
both of which are supported by a $225,000,000 long-term bank credit
agreement. Investments for additional nuclear fuel during the 1996-
2000 period are estimated to be approximately $180,000,000, of
which approximately $29,000,000 applies to 1996. During the same
periods, the Companies' nuclear fuel investments are expected to be
reduced by approximately $191,000,000 and $39,000,000,
respectively, as the nuclear fuel is consumed. Also, the Companies
have operating lease commitments of approximately $594,000,000 for
the 1996-2000 period, of which approximately $108,000,000 relates
to 1996. The Companies recover the cost of nuclear fuel consumed
and operating leases through their electric rates.
Short-term borrowings of $119,965,000 at December 31, 1995,
represent debt of OES Capital (a wholly owned subsidiary of the
Company), which is secured by customer accounts receivable. OES
Capital can borrow up to $120,000,000 under a receivables financing
agreement at rates based on certain bank commercial paper. The
Companies also had $52,000,000 of unused short-term bank lines of
credit as of December 31, 1995. In addition, $50,000,000 was
available through bank facilities that provide for borrowings on a
short-term basis at the banks' discretion. Through OES Fuel credit
facilities, the Company had the capability to borrow approximately
$128,000,000 as of the end of 1995.
Based on their present plans, the Companies could provide for
their cash requirements in 1996 from the following sources: funds
to be received from operations; available cash and temporary cash
investments (approximately $30,000,000 as of December 31, 1995);
the issuance of long-term debt (for refunding purposes) and funds
available under short-term bank credit arrangements.
For the period 1996-2000, external financings may be used to
provide a portion of the Companies' cash requirements. The extent
and type of future financings will depend on the need for external
funds as well as market conditions, the maintenance of an
appropriate capital structure and the ability of the Companies to
comply with coverage requirements in order to issue first mortgage
bonds and preferred stock. The Companies will continue to monitor
financial market conditions and, where appropriate, may take
advantage of economic opportunities to refund debt and preferred
stock to the extent that their financial resources permit.
The coverage requirements contained in the first mortgage
indentures under which the Companies issue first mortgage bonds
provide that, except for certain refunding purposes, the Companies
may not issue first mortgage bonds unless applicable net earnings
(before income taxes), calculated as provided in the indentures,
for any period of twelve consecutive months within the fifteen
calendar months preceding the month in which such additional bonds
are issued, are at least twice annual interest requirements on
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outstanding first mortgage bonds, including those being issued. The
Companies' respective articles of incorporation prohibit the sale
of preferred stock unless applicable gross income, calculated as
provided in the articles of incorporation, is equal to at least
1-1/2 times the aggregate of the annual interest requirements on
indebtedness and annual dividend requirements on preferred stock
outstanding immediately thereafter.
With respect to the issuance of first mortgage bonds under
the Company's first mortgage indenture, the availability of
property additions is more restrictive than the earnings test at
the present time and would limit the amount of first mortgage bonds
issuable against property additions to $388,000,000. The Company is
currently able to issue $986,000,000 principal amount of first
mortgage bonds against previously retired bonds without the need to
meet the above restrictions. Based upon earnings for 1995, the
Company would be permitted, under the earnings coverage test
contained in its charter, to issue at least $1,539,000,000 of
preferred stock at an assumed dividend rate of 8.25%. If the
Company were to issue additional debt at or prior to the time it
issued preferred stock, the amount of preferred stock which would
be issuable would be reduced.
To the extent that coverage requirements or market conditions
restrict the Companies' abilities to issue desired amounts of first
mortgage bonds or preferred stock, the Companies may seek other
methods of financing. Such financings could include the sale of
common stock and preference stock or of such other types of
securities as might be authorized by applicable regulatory
authorities which would not otherwise be sold and could result in
annual interest charges and/or dividend requirements in excess of
those that would otherwise be incurred.
Utility Regulation
The Companies are subject to broad regulation as to rates and
other matters by the Public Utilities Commission of Ohio (PUCO) and
the Pennsylvania Public Utility Commission (PPUC). With respect to
their wholesale and interstate electric operations and rates, the
Companies are subject to regulation, including regulation of their
accounting policies and practices, by the Federal Energy Regulatory
Commission (FERC). Under Ohio law, municipalities may regulate
rates, subject to appeal to the PUCO if not acceptable to the
utility.
In 1986, a law was passed which extended the jurisdiction of
the PUCO to nonutility affiliates of holding companies exempt under
Section 3(a)(1) and 3(a)(2) of the Public Utility Holding Company
Act of 1935 (1935 Act) to the extent that the activities of such
affiliates affect or relate to the cost of providing electric
utility service in Ohio. The law, among other things, requires PUCO
approval of investments in, or the transfer of assets to,
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nonutility affiliates. Investments in such affiliates are limited
to 15% of the aggregate capitalization of the holding company on a
consolidated basis. The Company is an exempt holding company under
Section 3(a)(2) of the 1935 Act, but the law has not had any effect
on its operations as they are currently conducted.
The Energy Policy Act of 1992 (1992 Act) amended portions of
the 1935 Act, providing independent power producers and other
nonregulated generating facilities easier entry into electric
generation markets. The 1992 Act also amended portions of the
Federal Power Act, authorizing the FERC, under certain
circumstances, to mandate access to utility-owned transmission
facilities.
PUCO Rate Matters
On October 18, 1995, the PUCO approved the Company's Rate
Reduction and Economic Development Plan (Regulatory Plan). The
Regulatory Plan is designed to enhance and accelerate economic
development within the Company's service area and to assure the
Company's customers of long-term competitive pricing for energy
services.
Under the Regulatory Plan, the Company agreed to freeze base
electric rates until December 31, 2005, unless additional revenues
are needed to recover the costs of changes in environmental,
regulatory or tax laws or regulations. Also, as part of the
Regulatory Plan, transition rate credits were implemented for
customers on November 1, 1995, which are expected to reduce
operating revenues by approximately $600,000,000 during the
Regulatory Plan period. The Regulatory Plan also established a
revised fuel recovery rate formula which eliminated the automatic
pass-through of fuel costs to the Company's retail customers (see
"Ohio Fuel Recovery Procedures").
All of the Company's regulatory assets are now being
recovered under provisions of the Regulatory Plan. In addition, the
PUCO authorized the Company to recognize additional depreciation
expense related to its generating assets and additional
amortization of regulatory assets during the ten-year Regulatory
Plan period of at least $2,000,000,000 more than the amount that
would have been recognized if the Regulatory Plan were not in
effect. These additional amounts are being recovered through
current rates. Among other provisions, the Regulatory Plan also
limits the Company's annual earnings on common stock; any amounts
otherwise earned in excess of the limitation would be credited to
the Company's retail customers in a future period.
PPUC Rate Matters
On March 7, 1996, Penn Power filed a petition and application
with the PPUC requesting approval of a Rate Stability and Economic
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Development Plan (Plan). The Plan, which would remain in effect
unless certain significant events occur, provides for the roll-in
to base rates of the energy cost rate and the freezing of base
rates for a ten-year period. A major component of the Plan is the
commitment to reduce fixed costs during the ten-year period. Penn
Power expects to recognize additional depreciation expense related
to generating assets and additional amortization of regulatory
assets during the ten-year Plan period of at least $330,000,000
more than the amount that would have been recognized if the Plan
were not in effect. Additionally, the Plan provides for an increase
in contributions to Penn Power's nuclear decommissioning trusts
amounting to $28,000,000 over the ten-year period. The entire
$358,000,000 would be recovered through current rates.
FERC Rate Matters
Rates for the Companies' respective wholesale customers are
regulated by the FERC. The Company's tariff for its customers was
approved by the FERC in 1989. Penn Power has agreements to sell
power to four wholesale customers; two of the agreements expire in
March 1997, and the other two will be in effect until September
1999. A former municipal customer of Penn Power signed a contract
with another energy supplier in November 1995. Penn Power and the
former customer are in dispute over Penn Power's proposed
transmission rate. Both parties have filed proposals with the FERC
requesting it to establish final terms. FERC has accepted the
proposed transmission rate, subject to refund upon hearing.
Ohio Fuel Recovery Procedures
In accordance with the Regulatory Plan, the Company's
Electric Fuel Component (EFC) rate will be frozen until
December 31, 2005, subject only to limited periodic adjustments.
The rate will be adjusted annually based on changes in the GDP
Implicit Price Deflator, unless significant changes in
environmental, regulatory or tax laws or regulations increase or
decrease the cost of fuel. Such changes in laws, regulations and/or
taxes would require PUCO approval to be reflected as an adjustment
to the EFC rate. Furthermore, for the period July 1, 1996 through
July 1, 1999, the EFC rate will be limited to the average fuel cost
rate of certain utilities within the state. Commencing July 1,
2000, the EFC rate will be limited to 97% of the average fuel cost
rate of these companies. The average fuel cost rate for these
utilities may be adjusted by the PUCO to reflect any significant
changes in the Phase II environmental compliance plans of such
companies involving capital additions or equipment utilization.
Nuclear Regulation
The construction and operation of nuclear generating units
are subject to the regulatory jurisdiction of the Nuclear
Regulatory Commission (NRC) including the issuance by it of
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construction permits and operating licenses. The NRC's procedures
with respect to application for construction permits and operating
licenses afford opportunities for interested parties to request
public hearings on health, safety, environmental and antitrust
issues. In this connection, the NRC may require substantial changes
in operation or the installation of additional equipment to meet
safety or environmental standards with resulting delay and added
costs. The possibility also exists for modification, denial or
revocation of licenses or permits. Full power operating licenses
were issued for Beaver Valley Unit 1, Perry and Beaver Valley Unit
2 on July 1, 1976, November 13, 1986 and August 14, 1987,
respectively.
The NRC has promulgated and continues to promulgate
regulations related to the safe operation of nuclear power plants.
The Companies cannot predict what additional regulations will be
promulgated or design changes required or the effect that any such
regulations or design changes, or the consideration thereof, may
have upon the Beaver Valley and Perry plants. Although the
Companies have no reason to anticipate an accident at any nuclear
plant in which they have an interest, if such an accident did
happen, it could have a material but presently undeterminable
adverse effect on the Company's consolidated financial position. In
addition, such an accident at any operating nuclear plant, whether
or not owned by the Companies, could result in regulations or
requirements that could affect the operation or licensing of plants
that the Companies do own with a consequent but presently
undeterminable adverse impact, and could affect the Companies'
abilities to raise funds in the capital markets.
Nuclear Insurance
The Price-Anderson Act limits the public liability which can
be assessed with respect to a nuclear power plant to $8,920,000,000
(assuming 110 units licensed to operate) for a single nuclear
incident, which amount is covered by: (i) private insurance
amounting to $200,000,000; and (ii) $8,720,000,000 provided by an
industry retrospective rating plan required by the NRC pursuant
thereto. Under such retrospective rating plan, in the event of a
nuclear incident at any unit in the United States resulting in
losses in excess of private insurance, up to $75,500,000 (but not
more than $10,000,000 per unit per year in the event of more than
one incident) must be contributed for each nuclear unit licensed to
operate in the country by the licensees thereof to cover
liabilities arising out of the incident. Based on their present
ownership and leasehold interests in the Beaver Valley Station and
the Perry Plant, the Companies' maximum potential assessment under
these provisions (assuming the other CAPCO companies were to
contribute their proportionate share of any assessments under the
retrospective rating plan) would be $102,800,000 per incident but
not more than $13,000,000 in any one year for each incident.
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In addition to the public liability insurance provided
pursuant to the Price-Anderson Act, the Companies have also
obtained insurance coverage in limited amounts for economic loss
and property damage arising out of nuclear incidents. The Companies
are members of Nuclear Electric Insurance Limited (NEIL) which
provides coverage (NEIL I) for the extra expense of replacement
power incurred due to prolonged accidental outages of nuclear
units. Under NEIL I, the Companies have policies, renewable yearly,
corresponding to their respective interests in the Beaver Valley
Station and the Perry Plant, which provide an aggregate indemnity
of up to approximately $414,000,000 for replacement power costs
incurred during an outage after an initial 21-week waiting period.
Members of NEIL I pay annual premiums and are subject to
assessments if losses exceed the accumulated funds available to the
insurer. The Companies' present maximum aggregate assessment for
incidents at any covered nuclear facility occurring during a policy
year would be approximately $4,100,000.
The Companies are insured as to their respective interests in
the Beaver Valley Station and Perry Plant under property damage
insurance provided by American Nuclear Insurers, Mutual Atomic
Energy Liability Underwriters and NEIL to the operating company for
each plant. Under these arrangements, $2,750,000,000 of coverage
for decontamination costs, decommissioning costs, debris removal
and repair and/or replacement of property is provided for the
Beaver Valley Station and the Perry Plant. The Companies pay annual
premiums for this coverage and are liable for retrospective
assessments of up to approximately $13,300,000 during a policy
year.
The Companies intend to maintain insurance against nuclear
risks as described above as long as it is available. To the extent
that replacement power, property damage, decontamination,
decommissioning, repair and replacement costs and other such costs
arising from a nuclear incident at any of the Companies' plants
exceed the policy limits of the insurance in effect with respect to
that plant, to the extent a nuclear incident is determined not to
be covered by the Companies' insurance policies, or to the extent
such insurance becomes unavailable in the future, the Companies
would remain at risk for such costs.
The NRC requires nuclear power plant licensees to obtain
minimum property insurance coverage of $1,060,000,000 or the amount
generally available from private sources, whichever is less. The
proceeds of this insurance are required to be used first to ensure
that the licensed reactor is in a safe and stable condition and can
be maintained in that condition so as to prevent any significant
risk to the public health and safety. Within 30 days of
stabilization, the licensee is required to prepare and submit to
the NRC a cleanup plan for approval. The plan is required to
identify all cleanup operations necessary to decontaminate the
reactor sufficiently to permit the resumption of operations or to
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commence decommissioning. Any property insurance proceeds not
already expended to place the reactor in a safe and stable
condition must be used first to complete those decontamination
operations that are ordered by the NRC. The Companies are unable to
predict what effect these requirements may have on the availability
of insurance proceeds to the Companies for the Companies'
bondholders.
Environmental Matters
Various federal, state and local authorities regulate the
Companies with regard to air and water quality and other
environmental matters. The Companies have estimated capital
expenditures for environmental compliance of approximately
$17,000,000, which is included in the construction estimate given
under "Capital Requirements" for 1996 through 2000.
Air Regulation
Under the provisions of the Clean Air Act of 1970, both the
State of Ohio and the Commonwealth of Pennsylvania adopted ambient
air quality standards, and related emission limits, including
limits for sulfur dioxide (SO2) and particulates. In addition, the
U.S. Environmental Protection Agency (EPA) promulgated an SO2
regulatory plan for Ohio which became effective for the Company's
plants in 1977. Generating plants to be constructed in the future
and some future modifications of existing facilities will be
covered not only by the applicable state standards but also by EPA
emission performance standards for new sources. In both Ohio and
Pennsylvania the construction or modification of emission sources
requires approval from appropriate environmental authorities, and
the facilities involved may not be operated unless a permit or
variance to do so has been issued by those same authorities.
The Companies are in compliance with the SO2 and nitrogen
oxides (NOx) reduction requirements for 1995 under the Clean Air
Act Amendments of 1990. SO2 reductions for the years 1995 through
1999 are being achieved by burning lower-sulfur fuel, generating
more electricity from lower-emitting plants, and/or purchasing
emission allowances. Plans for complying with reductions required
for the year 2000 and thereafter have not been finalized. EPA is
conducting additional studies which could indicate the need for
additional NOx reductions from the Companies' Pennsylvania
facilities by the year 2003. The cost of such reductions, if
required, may be substantial. The Companies continue to evaluate
their compliance plans and other compliance options.
The Companies are required to meet federally approved SO2
regulations. Violations of such regulations can result in shutdown
of the generating unit involved and/or civil or criminal penalties
of up to $25,000 for each day the unit is in violation. The EPA has
an interim enforcement policy for SO2 regulations in Ohio that
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allows for compliance based on a 30-day averaging period. The EPA
has proposed regulations that could change the interim enforcement
policy, including the method of determining compliance with
emission limits. The Companies cannot predict what action the EPA
may take in the future with respect to proposed regulations or the
interim enforcement policy.
Water Regulation
Various water quality regulations, the majority of which are
the result of the federal Clean Water Act and its amendments, apply
to the Companies' plants. In addition, Ohio and Pennsylvania have
water quality standards applicable to the Companies' operations. As
provided in the Clean Water Act, authority to grant federal
National Pollutant Discharge Elimination System (NPDES) water
discharge permits can be assumed by a state. Ohio and Pennsylvania
have assumed such authority.
The Ohio Environmental Protection Agency (Ohio EPA) has
issued NPDES Permits for the R.E. Burger, Edgewater, Niles, W.H.
Sammis and West Lorain plants and has proposed a water discharge
permit for the Mad River Plant. The West Lorain Plant is in
compliance with all permit conditions. The other plants are in
compliance with chemical limitations of the permits. The permit
conditions would have required the addition of cooling towers at
all of the above plants except West Lorain. However, the EPA and
Ohio EPA have approved variance requests for the W.H. Sammis, R.E.
Burger, Edgewater and Niles plants, eliminating the current need
for cooling towers at those plants.
Waste Disposal
As a result of the Resource Conservation and Recovery Act of
1976, as amended, and the Toxic Substances Control Act of 1976,
federal and state hazardous waste regulations have been
promulgated. These regulations may result in significantly
increased costs to dispose of waste materials. The ultimate effect
of these requirements cannot presently be determined.
The Pennsylvania Department of Environmental Resources (DER)
issued regulations dealing with the storage, treatment,
transportation and disposal of residual waste such as coal ash and
scrubber sludge. These regulations impose additional requirements
relating to permitting, ground water monitoring, leachate
collection systems, closure, liability insurance and operating
matters. Penn Power recently entered into an agreement with the
Pennsylvania Department of Environmental Protection (formerly DER)
resolving the major repermitting issues for the Bruce Mansfield
Plant's waste disposal facility. As a result of the agreement, the
Companies expect that the increased costs of compliance with these
regulations will not be material.
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Summary
Environmental controls are still in the process of
development and require, in many instances, balancing the needs for
additional quantities of energy in future years and the need to
protect the environment. As a result, the Companies cannot now
estimate the precise effect of existing and potential regulations
and legislation upon any of their existing and proposed facilities
and operations or upon their ability to issue additional first
mortgage bonds under their respective mortgages. These mortgages
contain covenants by the Companies to observe and conform to all
valid governmental requirements at the time applicable unless in
course of contest, and provisions which, in effect, prevent the
issuance of additional bonds if there is a completed default under
the mortgage. The provisions of each of the mortgages, in effect,
also require, in the opinion of counsel for the respective
Companies, that certification of property additions as the basis
for the issuance of bonds or other action under the mortgages be
accompanied by an opinion of counsel that the company certifying
such property additions has all governmental permissions at the
time necessary for its then current ownership and operation of such
property additions. The Companies intend to contest any
requirements they deem unreasonable or impossible for compliance or
otherwise contrary to the public interest. Developments in these
and other areas of regulation may require the Companies to modify,
supplement or replace equipment and facilities, and may delay or
impede the construction and operation of new facilities, at costs
which could be substantial.
Fuel Supply
The Companies' sources of generation during 1995 were 74.0%
coal and 26.0% nuclear. Over two-thirds of the Company's annual
coal purchase requirements are supplied under long-term contracts.
These contracts have minimum annual tonnage levels of approximately
5,300,000 tons (including the Company's portion of the coal
purchase contract relating to the Bruce Mansfield Plant discussed
below). This contract coal is produced primarily from mines located
in Ohio, Pennsylvania, Kentucky and West Virginia; the contracts
expire at various times through February 28, 2003.
The Companies estimate their 1996 coal requirements to be
approximately 9,800,000 tons (including their respective shares of
the coal requirements of CAPCO's W. H. Sammis Unit 7 and the Bruce
Mansfield Plant). See "Environmental Matters" for factors
pertaining to meeting environmental regulations affecting coal-
fired generating units.
The Companies, together with the other CAPCO companies, have
each severally guaranteed (the Company's and Penn Power's composite
percentages being approximately 46.8% and 6.7%, respectively)
certain debt and lease obligations in connection with a coal supply
- 11 -
contract for the Bruce Mansfield Plant (see Note 7 of Notes to
Consolidated Financial Statements). As of December 31, 1995, the
Companies' shares of the guarantees were $72,851,000. The price
under the coal supply contract, which includes certain minimum
payments, has been determined to be sufficient to satisfy the debt
and lease obligations. This contract extends to December 31, 1999.
The Companies' fuel costs (excluding disposal costs) for each
of the five years ended December 31, 1995, were as follows:
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
Cost of fuel consumed per
million BTUs:
Coal $1.36 $1.36 $1.37 $1.40 $1.40
Nuclear $ .65 $ .75 $ .76 $ .83 $ .87
Average fuel cost per
kilowatt-hour
generated (cents) 1.22 1.26 1.31 1.31 1.34
Nuclear Fuel
OES Fuel is the sole lessor for the Companies' nuclear fuel
requirements (see "Capital Requirements" and Note 5F of Notes to
Consolidated Financial Statements).
The Companies and OES Fuel have contracts for the supply of
uranium sufficient to meet projected needs through 2000 and
conversion services sufficient to meet projected needs through
2001. Fabrication services for fuel assemblies have been contracted
by the CAPCO companies for the next four reloads for Beaver Valley
Unit 1, two reloads for Beaver Valley Unit 2 (through approximately
2000 and 1998, respectively), and the next six reloads for Perry
(through approximately 2004). The Companies have a contract with
U.S. Enrichment Corporation for the majority of their enrichment
requirements for nuclear fuel through 2014.
Prior to the expiration of existing commitments, the
Companies intend to make additional arrangements for the supply of
uranium and for the subsequent conversion, enrichment, fabrication,
reprocessing and/or waste disposal services, the specific prices
and availability of which are not known at this time. Due to the
present lack of availability of domestic reprocessing services, to
the continuing absence of any program to begin development of such
reprocessing capability and questions as to the economics of
reprocessing, the Companies are calculating nuclear fuel costs
based on the assumption that spent fuel will not be reprocessed.
On-site spent fuel storage facilities for the Perry Plant are
expected to be adequate through 2010; facilities at Beaver Valley
Units 1 and 2 are expected to be adequate through 2011 and 2005,
respectively. After on-site storage capacity is exhausted,
additional storage capacity will have to be obtained which could
- 12 -
result in significant additional costs unless reprocessing services
or permanent waste disposal facilities become available. The
Federal Nuclear Waste Policy Act of 1982 provides for the
construction of facilities for the disposal of high-level nuclear
wastes, including spent fuel from nuclear power plants operated by
electric utilities; however, the selection of a suitable site has
become embroiled in the political process. Duquesne and CEI have
each previously entered into contracts with the U.S. Department of
Energy for the disposal of spent fuel from the Beaver Valley Power
Station and the Perry Plant, respectively.
System Capacity and Reserves
The 1995 net maximum hourly demand on the Companies of
6,332,000 kilowatts (kW) (including 450,000 kW of firm power sales
which extend through 2005 as discussed under "Competition")
occurred on August 15, 1995. The seasonal capability of the
Companies on that day was 6,489,000 kW. Of that system capability,
2.2% was available to serve additional load, after giving effect to
net firm and capacity purchases at that hour of 864,000 kW and term
power sales to other utilities. Based on existing capacity plans,
the load forecast made in October 1995 and anticipated term power
sales to other utilities, the capacity margins during the 1996-2000
period are expected to range from about 6% to 10%.
Regional Reliability
The Company participates with 26 other electric companies
operating in nine states in the East Central Area Reliability
Coordination Agreement (ECAR), which was organized for the purpose
of furthering the reliability of bulk power supply in the area
through coordination of the planning and operation by the ECAR
members of their bulk power supply facilities. The ECAR members
have established principles and procedures regarding matters
affecting the reliability of the bulk power supply within the ECAR
region. Procedures have been adopted regarding: i) the evaluation
and simulated testing of systems' performance; ii) the
establishment of minimum levels of daily operating reserves; iii)
the development of a program regarding emergency procedures during
conditions of declining system frequency; and iv) the basis for
uniform rating of generating equipment.
Competition
The Companies compete with other utilities for intersystem
bulk power sales and for sales to municipalities and cooperatives.
The Companies compete with suppliers of natural gas and other forms
of energy in connection with their industrial and commercial sales
and in the home climate control market, both with respect to new
customers and conversions, and with all other suppliers of
electricity. To date, there has been no substantial cogeneration by
the Companies' customers.
- 13 -
Technological advances and regulatory changes are driving
forces toward increasing competition in the energy market. In
addition, many large electricity users continue to push for some
form of retail wheeling, which would enable retail customers to
purchase electricity from producers other than the local utility.
In February 1996, the PUCO approved a change allowing large
industrial customers that have interruptible service contracts to
buy their power from other sources when they have been advised by
their local utility that service will be interrupted. While
regulators appear to be reluctant to pursue full retail wheeling
(primarily because of the adverse impact retail wheeling would have
on small users) the debate could place further downward pressure on
the Companies' prices in the future.
In an effort to more fully utilize their facilities and hold
down rates to their other customers, the Companies have entered
into a long-term power sales agreement with another utility.
Currently, the Companies are selling 450,000 kW annually under this
contract through December 31, 2005. The Companies have the option
to reduce this commitment by 150,000 kW, with three years advance
notice.
Research and Development
The Company participates in funding the Electric Power
Research Institute (EPRI), which was formed for the purpose of
expanding electric research and development under the voluntary
sponsorship of the nation's electric utility industry - public,
private and cooperative. Its goal is to mutually benefit utilities
and their customers by promoting the development of new and
improved technologies to help the utility industry meet present and
future electric energy needs in environmentally and economically
acceptable ways. EPRI conducts research on all aspects of electric
power production and use, including fuels, generating, delivery,
energy management and conservation, environmental effects and
energy analysis. The major portion of EPRI research and development
projects is directed toward practical solutions and their
applications to problems currently facing the electric utility
industry. In 1995, approximately 82% of the Company's research and
development expenditures were related to EPRI.
The Company also participates in various research and
development efforts by sponsoring clean coal technology
demonstration projects at Company-owned coal-fired units. These
projects are designed to derive alternate ways of using coal that
would otherwise be environmentally unacceptable. In addition to
researching environmentally acceptable ways of burning coal, the
Company is also researching technology which will produce ash waste
with properties and characteristics different from present fly ash
and bottom ash, with the initial goal of producing marketable
products for use in agronomy and civil engineering applications.
- 14 -
Executive Officers
The executive officers are elected at the annual organization
meeting of the Board of Directors, held immediately after the
annual meeting of stockholders, and hold office until the next such
organization meeting, unless the Board of Directors shall otherwise
determine, or unless a resignation is submitted.
Position Held During
Name Age Past Five Years Dates
- ---------------- --- ----------------------------- -------------
W. R. Holland 59 President and Chief Executive
Officer 1993-present
President and Chief Operating
Officer 1991-1993
Senior Vice President of
Detroit Edison Company *-1991
A. J. Alexander 44 Senior Vice President and
General Counsel 1991-present
Vice President and General
Counsel *-1991
H. P. Burg 49 Senior Vice President and
Chief Financial Officer *-present
R. J. McWhorter 63 Senior Vice President-
Generating Plant and
Transmission Operations *-present
E. T. Carey 53 Vice President-Division
Operations and Customer
Service 1995-present
Vice President-Marketing
and Customer Service Support 1994-1995
Manager, Performance
Initiatives 1993-1994
Division Manager *-1993
A. R. Garfield 57 Vice President-System
Operations 1991-present
Manager, System Operations *-1991
J. A. Gill 58 Vice President-Administration *-present
B. M. Miller 63 Vice President-Engineering
and Construction *-present
D. L. Yeager 61 Vice President-Special
Projects *-present
- 15 -
N. C. Ashcom 48 Secretary 1994-present
Assistant Secretary *-1994
R. H. Marsh 45 Treasurer 1991-present
Manager, Assets
Administration *-1991
H. L. Wagner 43 Comptroller *-present
*Indicates position held at least since January 1, 1991.
At December 31, 1995, the Company had 3,592 employees and
Penn Power had 1,220 employees for a total of 4,812 employees for
the Companies.
ITEM 2. PROPERTIES
The Companies' respective first mortgage indentures
constitute, in the opinion of the Companies' counsel, direct first
liens on substantially all of the respective Companies' physical
property, subject only to excepted encumbrances, as defined in the
indentures. See Notes 4 and 5 to the Consolidated Financial
Statements for information concerning leases and financing
encumbrances affecting certain of the Companies' properties.
The Companies own, individually or together with one or more
of the other CAPCO companies as tenants in common, and/or lease,
the generating units in service as of March 1, 1996, shown on the
table below.
Net Demonstrated Interest
---------------------
Capacity (kW) Penn
------------------
Companies' Ohio Edison Power
-------------
Plant-Location Unit Total Entitlement Owned Leased Owned
- ---------------- ---- --------- ----------- ------- ------- -------
Coal-Fired Units
R.E. Burger- 3-5 406,000 406,000 100.00% - -
Shadyside, OH
B. Mansfield- 1 780,000 501,000 60.00% - 4.20%
Shippingport, PA 2 780,000 360,000 39.30% - 6.80%
3 800,000 335,000 35.60% - 6.28%
New Castle- 3-5 333,000 333,000 - - 100.00%
W. Pittsburg, PA
Niles-Niles, OH 1-2 216,000 216,000 100.00% - -
W.H. Sammis- 1-6 1,620,000 1,620,000 100.00% - -
- 16 -
Stratton, OH 7 600,000 413,000 48.00% - 20.80%
Nuclear Units
Beaver Valley- 1 810,000 425,000 35.00% - 17.50%
Shippingport, PA 2 820,000 343,000 20.22% 21.66% -
Perry- 1,194,000 421,000 17.42%* 12.58% 5.24%
N. Perry Village, OH
Oil/Gas-Fired Units
Edgewater-Lorain,
OH 4 100,000 100,000 100.00% - -
West Lorain-
Lorain, OH 1 120,000 120,000 100.00% - -
Other 164,000 164,000 84.82% - 15.18%
---------
Total 5,757,000
=========
* Represents portion leased from a wholly owned subsidiary of the
Company.
Prolonged outages of existing generating units might make it
necessary for the Companies, depending upon the demand for electric
service upon their system, to use to a greater extent than
otherwise, less efficient and less economic generating units, or
purchased power, and in some cases may require the reduction of
load during peak periods under the Companies' interruptible
programs, all to an extent not presently determinable.
The Companies' generating plants and load centers are
connected by a transmission system consisting of elements having
various voltage ratings ranging from 23 kilovolts (kV) to 345 kV.
The Companies' overhead and underground transmission lines
aggregate 4,576 miles.
The Companies' electric distribution systems include 26,114
miles of overhead pole line and underground conduit carrying
primary, secondary and street lighting circuits. They own,
individually or together with one or more of the other CAPCO
companies as tenants in common, 443 substations with a total
installed transformer capacity of 24,380,724 kilovolt-amperes, of
which 69 are transmission substations, including 9 located at
generating plants.
The Company's transmission lines also interconnect with those
of American Electric Power Company, CEI, The Dayton Power and Light
Company, Duquesne, Monongahela Power Company and Toledo; Penn
Power's interconnect with those of Duquesne and West Penn Power
Company. These interconnections make possible utilization by the
Company and Penn Power of generating capacity constructed as a part
- 17 -
of the CAPCO program, as well as providing opportunities for the
sale of power to other utilities.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCK-
HOLDER MATTERS
ITEM 6. SELECTED FINANCIAL DATA
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information called for by Items 5 through 8 is
incorporated herein by reference to the Common Stock Data,
Classification of Holders of Common Stock as of December 31, 1995,
Selected Financial Data, Management's Discussion and Analysis of
Results of Operations and Financial Condition, and Consolidated
Financial Statements included on pages 13 through 30 in the
Company's 1995 Annual Report to Stockholders (Exhibit 13).
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNT-
ING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by Item 10, with respect to
Identification of Directors and with respect to reports required to
be filed under Section 16 of the Securities Exchange Act of 1934,
is incorporated herein by reference to the Company's 1996 Proxy
Statement filed with the Securities and Exchange Commission (SEC)
pursuant to Regulation 14A and, with respect to Identification of
Executive Officers, to "Part I, Item 1. Business- Executive
Officers" herein.
ITEM 11. EXECUTIVE COMPENSATION
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
- 18 -
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Items 11, 12 and 13 is
incorporated herein by reference to the Company's 1996 Proxy
Statement filed with the SEC pursuant to Regulation 14A.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
(a) 1. Financial Statements
Included in Part II of this report and incorporated herein
by reference to the Company's 1995 Annual Report to Stockholders
(Exhibit 13 below) at the pages indicated.
Page No.
--------
Consolidated Statements of Income-Three Years
Ended December 31, 1995........................... 17
Consolidated Balance Sheets-December 31,
1995 and 1994..................................... 18
Consolidated Statements of Retained Earnings-
Three Years Ended December 31, 1995............... 19
Consolidated Statements of Capital Stock and
Other Paid-In Capital-Three Years Ended
December 31, 1995................................. 19
Consolidated Statements of Capitalization-
December 31, 1995 and 1994........................20-21
Consolidated Statements of Cash Flows-Three
Years Ended December 31, 1995..................... 22
Consolidated Statements of Taxes-Three Years
Ended December 31, 1995........................... 23
Notes to Consolidated Financial Statements..........24-30
Report of Independent Public Accountants............ 30
2. Financial Statement Schedules
Included in Part IV of this report:
Page No.
--------
Report of Independent Public Accountants............ 29
Schedule - Three Years Ended December 31, 1995:
II - Consolidated Valuation and
Qualifying Accounts..................... 30
- 19 -
Schedules other than the schedule listed above are omitted
for the reason that they are not required or are not applicable, or
the required information is shown in the financial statements or
notes thereto.
3. Exhibits
Exhibit
Number
- -------
3-1 - Amended Articles of Incorporation, Effective June
21, 1994, constituting the Company's Articles of
Incorporation. (1994 Form 10-K, Exhibit 3-1.)
3-2 - Code of Regulations of the Company as amended
April 24, 1986. (Registration No. 33-5081, Exhibit
(4)(d).)
(B) 4-1 - Indenture dated as of August 1, 1930 between the
Company and Bankers Trust Company, as Trustee, as
amended and supplemented by Supplemental
Indentures:
Dated as of File Reference Exhibit No.
----------- -------------- -----------
March 3, 1931 2-1725 B-1,B-1(a),B-1(b)
November 1, 1935 2-2721 B-4
January 1, 1937 2-3402 B-5
September 1, 1937 Form 8-A B-6
June 13, 1939 2-5462 7(a)-7
August 1, 1974 Form 8-A, August 28, 1974 2(b)
July 1, 1976 Form 8-A, July 28, 1976 2(b)
December 1, 1976 Form 8-A, December 15, 1976 2(b)
June 15, 1977 Form 8-A, June 27, 1977 2(b)
Supplemental Indentures:
Dated as of File Reference Exhibit No.
----------- -------------- -----------
September 1, 1944 2-61146 2(b)(2)
April 1, 1945 2-61146 2(b)(2)
September 1, 1948 2-61146 2(b)(2)
May 1, 1950 2-61146 2(b)(2)
January 1, 1954 2-61146 2(b)(2)
May 1, 1955 2-61146 2(b)(2)
August 1, 1956 2-61146 2(b)(2)
March 1, 1958 2-61146 2(b)(2)
April 1, 1959 2-61146 2(b)(2)
- 20 -
Dated as of File Reference Exhibit No.
----------- -------------- -----------
June 1, 1961 2-61146 2(b)(2)
September 1, 1969 2-34351 2(b)(2)
May 1, 1970 2-37146 2(b)(2)
September 1, 1970 2-38172 2(b)(2)
June 1, 1971 2-40379 2(b)(2)
August 1, 1972 2-44803 2(b)(2)
September 1, 1973 2-48867 2(b)(2)
May 15, 1978 2-66957 2(b)(4)
February 1, 1980 2-66957 2(b)(5)
April 15, 1980 2-66957 2(b)(6)
June 15, 1980 2-68023 (b)(4)(b)(5)
October 1, 1981 2-74059 (4)(d)
October 15, 1981 2-75917 (4)(e)
February 15, 1982 2-75917 (4)(e)
July 1, 1982 2-89360 (4)(d)
March 1, 1983 2-89360 (4)(e)
March 1, 1984 2-89360 (4)(f)
September 15, 1984 2-92918 (4)(d)
September 27, 1984 33-2576 (4)(d)
November 8, 1984 33-2576 (4)(d)
December 1, 1984 33-2576 (4)(d)
December 5, 1984 33-2576 (4)(e)
January 30, 1985 33-2576 (4)(e)
February 25, 1985 33-2576 (4)(e)
July 1, 1985 33-2576 (4)(e)
October 1, 1985 33-2576 (4)(e)
January 15, 1986 33-8791 (4)(d)
May 20, 1986 33-8791 (4)(d)
June 3, 1986 33-8791 (4)(e)
October 1, 1986 33-29827 (4)(d)
July 15, 1989 33-34663 (4)(d)
August 25, 1989 33-34663 (4)(d)
February 15, 1991 33-39713 (4)(d)
May 1, 1991 33-45751 (4)(d)
May 15, 1991 33-45751 (4)(d)
September 15, 1991 33-45751 (4)(d)
April 1, 1992 33-48931 (4)(d)
June 15, 1992 33-48931 (4)(d)
September 15, 1992 33-48931 (4)(e)
April 1, 1993 33-51139 (4)(d)
June 15, 1993 33-51139 (4)(d)
September 15, 1993 33-51139 (4)(d)
November 15, 1993 1-2578 (4)(2)
April 1, 1995 (A) (4)(2)
May 1, 1995 (A) (4)(2)
July 1, 1995 (A) (4)(2)
- 21 -
Exhibit
Number
- -------
10-1 - Administration Agreement between the CAPCO Group
dated as of September 14, 1967. (Registration
No. 2-43102, Exhibit 5(c)(2).)
10-2 - Amendment No. 1 dated January 4, 1974 to
Administration Agreement between the CAPCO Group
dated as of September 14, 1967. (Registration
No. 2-68906, Exhibit 5(c)(3).)
10-3 - Transmission Facilities Agreement between the
CAPCO Group dated as of September 14, 1967.
(Registration No. 2-43102, Exhibit 5(c)(3).)
10-4 - Amendment No. 1 dated as of January 1, 1993 to
Transmission Facilities Agreement between the
CAPCO Group dated as of September 14, 1967.
(1993 Form 10-K, Exhibit 10-4.)
10-5 - Agreement for the Termination or Construction of
Certain Agreements effective September 1, 1980
among the CAPCO Group. (Registration No. 2-
68906, Exhibit 10-4.)
10-6 - Amendment dated as of December 23, 1993 to
Agreement for the Termination or Construction of
Certain Agreements effective September 1, 1980
among the CAPCO Group. (1993 Form 10-K, Exhibit
10-6.)
10-7 - CAPCO Basic Operating Agreement, as amended
September 1, 1980. (Registration No. 2-68906,
Exhibit 10-5.)
10-8 - Amendment No. 1 dated August 1, 1981, and
Amendment No. 2 dated September 1, 1982 to CAPCO
Basic Operating Agreement, as amended
September 1, 1980. (September 30, 1981
Form 10-Q, Exhibit 20-1 and 1982 Form 10-K,
Exhibit 19-3, respectively.)
10-9 - Amendment No. 3 dated July 1, 1984 to CAPCO
Basic Operating Agreement, as amended
September 1, 1980. (1985 Form 10-K, Exhibit
10-7.)
10-10 - Basic Operating Agreement between the CAPCO
Companies as amended October 1, 1991. (1991 Form
10-K, Exhibit 10-8.)
- 22 -
Exhibit
Number
- -------
10-11 - Basic Operating Agreement between the CAPCO
Companies as amended January 1, 1993. (1993 Form
10-K, Exhibit 10-11.)
10-12 - Memorandum of Agreement effective as of
September 1, 1980 among the CAPCO Group. (1982
Form 10-K, Exhibit 19-2.)
10-13 - Operating Agreement for Beaver Valley Power
Station Units Nos. 1 and 2 as Amended and
Restated September 15, 1987, by and between the
CAPCO Companies. (1987 Form 10-K, Exhibit 10-
15.)
10-14 - Construction Agreement with respect to Perry
Plant between the CAPCO Group dated as of July
22, 1974. (Registration No. 2-52251 of Toledo
Edison Company, Exhibit 5(yy).)
10-15 - Participation Agreement No. 1 relating to the
financing of the development of certain coal
mines, dated as of October 1, 1973, among Quarto
Mining Company, the CAPCO Group, Energy
Properties, Inc., General Electric Credit
Corporation, the Loan Participants listed in
Schedules A and B thereto, Central National Bank
of Cleveland, as Owner Trustee, National City
Bank, as Loan Trustee, and Owner Trustee,
National City Bank, as Loan Trustee, and
National City Bank, as Bond Trustee.
(Registration No. 2-61146, Exhibit 5(e)(1).)
10-16 - Amendment No. 1 dated as of September 15, 1978
to Participation Agreement No. 1 dated as of
October 1, 1973 among Quarto Mining Company, the
CAPCO Group, Energy Properties, Inc., General
Electric Credit Corporation, the Loan
Participants listed in Schedules A and B
thereto, Central National Bank of Cleveland as
Owner Trustee, National City Bank as Loan
Trustee and National City Bank as Bond Trustee.
(Registration No. 2-68906 of Pennsylvania Power
Company, Exhibit 5(e)(2).)
10-17 - Participation Agreement No. 2 relating to the
financing of the development of certain coal
mines, dated as of August 1, 1974, among Quarto
Mining Company, the CAPCO Group, Energy
Properties, Inc., General Electric Credit
- 23 -
Exhibit
Number
- -------
Corporation, the Loan Participants listed in
Schedules A and B thereto, Central National Bank
of Cleveland, as Owner Trustee, National City
Bank, as Loan Trustee, and National City Bank,
as Bond Trustee. (Registration No. 2-53059,
Exhibit 5(h)(2).)
10-18 - Amendment No. 1 dated as of September 15, 1978
to Participation Agreement No. 2 dated as of
August 1, 1974 among Quarto Mining Company, the
CAPCO Group, Energy Properties, Inc., General
Electric Credit Corporation, the Loan
Participants listed in Schedules A and B
thereto, Central National Bank of Cleveland as
Owner Trustee, National City Bank as Loan
Trustee and National City Bank as Bond Trustee.
(Registration No. 2-68906 of Pennsylvania Power
Company, Exhibit 5(e)(4).)
10-19 - Participation Agreement No. 3 dated as of
September 15, 1978 among Quarto Mining Company,
the CAPCO Companies, Energy Properties, Inc.,
General Electric Credit Corporation, the Loan
Participants listed in Schedules A and B
thereto, Central National Bank of Cleveland as
Owner Trustee, and National City Bank as Loan
Trustee and Bond Trustee. (Registration No. 2-
68906 of Pennsylvania Power Company, Exhibit
5(e)(5).)
10-20 - Participation Agreement No. 4 dated as of
October 31, 1980 among Quarto Mining Company,
the CAPCO Group, the Loan Participants listed in
Schedule A thereto and National City Bank as
Bond Trustee. (Registration No. 2- 68906 of
Pennsylvania Power Company, Exhibit 10-16.)
10-21 - Participation Agreement dated as of May 1, 1986,
among Quarto Mining Company, the CAPCO
Companies, the Loan Participants thereto, and
National City Bank as Bond Trustee. (1986 Form
10-K, Exhibit 10-22.)
10-22 - Participation Agreement No. 6 dated as of
December 1, 1991 among Quarto Mining Company,
The Cleveland Electric Illuminating Company,
Duquesne Light Company, Ohio Edison Company,
Pennsylvania Power Company, the Toledo Edison
Company, the Loan Participants listed in
- 24 -
Exhibit
Number
- -------
Schedule A thereto, National City Bank, as
Mortgage Bond Trustee and National City Bank, as
Refunding Bond Trustee. (1991 Form 10-K, Exhibit
10-19.)
10-23 - Agreement entered into as of October 20, 1981
among the CAPCO Companies regarding the use of
Quarto coal at Mansfield Units 1, 2 and 3. (1981
Form 10-K, Exhibit 20-1.)
10-24 - Restated Option Agreement dated as of May 1,
1983 by and between the North American Coal
Corporation and the CAPCO Companies. (1983 Form
10-K, Exhibit 19-1.)
10-25 - Trust Indenture and Mortgage dated as of October
1, 1973 between Quarto Mining Company and
National City Bank, as Bond Trustee, together
with Guaranty dated as of October 1, 1973 with
respect thereto by the CAPCO Group.
(Registration No. 2-61146, Exhibit 5(e)(5).)
10-26 - Amendment No. 1 dated August 1, 1974 to Trust
Indenture and Mortgage dated as of October 1,
1973 between Quarto Mining Company and National
City Bank, as Bond Trustee, together with
Amendment No. 1 dated August 1, 1974 to Guaranty
dated as of October 1, 1973 with respect thereto
by the CAPCO Group. (Registration No. 2-53059,
Exhibit 5(h)(2).)
10-27 - Amendment No. 2 dated as of September 15, 1978
to the Trust Indenture and Mortgage dated as of
October 1, 1973, as amended, between Quarto
Mining Company and National City Bank, as Bond
Trustee, together with Amendment No. 2 dated as
of September 15, 1978 to Guaranty dated as of
October 1, 1973 with respect to the CAPCO Group.
(Registration No. 2-68906 of Pennsylvania Power
Company, Exhibits 5(e)(11) and 5(e)(12).)
10-28 - Amendment No. 3 dated as of October 31, 1980, to
Trust Indenture and Mortgage dated as of October
1, 1973, as amended between Quarto Mining
Company and National City Bank as Bond Trustee.
(Registration No. 2-68906 of Pennsylvania Power
Company, Exhibit 10-16.)
- 25 -
Exhibit
Number
- -------
10-29 - Amendment No. 4 dated as of July 1, 1985 to the
Trust Indenture and Mortgage dated as of October
1, 1973, as amended between Quarto Mining
Company and National City Bank as Bond Trustee.
(1985 Form 10-K, Exhibit 10-28.)
10-30 - Amendment No. 5 dated as of May 1, 1986, to the
Trust Indenture and Mortgage between Quarto and
National City Bank as Bond Trustee. (1986 Form
10-K, Exhibit 10-30.)
10-31 - Amendment No. 6 dated as of December 1, 1991, to
the Trust Indenture and Mortgage dated as of
October 1, 1973, between Quarto Mining Company
and National City Bank, as Bond Trustee. (1991
Form 10-K, Exhibit 10-28.)
10-32 - Trust Indenture dated as of December 1, 1991,
between Quarto Mining Company and National City
Bank, as Bond Trustee. (1991 Form 10-K, Exhibit
10-29.)
10-33 - Amendment No. 3 dated as of October 31, 1980 to
the Bond Guaranty dated as of October 1, 1973,
as amended, with respect to the CAPCO Group.
(Registration No. 2- 68906 of Pennsylvania Power
Company, Exhibit 10-16.)
10-34 - Amendment No. 4 dated as of July 1, 1985 to the
Bond Guaranty dated as of October 1, 1973, as
amended, by the CAPCO Companies to National City
Bank as Bond Trustee. (1985 Form 10-K, Exhibit
10-30.)
10-35 - Amendment No. 5 dated as of May 1, 1986, to the
Bond Guaranty by the CAPCO Companies to National
City Bank as Bond Trustee. (1986 Form 10-K,
Exhibit 10-33.)
10-36 - Amendment No. 6A dated as of December 1, 1991,
to the Bond Guaranty dated as of October 1,
1973, by The Cleveland Electric Illuminating
Company, Duquesne Light Company, Ohio Edison
Company, Pennsylvania Power Company, the Toledo
Edison Company to National City Bank, as Bond
Trustee. (1991 Form 10-K, Exhibit 10-33.)
10-37 - Amendment No. 6B dated as of December 30, 1991,
to the Bond Guaranty dated as of October 1, 1973
- 26 -
Exhibit
Number
- -------
by The Cleveland Electric Illuminating Company,
Duquesne Light Company, Ohio Edison Company,
Pennsylvania Power Company, the Toledo Edison
Company to National City Bank, as Bond Trustee.
(1991 Form 10-K, Exhibit 10-34.)
10-38 - Bond Guaranty dated as of December 1, 1991, by
The Cleveland Electric Illuminating Company,
Duquesne Light Company, Ohio Edison Company,
Pennsylvania Power Company, the Toledo Edison
Company to National City Bank, as Bond Trustee.
(1991 Form 10-K, Exhibit 10-35.)
10-39 - Open end Mortgage dated as of October 1, 1973
between Quarto Mining Company and the CAPCO
Companies and Amendment No. 1 thereto, dated as
of September 15, 1978. (Registration No. 2-68906
of Pennsylvania Power Company, Exhibit 10-23.)
10-40 - Repayment and Security Agreement and Assignment
of Lease dated as of October 1, 1973 between
Quarto Mining Company and Ohio Edison Company as
Agent for the CAPCO Companies and Amendment No.
1 thereto, dated as of September 15, 1978. (1980
Form 10-K, Exhibit 20-2.)
10-41 - Restructuring Agreement dated as of April 1,
1985 among Quarto Mining Company, the Company
and the other CAPCO Companies, Energy
Properties, Inc., General Electric Credit
Corporation, the Loan Participants signatories
thereto, Central National Bank of Cleveland, as
Owner Trustee and National City Bank as Loan
Trustee and Bond Trustee. (1985 Form 10-K,
Exhibit 10-33.)
10-42 - Unsecured Note Guaranty dated as of July 1, 1985
by the CAPCO Companies to General Electric
Credit Corporation. (1985 Form 10-K, Exhibit 10-
34.)
10-43 - Memorandum of Understanding dated March 31, 1985
among the CAPCO Companies. (1985 Form 10-K,
Exhibit 10-35.)
(A)(C) 10-44 - Ohio Edison System Executive Supplemental Life
Insurance Plan.
- 27 -
Exhibit
Number
- -------
(A)(C) 10-45 - Ohio Edison System Executive Incentive
Compensation Plan.
(A)(C) 10-46 - Ohio Edison System Restated and Amended
Executive Deferred Compensation Plan.
(A)(C) 10-47 - Ohio Edison System Restated and Amended
Supplemental Executive Retirement Plan.
(A)(C) 10-48 - Severance pay agreement between Ohio Edison
Company and W. R. Holland.
(A)(C) 10-49 - Severance pay agreement between Ohio Edison
Company and H. P. Burg.
(A)(C) 10-50 - Severance pay agreement between Ohio Edison
Company and A. J. Alexander.
(A)(C) 10-51 - Severance pay agreement between Ohio Edison
Company and J. A. Gill.
(D) 10-52 - Participation Agreement dated as of March 16,
1987 among Perry One Alpha Limited Partnership,
as Owner Participant, the Original Loan
Participants listed in Schedule 1 Hereto, as
Original Loan Participants, PNPP Funding
Corporation, as Funding Corporation, The First
National Bank of Boston, as Owner Trustee,
Irving Trust Company, as Indenture Trustee and
Ohio Edison Company, as Lessee. (1986 Form 10-K,
Exhibit 28-1.)
(D) 10-53 - Amendment No. 1 dated as of September 1, 1987 to
Participation Agreement dated as of March 16,
1987 among Perry One Alpha Limited Partnership,
as Owner Participant, the Original Loan
Participants listed in Schedule 1 thereto, as
Original Loan Participants, PNPP Funding
Corporation, as Funding Corporation, The First
National Bank of Boston, as Owner Trustee,
Irving Trust Company (now The Bank of New York),
as Indenture Trustee, and Ohio Edison Company,
as Lessee. (1991 Form 10-K, Exhibit 10-46.)
(D) 10-54 - Amendment No. 3 dated as of May 16, 1988 to
Participation Agreement dated as of March 16,
1987, as amended among Perry One Alpha Limited
Partnership, as Owner Participant, PNPP Funding
Corporation, The First National Bank of Boston,
- 28 -
Exhibit
Number
- -------
as Owner Trustee, Irving Trust Company, as
Indenture Trustee, and Ohio Edison Company, as
Lessee. (1992 Form 10-K, Exhibit 10-47.)
(D) 10-55 - Amendment No. 4 dated as of November 1, 1991 to
Participation Agreement dated as of March 16,
1987 among Perry One Alpha Limited Partnership,
as Owner Participant, PNPP Funding Corporation,
as Funding Corporation, PNPP II Funding
Corporation, as New Funding Corporation, The
First National Bank of Boston, as Owner Trustee,
The Bank of New York, as Indenture Trustee and
Ohio Edison Company, as Lessee. (1991 Form 10-K,
Exhibit 10-47.)
(D) 10-56 - Amendment No. 5 dated as of November 24, 1992 to
Participation Agreement dated as of March 16,
1987, as amended, among Perry One Alpha Limited
Partnership, as Owner Participant, PNPP Funding
Corporation, as Funding Corporation, PNPPII
Funding Corporation, as New Funding Corporation,
The First National Bank of Boston, as Owner
Trustee, The Bank of New York, as Indenture
Trustee and Ohio Edison Company as Lessee. (1992
Form 10-K, Exhibit 10-49.)
(D) 10-57 - Amendment No. 6 dated as of January 12, 1993 to
Participation Agreement dated as of March 16,
1987 among Perry One Alpha Limited Partnership,
as Owner Participant, PNPP Funding Corporation,
as Funding Corporation, PNPP II Funding
Corporation, as New Funding Corporation, The
First National Bank of Boston, as Owner Trustee,
The Bank of New York, as Indenture Trustee and
Ohio Edison Company, as Lessee. (1992 Form 10-K,
Exhibit 10-50.)
(D) 10-58 - Amendment No. 7 dated as of October 12, 1994 to
Participation Agreement dated as of March 16,
1987 as amended, among Perry One Alpha Limited
Partnership, as Owner Participant, PNPP Funding
Corporation, as Funding Corporation, PNPP II
Funding Corporation, as New Funding Corporation,
The First National Bank of Boston, as Owner
Trustee, The Bank of New York, as Indenture
Trustee and Ohio Edison Company, as Lessee.
(1994 Form 10-K, Exhibit 10-54.)
- 29 -
Exhibit
Number
- -------
(D) 10-59 - Facility Lease dated as of March 16, 1987
between The First National Bank of Boston, as
Owner Trustee, with Perry One Alpha Limited
Partnership, Lessor, and Ohio Edison Company,
Lessee. (1986 Form 10-K, Exhibit 28-2.)
(D) 10-60 - Amendment No. 1 dated as of September 1, 1987 to
Facility Lease dated as of March 16, 1987
between The First National Bank of Boston, as
Owner Trustee, Lessor and Ohio Edison Company,
Lessee. (1991 Form 10-K, Exhibit 10-49.)
(D) 10-61 - Amendment No. 2 dated as of November 1, 1991, to
Facility Lease dated as of March 16, 1987,
between The First National Bank of Boston, as
Owner Trustee, Lessor and Ohio Edison Company,
Lessee. (1991 Form 10-K, Exhibit 10-50.)
(D) 10-62 - Amendment No. 3 dated as of November 24, 1992 to
Facility Lease dated as of March 16, 1987, as
amended, between The First National Bank of
Boston, as Owner Trustee, with Perry One Alpha
Limited Partnership, as Owner Participant and
Ohio Edison Company, as Lessee. (1992 Form 10-K,
Exhibit 10-54.)
(D) 10-63 - Amendment No. 4 dated as of January 12, 1993 to
Facility Lease dated as of March 16, 1987 as
amended, between, The First National Bank of
Boston, as Owner Trustee, with Perry One Alpha
Limited Partnership, as Owner Participant, and
Ohio Edison Company, as Lessee. (1994 Form 10-K,
Exhibit 10-59.)
(D) 10-64 - Amendment No. 5 dated as of October 12, 1994 to
Facility Lease dated as of March 16, 1987 as
amended, between, The First National Bank of
Boston, as Owner Trustee, with Perry One Alpha
Limited Partnership, as Owner Participant, and
Ohio Edison Company, as Lessee. (1994 Form 10-K,
Exhibit 10-60.)
(D) 10-65 - Letter Agreement dated as of March 19, 1987
between Ohio Edison Company, Lessee, and The
First National Bank of Boston, as Owner Trustee
under a Trust dated March 16, 1987 with Chase
Manhattan Realty Leasing Corporation, required
by Section 3(d) of the Facility Lease. (1986
Form 10-K, Exhibit 28-3.)
- 30 -
Exhibit
Number
- -------
(D) 10-66 - Ground Lease dated as of March 16, 1987 between
Ohio Edison Company, Ground Lessor, and The
First National Bank of Boston, as Owner Trustee
under a Trust Agreement, dated as of March 16,
1987, with the Owner Participant, Tenant. (1986
Form 10-K, Exhibit 28-4.)
(D) 10-67 - Trust Agreement dated as of March 16, 1987
between Perry One Alpha Limited Partnership, as
Owner Participant, and The First National Bank
of Boston. (1986 Form 10-K, Exhibit 28-5.)
(D) 10-68 - Trust Indenture, Mortgage, Security Agreement
and Assignment of Facility Lease dated as of
March 16, 1987 between The First National Bank
of Boston, as Owner Trustee under a Trust
Agreement dated as of March 16, 1987 with Perry
One Alpha Limited Partnership, and Irving Trust
Company, as Indenture Trustee. (1986 Form 10-K,
Exhibit 28-6.)
(D) 10-69 - Supplemental Indenture No. 1 dated as of
September 1, 1987 to Trust Indenture, Mortgage,
Security Agreement and Assignment of Facility
Lease dated as of March 16, 1987 between The
First National Bank of Boston as Owner Trustee
and Irving Trust Company (now The Bank of New
York), as Indenture Trustee. (1991 Form 10-K,
Exhibit 10-55.)
(D) 10-70 - Supplemental Indenture No. 2 dated as of
November 1, 1991 to Trust Indenture, Mortgage,
Security Agreement and Assignment of Facility
Lease dated as of March 16, 1987 between The
First National Bank of Boston, as Owner Trustee
and The Bank of New York, as Indenture Trustee.
(1991 Form 10-K, Exhibit 10-56.)
(D) 10-71 - Tax Indemnification Agreement dated as of March
16, 1987 between Perry One, Inc. and PARock
Limited Partnership as General Partners and Ohio
Edison Company, as Lessee. (1986 Form 10-K,
Exhibit 28-7.)
(D) 10-72 - Amendment No. 1 dated as of November 1, 1991 to
Tax Indemnification Agreement dated as of March
16, 1987 between Perry One, Inc. and Parock
Limited Partnership and Ohio Edison Company.
(1991 Form 10-K, Exhibit 10-58.)
- 31 -
Exhibit
Number
- -------
(D) 10-73 - Amendment No. 2 dated as of January 12, 1993 to
Tax Indemnification Agreement dated as of
March 16, 1987 between Perry One, Inc. and
Parock Limited Partnership and Ohio Edison
Company. (1994 Form 10-K, Exhibit 10-69.)
(D) 10-74 - Amendment No. 3 dated as of October 12, 1994 to
Tax Indemnification Agreement dated as of
March 16, 1987 between Perry One, Inc. and
Parock Limited Partnership and Ohio Edison
Company. (1994 Form 10-K, Exhibit 10-70.)
(D) 10-75 - Partial Mortgage Release dated as of March 19,
1987 under the Indenture between Ohio Edison
Company and Bankers Trust Company, as Trustee,
dated as of the 1st day of August, 1930. (1986
Form 10-K, Exhibit 28-8.)
(D) 10-76 - Assignment, Assumption and Further Agreement
dated as of March 16, 1987 among The First
National Bank of Boston, as Owner Trustee under
a Trust Agreement, dated as of March 16, 1987,
with Perry One Alpha Limited Partnership, The
Cleveland Electric Illuminating Company,
Duquesne Light Company, Ohio Edison Company,
Pennsylvania Power Company and Toledo Edison
Company. (1986 Form 10-K, Exhibit 28-9.)
(D) 10-77 - Additional Support Agreement dated as of March
16, 1987 between The First National Bank of
Boston, as Owner Trustee under a Trust
Agreement, dated as of March 16, 1987, with
Perry One Alpha Limited Partnership, and Ohio
Edison Company. (1986 Form 10-K, Exhibit 28-10.)
(D) 10-78 - Bill of Sale, Instrument of Transfer and
Severance Agreement dated as of March 19, 1987
between Ohio Edison Company, Seller, and The
First National Bank of Boston, as Owner Trustee
under a Trust Agreement, dated as of March 16,
1987, with Perry One Alpha Limited Partnership.
(1986 Form 10-K, Exhibit 28- 11.)
(D) 10-79 - Easement dated as of March 16, 1987 from Ohio
Edison Company, Grantor, to The First National
Bank of Boston, as Owner Trustee under a Trust
Agreement, dated as of March 16, 1987, with
Perry One Alpha Limited Partnership, Grantee.
(1986 Form 10-K, File Exhibit 28-12.)
- 32 -
Exhibit
Number
- -------
10-80 - Participation Agreement dated as of March 16,
1987 among Security Pacific Capital Leasing
Corporation, as Owner Participant, the Original
Loan Participants listed in Schedule 1 Hereto,
as Original Loan Participants, PNPP Funding
Corporation, as Funding Corporation, The First
National Bank of Boston, as Owner Trustee,
Irving Trust Company, as Indenture Trustee and
Ohio Edison Company, as Lessee. (1986 Form 10-K,
as Exhibit 28-13.)
10-81 - Amendment No. 1 dated as of September 1, 1987 to
Participation Agreement dated as of March 16,
1987 among Security Pacific Capital Leasing
Corporation, as Owner Participant, The Original
Loan Participants Listed in Schedule 1 thereto,
as Original Loan Participants, PNPP Funding
Corporation, as Funding Corporation, The First
National Bank of Boston, as Owner Trustee,
Irving Trust Company, as Indenture Trustee and
Ohio Edison Company, as Lessee. (1991 Form 10-K,
Exhibit 10-65.)
10-82 - Amendment No. 4 dated as of November 1, 1991, to
Participation Agreement dated as of March 16,
1987 among Security Pacific Capital Leasing
Corporation, as Owner Participant, PNPP Funding
Corporation, as Funding Corporation, PNPP II
Funding Corporation, as New Funding Corporation,
The First National Bank of Boston, as Owner
Trustee, The Bank of New York, as Indenture
Trustee and Ohio Edison Company, as Lessee.
(1991 Form 10-K, Exhibit 10-66.)
10-83 - Amendment No. 5 dated as of November 24, 1992 to
Participation Agreement dated as of March 16,
1987 as amended among Security Pacific Capital
Leasing Corporation, as Owner Participant, PNPP
Funding Corporation, as Funding Corporation,
PNPP II Funding Corporation, as New Funding
Corporation, The First National Bank of Boston,
as Owner Trustee, The Bank of New York, as
Indenture Trustee and Ohio Edison Company, as
Lessee. (1992 Form 10-K, Exhibit 10-71.)
10-84 - Amendment No. 6 dated as of January 12, 1993 to
Participation Agreement dated as of March 16,
1987 as amended among Security Pacific Capital
Leasing Corporation, as Owner Participant, PNPP
- 33 -
Exhibit
Number
- -------
Funding Corporation, as Funding Corporation,
PNPP II Funding Corporation, as New Funding
Corporation, The First National Bank of Boston,
as Owner Trustee, The Bank of New York, as
Indenture Trustee and Ohio Edison Company, as
Lessee. (1994 Form 10-K, Exhibit 10-80.)
10-85 - Amendment No. 7 dated as of October 12, 1994 to
Participation Agreement dated as of March 16,
1987 as amended among Security Pacific Capital
Leasing Corporation, as Owner Participant, PNPP
Funding Corporation, as Funding Corporation,
PNPP II Funding Corporation, as New Funding
Corporation, The First National Bank of Boston,
as Owner Trustee, The Bank of New York, as
Indenture Trustee and Ohio Edison Company, as
Lessee. (1994 Form 10-K, Exhibit 10-81.)
10-86 - Facility Lease dated as of March 16, 1987
between The First National Bank of Boston, as
Owner Trustee, with Security Pacific Capital
Leasing Corporation, Lessor, and Ohio Edison
Company, as Lessee. (1986 Form 10-K, Exhibit 28-
14.)
10-87 - Amendment No. 1 dated as of September 1, 1987 to
Facility Lease dated as of March 16, 1987
between The First National Bank of Boston as
Owner Trustee, Lessor and Ohio Edison Company,
Lessee. (1991 Form 10-K, Exhibit 10-68.)
10-88 - Amendment No. 2 dated as of November 1, 1991 to
Facility Lease dated as of March 16, 1987
between The First National Bank of Boston as
Owner Trustee, Lessor and Ohio Edison Company,
Lessee. (1991 Form 10-K, Exhibit 10-69.)
10-89 - Amendment No. 3 dated as of November 24, 1992 to
Facility Lease dated as of March 16, 1987, as
amended, between, The First National Bank of
Boston, as Owner Trustee, with Security Pacific
Capital Leasing Corporation, as Owner
Participant and Ohio Edison Company, as Lessee.
(1992 Form 10-K, Exhibit 10-75.)
10-90 - Amendment No. 4 dated as of January 12, 1993 to
Facility Lease dated as of March 16, 1987 as
amended between, The First National Bank of
Boston, as Owner Trustee, with Security Pacific
- 34 -
Exhibit
Number
- -------
Capital Leasing Corporation, as Owner
Participant, and Ohio Edison Company, as Lessee.
(1992 Form 10-K, Exhibit 10-76.)
10-91 - Amendment No. 5 dated as of October 12, 1994 to
Facility Lease dated as of March 16, 1987 as
amended between, The First National Bank of
Boston, as Owner Trustee, with Security Pacific
Capital Leasing Corporation, as Owner
Participant, and Ohio Edison Company, as Lessee.
(1994 Form 10-K, Exhibit 10-87.)
10-92 - Letter Agreement dated as of March 19, 1987
between Ohio Edison Company, as Lessee, and The
First National Bank of Boston, as Owner Trustee
under a Trust, dated as of March 16, 1987, with
Security Pacific Capital Leasing Corporation,
required by Section 3(d) of the Facility Lease.
(1986 Form 10-K, Exhibit 28-15.)
10-93 - Ground Lease dated as of March 16, 1987 between
Ohio Edison Company, Ground Lessor, and The
First National Bank of Boston, as Owner Trustee
under a Trust Agreement, dated as of March 16,
1987, with Perry One Alpha Limited Partnership,
Tenant. (1986 Form 10-K, Exhibit 28-16.)
10-94 - Trust Agreement dated as of March 16, 1987
between Security Pacific Capital Leasing
Corporation, as Owner Participant, and The First
National Bank of Boston. (1986 Form 10-K,
Exhibit 28-17.)
10-95 - Trust Indenture, Mortgage, Security Agreement
and Assignment of Facility Lease dated as of
March 16, 1987 between The First National Bank
of Boston, as Owner Trustee under a Trust
Agreement, dated as of March 16, 1987, with
Security Pacific Capital Leasing Corporation,
and Irving Trust Company, as Indenture Trustee.
(1986 Form 10-K, Exhibit 28-18.)
10-96 - Supplemental Indenture No. 1 dated as of
September 1, 1987 to Trust Indenture, Mortgage,
Security Agreement and Assignment of Facility
Lease dated as of March 16, 1987 between The
First National Bank of Boston, as Owner Trustee
and Irving Trust Company (now The Bank of New
York), as Indenture Trustee. (1991 Form 10-K,
Exhibit 10-74.)
- 35 -
Exhibit
Number
- -------
10-97 - Supplemental Indenture No. 2 dated as of
November 1, 1991 to Trust Indenture, Mortgage,
Security Agreement and Assignment of Facility
Lease dated as of March 16, 1987 between The
First National Bank of Boston, as Owner Trustee
and The Bank of New York, as Indenture Trustee.
(1991 Form 10-K, Exhibit 10-75.)
10-98 - Tax Indemnification Agreement dated as of March
16, 1987 between Security Pacific Capital
Leasing Corporation, as Owner Participant, and
Ohio Edison Company, as Lessee. (1986 Form 10-K,
Exhibit 28-19.)
10-99 - Amendment No. 1 dated as of November 1, 1991 to
Tax Indemnification Agreement dated as of March
16, 1987 between Security Pacific Capital
Leasing Corporation and Ohio Edison Company.
(1991 Form 10-K, Exhibit 10-77.)
10-100 - Amendment No. 2 dated as of January 12, 1993 to
Tax Indemnification Agreement dated as of
March 16, 1987 between Security Pacific Capital
Leasing Corporation and Ohio Edison Company.
(1994 Form 10-K, Exhibit 10-96.)
10-101 - Amendment No. 3 dated as of October 12, 1994 to
Tax Indemnification Agreement dated as of
March 16, 1987 between Security Pacific Capital
Leasing Corporation and Ohio Edison Company.
(1994 Form 10-K, Exhibit 10-97.)
10-102 - Assignment, Assumption and Further Agreement
dated as of March 16, 1987 among The First
National Bank of Boston, as Owner Trustee under
a Trust Agreement, dated as of March 16, 1987,
with Security Pacific Capital Leasing
Corporation, The Cleveland Electric Illuminating
Company, Duquesne Light Company, Ohio Edison
Company, Pennsylvania Power Company and Toledo
Edison Company. (1986 Form 10-K, Exhibit 28-20.)
10-103 - Additional Support Agreement dated as of March
16, 1987 between The First National Bank of
Boston, as Owner Trustee under a Trust
Agreement, dated as of March 16, 1987, with
Security Pacific Capital Leasing Corporation,
and Ohio Edison Company. (1986 Form 10-K,
Exhibit 28-21.)
- 36 -
Exhibit
Number
- -------
10-104 - Bill of Sale, Instrument of Transfer and
Severance Agreement dated as of March 19, 1987
between Ohio Edison Company, Seller, and The
First National Bank of Boston, as Owner Trustee
under a Trust Agreement, dated as of March 16,
1987, with Security Pacific Capital Leasing
Corporation, Buyer. (1986 Form 10-K, Exhibit 28-
22.)
10-105 - Easement dated as of March 16, 1987 from Ohio
Edison Company, Grantor, to The First National
Bank of Boston, as Owner Trustee under a Trust
Agreement, dated as of March 16, 1987, with
Security Pacific Capital Leasing Corporation,
Grantee. (1986 Form 10-K, Exhibit 28-23.)
10-106 - Refinancing Agreement dated as of November 1,
1991 among Perry One Alpha Limited Partnership,
as Owner Participant, PNPP Funding Corporation,
as Funding Corporation, PNPP II Funding
Corporation, as New Funding Corporation, The
First National Bank of Boston, as Owner Trustee,
The Bank of New York, as Indenture Trustee, The
Bank of New York, as Collateral Trust Trustee,
The Bank of New York, as New Collateral Trust
Trustee and Ohio Edison Company, as Lessee.
(1991 Form 10-K, Exhibit 10-82.)
10-107 - Refinancing Agreement dated as of November 1,
1991 among Security Pacific Leasing Corporation,
as Owner Participant, PNPP Funding Corporation,
as Funding Corporation, PNPP II Funding
Corporation, as New Funding Corporation, The
First National Bank of Boston, as Owner Trustee,
The Bank of New York, as Indenture Trustee, The
Bank of New York, as Collateral Trust Trustee,
The Bank of New York, as New Collateral Trust
Trustee and Ohio Edison Company, as Lessee.
(1991 Form 10-K, Exhibit 10-83.)
10-108 - Ohio Edison Company Master Decommissioning Trust
Agreement for Perry Nuclear Power Plant Unit
One, Perry Nuclear Power Plant Unit Two, Beaver
Valley Power Station Unit One and Beaver Valley
Power Station Unit Two dated July 1, 1993. (1993
Form 10-K, Exhibit 10-94.)
10-109 - Nuclear Fuel Lease dated as of March 31, 1989,
between OES Fuel, Incorporated, as Lessor, and
- 37 -
Exhibit
Number
- -------
Ohio Edison Company, as Lessee. (1989 Form 10-K,
Exhibit 10-62.)
10-110 - Receivables Purchase Agreement dated as
November 28, 1989, as amended and restated as of
April 23, 1993, between OES Capital,
Incorporated, Corporate Asset Funding Company,
Inc. and Citicorp North America, Inc. (1994 Form
10-K, Exhibit 10-106.)
10-111 - Guarantee Agreement entered into by Ohio Edison
Company dated as of January 17, 1991. (1990 Form
10-K, Exhibit 10-64).
10-112 - Transfer and Assignment Agreement among Ohio
Edison Company and Chemical Bank, as trustee
under the OE Power Contract Trust. (1990 Form
10-K, Exhibit 10-65).
10-113 - Renunciation of Payments and Assignment among
Ohio Edison Company, Monongahela Power Company,
West Penn Power Company, and the Potomac Edison
Company dated as of January 4, 1991. (1990 Form
10-K, Exhibit 10-66).
10-114 - Transfer and Assignment Agreement dated May 20,
1994 among Ohio Edison Company and Chemical
Bank, as trustee under the OE Power Contract
Trust. (1994 Form 10-K, Exhibit 10-110.)
10-115 - Renunciation of Payments and Assignment among
Ohio Edison Company, Monongahela Power Company,
West Penn Power Company, and the Potomac Edison
Company dated as of May 20, 1994. (1994 Form 10-
K, Exhibit 10-111.)
10-116 - Transfer and Assignment Agreement dated
October 12, 1994 among Ohio Edison Company and
Chemical Bank, as trustee under the OE Power
Contract Trust. (1994 Form 10-K, Exhibit 10-
112.)
10-117 - Renunciation of Payments and Assignment among
Ohio Edison Company, Monongahela Power Company,
West Penn Power Company, and the Potomac Edison
Company dated as of October 12, 1994. (1994 Form
10-K, Exhibit 10-113.)
- 38 -
Exhibit
Number
- -------
(E) 10-118 - Participation Agreement dated as of
September 15, 1987, among Beaver Valley Two Pi
Limited Partnership, as Owner Participant, the
Original Loan Participants listed in Schedule 1
Thereto, as Original Loan Participants, BVPS
Funding Corporation, as Funding Corporation, The
First National Bank of Boston, as Owner Trustee,
Irving Trust Company, as Indenture Trustee and
Ohio Edison Company, as Lessee. (1987 Form 10-K,
Exhibit 28-1.)
(E) 10-119 - Amendment No. 1 dated as of February 1, 1988, to
Participation Agreement dated as of
September 15, 1987, among Beaver Valley Two Pi
Limited Partnership, as Owner Participant, the
Original Loan Participants listed in Schedule 1
Thereto, as Original Loan Participants, BVPS
Funding Corporation, as Funding Corporation, The
First National Bank of Boston, as Owner Trustee,
Irving Trust Company, as Indenture Trustee and
Ohio Edison Company, as Lessee. (1987 Form 10-K,
Exhibit 28-2.)
(E) 10-120 - Amendment No. 3 dated as of March 16, 1988 to
Participation Agreement dated as of
September 15, 1987, as amended, among Beaver
Valley Two Pi Limited Partnership, as Owner
Participant, BVPS Funding Corporation, The First
National Bank of Boston, as Owner Trustee,
Irving Trust Company, as Indenture Trustee and
Ohio Edison Company, as Lessee. (1992 Form 10-K,
Exhibit 10-99.)
(E) 10-121 - Amendment No. 4 dated as of November 5, 1992 to
Participation Agreement dated as of
September 15, 1987, as amended, among Beaver
Valley Two Pi Limited Partnership, as Owner
Participant, BVPS Funding Corporation, BVPS II
Funding Corporation, The First National Bank of
Boston, as Owner Trustee, The Bank of New York,
as Indenture Trustee and Ohio Edison Company, as
Lessee. (1992 Form 10-K, Exhibit 10-100.)
(E) 10-122 - Amendment No. 5 dated as of September 30, 1994
to Participation Agreement dated as of
September 15, 1987, as amended, among Beaver
Valley Two Pi Limited Partnership, as Owner
Participant, BVPS Funding Corporation, BVPS II
Funding Corporation, The First National Bank of
- 39 -
Exhibit
Number
- -------
Boston, as Owner Trustee, The Bank of New York,
as Indenture Trustee and Ohio Edison Company, as
Lessee. (1994 Form 10-K, Exhibit 10-118.)
(E) 10-123 - Facility Lease dated as of September 15, 1987,
between The First National Bank of Boston, as
Owner Trustee, with Beaver Valley Two Pi Limited
Partnership, Lessor, and Ohio Edison Company,
Lessee. (1987 Form 10-K, Exhibit 28-3.)
(E) 10-124 - Amendment No. 1 dated as of February 1, 1988, to
Facility Lease dated as of September 15, 1987,
between The First National Bank of Boston, as
Owner Trustee, with Beaver Valley Two Pi Limited
Partnership, Lessor, and Ohio Edison Company,
Lessee. (1987 Form 10-K, Exhibit 28-4.)
(E) 10-125 - Amendment No. 2 dated as of November 5, 1992 to
Facility Lease dated as of September 15, 1987,
as amended, between The First National Bank of
Boston, as Owner Trustee, with Beaver Valley Two
Pi Limited Partnership, as Owner Participant,
and Ohio Edison Company, as Lessee. (1992 Form
10-K, Exhibit 10-103.)
(E) 10-126 - Amendment No. 3 dated as of September 30, 1994
to Facility Lease dated as of September 15,
1987, as amended, between The First National
Bank of Boston, as Owner Trustee, with Beaver
Valley Two Pi Limited Partnership, as Owner
Participant, and Ohio Edison Company, as Lessee.
(1994 Form 10-K, Exhibit 10-122.)
(E) 10-127 - Ground Lease and Easement Agreement dated as of
September 15, 1987, between Ohio Edison Company,
Ground Lessor, and The First National Bank of
Boston, as Owner Trustee under a Trust
Agreement, dated as of September 15, 1987, with
Beaver Valley Two Pi Limited Partnership,
Tenant. (1987 Form 10-K, Exhibit 28- 5.)
(E) 10-128 - Trust Agreement dated as of September 15, 1987,
between Beaver Valley Two Pi Limited
Partnership, as Owner Participant, and The First
National Bank of Boston. (1987 Form 10-K,
Exhibit 28-6.)
(E) 10-129 - Trust Indenture, Mortgage, Security Agreement
and Assignment of Facility Lease dated as of
- 40 -
Exhibit
Number
- -------
September 15, 1987, between The First National
Bank of Boston, as Owner Trustee under a Trust
Agreement dated as of September 15, 1987, with
Beaver Valley Two Pi Limited Partnership, and
Irving Trust Company, as Indenture Trustee.
(1987 Form 10-K, Exhibit 28-7.)
(E) 10-130 - Supplemental Indenture No. 1 dated as of
February 1, 1988 to Trust Indenture, Mortgage,
Security Agreement and Assignment of Facility
Lease dated as of September 15, 1987 between The
First National Bank of Boston, as Owner Trustee
under a Trust Agreement dated as of
September 15, 1987 with Beaver Valley Two Pi
Limited Partnership and Irving Trust Company, as
Indenture Trustee. (1987 Form 10-K, Exhibit 28-
8.)
(E) 10-131 - Tax Indemnification Agreement dated as of
September 15, 1987, between Beaver Valley Two Pi
Inc. and PARock Limited Partnership as General
Partners and Ohio Edison Company, as Lessee.
(1987 Form 10-K, Exhibit 28-9.)
(E) 10-132 - Amendment No. 1 dated as of November 5, 1992 to
Tax Indemnification Agreement dated as of
September 15, 1987, between Beaver Valley Two Pi
Inc. and PARock Limited Partnership as General
Partners and Ohio Edison Company, as Lessee.
(1994 Form 10-K, Exhibit 10-128.)
(E) 10-133 - Amendment No. 2 dated as of September 30, 1994
to Tax Indemnification Agreement dated as of
September 15, 1987, between Beaver Valley Two Pi
Inc. and PARock Limited Partnership as General
Partners and Ohio Edison Company, as Lessee.
(1994 Form 10-K, Exhibit 10-129.)
(E) 10-134 - Tax Indemnification Agreement dated as of
September 15, 1987, between HG Power Plant,
Inc., as Limited Partner and Ohio Edison
Company, as Lessee. (1987 Form 10-K, Exhibit
28-10.)
(E) 10-135 - Amendment No. 1 dated as of November 5, 1992 to
Tax Indemnification Agreement dated as of
September 15, 1987, between HG Power Plant,
Inc., as Limited Partner and Ohio Edison
Company, as Lessee. (1994 Form 10-K, Exhibit 10-
131.)
- 41 -
Exhibit
Number
- -------
(E) 10-136 - Amendment No. 2 dated as of September 30, 1994
to Tax Indemnification Agreement dated as of
September 15, 1987, between HG Power Plant,
Inc., as Limited Partner and Ohio Edison
Company, as Lessee. (1994 Form 10-K, Exhibit 10-
132.)
(E) 10-137 - Assignment, Assumption and Further Agreement
dated as of September 15, 1987, among The First
National Bank of Boston, as Owner Trustee under
a Trust Agreement, dated as of September 15,
1987, with Beaver Valley Two Pi Limited
Partnership, The Cleveland Electric Illuminating
Company, Duquesne Light Company, Ohio Edison
Company, Pennsylvania Power Company and Toledo
Edison Company. (1987 Form 10-K, Exhibit 28-11.)
(E) 10-138 - Additional Support Agreement dated as of
September 15, 1987, between The First National
Bank of Boston, as Owner Trustee under a Trust
Agreement, dated as of September 15, 1987, with
Beaver Valley Two Pi Limited Partnership, and
Ohio Edison Company. (1987 Form 10-K, Exhibit
28-12.)
(F) 10-139 - Participation Agreement dated as of
September 15, 1987, among Chrysler Consortium
Corporation, as Owner Participant, the Original
Loan Participants listed in Schedule 1 Thereto,
as Original Loan Participants, BVPS Funding
Corporation, as Funding Corporation, The First
National Bank of Boston, as Owner Trustee,
Irving Trust Company, as Indenture Trustee and
Ohio Edison Company, as Lessee. (1987 Form 10-K,
Exhibit 28-13.)
(F) 10-140 - Amendment No. 1 dated as of February 1, 1988, to
Participation Agreement dated as of
September 15, 1987, among Chrysler Consortium
Corporation, as Owner Participant, the Original
Loan Participants listed in Schedule I Thereto,
as Original Loan Participants, BVPS Funding
Corporation, as Funding Corporation, The First
National Bank of Boston, as Owner Trustee,
Irving Trust Company, as Indenture Trustee, and
Ohio Edison Company, as Lessee. (1987 Form 10-K,
Exhibit 28-14.)
- 42 -
Exhibit
Number
- -------
(F) 10-141 - Amendment No. 3 dated as of March 16, 1988 to
Participation Agreement dated as of
September 15, 1987, as amended, among Chrysler
Consortium Corporation, as Owner Participant,
BVPS Funding Corporation, The First National
Bank of Boston, as Owner Trustee, Irving Trust
Company, as Indenture Trustee, and Ohio Edison
Company, as Lessee. (1992 Form 10-K, Exhibit 10-
114.)
(F) 10-142 - Amendment No. 4 dated as of November 5, 1992 to
Participation Agreement dated as of
September 15, 1987, as amended, among Chrysler
Consortium Corporation, as Owner Participant,
BVPS Funding Corporation, BVPS II Funding
Corporation, The First National Bank of Boston,
as Owner Trustee, The Bank of New York, as
Indenture Trustee and Ohio Edison Company, as
Lessee. (1992 Form 10-K, Exhibit 10-115.)
(F) 10-143 - Amendment No. 5 dated as of January 12, 1993 to
Participation Agreement dated as of
September 15, 1987, as amended, among Chrysler
Consortium Corporation, as Owner Participant,
BVPS Funding Corporation, BVPS II Funding
Corporation, The First National Bank of Boston,
as Owner Trustee, The Bank of New York, as
Indenture Trustee and Ohio Edison Company, as
Lessee. (1994 Form 10-K, Exhibit 10-139.)
(F) 10-144 - Amendment No. 6 dated as of September 30, 1994
to Participation Agreement dated as of
September 15, 1987, as amended, among Chrysler
Consortium Corporation, as Owner Participant,
BVPS Funding Corporation, BVPS II Funding
Corporation, The First National Bank of Boston,
as Owner Trustee, The Bank of New York, as
Indenture Trustee and Ohio Edison Company, as
Lessee. (1994 Form 10-K, Exhibit 10-140.)
(F) 10-145 - Facility Lease dated as of September 15, 1987,
between The First National Bank of Boston, as
Owner Trustee, with Chrysler Consortium
Corporation, Lessor, and Ohio Edison Company, as
Lessee. (1987 Form 10-K, Exhibit 28-15.)
(F) 10-146 - Amendment No. 1 dated as of February 1, 1988, to
Facility Lease dated as of September 15, 1987,
between The First National Bank of Boston, as
- 43 -
Exhibit
Number
- -------
Owner Trustee, with Chrysler Consortium
Corporation, Lessor, and Ohio Edison Company,
Lessee. (1987 Form 10-K, Exhibit 28-16.)
(F) 10-147 - Amendment No. 2 dated as of November 5, 1992 to
Facility Lease dated as of September 15, 1987,
as amended, between The First National Bank of
Boston, as Owner Trustee, with Chrysler
Consortium Corporation, as Owner Participant and
Ohio Edison Company, as Lessee. (1992 Form 10-K,
Exhibit 118.)
(F) 10-148 - Amendment No. 3 dated as of January 12, 1993 to
Facility Lease dated as of September 15, 1987,
as amended, between The First National Bank of
Boston, as Owner Trustee, with Chrysler
Consortium Corporation, as Owner Participant,
and Ohio Edison Company, as Lessee. (1992 Form
10-K, Exhibit 10-119.)
(F) 10-149 - Amendment No. 4 dated as of September 30, 1994
to Facility Lease dated as of September 15,
1987, as amended, between The First National
Bank of Boston, as Owner Trustee, with Chrysler
Consortium Corporation, as Owner Participant,
and Ohio Edison Company, as Lessee. (1994 Form
10-K, Exhibit 10-145.)
(F) 10-150 - Ground Lease and Easement Agreement dated as of
September 15, 1987, between Ohio Edison Company,
Ground Lessor, and The First National Bank of
Boston, as Owner Trustee under a Trust
Agreement, dated as of September 15, 1987, with
Chrysler Consortium Corporation, Tenant. (1987
Form 10-K, Exhibit 28-17.)
(F) 10-151 - Trust Agreement dated as of September 15, 1987,
between Chrysler Consortium Corporation, as
Owner Participant, and The First National Bank
of Boston. (1987 Form 10-K, Exhibit 28-18.)
(F) 10-152 - Trust Indenture, Mortgage, Security Agreement
and Assignment of Facility Lease dated as of
September 15, 1987, between the First National
Bank of Boston, as Owner Trustee under a Trust
Agreement, dated as of September 15, 1987, with
Chrysler Consortium Corporation and Irving Trust
Company, as Indenture Trustee. (1987 Form 10-K,
Exhibit 28-19.)
- 44 -
Exhibit
Number
- -------
(F) 10-153 - Supplemental Indenture No. 1 dated as of
February 1, 1988 to Trust Indenture, Mortgage,
Security Agreement and Assignment of Facility
Lease dated as of September 15, 1987 between The
First National Bank of Boston, as Owner Trustee
under a Trust Agreement dated as of
September 15, 1987 with Chrysler Consortium
Corporation and Irving Trust Company, as
Indenture Trustee. (1987 Form 10-K, Exhibit 28-
20.)
(F) 10-154 - Tax Indemnification Agreement dated as of
September 15, 1987, between Chrysler Consortium
Corporation, as Owner Participant, and Ohio
Edison Company, as Lessee. (1987 Form 10-K,
Exhibit 28-21.)
(F) 10-155 - Amendment No. 1 dated as of November 5, 1992 to
Tax Indemnification Agreement dated as of
September 15, 1987, between Chrysler Consortium
Corporation, as Owner Participant, and Ohio
Edison Company, as Lessee. (1994 Form 10-K,
Exhibit 10-151.)
(F) 10-156 - Amendment No. 2 dated as of January 12, 1993 to
Tax Indemnification Agreement dated as of
September 15, 1987, between Chrysler Consortium
Corporation, as Owner Participant, and Ohio
Edison Company, as Lessee. (1994 Form 10-K,
Exhibit 10-152.)
(F) 10-157 - Amendment No. 3 dated as of September 30, 1994
to Tax Indemnification Agreement dated as of
September 15, 1987, between Chrysler Consortium
Corporation, as Owner Participant, and Ohio
Edison Company, as Lessee. (1994 Form 10-K,
Exhibit 10-153.)
(F) 10-158 - Assignment, Assumption and Further Agreement
dated as of September 15, 1987, among The First
National Bank of Boston, as Owner Trustee under
a Trust Agreement, dated as of September 15,
1987, with Chrysler Consortium Corporation, The
Cleveland Electric Illuminating Company,
Duquesne Light Company, Ohio Edison Company,
Pennsylvania Power Company, and Toledo Edison
Company. (1987 Form 10-K, Exhibit 28-22.)
- 45 -
Exhibit
Number
- -------
(F) 10-159 - Additional Support Agreement dated as of
September 15, 1987, between The First National
Bank of Boston, as Owner Trustee under a Trust
Agreement, dated as of September 15, 1987, with
Chrysler Consortium Corporation, and Ohio Edison
Company. (1987 Form 10-K, Exhibit 28-23.)
10-160 - Operating Agreement dated March 10, 1987 with
respect to Perry Unit No. 1 between the CAPCO
Companies. (1987 Form 10-K, Exhibit 28-24.)
10-161 - Operating Agreement for Bruce Mansfield Units
Nos. 1, 2 and 3 dated as of June 1, 1976, and
executed on September 15, 1987, by and between
the CAPCO Companies. (1987 Form 10-K, Exhibit
28-25.)
10-162 - Operating Agreement for W. H. Sammis Unit No. 7
dated as of September 1, 1971 by and between the
CAPCO Companies. (1987 Form 10-K, Exhibit 28-
26.)
10-163 - OE-APS Power Interchange Agreement dated
March 18, 1987, by and among Ohio Edison Company
and Pennsylvania Power Company, and Monongahela
Power Company and West Penn Power Company and
The Potomac Edison Company. (1987 Form 10-K,
Exhibit 28-27.)
10-164 - OE-PEPCO Power Supply Agreement dated March 18,
1987, by and among Ohio Edison Company and
Pennsylvania Power Company and Potomac Electric
Power Company. (1987 Form 10-K, Exhibit 28-28.)
10-165 - Supplement No. 1 dated as of April 28, 1987, to
the OE-PEPCO Power Supply Agreement dated
March 18, 1987, by and among Ohio Edison
Company, Pennsylvania Power Company, and Potomac
Electric Power Company. (1987 Form 10-K, Exhibit
28-29.)
10-166 - APS-PEPCO Power Resale Agreement dated March 18,
1987, by and among Monongahela Power Company,
West Penn Power Company, and The Potomac Edison
Company and Potomac Electric Power Company.
(1987 Form 10-K, Exhibit 28-30.)
(A) 12 - Consolidated fixed charge ratios.
- 46 -
Exhibit
Number
- -------
(A) 13 - 1995 Annual Report to Stockholders. (Only those
portions expressly incorporated by reference in
this Form 10-K are to be deemed "filed" with the
SEC.)
(A) 21 - List of Subsidiaries of the Registrant at
December 31, 1995.
(A) 23 - Consent of Independent Public Accountants.
(A) 27 - Financial Data Schedule.
(A) Provided herein in electronic format as an exhibit.
(B) Pursuant to paragraph (b)(4)(iii)(A) of Item 601 of Regulation
S-K, the Company has not filed as an exhibit to this Form 10-K
any instrument with respect to long-term debt if the total
amount of securities authorized thereunder does
not exceed 10% of the total assets of the Company
and its subsidiaries on a consolidated basis, but
hereby agrees to furnish to the SEC on request any
such instruments.
(C) Management contract or compensatory plan contract or
arrangement filed pursuant to Item 601 of Regulation S-K.
(D) Substantially similar documents have been entered into
relating to three additional Owner Participants.
(E) Substantially similar documents have been entered into
relating to five additional Owner Participants.
(F) Substantially similar documents have been entered into
relating to two additional Owner Participants.
Note: Reports of the Company on Forms 10-Q and 10-K are on
file with the SEC under number 1-2578.
Pursuant to Rule 14a - 3 (10) of the Securities Exchange Act
of 1934, the Company will furnish any exhibit in this Report
upon the payment of the Company's expenses in furnishing such
exhibit.
(b) Reports on Form 8-K
The Company filed one report on Form 8-K since
September 30, 1995. A report dated February 23, 1996,
reported audited consolidated financial statements for the
year ended December 31, 1995, and related matters.
- 47 -
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders and Board of Directors of Ohio Edison Company:
We have audited, in accordance with generally accepted
auditing standards, the consolidated financial statements included
in Ohio Edison Company's Annual Report to Stockholders incorporated
by reference in this Form 10-K and have issued our report thereon
dated February 8, 1996. Our audit was made for the purpose of
forming an opinion on those statements taken as a whole. The
schedule listed in Item 14 is the responsibility of the Company's
management and is presented for the purpose of complying with the
Securities and Exchange Commission's rules and is not part of the
basic consolidated financial statements. This schedule has been
subjected to the auditing procedures applied in the audit of the
basic consolidated financial statements and, in our opinion, fairly
states in all material respects the financial data required to be
set forth therein in relation to the basic consolidated financial
statements taken as a whole.
ARTHUR ANDERSEN LLP
Cleveland, Ohio
February 8, 1996
- 48 -
<TABLE>
SCHEDULE II
OHIO EDISON COMPANY
CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<CAPTION>
Additions
--------------------------
Charged Charged
(Credited) (Credited)
Beginning to to Other Ending
Description Balance Income Accounts Deductions Balance
----------- --------- ---------- ---------- ---------- -------
(In Thousands)
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1995:
Accumulated provision for
uncollectible accounts $2,517 $5,236 $1,836 (a) $7,061 (b) $2,528
====== ====== ====== ====== ======
Year Ended December 31, 1994:
Accumulated provision for
uncollectible accounts $6,907 $ (32)(c) $1,998 (a) $6,356 (b) $2,517
====== ====== ====== ====== ======
Year Ended December 31, 1993:
Accumulated provision for
uncollectible accounts $6,432 $8,002 (d) $1,751 (a) $9,278 (b) $6,907
====== ====== ====== ====== ======
<FN>
- ----------------------------
(a) Represents recoveries and reinstatements of accounts previously
written off.
(b) Represents the write-off of accounts considered to be uncollectible.
(c) Includes $4,136,000 reversal of bad debt expense due to PUCO
authorization for automatic surcharge recovery.
(d) Includes $2,291,000 related to the bankruptcy of a customer.
</TABLE>
- 49 -
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
OHIO EDISON COMPANY
BY /s/ W. R. Holland
-----------------------------------------
W. R. Holland
President and Chief Executive Officer
Date: March 19, 1996
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the date
indicated:
/s/ W. R. Holland /s/ H. P. Burg
- ----------------------------- ----------------------------------
W. R. Holland H. P. Burg
President and Chief Senior Vice President and
Executive Officer and Director
Director (Principal (Principal Financial Officer
Executive Officer) and Principal Accounting
Officer)
/s/ Donald C. Blasius /s/ Glenn H. Meadows
- ----------------------------- ----------------------------------
Donald C. Blasius Glenn H. Meadows
Director Director
/s/ Robert H. Carlson /s/ Paul J. Powers
- ----------------------------- ----------------------------------
Robert H. Carlson Paul J. Powers
Director Director
/s/ Robert M. Carter /s/ Charles W. Rainger
- ----------------------------- ----------------------------------
Robert M. Carter Charles W. Rainger
Director Director
/s/ Carol A. Cartwright
- ----------------------------- ----------------------------------
Carol A. Cartwright George M. Smart
Director Director
- 50 -
/s/ R. L. Loughhead /s/ Jesse T. Williams, Sr.
- ----------------------------- ----------------------------------
R. L. Loughhead Jesse T. Williams, Sr.
Director Director
/s/ Russell W. Maier
- -----------------------------
Russell W. Maier
Director
Date: March 19, 1996
- 51 -
Conformed Copy
-------------------------------------------------
OHIO EDISON COMPANY
with
BANKERS TRUST COMPANY,
As Trustee
_______________
Sixty-Fifth Supplemental Indenture
Providing among other things for
First Mortgage Bonds
Guarantee Series of 1995 due 2015
_______________
Dated as of April 1, 1995
-------------------------------------------------------
SUPPLEMENTAL INDENTURE, dated as of April 1, 1995
between Ohio Edison Company, a corporation organized and existing
under the laws of the State of Ohio (hereinafter called the
"Company"), party of the first part, and Bankers Trust Company, a
corporation organized and existing under the laws of the State of
New York, as Trustee under the Indenture hereinafter referred to,
party of the second part.
Whereas, the Company has heretofore executed and
delivered to Bankers Trust Company, as Trustee (hereinafter
called the "Trustee"), a certain Indenture of Mortgage and Deed
of Trust, dated as of August 1, 1930, to secure an issue of bonds
of the Company, issued and to be issued in series, from time to
time, in the manner and subject to the conditions set forth in
the said Indenture; and the said Indenture has been supplemented
by supplemental indentures, dated as of August 1, 1930, March 3,
1931, as of November 1, 1935, as of January 1, 1937, as of
September 1, 1937, as of June 13, 1939, as of September 1, 1944,
as of April 1, 1945, as of September 1, 1948, as of May 1, 1950,
as of January 1, 1954, as of May 1, 1955, as of August 1, 1956,
as of March 1, 1958, as of April 1, 1959, as of June 1, 1961, as
of September 1, 1969, as of May 1, 1970, as of September 1, 1970,
as of June 1, 1971, as of August 1, 1972, as of September 1,
1973, as of August 1, 1974, as of July 1, 1976, as of December 1,
1976, as of June 15, 1977, as of May 15, 1978, as of February 1,
1980, as of April 15, 1980, as of June 15, 1980, as of October 1,
1981, as of October 15, 1981, as of February 15, 1982, as of July
1, 1982, as of March 1, 1983, as of March 1, 1984, as of
September 15, 1984, as of September 27, 1984, as of November 8,
1984, as of December 1, 1984, as of December 5, 1984, as of
January 1, 1985, as of January 30, 1985, as of February 25, 1985,
as of July 1, 1985, as of October 1, 1985, as of January 15,
1986, as of May 20, 1986, as of June 3, 1986, as of October 1,
1986, as of July 15, 1989, as of August 25, 1989, as of February
15, 1991, as of May 1, 1991, as of May 15, 1991, as of September
15, 1991, as of April 1, 1992, as of June 15, 1992, as of
September 15, 1992, as of April 1, 1993, as of June 15, 1993, as
of September 15, 1993 and as of November 15, 1993 respectively,
which Indenture as so supplemented and to be hereby supplemented
is hereinafter referred to as the "Indenture"; and
Whereas, the Indenture provides for the issuance of
bonds thereunder in one or more series, the form of each series
of bonds and of the coupons to be attached to the coupon bonds,
if any, to be substantially in the forms set forth therein with
such insertions, omissions and variations as the Board of
Directors of the Company may determine; and
Whereas, the Company, by appropriate corporate action
in conformity with the terms of the Indenture, has duly
determined to create a new series of bonds under the Indenture,
consisting of $40,000,000 in principal amount to be designated as
"First Mortgage Bonds Guarantee Series of 1995 due 2015"
(hereinafter sometimes referred to as the "bonds of Guarantee
Series"), the bonds of which series are to bear interest at the
rate of 6.75% per annum, are to mature July 1, 2015, and are to
be substantially in the following form:
[Form of Bond of Guarantee Series]
This Bond is not transferable except to a successor trustee under
the Trust Indenture, dated as of July 1, 1994, between the OHIO
WATER DEVELOPMENT AUTHORITY and SOCIETY NATIONAL BANK, as
Trustee, or in connection with the exercise of the rights and
remedies of the holder hereof consequent upon a "default" as
defined in the Mortgage referred to herein.
OHIO EDISON COMPANY
First Mortgage Bond Guarantee Series of 1995 Due 2015
Due July 1, 2015
$ No.
Ohio Edison Company, a corporation of the State of Ohio
(hereinafter called the Company), for value received, hereby
promises to pay to or registered assigns,
dollars at an office or
agency of the Company in the Borough of Manhattan, The City of
New York, N.Y. or in the City of Akron, Ohio, on July 1, 2015
in any coin or currency of the United States of America which at
the time of payment is legal tender for public and private debts,
and to pay at said offices or agencies to the registered owner
hereof, in like coin or currency, interest thereon from the
Initial Interest Accrual Date (hereinbelow defined) at the rate
of six and seventy-five hundredths per centum per annum.
Payments of principal of and interest on this bond shall be made
at an office or agency of the Company in the Borough of
Manhattan, The City of New York, N. Y. or in the City of Akron,
Ohio.
The provisions of this bond are continued on the
reverse hereof and such continued provisions shall for all
purposes have the same effect as though fully set forth at this
place.
This bond shall not become obligatory until Bankers
Trust Company, the Trustee under the Mortgage referred to on the
reverse hereof, or its successor thereunder, shall have
authenticated the form of certificate endorsed hereon.
- 2 -
In witness whereof, Ohio Edison Company has caused this
bond to be signed in its name by its President or a Vice
President, by his signature or a facsimile thereof, and its
corporate seal to be printed hereon, attested by its Secretary or
an Assistant Secretary, by his signature or a facsimile thereof.
Dated, , 199_
Ohio Edison Company,
By____________________
Title:
Attest:
_________________________
Title:
[form of trustee's authentication certificate]
Trustee's Authentication Certificate
This bond is one of the bonds of the series designated
therein, described in the within-mentioned Mortgage.
Bankers Trust Company,
as Trustee,
By_________________________
Authorized Officer
- 3 -
[Form of Bond of Guarantee Series]
[Reverse]
OHIO EDISON COMPANY
First Mortgage Bond Guarantee Series of 1995 Due 2015
This bond is one of an issue of bonds of the Company,
issuable in series, and is one of a series known as its First
Mortgage Bonds of the series designated in its title, all issued
and to be issued under and equally secured (except as to any
sinking fund established in accordance with the provisions of the
Mortgage hereinafter mentioned for the bonds of any particular
series) by an Indenture of Mortgage and Deed of Trust, dated as
of August 1, 1930, executed by the Company to Bankers Trust
Company, as Trustee, as amended and supplemented by indentures
supplemental thereto, to which Indenture as so amended and
supplemented (herein referred to as the "Mortgage") reference is
made for a description of the property mortgaged and pledged, the
nature and extent of the security, the rights of the holders of
the bonds in respect thereof and the terms and conditions upon
which the bonds are secured.
The bonds of this series shall be redeemed in whole, by
payment of the principal amount thereof plus accrued interest
thereon, if any, to the date fixed for redemption, upon receipt
by the Trustee of a written advice from the trustee under the
Trust Indenture (the "Revenue Bond Indenture") dated as of July
1, 1994, between Ohio Water Development Authority and Society
National Bank, as trustee (such trustee and any successor trustee
being hereinafter referred to as the "Revenue Bond Trustee"),
securing $40,000,000 of Ohio Water Development Authority State of
Ohio 6.75% Pollution Control Revenue Refunding Bonds, Series 1995
(Ohio Edison Company Project), stating that the principal amount
of all the revenue bonds (the "Revenue Bonds") then outstanding
under the Revenue Bond Indenture has been declared due and
payable pursuant to the provisions of Section 9.02 of the Revenue
Bond Indenture, specifying the date of the accelerated maturity
of such Revenue Bonds and the date from which interest on the
Revenue Bonds issued under the Revenue Bond Indenture has then
accrued, stating such declaration of maturity has not been
annulled and demanding payment of the principal amount hereof
plus accrued interest hereon to the date fixed for such
redemption. As provided in the supplemental indenture
establishing the terms and provisions of the bonds of this
series, the date fixed for such redemption shall be not earlier
than the date specified in the aforesaid written advice as the
date of the accelerated maturity of the Revenue Bonds then
outstanding under the Revenue Bond Indenture and not later than
- 4 -
the 45th day after receipt by the Trustee of such advice, unless
such 45th day is earlier than such date of accelerated maturity.
The date fixed for such redemption shall be specified in a notice
of redemption to be given not less than 30 days prior to the date
so fixed for such redemption. Upon mailing of such notice of
redemption, the date from which unpaid interest on the Revenue
Bonds has then accrued (as specified by the Revenue Bond Trustee)
shall become the initial interest accrual date (the "Initial
Interest Accrual Date") with respect to the bonds of this series,
and the date which is six months after the Initial Interest
Accrual Date shall be the first interest payment date for the
bonds of this series, provided, however, on any demand for
payment of the principal amount hereof at maturity as a result of
the principal of the Revenue Bonds becoming due and payable on
the maturity date of the bonds of this series, the date from
which unpaid interest on the Revenue Bonds has then accrued shall
become the Initial Interest Accrual Date with respect to the
bonds of this series, such date to be as stated in a written
notice from the Revenue Bond Trustee to the Trustee. As provided
in said supplemental indenture, the aforementioned notice of
redemption shall become null and void for all purposes under said
supplemental indenture and the Mortgage (including the fixing of
the Initial Interest Accrual Date with respect to the bonds of
this series) upon receipt by the Trustee of written notice from
the Revenue Bond Trustee of the annulment of the acceleration of
the maturity of the Revenue Bonds then outstanding under the
Revenue Bond Indenture and of the rescission of the aforesaid
written advice prior to the redemption date specified in such
notice of redemption, and thereupon no redemption of the bonds of
this series and no payment in respect thereof as specified in
such notice of redemption shall be effected or required. But no
such rescission shall extend to any subsequent written advice
from the Revenue Bond Trustee or impair any right consequent on
such subsequent written advice.
Bonds of this series are not otherwise redeemable prior
to their maturity.
Notwithstanding the foregoing, the Company reserves the
right, without any consent or other action by holders of the
bonds of this series, to have the bonds of this series exchanged
(the "Exchange") at any time in whole, but not in part, for other
mortgage bonds (the "New Mortgage Bonds") of the Company (i) to
be issued under a separate indenture of mortgage and deed of
trust (the "New Mortgage") in an aggregate principal amount equal
to the aggregate principal amount of bonds of this series then
outstanding, (ii) containing provisions with respect to maturity,
principal, interest, and premium, if any, and redemption
corresponding to the bonds of this series, and (iii) otherwise
satisfying the provisions of the Pledge Agreement dated as of
July 1, 1994, as amended as of April 1, 1995, between the Company
- 5 -
and Society National Bank. The date fixed by the Company for any
Exchange (the "Exchange Date") shall be specified in a notice of
exchange to be given to the registered owner hereof not less than
30 days prior to the date so fixed for Exchange, which notice may
be revoked by the Company at any time prior to the Exchange Date.
Any such revocation shall not prevent the Company from exercising
its right to effect the Exchange after appropriate notice at a
later date. If the Company has not revoked its election to have
the bonds of this series exchanged prior to the Exchange Date, on
the Exchange Date the New Mortgage Bonds shall be delivered by
the Company to the holders of the bonds of this series in
exchange for the bonds of this series held by such holders and
the bonds of this series shall cease to be outstanding and shall
cease to accrue interest and shall represent only the right to
receive a like principal amount of the New Mortgage Bonds.
As more fully described in the supplemental indenture
establishing the terms and provisions of the bonds of this
series, the Company reserves the right, without any consent or
other action by holders of the bonds of this series, to amend the
Mortgage to provide (a) that the Mortgage, the rights and
obligations of the Company and the rights of the bondholders may
be modified with the consent of the holders of not less than 60%
in principal amount of the bonds adversely affected; provided,
however, that no modification shall (1) extend the time, or
reduce the amount, of any payment on any bond, without the
consent of the holder of each bond so affected, (2) permit the
creation of any lien, not otherwise permitted, prior to or on a
parity with the lien of the Mortgage, without the consent of the
holders of all bonds then outstanding, or (3) reduce the above
percentage of the principal amount of bonds the holders of which
are required to approve any such modification without the consent
of the holders of all bonds then outstanding and (b) that (i)
additional bonds may be issued against 70% of the value of the
property which forms the basis for such issuance and (ii) the
charge against property subject to a prior lien which is used to
effectuate the release of property under the Mortgage be
similarly based.
The principal hereof may be declared or may become due
on the conditions, in the manner and at the time set forth in the
Mortgage, upon the occurrence of a completed default as in the
Mortgage provided.
No recourse shall be had for the payment of the
principal of or interest on this bond against any incorporator or
any past, present or future subscriber to the capital stock,
stockholder, officer or director of the Company or any
predecessor or successor corporation, either directly or through
the Company or any predecessor or successor corporation, under
any rule of law, statute or constitution or by the enforcement of
- 6 -
any assessment or otherwise, all such liability of incorporators,
subscribers, stockholders, officers and directors being released
by the registered owner hereof by the acceptance of this bond and
being likewise waived and released by the terms of the Mortgage.
The bonds of this series are issuable only as
registered bonds without coupons in denominations of $5,000 and
authorized multiples thereof. Subject only to the restrictions
contained in the Pledge Agreement dated as of July 1, 1994
between the Company and the Revenue Bond Trustee relating to
bonds of this series, this bond is transferable as prescribed in
the Mortgage by the registered owner hereof, in person or by
attorney duly authorized, at an office or agency of the Company,
in the Borough of Manhattan, The City of New York, N.Y. or in the
City of Akron, Ohio, upon surrender and cancellation of this bond
and thereupon a new registered bond or bonds of the same series
for a like principal amount, in authorized denominations, will be
issued to the transferee in exchange therefor, as provided in the
Mortgage, and upon payment, if the Company shall require it, of
the transfer charges therein prescribed. The Company and the
Trustee may deem and treat the person in whose name this bond is
registered as the absolute owner for the purpose of receiving
payment of or on account of the principal and interest due hereon
and for all other purposes. Registered bonds of this series
shall be exchangeable at said offices or agencies of the Company
for registered bonds of other authorized denominations having the
same aggregate principal amount, in the manner and upon the
conditions prescribed in the Mortgage. Notwithstanding any
provision of the Mortgage, (a) neither the Company nor the
Trustee shall be required to make transfers or exchanges of bonds
of this series during the period between any interest payment
date for such series and the record date next preceding such
interest payment date, and (b) no charge shall be made upon any
transfer or exchange of bonds of this series other than for any
tax or taxes or other governmental charge required to be paid by
the Company.
[end of form of bond of Guarantee Series]
and
Whereas, Section 115 of the Indenture provides that the
Company and the Trustee may, from time to time and at any time,
enter into such indentures supplemental thereto as shall be
deemed necessary or desirable for one or more purposes,
including, among others, to describe and set forth the particular
terms and the form of additional series of bonds to be issued
under the Indenture, to add other limitations on the issue of
bonds, withdrawal of cash or release of property, to add to the
covenants and agreements of the Company for the protection of the
holders of the bonds and of the mortgaged and pledged property,
to supplement defective or inconsistent provisions contained in
the Indenture, and for any other purpose not inconsistent with
the terms of the Indenture; and
- 7 -
Whereas, all things necessary to make the bonds of
Guarantee Series when authenticated by the Trustee and issued as
in the Indenture provided, the valid, binding and legal
obligations of the Company, entitled in all respects to the
security of the Indenture, have been done and performed, and the
creation, execution and delivery of this Supplemental Indenture
have in all respects been duly authorized; and
Whereas, the Company and Trustee deem it advisable to
enter into this Supplemental Indenture for the purposes of
describing the bonds of Guarantee Series and of establishing the
terms and provisions thereof, confirming the mortgaging under the
Indenture of additional property for the equal and proportionate
benefit and security of the holders of all bonds at any time
issued thereunder, amplifying the description of the property
mortgaged, adding other limitations to the Indenture on the issue
of bonds, withdrawal of cash or release of property, and adding
to the covenants and agreements of the Company for the protection
of the holders of bonds and of mortgaged and pledged property;
Now, therefore, this supplemental indenture witnesseth:
That Ohio Edison Company, in consideration of the premises and of
one dollar to it duly paid by the Trustee at or before the
ensealing and delivery of these presents, the receipt whereof is
hereby acknowledged, and of the purchase and acceptance of the
bonds issued or to be issued hereunder by the holders thereof,
and in order to secure the payment both of the principal and
interest of all bonds at any time issued and outstanding under
the Indenture, according to their tenor and effect, and the
performance of all the provisions of the Indenture and of said
bonds, hath granted, bargained, sold, released, conveyed,
assigned, transferred, pledged, set over and confirmed and by
these presents doth grant, bargain, sell, release, convey,
assign, transfer, pledge, set over and confirm unto Bankers Trust
Company, as Trustee, and to its successor or successors in said
trust, and to its and their assigns forever, all the properties
of the Company described in Schedule A (which is identified by
the signature of an officer of each party hereto at the end
thereof) hereto annexed and hereby made a part hereof;
Together with all and singular the tenements,
hereditaments and appurtenances belonging or in any wise
appertaining to the aforesaid property or any part thereof, with
the reversion and reversions, remainder and remainders and
(subject to the provisions of Article XI of the Indenture) the
tolls, rents, revenues, issues, earnings, income, product and
profits thereof, and all the estate, right, title and interest
and claim whatsoever, at law as well as in equity, which the
Company now has or may hereafter acquire in and to the aforesaid
property and franchises and every part and parcel thereof.
- 8 -
The Company does hereby agree and does hereby confirm
and reaffirm the agreement made by it in the Indenture, dated as
of August 1, 1930, that all the property, rights and franchises
acquired by the Company after the date of the Indenture, dated as
of August 1, 1930 (except any hereinafter expressly excepted),
shall be as fully embraced within the lien of the Indenture as if
such property had been owned by the Company on the date of the
Indenture, dated as of August 1, 1930 and was specifically
described therein and conveyed thereby and does hereby confirm
that the Company will not cause or consent to a partition,
whether voluntary or through legal proceedings, of property,
whether herein described or heretofore or hereafter acquired, in
which its ownership shall be as a tenant in common except as
permitted by and in conformity with the provisions of the
Indenture and particularly of Article XI thereof.
Provided that the following are not and are not
intended to be now or hereafter granted, bargained, sold,
released, conveyed, assigned, transferred, mortgaged, pledged,
set over or confirmed hereunder and are hereby expressly excepted
from the lien and operation of the Indenture, viz.: cash, shares
of stock and obligations (including bonds, notes and other
securities) not heretofore or hereafter specifically pledged,
paid or deposited or delivered under the Indenture or covenanted
so to be.
To have and to hold all such properties, real, personal
and mixed, mortgaged, pledged or conveyed by the Company as
aforesaid, or intended so to be, unto the Trustee and its
successors and assigns forever.
In trust, nevertheless, upon the terms and trusts of
the Indenture for those who shall hold the bonds and coupons
issued and to be issued thereunder, or any of them, without
preference, priority or distinction as to lien of any of said
bonds and coupons over any others thereof by reason of priority
in the time of the issue or negotiations thereof, or otherwise
howsoever, subject, however, to the provisions in reference to
extended, transferred or pledged coupons and claims for interest
set forth in the Indenture (and subject to any sinking funds that
may be hereafter created for the benefit of any particular
series).
Provided, however, and these presents are upon the
condition that if the Company, its successors or assigns, shall
pay or cause to be paid, the principal of and interest on said
bonds, at the times and in the manner stipulated therein and
herein, and shall keep, perform and observe all and singular the
covenants and promises in said bonds and in the Indenture
expressed to be kept, performed and observed by or on the part of
the Company, then this Supplemental Indenture and the estate and
rights hereby granted shall cease, determine and be void,
otherwise to be and remain in full force and effect.
- 9 -
It is hereby covenanted, declared and agreed, by the
Company, that all such bonds and coupons are to be issued,
authenticated and delivered, and that all property subject or to
become subject hereto is to be held, subject to the further
covenants, conditions, uses and trusts in the Indenture set
forth, and the parties hereto mutually agree as follows:
Section 1. Bonds of Guarantee Series shall mature on
July 1, 2015, and shall be designated as the Company's "First
Mortgage Bonds Guarantee Series of 1995 due 2015." The bonds of
Guarantee Series shall bear interest from the Initial Interest
Accrual Date (as defined in the form of the bond hereinabove set
forth) at the rate of six and seventy-five hundredths per centum
per annum. Principal or redemption price of and interest on the
bonds of Guarantee Series shall be payable in any coin or
currency of the United States of America which at the time of
payment is legal tender for public and private debts, at an
office or agency of the Company in the Borough of Manhattan, The
City of New York, N.Y. or in the City of Akron, Ohio.
Definitive bonds of Guarantee Series may be issued,
originally or otherwise, only as registered bonds, substantially
in the form of bond hereinbefore recited, and in the
denominations of $5,000 and authorized multiples thereof.
Delivery of a bond of Guarantee Series to the Trustee for
authentication shall be conclusive evidence that its serial
number has been duly approved by the Company.
The bonds of Guarantee Series shall be redeemable
pursuant to the requirements of this Sixty-fifth Supplemental
Indenture in whole, prior to maturity, upon notice given by
mailing the same, postage pre-paid, at least thirty days and not
more than forty-five days prior to the date fixed for redemption
to each registered holder of a bond to be redeemed at the last
address of such holder appearing on the registry books. The
Trustee shall within five business days of receiving the written
advice specified in the form of bond of Guarantee Series provided
for herein mail a copy thereof to the Company stamped or
otherwise marked to indicate the date of receipt by the Trustee.
The Company shall fix a redemption date for the redemption so
demanded and shall mail to the Trustee notice of such date at
least 35 days prior thereto. Subject to the foregoing sentence,
the redemption date so fixed may be any day not earlier than the
date specified in the aforesaid written advice as the date of the
accelerated maturity of the Revenue Bonds then outstanding under
the Revenue Bond Indenture and not later than the 45th day after
receipt by the Trustee of such advice, unless such 45th day is
earlier than such date of accelerated maturity. If the Trustee
does not receive such notice from the Company within 13 days
after receipt by the Trustee of the aforesaid written advice, the
redemption date shall be deemed fixed as the 45th day after such
receipt. The Trustee shall mail notice of the redemption date to
- 10 -
the Revenue Bond Trustee not less than 30 days prior to such
redemption date, provided, however, that the Trustee shall mail
no such notice (and no redemption shall be made) if prior to the
mailing of such notice the Trustee shall have received written
notice from the Revenue Bond Trustee of the annulment of the
acceleration of the maturity of the Revenue Bonds then
outstanding under the Revenue Bond Indenture and of the
rescission of the aforesaid written advice. The terms "Revenue
Bond Trustee" and "Revenue Bond Indenture" and "Revenue Bonds"
shall have the meanings specified in the form of bond of
Guarantee Series provided for herein. Redemption of the bonds of
Guarantee Series shall be at the principal amount thereof, plus
accrued interest thereon to the date fixed for redemption and
such amount shall become due and payable on the date fixed for
such redemption. Anything in this paragraph contained to the
contrary notwithstanding, if, after mailing notice of the date
fixed for redemption but prior to such date, the Trustee shall
have been advised in writing by the Revenue Bond Trustee that the
acceleration of the maturity of the Revenue Bonds then
outstanding under the Revenue Bond Indenture has been annulled
and that the aforesaid written advice has been rescinded, the
aforesaid written advice shall thereupon, without further act of
the Trustee or the Company, be rescinded and become null and void
for all purposes hereunder (including the fixing of the Initial
Interest Accrual Date as provided in the form of bond of
Guarantee Series provided for herein) and no redemption of the
bonds of Guarantee Series and no payments in respect thereof as
specified in the aforesaid written notice shall be effected or
required. But no such rescission shall extend to any subsequent
written advice from the Revenue Bond Trustee or impair any right
consequent on such subsequent written advice.
Section 2. Bonds of Guarantee Series shall be deemed
to be paid and no longer outstanding under the Indenture to the
extent that Revenue Bonds which are outstanding from time to time
under the Revenue Bond Indenture are paid or deemed to be paid
and are no longer outstanding and the Trustee has been notified
to such effect by the Company.
Section 3. Subject to the terms of the Pledge
Agreement dated as of July 1, 1994 between the Company and the
Revenue Bond Trustee relating to the bonds of Guarantee Series,
bonds of Guarantee Series may be transferred by the registered
owners thereof, in person or by attorney duly authorized, at an
office or agency of the Company in the Borough of Manhattan, The
City of New York, N. Y. or in the City of Akron, Ohio but only in
the manner and upon the conditions prescribed in the Indenture
and in the form of bond hereinbefore recited. Bonds of Guarantee
Series shall be exchangeable for other registered bonds of the
- 11 -
same series, in the manner and upon the conditions prescribed in
the Indenture, and in the form of bond hereinbefore recited, upon
the surrender of such bonds at said offices or agencies of the
Company. However, notwithstanding the provisions of Section 14
or 15 of the Indenture, no charge shall be made upon any transfer
or exchange of bonds of said series other than for any tax or
taxes or other governmental charge required to be paid by the
Company.
Section 4. The Company reserves the right, without any
consent or other action by holders of the bonds of Guarantee
Series, or any subsequent series of bonds, to amend the Indenture
by inserting the following language as Section 115A immediately
following current Section 115 of the Indenture:
With the consent of the holders of not less than
sixty per centum (60%) in principal amount of the bonds at
the time outstanding or their attorneys-in-fact duly
authorized, or, if the rights of the holders of one or more,
but not all, series then outstanding are affected, the
consent of the holders of not less than sixty per centum
(60%) in aggregate principal amount of the bonds at the time
outstanding of all affected series, taken together, and not
any other series, the Company, when authorized by a
resolution, and the Trustee may from time to time and at any
time enter into an indenture or indentures supplemental
hereto for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions
of this Indenture or of any supplemental indenture or
modifying the rights and obligations of the Company and the
rights of the holders of any of the bonds and coupons;
provided, however, that no such supplemental indenture shall
(1) extend the maturity of any of the bonds or reduce the
rate or extend the time of payment of interest thereon, or
reduce the amount of the principal thereof, or reduce any
premium, payable on the redemption thereof or change the
coin or currency in which any bond or interest thereon is
payable, without the consent of the holder of each bond so
affected, or (2) permit the creation of any lien, not
otherwise permitted, prior to or on a parity with the lien
of this Indenture, without the consent of the holders of all
of the bonds then outstanding, or (3) reduce the aforesaid
percentage of the principal amount of bonds the holders of
which are required to approve any such supplemental
indenture, without the consent of the holders of all the
bonds then outstanding. For the purposes of this Section,
bonds shall be deemed to be affected by a supplemental
indenture if such supplemental indenture adversely affects
or diminishes the right of holders thereof against the
Company or against its property.
- 12 -
Upon the written request of the Company,
accompanied by a resolution authorizing the execution of any
such supplemental indenture, and upon the filing with the
Trustee of evidence of the consent of bondholders as
aforesaid (the instrument or instruments evidencing such
consent to be dated within one year of such request), the
Trustee shall join with the Company in the execution of such
supplemental indenture unless such supplemental indenture
affects the Trustee's own rights, duties or immunities under
this Indenture or otherwise, in which case the Trustee may
in its discretion but shall not be obligated to enter into
such supplemental indenture. The Trustee shall be entitled
to receive and, subject to Section 102 of the Indenture and
Article Five of the Seventh Supplemental Indenture, may rely
upon an opinion of counsel as conclusive evidence that any
such supplemental indenture is authorized or permitted by
the provisions of this Section.
It shall not be necessary for the consent of the
bondholders under this Section to approve the particular
form of any proposed supplemental indenture, but it shall be
sufficient if such consent shall approve the substance
thereof.
The Company and the Trustee, if they so elect, and
either before or after such 60% or greater consent has been
obtained, may require the holder of any bond consenting to
the execution of any such supplemental indenture to submit
his bond to the Trustee or to such bank, banker or trust
company as may be designated by the Trustee for the purpose,
for the notation thereon of the fact that the holder of such
bond has consented to the execution of such supplemental
indenture, and in such case such notation, in form
satisfactory to the Trustee, shall be made upon all bonds so
submitted, and such bonds bearing such notation shall
forthwith be returned to the persons entitled thereto. All
subsequent holders of bonds bearing such notation shall be
deemed to have consented to the execution of such
supplemental indenture, and consent, once given or deemed to
be given, may not be withdrawn.
Prior to the execution by the Company and the
Trustee of any supplemental indenture pursuant to the
provisions of this Section, the Company shall publish a
notice, setting forth in general terms the substance of such
supplemental indenture, at least once in one daily newspaper
of general circulation in each city in which the principal
of any of the bonds shall be payable, or, if all bonds
outstanding shall be registered bonds without coupons or
coupon bonds registered as to principal, such notice shall
be sufficiently given if mailed, first class, postage
prepaid, and registered if the Company so elects, to each
- 13 -
registered holder of bonds at the last address of such
holder appearing on the registry books, such publication or
mailing, as the case may be, to be made not less than thirty
days prior to such execution. Any failure of the Company to
give such notice, or any defect therein, shall not, however,
in any way impair or affect the validity of any such
supplemental indenture.
Section 5. The Company reserves the right, without any
consent or other action by the holders of the bonds of Guarantee
Series, or any subsequent series of bonds, to amend the Indenture
by deleting the phrase "sixty per centum (60%)" in Section 28 of
the Indenture and substituting therefor the phrase "seventy per
centum (70%)" and by deleting the phrase "One hundred sixty-six
and two-thirds per cent. (166 2/3%)" in Sections 65 and 67 of the
Indenture and substituting therefor the phrase "One hundred and
forty-two and eighty-six hundredths per cent. (142.86%)".
Section 6. Except as herein otherwise expressly
provided, no duties, responsibilities or liabilities are assumed,
or shall be construed to be assumed, by the Trustee by reason of
this Supplemental Indenture; the Trustee shall not be responsible
for the recitals herein or in the bonds (except the Trustee's
authentication certificate), all of which are made by the Company
solely; and this Supplemental Indenture is executed and accepted
by the Trustee, subject to all the terms and conditions set forth
in the Indenture, as fully to all intents and purposes as if the
terms and conditions of the Indenture were herein set forth at
length.
Section 7. As supplemented by this Supplemental
Indenture, the Indenture is in all respects ratified and
confirmed, and the Indenture as herein defined, and this
Supplemental Indenture, shall be read, taken and construed as one
and the same instrument.
Section 8. Nothing in this Supplemental Indenture
contained shall or shall be construed to confer upon any person
other than a holder of bonds issued under the Indenture, the
Company and the Trustee any right or interest to avail himself of
any benefit under any provision of the Indenture or of this
Supplemental Indenture.
Section 9. This Supplemental Indenture may be
simultaneously executed in several counterparts and all such
counterparts executed and delivered, each as an original, shall
constitute but one and the same instrument.
- 14 -
In witness whereof, Ohio Edison Company, party of the
first part hereto, and Bankers Trust Company, party of the second
part hereto, have caused these presents to be executed in their
respective names by their respective Presidents or one of their
Vice Presidents or Assistant Vice Presidents and their respective
seals to be hereunto affixed and attested by their respective
Secretaries or one of their Assistant Secretaries or Assistant
Treasurers, all as of the day and year first above written.
Ohio Edison Company
[Seal]
By: /s/ H. P. Burg
--------------------------
Title: Senior Vice President
Attest: /s/ T. F. Struck, II
-----------------------
Title: Assistant Treasurer and
Assistant Secretary
Signed, Sealed and Acknowledged on behalf of
Ohio Edison Company in the presence of:
/s/ Cynthia A. Kippes
-----------------------
/s/ Janice K. Burgy
-----------------------
Bankers Trust Company
[Seal]
By: /s/ Robert Caporale
-----------------------
Title: Vice President
Attest: /s/ Scott Thiel
-------------------------
Title: Assistant Treasurer
Signed, Sealed and Acknowledged on behalf of
Bankers Trust Company in the presence of:
/s/ Kerri O'Brien
----------------------
/s/ Michael Waters
----------------------
- 15 -
State of Ohio )
: ss.:
County of Summit )
On the 29th day of March, 1995, personally appeared
before me, a Notary Public in and for the said County and State
aforesaid, H. P. Burg and T. F. Struck, II, to me known and known
to me to be a Senior Vice President and an Assistant Treasurer
and Assistant Secretary, respectively, of Ohio Edison Company,
the corporation which executed the foregoing instrument, and who
severally acknowledged that they did sign and seal such
instrument as such Senior Vice President and Assistant Treasurer
and Assistant Secretary, respectively, of Ohio Edison Company,
the same is their free act and deed and the free and corporate
act and deed of said corporation.
In witness whereof, I have hereunto set my hand and
seal the 29th day of March, 1995.
/s/ Debra L. Cordea
-------------------------------
Debra L. Cordea, Notary Public
Residence - Summit County
State Wide Jurisdiction, Ohio
My Commission Expires Nov. 20, 1999
[Seal]
State of Ohio )
: ss.:
County of Summit )
On the 29th day of March, 1995, before me personally
came H. P. Burg, to me known, who, being by me duly sworn, did
depose and say that he resides at 4311 Leewood Road, Stow, Ohio
44224; that he is a Senior Vice President of Ohio Edison Company,
one of the corporations described in and which executed the above
instrument; that he knows the seal of said corporation; that the
seal affixed to said instrument is such corporate seal; that it
was so affixed by order of the Board of Directors of said
corporation, and that he signed his name thereto by like order.
/s/ Debra L. Cordea
--------------------------
Debra L. Cordea, Notary Public
Residence - Summit County
State Wide Jurisdiction, Ohio
My Commission Expires Nov. 20, 1999
[Seal]
- 16 -
State of New York )
: ss.:
County of New York )
On the 30th day of March, 1995, personally appeared
before me, a Notary Public in and for the said County and State
aforesaid, Robert Caporale and Scott Thiel, to me known and known
to me to be a Vice President and Assistant Treasurer,
respectively, of Bankers Trust Company, the corporation which
executed the foregoing instrument, and who severally acknowledged
that they did sign and seal such instrument as such Vice
President and Assistant Treasurer for and on behalf of said
corporation and that the same is their free act and deed and the
free and corporate act and deed of said corporation.
In witness whereof, I have hereunto set my hand and
seal the 30th day of March, 1995.
/s/ Sharon V. Alston
--------------------------
SHARON V. ALSTON
Notary Public, State of New York
No. 31-4966275
Qualified in New York County
My Commission Expires May 7, 1996
[Seal]
State of New York )
: ss.:
County of New York )
On the 30th day of March, 1995, before me personally
came Robert Caporale, to me known, who, being by me duly sworn,
did depose and say that he resides at 25 Lake Street, White
Plains, New York 10603; that he is a Vice President of Bankers
Trust Company, one of the parties described in and which executed
the above instrument; that she knows the seal of said
corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed by order of the Board of
Directors of said corporation, and that she signed her name
thereto by like authority.
/s/ Sharon V. Alston
---------------------------
SHARON V. ALSTON
Notary Public, State of New York
No. 31-4966275
Qualified in New York County
My Commission Expires May 7, 1996
[Seal]
- 17 -
Bankers Trust Company hereby certifies that its precise
name and address as Trustee hereunder are:
Bankers Trust Company
Four Albany Street
Borough of Manhattan
City, County and State of New York 10015
Bankers Trust Company
By: /s/ Robert Caporale
----------------------------
Title: Vice President
- 18 -
SCHEDULE A
Detailed Description of Additional Properties
A. ELECTRIC TRANSMISSION LINES
The following electric transmission lines of the
Company, including the towers, poles, pole lines, wire, switch
racks, insulators and other appurtenances, and equipment owned by
the Company, and all other property of the Company, with all the
Company's rights of way, easements, permits, privileges and
consents, licenses and rights over or relating to the
construction, maintenance or operation thereof, through, over,
under or upon any public streets or highways or other lands,
public or private:
Lake Erie Division
1. Baumhart Loop: Single circuit wood pole construction
extending from Structure #121 and #121A on the existing
Edgewater-Shinrock line southerly, westerly, and
northerly to Baumhart Substation, a distance of 0.11
mile, all being located in the City of Vermilion,
Lorain County, Ohio.
/s/ T. F. Struck, II,
----------------------------------
T. F. Struck, II, Assistant Treasurer and
Assistant Secretary
Ohio Edison Company
/s/ Robert Caporale,
----------------------------
Robert Caporale, Vice President
Bankers Trust Company
- 19 -
[Conformed with Recordation Data]
----------------------------------------------------------------
OHIO EDISON COMPANY
with
BANKERS TRUST COMPANY,
As Trustee
_______________
Sixty-Sixth Supplemental Indenture
Providing among other things for
First Mortgage Bonds
Guarantee Series I of 1995 due 2002
_______________
Dated as of May 1, 1995
----------------------------------------------------------------
SUPPLEMENTAL INDENTURE, dated as of May 1, 1995 between
Ohio Edison Company, a corporation organized and existing under
the laws of the State of Ohio (hereinafter called the "Company"),
party of the first part, and Bankers Trust Company, a corporation
organized and existing under the laws of the State of New York,
as Trustee under the Indenture hereinafter referred to, party of
the second part.
Whereas, the Company has heretofore executed and
delivered to Bankers Trust Company, as Trustee (hereinafter
called the "Trustee"), a certain Indenture of Mortgage and Deed
of Trust, dated as of August 1, 1930, to secure an issue of bonds
of the Company, issued and to be issued in series, from time to
time, in the manner and subject to the conditions set forth in
the said Indenture; and the said Indenture has been supplemented
by supplemental indentures, dated as of August 1, 1930, March 3,
1931, as of November 1, 1935, as of January 1, 1937, as of
September 1, 1937, as of June 13, 1939, as of September 1, 1944,
as of April 1, 1945, as of September 1, 1948, as of May 1, 1950,
as of January 1, 1954, as of May 1, 1955, as of August 1, 1956,
as of March 1, 1958, as of April 1, 1959, as of June 1, 1961, as
of September 1, 1969, as of May 1, 1970, as of September 1, 1970,
as of June 1, 1971, as of August 1, 1972, as of September 1,
1973, as of August 1, 1974, as of July 1, 1976, as of December 1,
1976, as of June 15, 1977, as of May 15, 1978, as of February 1,
1980, as of April 15, 1980, as of June 15, 1980, as of October 1,
1981, as of October 15, 1981, as of February 15, 1982, as of July
1, 1982, as of March 1, 1983, as of March 1, 1984, as of
September 15, 1984, as of September 27, 1984, as of November 8,
1984, as of December 1, 1984, as of December 5, 1984, as of
January 1, 1985, as of January 30, 1985, as of February 25, 1985,
as of July 1, 1985, as of October 1, 1985, as of January 15,
1986, as of May 20, 1986, as of June 3, 1986, as of October 1,
1986, as of July 15, 1989, as of August 25, 1989, as of February
15, 1991, as of May 1, 1991, as of May 15, 1991, as of September
15, 1991, as of April 1, 1992, as of June 15, 1992, as of
September 15, 1992, as of April 1, 1993, as of June 15, 1993, as
of September 15, 1993, as of November 15, 1993 and as of April 1,
1995, respectively, which Indenture as so supplemented and to be
hereby supplemented is hereinafter referred to as the
"Indenture"; and
Whereas, the Indenture provides for the issuance of
bonds thereunder in one or more series, the form of each series
of bonds and of the coupons to be attached to the coupon bonds,
if any, to be substantially in the forms set forth therein with
such insertions, omissions and variations as the Board of
Directors of the Company may determine; and
Whereas, the Company, by appropriate corporate action
in conformity with the terms of the Indenture, in accordance with
the requirements of the Letter of Credit and Reimbursement
Agreement dated as of May 12, 1995 among the Company, Deutsche
Bank AG New York Branch, as Administrative Agent (the
"Administrative Agent") and Issuing Bank, and the Lenders named
therein (as the same may be amended from time to time, the
"Reimbursement Agreement"), has duly determined to create a new
series of bonds under the Indenture, consisting of
$227,886,000.00 in principal amount to be designated as "First
Mortgage Bonds Guarantee Series I of 1995 due 2002" (hereinafter
sometimes referred to as the "bonds of Guarantee Series I"), the
bonds of which series are to bear interest (which for the
purposes hereof shall also include commissions, fees and other
amounts (other than amounts payable as principal) due and owing
under the Reimbursement Agreement) at the same rates and on the
same dates as the Reimbursement Agreement provides for the
accrual and payment of interest, fees, commissions and such other
amounts are to mature on May 12, 2002, or, as provided herein,
such later date as shall correspond to the latest Stated
Termination Date (as defined in the Reimbursement Agreement) of
any Letter of Credit (as defined in the Reimbursement Agreement)
issued and outstanding under the Reimbursement Agreement, and are
to be substantially in the following form:
THIS BOND IS NOT TRANSFERABLE EXCEPT (X) TO A SUCCESSOR
ADMINISTRATIVE AGENT UNDER A REIMBURSEMENT AGREEMENT, DATED AS OF
MAY 12, 1995, AMONG THE OHIO EDISON COMPANY, THE ADMINISTRATIVE
AGENT, THE ISSUING BANK AND THE LENDERS NAMED THEREIN AS THE SAME
MAY BE AMENDED FROM TIME TO TIME, OR (Y) IN CONNECTION WITH THE
EXERCISE OF THE RIGHTS AND REMEDIES OF THE HOLDER HEREOF
CONSEQUENT UPON A "REIMBURSEMENT EVENT OF DEFAULT" AS DEFINED IN
SUCH REIMBURSEMENT AGREEMENT REFERRED TO HEREIN.
OHIO EDISON COMPANY
First Mortgage Bond Guarantee Series I of 1995 Due 2002
Due May 12, 2002
No.
Ohio Edison Company, a corporation of the State of Ohio
(hereinafter called the Company), for value received, hereby
promises to pay to Deutsche Bank AG New York Branch, as
Administrative Agent under the Reimbursement Agreement
hereinafter described, or registered assigns, dollars
(reduced from time to time as hereinafter provided) at an office
or agency of the Company in the Borough of Manhattan, The City of
New York, N.Y. or in the City of Akron, Ohio, on the dates and in
the amounts set forth in the Reimbursement Agreement for the
payment of the principal of Advances (as defined in the
Reimbursement Agreement) and the reimbursement of drawings under
any Letter of Credit (as defined in the Reimbursement Agreement)
and to pay interest on said sum as described on the reverse
hereof, in any coin or currency of the United States of America
- 2 -
which at the time of payment is legal tender for public and
private debts. Payments of principal of and interest on this
bond shall be made at an office or agency of the Company in the
Borough of Manhattan, The City of New York, N. Y. or in the City
of Akron, Ohio.
The provisions of this bond are continued on the
reverse hereof and such continued provisions shall for all
purposes have the same effect as though fully set forth at this
place.
This bond shall not become obligatory until Bankers
Trust Company, the Trustee under the Mortgage referred to on the
reverse hereof, or its successor thereunder, shall have
authenticated the form of certificate endorsed hereon.
- 3 -
In witness whereof, Ohio Edison Company has caused this
bond to be signed in its name by its President or a Vice
President, by his signature or a facsimile thereof, and its
corporate seal to be printed hereon, attested by its Secretary or
an Assistant Secretary, by his signature or a facsimile thereof.
Dated, ________ __, 199_
Ohio Edison Company,
By____________________
Title: President
Attest:
_________________________
Title: Secretary
Trustee's Authentication Certificate
This bond is one of the bonds of the series designated
therein, described in the within-mentioned Mortgage.
Bankers Trust Company,
as Trustee,
By_________________________
Authorized Officer
- 4 -
OHIO EDISON COMPANY
First Mortgage Bond Guarantee Series I of 1995 Due 2002
This bond is one of an issue of bonds of the Company,
issuable in series, and is one of a series known as its First
Mortgage Bonds of the series designated in its title, all issued
and to be issued under and equally secured (except as to any
sinking fund established in accordance with the provisions of the
Mortgage hereinafter mentioned for the bonds of any particular
series) by an Indenture of Mortgage and Deed of Trust, dated as
of August 1, 1930, executed by the Company to Bankers Trust
Company, as Trustee, as amended and supplemented by indentures
supplemental thereto, to which Indenture as so amended and
supplemented (herein referred to as the "Mortgage") reference is
made for a description of the property mortgaged and pledged, the
nature and extent of the security, the rights of the holders of
the bonds in respect thereof and the terms and conditions upon
which the bonds are secured.
The bonds of this Series have been issued to Deutsche
Bank AG New York Branch ("DBNY"), as Administrative Agent
(including any successors as Administrative Agent under the
Reimbursement Agreement, the "Administrative Agent") in
connection with the execution and delivery by the Company of the
Letter of Credit and Reimbursement Agreement dated as of May 12,
1995 among the Company, DBNY as Administrative Agent and Issuing
Bank, and the Lenders named therein (as the same may be amended
from time to time, the "Reimbursement Agreement"). The principal
amount of this bond shall equal the Commitment or the Adjusted
Commitment whichever is less (in each case as defined in the
Reimbursement Agreement), under the Reimbursement Agreement.
Except as hereinafter provided, interest (which for the
purposes hereof shall also include commissions, fees and other
amounts (other than amounts payable as principal) due and owing
under the Reimbursement Agreement) on this bond accrues and is
payable at the same rates and on the same dates as the
Reimbursement Agreement provides for the accrual and payment of
interest, fees, commissions and such other amounts.
The obligation of the Company to make payments with
respect to the principal and interest (calculated as set forth
above) on the bonds of this Series whether at stated maturity, as
a result of acceleration of maturity or upon mandatory redemption
shall be fully or partially, as the case may be, satisfied and
discharged to the extent that, at any time that any such payment
shall become due, the Company shall have fully or partially paid
the then due principal amount of any Advances or any unreimbursed
- 5 -
drawings under any Letter of Credit outstanding under the
Reimbursement Agreement, or the then due interest on any thereof,
or any fees, commissions or other amounts payable under the
Reimbursement Agreement.
The maturity date of bonds of this Series shall be
extended automatically, without further written amendment or
other action by either the Company or the Trustee, to correspond
to the latest Stated Termination Date of any Letter of Credit, as
the same may be extended pursuant to the Reimbursement Agreement,
but in no event shall such maturity be extended beyond May 12,
2020.
The bonds of this series shall be redeemed in whole, by
payment of the principal amount thereof plus accrued interest
(calculated as set forth above) thereon, if any, to the date
fixed for redemption, upon receipt by the Trustee of a written
advice from the Administrative Agent, stating that a
Reimbursement Event of Default (as defined in the Reimbursement
Agreement) has occurred pursuant to the provisions of Section
6.02 of the Reimbursement Agreement, specifying the date of the
occurrence of such a Reimbursement Event of Default, stating such
occurrence of a Reimbursement Event of Default has not been
annulled and demanding payment of the principal amount hereof
plus accrued interest (calculated as set forth above) hereon to
the date fixed for such redemption. As provided in the
supplemental indenture establishing the terms and provisions of
the bonds of this series, the date fixed for such redemption
shall be not earlier than the date specified in the aforesaid
written advice as the date of the occurrence of a Reimbursement
Event of Default and not later than the 45th day after receipt by
the Trustee of such advice, unless such 45th day is earlier than
the date of such declaration of a Reimbursement Event of Default.
The date fixed for such redemption shall be specified in a notice
of redemption to be given not less than 30 days prior to the date
so fixed for such redemption. As provided in said supplemental
indenture, the aforementioned notice of redemption shall become
null and void for all purposes under said supplemental indenture
and the Mortgage upon receipt by the Trustee of written notice
from the Administrative Agent confirming that such Reimbursement
Event of Default under the Reimbursement Agreement is no longer
continuing prior to the redemption date specified in such notice
of redemption, and thereupon no redemption of the bonds of this
series and no payment in respect thereof as specified in such
notice of redemption shall be effected or required. But no such
rescission shall extend to any subsequent written advice from the
Administrative Agent or impair any right consequent on such
subsequent written advice.
Bonds of this series are not otherwise redeemable prior
to their maturity.
- 6 -
As more fully described in the supplemental indenture
establishing the terms and provisions of the bonds of this series
(the "Indenture Supplement"), the Company reserves the right,
without any consent or other action by holders of the bonds of
this series, to amend the Mortgage to provide (a) that the
Mortgage, the rights and obligations of the Company and the
rights of the bondholders may be modified with the consent of the
holders of not less than 60% in principal amount of the bonds
adversely affected; provided, however, that no modification shall
(1) extend the time, or reduce the amount, of any payment on any
bond, without the consent of the holder of each bond so affected,
(2) permit the creation of any lien, not otherwise permitted,
prior to or on a parity with the lien of the Mortgage, without
the consent of the holders of all bonds then outstanding, or (3)
reduce the above percentage of the principal amount of bonds the
holders of which are required to approve any such modification
without the consent of the holders of all bonds then outstanding
and (b) that (i) additional bonds may be issued against 70% of
the value of the property which forms the basis for such issuance
and (ii) the charge against property subject to a prior lien
which is used to effectuate the release of property under the
Mortgage be similarly based.
The principal hereof may be declared or may become due
on the conditions, in the manner and at the time set forth in the
Mortgage, upon the occurrence of a completed default as in the
Mortgage provided.
No recourse shall be had for the payment of the
principal of or interest (calculated as set forth above) on this
bond against any incorporator or any past, present or future
subscriber to the capital stock, stockholder, officer or director
of the Company or of any predecessor or successor corporation,
either directly or through the Company or any predecessor or
successor corporation, under any rule of law, statute or
constitution or by the enforcement of any assessment or
otherwise, all such liability of incorporators, subscribers,
stockholders, officers and directors being released by the
registered owner hereof by the acceptance of this bond and being
likewise waived and released by the terms of the Mortgage.
The bonds of this series are issuable only as
registered bonds without coupons in denominations of $1,000 and
authorized multiples thereof. Subject to the restrictions
contained in the Reimbursement Agreement, this bond is
transferable as prescribed in the Mortgage by the registered
owner hereof, and exchangeable as set forth in the next sentence,
in person or by attorney duly authorized, at an office or agency
of the Company, in the Borough of Manhattan, The City of New
York, N.Y. or in the City of Akron, Ohio, upon surrender and
cancellation of this bond and thereupon a new registered bond or
bonds of the same series for a like aggregate principal amount,
- 7 -
in authorized denominations, will be issued to the transferee in
exchange therefor, as provided in the Mortgage, and upon payment,
if the Company shall require it, of the transfer charges therein
prescribed. In the event the maturity of bonds of this Series is
extended in accordance with the provisions hereof and of the
Indenture Supplement, as a result of the extension of the Stated
Termination Date of any Letter of Credit, as the same may be
extended pursuant to the Reimbursement Agreement, the holder
hereof shall be entitled to exchange this bond for a bond or
bonds stating such new maturity date. The Company and the
Trustee may deem and treat the person in whose name this bond is
registered as the absolute owner for the purpose of receiving
payment of or on account of the principal and interest due hereon
and for all other purposes. Registered bonds of this series
shall be exchangeable at said offices or agencies of the Company
for registered bonds of other authorized denominations having the
same aggregate principal amount, in the manner and upon the
conditions prescribed in the Mortgage. Notwithstanding any
provision of the Mortgage, (a) neither the Company nor the
Trustee shall be required to make transfers or exchanges of bonds
of this series during the period between any interest payment
date for such series and the record date next preceding such
interest payment date, and (b) no charge shall be made upon any
transfer or exchange of bonds of this series other than for any
tax or taxes or other governmental charge required to be paid by
the Company.
[END OF BOND OF GUARANTEE SERIES I]
and
Whereas, Section 115 of the Indenture provides that the
Company and the Trustee may, from time to time and at any time,
enter into such indentures supplemental thereto as shall be
deemed necessary or desirable for one or more purposes,
including, among others, to describe and set forth the particular
terms and the form of additional series of bonds to be issued
under the Indenture, to add other limitations on the issue of
bonds, withdrawal of cash or release of property, to add to the
covenants and agreements of the Company for the protection of the
holders of the bonds and of the mortgaged and pledged property,
to supplement defective or inconsistent provisions contained in
the Indenture, and for any other purpose not inconsistent with
the terms of the Indenture; and
Whereas, all things necessary to make the bonds of
Guarantee Series I when authenticated by the Trustee and issued
as in the Indenture provided, the valid, binding and legal
obligations of the Company, entitled in all respects to the
security of the Indenture, have been done and performed, and the
creation, execution and delivery of this Supplemental Indenture
have in all respects been duly authorized; and
- 8 -
Whereas, the Company and Trustee deem it advisable to
enter into this Supplemental Indenture for the purposes of
describing the bonds of Guarantee Series I and of establishing
the terms and provisions thereof, confirming the mortgaging under
the Indenture of additional property for the equal and
proportionate benefit and security of the holders of all bonds at
any time issued thereunder, amplifying the description of the
property mortgaged, adding other limitations to the Indenture on
the issue of bonds, withdrawal of cash or release of property,
and adding to the covenants and agreements of the Company for the
protection of the holders of bonds and of mortgaged and pledged
property;
Now, therefore, this supplemental indenture witnesseth:
That Ohio Edison Company, in consideration of the premises and of
one dollar to it duly paid by the Trustee at or before the
ensealing and delivery of these presents, the receipt whereof is
hereby acknowledged, and of the purchase and acceptance of the
bonds issued or to be issued hereunder by the holders thereof,
and in order to secure the payment both of the principal and
interest of all bonds at any time issued and outstanding under
the Indenture, according to their tenor and effect, and the
performance of all the provisions of the Indenture and of said
bonds, hath granted, bargained, sold, released, conveyed,
assigned, transferred, pledged, set over and confirmed and by
these presents doth grant, bargain, sell, release, convey,
assign, transfer, pledge, set over and confirm unto Bankers Trust
Company, as Trustee, and to its successor or successors in said
trust, and to its and their assigns forever, all the properties
of the Company described in Schedule A (which is identified by
the signature of an officer of each party hereto at the end
thereof) hereto annexed and hereby made a part hereof;
Together with all and singular the tenements,
hereditaments and appurtenances belonging or in any wise
appertaining to the aforesaid property or any part thereof, with
the reversion and reversions, remainder and remainders and
(subject to the provisions of Article XI of the Indenture) the
tolls, rents, revenues, issues, earnings, income, product and
profits thereof, and all the estate, right, title and interest
and claim whatsoever, at law as well as in equity, which the
Company now has or may hereafter acquire in and to the aforesaid
property and franchises and every part and parcel thereof.
The Company does hereby agree and does hereby confirm
and reaffirm the agreement made by it in the Indenture, dated as
of August 1, 1930, that all the property, rights and franchises
acquired by the Company after the date of the Indenture, dated as
of August 1, 1930 (except any hereinafter expressly excepted),
shall be as fully embraced within the lien of the Indenture as if
such property had been owned by the Company on the date of the
Indenture, dated as of August 1, 1930 and was specifically
- 9 -
described therein and conveyed thereby and does hereby confirm
that the Company will not cause or consent to a partition,
whether voluntary or through legal proceedings, of property,
whether herein described or heretofore or hereafter acquired, in
which its ownership shall be as a tenant in common except as
permitted by and in conformity with the provisions of the
Indenture and particularly of Article XI thereof.
Provided that the following are not and are not
intended to be now or hereafter granted, bargained, sold,
released, conveyed, assigned, transferred, mortgaged, pledged,
set over or confirmed hereunder and are hereby expressly excepted
from the lien and operation of the Indenture, viz.: cash, shares
of stock and obligations (including bonds, notes and other
securities) not heretofore or hereafter specifically pledged,
paid or deposited or delivered under the Indenture or covenanted
so to be.
To have and to hold all such properties, real, personal
and mixed, mortgaged, pledged or conveyed by the Company as
aforesaid, or intended so to be, unto the Trustee and its
successors and assigns forever.
In trust, nevertheless, upon the terms and trusts of
the Indenture for those who shall hold the bonds and coupons
issued and to be issued thereunder, or any of them, without
preference, priority or distinction as to lien of any of said
bonds and coupons over any others thereof by reason of priority
in the time of the issue or negotiations thereof, or otherwise
howsoever, subject, however, to the provisions in reference to
extended, transferred or pledged coupons and claims for interest
set forth in the Indenture (and subject to any sinking funds that
may be hereafter created for the benefit of any particular
series).
Provided, however, and these presents are upon the
condition that if the Company, its successors or assigns, shall
pay or cause to be paid, the principal of and interest on said
bonds, at the times and in the manner stipulated therein and
herein, and shall keep, perform and observe all and singular the
covenants and promises in said bonds and in the Indenture
expressed to be kept, performed and observed by or on the part of
the Company, then this Supplemental Indenture and the estate and
rights hereby granted shall cease, determine and be void,
otherwise to be and remain in full force and effect.
It is hereby covenanted, declared and agreed, by the
Company, that all such bonds and coupons are to be issued,
authenticated and delivered, and that all property subject or to
become subject hereto is to be held, subject to the further
covenants, conditions, uses and trusts in the Indenture set
forth, and the parties hereto mutually agree as follows:
- 10 -
Section 1. Bonds of Guarantee Series I shall mature on
May 12, 2002, or such later date as shall correspond to the
latest Stated Termination Date of any Letter of Credit, as the
same may be extended pursuant to the Reimbursement Agreement, but
in no event shall such maturity be extended beyond May 12, 2020,
and shall be designated as the Company's "First Mortgage Bonds
Guarantee Series I of 1995 due 2002." The bonds of Guarantee
Series I shall bear interest (which for the purposes hereof shall
also include commissions, fees and other amounts (other than
amounts payable as principal) due and owing under the
Reimbursement Agreement) at the same rates and on the same dates
as the Reimbursement Agreement provides for the accrual and
payment of interest, fees, commissions and such other amounts.
Principal or redemption price of and interest on the bonds of
Guarantee Series I shall be payable in any coin or currency of
the United States of America which at the time of payment is
legal tender for public and private debts, at an office or agency
of the Company in the Borough of Manhattan, The City of New York,
N.Y. or in the City of Akron, Ohio.
Definitive bonds of Guarantee Series I may be issued,
originally or otherwise, only as registered bonds, substantially
in the form of bond hereinbefore recited, and in the
denominations of $1,000 and authorized multiples thereof.
Delivery of a bond of Guarantee Series I to the Trustee for
authentication shall be conclusive evidence that its serial
number has been duly approved by the Company.
The bonds of Guarantee Series I shall be redeemable
pursuant to the requirements of this Sixty-Sixth Supplemental
Indenture in whole, prior to maturity, upon notice given by
mailing the same, postage pre-paid, at least thirty days and not
more than forty-five days prior to the date fixed for redemption
to each registered holder of a bond to be redeemed at the last
address of such holder appearing on the registry books. The
Trustee shall within five business days of receiving the written
advice specified in the form of bond of Guarantee Series I
provided for herein mail a copy thereof to the Company stamped or
otherwise marked to indicate the date of receipt by the Trustee.
The Company shall fix a redemption date for the redemption so
demanded and shall mail to the Trustee notice of such date at
least 35 days prior thereto. Subject to the foregoing sentence,
the redemption date so fixed may be any day not earlier than the
date specified in the aforesaid written advice as the date of
such occurrence of a Reimbursement Event of Default under the
Reimbursement Agreement and not later than the 45th day after
receipt by the Trustee of such advice, unless such 45th day is
earlier than such date of occurrence of a Reimbursement Event of
Default. If the Trustee does not receive such notice from the
Company within 13 days after receipt by the Trustee of the
aforesaid written advice, the redemption date shall be deemed
fixed as the 45th day after such receipt. The Trustee shall mail
- 11 -
notice of the redemption date to the Administrative Agent not
less than 30 days prior to such redemption date, provided,
however, that the Trustee shall mail no such notice (and no
redemption shall be made) if prior to the mailing of such notice
the Trustee shall have received written notice from the
Administrative Agent confirming that such Reimbursement Event of
Default under the Reimbursement Agreement is no longer
continuing. The terms "Administrative Agent" and "Reimbursement
Agreement" shall have the meanings specified in the form of bond
of Guarantee Series I provided for herein. Redemption of the
bonds of Guarantee Series I shall be at the principal amount
thereof, plus accrued interest thereon to the date fixed for
redemption and such amount shall become due and payable on the
date fixed for such redemption. Anything in this paragraph
contained to the contrary notwithstanding, if, after mailing
notice of the date fixed for redemption but prior to such date,
the Trustee shall have been advised in writing by the
Administrative Agent that such Reimbursement Event of Default
under the Reimbursement Agreement is no longer continuing and
that the aforesaid written advice has been rescinded, the
aforesaid written advice shall thereupon, without further act of
the Trustee or the Company, be rescinded and become null and void
for all purposes hereunder and no redemption of the bonds of
Guarantee Series I and no payments in respect thereof as
specified in the aforesaid written notice shall be effected or
required. But no such rescission shall extend to any subsequent
written advice from the Administrative Agent or impair any right
consequent on such subsequent written advice.
Section 2. Bonds of Guarantee Series I shall be deemed
to be paid and no longer outstanding under the Indenture to the
extent that the Company's obligations with respect to the
principal, interest, commissions, fees and other amounts payable
under or in connection with the Reimbursement Agreement which are
due from time to time under the Reimbursement Agreement are, and
any Letter of Credit issued pursuant thereto is, no longer
outstanding and the Trustee has been notified to such effect by
the Company.
Section 3. Subject to the terms of the Reimbursement
Agreement dated as of May 12, 1995 between the Company and the
Administrative Agent relating to the bonds of Guarantee Series I,
bonds of Guarantee Series I may be transferred by the registered
owners thereof, and exchanged as set forth in the next sentence,
in person or by attorney duly authorized, at an office or agency
of the Company in the Borough of Manhattan, The City of New York,
N.Y. or in the City of Akron, Ohio but only in the manner and
upon the conditions prescribed in the Indenture and in the form
of bond hereinbefore recited. In the event the maturity of bonds
of Guarantee Series I is extended in accordance with the
provisions hereof and of the Indenture Supplement, as a result of
the extension of the Stated Termination Date of any Letter of
- 12 -
Credit, as the same may be extended pursuant to the Reimbursement
Agreement, the holder hereof shall be entitled to exchange this
bond for a bond or bonds stating such new maturity date. Bonds
of Guarantee Series I shall be exchangeable for other registered
bonds of the same series, in the manner and upon the conditions
prescribed in the Indenture, and in the form of bond hereinbefore
recited, upon the surrender of such bonds at said offices or
agencies of the Company. However, notwithstanding the provisions
of Section 14 or 15 of the Indenture, no charge shall be made
upon any transfer or exchange of bonds of said series other than
for any tax or taxes or other governmental charge required to be
paid by the Company.
Section 4. Bonds of Guarantee Series I shall be
considered and deemed to be "outstanding" for all purposes under
the Mortgage in the full principal amount thereof, until the
maturity thereof, regardless of whether any amounts have accrued
thereunder or are then due and owing thereunder.
Section 5. The Company reserves the right, without any
consent or other action by holders of the bonds of Guarantee
Series I, or any subsequent series of bonds, to amend the
Indenture by inserting the following language as Section 115A
immediately following current Section 115 of the Indenture:
With the consent of the holders of not less than
sixty per centum (60%) in principal amount of the bonds at
the time outstanding or their attorneys-in-fact duly
authorized, or, if the rights of the holders of one or more,
but not all, series then outstanding are affected, the
consent of the holders of not less than sixty per centum
(60%) in aggregate principal amount of the bonds at the time
outstanding of all affected series, taken together, and not
any other series, the Company, when authorized by a
resolution, and the Trustee may from time to time and at any
time enter into an indenture or indentures supplemental
hereto for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions
of this Indenture or of any supplemental indenture or
modifying the rights and obligations of the Company and the
rights of the holders of any of the bonds and coupons;
provided, however, that no such supplemental indenture shall
(1) extend the maturity of any of the bonds or reduce the
rate or extend the time of payment of interest thereon, or
reduce the amount of the principal thereof, or reduce any
premium, payable on the redemption thereof or change the
coin or currency in which any bond or interest thereon is
payable, without the consent of the holder of each bond so
affected, or (2) permit the creation of any lien, not
otherwise permitted, prior to or on a parity with the lien
of this Indenture, without the consent of the holders of all
of the bonds then outstanding, or (3) reduce the aforesaid
- 13 -
percentage of the principal amount of bonds the holders of
which are required to approve any such supplemental
indenture, without the consent of the holders of all the
bonds then outstanding. For the purposes of this Section,
bonds shall be deemed to be affected by a supplemental
indenture if such supplemental indenture adversely affects
or diminishes the right of holders thereof against the
Company or against its property.
Upon the written request of the Company,
accompanied by a resolution authorizing the execution of any
such supplemental indenture, and upon the filing with the
Trustee of evidence of the consent of bondholders as
aforesaid (the instrument or instruments evidencing such
consent to be dated within one year of such request), the
Trustee shall join with the Company in the execution of such
supplemental indenture unless such supplemental indenture
affects the Trustee's own rights, duties or immunities under
this Indenture or otherwise, in which case the Trustee may
in its discretion but shall not be obligated to enter into
such supplemental indenture. The Trustee shall be entitled
to receive and, subject to Section 102 of the Indenture and
Article Five of the Seventh Supplemental Indenture, may rely
upon an opinion of counsel as conclusive evidence that any
such supplemental indenture is authorized or permitted by
the provisions of this Section.
It shall not be necessary for the consent of the
bondholders under this Section to approve the particular
form of any proposed supplemental indenture, but it shall be
sufficient if such consent shall approve the substance
thereof.
The Company and the Trustee, if they so elect, and
either before or after such 60% or greater consent has been
obtained, may require the holder of any bond consenting to
the execution of any such supplemental indenture to submit
his bond to the Trustee or to such bank, banker or trust
company as may be designated by the Trustee for the purpose,
for the notation thereon of the fact that the holder of such
bond has consented to the execution of such supplemental
indenture, and in such case such notation, in form
satisfactory to the Trustee, shall be made upon all bonds so
submitted, and such bonds bearing such notation shall
forthwith be returned to the persons entitled thereto. All
subsequent holders of bonds bearing such notation shall be
deemed to have consented to the execution of such
supplemental indenture, and consent, once given or deemed to
be given, may not be withdrawn.
- 14 -
Prior to the execution by the Company and the
Trustee of any supplemental indenture pursuant to the
provisions of this Section, the Company shall publish a
notice, setting forth in general terms the substance of such
supplemental indenture, at least once in one daily newspaper
of general circulation in each city in which the principal
of any of the bonds shall be payable, or, if all bonds
outstanding shall be registered bonds without coupons or
coupon bonds registered as to principal, such notice shall
be sufficiently given if mailed, first class, postage
prepaid, and registered if the Company so elects, to each
registered holder of bonds at the last address of such
holder appearing on the registry books, such publication or
mailing, as the case may be, to be made not less than thirty
days prior to such execution. Any failure of the Company to
give such notice, or any defect therein, shall not, however,
in any way impair or affect the validity of any such
supplemental indenture.
Section 6. The Company reserves the right, without any
consent or other action by the holders of the bonds of Guarantee
Series I, or any subsequent series of bonds, to amend the
Indenture by deleting the phrase "sixty per centum (60%)" in
Section 28 of the Indenture and substituting therefor the phrase
"seventy per centum (70%)" and by deleting the phrase "One
hundred sixty-six and two-thirds per cent. (166 2/3%)" in
Sections 65 and 67 of the Indenture and substituting therefor the
phrase "One hundred and forty-two and eighty-six hundredths per
cent. (142.86%)".
Section 7. Except as herein otherwise expressly
provided, no duties, responsibilities or liabilities are assumed,
or shall be construed to be assumed, by the Trustee by reason of
this Supplemental Indenture; the Trustee shall not be responsible
for the recitals herein or in the bonds (except the Trustee's
authentication certificate), all of which are made by the Company
solely; and this Supplemental Indenture is executed and accepted
by the Trustee, subject to all the terms and conditions set forth
in the Indenture, as fully to all intents and purposes as if the
terms and conditions of the Indenture were herein set forth at
length.
Section 8. As supplemented by this Supplemental
Indenture, the Indenture is in all respects ratified and
confirmed, and the Indenture as herein defined, and this
Supplemental Indenture, shall be read, taken and construed as one
and the same instrument.
Section 9. Nothing in this Supplemental Indenture
contained shall or shall be construed to confer upon any person
other than a holder of bonds issued under the Indenture, the
Company and the Trustee any right or interest to avail himself of
- 15 -
any benefit under any provision of the Indenture or of this
Supplemental Indenture.
Section 10. This Supplemental Indenture may be
simultaneously executed in several counterparts and all such
counterparts executed and delivered, each as an original, shall
constitute but one and the same instrument.
In witness whereof, Ohio Edison Company, party of the
first part hereto, and Bankers Trust Company, party of the second
part hereto, have caused these presents to be executed in their
respective names by their respective Presidents or one of their
Vice Presidents or Assistant Vice Presidents and their respective
seals to be hereunto affixed and attested by their respective
Secretaries or one of their Assistant Secretaries or Assistant
Treasurers, all as of the day and year first above written.
- 16 -
Ohio Edison Company
[Seal]
By: /s/ H. P. Burg
-----------------------------
Title: Senior Vice President
Attest: /s/ T. F. Struck II
------------------------------
Title: Assistant Treasurer and
Assistant Secretary
Signed, Sealed and Acknowledged on behalf of
Ohio Edison Company in the presence of:
/s/ Cynthia A. Kippes
-------------------------
Cynthia A. Kippes
/s/ Janice K. Burgy
------------------------
Janice K. Burgy
Bankers Trust Company
[Seal]
By: /s/ Robert Caporale
-----------------------
Title: Vice President
Attest: /s/ Scott Thiel
---------------------------
Title: Assistant Treasurer
Signed, Sealed and Acknowledged on behalf of
Bankers Trust Company in the presence of:
/s/ Kerri O'Brien
------------------------
Kerri O'Brien
/s/ Michael Waters
-----------------------------
Michael Waters
- 17 -
State of Ohio )
: ss.:
County of Summit )
On the 5th day of May, 1995, personally appeared before
me, a Notary Public in and for the said County and State
aforesaid, H.P. Burg and T.F. Struck, II, to me known and known
to me to be a Senior Vice President and an Assistant Treasurer
and Assistant Secretary, respectively, of Ohio Edison Company,
the corporation which executed the foregoing instrument, and who
severally acknowledged that they did sign and seal such
instrument as such Senior Vice President and Assistant Treasurer
and Assistant Secretary, respectively, of Ohio Edison Company,
the same is their free act and deed and the free and corporate
act and deed of said corporation.
In witness whereof, I have hereunto set my hand and
seal the 5th day of May, 1995.
/s/ Debra L. Cordea
--------------------------------
Debra L. Cordea, Notary Public
Residence - Summit County
State Wide Jurisdiction, Ohio
My Commission Expires Nov. 20, 1999
[Seal]
State of Ohio )
: ss.:
County of Summit )
On the 5th day of May, 1995, before me personally came
H.P. Burg, to me known, who, being by me duly sworn, did depose
and say that he resides at 4311 Leewood Road, Stow, Ohio 44224;
that he is a Senior Vice President of Ohio Edison Company, one of
the corporations described in and which executed the above
instrument; that he knows the seal of said corporation; that the
seal affixed to said instrument is such corporate seal; that it
was so affixed by order of the Board of Directors of said
corporation, and that he signed his name thereto by like order.
/s/ Debra L. Cordea
------------------------------
Debra L. Cordea, Notary Public
Residence - Summit County
State Wide Jurisdiction, Ohio
My Commission Expires Nov. 20, 1999
[Seal]
- 18 -
State of New York )
: ss.:
County of New York)
On the 11th day of May, 1995, personally appeared
before me, a Notary Public in and for the said County and State
aforesaid, Robert Caporale and Scott Thiel, to me known and known
to me to be a Vice President and Assistant Treasurer,
respectively, of Bankers Trust Company, the corporation which
executed the foregoing instrument, and who severally acknowledged
that they did sign and seal such instrument as such Vice
President and Assistant Treasurer for and on behalf of said
corporation and that the same is their free act and deed and the
free and corporate act and deed of said corporation.
In witness whereof, I have hereunto set my hand and
seal the 11th day of May, 1995.
/s/ Margaret Bereza
--------------------------------
Notary Public, State of New York
No. 31-5023900
Qualified in New York County
Commission Expires 2/22/96
[Seal]
State of New York )
: ss.:
County of New York)
On the 11th day of May, 1995, before me personally came
Robert Caporale, to me known, who, being by me duly sworn, did
depose and say that he resides at 25 Lake Street, White Plains,
New York 10603; that he is a Vice President of Bankers Trust
Company, one of the parties described in and which executed the
above instrument; that he knows the seal of said corporation;
that the seal affixed to said instrument is such corporate seal;
that it was so affixed by order of the Board of Directors of said
corporation, and that he signed his name thereto by like
authority.
/s/ Margaret Bereza
--------------------------------
Notary Public, State of New York
No. 31-5023900
Qualified in New York County
Commission Expires 2/22/96
[Seal]
- 19 -
Bankers Trust Company hereby certifies that its precise
name and address as Trustee hereunder are:
Bankers Trust Company
Four Albany Street
Borough of Manhattan
City, County and State of New York 10015
Bankers Trust Company
By: /s/ Robert Caporale
------------------------
Title: Vice President
- 20 -
SCHEDULE A
Detailed Description of Additional Properties
A. ELECTRIC TRANSMISSION LINES
The following electric transmission lines of the
Company, including the towers, poles, pole lines, wire, switch
racks, insulators and other appurtenances and equipment owned by
the Company, and all other property of the Company, with all the
Company's rights of way, easements, permits, privileges and
consents, licenses and rights over or relating to the
construction, maintenance or operation thereof, through, over,
under or upon any public streets or highways or other lands,
public or private:
Mansfield Division
1. Ideal Electric Company Tap: Single circuit wood
pole construction extending from structure #2 on
the existing Bowman line southerly, easterly,
southerly and westerly to Ideal Electric Company
Substation, a distance of 1.15 miles, all being
located in the City of Mansfield, Richland County,
Ohio.
/s/ T.F. Struck, II ,
----------------------------------------
T.F. Struck, II, Assistant Treasurer and
Assistant Secretary
Ohio Edison Company
/s/ Robert Caporale ,
---------------------------------------
Robert Caporale, Vice President
Bankers Trust Company
- 21 -
RECORDING DATA
Recorded
------------------
County Date Filed Volume Page
------ ---------- ------ ----
Ohio
Ashland . . . . . . . . . 5-17-95 2 203
Ashtabula . . . . . . . . 5-17-95 81 3589
Belmont . . . . . . . . . 5-17-95 636 448
Carroll . . . . . . . . . 5-17-95 232 384
Champaign . . . . . . . . 5-17-95 161 192
Clark . . . . . . . . . . 5-17-95 363 43
Columbiana. . . . . . . . 5-17-95 477 99
Crawford. . . . . . . . . 5-17-95 494 417
Cuyahoga. . . . . . . . . 5-17-95 95-03701 15
Delaware. . . . . . . . . 5-17-95 776 531
Erie. . . . . . . . . . . 5-17-95 222 46
Fayette . . . . . . . . . 5-17-95 204 622
Franklin. . . . . . . . . 5-17-95 29088 I12
Geauga. . . . . . . . . . 5-17-95 1015 511
Greene. . . . . . . . . . 5-17-95 908 376
Harrison. . . . . . . . . 5-17-95 18 12
Holmes. . . . . . . . . . 5-17-95 218 650
Huron . . . . . . . . . . 5-17-95 494 759
Jefferson . . . . . . . . 5-17-95 164 156
Knox. . . . . . . . . . . 5-17-95 474 814
Lake. . . . . . . . . . . 5-17-95 1117 5
Lorain. . . . . . . . . . 5-17-95 241 963
Madison . . . . . . . . . 5-17-95 17 1177
Mahoning. . . . . . . . . 5-17-95 2544 211
Marion. . . . . . . . . . 5-17-95 278 352
Medina. . . . . . . . . . 5-17-95 1036 217
Monroe. . . . . . . . . . 5-17-95 13 281
Morrow. . . . . . . . . . 5-17-95 312 634
Noble . . . . . . . . . . 5-17-95 18 362
Ottawa. . . . . . . . . . 5-17-95 454 402
Portage . . . . . . . . . 5-17-95 25 488
Richland. . . . . . . . . 5-17-95 364 538
Sandusky. . . . . . . . . 5-17-95 478 55
Seneca. . . . . . . . . . 5-17-95 511 1
Stark . . . . . . . . . . 5-17-95 --- ---
Summit. . . . . . . . . . 5-17-95 1926 510
Trumbull. . . . . . . . . 5-17-95 932 355
Tuscarawas. . . . . . . . 5-17-95 723 402
Union . . . . . . . . . . 5-17-95 10 49
Wayne . . . . . . . . . . 5-17-95 892 433
Wyandot . . . . . . . . . 5-17-95 210 468
West Virginia
Hancock . . . . . . . . . 5-17-95 326 604
Marshall. . . . . . . . . 5-17-95 545 663
- 22 -
Recorded
------------------
County Date Filed Volume Page
------ ---------- ------ ----
Marshall. . . . . . . . . 5-17-95 545 663
Pennsylvania
Beaver. . . . . . . . . . 5-17-95 1368 333
Lawrence. . . . . . . . . 5-17-95 1207 565
Mercer. . . . . . . . . . 5-17-95 189 827
FINANCING STATEMENTS
*Department of State,
Commonwealth of
Pennsylvania. . . . 5-17-95 File No. FMBLOC95
- -----------------------
*Filed with Prothonotary.
- 23 -
_____________________________________________
OHIO EDISON COMPANY
with
BANKERS TRUST COMPANY,
As Trustee
_______________
SIXTY-SEVENTH SUPPLEMENTAL INDENTURE
Providing among other things for
First Mortgage Bonds
Guarantee Series A of 1995 due 2020
_______________
Dated as of July 1, 1995
_____________________________________________
SUPPLEMENTAL INDENTURE, dated as of July 1, 1995
between Ohio Edison Company, a corporation organized and existing
under the laws of the State of Ohio (hereinafter called the
"Company"), party of the first part, and Bankers Trust Company, a
corporation organized and existing under the laws of the State of
New York, as Trustee under the Indenture hereinafter referred to,
party of the second part.
Whereas, the Company has heretofore executed and
delivered to Bankers Trust Company, as Trustee (hereinafter
called the "Trustee"), a certain Indenture of Mortgage and Deed
of Trust, dated as of August 1, 1930, to secure an issue of bonds
of the Company, issued and to be issued in series, from time to
time, in the manner and subject to the conditions set forth in
the said Indenture; and the said Indenture has been supplemented
by supplemental indentures, dated as of August 1, 1930, March 3,
1931, as of November 1, 1935, as of January 1, 1937, as of
September 1, 1937, as of June 13, 1939, as of September 1, 1944,
as of April 1, 1945, as of September 1, 1948, as of May 1, 1950,
as of January 1, 1954, as of May 1, 1955, as of August 1, 1956,
as of March 1, 1958, as of April 1, 1959, as of June 1, 1961, as
of September 1, 1969, as of May 1, 1970, as of September 1, 1970,
as of June 1, 1971, as of August 1, 1972, as of September 1,
1973, as of August 1, 1974, as of July 1, 1976, as of December 1,
1976, as of June 15, 1977, as of May 15, 1978, as of February 1,
1980, as of April 15, 1980, as of June 15, 1980, as of October 1,
1981, as of October 15, 1981, as of February 15, 1982, as of July
1, 1982, as of March 1, 1983, as of March 1, 1984, as of
September 15, 1984, as of September 27, 1984, as of November 8,
1984, as of December 1, 1984, as of December 5, 1984, as of
January 1, 1985, as of January 30, 1985, as of February 25, 1985,
as of July 1, 1985, as of October 1, 1985, as of January 15,
1986, as of May 20, 1986, as of June 3, 1986, as of October 1,
1986, as of July 15, 1989, as of August 25, 1989, as of February
15, 1991, as of May 1, 1991, as of May 15, 1991, as of September
15, 1991, as of April 1, 1992, as of June 15, 1992, as of
September 15, 1992, as of April 1, 1993, as of June 15, 1993, as
of September 15, 1993, as of November 15, 1993, as of April 1,
1995, and as of May 1, 1995, respectively, which Indenture as so
supplemented and to be hereby supplemented is hereinafter
referred to as the "Indenture"; and
Whereas, the Indenture provides for the issuance of
bonds thereunder in one or more series, the form of each series
of bonds and of the coupons to be attached to the coupon bonds,
if any, to be substantially in the forms set forth therein with
such insertions, omissions and variations as the Board of
Directors of the Company may determine; and
Whereas, the Company, by appropriate corporate action
in conformity with the terms of the Indenture, has duly
determined to create a new series of bonds under the Indenture,
consisting of $60,000,000 in principal amount to be designated as
"First Mortgage Bonds Guarantee Series A of 1995 due 2020"
(hereinafter sometimes referred to as the "bonds of Guarantee
Series"), the bonds of which series are to bear interest at the
rate of 7.05% per annum, are to mature October 1, 2020, and are
to be substantially in the following form:
[form of bond of Guarantee Series]
This Bond is not transferable except to a successor trustee under
the Trust Indenture, dated as of October 1, 1994, between the
BEAVER COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY and SOCIETY
NATIONAL BANK, as Trustee, or in connection with the exercise of
the rights and remedies of the holder hereof consequent upon a
"default" as defined in the Mortgage referred to herein.
OHIO EDISON COMPANY
First Mortgage Bond Guarantee Series A of 1995 Due 2020
Due October 1, 2020
$ No.
Ohio Edison Company, a corporation of the State of Ohio
(hereinafter called the Company), for value received, hereby
promises to pay to or registered assigns,
dollars at an office or
agency of the Company in the Borough of Manhattan, The City of
New York, N.Y. or in the City of Akron, Ohio, on October 1,
2020 in any coin or currency of the United States of America
which at the time of payment is legal tender for public and
private debts, and to pay at said offices or agencies to the
registered owner hereof, in like coin or currency, interest
thereon from the Initial Interest Accrual Date (hereinbelow
defined) at the rate of seven and five one-hundredths per centum
per annum. Payments of principal of and interest on this bond
shall be made at an office or agency of the Company in the
Borough of Manhattan, The City of New York, N. Y. or in the City
of Akron, Ohio.
The provisions of this bond are continued on the
reverse hereof and such continued provisions shall for all
purposes have the same effect as though fully set forth at this
place.
This bond shall not become obligatory until Bankers
Trust Company, the Trustee under the Mortgage referred to on the
reverse hereof, or its successor thereunder, shall have
authenticated the form of certificate endorsed hereon.
- 2 -
In witness whereof, Ohio Edison Company has caused this
bond to be signed in its name by its President or a Vice
President, by his signature or a facsimile thereof, and its
corporate seal to be printed hereon, attested by its Secretary or
an Assistant Secretary, by his signature or a facsimile thereof.
Dated, , 199_
Ohio Edison Company,
By____________________
Title: President
Attest:
_________________________
Title: Secretary
[form of trustee's authentication certificate]
Trustee's Authentication Certificate
This bond is one of the bonds of the series designated
therein, described in the within-mentioned Mortgage.
Bankers Trust Company,
as Trustee,
By_________________________
Authorized Officer
- 3 -
[form of bond of Guarantee Series]
[Reverse]
OHIO EDISON COMPANY
First Mortgage Bond Guarantee Series A of 1995 Due 2020
This bond is one of an issue of bonds of the Company,
issuable in series, and is one of a series known as its First
Mortgage Bonds of the series designated in its title, all issued
and to be issued under and equally secured (except as to any
sinking fund established in accordance with the provisions of the
Mortgage hereinafter mentioned for the bonds of any particular
series) by an Indenture of Mortgage and Deed of Trust, dated as
of August 1, 1930, executed by the Company to Bankers Trust
Company, as Trustee, as amended and supplemented by indentures
supplemental thereto, to which Indenture as so amended and
supplemented (herein referred to as the "Mortgage") reference is
made for a description of the property mortgaged and pledged, the
nature and extent of the security, the rights of the holders of
the bonds in respect thereof and the terms and conditions upon
which the bonds are secured.
The bonds of this series shall be redeemed in whole, by
payment of the principal amount thereof plus accrued interest
thereon, if any, to the date fixed for redemption, upon receipt
by the Trustee of a written advice from the trustee under the
Trust Indenture (the "Revenue Bond Indenture") dated as of
October 1, 1994, between Beaver County Industrial Development
Authority and Society National Bank, as trustee (such trustee and
any successor trustee being hereinafter referred to as the
"Revenue Bond Trustee"), securing $60,000,000 of Beaver County
Industrial Development Authority Pollution Control Revenue
Refunding Bonds, 7.05% 1995 Series A (Ohio Edison Company Beaver
Valley Project), stating that the principal amount of all the
revenue bonds (the "Revenue Bonds") then outstanding under the
Revenue Bond Indenture has been declared due and payable pursuant
to the provisions of Section 8.02 of the Revenue Bond Indenture,
specifying the date of the accelerated maturity of such Revenue
Bonds and the date from which interest on the Revenue Bonds
issued under the Revenue Bond Indenture has then accrued, stating
such declaration of maturity has not been annulled and demanding
payment of the principal amount hereof plus accrued interest
hereon to the date fixed for such redemption. As provided in the
supplemental indenture establishing the terms and provisions of
the bonds of this series, the date fixed for such redemption
shall be not earlier than the date specified in the aforesaid
written advice as the date of the accelerated maturity of the
Revenue Bonds then outstanding under the Revenue Bond Indenture
and not later than the 45th day after receipt by the Trustee of
- 4 -
such advice, unless such 45th day is earlier than such date of
accelerated maturity. The date fixed for such redemption shall
be specified in a notice of redemption to be given not less than
30 days prior to the date so fixed for such redemption. Upon
mailing of such notice of redemption, the date from which unpaid
interest on the Revenue Bonds has then accrued (as specified by
the Revenue Bond Trustee) shall become the initial interest
accrual date (the "Initial Interest Accrual Date") with respect
to the bonds of this series, and the date which is six months
after the Initial Interest Accrual Date shall be the first
interest payment date for the bonds of this series, provided,
however, on any demand for payment of the principal amount hereof
at maturity as a result of the principal of the Revenue Bonds
becoming due and payable on the maturity date of the bonds of
this series, the date from which unpaid interest on the Revenue
Bonds has then accrued shall become the Initial Interest Accrual
Date with respect to the bonds of this series, such date to be as
stated in a written notice from the Revenue Bond Trustee to the
Trustee. As provided in said supplemental indenture, the
aforementioned notice of redemption shall become null and void
for all purposes under said supplemental indenture and the
Mortgage (including the fixing of the Initial Interest Accrual
Date with respect to the bonds of this series) upon receipt by
the Trustee of written notice from the Revenue Bond Trustee of
the annulment of the acceleration of the maturity of the Revenue
Bonds then outstanding under the Revenue Bond Indenture and of
the rescission of the aforesaid written advice prior to the
redemption date specified in such notice of redemption, and
thereupon no redemption of the bonds of this series and no
payment in respect thereof as specified in such notice of
redemption shall be effected or required. But no such rescission
shall extend to any subsequent written advice from the Revenue
Bond Trustee or impair any right consequent on such subsequent
written advice.
Bonds of this series are not otherwise redeemable prior
to their maturity.
Notwithstanding the foregoing, the Company reserves the
right, without any consent or other action by holders of the
bonds of this series, to have the bonds of this series exchanged
(the "Exchange") at any time in whole, but not in part, for other
mortgage bonds (the "New Mortgage Bonds") of the Company (i) to
be issued under a separate indenture of mortgage and deed of
trust (the "New Mortgage") in an aggregate principal amount equal
to the aggregate principal amount of bonds of this series then
outstanding, (ii) containing provisions with respect to maturity,
principal, interest, and premium, if any, and redemption
corresponding to the bonds of this series, and (iii) otherwise
satisfying the provisions of the Pledge Agreement dated as of
October 1, 1994, as amended as of July 1, 1995, between the
Company and Society National Bank. The date fixed by the Company
- 5 -
for any Exchange (the "Exchange Date") shall be specified in a
notice of exchange to be given to the registered owner hereof not
less than 30 days prior to the date so fixed for Exchange, which
notice may be revoked by the Company at any time prior to the
Exchange Date. Any such revocation shall not prevent the Company
from exercising its right to effect the Exchange after
appropriate notice at a later date. If the Company has not
revoked its election to have the bonds of this series exchanged
prior to the Exchange Date, on the Exchange Date the New Mortgage
Bonds shall be delivered by the Company to the holders of the
bonds of this series in exchange for the bonds of this series
held by such holders and the bonds of this series shall cease to
be outstanding and shall cease to accrue interest and shall
represent only the right to receive a like principal amount of
the New Mortgage Bonds.
As more fully described in the supplemental indenture
establishing the terms and provisions of the bonds of this
series, the Company reserves the right, without any consent or
other action by holders of the bonds of this series, to amend the
Mortgage to provide (a) that the Mortgage, the rights and
obligations of the Company and the rights of the bondholders may
be modified with the consent of the holders of not less than 60%
in principal amount of the bonds adversely affected; provided,
however, that no modification shall (1) extend the time, or
reduce the amount, of any payment on any bond, without the
consent of the holder of each bond so affected, (2) permit the
creation of any lien, not otherwise permitted, prior to or on a
parity with the lien of the Mortgage, without the consent of the
holders of all bonds then outstanding, or (3) reduce the above
percentage of the principal amount of bonds the holders of which
are required to approve any such modification without the consent
of the holders of all bonds then outstanding and (b) that (i)
additional bonds may be issued against 70% of the value of the
property which forms the basis for such issuance and (ii) the
charge against property subject to a prior lien which is used to
effectuate the release of property under the Mortgage be
similarly based.
The principal hereof may be declared or may become due
on the conditions, in the manner and at the time set forth in the
Mortgage, upon the occurrence of a completed default as in the
Mortgage provided.
No recourse shall be had for the payment of the
principal of or interest on this bond against any incorporator or
any past, present or future subscriber to the capital stock,
stockholder, officer or director of the Company or any
predecessor or successor corporation, either directly or through
the Company or any predecessor or successor corporation, under
any rule of law, statute or constitution or by the enforcement of
- 6 -
any assessment or otherwise, all such liability of incorporators,
subscribers, stockholders, officers and directors being released
by the registered owner hereof by the acceptance of this bond and
being likewise waived and released by the terms of the Mortgage.
The bonds of this series are issuable only as
registered bonds without coupons in denominations of $5,000 and
authorized multiples thereof. Subject only to the restrictions
contained in the Pledge Agreement dated as of October 1, 1994, as
amended as of July 1, 1995, between the Company and the Revenue
Bond Trustee relating to bonds of this series, this bond is
transferable as prescribed in the Mortgage by the registered
owner hereof, in person or by attorney duly authorized, at an
office or agency of the Company, in the Borough of Manhattan, The
City of New York, N.Y. or in the City of Akron, Ohio, upon
surrender and cancellation of this bond and thereupon a new
registered bond or bonds of the same series for a like principal
amount, in authorized denominations, will be issued to the
transferee in exchange therefor, as provided in the Mortgage, and
upon payment, if the Company shall require it, of the transfer
charges therein prescribed. The Company and the Trustee may deem
and treat the person in whose name this bond is registered as the
absolute owner for the purpose of receiving payment of or on
account of the principal and interest due hereon and for all
other purposes. Registered bonds of this series shall be
exchangeable at said offices or agencies of the Company for
registered bonds of other authorized denominations having the
same aggregate principal amount, in the manner and upon the
conditions prescribed in the Mortgage. Notwithstanding any
provision of the Mortgage, (a) neither the Company nor the
Trustee shall be required to make transfers or exchanges of bonds
of this series during the period between any interest payment
date for such series and the record date next preceding such
interest payment date, and (b) no charge shall be made upon any
transfer or exchange of bonds of this series other than for any
tax or taxes or other governmental charge required to be paid by
the Company.
[end of form of bond of Guarantee Series]
and
Whereas, Section 115 of the Indenture provides that the
Company and the Trustee may, from time to time and at any time,
enter into such indentures supplemental thereto as shall be
deemed necessary or desirable for one or more purposes,
including, among others, to describe and set forth the particular
terms and the form of additional series of bonds to be issued
under the Indenture, to add other limitations on the issue of
bonds, withdrawal of cash or release of property, to add to the
covenants and agreements of the Company for the protection of the
holders of the bonds and of the mortgaged and pledged property,
to supplement defective or inconsistent provisions contained in
- 7 -
the Indenture, and for any other purpose not inconsistent with
the terms of the Indenture; and
Whereas, all things necessary to make the bonds of
Guarantee Series when authenticated by the Trustee and issued as
in the Indenture provided, the valid, binding and legal
obligations of the Company, entitled in all respects to the
security of the Indenture, have been done and performed, and the
creation, execution and delivery of this Supplemental Indenture
have in all respects been duly authorized; and
Whereas, the Company and Trustee deem it advisable to
enter into this Supplemental Indenture for the purposes of
describing the bonds of Guarantee Series and of establishing the
terms and provisions thereof, confirming the mortgaging under the
Indenture of additional property for the equal and proportionate
benefit and security of the holders of all bonds at any time
issued thereunder, amplifying the description of the property
mortgaged, adding other limitations to the Indenture on the issue
of bonds, withdrawal of cash or release of property, and adding
to the covenants and agreements of the Company for the protection
of the holders of bonds and of mortgaged and pledged property;
Now, therefore, this supplemental indenture witnesseth:
That Ohio Edison Company, in consideration of the premises and of
one dollar to it duly paid by the Trustee at or before the
ensealing and delivery of these presents, the receipt whereof is
hereby acknowledged, and of the purchase and acceptance of the
bonds issued or to be issued hereunder by the holders thereof,
and in order to secure the payment both of the principal and
interest of all bonds at any time issued and outstanding under
the Indenture, according to their tenor and effect, and the
performance of all the provisions of the Indenture and of said
bonds, hath granted, bargained, sold, released, conveyed,
assigned, transferred, pledged, set over and confirmed and by
these presents doth grant, bargain, sell, release, convey,
assign, transfer, pledge, set over and confirm unto Bankers Trust
Company, as Trustee, and to its successor or successors in said
trust, and to its and their assigns forever, all the properties
of the Company described in Schedule A (which is identified by
the signature of an officer of each party hereto at the end
thereof) hereto annexed and hereby made a part hereof;
Together with all and singular the tenements,
hereditaments and appurtenances belonging or in any wise
appertaining to the aforesaid property or any part thereof, with
the reversion and reversions, remainder and remainders and
(subject to the provisions of Article XI of the Indenture) the
tolls, rents, revenues, issues, earnings, income, product and
profits thereof, and all the estate, right, title and interest
and claim whatsoever, at law as well as in equity, which the
Company now has or may hereafter acquire in and to the aforesaid
property and franchises and every part and parcel thereof.
- 8 -
The Company does hereby agree and does hereby confirm
and reaffirm the agreement made by it in the Indenture, dated as
of August 1, 1930, that all the property, rights and franchises
acquired by the Company after the date of the Indenture, dated as
of August 1, 1930 (except any hereinafter expressly excepted),
shall be as fully embraced within the lien of the Indenture as if
such property had been owned by the Company on the date of the
Indenture, dated as of August 1, 1930, and was specifically
described therein and conveyed thereby and does hereby confirm
that the Company will not cause or consent to a partition,
whether voluntary or through legal proceedings, of property,
whether herein described or heretofore or hereafter acquired, in
which its ownership shall be as a tenant in common except as
permitted by and in conformity with the provisions of the
Indenture and particularly of Article XI thereof.
Provided that the following are not and are not
intended to be now or hereafter granted, bargained, sold,
released, conveyed, assigned, transferred, mortgaged, pledged,
set over or confirmed hereunder and are hereby expressly excepted
from the lien and operation of the Indenture, viz.: cash, shares
of stock and obligations (including bonds, notes and other
securities) not heretofore or hereafter specifically pledged,
paid or deposited or delivered under the Indenture or covenanted
so to be.
To have and to hold all such properties, real, personal
and mixed, mortgaged, pledged or conveyed by the Company as
aforesaid, or intended so to be, unto the Trustee and its
successors and assigns forever.
In trust, nevertheless, upon the terms and trusts of
the Indenture for those who shall hold the bonds and coupons
issued and to be issued thereunder, or any of them, without
preference, priority or distinction as to lien of any of said
bonds and coupons over any others thereof by reason of priority
in the time of the issue or negotiations thereof, or otherwise
howsoever, subject, however, to the provisions in reference to
extended, transferred or pledged coupons and claims for interest
set forth in the Indenture (and subject to any sinking funds that
may be hereafter created for the benefit of any particular
series).
Provided, however, and these presents are upon the
condition that if the Company, its successors or assigns, shall
pay or cause to be paid, the principal of and interest on said
bonds, at the times and in the manner stipulated therein and
herein, and shall keep, perform and observe all and singular the
covenants and promises in said bonds and in the Indenture
expressed to be kept, performed and observed by or on the part of
the Company, then this Supplemental Indenture and the estate and
rights hereby granted shall cease, determine and be void,
otherwise to be and remain in full force and effect.
- 9 -
It is hereby covenanted, declared and agreed, by the
Company, that all such bonds and coupons are to be issued,
authenticated and delivered, and that all property subject or to
become subject hereto is to be held, subject to the further
covenants, conditions, uses and trusts in the Indenture set
forth, and the parties hereto mutually agree as follows:
Section 1. Bonds of Guarantee Series shall mature on
October 1, 2020, and shall be designated as the Company's "First
Mortgage Bonds Guarantee Series A of 1995 due 2020." The bonds
of Guarantee Series shall bear interest from the Initial Interest
Accrual Date (as defined in the form of the bond hereinabove set
forth) at the rate of seven and five one-hundredths per centum
per annum. Principal or redemption price of and interest on the
bonds of Guarantee Series shall be payable in any coin or
currency of the United States of America which at the time of
payment is legal tender for public and private debts, at an
office or agency of the Company in the Borough of Manhattan, The
City of New York, N.Y. or in the City of Akron, Ohio.
Definitive bonds of Guarantee Series may be issued,
originally or otherwise, only as registered bonds, substantially
in the form of bond hereinbefore recited, and in the
denominations of $5,000 and authorized multiples thereof.
Delivery of a bond of Guarantee Series to the Trustee for
authentication shall be conclusive evidence that its serial
number has been duly approved by the Company.
The bonds of Guarantee Series shall be redeemable
pursuant to the requirements of this Sixty-Seventh Supplemental
Indenture in whole, prior to maturity, upon notice given by
mailing the same, postage pre-paid, at least thirty days and not
more than forty-five days prior to the date fixed for redemption
to each registered holder of a bond to be redeemed at the last
address of such holder appearing on the registry books. The
Trustee shall within five business days of receiving the written
advice specified in the form of bond of Guarantee Series provided
for herein mail a copy thereof to the Company stamped or
otherwise marked to indicate the date of receipt by the Trustee.
The Company shall fix a redemption date for the redemption so
demanded and shall mail to the Trustee notice of such date at
least 35 days prior thereto. Subject to the foregoing sentence,
the redemption date so fixed may be any day not earlier than the
date specified in the aforesaid written advice as the date of the
accelerated maturity of the Revenue Bonds then outstanding under
the Revenue Bond Indenture and not later than the 45th day after
receipt by the Trustee of such advice, unless such 45th day is
earlier than such date of accelerated maturity. If the Trustee
does not receive such notice from the Company within 13 days
after receipt by the Trustee of the aforesaid written advice, the
redemption date shall be deemed fixed as the 45th day after such
receipt. The Trustee shall mail notice of the redemption date to
- 10 -
the Revenue Bond Trustee not less than 30 days prior to such
redemption date, provided, however, that the Trustee shall mail
no such notice (and no redemption shall be made) if prior to the
mailing of such notice the Trustee shall have received written
notice from the Revenue Bond Trustee of the annulment of the
acceleration of the maturity of the Revenue Bonds then
outstanding under the Revenue Bond Indenture and of the
rescission of the aforesaid written advice. The terms "Revenue
Bond Trustee" and "Revenue Bond Indenture" and "Revenue Bonds"
shall have the meanings specified in the form of bond of
Guarantee Series provided for herein. Redemption of the bonds of
Guarantee Series shall be at the principal amount thereof, plus
accrued interest thereon to the date fixed for redemption and
such amount shall become due and payable on the date fixed for
such redemption. Anything in this paragraph contained to the
contrary notwithstanding, if, after mailing notice of the date
fixed for redemption but prior to such date, the Trustee shall
have been advised in writing by the Revenue Bond Trustee that the
acceleration of the maturity of the Revenue Bonds then
outstanding under the Revenue Bond Indenture has been annulled
and that the aforesaid written advice has been rescinded, the
aforesaid written advice shall thereupon, without further act of
the Trustee or the Company, be rescinded and become null and void
for all purposes hereunder (including the fixing of the Initial
Interest Accrual Date as provided in the form of bond of
Guarantee Series provided for herein) and no redemption of the
bonds of Guarantee Series and no payments in respect thereof as
specified in the aforesaid written notice shall be effected or
required. But no such rescission shall extend to any subsequent
written advice from the Revenue Bond Trustee or impair any right
consequent on such subsequent written advice.
Section 2. Bonds of Guarantee Series shall be deemed
to be paid and no longer outstanding under the Indenture to the
extent that Revenue Bonds which are outstanding from time to time
under the Revenue Bond Indenture are paid or deemed to be paid
and are no longer outstanding and the Trustee has been notified
to such effect by the Company.
Section 3. Subject to the terms of the Pledge
Agreement dated as of October 1, 1994, as amended as of July 1,
1995, between the Company and the Revenue Bond Trustee relating
to the bonds of Guarantee Series, bonds of Guarantee Series may
be transferred by the registered owners thereof, in person or by
attorney duly authorized, at an office or agency of the Company
in the Borough of Manhattan, The City of New York, N.Y. or in the
City of Akron, Ohio but only in the manner and upon the
conditions prescribed in the Indenture and in the form of bond
hereinbefore recited. Bonds of Guarantee Series shall be
exchangeable for other registered bonds of the same series, in
- 11 -
the manner and upon the conditions prescribed in the Indenture,
and in the form of bond hereinbefore recited, upon the surrender
of such bonds at said offices or agencies of the Company.
However, notwithstanding the provisions of Section 14 or 15 of
the Indenture, no charge shall be made upon any transfer or
exchange of bonds of said series other than for any tax or taxes
or other governmental charge required to be paid by the Company.
Section 4. The Company reserves the right, without any
consent or other action by holders of the bonds of Guarantee
Series, or any subsequent series of bonds, to amend the Indenture
by inserting the following language as Section 115A immediately
following current Section 115 of the Indenture:
With the consent of the holders of not less than
sixty per centum (60%) in principal amount of the bonds at
the time outstanding or their attorneys-in-fact duly
authorized, or, if the rights of the holders of one or more,
but not all, series then outstanding are affected, the
consent of the holders of not less than sixty per centum
(60%) in aggregate principal amount of the bonds at the time
outstanding of all affected series, taken together, and not
any other series, the Company, when authorized by a
resolution, and the Trustee may from time to time and at any
time enter into an indenture or indentures supplemental
hereto for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions
of this Indenture or of any supplemental indenture or
modifying the rights and obligations of the Company and the
rights of the holders of any of the bonds and coupons;
provided, however, that no such supplemental indenture shall
(1) extend the maturity of any of the bonds or reduce the
rate or extend the time of payment of interest thereon, or
reduce the amount of the principal thereof, or reduce any
premium, payable on the redemption thereof or change the
coin or currency in which any bond or interest thereon is
payable, without the consent of the holder of each bond so
affected, or (2) permit the creation of any lien, not
otherwise permitted, prior to or on a parity with the lien
of this Indenture, without the consent of the holders of all
of the bonds then outstanding, or (3) reduce the aforesaid
percentage of the principal amount of bonds the holders of
which are required to approve any such supplemental
indenture, without the consent of the holders of all the
bonds then outstanding. For the purposes of this Section,
bonds shall be deemed to be affected by a supplemental
indenture if such supplemental indenture adversely affects
or diminishes the right of holders thereof against the
Company or against its property.
- 12 -
Upon the written request of the Company,
accompanied by a resolution authorizing the execution of any
such supplemental indenture, and upon the filing with the
Trustee of evidence of the consent of bondholders as
aforesaid (the instrument or instruments evidencing such
consent to be dated within one year of such request), the
Trustee shall join with the Company in the execution of such
supplemental indenture unless such supplemental indenture
affects the Trustee's own rights, duties or immunities under
this Indenture or otherwise, in which case the Trustee may
in its discretion but shall not be obligated to enter into
such supplemental indenture. The Trustee shall be entitled
to receive and, subject to Section 102 of the Indenture and
Article Five of the Seventh Supplemental Indenture, may rely
upon an opinion of counsel as conclusive evidence that any
such supplemental indenture is authorized or permitted by
the provisions of this Section.
It shall not be necessary for the consent of the
bondholders under this Section to approve the particular
form of any proposed supplemental indenture, but it shall be
sufficient if such consent shall approve the substance
thereof.
The Company and the Trustee, if they so elect, and
either before or after such 60% or greater consent has been
obtained, may require the holder of any bond consenting to
the execution of any such supplemental indenture to submit
his bond to the Trustee or to such bank, banker or trust
company as may be designated by the Trustee for the purpose,
for the notation thereon of the fact that the holder of such
bond has consented to the execution of such supplemental
indenture, and in such case such notation, in form
satisfactory to the Trustee, shall be made upon all bonds so
submitted, and such bonds bearing such notation shall
forthwith be returned to the persons entitled thereto. All
subsequent holders of bonds bearing such notation shall be
deemed to have consented to the execution of such
supplemental indenture, and consent, once given or deemed to
be given, may not be withdrawn.
Prior to the execution by the Company and the
Trustee of any supplemental indenture pursuant to the
provisions of this Section, the Company shall publish a
notice, setting forth in general terms the substance of such
supplemental indenture, at least once in one daily newspaper
of general circulation in each city in which the principal
of any of the bonds shall be payable, or, if all bonds
outstanding shall be registered bonds without coupons or
coupon bonds registered as to principal, such notice shall
be sufficiently given if mailed, first class, postage
prepaid, and registered if the Company so elects, to each
- 13 -
registered holder of bonds at the last address of such
holder appearing on the registry books, such publication or
mailing, as the case may be, to be made not less than thirty
days prior to such execution. Any failure of the Company to
give such notice, or any defect therein, shall not, however,
in any way impair or affect the validity of any such
supplemental indenture.
Section 5. The Company reserves the right, without any
consent or other action by the holders of the bonds of Guarantee
Series, or any subsequent series of bonds, to amend the Indenture
by deleting the phrase "sixty per centum (60%)" in Section 28 of
the Indenture and substituting therefor the phrase "seventy per
centum (70%)" and by deleting the phrase "One hundred sixty-six
and two-thirds per cent. (166 2/3%)" in Sections 65 and 67 of the
Indenture and substituting therefor the phrase "One hundred and
forty-two and eighty-six hundredths per cent. (142.86%)".
Section 6. Except as herein otherwise expressly
provided, no duties, responsibilities or liabilities are assumed,
or shall be construed to be assumed, by the Trustee by reason of
this Supplemental Indenture; the Trustee shall not be responsible
for the recitals herein or in the bonds (except the Trustee's
authentication certificate), all of which are made by the Company
solely; and this Supplemental Indenture is executed and accepted
by the Trustee, subject to all the terms and conditions set forth
in the Indenture, as fully to all intents and purposes as if the
terms and conditions of the Indenture were herein set forth at
length.
Section 7. As supplemented by this Supplemental
Indenture, the Indenture is in all respects ratified and
confirmed, and the Indenture as herein defined, and this
Supplemental Indenture, shall be read, taken and construed as one
and the same instrument.
Section 8. Nothing in this Supplemental Indenture
contained shall or shall be construed to confer upon any person
other than a holder of bonds issued under the Indenture, the
Company and the Trustee any right or interest to avail himself of
any benefit under any provision of the Indenture or of this
Supplemental Indenture.
Section 9. This Supplemental Indenture may be
simultaneously executed in several counterparts and all such
counterparts executed and delivered, each as an original, shall
constitute but one and the same instrument.
In witness whereof, Ohio Edison Company, party of the
first part hereto, and Bankers Trust Company, party of the second
part hereto, have caused these presents to be executed in their
respective names by their respective Presidents or one of their
- 14 -
Vice Presidents or Assistant Vice Presidents and their respective
seals to be hereunto affixed and attested by their respective
Secretaries or one of their Assistant Secretaries or Assistant
Treasurers, all as of the day and year first above written.
Ohio Edison Company
[Seal]
By: /s/ John A. Gill
-----------------------
John A. Gill
Title: Vice President
Attest: /s/ Theodore F. Struck, II
-------------------------------
Theodore F. Struck, II
Title: Assistant Treasurer and
Assistant Secretary
Signed, Sealed and Acknowledged on behalf of
Ohio Edison Company in the presence of:
/s/ Cynthia A. Kippes
-------------------------
Cynthia A. Kippes
/s/ Janice K. Burgy
-------------------------
Janice K. Burgy
Bankers Trust Company
[Seal]
By: /s/ Robert Caporale
----------------------
Robert Caporale
Title: Vice President
Attest: /s/ Scott Thiel
---------------------------
Scott Thiel
Title: Assistant Treasurer
Signed, Sealed and Acknowledged on behalf of
Bankers Trust Company in the presence of:
/s/ Kerri O'Brien
----------------------
Kerri O'Brien
/s/ Shafig Jadavji
------------------
Shafiq Jadavji
- 15 -
State of Ohio )
: ss.:
County of Summit )
On the 3 rd day of July, 1995, personally appeared
before me, a Notary Public in and for the said County and State
aforesaid, J.A. Gill and T.F. Struck, II, to me known and known
to me to be a Vice President and an Assistant Treasurer and
Assistant Secretary, respectively, of Ohio Edison Company, the
corporation which executed the foregoing instrument, and who
severally acknowledged that they did sign and seal such
instrument as such Vice President and Assistant Treasurer and
Assistant Secretary, respectively, of Ohio Edison Company, the
same is their free act and deed and the free and corporate act
and deed of said corporation.
In witness whereof, I have hereunto set my hand and
seal the 3 rd day of July, 1995.
/s/ Debra L. Cordea
------------------------------
Debra L. Cordea, Notary Public
Residence - Summit County
State Wide Jurisdiction, Ohio
My Commission Expires Nov. 20, 1999
[Seal]
State of Ohio )
: ss.:
County of Summit )
On the 3 rd day of July, 1995, before me personally
came J.A. Gill, to me known, who, being by me duly sworn, did
depose and say that he resides at 123 Meadow Lane, Peninsula,
Ohio 44264; that he is a Vice President of Ohio Edison Company,
one of the corporations described in and which executed the above
instrument; that he knows the seal of said corporation; that the
seal affixed to said instrument is such corporate seal; that it
was so affixed by order of the Board of Directors of said
corporation, and that he signed his name thereto by like order.
/s/ Debra L. Cordea
----------------------------
Debra L. Cordea, Notary Public
Residence - Summit County
State Wide Jurisdiction, Ohio
My Commission Expires Nov. 20, 1999
[Seal]
- 16 -
State of New York )
: ss.:
County of New York )
On the 6 th day of July, 1995, personally appeared
before me, a Notary Public in and for the said County and State
aforesaid, Robert Caporale and Scott Thiel, to me known and known
to me to be a Vice President and Assistant Treasurer,
respectively, of Bankers Trust Company, the corporation which
executed the foregoing instrument, and who severally acknowledged
that they did sign and seal such instrument as such Vice
President and Assistant Treasurer for and on behalf of said
corporation and that the same is their free act and deed and the
free and corporate act and deed of said corporation.
In witness whereof, I have hereunto set my hand and
seal the 6 th day of July, 1995.
/s/ Sharon V. Alston
--------------------------
SHARON V. ALSTON
Notary Public, State of New York
No. 31-4966275
Qualified in New York County
My Commission Expires May 7, 1996
[Seal]
State of New York )
: ss.:
County of New York )
On the 6 th day of July, 1995, before me personally
came Robert Caporale, to me known, who, being by me duly sworn,
did depose and say that he resides at 25 Lake Street, White
Plains, New York 10603, that he is a Vice President of Bankers
Trust Company, one of the parties described in and which executed
the above instrument; that he knows the seal of said corporation;
that the seal affixed to said instrument is such corporate seal;
that it was so affixed by order of the Board of Directors of said
corporation, and that he signed his name thereto by like
authority.
/s/ Sharon V. Alston
--------------------------
SHARON V. ALSTON
Notary Public, State of New York
No. 31-4966275
Qualified in New York County
My Commission Expires May 7, 1996
[Seal]
- 17 -
Bankers Trust Company hereby certifies that its precise
name and address as Trustee hereunder are:
Bankers Trust Company
Four Albany Street
Borough of Manhattan
City, County and State of New York 10015
Bankers Trust Company
By: /s/ Robert Caporale
--------------------------------
Robert Caporale
Title: Vice President
- 18 -
SCHEDULE A
Detailed Description of Additional Properties
A. ELECTRIC TRANSMISSION LINES
The following electric transmission lines of the Company,
including the towers, poles, pole lines, wire, switch racks,
insulators and other appurtenances, and equipment owned by the
Company, and all other property of the Company, with all the
Company's rights of way, easements, permits, privileges and
consents, licenses and rights over or relating to the
construction, maintenance or operation thereof, through, over,
under or upon any public streets or highways or other lands,
public or private:
Stark Division
1. Carmont Tap: Single circuit wood pole construction extending
from Structure #4 on the existing Tiger line westerly,
northwesterly, and westerly to Carmont Substation, a distance of
0.33 mile, all being located in the City of Massillon, Stark
County, Ohio.
/s/ T. F. Struck, II,
---------------------------------
T.F. Struck, II, Assistant Treasurer and
Assistant Secretary
Ohio Edison Company
/s/ Robert Caporale,
---------------------------------
Robert Caporale, Vice President
Bankers Trust Company
- 19 -
OHIO EDISON SYSTEM
EXECUTIVE SUPPLEMENTAL LIFE INSURANCE PLAN
I. Purpose
-------
The Executive Supplemental Life Insurance Plan ("the
Plan") was established on January 1, 1988 as part of an integrated
executive compensation program that is intended to attract, retain,
and motivate certain key Executives who are in positions to make
significant contributions to the operation and profitability of
Ohio Edison Company and its subsidiary Pennsylvania Power Company
(collectively, the "Company") for the benefit of stockholders and
customers.
The Plan is a means by which the Company assists the
Executive in purchasing life insurance on the Executive's life that
builds cash value at a low cost.
II. Eligibility and Participation.
-----------------------------
(A) Eligibility. The Compensation Committee of the
-----------
Board of Directors of Ohio Edison Company may designate
any Executive as eligible for this Plan and may change
this eligibility provision as required to carry out the
purpose of the Plan.
(B) Participation. Upon an eligible Executive agreeing
-------------
to participate in the Plan, the Company and the Executive
will apply for and become joint owners and beneficiaries
of a Universal Life insurance policy or policies (the
"Policy") issued by an Insurance Company ("Insurer") as
chosen by the Company on the Executive's life. The face
amount of the Policy may be revised annually based upon
changes in the Executive Policy Interest as determined in
accordance with Article V and other factors which shall
be determined by the Company. Upon issuance of the
Policy by Insurer, Executive shall become a participant
in the Plan.
-2-
III. Payment of Premiums on the Policy.
---------------------------------
The Executive will pay that portion of the annual premium
due on the Policy that is equal to the lower of the Insurer's
lowest annual term rate or the PS-58 cost. The Company will pay
the remainder of the premium in excess of yearly annual term cost
paid by Executive. Any premium or portion thereof which is payable
by Executive will be deducted from the cash compensation otherwise
payable to Executive and Company will transmit that premium or
portion, along with any premium or portion thereof payable by it,
to Insurer on or before the premium due date.
IV. Division of Ownership Rights.
----------------------------
(A) Participation in this Plan by Executive is intended
to be of a limited and specific duration and shall cease
upon completion of the vesting period specified in
Paragraph (D) below. During Executive's participation in
this Plan, both Company and Executive are owners of a
specific and limited ownership interest in the Policy
hereinafter referred to, respectively, as the "Company
Policy Interest" and the "Executive Policy Interest."
(B) (1) While Executive is living, Company's Policy
Interest shall be in an amount equal to
the total of premiums theretofore paid for the
Policy by Company pursuant to Article III, reduced
by the outstanding balance of any loans made to
Company by Insurer.
(2) Upon Executive's death, the Company's Policy
Interest shall be determined in accordance with
Article VI.
(3) Company has the right to obtain a loan from
Insurer and/or to withdraw from the cash value of
the Policy to the extent of its Company Policy
Interest. The right to withdraw from the cash
value of the Policy may be exercised only at
termination of Executive's participation in this
Plan.
-3-
(C) (1) The Executive Policy Interest shall be equal
to:
(a) the cash surrender value of the Policy
less the Company Policy Interest, while the
Executive is living, and
(b) The Executive's base salary as of the
effective date of participation in this Plan,
subject to revision annually in accordance
with Article V of this Plan, upon the
Executive's death.
(2) The Executive may not obtain access to the
Executive Policy Interest until after satisfaction
of a vesting period (the "Executive Vesting
Period"), described in the following paragraph.
(D) (1) The Executive Vesting Period shall be satisfied
at:
(a) the later of the end of five years of
Plan participation or participation in the
Plan to age 65;
(b) termination of employment with Company;
or
(c) termination of the Plan by the Company or
by written notice of the Company to the
Executive. A failure of the Company to pay
its premiums when due under Article III shall
be considered a termination of the Plan.
(2) Upon completion of the Executive Vesting
Period the Executive shall cease to be a
participant in the Plan in accordance with Article
VII.
(E) (1) Executive will have all rights, options and
privileges specified in the Policy other than those
specifically reserved to Company pursuant to this Article
IV, provided, however, during the term of this Plan
Executive cannot borrow upon or withdraw from his
interest in the Policy except as provided in Article VII.
-4-
(2) Nothing contained in this Plan will be
construed as enabling Company to compel Executive
to exercise any right, privilege or option in the
Policy.
V. Executive Policy interest Upon Death.
------------------------------------
(A) If Executive is age sixty-five (65) or older at the
time of becoming a participant in this Plan, the
Executive Policy Interest upon Executive's death, as
determined herein above, will remain fixed until
termination of participation in accordance with Article
IV of this Plan.
(B) If Executive is less than age sixty-five (65) at the
time of entering into this Plan, the Executive Policy
Interest upon Executive's death, as determined herein
above, may be increased annually, effective each January
1, at Company's option, until Executive attains age
sixty-five (65), or terminates employment with Company,
whichever is earlier. The revised Executive Policy
Interest may not exceed Executive's base salary as of
September 1 of the year prior to the increase except that
in no event may the Executive Policy Interest be
decreased.
VI. Rights to Repayment at Death.
----------------------------
(A) While Executive is participating in this Plan,
Executive and Company as co-owners of the Policy shall
have the right to name Executive's designated beneficiary
and Company as the beneficiaries of the Policy.
(B) In the event of Executive's death during
participation in this Plan, the beneficiary designated by
Executive to Insurer will be entitled to the Executive's
Policy Interest. Company will be entitled to receive the
remainder of the Policy proceeds.
(C) within sixty (60) days after the death of Executive,
Company will provide to Insurer a written statement
indicating the amount of the Executive Policy Interest
and the amount of any remaining Policy proceeds which the
Company is entitled to receive and, if required by
Insurer, a written release of the Executive's Policy
Interest.
-5-
VII. Termination of Participation.
----------------------------
(A) Except in cases where the Company has expressly
given its written consent that an Executive may continue
to participate in the Plan beyond the termination of
Executive's employment with the Company, upon
satisfaction of the Executive Vesting Period as specified
in Article IV, the Company will instruct the Insurer to
pay to the Company an amount up to its Company Policy
Interest. Upon such payment, no other amount will be due
to Company under this Plan and Company will instruct the
Insurer to release and transfer the Company's ownership
interest in the Policy to Executive who will thereafter
own the Policy free from the terms of this Plan.
(B) In the event the Executive terminates participation
in the Plan by written notice to the Company, or ceases
to contribute Executive's portion of the annual premium,
Executive shall forfeit all rights to any ownership
interest in the Policy. Company shall then hold all
rights to the Policy.
VIII. Relationship with Insurer.
-------------------------
Insurer is hereby authorized to take any action related
to the Policy that it is instructed to take in a writing signed by
Executive and by the Committee as designated in Article X. Provided
Insurer acts in accordance with the written instructions given and
pursuant to this Article VIII hereof, it shall have no further
liability to Executive or to Company as a result of having complied
with said instructions.
IX. Irrevocable Assignment by Executive.
-----------------------------------
By delivery to Company of a written notice, Executive may
irrevocably assign all (but not less than all) of the rights and
obligations of Executive hereunder. From and after such notice is
delivered to Company, the Assignee of Executive shall succeed to
all rights and obligations of Executive hereunder and such assignee
shall automatically become subject to the terms of this Plan.
Thereafter, Executive shall no longer be a participant under this
Plan or have any rights or obligations hereunder.
-6-
X. Named Fiduciary.
---------------
A Committee of three or more individuals appointed by the
Chief Executive Officer of the Ohio Edison Company ("Committee")
shall be designated as Fiduciary ("Named Fiduciary") until removal
by the Chief Executive Officer. At least one member of the
Committee shall be an employee of Pennsylvania Power Company. As
Named Fiduciary, the Committee shall administer the Plan and will
have the power and the duty to take all action and to make all
decisions necessary or proper to carry out the Plan. The
determination of the committee as to any question involving the
general administration and interpretation of the Plan shall be
final, conclusive, and binding. Any discretionary actions to be
taken under the Plan by the Committee with respect to the
classification of Employees, Executives, contributions or benefits
shall be uniform in nature and applicable to all persons similarly
situated. Without limiting the generality of the foregoing, the
Committee shall have the following powers and duties:
(a) To require any person to furnish such
information as it may request for the purpose of
the proper administration of the Plan as a
condition to receiving any benefit under the Plan;
(b) To make and enforce such rules and regulations
and prescribe the use of such forms as it deems
necessary for the efficient administration of the
Plan;
(c) To interpret the Plan and to resolve
ambiguities, inconsistencies and omissions;
(d) To decide all questions concerning the Plan
and the eligibility of any Employee to participate
in the Plan; and
(e) To determine the amount of benefits which will
be payable to any person in accordance with the
provisions of the Plan.
Committee may allocate to others certain aspects of the management
and operation responsibilities of the Plan, including the
employment of advisors and the delegation of any ministerial duties
to qualified individuals.
-7-
XII. Claims Procedure.
----------------
(A) Claims for any benefits due under the Plan or upon
surrender of the Policy shall be made in writing by
Company, and the Executive or his designated beneficiary
or beneficiaries, as the case may be, to the Committee
which shall respond in writing as soon as practicable.
The Committee shall retain such discretion in acting upon
such claims consistent with Article X of this Plan.
(B) In the event a claim is denied or disputed, the
Committee shall, within a reasonable period of time after
receipt of the claim, notify the Company, and the
Executive or his designated beneficiary or beneficiaries,
as the case may be, of such denial or dispute listing:
(1) The reasons for the denial or dispute; with
specific reference to the Plan provisions upon
which the denial or dispute is based;
(2) A description of any additional material or
information necessary and an explanation of why it
is necessary; and
(3) An explanation of the Plan's claim review
procedure.
(C) Within ninety (90) days of denial or notice of claim
under the Plan, a claimant may request that the claim be
reviewed by the Committee. The claim or request shall be
reviewed by the Committee, which may, but shall not be
required to, grant the claimant a hearing. On review,
the claimant may have representation, examine pertinent
documents and submit issues and comments in writing.
(D) The decision of the Committee on review shall
normally be made within sixty (60) days. If an extension
of time is required for a hearing or other special
circumstances, the claimant shall be notified and the
time limit shall be one hundred twenty (120) days. The
decision shall be in writing and shall state the reasons
and the relevant Plan provisions. All decisions on
review shall be final and bind all parties concerned.
-8-
XII. Miscellaneous.
-------------
(A) Not a Contract of Employment. The terms and
----------------------------
conditions of the Plan shall not be deemed to constitute
a contract of employment between the Company and the
Executive, and the Executive (or his beneficiary) shall
have no rights against the Company except as may be
otherwise provided specifically herein. Moreover,
nothing in the Plan shall be deemed to give an Executive
the right to be retained in the service of the Company or
to interfere with the right of the Company to discipline
or discharge him or her at any time.
(B) Protective Provisions. An Executive shall cooperate
---------------------
with the Company by furnishing any and all information
requested by the Company in order to evaluate a claim or
to facilitate the payment of benefits hereunder, and by
taking such physical examinations as the Company may deem
necessary and taking such other action as may be
requested by the Company.
(C) Captions. The captions of the articles, sections
--------
and paragraphs of the Plan are for convenience only and
shall not control or affect the meaning or construction
of any of its provisions.
(D) Governing Law. The provisions of the Plan shall be
-------------
construed, administered, and enforced according to and
governed by the laws (other than conflict of law
provisions) of the state of Ohio, except to the extent
such laws are superseded by ERISA.
(E) Validity. In case any provision of the Plan shall be
--------
illegal or invalid for any reason, such illegality or
invalidity shall not affect the remaining parts hereof,
but the Plan shall be construed and enforced as if such
illegal and invalid provision had never been included
herein.
(F) Mistaken Information. If any information upon which
--------------------
an Executive's benefit under the Plan is misstated or
otherwise mistaken, such benefit shall not be invalidated
(unless upon the basis of the correct information the
Executive would not be entitled to a benefit), but the
amount of the benefit shall be adjusted to the proper
amount and any overpayments shall be charged against
future payments.
-9-
(G) Taxes and Expenses. Any taxes imposed on Plan
------------------
benefits shall be the sole responsibility of the
Executive or his or her beneficiary. The Company shall
deduct from Plan benefits any amounts required by applied
law to be withheld. All Plan administration expenses
incurred by the Company or Committee shall be borne by
the Company.
XIII. Amendment.
---------
This Plan may be altered, amended or modified, including
the addition of any extra Policy provisions, except that no such
modification or amendment may eliminate or decrease the Executive
Policy Interest accrued as of the date of any such amendment or
modification. Any alteration, amendment or modification must be by
a written instrument signed by Company and adopted pursuant to
resolution of the Board of Directors of Company.
XIV. Successors
----------
The provisions of this Plan shall bind and inure to. the
benefit of the Company and its successors and assigns. The terms
successors as used herein shall include any corporate or other
business entity which shall, whether my merger, consolidation,
purchase or otherwise acquire all or substantially all of the
business and assets of the Company, and successors of any such
corporation or other business entity.
-10-
IN WITNESS WHEREOF, and pursuant to resolution of the
Board of Directors of the respective undersigned corporations, such
corporations have caused this instrument to be executed by its duly
authorized officers effective as of November 17, 1989.
--
OHIO EDISON COMPANY
By /s/ Justin T. Rogers, Jr.
--------------------------------
(Signature)
Justin T. Rogers, Jr.
President
-------------------------------
(Title)
Witness: /s/ Thomas A. Kayuha
-----------------------------
Thomas A. Kayuha
Manager, Human Resources &
Industrial Relations
-----------------------------
(Title)
PENNSYLVANIA POWER COMPANY
By /s/ Justin T. Rogers, Jr.
--------------------------------
(Signature)
Justin T. Rogers, Jr.
President
-------------------------------
(Title)
Witness: /s/ Thomas A. Kayuha
-----------------------------
Thomas A. Kayuha
Manager, Human Resources &
Industrial Relations
-----------------------------
(Title)
Ohio Edison System
1996 Executive Incentive Compensation Plan
Purpose: The purpose of the Executive Incentive Compensation
- -------
Plan is to attract, retain and motivate key executives who are in
positions to make significant contributions to the short-term and
long-term operation and profitability of Ohio Edison System
("System") for the benefit of stockholders and customers.
Performance goals and objectives are established to meet the
System's strategic vision of becoming the best performing energy
service company in the region and remain our customers' supplier
of choice.
The Plan consists of a 1996 Annual Incentive Program and a Long-
Term Incentive Program for the period 1996 through 1999.
General Eligibility: Executives in positions evaluated at a 1996
- -------------------
standard rate of $77,114 or higher. Executive positions have
been grouped into five tiers for the purposes of establishing the
appropriate proportion of base pay and incentive compensation in
an executive's total pay package, allocating the total incentive
opportunity between annual and long-term components, and
assigning weights to the System financial goals,
strategic/operational goals or functional/individual objectives
in the Annual Incentive Program. (Attachment #1, Column A)
Standard Rate: Estimated 1996 median electric utility base
- -------------
salary levels are used to position the standard rates for
executive positions (Attachment #1, Column B).
The actual base salary for senior executives will be capped at
100% of the standard rate. Mid-level executives will be capped
at 110% of standard rate. The principle is to ensure that any
additional compensation is based upon 1996 annual and long-term
incentive program results as described below.
Pay Mix: The median electric utility pay mix is used to
- -------
establish the proportion of an executive's total direct
compensation that will be provided by base salary and the
proportion that will be provided by incentives. This is used to
establish a total target incentive award for each executive's
position. As Attachment #1, Column C indicates, the principle is
that more pay is put at risk as the level of the executive's
position increases. For example, a larger portion of a senior
executive's total direct compensation will be based on incentives
than a mid-level executive's.
- 2 -
Allocation of Total Incentive: The total target incentive award
- -----------------------------
for each executive position is allocated between 1996 annual and
long-term incentive awards. As Attachment #1, Column D
indicates, the principle is that the portion of an executive's
total incentive award that is tied to long-term results increases
with the level of an executive's position. For example, a larger
portion of a senior executive's total award will be based on
long-term results than a mid-level executive's.
Annual Award Allocation: An executive's target 1996 annual award
- -----------------------
is allocated into various categories of performance goals;
namely, System financial goals, strategic or operational goals
and functional or individual objectives. The percentage
allocated to System financial goals is based on the nature and
level of each executive's position responsibilities, as indicated
by each executive's tier assignment. As Attachment #1, Column E
indicates, the principle is that the portion of an executive's
annual award that is tied directly to System financial results
increases with the level of an executive's position. For
example, a larger portion of a senior executive's annual award
will be based on System financial results than a mid-level
executive's. The remaining portion of the award will be based on
the achievement of strategic/operational goals or
functional/individual objectives on which the executive directly
impacts and which will not be dependent on the achievement of the
System financial goals.
System financial goals and a menu of strategic and operational
goals have been established for 1996. The System financial goals
apply to all executives. For each executive, appropriate
management may select strategic and operational goals from the
menu and/or establish measurable functional or individual
objectives that directly contribute to the achievement of the
financial or strategic goals. Each goal or objective has a
threshold, target and maximum level of achievement. The level of
achievement of the System financial goals at or above the
threshold level will generate a payout from 25% to 150% of the
target award. The level of achievement of strategic or
operational goals will generate a payout from 50% to 150% of
target and the level of achievement of functional or individual
objectives from 80% to 120% of target. The principle is that as
the further a goal or objective is away from having a direct
impact on System financial results, the consequences of achieving
or not achieving the goal or objective is less. Consequently,
there is a smaller payout spread between threshold and maximum.
Results between threshold and target, and target and maximum,
will be interpolated.
Conversion of Long-Term Award into Phantom Stock Grant:
- ------------------------------------------------------
Effective January 1, 1996, each executive's target long-term
award was converted into an equivalent number of hypothetical
shares of Ohio Edison common stock based on the average of the
daily closing prices of the common stock during December 1995 and
placed into a Common Stock Equivalent Account for four years.
- 3 -
During the 1996 through 1999 performance period, dividend
equivalents will be converted into additional hypothetical shares
based on the closing price on the date the dividends are paid.
At the end of the four-year performance period, the executive's
account will be valued based on the average of the daily closing
prices during December 1999. As the Long-Term Award Table on
Attachment #1 indicates, this value may be significantly adjusted
upward or downward based upon the total shareholder return of the
Ohio Edison common stock relative to the Edison Electric
Institute's Index of 100 Investor-Owned Electric Utility
Companies during this four-year period. Note that if the total
shareholder return ranking is 61 or below, no long-term award
will be paid. Award payouts between a ranking of 60 (50% payout)
and 15 (150% payout) will be interpolated. The principle of this
design is to strengthen the linkage between an executive's total
compensation and the long-term creation of shareholder wealth.
Attachment #2 and Attachment #3 are illustrations of an Annual
Incentive Program and a Long-Term Incentive Program,
respectively.
Shareholder and Ratepayer Protection Measures: No 1996 annual
- ---------------------------------------------
incentive awards will be paid unless: Ohio Edison common stock
dividends paid during 1996 are equal to or greater than $1.50 per
share; total 1996 earnings are greater than dividends paid plus
maximum annual awards from all incentive plans; and the rate
freeze as contained in the 1995 Rate Reduction and Economic
Development Program remains in effect.
Special Provisions: The following special provisions pertain to
- ------------------
award eligibility and calculations for an executive who is hired
or promoted into the executive group during 1996, leaves
employment due to retirement, death, disability, resignation or
involuntary separation prior to December 31, 1999, or does not
meet certain other requirements.
1996 Annual Incentive Program
-----------------------------
Eligibility for 1996 Award (Payable March 1997)
* Must perform the duties of his or her job for
at least 1040 regular hours during the year.
Thus, generally, a new hire into the
executive group must be employed during the
first half of 1996 to be eligible for an
annual award. Likewise, a separation of
employment due to retirement, death or
disability generally must occur during the
second half of 1996. If an executive is
promoted internally into the executive group
or reassigned to another position outside the
executive group, all hours worked during the
year are counted toward this criterion.
- 4 -
* Must be actively employed as of December 31,
1996, or have separated employment during
1996 due to retirement, disability or death.
Thus an executive who voluntarily resigns or
who is involuntarily separated is ineligible
to receive a 1996 annual award.
* Must receive or would have received a
performance rating of at least Generally
Meets Standards or New in Position. Thus an
executive rated Does Not Meet Standards is
ineligible to receive a 1996 annual award.
* Must not have voluntarily resigned or been
discharged for misconduct after December 31,
1996, but prior to the date that 1996 annual
awards are paid in 1997, if any.
Prorated Annual Award Calculation
If an executive meets the above eligibility criteria and
retires, separates employment due to disability or dies
during 1996, his/her target annual award will be prorated
based upon the number of months he or she worked.
During 1996 if an executive changes his or her job within
the executive group or is reassigned to another position
outside the executive group, the executive's total annual
award will be the sum of the prorated award earned at each
position.
1996 Long-Term Incentive Program
--------------------------------
Eligibility for Long-Term Incentive Award (Payable March
2000)
* An executive who is hired or promoted into
the executive group during 1996 will not be
eligible for the 1996 Long-Term Incentive
Program.
* An executive must be actively employed as of
the date long-term awards are paid in March
2000, or have separated employment due to
retirement, disability or death between
January 1, 1997 to the award payment date.
Thus an executive who voluntarily resigns or
who is involuntarily separated during this
time frame will be ineligible to receive a
long-term award from the 1996 program. Also,
an executive who separates employment due to
retirement, death or disability during 1996
will be ineligible to receive a long-term
award from the 1996 program. Lastly, an
executive must work at least one year in an
executive group position during the four-year
performance cycle to be eligible for a long-
term award.
- 5 -
Prorated Long-Term Award Calculation
If an executive meets the above eligibility criteria,
his/her original long-term target award will be prorated
based on the number of months worked in an executive group
position during the 1996 to 1999 performance cycle.
Deferral Option: An executive will be permitted to defer up to
- ---------------
100% of his/her 1996 award less applicable taxes, if any, into
the Executive Deferred Compensation Plan. In March 2000, any
long-term award will be paid in cash unless the Long-Term
Incentive Program is converted during the interim period to
provide payout of actual Ohio Edison common stock. In either
case, there will be no further deferral option for a long-term
award.
Administration:
- --------------
Terms: For the purposes of this Plan, the term "System" as used
in this summary refers to Ohio Edison System which includes Ohio
Edison and Penn Power collectively. The term "Company" refers
to Ohio Edison or Penn Power individually, as appropriate.
Goal Establishment and Determination: The System establishes all
goals and objectives and determines whether or not they have been
achieved.
Right to Modify or Terminate Plan: Ohio Edison reserves the
right to modify provisions of this Plan or end this Plan at any
time with or without notice. The Plan may change from year to
year or even be discontinued in the future. If it is determined
that significant unusual events occurred that impacted the
System's reported earnings but do not truly reflect the achieved
operating results of the System, then Ohio Edison may, in its
sole discretion, increase or decrease the amount of any awards
determined by this Plan or even determine that no awards will be
paid.
No Guarantee of Future Employment: Nothing in this Plan shall be
construed as giving any participant the right to be retained in
the employ of either Company, nor shall either Company be
required, by virtue of the existence of this Plan, to maintain
the employment of any participant through any specified date.
No Funded Trust: All awards paid under this Plan shall at all
times constitute general unsecured liabilities of either Company,
payable out of its own general assets. In no event shall either
Company be obliged to reserve any funds or assets to secure the
payment of such amounts and nothing contained in the Plan shall
confer upon any participant the right, title or interest of any
assets of either Company.
Administration: The Plan is administered by the Human Resources
and Industrial Relations Department of Ohio Edison.
Beneficiary Designation: Each executive may, at any time,
designate one or more persons as the executive's primary or
- 6 -
contingent beneficiary(ies) to whom awards earned under this Plan
shall be paid in the event of the executive's death prior to
payment of such awards to the executive. In the absence of an
effective beneficiary designation, or if all beneficiaries
predecease the executive, the executive's designated beneficiary
shall be the person in the first of the following classes in
which there is a survivor: the executive's surviving spouse; the
executive's estate.
JAB\01-96
Attachment #1
<TABLE>
Ohio Edison System
1996 Executive Incentive Compensation Plan
<CAPTION>
A B C D E
Total Direct
Compensation Allocation
Pay Mix of Total
Proportion of: Incentive Short-Term Allocation
-------------- ------------- ----------------------------------
Total Corp. Strategic/ Functional/
Executive No. of 1996 Standard Incen- Long- Short- Financial Operational Individual
Tier Executives Rate Range Base tive Term Term Goal(s) Goals
---- ---------- ------------- ---- ------ ----- ----- -------- -------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
I President 518.6 50% 50% 60% 40% 80% 20%
and CEO
II 4 213.8 - 237.7 65% 35% 60% 40% 60% 40%
III 3 160.9 - 202.9 70% 30% 50% 50% 40% 60%
IV 16 117.0 - 151.4 75% 25% 30% 70% 25% 75%
V 97 77.1 - 113.1 80% 20% 15% 85% 15% 85%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
<CAPTION>
Short-Term Incentive Award Leverage 25-150% 50-150% 80-120%
<CAPTION>
Long-Term Award Table
---------------------
TSR Ranking % Earned
----------- --------
<C> <C>
1-15 150%
26* 125% <FN>
38* 100% * Examples of % earned
49* 75% interpolated between
60 50% 15th and 60th rankings.
> 61 0%
-
</TABLE>
Attachment #2
Tier I
Ohio Edison System
1996 Executive Incentive Compensation Plan
Illustration of 1996 Annual Incentive Program for John Doe
Payable March 1997
Tier: I
Pay Mix: 50% Base Pay, 50% Incentives
1996 Standard Rate: $518,576
Target Total Incentive: $518,576 = ($518,576/.50 - $518,576)
Target Annual Incentive: 40% x $518,576 = $207,430
<TABLE>
<CAPTION>
===========================================================================
Weight Threshold Target Maximum
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
80% System Financial Goals 25% 100% 150%
- ---------------------------------------------------------------------------
1. Attain an E.P.S. of $2.00 $2.07 $2.30
at least $2.00. 40% $20,743 $82,972 $124,458
- ---------------------------------------------------------------------------
2. Generate shareholder cash
flow(1) of at least $470 $470M $500M $600M
million. 40% $20,743 $82,972 $124,458
- ---------------------------------------------------------------------------
20% Strategic/Operational Goals 50% 100% 150%
- ---------------------------------------------------------------------------
3. A
xx.x xx.x xx.x
10% $10,372 $20,743 $31,115
- ---------------------------------------------------------------------------
4. B
xx.x xx.x xx.x
5% $5,186 $10,372 $15,557
- ---------------------------------------------------------------------------
5. C
xx.x xx.x xx.x
5% $5,186 $10,372 $15,557
- ---------------------------------------------------------------------------
Total 1996 Award Range 100% $0-$62,230 $207,430 $311,145
===========================================================================
<FN>
(1) Shareholder cash flow is a measurement of financial reserves available
to pay common stock dividends, reduce debt, and reinvest in our
business. It is equal to revenue plus other income less the sum of:
cash operating, maintenance and construction expenses; general and
income taxes; interest expense; and preferred stock dividends.
Special provisions apply when an individual enters or leaves the executive
group for any reason during the performance period.
JAB/01-23-96
</TABLE>
Attachment #2
Tier II
Ohio Edison System
1996 Executive Incentive Compensation Plan
Illustration of 1996 Annual Incentive Program for John Doe
Payable March 1997
Tier: II
Pay Mix: 65% Base Pay, 35% Incentives
1996 Standard Rate: $237,729
Target Total Incentive: $128,008 = ($237,729/.65 - $237,729)
Target Annual Incentive: 40% x $128,008 = $51,203
<TABLE>
<CAPTION>
===========================================================================
Weight Threshold Target Maximum
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
60% System Financial Goals 25% 100% 150%
- ---------------------------------------------------------------------------
1. Attain an E.P.S. of $2.00 $2.07 $2.30
at least $2.00. 30% $3,840 $15,361 $23,041
- ---------------------------------------------------------------------------
2. Generate shareholder cash
flow(1) of at least $470 $470M $500M $600M
million. 30% $3,840 $15,361 $23,041
- ---------------------------------------------------------------------------
30% Strategic/Operational Goals 50% 100% 150%
- ---------------------------------------------------------------------------
3. A xx.x xx.x xx.x
15% $3,840 $7,680 $11,521
- ---------------------------------------------------------------------------
4. B xx.x xx.x xx.x
15% $3,840 $7,680 $11,521
- ---------------------------------------------------------------------------
10% Functional/Individual Goals 80% 100% 120%
- ---------------------------------------------------------------------------
5. C xx.x xx.x xx.x
5% $2,048 $2,560 $3,072
- ---------------------------------------------------------------------------
6. D xx.x xx.x xx.x
5% $2,048 $2,560 $3,072
- ---------------------------------------------------------------------------
Total 1996 Award Range 100% $0-$19,457 $51,203 $75,268
===========================================================================
<FN>
(1) Shareholder cash flow is a measurement of financial reserves available
to pay common stock dividends, reduce debt, and reinvest in our
business. It is equal to revenue plus other income less the sum of:
cash operating, maintenance and construction expenses; general and
income taxes; interest expense; and preferred stock dividends.
Special provisions apply when an individual enters or leaves the executive
group for any reason during the performance period.
JAB/01-23-96
</TABLE>
Attachment #2
Tier III
Ohio Edison System
1996 Executive Incentive Compensation Plan
Illustration of 1996 Annual Incentive Program for John Doe
Payable March 1997
Tier: III
Pay Mix: 70% Base Pay, 30% Incentives
1996 Standard Rate: $160,883
Target Total Incentive: $68,950 = ($160,883/.70 - $160,883)
Target Annual Incentive: 50% x $68,950 = $34,475
<TABLE>
<CAPTION>
===========================================================================
Weight Threshold Target Maximum
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
40% System Financial Goals 25% 100% 150%
- ---------------------------------------------------------------------------
1. Attain an E.P.S. of $2.00 $2.07 $2.30
at least $2.00. 20% $1,724 $6,895 $10,343
- ---------------------------------------------------------------------------
2. Generate shareholder cash
flow(1) of at least $470 $470M $500M $600M
million. 20% $1,724 $6,895 $10,343
- ---------------------------------------------------------------------------
40% Strategic/Operational Goals 50% 100% 150%
- ---------------------------------------------------------------------------
3. A xx.x xx.x xx.x
20% $3,448 $6,895 $10,343
- ---------------------------------------------------------------------------
4. B xx.x xx.x xx.x
20% $3,448 $6,895 $10,343
- ---------------------------------------------------------------------------
20% Functional/Individual Goals 80% 100% 120%
- ---------------------------------------------------------------------------
5. C xx.x xx.x xx.x
10% $2,758 $3,448 $4,137
- ---------------------------------------------------------------------------
6. D xx.x xx.x xx.x
10% $2,758 $3,448 $4,137
- ---------------------------------------------------------------------------
Total 1996 Award Range 100% $0-$15,859 $34,475 $49,644
===========================================================================
<FN>
(1) Shareholder cash flow is a measurement of financial reserves available
to pay common stock dividends, reduce debt, and reinvest in our
business. It is equal to revenue plus other income less the sum of:
cash operating, maintenance and construction expenses; general and
income taxes; interest expense; and preferred stock dividends.
Special provisions apply when an individual enters or leaves the executive
group for any reason during the performance period.
JAB/01-23-96
</TABLE>
Attachment #2
Tier IV
Ohio Edison System
1996 Executive Incentive Compensation Plan
Illustration of 1996 Annual Incentive Program for John Doe
Payable March 1997
Tier: IV
Pay Mix: 75% Base Pay, 25% Incentives
1996 Standard Rate: $130,082
Target Total Incentive: $43,361 = ($130,082/.75 - $130,082)
Target Annual Incentive: 70% x $43,361 = $30,353
<TABLE>
<CAPTION>
===========================================================================
Weight Threshold Target Maximum
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
20% System Financial Goals 25% 100% 150%
- ---------------------------------------------------------------------------
1. Attain an E.P.S. of $2.00 $2.07 $2.30
at least $2.00. 13% $986 $3,946 $5,919
- ---------------------------------------------------------------------------
2. Generate shareholder cash
flow(1) of at least $470 $470M $500M $600M
million. 12% $911 $3,642 $5,464
- ---------------------------------------------------------------------------
40% Strategic/Operational Goals 50% 100% 150%
- ---------------------------------------------------------------------------
3. A xx.x xx.x xx.x
20% $3,035 $6,071 $9,106
- ---------------------------------------------------------------------------
4. B xx.x xx.x xx.x
20% $3,035 $6,071 $9,106
- ---------------------------------------------------------------------------
40% Functional/Individual Goals 80% 100% 120%
- ---------------------------------------------------------------------------
5. C xx.x xx.x xx.x
20% $4,856 $6,071 $7,285
- ---------------------------------------------------------------------------
6. D xx.x xx.x xx.x
15% $3,642 $4,553 $5,464
- ---------------------------------------------------------------------------
Total 1996 Award Range 100% $0-$16,467 $30,353 $42,342
===========================================================================
<FN>
(1) Shareholder cash flow is a measurement of financial reserves available
to pay common stock dividends, reduce debt, and reinvest in our
business. It is equal to revenue plus other income less the sum of:
cash operating, maintenance and construction expenses; general and
income taxes; interest expense; and preferred stock dividends.
Special provisions apply when an individual enters or leaves the executive
group for any reason during the performance period.
JAB/01-23-96
</TABLE>
Attachment #2
Tier V
Ohio Edison System
1996 Executive Incentive Compensation Plan
Illustration of 1996 Annual Incentive Program for John Doe
Payable March 1997
Tier: V
Pay Mix: 80% Base Pay, 20% Incentives
1996 Standard Rate: $94,147
Target Total Incentive: $23,537 = ($94,147/.80 - $94,147)
Target Annual Incentive: 85% x $23,537 = $20,006
<TABLE>
<CAPTION>
===========================================================================
Weight Threshold Target Maximum
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
15% System Financial Goals 25% 100% 150%
- ---------------------------------------------------------------------------
1. Attain an E.P.S. of $2.00 $2.07 $2.30
at least $2.00. 8% $400 $1,600 $2,401
- ---------------------------------------------------------------------------
2. Generate shareholder cash
flow(1) of at least $470 $470M $500M $600M
million. 7% $350 $1,400 $2,101
- ---------------------------------------------------------------------------
50% Strategic/Operational Goals 50% 100% 150%
- ---------------------------------------------------------------------------
3. A xx.x xx.x xx.x
25% $2,501 $5,002 $7,502
- ---------------------------------------------------------------------------
4. B xx.x xx.x xx.x
25% $2,501 $5,002 $7,502
- ---------------------------------------------------------------------------
35% Functional/Individual Goals 80% 100% 120%
- ---------------------------------------------------------------------------
5. C xx.x xx.x xx.x
20% $3,201 $4,001 $4,801
- ---------------------------------------------------------------------------
6. D xx.x xx.x xx.x
15% $2,401 $3,001 $3,601
- ---------------------------------------------------------------------------
Total 1996 Award Range 100% $0-$11,353 $20,006 $27,908
===========================================================================
<FN>
(1) Shareholder cash flow is a measurement of financial reserves available
to pay common stock dividends, reduce debt, and reinvest in our
business. It is equal to revenue plus other income less the sum of:
cash operating, maintenance and construction expenses; general and
income taxes; interest expense; and preferred stock dividends.
Special provisions apply when an individual enters or leaves the executive
group for any reason during the performance period.
JAB/01-23-96
</TABLE>
Attachment #3
Tier I
Ohio Edison System
1996 Executive Incentive Compensation Plan
Illustration of 1996 Long-Term Incentive Program for John Doe
Payable March 2000
Tier: I
Pay Mix: 50% Base Pay, 50% Incentives
1996 Standard Rate: $518,576
Target Total Incentive: $518,576 = ($518,576/.50 - $518,576)
Target Long-Term Incentive: 60% x $518,576 = $311,146 Phantom
Stock Grant
of 13,463.695 Shares
@ $23.110/Share
Mr. Doe's long-term award payable in 2000 will be based on the
following factors:
1. The total shareholder return (TSR) of the Company's
common stock during the period 1996 to 1999 relative to
the EEI 100 Index.
2. Dividend equivalents credited to Mr. Doe's Common Stock
Equivalent Account during this period.
3. The average of the closing prices of the Company's
common stock during December 1999.
The following table illustrates potential long-term award levels
for Mr. Doe payable in 1999 at various percentile rankings of the
total shareholder return of the Company's common stock relative
to the EEI 100 Index during the 1996-1999 period.
==================================================
TSR Ranking Award Payout** % Earned
--------------------------------------------------
1-15%ile $466,719 150%
26%ile* $388,933 125%
38%ile* $311,146 100%
49%ile* $233,360 75%
60%ile $155,573 50%
61-100%ile $0 0%
--------------------------------------------------
* Examples of award payouts interpolated between the 15th and
60th rankings.
** For the purposes of illustration, assumes that no dividends
are paid and that the Ohio Edison's common stock price does not
appreciate during the four-year period.
Special provisions apply when an individual enters or leaves the
executive group for any reason during the performance period.
JAB/01-23-96
Attachment #3
Tier II
Ohio Edison System
1996 Executive Incentive Compensation Plan
Illustration of 1996 Long-Term Incentive Program for John Doe
Payable March 2000
Tier: II
Pay Mix: 65% Base Pay, 35% Incentives
1996 Standard Rate: $237,729
Target Total Incentive: $128,008 = ($237,729/.65 - $237,729)
Target Long-Term Incentive: 60% x $128,008 = $76,805 Phantom
Stock Grant
of 3,323.022 Shares
@ $23.113/Share
Mr. Doe's long-term award payable in 2000 will be based on the
following factors:
1. The total shareholder return (TSR) of the Company's
common stock during the period 1996 to 1999 relative to
the EEI 100 Index.
2. Dividend equivalents credited to Mr. Doe's Common Stock
Equivalent Account during this period.
3. The average of the closing prices of the Company's
common stock during December 1999.
The following table illustrates potential long-term award levels
for Mr. Doe payable in 2000 at various percentile rankings of the
total shareholder return of the Company's common stock relative
to the EEI 100 Index during the 1996-1999 period.
==================================================
TSR Ranking Award Payout** % Earned
--------------------------------------------------
1-15%ile $115,208 150%
26%ile* $96,006 125%
38%ile* $76,805 100%
49%ile* $57,604 75%
60%ile $38,403 50%
61-100%ile $0 0%
--------------------------------------------------
* Examples of award payouts interpolated between the 15th and
60th rankings.
** For the purposes of illustration, assumes that no dividends
are paid and that the Ohio Edison's common stock price does not
appreciate during the four-year period.
Special provisions apply when an individual enters or leaves the
executive group for any reason during the performance period.
JAB/01-23-96
Attachment #3
Tier III
Ohio Edison System
1996 Executive Incentive Compensation Plan
Illustration of 1996 Long-Term Incentive Program for John Doe
Payable March 2000
Tier: III
Pay Mix: 70% Base Pay, 30% Incentives
1996 Standard Rate: $160,883
Target Total Incentive: $68,950 = ($160,883/.70 - $160,883)
Target Long-Term Incentive: 50% x $68,950 = $34,475 Phantom
Stock Grant
of 1,491.585 Shares
@ $23.113/Share
Mr. Doe's long-term award payable in 2000 will be based on the
following factors:
1. The total shareholder return (TSR) of the Company's
common stock during the period 1996 to 1999 relative to
the EEI 100 Index.
2. Dividend equivalents credited to Mr. Doe's Common Stock
Equivalent Account during this period.
3. The average of the closing prices of the Company's
common stock during December 1999.
The following table illustrates potential long-term award levels
for Mr. Doe payable in 2000 at various percentile rankings of the
total shareholder return of the Company's common stock relative
to the EEI 100 Index during the 1996-1999 period.
==================================================
TSR Ranking Award Payout** % Earned
--------------------------------------------------
1-15%ile $51,713 150%
26%ile* $43,094 125%
38%ile* $34,475 100%
49%ile* $25,856 75%
60%ile $17,238 50%
61-100%ile $0 0%
--------------------------------------------------
* Examples of award payouts interpolated between the 15th and
60th rankings.
** For the purposes of illustration, assumes that no dividends
are paid and that the Ohio Edison's common stock price does not
appreciate during the four-year period.
Special provisions apply when an individual enters or leaves the
executive group for any reason during the performance period.
JAB/01-23-96
Attachment #3
Tier IV
Ohio Edison System
1996 Executive Incentive Compensation Plan
Illustration of 1996 Long-Term Incentive Program for John Doe
Payable March 2000
Tier: IV
Pay Mix: 75% Base Pay, 25% Incentives
1996 Standard Rate: $130,082
Target Total Incentive: $43,361 = ($130,082/.75 - $130,082)
Target Long-Term Incentive: 30% x $43,361 = $13,008 Phantom
Stock Grant
of 562.8 Shares
@ $23.113/Share
Mr. Doe's long-term award payable in 2000 will be based on the
following factors:
1. The total shareholder return (TSR) of the Company's
common stock during the period 1996 to 1999 relative to
the EEI 100 Index.
2. Dividend equivalents credited to Mr. Doe's Common Stock
Equivalent Account during this period.
3. The average of the closing prices of the Company's
common stock during December 1999.
The following table illustrates potential long-term award levels
for Mr. Doe payable in 2000 at various percentile rankings of the
total shareholder return of the Company's common stock relative
to the EEI 100 Index during the 1996-1999 period.
==================================================
TSR Ranking Award Payout** % Earned
--------------------------------------------------
1-15%ile $19,512 150%
26%ile* $16,260 125%
38%ile* $13,008 100%
49%ile* $9,756 75%
60%ile $6,504 50%
61-100%ile $0 0%
--------------------------------------------------
* Examples of award payouts interpolated between the 15th and
60th rankings.
** For the purposes of illustration, assumes that no dividends
are paid and that the Ohio Edison's common stock price does not
appreciate during the four-year period.
Special provisions apply when an individual enters or leaves the
executive group for any reason during the performance period.
JAB/01-23-96
Attachment #3
Tier V
Ohio Edison System
1996 Executive Incentive Compensation Plan
Illustration of 1996 Long-Term Incentive Program for John Doe
Payable March 2000
Tier: V
Pay Mix: 80% Base Pay, 20% Incentives
1996 Standard Rate: $94,147
Target Total Incentive: $23,537 = ($94,147/.80 - $94,147)
Target Long-Term Incentive: 15% x $23,537 = $3,531 Phantom Stock
Grant
of 152.771 Shares
@ $23.113/Share
Mr. Doe's long-term award payable in 2000 will be based on the
following factors:
1. The total shareholder return (TSR) of the Company's
common stock during the period 1996 to 1999 relative to
the EEI 100 Index.
2. Dividend equivalents credited to Mr. Doe's Common Stock
Equivalent Account during this period.
3. The average of the closing prices of the Company's
common stock during December 1999.
The following table illustrates potential long-term award levels
for Mr. Doe payable in 2000 at various percentile rankings of the
total shareholder return of the Company's common stock relative
to the EEI 100 Index during the 1996-1999 period.
==================================================
TSR Ranking Award Payout** % Earned
--------------------------------------------------
1-15%ile $5,297 150%
26%ile* $4,414 125%
38%ile* $3,531 100%
49%ile* $2,648 75%
60%ile $1,766 50%
61-100%ile $0 0%
--------------------------------------------------
* Examples of award payouts interpolated between the 15th and
60th rankings.
** For the purposes of illustration, assumes that no dividends
are paid and that the Ohio Edison's common stock price does not
appreciate during the four-year period.
Special provisions apply when an individual enters or leaves the
executive group for any reason during the performance period.
JAB/01-23-96
OHIO EDISON SYSTEM
EXECUTIVE DEFERRED COMPENSATION PLAN
EFFECTIVE:
September 29, 1985 for Ohio Edison Company
September 28, 1985 for Pennsylvania Power Company
Amended and Restated
as of January 1, 1996
OHIO EDISON SYSTEM
EXECUTIVE DEFERRED COMPENSATION PLAN
ARTICLE I
PURPOSE; EFFECTIVE DATE; COMPANY
--------------------------------
1.1 Purpose. The purpose of this Executive Deferred
-------
Compensation Plan (the "Plan") is to provide current tax planning
opportunities as well as supplemental funds for retirement, death,
disability or other separation of employment for key executives of
the Ohio Edison System. It is intended that the Plan will aid in
retaining and attracting personnel of exceptional ability by
providing such individuals with these benefits.
1.2 Effective Date. The Plan shall be effective the pay
--------------
period beginning September 29, 1985, for Ohio Edison Company and
September 28, 1985, for Pennsylvania Power Company.
1.3 Company. The Plan is adopted for the benefit of selected
-------
employees of Ohio Edison Company and its wholly-owned subsidiary
Pennsylvania Power Company (collectively, the "Company"). Actions
by the Company with respect to the Plan shall be taken by the Chief
Executive Officer of Ohio Edison Company (the "Chief Executive
Officer") or other officers appointed by the Chief Executive
Officer to approve or take such action. The Board of Directors of
the Ohio Edison Company (the "Board") or the Compensation Committee
of the Board (the "Compensation Committee") may make the Plan
applicable to other corporations or other entities affiliated with
or subsidiary to the Company.
1.4 Committee. "Committee" means the Administrative Committee
---------
that shall administer this Plan as provided in Article VII. The
Committee shall consist of three or more individuals appointed by
the Chief Executive Officer with at least one member being an
employee of Pennsylvania Power Company.
ARTICLE II
PARTICIPATION AND DEFERRAL COMMITMENTS
--------------------------------------
2.1 Eligibility and Participation.
-----------------------------
(a) Eligibility. The Chief Executive
-----------
Officer may designate any key
executive as eligible to participate
in the Plan.
- 2 -
(b) Participation. An individual who
-------------
becomes eligible to participate in
the Plan during a Deferral Period
may elect to participate in the Plan
by filing with the Committee a
Participation Agreement in a form
prescribed by the Committee during
the period of November 15 through
December 15 of the calendar year
preceding the next following
Deferral Period.
(c) "Deferral Period" means a single
---------------
calendar year inclusive of all pay
periods paid in such calendar year
for which a Participant has made a
Salary or Annual Incentive Award
Deferral Commitment.
(d) "Participant" means any eligible
individual who has elected to make
deferrals under this Plan.
2.2 Form of Deferral; Minimum Deferral. A Participant may
----------------------------------
elect in the Participation Agreement the following Deferral
Commitment:
(a) Salary Deferral Commitment. A
--------------------------
Participant may elect to defer a
percentage of base salary for the
Deferral Period. The amount to be
deferred must not be less than 1
percent nor more than 25 percent of
base salary. The commitment must be
in increments of at least 1 percent
of base salary.
(b) Ohio Edison System Savings Plan
-------------------------------
Exception. In addition to the
---------
deferral permitted under (a) above,
any Participant that is eligible to
participate in the Ohio Edison
System Savings Plan (the "Savings
Plan") may elect to defer under this
Plan that portion of base salary
which could be deferred under the
terms of the Savings Plan but for
limits of the provisions of Sections
401(a)(17), 401(k)(3), 402(g)(1) and
- 3-
(5) of the Internal Revenue Code of
1986, as amended, which preclude
such deferral under the Savings
Plan.
(c) Deferral Commitment for Annual
------------------------------
Incentive Award from Executive
------------------------------
Incentive Compensation Plan.
---------------------------
Commencing with the 1995 Deferral
Period, any Participant may elect to
defer a percentage of his or her
Annual Incentive Award payable the
following calendar year. The amount
to be deferred must not be less than
1 percent nor more than 100 percent
of such award, less any taxes
required to be withheld and
applicable deductions. The
commitment must be in increments of
at least one percent.
(d) Period of the Commitment. Once a
------------------------
Participant has made a Deferral
Commitment, that Commitment shall
remain in effect for that Deferral
Period. It shall also remain in
effect unless revoked or amended in
writing by the Participant and
delivered to the Committee no later
than the period of November 15
through December 15 of the year
preceding a subsequent Deferral
Period.
2.3 Modification of Deferral Commitment. A Deferral
-----------------------------------
Commitment shall be irrevocable, except that the Committee may
permit a Participant to reduce or waive the remainder of the
Deferral Commitment for a calendar year upon a finding, based upon
uniform standards established by the Committee, that the
Participant has suffered an unforeseen and sudden financial
emergency. If the Committee grants a waiver in the Deferral
Commitment, the Participant may not make any further deferrals
under the Plan unless the Participant files a new
Deferral Commitment in writing and delivers it to the Committee
during the period November 15 through December 15 to be effective
for the following calendar year.
2.4 Vesting of Retirement Account. A Participant shall be
-----------------------------
100 percent vested in all amounts credited to such Participant's
Retirement Account.
- 4 -
ARTICLE III
RETIREMENT ACCOUNT
3.1 Elective Deferred Compensation. The amount of salary
------------------------------
and Annual Incentive Award that a Participant elects to defer shall
be withheld and credited to the Participant's Retirement Account.
Any withholding of taxes or other amounts with respect to deferred
compensation which is required by state, federal or local law shall
be withheld to the extent possible from the Participant's
nondeferred compensation, if any.
3.2 Type of Account. For a Participant in the active employ
---------------
of the Company on or after January 1, 1996, a Retirement Account
only shall be maintained solely for recordkeeping purposes. The
deferred salary and deferred Annual Incentive Award shall be
credited to such Account. For any participant who separated
employment from the Company prior to January 1, 1996, with a vested
"Separation Account" (as that term was defined under the Plan in
effect at the time of such separation ("Prior Plan")) such Prior
Plan and any references in this Plan to "Retirement Account" shall,
for such Participants, mean "Separation Account."
3.3 Interest. The Retirement Account shall be
--------
credited with Interest as follows:
(a) Retirement Account Interest. The
---------------------------
interest rate credited to a
Retirement Account shall be the
greater of:
(i) The annual equivalent of the
average of the Moody's Average
Corporate Bond Yield Index for
the 12 months of November
through October preceding the
Deferral Period as published by
Moody's Investors Service, Inc.
(or any successor thereto), or,
if such index is no longer
published, a substantially
similar index selected by the
Committee, plus two percentage
points, or
(ii) The annual equivalent of a 10
percent annual yield.
- 5 -
(b) "Member of Senior Management" means
---------------------------
a Participant who is designated as a
Member of Senior Management by the
Chief Executive Officer in his or
her sole discretion.
(c) Retirement Account Interest; Senior
-----------------------------------
Management Participants.
-----------------------
The interest rate credited to a
Retirement Account for a Participant
who is designated as a Member of
Senior Management (as defined in
3.3(b)) on January 1 of each year
shall be the greater of:
(i) The annual equivalent of the
average of the Moody's Average
Corporate Bond Yield Index for
the 12 months of November
through October preceding the
Deferral Period as published
by Moody's Investors Service,
Inc. (or any successor
thereto), or, if such index is
no longer published, a
substantially similar index
selected by the Committee, plus
four percentage points, or
(ii) The annual equivalent of a 12
percent annual yield.
3.4 Determination of Account. Determination Dates shall be
------------------------
specified by the Committee. Each Participant's Retirement Account
as of each Determination Date shall consist of the balance as of
the immediately preceding Determination Date, plus the
Participant's elective deferred compensation and interest credited,
minus the amount of any distributions made, since the immediately
preceding Determination Date. Interest credited shall be
calculated as of each Determination Date based upon the average
daily balance of the account since the preceding Determination
Date.
3.5 Statement of Account. The Committee shall submit to
--------------------
each Participant, after the close of each calendar year and at such
other times as determined by the Committee, a statement setting
forth the balance to the credit of the Retirement Account
maintained for a Participant.
- 6 -
ARTICLE IV
SUPPLEMENTAL PENSION BENEFIT
----------------------------
4.1 Eligibility. For purposes of this Article IV only,
-----------
effective January 1, 1996, a Participant means any employee who is
eligible to participate in this Plan according to Section
2.1(a), irrespective of whether or not such employee has elected to
participate in this Plan in accordance with Section 2.1(b).
4.2 Purpose. The Company maintains a tax-qualified defined
-------
benefit pension plan known as the Ohio Edison System Pension Plan
("Pension Plan"). Benefits under the Pension Plan are based on the
employee's non-deferred base salary earnings and are subject to
limitations imposed by the Internal Revenue Code ("the Code"). It
is intended that the benefit provided by this Article IV supplement
a Participant's (or his or her Surviving Spouse or Provisional
Payee as designated under the Pension Plan) reduction in his or her
retirement income or vested pension benefit, as appropriate, from
the Pension Plan as a result of
a) electing deferrals under this Plan, or
b) limitations imposed by Sections 401(a)(17) and Section
415 of the Code on Pension Plan earnings, or
c) the exclusion of Annual Incentive Awards from Pension
Plan earnings.
4.3 Supplemental Pension Benefit. At the time a Participant
----------------------------
separates employment for any reason and is entitled to a benefit
under the Pension Plan, the Company shall pay to the Participant,
his or her Surviving Spouse or Provisional Payee as designated by
the Participant under the Pension Plan, a supplemental pension
benefit from its general assets equal to the amount of the benefit
that would have been payable under the Pension Plan, calculated
without regard to the Participant's deferrals under the Plan, the
limitations imposed by Sections 401(a)(17) and Section 415 of the
Code on the Participant's Pension Plan earnings after January 1,
1996, or the exclusion of Annual Incentive Awards after January 1,
1996, from the Participant's Pension Plan earnings, less the
benefit actually payable under the Pension Plan. Such supplemental
pension benefit shall be nonforfeitable upon the date the
Participant separates employment.
- 7 -
4.5 Payment of Supplemental Pension Benefit. The
---------------------------------------
supplemental pension benefit provided for in Section 4.3 shall be
paid in the same form and manner over the same period as payments
under the Pension Plan.
ARTICLE V
PLAN BENEFITS
-------------
5.1 Separation of Employment Benefit. The Company shall pay
--------------------------------
a Plan benefit equal to the amount of the Participant's Retirement
Account to each Participant who separates employment for any other
reason other than death.
5.2 Death Benefit. Upon the death of a Participant, either
-------------
before or after separation of employment, the Company shall pay to
the Participant's Beneficiary an amount equal to the Participant's
Retirement Account balance.
5.3 Form of Benefit Payment.
-----------------------
(a) Retirement Benefit. For a Participant who
------------------
at the time of separation of employment is
age 55 or over and is entitled to a benefit
under the Pension Plan, the Retirement
Account balance shall be paid as elected by
the Participant in the Participation
Agreement. However, the Participant may
amend such election up to 90 days prior to
the date of Retirement. Forms of benefit
payment shall be:
(i) A lump sum payment;and/or
(ii) Monthly installments of
principal and interest over a
period of up to 180 months.
The amount of the installment
shall be redetermined January 1
of each year based upon the
then current rate of Interest
on Retirement Accounts, the
remaining Retirement Account
balance, and the remaining
number of payment periods.
- 8 -
(iii) A Participant may irrevocably
elect at least 90 days prior to
the date of Retirement to defer
commencement of payment of the
Retirement Account to a later
date. Payments from the
Retirement Account must
commence, however, no later than
the first day of the month
following the Participant's 70th
birthday.
(b) Disability Benefit. If a participant
------------------
separates employment at any age by reason
of disability, the Retirement Account
balance shall be paid as elected by the
Participant in the Participation Agreement.
"Disabled" means a disability such that a
Participant would be entitled to receive a
monthly disability pension payment under
the Pension Plan. For the purposes of this
provision, such a Participant need not have
completed ten years of Eligibility Service,
as defined by the Pension Plan, with the
Company. However, the Participant may amend
such election any time prior to Disability.
Forms of benefit payments shall be the same
as in Section 5.3(a) (i) and/or (ii).
(c) Separation of Employment Benefit for Reasons Other
-------------------------------------------------
than Retirement, Disability or Death.
------------------------------------
(i) For a Participant who at the time of
separation from employment is under age 55 or
who is not entitled to a benefit under the
Pension Plan, the Retirement Account balance
shall be paid in a lump sum following
separation from employment.
(d) Death Benefits.
--------------
(i) If a Participant dies prior to separation of
employment, the Retirement Account balance
shall be paid to the Beneficiary as elected by
the Participant in the Participation Agreement
or Form of Benefit Payout, whichever is on
file and controlling. The Participant may
amend such election any time prior to death.
Form of benefit payments shall be the same as
in 5.3(a) (i) and/or (ii).
- 9 -
(ii) If a Participant dies after separation of
employment due to Retirement or Disability,
the Retirement Account balance shall continue
to be paid to the Beneficiary in the form and
manner elected by the Participant in the
Participation Agreement or Form of Benefit
Payout, whichever is on file and controlling.
However, if the Participant elected to defer
commencement of retirement benefits to a later
date (pursuant to 5.3(a)(iii)) and dies prior
to commencement of retirement benefit
payments, the election to defer commencement
of retirement benefit payments will become
null and void and payments will commence
immediately to the Beneficiary in the form and
manner elected by the Participant.
(e) Participant Call Provision. Notwithstanding the
--------------------------
foregoing in Section 5.3 (a), (b), (c) and (d)
above, a Participant (or the Participant's
Beneficiary in case of the death of the
Participant) at any time may request an accelerated
distribution of his or her Retirement Account,
subject to a 10% penalty. Such request must
be made in writing in a form and manner specified
by the Committee. The Company will distribute to
the Participant or Beneficiary 90% of his or her
Retirement Account balance as a lump sum within 63
days after the end of the month the Committee
receives the request. Such distribution shall
completely discharge the Committee and the Company
from all liability with respect to the
Participant's or Beneficiary's Retirement Account.
Further, if the Participant is in the active employ
of the Company, the Participant may not resume any
further deferrals into the Plan until January 1 of
the second calendar year following the calendar
year in which the Participant receives such
distribution.
(f) Inservice Withdrawal Provision. Notwithstanding
------------------------------
the foregoing in Section 5.3 (a), (b), (c) and (d)
above, a Participant who is in the active employ of
the Company may request to withdraw a portion of
his or her deferred salary and/or deferred Annual
Incentive Awards credited to his or her Retirement
Account for five or more calendar years, including
interest credited on such amounts. Such request
must be made in writing in a form and manner
specified by the Committee and must specify the
- 10 -
amount to be withdrawn and the future date or dates
to be paid which must be the first of a month in
the second calendar year following the calendar
year in which the request is made. The request
will be irrevocable after December 31, of the
calendar year in which it is made unless, prior to
payment, the Participant separates employment or
dies at which time the request will become null
and void and the Participant's Retirement Account
balance shall be paid as elected by the Participant
in the Participation Agreement pursuant to Section
5.3 (a), (b), (c) or (d).
5.4 Withholding; Payroll Taxes. The Company shall withhold
--------------------------
from payments made hereunder to the Participant or any Beneficiary,
any amounts required by applicable law to be withheld. All Plan
administration expenses incurred by the Company or Committee shall
be borne by the Company.
5.5 Commencement of Payments. Payment shall commence at the
------------------------
discretion of the Committee, but not later than 63 days after the
end of the month in which the Participant retires (or the later
date if the Participant elects to defer commencement of payment
under Section 5.3 (a) (iii)), dies, becomes disabled or otherwise
separates employment with the Company. All payments shall be made
as of the first day of the month.
5.6 Full Payment of Benefits. Notwithstanding any other
------------------------
provision of this Plan, all benefits shall be paid no later than
180 months following the date the Participant reaches age 70 or
termination of service, whichever is later.
5.7 Payment to Guardian. If a Plan benefit is payable to a
-------------------
minor or a person declared incompetent or to a person incapable of
handling the disposition of property, the Committee may direct
payment of such Plan benefit to the guardian, legal representative
or person having the care and custody of such minor or incompetent
person. The Committee may require proof of incompetency, minority,
incapacity or guardianship as it may deem appropriate prior to
distribution of the Plan benefit. Such distribution shall
completely discharge the Committee and the Company from all
liability with respect to such benefit.
- 11 -
ARTICLE VI
BENEFICIARY DESIGNATION
-----------------------
6.1 Beneficiary Designation. Each Participant shall have
-----------------------
the right, at any time, to designate one or more persons as the
Participant's primary or contingent Beneficiary(ies) to whom
benefits under this Plan, except benefits payable pursuant to
Article IV, shall be paid in the event of the Participant's death
prior to complete distribution to the Participant of the benefits
due under the Plan. Unless stated otherwise in writing in the form
provided by the Committee, the payments hereunder shall be paid in
equal shares to surviving beneficiaries if more than one
Beneficiary has been chosen. Each Beneficiary designation shall be
in a written form prescribed by the Committee and will be effective
only when filed with the Committee during the Participant's
lifetime. If a Participant's compensation is community property,
any Beneficiary designation shall be valid or effective only as
permitted under applicable law.
6.2 Amendments. Any Beneficiary designation may be changed
----------
by a Participant without the consent of any designated Beneficiary
by the filing of a new Beneficiary designation with the Committee.
6.3 No Beneficiary Designation or Death of Beneficiary. In
--------------------------------------------------
the absence of an effective Beneficiary designation, or if all
designated Beneficiaries predecease the Participant, the
Participant's designated Beneficiary shall be the person in the
first of the following classes in which there is a survivor:
(a) The surviving spouse;
(b) The Participant's estate;
In the event of the death of a Beneficiary after payments commence
but prior to the Beneficiary receiving all benefit payments
hereunder, the remaining balance of the Beneficiary's portion of
the Retirement Account shall be paid in a lump sum to the estate of
the Beneficiary.
6.4 Effect of Payment. Payment to the Beneficiary (or to the
-----------------
Beneficiary's estate) shall completely discharge the Company's
obligations under this Plan.
- 12 -
ARTICLE VII
ADMINISTRATION
--------------
7.1 Committee; Duties. This Plan shall be administered by
-----------------
the Committee appointed in Section 1.4. Members of the Committee
may be Participants under this Plan. However, no member of the
Committee may participate in a review of his or her own claim under
Article VIII. The Committee shall administer the Plan and will
have the power and the duty to take all action and to make all
decisions necessary or proper to carry out the Plan. The
determination of the Committee as to any question involving the
general administration and interpretation of the Plan shall be
final, conclusive, and binding except as otherwise provided in
Article VIII. A majority vote of the Committee members shall
control any decision. Any discretionary actions to be taken under
the Plan by the Committee with respect to the classification of
Employees, Participants, contributions or benefits shall be uniform
in nature and applicable to all persons similarly situated.
Without limiting the generality of the foregoing, the Committee
shall have the following discretionary authority, powers and
duties:
(a) To require any person to furnish such
information as it may request for the
purpose of the proper administration of the
Plan as a condition to receiving any
benefit under the Plan;
(b) To make and enforce such rules and regulations and
prescribe the use of such forms as it deems
necessary for the efficient administration of the
Plan;
(c) To interpret the Plan and to resolve ambiguities,
inconsistencies and omissions;
(d) To decide all questions concerning the Plan and the
eligibility of any Employee to participate in the
Plan; and
(e) To determine the amount of benefits which will be
payable to any person in accordance with the
provisions of the Plan.
7.2 Agents. In the administration of this Plan, the
------
Committee may, from time to time, employ agents and delegate to
them such administrative duties as it sees fit, and may from time
- 13 -
to time consult with counsel, who may be counsel to the Company.
7.3 Indemnity of Committee. The Company shall indemnify and
----------------------
hold harmless the members of the Committee and the Compensation
Committee against any and all claims, loss, damage, expense or
liability arising from any action or failure to act with respect to
this Plan, except in the case of intentional misconduct.
ARTICLE VIII
CLAIMS PROCEDURE
----------------
8.1 Claim. Any person claiming a benefit, requesting an
-----
interpretation or ruling under the Plan or requesting information
under the Plan shall present the request in writing to the
Committee, which shall respond in writing within 63 days after the
end of the month in which the request was received. Payment of a
claimed benefit shall also constitute a written response.
8.2 Denial of Claim. If the claim or request is denied, the
---------------
written notice of denial shall state:
(a) The reasons for denial, with specific reference to
the Plan provisions on which the denial is based.
(b) A description of any additional material or
information required and an explanation of why it
is necessary.
(c) An explanation of the Plan's claim review
procedure.
For purposes of this Section 8.2, the failure by the
Committee to deliver within the 63-day period notice of a written
denial of claim shall constitute a written response of denial,
unless the failure to correspond was the result of clerical or
administrative error.
8.3 Review of Claim. Any person whose claim or request is
---------------
denied or who has not received a response within 63 days after the
end of the month in which the request was received, may request
further review by notice given in writing to the Compensation
Committee. The Compensation Committee may, but shall not be
required to, grant the claimant a hearing. On review, the claimant
- 14 -
may have a representative examine pertinent documents and submit
issues and comments in writing.
8.4 Final Decision. The decision on review shall normally
--------------
be made within 60 days. If an extension of time is required for a
hearing or other special circumstances, the claimant shall be
notified and the time limit shall be 120 days. The decision shall
be in writing and shall state the reasons and the relevant plan
provisions. All decisions on review shall be final and bind all
parties concerned.
ARTICLE IX
AMENDMENT AND TERMINATION OF PLAN
---------------------------------
9.1 Right to Amend. The Plan may be amended any time by
--------------
action of the Board or the Compensation Committee or by a writing
executed on behalf of the Board or Compensation Committee by the
Company's duly elected officers, except that:
(a) no amendment shall be effective to decrease or
restrict any Participant's Retirement Account
balance or Supplemental Pension Benefit accrued to
that date, and
(b) no amendment shall be effective to restrict the
right of a Participant to elect to receive a lump
sum form of benefit payment of his or her
Retirement Account upon retirement, death,
disability or separation of employment, and
(c) no amendment to the definition of Retirement
Account Interest in Section 3.3(a) and (c) shall
decrease the interest rate credited to the
Retirement Account balance of any Participant below
the Moody's Average Corporate Bond Yield Index less
one (1) percent,else the Retirement Account balance
will be paid to all Participants within 60 days of
such amendment. Such amendment shall be effective
on the first day of the calendar year following
such amendment, provided that all Participants are
notified of such amendments no later than November
15 of the year in which such amendment occurs.
9.2 Right to Terminate. The Board or the Compensation
------------------
Committee of the Board may at any time terminate the Plan if, in
its sole judgment, the tax, accounting or other effects of the
continuance of the Plan, or potential payments thereunder, would
- 15 -
not be in the best interests of the Company. Such termination
shall not adversely effect any Plan Participant's Retirement
Account balance or accrued Supplemental Pension Benefit. The
Company shall pay the Retirement Account balance to all
Participants within 60 days after the effective date of the Plan
termination.
ARTICLE X
MISCELLANEOUS
-------------
10.1 Unfunded Plan. This Plan is intended to be an unfunded
-------------
plan for federal income tax purposes and for purposes of the
Employee Retirement Income Security Act of 1974, as amended,
maintained primarily to provide deferred compensation benefits for
a select group of management employees or highly compensated
employees. This Plan is not intended to create an investment
contract, but to provide tax planning opportunities and retirement
benefits to eligible individuals who have elected to participate in
the Plan. Eligible individuals are select members of management
who, by virtue of their position with the Company, have the ability
to materially affect the Company's profitability and operations.
10.2 Unsecured General Creditor. Participants and their
--------------------------
Beneficiaries, heirs, successors and assigns shall have no legal or
equitable rights, interest or claims in any property or assets of
Company. Any and all Company's assets shall be, and remain, the
general, unpledged, unrestricted assets of Company. Company's
obligation under the Plan shall be merely that of an unfunded and
unsecured promise of Company to pay money in the future.
10.3 Obligations to Company. If a Participant becomes
----------------------
entitled to a benefit under the Plan and the Participant has
outstanding any debt, obligation, or other liability representing
an amount owing to the Company, then the Company may offset such
amount owing to it or an affiliate against the amount of benefits
otherwise distributable to the Participant or Beneficiary. Such
determination shall be made by the Committee.
10.4 Nonassignability. Neither a Participant nor any other
----------------
person shall have any right to commute, sell, assign, transfer,
pledge, anticipate, mortgage or otherwise encumber, transfer,
hypothecate or convey in advance of actual receipt the amounts, if
any, payable hereunder, or any part thereof, which are, and all
rights to which are, expressly declared to be assignable and
nontransferable. No part of the amounts payable shall, prior to
- 16 -
actual payment, be subject to seizure or sequestration for the
payment of any debts, judgments, alimony or separate maintenance
owed by a Participant or any other person, nor be transferable by
operation of law in the event of a Participant's or any other
person's bankruptcy or insolvency.
10.5 Not a Contract of Employment. The terms and conditions
----------------------------
of this Plan shall not be deemed to constitute a contract of
employment between the Company and the Participant, and neither the
Participant nor the Participant's Beneficiary shall have any rights
against the Company except as may otherwise be specifically
provided herein. Moreover, nothing in this Plan shall be deemed to
give a Participant the right to be retained in the service of the
Company or to interfere with the right of Company to discipline or
discharge him or her at any time.
10.6 Protective Provisions. A Participant will cooperate
---------------------
with the Company by furnishing any and all information requested by
the Company, in order to facilitate the payment of benefits
hereunder.
10.7 Captions. The captions of the articles, sections and
--------
paragraphs of this Plan are for convenience only and shall not
control or affect the meaning or construction of any of its
provisions.
10.8 Governing Law. The provisions of this Plan shall be
-------------
construed, administered, and enforced according to and governed by
the laws (other than conflict of law provisions) of the state of
Ohio, except to the extent such laws are superseded by ERISA.
10.9 Validity. In case any provision of this Plan shall be
--------
held illegal or invalid for any reason, such illegality or
invalidity shall not affect the remaining parts hereof, but this
Plan shall be construed and enforced as if such illegal and invalid
provision had never been inserted herein.
10.10 Notice. Any notice or filing required or permitted to
------
be given to the Committee under the Plan shall be sufficient if in
writing and hand delivered, or sent by registered or certified mail
to any member of the Committee, or to the Statutory Agent of Ohio
Edison Company. Notice to the Committee may be given to any member
of the Committee and if mailed shall be addressed to the principal
executive offices of Ohio Edison Company. Notice mailed to the
Participant shall be sent to the address set out in the
- 17 -
Participant's most recent Participation Agreement or such other
address as is given to the Committee by notice. Notices shall be
deemed given as of the date of delivery or, if delivery is made by
mail, as of the date shown on the postmark on the receipt for
registration or certification.
10.11 Successors. The provisions of this Plan shall bind and
----------
inure to the benefit of the Company and its successors and assigns.
The term successors as used herein shall include any corporate or
other business entity which shall, whether by merger,
consolidation, purchase or otherwise acquire all or substantially
all of the business and assets of the Company, and successors of
any such corporation or other business entity.
IN WITNESS WHEREOF, and pursuant to resolution of the
Board, the Company has caused this instrument to be executed by its
duly authorized officers effective as of September 29, 1985, as
amended and restated as of December 19, 1989, and as amended and
restated as of January 1, 1996.
FOR THE COMPANY
By: /s/ W. R. Holland Date 11/1/95
--------------------------- ---------
W. R. Holland
President and Chief Executive Officer of Ohio
Edison Company
Chairman of the Board, Pennsylvania Power
Company
Witness: /s/ J. A. Gill
----------------------------
J. A. Gill
Vice President, Administration
OHIO EDISON SYSTEM
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
EFFECTIVE
September 29, 1985
Amended and Restated
as of January 1, 1996
<PAGE>
OHIO EDISON SYSTEM
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
I. Purpose
-------
The Supplemental Executive Retirement Plan (the
"Plan") is part of an integrated executive compensation program
that is intended to attract, retain, and motivate key senior
Executives who are in positions to make significant contributions
to the operation and profitability of Ohio Edison Company and its
wholly-owned subsidiary Pennsylvania Power Company (collectively,
the "Company") for the benefit of stockholders and customers. The
Board of Directors of Ohio Edison Company (the "Board") or the
Compensation Committee of the Board (the "Compensation Committee")
may make the Plan applicable to other corporations or other
entities affiliated with or subsidiary to the Company.
The Plan provides for the payment of supplemental
retirement, death, and disability benefits to or in respect of key
senior Executives designated by the Chief Executive Officer of the
Ohio Edison Company (the "Chief Executive Officer").
The Chief Executive Officer shall appoint an
Administrative Committee (the "Committee") to administer this Plan.
The Committee shall consist of three or more individuals with at
least one member being an employee of Pennsylvania Power Company.
II. Type and Level of Benefits
--------------------------
An Executive included in the Plan shall, subject to the
terms and conditions set forth herein, be eligible to receive a
supplemental benefit under the Plan after termination of employment
due to retirement, death, disability or involuntary separation that
is directly related to either:
* the Executive's Highest Average Monthly Base
Earnings which is defined as the average of
the highest 12 consecutive full months of base
salary earnings paid to the Executive in the
120 consecutive full months prior to
termination of employment, including any
salary deferred in the Ohio Edison System
Executive Deferred Compensation Plan
("Deferred Plan") or the Ohio Edison System
Savings Plan ("Savings Plan"), but excluding
any incentive payments, or
* the Executive's Highest Average Monthly Total
Compensation which is defined as the average
of the highest 36 consecutive full months of
base salary earnings paid to the Executive in
the 120 consecutive full months prior to
termination of employment, including any
- 2 -
salary deferred into the Deferred Plan and
Savings Plan. Highest Total Compensation
shall also include any Annual Incentive Award
from the Executive Incentive Compensation Plan
either paid to the Executive or deferred into
the Deferred Plan after January 1, 1996.
For the purpose of this Plan, a "Month of Service" shall
be a whole month of service based upon the Executive's service
anniversary date with the Company.
For the purposes of this Plan, Eligible Spouse shall mean
the spouse to whom the Executive is married at the time payment of
a supplemental benefit from the Plan commences and who is so
designated, or deemed to have been designated in accordance with
the Ohio Edison System Pension Plan ("Pension Plan").
A supplemental benefit under this Plan will be determined
in accordance with and shall be nonforfeitable upon the date the
Executive terminates employment under the conditions described in
the following sections:
A. Retirement Benefits
-------------------
1. An Executive retiring from the Company on or after
age 55 will be entitled to receive, commencing at
retirement, a monthly supplemental retirement
benefit under the Plan equal to 65 percent of the
Executive's Highest Average Monthly Base Earnings
or 55 percent of the Executive's Highest Average
Monthly Total Compensation, whichever is greater,
multiplied by the number of Months of Service the
Executive has with the Company up to a maximum of
60 months divided by 60, less:
(a) The monthly primary Social Security benefit to
which the Executive may be entitled at such
retirement (or the projected age 62 benefit if
retirement occurs prior to age 62),
irrespective of whether the Executive actually
receives such benefit at the time of
retirement, and
(b) The monthly early, normal or deferred
retirement income benefit to which the
Executive may be entitled at such retirement,
under the Pension Plan, the monthly
supplemental pension benefit under the
Deferred Plan and the monthly benefit, or
actuarial equivalent, under the tax qualified
or nonqualified defined benefit pension plans
of previous employers, all calculated with the
- 3 -
following assumptions based on the Executive's
marital status at the time of such retirement:
1) In the case of a married Executive in the
form of a 50 percent joint and survivor
annuity.
2) In the case of an unmarried Executive, in
the form of a single life annuity.
For an Executive who retires less than age 65, the
net dollar amount above shall be further reduced by
one-fourth (1/4) of one percent for each month the
commencement of benefits under this Plan precedes
the month the Executive attains age 65.
2. After commencement of supplemental retirement
benefits to the Executive, such payments shall
continue in monthly installments thereafter ending
with a payment for the month in which such
Executive's death occurs. At death, benefits under
Section II (C) (2) may be paid to the Executive's
surviving Eligible Spouse.
B. Disability Benefits
-------------------
1. An Executive who becomes disabled while employed by
the Company will be entitled to receive, commencing
at the time the Executive's employment terminates
by reason of disability, a monthly supplemental
disability benefit under the Plan equal to 65
percent of the Executive's Highest Base Earnings or
55% of the Executive's Highest Total Compensation,
whichever is greater, divided by twelve (12),
multiplied by the number of Months of Service the
Executive has with the Company up to a maximum of
60 months divided by 60, less:
(a) The monthly Social Security disability benefit
to which the Executive may become entitled due
to such disability.
(b) The monthly disability pension payment under
the Pension Plan, the monthly benefit provided
by the Long-Term Disability Plan of the
Company and the monthly disability or pension
benefits, or actuarial equivalent, from plans
of previous employers to which the Executive
may be entitled at termination of employment.
- 4 -
"Disabled" means a disability such that an
Executive would be entitled to receive a monthly
disability payment under the Pension Plan, except
for the purposes of this provision an Executive
need not have completed ten (10) Years of
Eligibility Service, as defined by the Pension
Plan, with the Company.
2. After commencement of supplemental disability
benefits to the Executive, such payments shall
continue in monthly installments thereafter ending
with a payment in the month in which the Executive
attains age 65 or retires from the Company, dies,
or is no longer disabled, whichever first occurs.
Upon retirement, benefits under Section II (A) may
be paid. At death, benefits under Section II (C)
(1) may be paid to the Executive's surviving
Eligible Spouse.
C. Death Benefits
--------------
1. If an Executive, including an Executive receiving a
supplemental disability benefit under the Plan,
dies prior to retiring from the Company, the
Executive's surviving Eligible Spouse shall be
entitled to receive commencing in the month
following the Executive's death, a monthly
supplemental surviving spouse benefit under the
Plan equal to 50 percent of the monthly
supplemental retirement benefit, calculated in
accordance with Section II (A), which the Executive
would have received had he or she retired in the
month of death, except that if the Executive dies
prior to attaining age 55, such monthly
supplemental retirement benefit will be calculated
as if the Executive had attained age 55 and retired
on the date of his or her death.
The surviving spouse benefit payment shall be paid
in monthly installments thereafter ending with a
payment for the month in which such surviving
Eligible Spouse's death occurs, or for a period of
180 payments less the number of supplemental
disability payments the Executive had received,
whichever first occurs.
2. After retiring from the Company the Executive dies
and has received less than 180 monthly supplemental
retirement and/or supplemental disability payments
under the Plan, then the Executive's surviving
Eligible Spouse shall be entitled to receive a
monthly supplemental surviving spouse benefit under
- 5 -
the Plan equal to 50 percent of the supplemental
retirement benefit which the deceased Executive was
receiving on the day before his or her death.
This monthly supplemental surviving spouse benefit
paymentshall commence in the month following the
Executive's death and shall be paid in monthly
installments thereafter ending with a payment for
the month in which such surviving Eligible Spouse's
death occurs, or for a period of 180 payments less
the number of supplemental retirement and/or
supplemental disability payments the Executive had
received, whichever first occurs.
D. Involuntary Separation Benefits
-------------------------------
1. If an Executive is involuntarily separated prior to
age 55 due to the closing of a facility, corporate
restructuring, reduction in the work force, or job
elimination then the Executive will be entitled to
receive, beginning at age 55, a supplemental
retirement benefit under the Plan calculated in
accordance with Section II (A). If the Executive
dies prior to or after commencement of his or her
supplemental retirement benefit, then the
Executive's surviving Eligible Spouse shall be
entitled to commence a monthly supplemental
surviving spouse benefit under the Plan calculated
in accordance with Section II (C). Such
supplemental benefits will be calculated using the
number of Months of Service the Executive had with
the Company at separation of employment. However,
the Executive will not be eligible for a
supplemental retirement benefit beginning at age 55
if the separation is due to any other reason
including but not limited to: voluntary
resignation; discharge for misconduct or poor job
performance; failure to return from a leave of
absence; or as a result of a merger or acquisition
of the Company or any of its assets and the
Executive's employment with the acquiring or
merging company is continued and the Executive does
not suffer unemployment.
III. Unfunded Plan
-------------
The Plan shall be unfunded. The Plan is intended to
benefit key senior Executives who are considered within a select
group of management or highly compensated employees
within the meaning of the Employee Retirement Income Security Act
of 1974, as amended. The Chief Executive Officer reserves the
right to restrict participation to such Executives.
- 6 -
Neither an Executive nor any other person shall have
any right to transfer, pledge, or otherwise encumber, in advance of
actual receipt, any amounts payable hereunder. No part of the
amounts payable shall, prior to actual payment, be subject to
seizure or sequestration for the payment of any debts, judgments,
alimony, or separate maintenance owed by an Executive or any other
person, nor be transferable by operation of law in the event of an
Executive's or any other person's bankruptcy or insolvency.
IV. Administration
--------------
This Plan will be administered by and under the
direction of the Committee. Members of the Committee may be
participants in this Plan. However, no member of the Committee may
participate in a review of his or her own claim under Article V.
The Committee shall administer the Plan and will have the power and
the duty to take all action and to make all decisions necessary or
proper to carry out the Plan. The determination of the Committee
as to any question involving the general administration and
interpretation of the Plan shall be final, conclusive, and binding
except as otherwise provided in Section V. A majority vote of the
Committee members shall control any decision. Any discretionary
actions to be taken under the Plan by the Committee with respect to
the Executives' contributions or benefits shall be uniform in
nature and applicable to all persons similarly situated. Without
limiting the generality of the foregoing, the Committee shall have
the following discretionary authority, powers and duties:
A. To require any person to furnish such information as it
may request for the purpose of the proper administration
of the Plan as a condition to receiving any benefit under
the Plan;
B. To make and enforce such rules and regulations and
prescribe the use of such forms as it deems necessary for
the efficient administration of the Plan;
C. To interpret the Plan and to resolve ambiguities,
inconsistencies and omissions;
D. To decide all questions concerning the Plan and the
eligibility of any Employee to participate in the Plan;
and
E. To determine the amount of benefits which will be payable
to any person in accordance with the provisions of the
Plan.
F. In the administration of this Plan, the Committee may,
from time to time, employ agents and delegate to them
such administrative duties as it sees fit, and may from
time to time consult with counsel, who may be counsel to
the Company.
- 7 -
The Company shall indemnify and hold harmless
members of the Committee and the Compensation Committee against any
and all claims, loss, damage, expense or liability arising from any
action or failure to act with respect to this Plan, except in the
case of intentional misconduct.
V. Claims Procedure
----------------
A. Claim. Any person claiming a benefit, requesting an
-----
interpretation or ruling under the Plan, or requesting
information under the Plan shall present the request in
writing to the Committee, which shall respond in writing
as soon as practicable, but no more than 63 days after
the end of the month the request is received. Payment of
a claimed benefit shall also constitute a written
response.
B. Denial of Claim. If the claim or request is denied, the
---------------
written notice of denial shall state:
1. The reason for denial, with specific reference to
the provision on which the denial is based.
2. A description of any additional material or
information required and an explanation of why it
is necessary.
3. An explanation of the Plan's claim review
procedure.
For the purposes of this Section, the failure by the
Committee to deliver within the 63-day period notice of
a written denial of claim shall constitute a written
response of denial, unless the failure to correspond was
the result of clerical or administrative error.
C. Review of Claim. Any person whose claim or request is
---------------
denied or who has not received a response
within 63 days after the end of the month in
which the request was received may request
review by notice given in writing to the
Compensation Committee. The claim or request
shall be reviewed by the Compensation
Committee who may, but shall not be required
to, grant the claimant a hearing. On review,
the claimant may have representation, examine
pertinent documents, and submit issues and
comments in writing.
- 8 -
D. Final Decision. The decision on review shall normally be
--------------
made within 60 days. If an extension of time is required
for a hearing or other special circumstances, the
claimant shall be notified and the time limit shall be
120 days. The decision shall be in writing and shall
state the reason and the relevant plan provisions. All
decisions on review shall be final and bind all parties
concerned.
VI. Miscellaneous
-------------
A. Obligations to Company. If an Executive or the
----------------------
Executive's surviving Eligible Spouse becomes entitled to
a benefit under the Plan and the Executive has
outstanding any debt, obligation, or other liability
representing an amount owing to the Company, then the
Company may offset such amount owing to it or an
affiliate against the amount of benefits otherwise
distributable. The determination of the amount and
duration of the offset shall be made by the Committee.
B. Not a Contract of Employment. The terms and conditions
----------------------------
of the Plan shall not be deemed to constitute a contract
of employment between the Company and the Executive, and
the Executive (or his or her surviving Eligible Spouse)
shall have no rights against the Company except as may be
otherwise provided specifically herein. Moreover,
nothing in the Plan shall be deemed to give an Executive
the right to be retained in the service of the Company or
to interfere with the right of the Company to discipline
or discharge him or her at any time.
C. Protective Provisions. An Executive shall cooperate with
---------------------
the Company by furnishing any and all information
requested by the Company in order to evaluate a claim or
to facilitate the payment of benefits hereunder, and by
taking such physical examinations as the Company may deem
necessary and taking such other action as may be
requested by the Company.
D. Captions. The captions of the articles, sections and
--------
paragraphs of the Plan are for convenience only and shall
not control or affect the meaning or construction of any
of its provisions.
- 9 -
E. Governing Law. The provisions of the Plan shall be
-------------
construed, administered, and enforced according to and
governed by the laws (other than conflict of law
provisions) of the state of Ohio, except to the extent
such laws are superseded by ERISA.
F. Validity. In case any provision of the Plan shall be
--------
illegal or invalid for any reason, such illegality or
invalidity shall not affect the remaining parts hereof,
but the Plan shall be construed and enforced as if such
illegal and invalid provision had never been included
herein.
G. Mistaken Information. If any information upon which an
--------------------
Executive's benefit under the Plan is misstated or
otherwise mistaken, such benefit shall not be invalidated
(unless upon the basis of the correct information the
Executive would not be entitled to a benefit), but the
amount of the benefit shall be adjusted to the proper
amount and any overpayments shall be charged against
future payments.
H. Taxes and Expenses. Any taxes imposed on Plan benefits
------------------
shall be the sole responsibility of the Executive or
surviving Eligible Spouse. The Company shall deduct from
Plan benefits any amounts required by applied law to be
withheld. All Plan administration expenses incurred by
the Company or Committee shall be borne by the Company.
VII. Effective Date, Termination, and Amendment
------------------------------------------
The effective date of the Plan shall be September
29, 1985. The effective date of participation of an Executive in
this Plan shall be determined by the Chief Executive Officer. The
Plan may be terminated at any time and amended from time to time by
action of the Board or the Compensation Committee or by a writing
executed on behalf of the Board or the Compensation Committee by
the Company's duly authorized officers, provided that neither
termination nor any amendment of the Plan may, without the written
approval of a participating Executive or surviving Eligible Spouse,
reduce or terminate any accrued benefit.
VIII. Successors
----------
The provisions of this Plan shall bind and inure to
the benefit of the Company and its successors and assigns. The
term successors as used herein shall include any corporate or other
business entity which shall, whether by merger, consolidation,
- 10 -
purchase or otherwise acquire all or substantially all of the
business and assets of the Company, and successors of any such
corporation or other business entity.
IN WITNESS WHEREOF, and pursuant to resolution of
the Board, the Company has caused this instrument to be executed by
its duly authorized officers effective as of September 29, 1985,
amended and restated on December 19, 1989, and as amended and
restated effective January 1, 1996.
FOR THE COMPANY
By: /s/ W. R. Holland Date 11/1/95
--------------------------------- -------
W. R. Holland
President and Chief Executive Officer of Ohio
Edison Company
Chairman of the Board, Pennsylvania Power
Company
Witness: /s/ J. A. Gill
--------------------------------
J. A. Gill
Vice President, Administration
February 22, 1995
Mr. Willard R. Holland
161 E. Fairlawn Blvd.
Akron, Ohio 44313
Dear Mr. Holland:
The purpose of this letter is two-fold. First, the
Board of Directors (the "Board") of Ohio Edison Company (the
"Company") recognizes that when it hired you effective September
1, 1991, you were required to forfeit many of the benefits
associated with your years of service with your prior employer.
Therefore, in order to induce you to join the Company, the Board
authorized the Company to recognize up to 25 years of your prior
years of service for purposes of the Company's benefit programs,
with the exception of the Company's tax-qualified defined benefit
and defined contribution retirement plans. This letter confirms
that with respect to the Company's other on-going benefit
programs, as well as the Special Severance Agreement described
below, your service with the Company is equal to your actual
years of service commencing with your date of hire plus 25.
Second, the Board also recognizes that, as is the case
with many publicly held corporations, there always exists the
possibility of a change of control of the Company. This
possibility and the uncertainty it creates may result in the loss
or distraction of members of management of the Company and its
subsidiaries to the detriment of the Company and its
shareholders.
The Board considers the establishment, maintenance, and
continuity of a sound and vital management to be essential to
protecting and enhancing the best interests of the Company and
its shareholders. The Board also believes that when a change of
control is perceived as imminent, or is occurring, the Board
should be able to receive and rely on disinterested advice from
management regarding the best interests of the Company and its
shareholders without concern that members of management might be
distracted or concerned by the personal uncertainties and risks
created by their perception of an imminent or occurring change of
control.
Accordingly, the Board has determined that appropriate
steps should be taken to assure the Company of the continued
employment and attention and dedication to duty of certain
members of management of the Company and to ensure the
availability of their disinterested advice, notwithstanding the
possibility, threat or occurrence of a change of control.
Therefore, in order to fulfill the above purposes, the
Board has designated you as eligible for severance benefits as
set forth below.
Special Severance Agreement
---------------------------
i. Offer
-----
In order to induce you to remain in the employ of the
Company and to provide continued services to the Company now and
in the event that a Change of Control is imminent or occurring,
this letter agreement (the "Agreement") sets forth severance
benefits which the Company offers to pay to you in the event of a
termination of your employment (in the manner described in
Section 5 below) subsequent to a Change of Control of the Company
(as defined in Section 4 below).
ii. Operation
---------
This Agreement shall be effective immediately upon its
execution but anything in this Agreement to the contrary
notwithstanding, neither this Agreement nor any of its provisions
shall be operative unless and until there has been a Change of
Control while you are still an employee of the Company, nor shall
this Agreement govern or affect your employment relationship with
the Company except as explicitly set forth herein. Upon a Change
of Control, if you are still employed by the Company, this
Agreement and all of its provisions shall become operative
immediately. If your employment relationship with the Company is
terminated before a Change of Control, you shall have no rights
or obligations under this Agreement.
3. Term
----
(a) Term of Agreement: The term of this
-----------------
Agreement shall commence immediately upon the date hereof and
continue until December 31, 1997.
(b) One-Year Evergreen Provision: Subject to
----------------------------
subsection (c) below, this Agreement shall be reviewed annually
by the Board at a regular meeting held between October 1 and
December 31 of each year. At such yearly review, the Board shall
consider whether or not to extend the term of this Agreement for
an additional year. Unless the Board affirmatively votes not to
extend this Agreement, the term of this Agreement shall be
2
extended for a period of one year from the previous termination
date. In the event the Board votes not to extend this Agreement,
the termination date of this Agreement shall be the later of
December 31, 1997 or thirty-six full calendar months from
December 31st of the year in which this Agreement was last
extended.
(c) Subsection (b) above notwithstanding, upon
the occurrence of a Change of Control, this Agreement shall be
automatically extended for a period of thirty-six full calendar
months commencing on the date of such Change of Control. At the
end of such thirty-six month period, this Agreement shall
terminate.
4. Change of Control
-----------------
For the purpose of this Agreement, a "Change of
Control" shall mean:
(a) The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"))
(a "Person") of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 50% (25% if such
Person proposes any individual for election to the Board or any
member of the Board is the representative of such Person) or more
of either (i) the then outstanding shares of common stock of the
Company (the "Outstanding Company Common Stock") or (ii) the
combined voting power of the then outstanding voting securities
of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities");
provided, however, that the following acquisitions shall not
constitute a Change of Control: (i) any acquisition directly
from the Company (excluding an acquisition by virtue of the
exercise of a conversion privilege), (ii) any acquisition by the
Company, (iii) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (iv) any acquisition by
any corporation pursuant to a reorganization, merger or
consolidation, if, following such reorganization, merger or
consolidation, the conditions described in clauses (i), (ii) and
(iii) of subsection (c) of this Section 4 are satisfied; or
(b) Individuals who, as of the date hereof,
constitute the Board (the "Incumbent Board") cease for any reason
to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to
the date hereof whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such
3
individual whose initial assumption of office occurs as a result
of either an actual or threatened election contest (as such terms
are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the
Board; or
(c) Approval by the shareholders of the Company
of a reorganization, merger or consolidation, in each case,
unless, following such reorganization, merger or consolidation,
(i) more than 75% of, respectively, the then outstanding shares
of common stock of the corporation resulting from such
reorganization, merger or consolidation and the combined voting
power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by
all or substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities
immediately prior to such reorganization, merger or consolidation
in substantially the same proportions as their ownership,
immediately prior to such reorganization, merger or
consolidation, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (ii)
no Person (excluding the Company, any employee benefit plan (or
related trust) of the Company or such corporation resulting from
such reorganization, merger or consolidation and any Person
beneficially owning, immediately prior to such reorganization,
merger or consolidation, directly or indirectly, 25% or more of
the Outstanding Company Common stock or Outstanding Voting
Securities, as the case may be) beneficially owns, directly or
indirectly, 25% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such
reorganization, merger or consolidation or the combined voting
power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of
directors and (iii) at least a majority of the members of the
board of directors of the corporation resulting from such
reorganization, merger or consolidation were members of the
Incumbent Board at the time of the execution of the initial
agreement providing for such reorganization, merger or
consolidation; or
(d) Approval by the shareholders of the Company
of (i) a complete liquidation or dissolution of the Company or
(ii) the sale or other disposition of all or substantially all of
the assets of the Company, other than to a corporation, with
respect to which following such sale or other disposition, (A)
more than 75% of, respectively, the then outstanding shares of
common stock of such corporation and the combined voting power of
the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then
4
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities
immediately prior to such sale or other disposition in
substantially the same proportion as their ownership, immediately
prior to such sale or other disposition, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities,
as the case may be, (B) no Person (excluding the Company and any
employee benefit plan (or related trust) of the Company or such
corporation and any Person beneficially owning, immediately prior
to such sale or other disposition, directly or indirectly, 25% or
more of the Outstanding Company Common Stock or Outstanding
Company Voting Securities, as the case may be) beneficially owns,
directly or indirectly, 25% or more of, respectively, the then
outstanding shares of common stock of such corporation and the
combined voting power of the then outstanding voting securities
of such corporation entitled to vote generally in the election of
directors and (C) at least a majority of the members of the board
of directors of such corporation were members of the Incumbent
Board at the time of the execution of the initial agreement or
action of the Board providing for such sale or other disposition
of assets of the Company.
5. Termination
-----------
(a) Termination Following Change of Control:
---------------------------------------
If, within a period of thirty-six full calendar months after a
Change of Control (as defined above) of the Company, you are
discharged without Cause or resign for Good Reason (as defined
below), you shall be entitled to the benefits provided by this
Agreement as set forth in Section 6 below.
(b) Good Reason: If any of the following events
-----------
occurs without your express consent and within thirty-six full
calendar months after a Change of Control, you may voluntarily
terminate your employment within 30 days of the occurrence of
such event and be entitled to the severance benefits set forth in
Section 6 below:
(1) The Company assigns any duties to you
which are inconsistent with your position, duties,
offices, titles, status (including membership on the
Board of Directors) responsibilities or reporting
requirements in effect immediately prior to a Change of
Control, or your removal from or any failure to re-
elect you to any of such positions or offices, except
in connection with termination of your employment for
Cause, Disability, Death or Normal Retirement, or by
you other than for Good Reason, or;
5
(2) Changes to your base salary are
inconsistent with your annual performance review and
the salary program applicable to other senior
executives of the Company; or
(3) The Company discontinues any bonus or
other compensation plans or any other benefit, stock
ownership plan, stock purchase plan, stock option plan,
life insurance plan, health plan, disability plan or
similar plan (as the same existed immediately prior to
the Change of Control) in which you participated or
were eligible to participate in immediately prior to
the Change of Control and in lieu thereof does not make
available plans providing at least comparable benefits;
or
(4) The Company takes action which adversely
affects your participation in, or eligibility for, or
materially reduces your benefits otherwise earned or
payable under, any of the plans described in (3) above
(unless such action is required by law), or which
deprives you of any material fringe benefit enjoyed by
you immediately prior to the Change of Control, or
fails to provide you with the number of paid vacation
days to which you were entitled in accordance with
normal vacation policy immediately prior to the Change
of Control; or
(5) The Company requires you to be based at
any office or location other than one within a 50 mile
radius of the office or location at which you were
based immediately prior to the Change of Control;
(except for required travel on the Company's business
to an extent substantially consistent with your
business travel obligations as they existed at the time
of a Change of Control of the Company); or, in the
event you consent to being based anywhere more than
fifty miles from such location, the failure by the
Company to pay (or reimburse you for) all reasonable
moving expenses incurred by you relating to a change of
your principal residence in connection with such
relocation and to indemnify you against any loss
(defined as the difference between the actual sale
price of such residence after the deduction of all real
estate brokerage charges and related selling expenses)
and the higher of (1) your aggregate investment in such
residence or (2) the fair market value of such
residence (as determined by a real estate appraiser
designated by you and reasonably satisfactory to the
Company) realized upon the sale of such residence in
connection with any such change of residence; or
6
(6) The Company's requiring you to perform
duties or services which necessitate absence overnight
from your place of residence, because of travel
involving the business or affairs of the Company, to a
degree not substantially consistent with the extent of
such absence necessitated by such travel during the
period of twelve months immediately preceding a Change
of Control of the Company; or
(7) The Company purports to terminate your
employment otherwise than as expressly permitted by
this Agreement; or
(8) The Company fails to comply with and
satisfy Section 9 below, provided that such successor
has received at least ten days prior written notice
from the Company or from you of the requirements of
Section 9 below.
You shall have the sole right to determine, in good
faith, whether any of the above events has occurred.
(c) Cause: Cause shall mean: conviction of a
-----
felony or crime involving an act of moral turpitude, dishonesty,
or misfeasance.
(d) Notice of Termination: Any termination by
---------------------
the Company for Cause, or by you for Good Reason, shall be
communicated by Notice of Termination to the other party hereto
given in accordance with Section 11 hereof. For purposes of this
Agreement, a "Notice of Termination" means a written notice which
(i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth
in reasonable detail the facts and circumstances claimed to
provide a basis for termination of your employment under the
provision so indicated and (iii) if the Date of Termination (as
defined below) is other than the date of receipt of such notice,
specifies the Date of Termination.
(e) Date of Termination: "Date of Termination"
-------------------
means (1) if your employment is terminated by the Company for
Cause or without Cause, or by you for Good Reason or other than
for Good Reason, the date of receipt by the other of the Notice
of Termination, and (2) if your employment is terminated by
reason of Death, Disability or Normal Retirement (as defined
below), the Date of Termination shall be the date of your death,
the date of receipt of your Notice of Termination, or the first
of the month following the month you reach the normal retirement
age for employees in your position, respectively.
7
(f) Normal Retirement: If your employment is
-----------------
terminated due to normal retirement, you shall not be entitled to
severance benefits under this Agreement, regardless of the
occurrence of a Change of Control. A termination by normal
retirement shall have occurred where your termination is caused
by the fact that you have reached normal retirement age for
employees in your position.
(g) Termination for Cause: If subsequent to a
---------------------
Change of Control, your employment is terminated by the Company
for Cause, the Company shall pay you your full base salary
through the Date of Termination at the rate in effect at the time
Notice of Termination is given, and you shall also receive all
accrued or vested benefits of any kind to which you are, or would
otherwise have been, entitled throughout the Date of Termination
(as defined in subsection (e) of this Section 5), and the Company
shall thereupon have no further obligation to you under this
Agreement.
(h) Disability or Death: If termination of your
-------------------
employment results from your Disability or death, you shall not
be entitled to severance benefits under this Agreement,
regardless of the occurrence of a Change of Control. You or your
designated beneficiary, in the case of your death, shall receive
all accrued or vested benefits of any kind to which you are, or
would otherwise have been, entitled through the Date of
Termination, and the Company shall thereupon have no further
obligation to you under this Agreement.
"Disability" shall mean, for the purposes of this
Agreement, your total and permanent disability such that you
would be entitled to receive Disability Retirement Income under
the Company's qualified pension plans, except for purposes of
this provision you need not have completed ten (10) years of
service with the Company, followed by the Company giving you
thirty days written notice of its intention to terminate your
employment by reason thereof, and your failure because of your
Disability to resume the full-time performance of your duties
within such period of thirty days and thereafter perform the same
for a period of two consecutive months.
6. Severance Benefits
------------------
If, within a period of thirty-six full calendar months
after a Change of Control of the Company, you are discharged
without Cause or resign for Good Reason, the following shall be
applicable:
8
(a) The Company shall pay to you within ten
business days following the Date of Termination a lump sum
severance benefit, payable in cash, the amounts determined as
provided below:
(1) Your full base salary through the Date
of Termination at the rate in effect at the time Notice
of Termination, is given.
(2) In lieu of further salary payments to
you for periods subsequent to the Date of Termination,
an amount equal to 2.99 multiplied by the sum of your
annual base salary at the rate in effect as of the Date
of Termination (or, if higher, at the rate in effect as
of the time of the Change of Control) plus the average
annual short-term incentive amount awarded to you under
the Ohio Edison System Executive Incentive Compensation
Plan ("Executive Incentive Plan") for the three years
immediately preceding the year during which the Date of
Termination occurs whether or not fully paid.
(b) For purposes of the Executive Incentive Plan,
you shall be considered to have retired and will be paid the pro
rata portion of your short-term incentive award earned, if any,
and any long-term deferred incentive awards earned, if any, per
the terms of the plan.
(c) For purposes of determining the amount of
benefits you may continue after the Date of Termination under the
Company's group health and life insurance plans, you shall be
considered as having retired at your current age or age 55,
whichever is greater, and your current years of service
calculated as if you are age 55, whichever is greater.
(d) For purposes of the Ohio Edison System
Executive Deferred Compensation Plan ("Deferred Compensation
Plan"), you shall be considered to have retired at age 62,
entitling you to the full amount of your Retirement Account, if
any, payable in accordance with the terms of the Deferred
Compensation Plan.
(e) For purposes of calculating your benefit
under the Ohio Edison System Supplemental Executive Retirement
Plan ("SERP"), you shall be considered as having retired from the
Company at your current age or age 55, whichever is greater, and
your current years of service or 5 years of service, whichever is
greater. Your benefit under the SERP will commence on the first
of the month following the Date of Termination as follows:
9
(1) If, on the Date of Termination, you are
less than age 55, your monthly benefit from the SERP
shall be calculated in accordance with the terms of the
SERP except that (a) until you reach age 55, such SERP
benefit shall be offset by any compensation earned by
you from a subsequent employer as provided in paragraph
(j) below; (b) at age 55, such SERP benefit shall only
be offset by the monthly amounts to which you will be
entitled at age 55 from the Company's tax-qualified
pension plan, the supplementary pension make-up benefit
under the Deferred Compensation Plan and/or the tax-
qualified pension plan of any previous employers
(collectively, "Pension Income"), irrespective of
whether you receive such benefits at that time; and,
(c) at age 62 such SERP benefit shall be offset only by
Pension Income and the monthly primary Social Security
Benefit to which you will be entitled at age 62,
irrespective of whether you receive such benefits at
that time;
(2) If, on the Date of Termination, you are
at least age 55 but less than age 62, your monthly
benefit from the SERP shall be calculated in accordance
with the terms of the SERP, except that (a) until you
reach age 62, such SERP benefit shall be offset only by
your Pension Income, irrespective of whether you
receive such benefits at that time; and (b) at age 62
such SERP benefit shall be offset only by Pension
Income and the monthly primary Social Security benefit
to which you will be entitled at age 62, irrespective
of whether you receive such benefits at that time;
(3) If, on the Date of Termination, you are
at least age 62,your monthly benefit from the SERP
shall be calculated and offset in accordance with the
terms of the SERP.
(f) For purposes of the Executive Supplemental
Life Plan ("ESLP"), you may continue to participate as if you
retired from the Company prior to age 65 in accordance with the
terms of the ESLP, irrespective of your age at the Date of
Termination.
(g) In the event that because of their
relationship to you, members of your family or other individuals
are covered by any plan, program, or arrangement described in
subsection (b) above immediately prior to the Date of
Termination, the provisions set forth in subsection (b) shall
apply equally to require the continued coverage of such persons;
provided, however, that if under the terms of any such plan,
program or arrangement, any such person would have ceased to be
eligible for coverage during the period in which the Company is
10
obligated to continue coverage for you, nothing set forth herein
shall obligate the Company to continue to provide coverage which
would have ceased even if you had remained an employee of the
Company.
(h) The Company shall enable you to purchase the
automobile, if any, which the Company was providing for your use
at the time Notice of Termination was given at the wholesale
value of such automobile at such time.
(i) Other Benefits Payable: The severance
----------------------
benefits described in Subsections (a), (b), (c), (d), (e), (f),
(g) and (h) above shall be payable in addition to, and not in
lieu of, all other accrued or vested or earned but deferred
compensation, rights, options or other benefits which may be owed
to you following your discharge or resignation (and are not
contingent on any Change of Control preceding such termination),
including but not limited to, accrued and/or banked vacation,
amounts or benefits payable, if any, under any bonus or other
compensation plans, stock option plan, stock ownership plan,
stock purchase plan, life insurance plan, health plan, disability
plan or similar plan.
(j) Payment Obligations: Other than as set forth
-------------------
in the Deferred Compensation Plan or the SERP, upon a Change of
Control the Company's obligations to pay the severance benefits
or make any other payments described in this Section 6 shall not
be affected by any set-off, counterclaim, recoupment, defense or
other right which the Company or any of its subsidiaries may have
against the Executive or anyone else. If you are less than age
55 at the time of your discharge without Cause or your
resignation for Good Reason, then, commencing 24 months after the
Date of Termination, you shall be required to seek employment
elsewhere and thereby mitigate the amount of SERP benefit payable
under Paragraph (d)(1). You shall not be required to accept a
position other than as a senior executive of an entity comparable
in size to the Company and having duties, responsibilities and
authority substantially similar in scope and nature to your
position with the Company immediately prior to the Date of
Termination. Upon obtaining such employment, you shall promptly
notify the Company of the compensation and benefits you received
or will receive from such new employer and of any changes
therein.
(k) Legal Fees and Expenses: Subject to and
-----------------------
contingent upon the occurrence of a Change of Control the Company
agrees to pay promptly as incurred, to the full extent permitted
by law, all legal fees and expenses which you may reasonably
thereafter incur as a result of any contest, litigation or
11
arbitration (regardless of the outcome thereof) by the Company,
you or others of the validity or enforceability of, or liability
under, any provision of this Agreement, the Deferred Compensation
Plan, or the SERP (including any contest by you about the amount
of any payment pursuant to this Agreement, the Deferred
Compensation Plan or the SERP), plus in each case interest on any
delayed payment at the rate of 150% of the Prime Rate as
published in the Wall Street Journal in the Money Rates Table on
the business day immediately preceding the conclusion of any such
contest, litigation or arbitration.
(l) Certain Additional Payments by the Company:
------------------------------------------
(1) Anything in this Agreement to the
contrary notwithstanding, in the event that the
Executive becomes entitled to severance benefits under
this Section 6 hereof, the Deferred Compensation Plan,
the SERP or otherwise, and it shall be determined that
any payment or distribution by the Company to or for
the benefit of the Executive, whether paid or payable
or distributed or distributable pursuant to the terms
of this Agreement, the Deferred Compensation Plan, the
SERP or otherwise (a "Payment"), would be subject to
the excise tax imposed by Section 4999 of the Internal
Revenue Code of 1986, as amended (the "Code") or any
interest or penalties with respect to such excise tax
(such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as
the "Excise Tax"), then the Executive shall be entitled
to receive an additional payment (a "Gross-Up Payment")
in an amount such that after payment by the Executive
of all taxes (including any interest or penalties
imposed with respect to such taxes), including any
Excise Tax, imposed upon the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments.
(2) All determinations required to be made
under this subsection (i), including whether a Gross-Up
Payment is required and the amount of such Gross-Up
Payment, shall be made in good faith by the Company
which shall provide detailed supporting calculations to
the Executive within 15 business days of the date of
termination of the Executive's employment, if
applicable, or such earlier time as is requested by the
Company. If the Company determines that no Excise Tax
is payable by the Executive, it shall furnish the
Executive with an opinion of counsel that he has
substantial authority not to report any Excise Tax on
his federal income tax return. Except as hereinafter
provided, any determination by the Company shall be
12
binding upon the Company and the Executive. As a
result of the uncertainty in the application of Section
4999 of the Code at the time of the initial
determination by the Company hereunder, it is possible
that Gross-Up Payments which will not have been made by
the Company should have been made ("Underpayment"),
consistent with the calculations required to be made
hereunder. In the event that the Executive is required
to make a payment of any Excise Tax, the Company shall
determine the amount of the Underpayment that has
occurred and any such Underpayment shall be promptly
paid by the Company to or for the benefit of the
Executive.
7. Assignability
-------------
This Agreement is binding on and is for the benefit of
the parties hereto and their respective successors, heirs,
executors, administrators and other legal representatives.
Neither this Agreement nor any right or obligation hereunder may
be assigned by the Company (except to any subsidiary or
affiliate) or by you.
8. Non-Competition
---------------
If subsequent to a Change of Control of the Company you
should for Good Reason terminate your employment, then for a
period of two years after the Date of Termination, you shall not
on your own account without the consent of the Company, or as a
shareholder, employee, officer, director, consultant or
otherwise, engage directly or indirectly in any business or
enterprise which is in competition with the Company. For all
purposes of this agreement the words "competition with the
Company" shall mean the provision of gas and/or electric services
on a retail and wholesale basis in the State of Ohio and in any
other state contiguous to the State of Ohio; provided, however,
that nothing herein contained shall prevent you from purchasing
and holding for investment less than 5% of the shares of any
corporation the shares of which are regularly traded either on a
national securities exchange or in the over-the-counter market.
9. Successor
---------
The Company shall require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the
Company to assume expressly and agree to perform this Agreement
in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place.
13
As used in this Agreement, "Company" shall mean the company as
hereinbefore defined and any successor to its business and/or
assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise. Failure of the
Company to obtain such agreement prior to the effectiveness of
such succession shall be a breach of this Agreement and shall
entitle you to compensation from the Company in the same amount
and on the same terms as you would be entitled hereunder if you
terminated your employment for Good Reason, except that for
purposes of implementing the foregoing, the date on which any
such succession becomes effective shall be deemed the Date of
Termination.
This agreement shall inure to the benefit of and be
enforceable by your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees. If you should die while any amounts would still be
payable to you hereunder if you had continued to live, all such
amounts, unless otherwise provided herein, shall be paid to such
beneficiary or beneficiaries as you shall have designated by
written notice delivered to the Company prior to your death or,
failing such written notice, to your estate.
10. Amendment; Waiver
-----------------
This Agreement may be amended only by an instrument in
writing signed by the parties hereto, and any provision hereof
may be waived only by an instrument in writing signed by the
party or parties against whom or which enforcement of such waiver
is sought. The failure of either party hereto at any time to
require the performance by the other party hereto of any
provision hereof shall in no way affect the full right to require
such performance at any time thereafter, nor shall the waiver by
either party hereto of a breach of any provision hereof be taken
or held to be a waiver of any succeeding breach of such provision
or a waiver of the provision itself or a waiver of any other
provision of this Agreement.
11. Notices
-------
All notices and other communications hereunder shall be
in writing and shall be given by hand delivery to the other party
or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
If to you:
---------
Willard R. Holland
161 E. Fairlawn Blvd.
Akron, Ohio 44313
14
If to the Company:
-----------------
Secretary
Ohio Edison Company
76 South Main Street
Akron, Ohio 44308
or to such other address as either party shall have furnished to
the other in writing in accordance herewith. Notice and
communications shall be effective when actually received by the
addressee.
12. Validity
--------
The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which
shall remain in full force and effect, nor shall the invalidity
or unenforceability of a portion of any provision of this
Agreement affect the validity or enforceability of the balance of
such provision. If any provision of this Agreement, or portion
thereof is so broad, in scope or duration, as to be
unenforceable, such provision or portion thereof shall be
interpreted to be only so broad as is enforceable.
13. Withholding
-----------
The Company may withhold from any amounts payable under
this Agreement such Federal, state or local taxes as shall be
required to be withheld pursuant to any applicable law or
regulation.
14. Entire Agreement
----------------
This Agreement contains the entire understanding of the
Company and you with respect to the subject matter hereof.
15. Applicable Law
--------------
This Agreement shall be governed by and construed in
accordance with the substantive internal law and not the conflict
of law provisions of the State of Ohio.
If the terms of the foregoing Agreement are acceptable
to you, please sign and return to the Company the enclosed copy
of this Agreement whereupon this Agreement shall become a valid
and legally binding contract between you and the Company.
15
Very truly yours,
OHIO EDISON COMPANY
By: /s/ H. Peter Burg
---------------------------
H. Peter Burg
Accepted and Agreed as of the date
first above written:
/s/ Willard R. Holland
---------------------------
Willard R. Holland
19866
16
February 22, 1995
Mr. H. Peter Burg
3331 Saratoga Blvd.
Stow, Ohio 44224
Special Severance Agreement
---------------------------
Dear Mr. Burg:
The Board of Directors (the "Board") of Ohio Edison
Company (the "Company") recognizes that, as is the case with many
publicly held corporations, there always exists the possibility
of a change of control of the Company. This possibility and the
uncertainty it creates may result in the loss or distraction of
members of management of the Company and its subsidiaries to the
detriment of the Company and its shareholders.
The Board considers the establishment, maintenance, and
continuity of a sound and vital management to be essential to
protecting and enhancing the best interests of the Company and
its shareholders. The Board also believes that when a change of
control is perceived as imminent, or is occurring, the Board
should be able to receive and rely on disinterested advice from
management regarding the best interests of the Company and its
shareholders without concern that members of management might be
distracted or concerned by the personal uncertainties and risks
created by their perception of an imminent or occurring change of
control.
Accordingly, the Board has determined that appropriate
steps should be taken to assure the Company of the continued
employment and attention and dedication to duty of certain
members of management of the Company and to ensure the
availability of their disinterested advice, notwithstanding the
possibility, threat or occurrence of a change of control.
Therefore, in order to fulfill the above purposes, the
Board has designated you as eligible for severance benefits as
set forth below.
i. Offer
-----
In order to induce you to remain in the employ of the
Company and to provide continued services to the Company now and
in the event that a Change of Control is imminent or occurring,
this letter agreement (the "Agreement") sets forth severance
benefits which the Company offers to pay to you in the event of a
termination of your employment (in the manner described in
Section 5 below) subsequent to a Change of Control of the Company
(as defined in Section 4 below).
ii. Operation
---------
This Agreement shall be effective immediately upon its
execution but anything in this Agreement to the contrary
notwithstanding, neither this Agreement nor any of its provisions
shall be operative unless and until there has been a Change of
Control while you are still an employee of the Company, nor shall
this Agreement govern or affect your employment relationship with
the Company except as explicitly set forth herein. Upon a Change
of Control, if you are still employed by the Company, this
Agreement and all of its provisions shall become operative
immediately. If your employment relationship with the Company is
terminated before a Change of Control, you shall have no rights
or obligations under this Agreement.
3. Term
----
(a) Term of Agreement: The term of this
-----------------
Agreement shall commence immediately upon the date hereof and
continue until December 31, 1997.
(b) One-Year Evergreen Provision: Subject to
----------------------------
subsection (c) below, this Agreement shall be reviewed annually
by the Board at a regular meeting held between October 1 and
December 31 of each year. At such yearly review, the Board shall
consider whether or not to extend the term of this Agreement for
an additional year. Unless the Board affirmatively votes not to
extend this Agreement, the term of this Agreement shall be
extended for a period of one year from the previous termination
date. In the event the Board votes not to extend this Agreement,
the termination date of this Agreement shall be the later of
December 31, 1997 or thirty-six full calendar months from
December 31st of the year in which this Agreement was last
extended.
(c) Subsection (b) above notwithstanding, upon
the occurrence of a Change of Control, this Agreement shall be
automatically extended for a period of thirty-six full calendar
months commencing on the date of such Change of Control. At the
end of such thirty-six month period, this Agreement shall
terminate.
4. Change of Control
-----------------
For the purpose of this Agreement, a "Change of
Control" shall mean:
2
(a) The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"))
(a "Person") of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 50% (25% if such
Person proposes any individual for election to the Board or any
member of the Board is the representative of such Person) or more
of either (i) the then outstanding shares of common stock of the
Company (the "Outstanding Company Common Stock") or (ii) the
combined voting power of the then outstanding voting securities
of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities");
provided, however, that the following acquisitions shall not
constitute a Change of Control: (i) any acquisition directly
from the Company (excluding an acquisition by virtue of the
exercise of a conversion privilege), (ii) any acquisition by the
Company, (iii) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (iv) any acquisition by
any corporation pursuant to a reorganization, merger or
consolidation, if, following such reorganization, merger or
consolidation, the conditions described in clauses (i), (ii) and
(iii) of subsection (c) of this Section 4 are satisfied; or
(b) Individuals who, as of the date hereof,
constitute the Board (the "Incumbent Board") cease for any reason
to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to
the date hereof whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result
of either an actual or threatened election contest (as such terms
are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the
Board; or
(c) Approval by the shareholders of the Company
of a reorganization, merger or consolidation, in each case,
unless, following such reorganization, merger or consolidation,
(i) more than 75% of, respectively, the then outstanding shares
of common stock of the corporation resulting from such
reorganization, merger or consolidation and the combined voting
power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by
all or substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities
3
immediately prior to such reorganization, merger or consolidation
in substantially the same proportions as their ownership,
immediately prior to such reorganization, merger or
consolidation, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (ii)
no Person (excluding the Company, any employee benefit plan (or
related trust) of the Company or such corporation resulting from
such reorganization, merger or consolidation and any Person
beneficially owning, immediately prior to such reorganization,
merger or consolidation, directly or indirectly, 25% or more of
the Outstanding Company Common stock or Outstanding Voting
Securities, as the case may be) beneficially owns, directly or
indirectly, 25% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such
reorganization, merger or consolidation or the combined voting
power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of
directors and (iii) at least a majority of the members of the
board of directors of the corporation resulting from such
reorganization, merger or consolidation were members of the
Incumbent Board at the time of the execution of the initial
agreement providing for such reorganization, merger or
consolidation; or
(d) Approval by the shareholders of the Company
of (i) a complete liquidation or dissolution of the Company or
(ii) the sale or other disposition of all or substantially all of
the assets of the Company, other than to a corporation, with
respect to which following such sale or other disposition, (A)
more than 75% of, respectively, the then outstanding shares of
common stock of such corporation and the combined voting power of
the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities
immediately prior to such sale or other disposition in
substantially the same proportion as their ownership, immediately
prior to such sale or other disposition, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities,
as the case may be, (B) no Person (excluding the Company and any
employee benefit plan (or related trust) of the Company or such
corporation and any Person beneficially owning, immediately prior
to such sale or other disposition, directly or indirectly, 25% or
more of the Outstanding Company Common Stock or Outstanding
Company Voting Securities, as the case may be) beneficially owns,
directly or indirectly, 25% or more of, respectively, the then
outstanding shares of common stock of such corporation and the
combined voting power of the then outstanding voting securities
of such corporation entitled to vote generally in the election of
directors and (C) at least a majority of the members of the board
4
of directors of such corporation were members of the Incumbent
Board at the time of the execution of the initial agreement or
action of the Board providing for such sale or other disposition
of assets of the Company.
5. Termination
-----------
(a) Termination Following Change of Control:
---------------------------------------
If, within a period of thirty-six full calendar months after a
Change of Control (as defined above) of the Company, you are
discharged without Cause or resign for Good Reason (as defined
below), you shall be entitled to the benefits provided by this
Agreement as set forth in Section 6 below.
(b) Good Reason: If any of the following events
-----------
occurs without your express consent and within thirty-six full
calendar months after a Change of Control, you may voluntarily
terminate your employment within 30 days of the occurrence of
such event and be entitled to the severance benefits set forth in
Section 6 below:
(1) The Company assigns any duties to you
which are inconsistent with your position, duties,
offices, titles, status (including membership on the
Board of Directors) responsibilities or reporting
requirements in effect immediately prior to a Change of
Control, or your removal from or any failure to re-
elect you to any of such positions or offices, except
in connection with termination of your employment for
Cause, Disability, Death or Normal Retirement, or by
you other than for Good Reason, or;
(2) Changes to your base salary are
inconsistent with your annual performance review and
the salary program applicable to other senior
executives of the Company; or
(3) The Company discontinues any bonus or
other compensation plans or any other benefit, stock
ownership plan, stock purchase plan, stock option plan,
life insurance plan, health plan, disability plan or
similar plan (as the same existed immediately prior to
the Change of Control) in which you participated or
were eligible to participate in immediately prior to
the Change of Control and in lieu thereof does not make
available plans providing at least comparable benefits;
or
5
(4) The Company takes action which adversely
affects your participation in, or eligibility
for, or materially reduces your benefits
otherwise earned or payable under, any of the
plans described in (3) above (unless such
action is required by law), or which deprives
you of any material fringe benefit enjoyed by
you immediately prior to the Change of
Control, or fails to provide you with the
number of paid vacation days to which you
were entitled in accordance with normal
vacation policy immediately prior to the
Change of Control; or
(5) The Company requires you to be based at
any office or location other than one within a 50 mile
radius of the office or location at which you were
based immediately prior to the Change of Control;
(except for required travel on the Company's business
to an extent substantially consistent with your
business travel obligations as they existed at the time
of a Change of Control of the Company); or, in the
event you consent to being based anywhere more than
fifty miles from such location, the failure by the
Company to pay (or reimburse you for) all reasonable
moving expenses incurred by you relating to a change of
your principal residence in connection with such
relocation and to indemnify you against any loss
(defined as the difference between the actual sale
price of such residence after the deduction of all real
estate brokerage charges and related selling expenses)
and the higher of (1) your aggregate investment in such
residence or (2) the fair market value of such
residence (as determined by a real estate appraiser
designated by you and reasonably satisfactory to the
Company) realized upon the sale of such residence in
connection with any such change of residence; or
(6) The Company's requiring you to perform
duties or services which necessitate absence overnight
from your place of residence, because of travel
involving the business or affairs of the Company, to a
degree not substantially consistent with the extent of
such absence necessitated by such travel during the
period of twelve months immediately preceding a Change
of Control of the Company; or
(7) The Company purports to terminate your
employment otherwise than as expressly
permitted by this Agreement; or
6
(8) The Company fails to comply with and
satisfy Section 9 below, provided that such successor
has received at least ten days prior written notice
from the Company or from you of the requirements of
Section 9 below.
You shall have the sole right to determine, in good
faith, whether any of the above events has occurred.
(c) Cause: Cause shall mean: conviction of a
-----
felony or crime involving an act of moral turpitude, dishonesty,
or misfeasance.
(d) Notice of Termination: Any termination by
---------------------
the Company for Cause, or by you for Good Reason, shall be
communicated by Notice of Termination to the other party hereto
given in accordance with Section 11 hereof. For purposes of this
Agreement, a "Notice of Termination" means a written notice which
(i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth
in reasonable detail the facts and circumstances claimed to
provide a basis for termination of your employment under the
provision so indicated and (iii) if the Date of Termination (as
defined below) is other than the date of receipt of such notice,
specifies the Date of Termination.
(e) Date of Termination: "Date of Termination"
-------------------
means (1) if your employment is terminated by the Company for
Cause or without Cause, or by you for Good Reason or other than
for Good Reason, the date of receipt by the other of the Notice
of Termination, and (2) if your employment is terminated by
reason of Death, Disability or Normal Retirement (as defined
below), the Date of Termination shall be the date of your death,
the date of receipt of your Notice of Termination, or the first
of the month following the month you reach the normal retirement
age for employees in your position, respectively.
(f) Normal Retirement: If your employment is
-----------------
terminated due to normal retirement, you shall not be entitled to
severance benefits under this Agreement, regardless of the
occurrence of a Change of Control. A termination by normal
retirement shall have occurred where your termination is caused
by the fact that you have reached normal retirement age for
employees in your position.
(g) Termination for Cause: If subsequent to a
---------------------
Change of Control, your employment is terminated by the Company
for Cause, the Company shall pay you your full base salary
7
through the Date of Termination at the rate in effect at the time
Notice of Termination is given, and you shall also receive all
accrued or vested benefits of any kind to which you are, or would
otherwise have been, entitled throughout the Date of Termination
(as defined in subsection (e) of this Section 5), and the Company
shall thereupon have no further obligation to you under this
Agreement.
(h) Disability or Death: If termination of
-------------------
your employment results from your Disability or death, you shall
not be entitled to severance benefits under this Agreement,
regardless of the occurrence of a Change of Control. You or your
designated beneficiary, in the case of your death, shall receive
all accrued or vested benefits of any kind to which you are, or
would otherwise have been, entitled through the Date of
Termination, and the Company shall thereupon have no further
obligation to you under this Agreement.
"Disability" shall mean, for the purposes of this
Agreement, your total and permanent disability such that you
would be entitled to receive Disability Retirement Income under
the Company's qualified pension plans, except for purposes of
this provision you need not have completed ten (10) years of
service with the Company, followed by the Company giving you
thirty days written notice of its intention to terminate your
employment by reason thereof, and your failure because of your
Disability to resume the full-time performance of your duties
within such period of thirty days and thereafter perform the same
for a period of two consecutive months.
6. Severance Benefits
------------------
If, within a period of thirty-six full calendar months
after a Change of Control of the Company, you are discharged
without Cause or resign for Good Reason, the following shall be
applicable:
(a) The Company shall pay to you within ten
business days following the Date of Termination a lump sum
severance benefit, payable in cash, the amounts determined as
provided below:
(1) Your full base salary through the Date
of Termination at the rate in effect at the time Notice
of Termination, is given.
(2) In lieu of further salary payments to
you for periods subsequent to the Date of Termination,
an amount equal to 2.99 multiplied by the sum of your
annual base salary at the rate in effect as of the Date
of Termination (or, if higher, at the rate in effect as
8
of the time of the Change of Control) plus the average
annual short-term incentive amount awarded to you under
the Ohio Edison System Executive Incentive Compensation
Plan ("Executive Incentive Plan") for the three years
immediately preceding the year during which the Date of
Termination occurs whether or not fully paid.
(b) For purposes of the Executive Incentive Plan,
you shall be considered to have retired and will be paid the pro
rata portion of your short-term incentive award earned, if any,
and any long-term deferred incentive awards earned, if any, per
the terms of the plan.
(c) For purposes of determining the amount of
benefits you may continue after the Date of Termination under the
Company's group health and life insurance plans, you shall be
considered as having retired at your current age or age 55,
whichever is greater, and your current years of service
calculated as if you are age 55, whichever is greater.
(d) For purposes of the Ohio Edison System
Executive Deferred Compensation Plan ("Deferred Compensation
Plan"), you shall be considered to have retired at age 62,
entitling you to the full amount of your Retirement Account, if
any, payable in accordance with the terms of the Deferred
Compensation Plan.
(e) For purposes of calculating your benefit
under the Ohio Edison System Supplemental Executive Retirement
Plan ("SERP"), you shall be considered as having retired from the
Company at your current age or age 55, whichever is greater, and
your current years of service or 5 years of service, whichever is
greater. Your benefit under the SERP will commence on the first
of the month following the Date of Termination as follows:
(1) If, on the Date of Termination, you are
less than age 55, your monthly benefit from the SERP
shall be calculated in accordance with the terms of the
SERP except that (a) until you reach age 55, such SERP
benefit shall be offset by any compensation earned by
you from a subsequent employer as provided in paragraph
(j) below; (b) at age 55, such SERP benefit shall only
be offset by the monthly amounts to which you will be
entitled at age 55 from the Company's tax-qualified
pension plan, the supplementary pension make-up benefit
under the Deferred Compensation Plan and/or the tax-
qualified pension plan of any previous employers
(collectively, "Pension Income"), irrespective of
whether you receive such benefits at that time; and,
(c) at age 62 such SERP benefit shall be offset only by
Pension Income and the monthly primary Social Security
Benefit to which you will be entitled at age 62,
9
irrespective of whether you receive such benefits at
that time;
(2) If, on the Date of Termination, you are
at least age 55 but less than age 62, your monthly
benefit from the SERP shall be calculated in accordance
with the terms of the SERP, except that (a) until you
reach age 62, such SERP benefit shall be offset only by
your Pension Income, irrespective of whether you
receive such benefits at that time; and (b) at age 62
such SERP benefit shall be offset only by Pension
Income and the monthly primary Social Security benefit
to which you will be entitled at age 62, irrespective
of whether you receive such benefits at that time;
(3) If, on the Date of Termination, you are
at least age 62, your monthly benefit from the SERP
shall be calculated and offset in accordance with the
terms of the SERP.
(f) For purposes of the Executive Supplemental
Life Plan ("ESLP"), you may continue to participate as if you
retired from the Company prior to age 65 in accordance with the
terms of the ESLP, irrespective of your age at the Date of
Termination.
(g) In the event that because of their
relationship to you, members of your family or other individuals
are covered by any plan, program, or arrangement described in
subsection (b) above immediately prior to the Date of
Termination, the provisions set forth in subsection (b) shall
apply equally to require the continued coverage of such persons;
provided, however, that if under the terms of any such plan,
program or arrangement, any such person would have ceased to be
eligible for coverage during the period in which the Company is
obligated to continue coverage for you, nothing set forth herein
shall obligate the Company to continue to provide coverage which
would have ceased even if you had remained an employee of the
Company.
(h) The Company shall enable you to purchase the
automobile, if any, which the Company was providing for your use
at the time Notice of Termination was given at the wholesale
value of such automobile at such time.
(i) Other Benefits Payable: The severance
----------------------
benefits described in Subsections (a), (b), (c), (d), (e), (f),
(g) and (h) above shall be payable in addition to, and not in
lieu of, all other accrued or vested or earned but deferred
compensation, rights, options or other benefits which may be owed
to you following your discharge or resignation (and are not
10
contingent on any Change of Control preceding such termination),
including but not limited to, accrued and/or banked vacation,
amounts or benefits payable, if any, under any bonus or other
compensation plans, stock option plan, stock ownership plan,
stock purchase plan, life insurance plan, health plan, disability
plan or similar plan.
(j) Payment Obligations: Other than as set forth
-------------------
in the Deferred Compensation Plan or the SERP, upon a Change of
Control the Company's obligations to pay the severance benefits
or make any other payments described in this Section 6 shall not
be affected by any set-off, counterclaim, recoupment, defense or
other right which the Company or any of its subsidiaries may have
against the Executive or anyone else. If you are less than age
55 at the time of your discharge without Cause or your
resignation for Good Reason, then, commencing 24 months after the
Date of Termination, you shall be required to seek employment
elsewhere and thereby mitigate the amount of SERP benefit payable
under Paragraph (d)(1). You shall not be required to accept a
position other than as a senior executive of an entity comparable
in size to the Company and having duties, responsibilities and
authority substantially similar in scope and nature to your
position with the Company immediately prior to the Date of
Termination. Upon obtaining such employment, you shall promptly
notify the Company of the compensation and benefits you received
or will receive from such new employer and of any changes
therein.
(k) Legal Fees and Expenses: Subject to and
-----------------------
contingent upon the occurrence of a Change of Control the Company
agrees to pay promptly as incurred, to the full extent permitted
by law, all legal fees and expenses which you may reasonably
thereafter incur as a result of any contest, litigation or
arbitration (regardless of the outcome thereof) by the Company,
you or others of the validity or enforceability of, or liability
under, any provision of this Agreement, the Deferred Compensation
Plan, or the SERP (including any contest by you about the amount
of any payment pursuant to this Agreement, the Deferred
Compensation Plan or the SERP), plus in each case interest on any
delayed payment at the rate of 150% of the Prime Rate as
published in the Wall Street Journal in the Money Rates Table on
the business day immediately preceding the conclusion of any such
contest, litigation or arbitration.
(l) Certain Additional Payments by the Company:
------------------------------------------
(1) Anything in this Agreement to the
contrary notwithstanding, in the event that the
Executive becomes entitled to severance benefits under
this Section 6 hereof, the Deferred Compensation Plan,
11
the SERP or otherwise, and it shall be determined that
any payment or distribution by the Company to or for
the benefit of the Executive, whether paid or payable
or distributed or distributable pursuant to the terms
of this Agreement, the Deferred Compensation Plan, the
SERP or otherwise (a "Payment"), would be subject to
the excise tax imposed by Section 4999 of the Internal
Revenue Code of 1986, as amended (the "Code") or any
interest or penalties with respect to such excise tax
(such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as
the "Excise Tax"), then the Executive shall be entitled
to receive an additional payment (a "Gross-Up Payment")
in an amount such that after payment by the Executive
of all taxes (including any interest or penalties
imposed with respect to such taxes), including any
Excise Tax, imposed upon the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments.
(2) All determinations required to be made
under this subsection (i), including whether a Gross-Up
Payment is required and the amount of such Gross-Up
Payment, shall be made in good faith by the Company
which shall provide detailed supporting calculations to
the Executive within 15 business days of the date of
termination of the Executive's employment, if
applicable, or such earlier time as is requested by the
Company. If the Company determines that no Excise Tax
is payable by the Executive, it shall furnish the
Executive with an opinion of counsel that he has
substantial authority not to report any Excise Tax on
his federal income tax return. Except as hereinafter
provided, any determination by the Company shall be
binding upon the Company and the Executive. As a
result of the uncertainty in the application of Section
4999 of the Code at the time of the initial
determination by the Company hereunder, it is possible
that Gross-Up Payments which will not have been made by
the Company should have been made ("Underpayment"),
consistent with the calculations required to be made
hereunder. In the event that the Executive is required
to make a payment of any Excise Tax, the Company shall
determine the amount of the Underpayment that has
occurred and any such Underpayment shall be promptly
paid by the Company to or for the benefit of the
Executive.
12
7. Assignability
-------------
This Agreement is binding on and is for the benefit of
the parties hereto and their respective successors, heirs,
executors, administrators and other legal representatives.
Neither this Agreement nor any right or obligation hereunder may
be assigned by the Company (except to any subsidiary or
affiliate) or by you.
8. Non-Competition
---------------
If subsequent to a Change of Control of the Company you
should for Good Reason terminate your employment, then for a
period of two years after the Date of Termination, you shall not
on your own account without the consent of the Company, or as a
shareholder, employee, officer, director, consultant or
otherwise, engage directly or indirectly in any business or
enterprise which is in competition with the Company. For all
purposes of this agreement the words "competition with the
Company" shall mean the provision of gas and/or electric services
on a retail and wholesale basis in the State of Ohio and in any
other state contiguous to the State of Ohio; provided, however,
that nothing herein contained shall prevent you from purchasing
and holding for investment less than 5% of the shares of any
corporation the shares of which are regularly traded either on a
national securities exchange or in the over-the-counter market.
9. Successor
---------
The Company shall require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the
Company to assume expressly and agree to perform this Agreement
in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place.
As used in this Agreement, "Company" shall mean the company as
hereinbefore defined and any successor to its business and/or
assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise. Failure of the
Company to obtain such agreement prior to the effectiveness of
such succession shall be a breach of this Agreement and shall
entitle you to compensation from the Company in the same amount
and on the same terms as you would be entitled hereunder if you
terminated your employment for Good Reason, except that for
purposes of implementing the foregoing, the date on which any
such succession becomes effective shall be deemed the Date of
Termination.
13
This agreement shall inure to the benefit of and be
enforceable by your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees. If you should die while any amounts would still be
payable to you hereunder if you had continued to live, all such
amounts, unless otherwise provided herein, shall be paid to such
beneficiary or beneficiaries as you shall have designated by
written notice delivered to the Company prior to your death or,
failing such written notice, to your estate.
10. Amendment; Waiver
-----------------
This Agreement may be amended only by an instrument in
writing signed by the parties hereto, and any provision hereof
may be waived only by an instrument in writing signed by the
party or parties against whom or which enforcement of such waiver
is sought. The failure of either party hereto at any time to
require the performance by the other party hereto of any
provision hereof shall in no way affect the full right to require
such performance at any time thereafter, nor shall the waiver by
either party hereto of a breach of any provision hereof be taken
or held to be a waiver of any succeeding breach of such provision
or a waiver of the provision itself or a waiver of any other
provision of this Agreement.
11. Notices
-------
All notices and other communications hereunder shall be
in writing and shall be given by hand delivery to the other party
or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
If to you:
---------
H. Peter Burg
3331 Saratoga Blvd.
Stow, Ohio 44224
If to the Company:
-----------------
Secretary
Ohio Edison Company
76 South Main Street
Akron, Ohio 44308
or to such other address as either party shall have furnished to
the other in writing in accordance herewith. Notice and
communications shall be effective when actually received by the
addressee.
14
12. Validity
--------
The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which
shall remain in full force and effect, nor shall the invalidity
or unenforceability of a portion of any provision of this
Agreement affect the validity or enforceability of the balance of
such provision. If any provision of this Agreement, or portion
thereof is so broad, in scope or duration, as to be
unenforceable, such provision or portion thereof shall be
interpreted to be only so broad as is enforceable.
13. Withholding
-----------
The Company may withhold from any amounts payable under
this Agreement such Federal, state or local taxes as shall be
required to be withheld pursuant to any applicable law or
regulation.
14. Entire Agreement
----------------
This Agreement contains the entire understanding of the
Company and you with respect to the subject matter hereof.
15. Applicable Law
--------------
This Agreement shall be governed by and construed in
accordance with the substantive internal law and not the conflict
of law provisions of the State of Ohio.
If the terms of the foregoing Agreement are acceptable
to you, please sign and return to the Company the enclosed copy
of this Agreement whereupon this Agreement shall become a valid
and legally binding contract between you and the Company.
Very truly yours,
OHIO EDISON COMPANY
By: /s/Willard R. Holland
-------------------------
Willard R. Holland
Accepted and Agreed as of the date
first above written:
/s/ H. Peter Burg
----------------------------
H. Peter Burg
15
February 22, 1995
Mr. Anthony J. Alexander
3926 Troon Drive
Uniontown, Ohio 44685
Special Severance Agreement
---------------------------
Dear Mr. Alexander:
The Board of Directors (the "Board") of Ohio Edison
Company (the "Company") recognizes that, as is the case with many
publicly held corporations, there always exists the possibility
of a change of control of the Company. This possibility and the
uncertainty it creates may result in the loss or distraction of
members of management of the Company and its subsidiaries to the
detriment of the Company and its shareholders.
The Board considers the establishment, maintenance, and
continuity of a sound and vital management to be essential to
protecting and enhancing the best interests of the Company and
its shareholders. The Board also believes that when a change of
control is perceived as imminent, or is occurring, the Board
should be able to receive and rely on disinterested advice from
management regarding the best interests of the Company and its
shareholders without concern that members of management might be
distracted or concerned by the personal uncertainties and risks
created by their perception of an imminent or occurring change of
control.
Accordingly, the Board has determined that appropriate
steps should be taken to assure the Company of the continued
employment and attention and dedication to duty of certain
members of management of the Company and to ensure the
availability of their disinterested advice, notwithstanding the
possibility, threat or occurrence of a change of control.
Therefore, in order to fulfill the above purposes, the
Board has designated you as eligible for severance benefits as
set forth below.
i. Offer
-----
In order to induce you to remain in the employ of the
Company and to provide continued services to the Company now and
in the event that a Change of Control is imminent or occurring,
this letter agreement (the "Agreement") sets forth severance
benefits which the Company offers to pay to you in the event of a
termination of your employment (in the manner described in
Section 5 below) subsequent to a Change of Control of the Company
(as defined in Section 4 below).
ii. Operation
---------
This Agreement shall be effective immediately upon its
execution but anything in this Agreement to the contrary
notwithstanding, neither this Agreement nor any of its provisions
shall be operative unless and until there has been a Change of
Control while you are still an employee of the Company, nor shall
this Agreement govern or affect your employment relationship with
the Company except as explicitly set forth herein. Upon a Change
of Control, if you are still employed by the Company, this
Agreement and all of its provisions shall become operative
immediately. If your employment relationship with the Company is
terminated before a Change of Control, you shall have no rights
or obligations under this Agreement.
3. Term
----
(a) Term of Agreement: The term of this
-----------------
Agreement shall commence immediately upon the date hereof and
continue until December 31, 1997.
(b) One-Year Evergreen Provision: Subject to
----------------------------
subsection (c) below, this Agreement shall be reviewed annually
by the Board at a regular meeting held between October 1 and
December 31 of each year. At such yearly review, the Board shall
consider whether or not to extend the term of this Agreement for
an additional year. Unless the Board affirmatively votes not to
extend this Agreement, the term of this Agreement shall be
extended for a period of one year from the previous termination
date. In the event the Board votes not to extend this Agreement,
the termination date of this Agreement shall be the later of
December 31, 1997 or thirty-six full calendar months from
December 31st of the year in which this Agreement was last
extended.
(c) Subsection (b) above notwithstanding, upon
the occurrence of a Change of Control, this Agreement shall be
automatically extended for a period of thirty-six full calendar
months commencing on the date of such Change of Control. At the
end of such thirty-six month period, this Agreement shall
terminate.
4. Change of Control
-----------------
For the purpose of this Agreement, a "Change of
Control" shall mean:
2
(a) The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"))
(a "Person") of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 50% (25% if such
Person proposes any individual for election to the Board or any
member of the Board is the representative of such Person) or more
of either (i) the then outstanding shares of common stock of the
Company (the "Outstanding Company Common Stock") or (ii) the
combined voting power of the then outstanding voting securities
of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities");
provided, however, that the following acquisitions shall not
constitute a Change of Control: (i) any acquisition directly
from the Company (excluding an acquisition by virtue of the
exercise of a conversion privilege), (ii) any acquisition by the
Company, (iii) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (iv) any acquisition by
any corporation pursuant to a reorganization, merger or
consolidation, if, following such reorganization, merger or
consolidation, the conditions described in clauses (i), (ii) and
(iii) of subsection (c) of this Section 4 are satisfied; or
(b) Individuals who, as of the date hereof,
constitute the Board (the "Incumbent Board") cease for any reason
to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to
the date hereof whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result
of either an actual or threatened election contest (as such terms
are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the
Board; or
(c) Approval by the shareholders of the Company
of a reorganization, merger or consolidation, in each case,
unless, following such reorganization, merger or consolidation,
(i) more than 75% of, respectively, the then outstanding shares
of common stock of the corporation resulting from such
reorganization, merger or consolidation and the combined voting
power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by
all or substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities
3
immediately prior to such reorganization, merger or consolidation
in substantially the same proportions as their ownership,
immediately prior to such reorganization, merger or
consolidation, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (ii)
no Person (excluding the Company, any employee benefit plan (or
related trust) of the Company or such corporation resulting from
such reorganization, merger or consolidation and any Person
beneficially owning, immediately prior to such reorganization,
merger or consolidation, directly or indirectly, 25% or more of
the Outstanding Company Common stock or Outstanding Voting
Securities, as the case may be) beneficially owns, directly or
indirectly, 25% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such
reorganization, merger or consolidation or the combined voting
power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of
directors and (iii) at least a majority of the members of the
board of directors of the corporation resulting from such
reorganization, merger or consolidation were members of the
Incumbent Board at the time of the execution of the initial
agreement providing for such reorganization, merger or
consolidation; or
(d) Approval by the shareholders of the Company
of (i) a complete liquidation or dissolution of the Company or
(ii) the sale or other disposition of all or substantially all of
the assets of the Company, other than to a corporation, with
respect to which following such sale or other disposition, (A)
more than 75% of, respectively, the then outstanding shares of
common stock of such corporation and the combined voting power of
the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities
immediately prior to such sale or other disposition in
substantially the same proportion as their ownership, immediately
prior to such sale or other disposition, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities,
as the case may be, (B) no Person (excluding the Company and any
employee benefit plan (or related trust) of the Company or such
corporation and any Person beneficially owning, immediately prior
to such sale or other disposition, directly or indirectly, 25% or
more of the Outstanding Company Common Stock or Outstanding
Company Voting Securities, as the case may be) beneficially owns,
directly or indirectly, 25% or more of, respectively, the then
outstanding shares of common stock of such corporation and the
combined voting power of the then outstanding voting securities
of such corporation entitled to vote generally in the election of
directors and (C) at least a majority of the members of the board
4
of directors of such corporation were members of the Incumbent
Board at the time of the execution of the initial agreement or
action of the Board providing for such sale or other disposition
of assets of the Company.
5. Termination
-----------
(a) Termination Following Change of Control:
---------------------------------------
If, within a period of thirty-six full calendar months after a
Change of Control (as defined above) of the Company, you are
discharged without Cause or resign for Good Reason (as defined
below), you shall be entitled to the benefits provided by this
Agreement as set forth in Section 6 below.
(b) Good Reason: If any of the following events
-----------
occurs without your express consent and within thirty-six full
calendar months after a Change of Control, you may voluntarily
terminate your employment within 30 days of the occurrence of
such event and be entitled to the severance benefits set forth in
Section 6 below:
(1) The Company assigns any duties to you
which are inconsistent with your position, duties,
offices, titles, status (including membership on the
Board of Directors) responsibilities or reporting
requirements in effect immediately prior to a Change of
Control, or your removal from or any failure to re-
elect you to any of such positions or offices, except
in connection with termination of your employment for
Cause, Disability, Death or Normal Retirement, or by
you other than for Good Reason, or;
(2) Changes to your base salary are
inconsistent with your annual performance review and
the salary program applicable to other senior
executives of the Company; or
(3) The Company discontinues any bonus or
other compensation plans or any other benefit, stock
ownership plan, stock purchase plan, stock option plan,
life insurance plan, health plan, disability plan or
similar plan (as the same existed immediately prior to
the Change of Control) in which you participated or
were eligible to participate in immediately prior to
the Change of Control and in lieu thereof does not make
available plans providing at least comparable benefits;
or
5
(4) The Company takes action which adversely
affects your participation in, or eligibility
for, or materially reduces your benefits
otherwise earned or payable under, any of the
plans described in (3) above (unless such
action is required by law), or which deprives
you of any material fringe benefit enjoyed by
you immediately prior to the Change of
Control, or fails to provide you with the
number of paid vacation days to which you
were entitled in accordance with normal
vacation policy immediately prior to the
Change of Control; or
(5) The Company requires you to be based at
any office or location other than one within a 50 mile
radius of the office or location at which you were
based immediately prior to the Change of Control;
(except for required travel on the Company's business
to an extent substantially consistent with your
business travel obligations as they existed at the time
of a Change of Control of the Company); or, in the
event you consent to being based anywhere more than
fifty miles from such location, the failure by the
Company to pay (or reimburse you for) all reasonable
moving expenses incurred by you relating to a change of
your principal residence in connection with such
relocation and to indemnify you against any loss
(defined as the difference between the actual sale
price of such residence after the deduction of all real
estate brokerage charges and related selling expenses)
and the higher of (1) your aggregate investment in such
residence or (2) the fair market value of such
residence (as determined by a real estate appraiser
designated by you and reasonably satisfactory to the
Company) realized upon the sale of such residence in
connection with any such change of residence; or
(6) The Company's requiring you to perform
duties or services which necessitate absence overnight
from your place of residence, because of travel
involving the business or affairs of the Company, to a
degree not substantially consistent with the extent of
such absence necessitated by such travel during the
period of twelve months immediately preceding a Change
of Control of the Company; or
(7) The Company purports to terminate your
employment otherwise than as expressly
permitted by this Agreement; or
6
(8) The Company fails to comply with and
satisfy Section 9 below, provided that such successor
has received at least ten days prior written notice
from the Company or from you of the requirements of
Section 9 below.
You shall have the sole right to determine, in good
faith, whether any of the above events has occurred.
(c) Cause: Cause shall mean: conviction of a
-----
felony or crime involving an act of moral turpitude, dishonesty,
or misfeasance.
(d) Notice of Termination: Any termination by
---------------------
the Company for Cause, or by you for Good Reason, shall be
communicated by Notice of Termination to the other party hereto
given in accordance with Section 11 hereof. For purposes of this
Agreement, a "Notice of Termination" means a written notice which
(i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth
in reasonable detail the facts and circumstances claimed to
provide a basis for termination of your employment under the
provision so indicated and (iii) if the Date of Termination (as
defined below) is other than the date of receipt of such notice,
specifies the Date of Termination.
(e) Date of Termination: "Date of Termination"
-------------------
means (1) if your employment is terminated by the Company for
Cause or without Cause, or by you for Good Reason or other than
for Good Reason, the date of receipt by the other of the Notice
of Termination, and (2) if your employment is terminated by
reason of Death, Disability or Normal Retirement (as defined
below), the Date of Termination shall be the date of your death,
the date of receipt of your Notice of Termination, or the first
of the month following the month you reach the normal retirement
age for employees in your position, respectively.
(f) Normal Retirement: If your employment is
-----------------
terminated due to normal retirement, you shall not be entitled to
severance benefits under this Agreement, regardless of the
occurrence of a Change of Control. A termination by normal
retirement shall have occurred where your termination is caused
by the fact that you have reached normal retirement age for
employees in your position.
(g) Termination for Cause: If subsequent to a
---------------------
Change of Control, your employment is terminated by the Company
for Cause, the Company shall pay you your full base salary
7
through the Date of Termination at the rate in effect at the time
Notice of Termination is given, and you shall also receive all
accrued or vested benefits of any kind to which you are, or would
otherwise have been, entitled throughout the Date of Termination
(as defined in subsection (e) of this Section 5), and the Company
shall thereupon have no further obligation to you under this
Agreement.
(h) Disability or Death: If termination of
-------------------
your employment results from your Disability or death, you shall
not be entitled to severance benefits under this Agreement,
regardless of the occurrence of a Change of Control. You or your
designated beneficiary, in the case of your death, shall receive
all accrued or vested benefits of any kind to which you are, or
would otherwise have been, entitled through the Date of
Termination, and the Company shall thereupon have no further
obligation to you under this Agreement.
"Disability" shall mean, for the purposes of this
Agreement, your total and permanent disability such that you
would be entitled to receive Disability Retirement Income under
the Company's qualified pension plans, except for purposes of
this provision you need not have completed ten (10) years of
service with the Company, followed by the Company giving you
thirty days written notice of its intention to terminate your
employment by reason thereof, and your failure because of your
Disability to resume the full-time performance of your duties
within such period of thirty days and thereafter perform the same
for a period of two consecutive months.
6. Severance Benefits
------------------
If, within a period of thirty-six full calendar months
after a Change of Control of the Company, you are discharged
without Cause or resign for Good Reason, the following shall be
applicable:
(a) The Company shall pay to you within ten
business days following the Date of Termination a lump sum
severance benefit, payable in cash, the amounts determined as
provided below:
(1) Your full base salary through the Date
of Termination at the rate in effect at the time Notice
of Termination, is given.
(2) In lieu of further salary payments to
you for periods subsequent to the Date of Termination,
an amount equal to 2.99 multiplied by the sum of your
annual base salary at the rate in effect as of the Date
of Termination (or, if higher, at the rate in effect as
8
of the time of the Change of Control) plus the average
annual short-term incentive amount awarded to you under
the Ohio Edison System Executive Incentive Compensation
Plan ("Executive Incentive Plan") for the three years
immediately preceding the year during which the Date of
Termination occurs whether or not fully paid.
(b) For purposes of the Executive Incentive Plan,
you shall be considered to have retired and will be paid the pro
rata portion of your short-term incentive award earned, if any,
and any long-term deferred incentive awards earned, if any, per
the terms of the plan.
(c) For purposes of determining the amount of
benefits you may continue after the Date of Termination under the
Company's group health and life insurance plans, you shall be
considered as having retired at your current age or age 55,
whichever is greater, and your current years of service
calculated as if you are age 55, whichever is greater.
(d) For purposes of the Ohio Edison System
Executive Deferred Compensation Plan ("Deferred Compensation
Plan"), you shall be considered to have retired at age 62,
entitling you to the full amount of your Retirement Account, if
any, payable in accordance with the terms of the Deferred
Compensation Plan.
(e) For purposes of calculating your benefit
under the Ohio Edison System Supplemental Executive Retirement
Plan ("SERP"), you shall be considered as having retired from the
Company at your current age or age 55, whichever is greater, and
your current years of service or 5 years of service, whichever is
greater. Your benefit under the SERP will commence on the first
of the month following the Date of Termination as follows:
(1) If, on the Date of Termination, you are
less than age 55, your monthly benefit from the SERP
shall be calculated in accordance with the terms of the
SERP except that (a) until you reach age 55, such SERP
benefit shall be offset by any compensation earned by
you from a subsequent employer as provided in paragraph
(j) below; (b) at age 55, such SERP benefit shall only
be offset by the monthly amounts to which you will be
entitled at age 55 from the Company's tax-qualified
pension plan, the supplementary pension make-up benefit
under the Deferred Compensation Plan and/or the tax-
qualified pension plan of any previous employers
(collectively, "Pension Income"), irrespective of
whether you receive such benefits at that time; and,
(c) at age 62 such SERP benefit shall be offset only by
Pension Income and the monthly primary Social Security
Benefit to which you will be entitled at age 62,
9
irrespective of whether you receive such benefits at
that time;
(2) If, on the Date of Termination, you are
at least age 55 but less than age 62, your monthly
benefit from the SERP shall be calculated in accordance
with the terms of the SERP, except that (a) until you
reach age 62, such SERP benefit shall be offset only by
your Pension Income, irrespective of whether you
receive such benefits at that time; and (b) at age 62
such SERP benefit shall be offset only by Pension
Income and the monthly primary Social Security benefit
to which you will be entitled at age 62, irrespective
of whether you receive such benefits at that time;
(3) If, on the Date of Termination, you are
at least age 62, your monthly benefit from the SERP
shall be calculated and offset in accordance with the
terms of the SERP.
(f) For purposes of the Executive Supplemental
Life Plan ("ESLP"), you may continue to participate as if you
retired from the Company prior to age 65 in accordance with the
terms of the ESLP, irrespective of your age at the Date of
Termination.
(g) In the event that because of their
relationship to you, members of your family or other individuals
are covered by any plan, program, or arrangement described in
subsection (b) above immediately prior to the Date of
Termination, the provisions set forth in subsection (b) shall
apply equally to require the continued coverage of such persons;
provided, however, that if under the terms of any such plan,
program or arrangement, any such person would have ceased to be
eligible for coverage during the period in which the Company is
obligated to continue coverage for you, nothing set forth herein
shall obligate the Company to continue to provide coverage which
would have ceased even if you had remained an employee of the
Company.
(h) The Company shall enable you to purchase the
automobile, if any, which the Company was providing for your use
at the time Notice of Termination was given at the wholesale
value of such automobile at such time.
(i) Other Benefits Payable: The severance
----------------------
benefits described in Subsections (a), (b), (c), (d), (e), (f),
(g) and (h) above shall be payable in addition to, and not in
lieu of, all other accrued or vested or earned but deferred
compensation, rights, options or other benefits which may be owed
to you following your discharge or resignation (and are not
10
contingent on any Change of Control preceding such termination),
including but not limited to, accrued and/or banked vacation,
amounts or benefits payable, if any, under any bonus or other
compensation plans, stock option plan, stock ownership plan,
stock purchase plan, life insurance plan, health plan, disability
plan or similar plan.
(j) Payment Obligations: Other than as set forth
-------------------
in the Deferred Compensation Plan or the SERP, upon a Change of
Control the Company's obligations to pay the severance benefits
or make any other payments described in this Section 6 shall not
be affected by any set-off, counterclaim, recoupment, defense or
other right which the Company or any of its subsidiaries may have
against the Executive or anyone else. If you are less than age
55 at the time of your discharge without Cause or your
resignation for Good Reason, then, commencing 24 months after the
Date of Termination, you shall be required to seek employment
elsewhere and thereby mitigate the amount of SERP benefit payable
under Paragraph (d)(1). You shall not be required to accept a
position other than as a senior executive of an entity comparable
in size to the Company and having duties, responsibilities and
authority substantially similar in scope and nature to your
position with the Company immediately prior to the Date of
Termination. Upon obtaining such employment, you shall promptly
notify the Company of the compensation and benefits you received
or will receive from such new employer and of any changes
therein.
(k) Legal Fees and Expenses: Subject to and
-----------------------
contingent upon the occurrence of a Change of Control the Company
agrees to pay promptly as incurred, to the full extent permitted
by law, all legal fees and expenses which you may reasonably
thereafter incur as a result of any contest, litigation or
arbitration (regardless of the outcome thereof) by the Company,
you or others of the validity or enforceability of, or liability
under, any provision of this Agreement, the Deferred Compensation
Plan, or the SERP (including any contest by you about the amount
of any payment pursuant to this Agreement, the Deferred
Compensation Plan or the SERP), plus in each case interest on any
delayed payment at the rate of 150% of the Prime Rate as
published in the Wall Street Journal in the Money Rates Table on
the business day immediately preceding the conclusion of any such
contest, litigation or arbitration.
(l) Certain Additional Payments by the Company:
------------------------------------------
(1) Anything in this Agreement to the
contrary notwithstanding, in the event that the
Executive becomes entitled to severance benefits under
this Section 6 hereof, the Deferred Compensation Plan,
11
the SERP or otherwise, and it shall be determined that
any payment or distribution by the Company to or for
the benefit of the Executive, whether paid or payable
or distributed or distributable pursuant to the terms
of this Agreement, the Deferred Compensation Plan, the
SERP or otherwise (a "Payment"), would be subject to
the excise tax imposed by Section 4999 of the Internal
Revenue Code of 1986, as amended (the "Code") or any
interest or penalties with respect to such excise tax
(such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as
the "Excise Tax"), then the Executive shall be entitled
to receive an additional payment (a "Gross-Up Payment")
in an amount such that after payment by the Executive
of all taxes (including any interest or penalties
imposed with respect to such taxes), including any
Excise Tax, imposed upon the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments.
(2) All determinations required to be made
under this subsection (i), including whether a Gross-Up
Payment is required and the amount of such Gross-Up
Payment, shall be made in good faith by the Company
which shall provide detailed supporting calculations to
the Executive within 15 business days of the date of
termination of the Executive's employment, if
applicable, or such earlier time as is requested by the
Company. If the Company determines that no Excise Tax
is payable by the Executive, it shall furnish the
Executive with an opinion of counsel that he has
substantial authority not to report any Excise Tax on
his federal income tax return. Except as hereinafter
provided, any determination by the Company shall be
binding upon the Company and the Executive. As a
result of the uncertainty in the application of Section
4999 of the Code at the time of the initial
determination by the Company hereunder, it is possible
that Gross-Up Payments which will not have been made by
the Company should have been made ("Underpayment"),
consistent with the calculations required to be made
hereunder. In the event that the Executive is required
to make a payment of any Excise Tax, the Company shall
determine the amount of the Underpayment that has
occurred and any such Underpayment shall be promptly
paid by the Company to or for the benefit of the
Executive.
12
7. Assignability
-------------
This Agreement is binding on and is for the benefit of
the parties hereto and their respective successors, heirs,
executors, administrators and other legal representatives.
Neither this Agreement nor any right or obligation hereunder may
be assigned by the Company (except to any subsidiary or
affiliate) or by you.
8. Non-Competition
---------------
If subsequent to a Change of Control of the Company you
should for Good Reason terminate your employment, then for a
period of two years after the Date of Termination, you shall not
on your own account without the consent of the Company, or as a
shareholder, employee, officer, director, consultant or
otherwise, engage directly or indirectly in any business or
enterprise which is in competition with the Company. For all
purposes of this agreement the words "competition with the
Company" shall mean the provision of gas and/or electric services
on a retail and wholesale basis in the State of Ohio and in any
other state contiguous to the State of Ohio; provided, however,
that nothing herein contained shall prevent you from purchasing
and holding for investment less than 5% of the shares of any
corporation the shares of which are regularly traded either on a
national securities exchange or in the over-the-counter market.
9. Successor
---------
The Company shall require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the
Company to assume expressly and agree to perform this Agreement
in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place.
As used in this Agreement, "Company" shall mean the company as
hereinbefore defined and any successor to its business and/or
assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise. Failure of the
Company to obtain such agreement prior to the effectiveness of
such succession shall be a breach of this Agreement and shall
entitle you to compensation from the Company in the same amount
and on the same terms as you would be entitled hereunder if you
terminated your employment for Good Reason, except that for
purposes of implementing the foregoing, the date on which any
such succession becomes effective shall be deemed the Date of
Termination.
13
This agreement shall inure to the benefit of and be
enforceable by your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees. If you should die while any amounts would still be
payable to you hereunder if you had continued to live, all such
amounts, unless otherwise provided herein, shall be paid to such
beneficiary or beneficiaries as you shall have designated by
written notice delivered to the Company prior to your death or,
failing such written notice, to your estate.
10. Amendment; Waiver
-----------------
This Agreement may be amended only by an instrument in
writing signed by the parties hereto, and any provision hereof
may be waived only by an instrument in writing signed by the
party or parties against whom or which enforcement of such waiver
is sought. The failure of either party hereto at any time to
require the performance by the other party hereto of any
provision hereof shall in no way affect the full right to require
such performance at any time thereafter, nor shall the waiver by
either party hereto of a breach of any provision hereof be taken
or held to be a waiver of any succeeding breach of such provision
or a waiver of the provision itself or a waiver of any other
provision of this Agreement.
11. Notices
-------
All notices and other communications hereunder shall be
in writing and shall be given by hand delivery to the other party
or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
If to you:
---------
Anthony J. Alexander
3926 Troon Drive
Uniontown, Ohio 44685
If to the Company:
-----------------
Secretary
Ohio Edison Company
76 South Main Street
Akron, Ohio 44308
or to such other address as either party shall have furnished to
the other in writing in accordance herewith. Notice and
communications shall be effective when actually received by the
addressee.
14
12. Validity
--------
The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which
shall remain in full force and effect, nor shall the invalidity
or unenforceability of a portion of any provision of this
Agreement affect the validity or enforceability of the balance of
such provision. If any provision of this Agreement, or portion
thereof is so broad, in scope or duration, as to be
unenforceable, such provision or portion thereof shall be
interpreted to be only so broad as is enforceable.
13. Withholding
-----------
The Company may withhold from any amounts payable under
this Agreement such Federal, state or local taxes as shall be
required to be withheld pursuant to any applicable law or
regulation.
14. Entire Agreement
----------------
This Agreement contains the entire understanding of the
Company and you with respect to the subject matter hereof.
15. Applicable Law
--------------
This Agreement shall be governed by and construed in
accordance with the substantive internal law and not the conflict
of law provisions of the State of Ohio.
If the terms of the foregoing Agreement are acceptable
to you, please sign and return to the Company the enclosed copy
of this Agreement whereupon this Agreement shall become a valid
and legally binding contract between you and the Company.
Very truly yours,
OHIO EDISON COMPANY
By: /s/Willard R. Holland
-------------------------
Willard R. Holland
Accepted and Agreed as of the date
first above written:
/s/ Anthony J. Alexander
----------------------------
Anthony J. Alexander
15
February 22, 1995
Mr. John A. Gill
123 Meadow Lane
Peninsula, Ohio 44264
Special Severance Agreement
---------------------------
Dear Mr. Gill:
The Board of Directors (the "Board") of Ohio Edison
Company (the "Company") recognizes that, as is the case with many
publicly held corporations, there always exists the possibility
of a change of control of the Company. This possibility and the
uncertainty it creates may result in the loss or distraction of
members of management of the Company and its subsidiaries to the
detriment of the Company and its shareholders.
The Board considers the establishment, maintenance, and
continuity of a sound and vital management to be essential to
protecting and enhancing the best interests of the Company and
its shareholders. The Board also believes that when a change of
control is perceived as imminent, or is occurring, the Board
should be able to receive and rely on disinterested advice from
management regarding the best interests of the Company and its
shareholders without concern that members of management might be
distracted or concerned by the personal uncertainties and risks
created by their perception of an imminent or occurring change of
control.
Accordingly, the Board has determined that appropriate
steps should be taken to assure the Company of the continued
employment and attention and dedication to duty of certain
members of management of the Company and to ensure the
availability of their disinterested advice, notwithstanding the
possibility, threat or occurrence of a change of control.
Therefore, in order to fulfill the above purposes, the
Board has designated you as eligible for severance benefits as
set forth below.
i. Offer
-----
In order to induce you to remain in the employ of the
Company and to provide continued services to the Company now and
in the event that a Change of Control is imminent or occurring,
this letter agreement (the "Agreement") sets forth severance
benefits which the Company offers to pay to you in the event of a
termination of your employment (in the manner described in
Section 5 below) subsequent to a Change of Control of the Company
(as defined in Section 4 below).
ii. Operation
---------
This Agreement shall be effective immediately upon its
execution but anything in this Agreement to the contrary
notwithstanding, neither this Agreement nor any of its provisions
shall be operative unless and until there has been a Change of
Control while you are still an employee of the Company, nor shall
this Agreement govern or affect your employment relationship with
the Company except as explicitly set forth herein. Upon a Change
of Control, if you are still employed by the Company, this
Agreement and all of its provisions shall become operative
immediately. If your employment relationship with the Company is
terminated before a Change of Control, you shall have no rights
or obligations under this Agreement.
3. Term
----
(a) Term of Agreement: The term of this
-----------------
Agreement shall commence immediately upon the date hereof and
continue until December 31, 1997.
(b) One-Year Evergreen Provision: Subject to
----------------------------
subsection (c) below, this Agreement shall be reviewed annually
by the Board at a regular meeting held between October 1 and
December 31 of each year. At such yearly review, the Board shall
consider whether or not to extend the term of this Agreement for
an additional year. Unless the Board affirmatively votes not to
extend this Agreement, the term of this Agreement shall be
extended for a period of one year from the previous termination
date. In the event the Board votes not to extend this Agreement,
the termination date of this Agreement shall be the later of
December 31, 1997 or thirty-six full calendar months from
December 31st of the year in which this Agreement was last
extended.
(c) Subsection (b) above notwithstanding, upon
the occurrence of a Change of Control, this Agreement shall be
automatically extended for a period of thirty-six full calendar
months commencing on the date of such Change of Control. At the
end of such thirty-six month period, this Agreement shall
terminate.
4. Change of Control
-----------------
For the purpose of this Agreement, a "Change of
Control" shall mean:
2
(a) The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"))
(a "Person") of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 50% (25% if such
Person proposes any individual for election to the Board or any
member of the Board is the representative of such Person) or more
of either (i) the then outstanding shares of common stock of the
Company (the "Outstanding Company Common Stock") or (ii) the
combined voting power of the then outstanding voting securities
of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities");
provided, however, that the following acquisitions shall not
constitute a Change of Control: (i) any acquisition directly
from the Company (excluding an acquisition by virtue of the
exercise of a conversion privilege), (ii) any acquisition by the
Company, (iii) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (iv) any acquisition by
any corporation pursuant to a reorganization, merger or
consolidation, if, following such reorganization, merger or
consolidation, the conditions described in clauses (i), (ii) and
(iii) of subsection (c) of this Section 4 are satisfied; or
(b) Individuals who, as of the date hereof,
constitute the Board (the "Incumbent Board") cease for any reason
to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to
the date hereof whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result
of either an actual or threatened election contest (as such terms
are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the
Board; or
(c) Approval by the shareholders of the Company
of a reorganization, merger or consolidation, in each case,
unless, following such reorganization, merger or consolidation,
(i) more than 75% of, respectively, the then outstanding shares
of common stock of the corporation resulting from such
reorganization, merger or consolidation and the combined voting
power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by
all or substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities
3
immediately prior to such reorganization, merger or consolidation
in substantially the same proportions as their ownership,
immediately prior to such reorganization, merger or
consolidation, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (ii)
no Person (excluding the Company, any employee benefit plan (or
related trust) of the Company or such corporation resulting from
such reorganization, merger or consolidation and any Person
beneficially owning, immediately prior to such reorganization,
merger or consolidation, directly or indirectly, 25% or more of
the Outstanding Company Common stock or Outstanding Voting
Securities, as the case may be) beneficially owns, directly or
indirectly, 25% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such
reorganization, merger or consolidation or the combined voting
power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of
directors and (iii) at least a majority of the members of the
board of directors of the corporation resulting from such
reorganization, merger or consolidation were members of the
Incumbent Board at the time of the execution of the initial
agreement providing for such reorganization, merger or
consolidation; or
(d) Approval by the shareholders of the Company
of (i) a complete liquidation or dissolution of the Company or
(ii) the sale or other disposition of all or substantially all of
the assets of the Company, other than to a corporation, with
respect to which following such sale or other disposition, (A)
more than 75% of, respectively, the then outstanding shares of
common stock of such corporation and the combined voting power of
the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities
immediately prior to such sale or other disposition in
substantially the same proportion as their ownership, immediately
prior to such sale or other disposition, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities,
as the case may be, (B) no Person (excluding the Company and any
employee benefit plan (or related trust) of the Company or such
corporation and any Person beneficially owning, immediately prior
to such sale or other disposition, directly or indirectly, 25% or
more of the Outstanding Company Common Stock or Outstanding
Company Voting Securities, as the case may be) beneficially owns,
directly or indirectly, 25% or more of, respectively, the then
outstanding shares of common stock of such corporation and the
combined voting power of the then outstanding voting securities
of such corporation entitled to vote generally in the election of
directors and (C) at least a majority of the members of the board
4
of directors of such corporation were members of the Incumbent
Board at the time of the execution of the initial agreement or
action of the Board providing for such sale or other disposition
of assets of the Company.
5. Termination
-----------
(a) Termination Following Change of Control:
---------------------------------------
If, within a period of thirty-six full calendar months after a
Change of Control (as defined above) of the Company, you are
discharged without Cause or resign for Good Reason (as defined
below), you shall be entitled to the benefits provided by this
Agreement as set forth in Section 6 below.
(b) Good Reason: If any of the following events
-----------
occurs without your express consent and within thirty-six full
calendar months after a Change of Control, you may voluntarily
terminate your employment within 30 days of the occurrence of
such event and be entitled to the severance benefits set forth in
Section 6 below:
(1) The Company assigns any duties to you
which are inconsistent with your position, duties,
offices, titles, status (including membership on the
Board of Directors) responsibilities or reporting
requirements in effect immediately prior to a Change of
Control, or your removal from or any failure to re-
elect you to any of such positions or offices, except
in connection with termination of your employment for
Cause, Disability, Death or Normal Retirement, or by
you other than for Good Reason, or;
(2) Changes to your base salary are
inconsistent with your annual performance review and
the salary program applicable to other senior
executives of the Company; or
(3) The Company discontinues any bonus or
other compensation plans or any other benefit, stock
ownership plan, stock purchase plan, stock option plan,
life insurance plan, health plan, disability plan or
similar plan (as the same existed immediately prior to
the Change of Control) in which you participated or
were eligible to participate in immediately prior to
the Change of Control and in lieu thereof does not make
available plans providing at least comparable benefits;
or
5
(4) The Company takes action which adversely
affects your participation in, or eligibility
for, or materially reduces your benefits
otherwise earned or payable under, any of the
plans described in (3) above (unless such
action is required by law), or which deprives
you of any material fringe benefit enjoyed by
you immediately prior to the Change of
Control, or fails to provide you with the
number of paid vacation days to which you
were entitled in accordance with normal
vacation policy immediately prior to the
Change of Control; or
(5) The Company requires you to be based at
any office or location other than one within a 50 mile
radius of the office or location at which you were
based immediately prior to the Change of Control;
(except for required travel on the Company's business
to an extent substantially consistent with your
business travel obligations as they existed at the time
of a Change of Control of the Company); or, in the
event you consent to being based anywhere more than
fifty miles from such location, the failure by the
Company to pay (or reimburse you for) all reasonable
moving expenses incurred by you relating to a change of
your principal residence in connection with such
relocation and to indemnify you against any loss
(defined as the difference between the actual sale
price of such residence after the deduction of all real
estate brokerage charges and related selling expenses)
and the higher of (1) your aggregate investment in such
residence or (2) the fair market value of such
residence (as determined by a real estate appraiser
designated by you and reasonably satisfactory to the
Company) realized upon the sale of such residence in
connection with any such change of residence; or
(6) The Company's requiring you to perform
duties or services which necessitate absence overnight
from your place of residence, because of travel
involving the business or affairs of the Company, to a
degree not substantially consistent with the extent of
such absence necessitated by such travel during the
period of twelve months immediately preceding a Change
of Control of the Company; or
(7) The Company purports to terminate your
employment otherwise than as expressly
permitted by this Agreement; or
6
(8) The Company fails to comply with and
satisfy Section 9 below, provided that such successor
has received at least ten days prior written notice
from the Company or from you of the requirements of
Section 9 below.
You shall have the sole right to determine, in good
faith, whether any of the above events has occurred.
(c) Cause: Cause shall mean: conviction of a
-----
felony or crime involving an act of moral turpitude, dishonesty,
or misfeasance.
(d) Notice of Termination: Any termination by
---------------------
the Company for Cause, or by you for Good Reason, shall be
communicated by Notice of Termination to the other party hereto
given in accordance with Section 11 hereof. For purposes of this
Agreement, a "Notice of Termination" means a written notice which
(i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth
in reasonable detail the facts and circumstances claimed to
provide a basis for termination of your employment under the
provision so indicated and (iii) if the Date of Termination (as
defined below) is other than the date of receipt of such notice,
specifies the Date of Termination.
(e) Date of Termination: "Date of Termination"
-------------------
means (1) if your employment is terminated by the Company for
Cause or without Cause, or by you for Good Reason or other than
for Good Reason, the date of receipt by the other of the Notice
of Termination, and (2) if your employment is terminated by
reason of Death, Disability or Normal Retirement (as defined
below), the Date of Termination shall be the date of your death,
the date of receipt of your Notice of Termination, or the first
of the month following the month you reach the normal retirement
age for employees in your position, respectively.
(f) Normal Retirement: If your employment is
-----------------
terminated due to normal retirement, you shall not be entitled to
severance benefits under this Agreement, regardless of the
occurrence of a Change of Control. A termination by normal
retirement shall have occurred where your termination is caused
by the fact that you have reached normal retirement age for
employees in your position.
(g) Termination for Cause: If subsequent to a
---------------------
Change of Control, your employment is terminated by the Company
for Cause, the Company shall pay you your full base salary
7
through the Date of Termination at the rate in effect at the time
Notice of Termination is given, and you shall also receive all
accrued or vested benefits of any kind to which you are, or would
otherwise have been, entitled throughout the Date of Termination
(as defined in subsection (e) of this Section 5), and the Company
shall thereupon have no further obligation to you under this
Agreement.
(h) Disability or Death: If termination of
-------------------
your employment results from your Disability or death, you shall
not be entitled to severance benefits under this Agreement,
regardless of the occurrence of a Change of Control. You or your
designated beneficiary, in the case of your death, shall receive
all accrued or vested benefits of any kind to which you are, or
would otherwise have been, entitled through the Date of
Termination, and the Company shall thereupon have no further
obligation to you under this Agreement.
"Disability" shall mean, for the purposes of this
Agreement, your total and permanent disability such that you
would be entitled to receive Disability Retirement Income under
the Company's qualified pension plans, except for purposes of
this provision you need not have completed ten (10) years of
service with the Company, followed by the Company giving you
thirty days written notice of its intention to terminate your
employment by reason thereof, and your failure because of your
Disability to resume the full-time performance of your duties
within such period of thirty days and thereafter perform the same
for a period of two consecutive months.
6. Severance Benefits
------------------
If, within a period of thirty-six full calendar months
after a Change of Control of the Company, you are discharged
without Cause or resign for Good Reason, the following shall be
applicable:
(a) The Company shall pay to you within ten
business days following the Date of Termination a lump sum
severance benefit, payable in cash, the amounts determined as
provided below:
(1) Your full base salary through the Date
of Termination at the rate in effect at the time Notice
of Termination, is given.
(2) In lieu of further salary payments to
you for periods subsequent to the Date of Termination,
an amount equal to 2.99 multiplied by the sum of your
annual base salary at the rate in effect as of the Date
of Termination (or, if higher, at the rate in effect as
8
of the time of the Change of Control) plus the average
annual short-term incentive amount awarded to you under
the Ohio Edison System Executive Incentive Compensation
Plan ("Executive Incentive Plan") for the three years
immediately preceding the year during which the Date of
Termination occurs whether or not fully paid.
(b) For purposes of the Executive Incentive Plan,
you shall be considered to have retired and will be paid the pro
rata portion of your short-term incentive award earned, if any,
and any long-term deferred incentive awards earned, if any, per
the terms of the plan.
(c) For purposes of determining the amount of
benefits you may continue after the Date of Termination under the
Company's group health and life insurance plans, you shall be
considered as having retired at your current age or age 55,
whichever is greater, and your current years of service
calculated as if you are age 55, whichever is greater.
(d) For purposes of the Ohio Edison System
Executive Deferred Compensation Plan ("Deferred Compensation
Plan"), you shall be considered to have retired at age 62,
entitling you to the full amount of your Retirement Account, if
any, payable in accordance with the terms of the Deferred
Compensation Plan.
(e) For purposes of calculating your benefit
under the Ohio Edison System Supplemental Executive Retirement
Plan ("SERP"), you shall be considered as having retired from the
Company at your current age or age 55, whichever is greater, and
your current years of service or 5 years of service, whichever is
greater. Your benefit under the SERP will commence on the first
of the month following the Date of Termination as follows:
(1) If, on the Date of Termination, you are
less than age 55, your monthly benefit from the SERP
shall be calculated in accordance with the terms of the
SERP except that (a) until you reach age 55, such SERP
benefit shall be offset by any compensation earned by
you from a subsequent employer as provided in paragraph
(j) below; (b) at age 55, such SERP benefit shall only
be offset by the monthly amounts to which you will be
entitled at age 55 from the Company's tax-qualified
pension plan, the supplementary pension make-up benefit
under the Deferred Compensation Plan and/or the tax-
qualified pension plan of any previous employers
(collectively, "Pension Income"), irrespective of
whether you receive such benefits at that time; and,
(c) at age 62 such SERP benefit shall be offset only by
Pension Income and the monthly primary Social Security
Benefit to which you will be entitled at age 62,
9
irrespective of whether you receive such benefits at
that time;
(2) If, on the Date of Termination, you are
at least age 55 but less than age 62, your monthly
benefit from the SERP shall be calculated in accordance
with the terms of the SERP, except that (a) until you
reach age 62, such SERP benefit shall be offset only by
your Pension Income, irrespective of whether you
receive such benefits at that time; and (b) at age 62
such SERP benefit shall be offset only by Pension
Income and the monthly primary Social Security benefit
to which you will be entitled at age 62, irrespective
of whether you receive such benefits at that time;
(3) If, on the Date of Termination, you are
at least age 62, your monthly benefit from the SERP
shall be calculated and offset in accordance with the
terms of the SERP.
(f) For purposes of the Executive Supplemental
Life Plan ("ESLP"), you may continue to participate as if you
retired from the Company prior to age 65 in accordance with the
terms of the ESLP, irrespective of your age at the Date of
Termination.
(g) In the event that because of their
relationship to you, members of your family or other individuals
are covered by any plan, program, or arrangement described in
subsection (b) above immediately prior to the Date of
Termination, the provisions set forth in subsection (b) shall
apply equally to require the continued coverage of such persons;
provided, however, that if under the terms of any such plan,
program or arrangement, any such person would have ceased to be
eligible for coverage during the period in which the Company is
obligated to continue coverage for you, nothing set forth herein
shall obligate the Company to continue to provide coverage which
would have ceased even if you had remained an employee of the
Company.
(h) The Company shall enable you to purchase the
automobile, if any, which the Company was providing for your use
at the time Notice of Termination was given at the wholesale
value of such automobile at such time.
(i) Other Benefits Payable: The severance
----------------------
benefits described in Subsections (a), (b), (c), (d), (e), (f),
(g) and (h) above shall be payable in addition to, and not in
lieu of, all other accrued or vested or earned but deferred
compensation, rights, options or other benefits which may be owed
to you following your discharge or resignation (and are not
10
contingent on any Change of Control preceding such termination),
including but not limited to, accrued and/or banked vacation,
amounts or benefits payable, if any, under any bonus or other
compensation plans, stock option plan, stock ownership plan,
stock purchase plan, life insurance plan, health plan, disability
plan or similar plan.
(j) Payment Obligations: Other than as set forth
-------------------
in the Deferred Compensation Plan or the SERP, upon a Change of
Control the Company's obligations to pay the severance benefits
or make any other payments described in this Section 6 shall not
be affected by any set-off, counterclaim, recoupment, defense or
other right which the Company or any of its subsidiaries may have
against the Executive or anyone else. If you are less than age
55 at the time of your discharge without Cause or your
resignation for Good Reason, then, commencing 24 months after the
Date of Termination, you shall be required to seek employment
elsewhere and thereby mitigate the amount of SERP benefit payable
under Paragraph (d)(1). You shall not be required to accept a
position other than as a senior executive of an entity comparable
in size to the Company and having duties, responsibilities and
authority substantially similar in scope and nature to your
position with the Company immediately prior to the Date of
Termination. Upon obtaining such employment, you shall promptly
notify the Company of the compensation and benefits you received
or will receive from such new employer and of any changes
therein.
(k) Legal Fees and Expenses: Subject to and
-----------------------
contingent upon the occurrence of a Change of Control the Company
agrees to pay promptly as incurred, to the full extent permitted
by law, all legal fees and expenses which you may reasonably
thereafter incur as a result of any contest, litigation or
arbitration (regardless of the outcome thereof) by the Company,
you or others of the validity or enforceability of, or liability
under, any provision of this Agreement, the Deferred Compensation
Plan, or the SERP (including any contest by you about the amount
of any payment pursuant to this Agreement, the Deferred
Compensation Plan or the SERP), plus in each case interest on any
delayed payment at the rate of 150% of the Prime Rate as
published in the Wall Street Journal in the Money Rates Table on
the business day immediately preceding the conclusion of any such
contest, litigation or arbitration.
(l) Certain Additional Payments by the Company:
------------------------------------------
(1) Anything in this Agreement to the
contrary notwithstanding, in the event that the
Executive becomes entitled to severance benefits under
this Section 6 hereof, the Deferred Compensation Plan,
11
the SERP or otherwise, and it shall be determined that
any payment or distribution by the Company to or for
the benefit of the Executive, whether paid or payable
or distributed or distributable pursuant to the terms
of this Agreement, the Deferred Compensation Plan, the
SERP or otherwise (a "Payment"), would be subject to
the excise tax imposed by Section 4999 of the Internal
Revenue Code of 1986, as amended (the "Code") or any
interest or penalties with respect to such excise tax
(such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as
the "Excise Tax"), then the Executive shall be entitled
to receive an additional payment (a "Gross-Up Payment")
in an amount such that after payment by the Executive
of all taxes (including any interest or penalties
imposed with respect to such taxes), including any
Excise Tax, imposed upon the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments.
(2) All determinations required to be made
under this subsection (i), including whether a Gross-Up
Payment is required and the amount of such Gross-Up
Payment, shall be made in good faith by the Company
which shall provide detailed supporting calculations to
the Executive within 15 business days of the date of
termination of the Executive's employment, if
applicable, or such earlier time as is requested by the
Company. If the Company determines that no Excise Tax
is payable by the Executive, it shall furnish the
Executive with an opinion of counsel that he has
substantial authority not to report any Excise Tax on
his federal income tax return. Except as hereinafter
provided, any determination by the Company shall be
binding upon the Company and the Executive. As a
result of the uncertainty in the application of Section
4999 of the Code at the time of the initial
determination by the Company hereunder, it is possible
that Gross-Up Payments which will not have been made by
the Company should have been made ("Underpayment"),
consistent with the calculations required to be made
hereunder. In the event that the Executive is required
to make a payment of any Excise Tax, the Company shall
determine the amount of the Underpayment that has
occurred and any such Underpayment shall be promptly
paid by the Company to or for the benefit of the
Executive.
12
7. Assignability
-------------
This Agreement is binding on and is for the benefit of
the parties hereto and their respective successors, heirs,
executors, administrators and other legal representatives.
Neither this Agreement nor any right or obligation hereunder may
be assigned by the Company (except to any subsidiary or
affiliate) or by you.
8. Non-Competition
---------------
If subsequent to a Change of Control of the Company you
should for Good Reason terminate your employment, then for a
period of two years after the Date of Termination, you shall not
on your own account without the consent of the Company, or as a
shareholder, employee, officer, director, consultant or
otherwise, engage directly or indirectly in any business or
enterprise which is in competition with the Company. For all
purposes of this agreement the words "competition with the
Company" shall mean the provision of gas and/or electric services
on a retail and wholesale basis in the State of Ohio and in any
other state contiguous to the State of Ohio; provided, however,
that nothing herein contained shall prevent you from purchasing
and holding for investment less than 5% of the shares of any
corporation the shares of which are regularly traded either on a
national securities exchange or in the over-the-counter market.
9. Successor
---------
The Company shall require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the
Company to assume expressly and agree to perform this Agreement
in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place.
As used in this Agreement, "Company" shall mean the company as
hereinbefore defined and any successor to its business and/or
assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise. Failure of the
Company to obtain such agreement prior to the effectiveness of
such succession shall be a breach of this Agreement and shall
entitle you to compensation from the Company in the same amount
and on the same terms as you would be entitled hereunder if you
terminated your employment for Good Reason, except that for
purposes of implementing the foregoing, the date on which any
such succession becomes effective shall be deemed the Date of
Termination.
13
This agreement shall inure to the benefit of and be
enforceable by your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees. If you should die while any amounts would still be
payable to you hereunder if you had continued to live, all such
amounts, unless otherwise provided herein, shall be paid to such
beneficiary or beneficiaries as you shall have designated by
written notice delivered to the Company prior to your death or,
failing such written notice, to your estate.
10. Amendment; Waiver
-----------------
This Agreement may be amended only by an instrument in
writing signed by the parties hereto, and any provision hereof
may be waived only by an instrument in writing signed by the
party or parties against whom or which enforcement of such waiver
is sought. The failure of either party hereto at any time to
require the performance by the other party hereto of any
provision hereof shall in no way affect the full right to require
such performance at any time thereafter, nor shall the waiver by
either party hereto of a breach of any provision hereof be taken
or held to be a waiver of any succeeding breach of such provision
or a waiver of the provision itself or a waiver of any other
provision of this Agreement.
11. Notices
-------
All notices and other communications hereunder shall be
in writing and shall be given by hand delivery to the other party
or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
If to you:
---------
John A. Gill
123 Meadow Lane
Peninsula, Ohio 44264
If to the Company:
-----------------
Secretary
Ohio Edison Company
76 South Main Street
Akron, Ohio 44308
or to such other address as either party shall have furnished to
the other in writing in accordance herewith. Notice and
communications shall be effective when actually received by the
addressee.
14
12. Validity
--------
The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which
shall remain in full force and effect, nor shall the invalidity
or unenforceability of a portion of any provision of this
Agreement affect the validity or enforceability of the balance of
such provision. If any provision of this Agreement, or portion
thereof is so broad, in scope or duration, as to be
unenforceable, such provision or portion thereof shall be
interpreted to be only so broad as is enforceable.
13. Withholding
-----------
The Company may withhold from any amounts payable under
this Agreement such Federal, state or local taxes as shall be
required to be withheld pursuant to any applicable law or
regulation.
14. Entire Agreement
----------------
This Agreement contains the entire understanding of the
Company and you with respect to the subject matter hereof.
15. Applicable Law
--------------
This Agreement shall be governed by and construed in
accordance with the substantive internal law and not the conflict
of law provisions of the State of Ohio.
If the terms of the foregoing Agreement are acceptable
to you, please sign and return to the Company the enclosed copy
of this Agreement whereupon this Agreement shall become a valid
and legally binding contract between you and the Company.
Very truly yours,
OHIO EDISON COMPANY
By: /s/Willard R. Holland
-------------------------
Willard R. Holland
Accepted and Agreed as of the date
first above written:
/s/ John a. Gill
----------------------------
John A. Gill
15
<TABLE> EXHIBIT 12
Page 1
OHIO EDISON COMPANY
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
<CAPTION>
Year Ended December 31,
---------------------------------------------------
1991 1992 1993 1994 1995
---- ---- ---- ---- ----
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
EARNINGS AS DEFINED IN REGULATION S-K:
Income before extraordinary items $264,823 $276,986 $ 24,523 $303,531 $317,241
Interest and other charges, before
reduction for amounts capitalized 324,017 296,292 285,169 283,849 273,719
Provision for income taxes 173,725 147,407 32,431 188,886 199,307
Interest element of rentals charged
to income (a) 125,777 117,224 104,700 108,463 111,534
-------- -------- --------- -------- --------
Earnings as defined $888,342 $837,909 $446,823 $884,729 $901,801
======== ======== ========= ======== ========
FIXED CHARGES AS DEFINED IN REGULATION S-K:
Interest on long-term debt $288,599 $275,835 $262,861 $259,554 $243,570
Other interest expense 27,696 13,958 16,445 18,931 22,944
Subsidiaries' preferred stock dividend
requirements 7,722 6,499 5,863 5,364 7,205
Adjustment to subsidiaries' preferred
stock dividends to state on a
pre-income tax basis 5,018 3,420 7,659 3,294 2,956
Interest element of rentals charged to
income (a) 125,777 117,224 104,700 108,463 111,534
-------- -------- -------- -------- --------
Fixed charges as defined $454,812 $416,936 $397,528 $395,606 $388,209
======== ======== ======== ======== ========
CONSOLIDATED RATIO OF EARNINGS TO FIXED
CHARGES (b) 1.95 2.01 1.12 2.24 2.32
==== ==== ==== ==== ====
<FN>
- ----------------------
(a) Includes the interest element of rentals where determinable plus 1/3
of rental expense where no readily defined interest element can be
determined.
(b) 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 ended December 31,
1995, respectively.
</TABLE>
- 1 -
<TABLE> EXHIBIT 12
Page 2
OHIO EDISON COMPANY
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES PLUS PREFERRED AND
PREFERENCE STOCK DIVIDEND REQUIREMENTS (PRE-INCOME TAX BASIS)
<CAPTION>
Year Ended December 31,
---------------------------------------------------
1991 1992 1993 1994 1995
---- ---- ---- ---- ----
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
EARNINGS AS DEFINED IN REGULATION S-K:
Income before extraordinary items $264,823 $276,986 $ 24,523 $303,531 $317,241
Add-
Interest and other charges, before
reduction for amounts capitalized 324,017 296,292 285,169 283,849 273,719
Provision for income taxes 173,725 147,407 32,431 188,886 199,307
Interest element of rentals charged
to income (a) 125,777 117,224 104,700 108,463 111,534
-------- -------- -------- -------- --------
Earnings as defined $888,342 $837,909 $446,823 $884,729 $901,801
======== ======== ======== ======== ========
FIXED CHARGES AS DEFINED IN REGULATION
S-K PLUS PREFERRED AND PREFERENCE STOCK
DIVIDEND REQUIREMENTS
(PRE-INCOME TAX BASIS):
Interest on long-term debt $288,599 $275,835 $262,861 $259,554 $243,570
Other interest expense 27,696 13,958 16,445 18,931 22,944
Preferred and preference stock dividend
requirements 32,476 30,425 29,570 27,043 29,699
Adjustment to preferred and preference
stock dividends to state on a
pre-income tax basis 20,887 15,854 38,265 16,444 16,745
Interest element of rentals charged to
income (a) 125,777 117,224 104,700 108,463 111,534
-------- -------- -------- -------- --------
Fixed charges as defined plus
preferred and preference stock
dividend requirements
(pre-income tax basis) $495,435 $453,296 $451,841 $430,435 $424,492
======== ======== ======== ======== ========
CONSOLIDATED RATIO OF EARNINGS TO FIXED
CHARGES PLUS PREFERRED AND PREFERENCE
STOCK DIVIDEND REQUIREMENTS
(PRE-INCOME TAX BASIS) (b) 1.79 1.85 0.99(c) 2.06 2.12
==== ==== ==== ==== ====
<FN>
- -----------------------
(a) Includes the interest element of rentals where determinable plus 1/3
of rental expense where no readily defined interest element can be
determined.
(b) 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 ended December 31,
1995, respectively.
(c) Earnings as defined were deficient in 1993 by $5,018,000 to cover fixed
charges plus preferred stock dividend requirements (pre-income tax basis).
</TABLE>
- 2 -
<TABLE>
OHIO EDISON COMPANY
SELECTED FINANCIAL DATA
<CAPTION>
1995 1994 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
Operating Revenues $2,465,846 $2,368,191 $2,369,940 $2,332,378 $2,358,946
--------------------------------------------------------------
Operating Income $566,618 $557,254 $525,330 $522,115 $550,452
--------------------------------------------------------------
Net Income $317,241 $303,531 $ 82,724 $276,986 $264,823
--------------------------------------------------------------
Earnings on Common Stock $294,747 $281,852 $ 59,017 $253,060 $240,069
--------------------------------------------------------------
Earnings per Share of Common Stock $2.05 $1.97 $0.39 $1.70 $1.60
Dividends Declared per Share of Common Stock $1.50 $1.50 $1.50 $1.50 $1.50
--------------------------------------------------------------
Total Assets $8,823,934 $8,993,964 $8,918,267 $7,830,026 $7,812,345
--------------------------------------------------------------
Capitalization at December 31:
Common Stockholders' Equity $2,407,871 $2,317,197 $2,243,292 $2,408,164 $2,371,946
Preferred and Preference Stock:
Not Subject to Mandatory Redemption 211,870 328,240 328,240 354,240 354,240
Subject to Mandatory Redemption 160,000 40,000 45,500 59,862 65,582
Long-Term Debt 2,786,256 3,166,593 3,039,263 3,121,647 3,243,167
--------------------------------------------------------------
Total Capitalization $5,565,997 $5,852,030 $5,656,295 $5,943,913 $6,034,935
--------------------------------------------------------------
COMMON STOCK DATA
The Company's Common Stock is listed on the New York and Chicago stock exchanges and is traded on other
registered exchanges.
<CAPTION>
PRICE RANGE OF COMMON STOCK 1995 1994
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
First Quarter High-Low 21-1/2 18-1/2 22-3/4 18-7/8
------------------------------------
Second Quarter High-Low 22-5/8 19-3/4 19-1/4 16-1/2
------------------------------------
Third Quarter High-Low 22-7/8 21-1/4 19-5/8 17-1/2
------------------------------------
Fourth Quarter High-Low 23-3/4 22-1/4 19-1/4 17-7/8
------------------------------------
Yearly High-Low 23-3/4 18-1/2 22-3/4 16-1/2
------------------------------------
Prices are based on reports published in The Wall Street Journal for New York Stock Exchange
-----------------------
Composite Transactions.
CLASSIFICATION OF HOLDERS OF COMMON STOCK AS OF DECEMBER 31, 1995
<CAPTION>
Holders of Record Shares Held
- ---------------------------------------------------------------------------------------------
Number % Number %
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Individuals 112,643 82.35 50,036,860 32.79
Fiduciaries 22,503 16.45 9,503,345 6.23
Nominees 47 .04 91,491,883 59.97
All Others 1,590 1.16 1,537,349 1.01
-------------------------------------------------
Total 136,783 100.00 152,569,437 100.00
-------------------------------------------------
<FN>
As of January 31, 1996, there were 136,828 holders of 152,569,437 shares of the Company's Common
Stock. Quarterly dividends of 37.5 cents per share were paid on the Company's Common Stock during 1995
and 1994. Information regarding retained earnings available for payment of cash dividends is given
in Note 5A.
</TABLE>
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
We continued making significant progress in 1995 as our Company prepares for
the rapidly changing environment within the electric utility industry.
The most significant event during the year was the approval by the Public
Utilities Commission of Ohio (PUCO) of the Company's Rate Reduction and
Economic Development Plan (Regulatory Plan). The Regulatory Plan is designed
to enhance and accelerate economic development within the Company's service
area and to assure our customers of long-term competitive pricing for energy
services.
The Regulatory Plan, which went into effect November 1, 1995, freezes base
electric rates until January 1, 2006, at which time base rates will be reduced
by $300,000,000, or approximately 20 percent below current levels, on an
annual basis. During the ten-year rate-freeze period, which will remain in
effect unless certain significant events occur, transition rate credits will
be implemented for customers served under the General Service-Large rates
(primarily industrial customers). Also, the monthly customer charge will be
reduced for customers served under the General Service-Secondary and
Residential rates. Combined, these transition rate credits are expected to
reduce operating revenues by approximately $600,000,000 during the ten-year
period.
A major component of the Regulatory Plan is our commitment to reduce fixed
costs during the ten-year period. The PUCO ordered the Company to recognize
additional depreciation expense related to our generating assets and
additional amortization of regulatory assets during the ten-year Regulatory
Plan period of at least $2,000,000,000 more than the amount that would have
been recognized if the Regulatory Plan were not in effect. The Regulatory Plan
includes a cap (based upon the most recent common equity return authorized for
the Company by the PUCO) on the amount the Company may earn applicable to its
common stockholders in any calendar year during the Regulatory Plan period. If
the cap is exceeded, the excess will be credited to our customers in a future
period.
The Companies achieved record operating revenues in 1995, a 4.0% increase over
the previous record set in 1993. The increased revenues, in combination with
our aggressive cost-control efforts, raised earnings on common stock to $2.05
per share in 1995 from $1.97 a year earlier. The 1993 amount of $.39 was
adversely affected by nonrecurring charges of $1.43 per share,
- 2 -
which included a $276,578,000 after-tax write-off of Perry Unit 2, the
expected resolution of fuel cost recovery issues in Pennsylvania and certain
costs associated with the Performance Initiatives program. The effect of the
1993 write-off was partially offset by a $58,201,000 credit from the
cumulative effect of a change in accounting to accrue metered but unbilled
revenue (see Note 2).
Operation and maintenance expenses were up by 2.5 percent in 1995, mostly due
to incremental fuel and purchased power costs incurred to meet the increased
demand from our customers. With our revenues increasing at a higher rate than
our variable costs, we were able to achieve record operating income for the
second consecutive year. A review of the work we do was an integral part of
Performance Initiatives which began in 1993 and continues as a part of our
Corporate Strategy program. Efficiencies continue to be identified that have
resulted in further opportunities for restructuring. In 1995, we reduced our
work force by 293 employees following the shutdown of several old generating
units and the restructuring of our generation and transmission group. We
expect these actions to result in annual savings of approximately $18,000,000.
Also, using economic value added-based justification for capital spending
contributed to a $67,000,000 reduction in our construction expenditures in
1995 compared to our base year of 1993.
For the third straight year, the Companies achieved record retail kilowatt-
hour sales. The following table summarizes the sources of changes in operating
revenues for 1995 and 1994 as compared to the previous year:
1995 1994
(In millions)
Increased retail kilowatt-hour sales $105.1 $ 2.4
Reduced average retail electric price (23.3) (3.1)
Sales to utilities 16.6 2.2
Other (0.7) (3.2)
----- ------
Net Increase (Decrease) $ 97.7 $ (1.7)
====== ======
An improving local economy and increased weather-related demand during the
second half of 1995 helped us achieve record retail sales of 26.4 billion
kilowatt-hours. Our customer base continues to grow with more than 12,300 new
retail customers added in 1995, after gaining approximately 13,100 customers
the previous year. Residential sales increased 4.2% in 1995 after falling
slightly the previous year. Commercial sales rose 3.9% during the year, which
follows a 1.4% gain in 1994. A 6.8% increase in industrial sales resulted, in
part, from the
- 3 -
resumption of operations by two major customers that had reduced operations in
1994. Excluding sales to these customers, industrial sales were 3.8% higher
than last year's level. We began supplying 300 megawatts of power to another
utility in the second quarter of 1995 under a short-term contract that expired
at the end of 1995. This contract was the principal cause for an 18.2%
increase in sales to other utilities in 1995, which followed an 18.2% decrease
the previous year. We have signed short-term contracts with other utilities in
1996 to replace the expired 1995 contract. As a result of all of these
factors, total kilowatt-hour sales were up 7.5% compared with sales in 1994,
which were down 3.9% from 1993.
Because of higher kilowatt-hour sales, we spent 5.6% more on fuel and
purchased power in 1995. During the same period, our nuclear expenses fell
4.9% compared to the previous year--nuclear expenses were higher in 1994
mainly due to corrective maintenance work at the Perry Plant. Expenses
associated with scheduled maintenance outages at our fossil-fueled generating
units contributed to a 4.6% increase in other operating costs during 1995,
compared to last year. Other operating costs were down significantly in 1994
from the previous year due to a one-time $39,000,000 charge in 1993 related to
Performance Initiatives. That charge consisted of $9,000,000 for obsolete
materials and supplies and $30,000,000 estimated for costs of early retirement
programs offered to qualifying employees resulting from strategies identified
in the Performance Initiatives program.
Higher depreciation charges in 1995 resulted mainly from $27,000,000 of
additional nuclear depreciation authorized under our Regulatory Plan discussed
earlier. A higher level of depreciable utility plant and an increase in the
accrual for nuclear decommissioning costs also contributed to the increase.
The change between 1995 and 1994 in the amortization of net regulatory assets
was due to increased amortization of deferred nuclear costs and the
discontinuation of deferral accounting for
postretirement benefits, also in accordance with the Regulatory Plan. Penn
Power provided an $8,728,000 reserve for deferred postretirement benefit costs
in 1994, which was responsible for the majority of the change in net
amortization of regulatory assets compared to 1993.
Overall, interest costs were lower in 1995 than in 1994. Interest on long-term
debt decreased due to refinancing and redemption of higher-cost debt. Other
interest expense increased compared to last year due primarily to higher
levels of short-term borrowing. We also discontinued deferring nuclear unit
interest in the second half of 1995, consistent with our Regulatory Plan.
Preferred and preference stock dividend requirements in 1995 include
approximately $2,300,000 for premiums paid on preferred stock redemptions.
- 4 -
CAPITAL RESOURCES AND LIQUIDITY
We have significantly improved our financial position over the past five
years. Cash generated from operations was 62% higher in 1995 than it was in
1990 due to higher revenues and aggressive cost controls. By the end of 1995,
we were serving about 60,000 more customers than we were five years ago, with
approximately 2,000 fewer employees. As a result, our customer/employee ratio
has improved significantly over the past five years, standing at 228 customers
per employee at the end of 1995, compared to 152 at the end of 1990. In
addition, capital expenditures have dropped substantially during that period.
Expenditures in 1995 were approximately 28% lower than they were in 1990, and
annual depreciation charges have exceeded property additions since the end of
1987. In fact, our projections for the next five years indicate that annual
depreciation charges will exceed construction program expenditures by at least
two to three times because of our reduced capital requirements, coupled with
the additional depreciation in accordance with the Regulatory Plan.
Over the past five years, we have aggressively taken advantage of
opportunities in the financial markets to reduce our embedded capital costs.
Through refinancing activities, we have reduced the average cost of
outstanding debt from 9.28% at the end of 1990 to 8.00% at the end of 1995.
Also, the cost of outstanding preferred and preference stock was reduced from
8.59% at the end of 1990 to 7.59% at the end of 1995. We have improved our
financial position as a result of these actions. For example, we have enhanced
our fixed charge coverage ratios and the percentage of common equity to total
capitalization. Our SEC ratio of earnings to fixed charges improved to 2.32 at
the end of 1995 from 1.97 at the end of 1990. The Company's indenture ratio,
which is used to determine the ability to issue first mortgage bonds, improved
from 4.79 at the end of 1990 to 5.78 at the end of 1995. Over the same period,
the charter ratio, a measure of our ability to issue preferred stock, improved
from 1.87 to 2.31, and, our common equity percentage of capitalization
(excluding the Employee Stock Ownership Plan Trust adjustment) rose from
approximately 42% at the end of 1990 to about 45% at the end of 1995.
At the end of 1995, we had the capability to issue $1,466,000,000 principal
amount of first mortgage bonds and $1,673,000,000 of preferred stock (assuming
no additional debt was issued). However, our cash requirements in 1996 for
operations and scheduled debt maturities are expected to be met without
issuing additional securities. During 1995, we reduced our total debt by
approximately $285,000,000. We expect to pay off over $1,300,000,000 of debt
over the next five years with internal cash, including $264,000,000 in 1996.
- 5 -
We had about $30,000,000 of cash and temporary investments and $120,000,000 of
short-term indebtedness on December 31, 1995. Through OES Fuel credit
facilities, we had the capability to borrow approximately $128,000,000 as of
the end of 1995. We also had $52,000,000 of unused short-term bank lines of
credit, and $50,000,000 of bank facilities that provide for borrowings on a
short-term basis at the banks' discretion.
Our capital spending for the period 1996-2000 is expected to be about
$650,000,000 (excluding nuclear fuel), of which approximately $160,000,000
applies to 1996. This spending level is more than $400,000,000 lower than
actual capital outlays over the past five years.
Investments for additional nuclear fuel during the 1996-2000 period are
estimated to be approximately $180,000,000, of which about $29,000,000 applies
to 1996. During the same periods, our nuclear fuel investments are expected to
be reduced by approximately $191,000,000 and $39,000,000, respectively, as the
nuclear fuel is consumed. Also, we have operating lease commitments of
approximately $594,000,000 for the 1996-2000 period, of which approximately
$108,000,000 relates to 1996. We recover the cost of nuclear fuel consumed and
operating leases through our electric rates.
Reference is made to Note 1 for a discussion of regulatory assets. In
accordance with the Regulatory Plan, the Company's rates include recovery of
all regulatory assets and authorizes the Company to accelerate amortization of
those regulatory assets over the next ten years.
One of Penn Power's former municipal customers signed a contract with another
energy supplier in November. Penn Power and the former customer are in dispute
over Penn Power's proposed transmission rate. Both parties have filed
proposals with the Federal Energy Regulatory Commission requesting it to
establish final terms. No ruling has yet been issued. Sales to this
municipality were approximately $1,500,000 in 1995.
OUTLOOK
Many competitive challenges lie ahead as the electric utility industry becomes
less regulated and more energy suppliers enter the marketplace. Retail
wheeling, which would allow retail customers to purchase electricity from
other energy producers, could be one of those challenges, if legislators
choose to move in that direction. The Company's Regulatory Plan provides the
foundation to position us to meet those challenges by significantly reducing
fixed costs and lowering rates to a more competitive level. For the Regulatory
Plan to succeed, it is imperative that we build on the success of our
Performance
- 6 -
Initiatives and Corporate Strategy programs and continue to find ways to
increase revenues, reduce costs and enhance shareholder value. In December
1995, we announced that we will offer a voluntary retirement program to 174
eligible union-represented employees beginning March 1, 1996. The program is
expected to produce annual savings of up to $7,900,000. Also, in January 1996,
employees at the Bruce Mansfield Plant were informed of future staff
reductions that will affect approximately 105 bargaining unit employees and 35
management and administrative/office employees. The reduction is expected to
occur between February 15, 1996, and April 1, 1996. This work force reduction
is the result of continuing efforts to make the plant's costs more
competitive.
Effective operation of the nuclear facilities we jointly own will also help us
meet these competitive challenges. In 1995, we increased our annual funding of
the decommissioning obligation. As discussed in Note 1, the Financial
Accounting Standards Board (FASB) is reviewing the accounting for
decommissioning costs regarding the recognition, measurement and
classification of decommissioning costs in the financial statements of
electric utilities. The FASB issued its proposed accounting standard in
February 1996.
The Clean Air Act Amendments of 1990, discussed in Note 7, require additional
emission reductions by 2000. We are pursuing cost-effective compliance
strategies for meeting those requirements.
Through our Performance Initiatives and Corporate Strategy programs, we have
identified substantial savings that will better position us to successfully
compete in the future. We continue to identify opportunities for revenue
enhancement and cost reduction. Also, our Regulatory Plan provides more
regulatory assurance that we will collect our fixed costs and minimizes the
risk of not recovering some portion of our assets from our customers. Our
focus is to exceed customers' service expectations by providing superior value
and high-quality products and services at competitive prices in order to
maximize the value of our shareholders' investment in the Company.
- 7 -
<TABLE>
OHIO EDISON COMPANY
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
For the Years Ended December 31, 1995 1994 1993
- ------------------------------------------------------------------------------------
(In thousands, except per share amounts)
<S> <C> <C> <C>
OPERATING REVENUES $2,465,846 $2,368,191 $2,369,940
---------- ---------- ----------
OPERATING EXPENSES AND TAXES:
Fuel and purchased power 465,483 440,936 456,494
Nuclear operating costs 289,717 304,716 290,321
Other operating costs 446,967 427,133 474,241
---------- ---------- ----------
Total operation and maintenance expenses 1,202,167 1,172,785 1,221,056
Provision for depreciation 256,085 220,502 217,980
General taxes 243,179 237,020 245,554
Amortization of net regulatory assets 5,825 (884) (6,753)
Income taxes 191,972 181,514 166,773
---------- ---------- ----------
Total operating expenses and taxes 1,899,228 1,810,937 1,844,610
---------- ---------- ----------
OPERATING INCOME 566,618 557,254 525,330
---------- ---------- ----------
OTHER INCOME AND EXPENSE:
Perry Unit 2 termination (Note 3) -- -- (390,835)
Income tax benefit from Perry Unit 2
termination -- -- 142,092
Other 14,424 16,459 19,921
---------- ---------- ----------
Total other income (expense) 14,424 16,459 (228,822)
---------- ---------- ----------
TOTAL INCOME 581,042 573,713 296,508
---------- ---------- ----------
NET INTEREST AND OTHER CHARGES:
Interest on long-term debt 243,570 259,554 262,861
Deferred nuclear unit interest (4,250) (8,511) (8,518)
Allowance for borrowed funds used during
construction and capitalized interest (5,668) (5,156) (4,666)
Other interest expense 22,944 18,931 16,445
Subsidiaries' preferred stock dividend
requirements 7,205 5,364 5,863
---------- ---------- ----------
Net interest and other charges 263,801 270,182 271,985
---------- ---------- ----------
INCOME BEFORE CUMULATIVE EFFECT OF A
CHANGE IN ACCOUNTING 317,241 303,531 24,523
Cumulative effect to January 1, 1993, of
a change in accounting for unbilled
revenues (net of income taxes of
$33,632,000) (Note 2) -- -- 58,201
---------- ---------- ----------
NET INCOME 317,241 303,531 82,724
PREFERRED AND PREFERENCE STOCK DIVIDEND
REQUIREMENTS 22,494 21,679 23,707
---------- ---------- ----------
EARNINGS ON COMMON STOCK $ 294,747 $ 281,852 $ 59,017
========== ========== ==========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 143,692 143,237 152,569
========== ========== ==========
EARNINGS PER SHARE OF COMMON STOCK:
Before cumulative effect of a change
in accounting $2.05 $1.97 $ .01
Cumulative effect to January 1, 1993,
of a change in accounting for unbilled
revenues (Note 2) -- -- .38
----- ----- -----
EARNINGS PER SHARE OF COMMON STOCK $2.05 $1.97 $ .39
===== ===== =====
DIVIDENDS DECLARED PER SHARE OF COMMON STOCK $1.50 $1.50 $1.50
===== ===== =====
<FN>
The accompanying Notes to Consolidated Financial Statements are an integral part of
these statements.
</TABLE>
- 8 -
<TABLE>
OHIO EDISON COMPANY
CONSOLIDATED BALANCE SHEETS
<CAPTION>
At December 31, 1995 1994
- --------------------------------------------------------------------------------------------------------
(In thousands)
ASSETS
<S> <C> <C>
UTILITY PLANT:
In service, at original cost $8,556,722 $8,518,050
Less--Accumulated provision for depreciation 3,051,148 2,910,587
---------- ----------
5,505,574 5,607,463
---------- ----------
Construction work in progress--
Electric plant 150,262 174,970
Nuclear fuel 39,613 52,470
---------- ----------
189,875 227,440
---------- ----------
5,695,449 5,834,903
---------- ----------
OTHER PROPERTY AND INVESTMENTS:
Letter of credit collateralization (Note 4) 277,763 277,763
Other 252,005 197,546
---------- ----------
529,768 475,309
---------- ----------
CURRENT ASSETS:
Cash and cash equivalents 29,830 23,291
Receivables--
Customers (less accumulated provisions of $2,528,000 and $2,517,000,
respectively, for uncollectible accounts) 274,692 254,515
Other 54,988 54,713
Materials and supplies, at average cost--
Owned 68,829 122,337
Under consignment 41,080 --
Prepayments 82,257 71,836
---------- ----------
551,676 526,692
---------- ----------
DEFERRED CHARGES:
Regulatory assets 1,786,543 1,898,875
Unamortized sale and leaseback costs 103,091 106,883
Property taxes 104,071 106,458
Other 53,336 44,844
---------- ----------
2,047,041 2,157,060
---------- ----------
$8,823,934 $8,993,964
========== ===========
- 9 -
CAPITALIZATION AND LIABILITIES
CAPITALIZATION (See Consolidated Statements of Capitalization):
Common stockholders' equity $2,407,871 $2,317,197
Preferred stock--
Not subject to mandatory redemption 160,965 277,335
Subject to mandatory redemption 25,000 25,000
Preferred stock of consolidated subsidiary--
Not subject to mandatory redemption 50,905 50,905
Subject to mandatory redemption 15,000 15,000
Company obligated mandatorily redeemable preferred securities of
subsidiary trust holding solely Company subordinated debentures 120,000 --
Long-term debt 2,786,256 3,166,593
---------- ----------
5,565,997 5,852,030
---------- ----------
CURRENT LIABILITIES:
Currently payable long-term debt 376,716 227,496
Short-term borrowings (Note 6) 119,965 174,642
Accounts payable 100,536 100,884
Accrued taxes 131,432 140,629
Accrued interest 57,462 65,743
Other 196,482 152,856
---------- ----------
982,593 862,250
---------- ----------
DEFERRED CREDITS:
Accumulated deferred income taxes 1,772,434 1,799,324
Accumulated deferred investment tax credits 213,876 223,827
Other 289,034 256,533
---------- ----------
2,275,344 2,279,684
---------- ----------
COMMITMENTS, GUARANTEES AND CONTINGENCIES
(Notes 4 and 7) ---------- ----------
$8,823,934 $8,993,964
========== ==========
<FN>
The accompanying Notes to Consolidated Financial Statements are an integral part of these balance sheets.
</TABLE>
- 10 -
<TABLE>
OHIO EDISON COMPANY
CONSOLIDATED STATEMENTS OF CAPITALIZATION
<CAPTION>
At December 31, 1995 1994
- ---------------------------------------------------------------------------------------------------------------------------
(In thousands, except per share amounts)
<S>
<C> <C>
COMMON STOCKHOLDERS' EQUITY:
Common stock, $9 par value, authorized 175,000,000 shares-
152,569,437 shares outstanding $1,373,125 $1,373,125
Other paid-in capital 726,307 724,848
Retained earnings (Note 5A) 471,095 389,600
Unallocated employee stock ownership plan common stock-
8,663,575 and 9,076,489 shares, respectively (Note 5B) (162,656) (170,376)
---------- ----------
Total common stockholders' equity 2,407,871 2,317,197
---------- ----------
Number of Shares Optional
Outstanding Redemption Price
------------------ ---------------------
1995 1994 Per Share Aggregate
------ ------ --------- ---------
<S> <C> <C> <C> <C> <C> <C>
PREFERRED STOCK (Note 5C):
Cumulative, $100 par value-
Authorized 6,000,000 shares
Not Subject to Mandatory Redemption:
3.90% 152,510 152,510 $103.63 $15,804 15,251 15,251
4.40% 176,280 176,280 108.00 19,038 17,628 17,628
4.44% 136,560 136,560 103.50 14,134 13,656 13,656
4.56% 144,300 144,300 103.38 14,917 14,430 14,430
7.24% -- 363,700 -- -- -- 36,370
7.36% -- 350,000 -- -- -- 35,000
8.20% -- 450,000 -- -- -- 45,000
--------- --------- ------- ---------- ----------
609,650 1,773,350 63,893 60,965 177,335
Cumulative, $25 par value-
Authorized 8,000,000 shares
Not Subject to Mandatory Redemption:
7.75% 4,000,000 4,000,000 100,000 100,000
--------- --------- ---------- ----------
Total not subject to
mandatory redemption 4,609,650 5,773,350 $63,893 160,965 277,335
========= ========= ======= ---------- ----------
Cumulative, $100 par value-
Subject to Mandatory Redemption (Note 5D):
8.45% 250,000 250,000 25,000 25,000
========= ========= ----------- ----------
- 11 -
PREFERRED STOCK OF CONSOLIDATED
SUBSIDIARY (Note 5C):
Pennsylvania Power Company
Cumulative, $100 par value-
Authorized 1,200,000 shares
Not Subject to Mandatory Redemption:
4.24% 40,000 40,000 $103.13 $ 4,125 4,000 4,000
4.25% 41,049 41,049 105.00 4,310 4,105 4,105
4.64% 60,000 60,000 102.98 6,179 6,000 6,000
7.64% 60,000 60,000 101.42 6,085 6,000 6,000
7.75% 250,000 250,000 -- -- 25,000 25,000
8.00% 58,000 58,000 102.07 5,920 5,800 5,800
--------- --------- ------- ---------- ----------
Total not subject to mandatory
redemption 509,049 509,049 $26,619 50,905 50,905
========= ========= ======= ---------- ----------
Subject to Mandatory Redemption (Note 5D):
7.625% 150,000 150,000 15,000 15,000
========= ========= ---------- ----------
Company Obligated Mandatorily Redeemable Preferred
Securities of Subsidiary Trust Holding Solely
Company Subordinated Debentures (Note 5E):
Cumulative, $25 par value-
Authorized 4,800,000 shares
Subject to Mandatory Redemption:
9.00% 4,800,000 -- 120,000 --
========= ========= ---------- ----------
</TABLE>
- 12 -
<TABLE>
OHIO EDISON COMPANY
CONSOLIDATED STATEMENTS OF CAPITALIZATION (Con't.)
<CAPTION>
At December 31, 1995 1994 1995 1994 1995 1994
- --------------------------------------------------------------------------------------------------------------------------
(In thousands)
<S> <C> <C> <S> <C> <C> <C> <C>
LONG-TERM DEBT (Note 5F):
First mortgage bonds:
Ohio Edison Company- Pennsylvania Power Company-
12.740% due 1995 -- 30,000 9.000% due 1996 50,000 50,000
8.500% due 1996 150,000 150,000 9.740% due 1999-2019 20,000 20,000
8.750% due 1998 150,000 150,000 7.500% due 2003 40,000 40,000
6.875% due 1999 150,000 150,000 6.375% due 2004 50,000 50,000
6.375% due 2000 80,000 80,000 6.625% due 2004 20,000 20,000
7.375% due 2002 120,000 120,000 8.500% due 2022 27,250 50,000
7.500% due 2002 34,265 34,265 7.625% due 2023 19,500 40,000
------- -------
8.250% due 2002 125,000 125,000
8.625% due 2003 150,000 150,000
6.875% due 2005 80,000 80,000
9.750% due 2019 35,300 35,300
8.750% due 2022 94,210 100,000
7.625% due 2023 75,000 75,000
7.875% due 2023 100,000 100,000
---------- ----------
Total first mortgage bonds 1,343,775 1,379,565 226,750 270,000 1,570,525 1,649,565
---------- ---------- ------- ------- ---------- ----------
Secured notes:
Ohio Edison Company Pennsylvania Power Company-
8.380% due 1996 16,464 53,718 4.750% due 1998 850 850
7.930% due 2002 69,579 77,997 6.080% due 2000 23,000 23,000
7.680% due 2005 200,000 200,000 5.400% due 2013 1,000 1,000
6.750% due 2015 40,000 -- 8.125% due 2015 -- 14,250
10.500% due 2015 -- 60,000 5.400% due 2017 10,600 10,600
10.625% due 2015 -- 40,000 7.150% due 2017 17,925 17,925
7.450% due 2016 47,725 47,725 5.900% due 2018 16,800 16,800
7.100% due 2018 26,000 26,000 8.100% due 2018 10,300 10,300
7.050% due 2020 60,000 -- 8.100% due 2020 5,200 5,200
7.000% due 2021 69,500 69,500 7.150% due 2021 14,482 14,482
7.150% due 2021 443 443 6.150% due 2023 12,700 12,700
7.625% due 2023 50,000 50,000 6.450% due 2027 14,500 14,500
8.100% due 2023 30,000 30,000 5.450% due 2028 6,950 6,950
7.750% due 2024 108,000 108,000 6.000% due 2028 14,250 --
5.625% due 2029 50,000 50,000 5.950% due 2029 238 238
------- -------
5.950% due 2029 56,212 56,212
5.450% due 2033 14,800 14,800
---------- ----------
838,723 884,395 148,795 148,795 987,518 1,033,190
---------- ---------- ------- -------
OES Fuel-
6.08% weighted average
interest rate 97,162 124,984
---------- ----------
Total secured notes 1,084,680 1,158,174
---------- ----------
Unsecured notes:
Ohio Edison Company-
9.440% due 1995 -- 75,000
7.430% due 1997 100,000 100,000
8.635% due 1997 50,000 50,000
4.900% due 2012 50,000 50,000
4.250% due 2014 50,000 50,000
3.450% due 2015 50,000 50,000
4.400% due 2018 56,000 56,000
4.750% due 2018 57,100 57,100
4.300% due 2032 53,400 53,400
---------- ----------
Total unsecured notes 466,500 541,500
---------- ----------
Capital lease obligations (Note 4) 48,221 54,180
---------- ----------
Net unamortized discount on debt (6,954) (9,330)
---------- ----------
Long-term debt due within one year (376,716) (227,496)
---------- ----------
Total long-term debt 2,786,256 3,166,593
---------- ----------
TOTAL CAPITALIZATION $5,565,997 $5,852,030
============================================================================================================================
<FN>
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
</TABLE>
- 13 -
<TABLE>
OHIO EDISON COMPANY
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
<CAPTION>
For the Years Ended December 31, 1995 1994 1993
- ---------------------------------------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C>
Balance at beginning of year $389,600 $322,821 $490,564
Net income 317,241 303,531 82,724
Tax benefit from ESOP dividends - - 5,256
-------- -------- --------
706,841 626,352 578,544
- --------------------------------------------------------------------------------------------------
Cash dividends on preferred and
preference stock 20,234 21,926 23,275
Cash dividends on common stock 215,512 214,826 228,855
Premium on redemption of preferred stock - - 3,593
-------- -------- --------
235,746 236,752 255,723
-------- -------- --------
Balance at end of year (Note 5A) $471,095 $389,600 $322,821
- --------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CAPITAL STOCK AND OTHER PAID-IN CAPITAL
Preferred and Preference Stock
---------------------------------------------
Not Subject to Subject to
Common Stock Unallocated Mandatory Redemption Mandatory Redemption
--------------------------------- -------------------- --------------------
Other ESOP Par or Par or
Number Par Paid-In Common Number Stated Number Stated
of Shares Value Capital Stock of Shares Value of Shares Value
--------- ----- ------- ----------- --------- ------ --------- ------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1993 152,569,437 $1,373,125 $731,793 $(187,318) 3,542,399 $354,240 592,016 $ 64,062
Allocation of ESOP Shares 6,799
Sale of 7.75% Class A
Preferred Stock (3,361) 4,000,000 100,000
Sale of 7.75% Preferred
Stock (345) 250,000 25,000
Redemptions--
$102.50 Series (216) (5,400) (5,400)
8.24% Series (45,000) (4,500)
8.48% Series (6) (80,000) (8,000)
8.64% Series (400,000) (40,000)
9.12% Series (450,000) (45,000)
9.16% Series (80,000) (8,000)
11.00% Series (8,000) (800)
11.50% Series (60,000) (6,000)
13.00% Series (10,000) (1,000)
- ----------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1993 152,569,437 1,373,125 727,865 (180,519) 6,782,399 378,240 463,616 46,362
Minimum liability for
unfunded retirement
benefits (3,053)
Allocation of ESOP Shares 36 10,143
Redemptions--
Market Auction Series (500,000) (50,000)
11.00% Series (3,616) (362)
13.00% Series (60,000) (6,000)
- ----------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1994 152,569,437 1,373,125 724,848 (170,376) 6,282,399 328,240 400,000 40,000
Minimum liability for
unfunded retirement
benefits 2,446
Allocation of ESOP Shares 1,274 7,720
Sale of 9% Preferred
Stock 4,800,000 120,000
Redemptions--
7.24% Series (720) (363,700) (36,370)
7.36% Series (609) (350,000) (35,000)
8.20% Series (932) (450,000) (45,000)
- ----------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1995 152,569,437 $1,373,125 $726,307 $(162,656) 5,118,699 $211,870 5,200,000 $160,000
============================================================================================================================
<FN>
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
</TABLE>
- 14 -
<TABLE>
OHIO EDISON COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
For the Years Ended December 31, 1995 1994 1993
- ------------------------------------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $317,241 $303,531 $ 82,724
Adjustments to reconcile net income to net
cash from operating activities:
Provision for depreciation 256,085 220,502 217,980
Nuclear fuel and lease amortization 70,849 72,141 59,858
Deferred income taxes, net 53,395 21,156 (26,233)
Investment tax credits, net (9,951) (8,036) (8,345)
Allowance for equity funds used
during construction - (5,277) (4,257)
Deferred fuel costs, net 3,916 (2,656) (1,078)
Perry Unit 2 termination - - 390,835
Cumulative effect of a change in
accounting for unbilled revenues - - (58,201)
Receivables (20,452) 32,113 (1,962)
Materials and supplies 12,428 6,865 41,467
Accounts payable 3,545 (18,261) 9,823
Other 66,158 72,986 20,272
-------- -------- --------
Net cash provided from operating activities 753,214 695,064 722,883
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
New Financing--
Preferred stock 120,000 - 121,294
Long-term debt 254,365 434,759 765,358
Short-term borrowings, net - 70,516 -
Redemptions and Repayments--
Preferred and preference stock 117,528 56,362 122,502
Long-term debt 499,276 483,347 773,128
Short-term borrowings, net 54,677 - 47,445
Dividend Payments--
Common stock 217,192 216,782 224,943
Preferred and preference stock 20,623 21,483 20,926
-------- -------- --------
Net cash used for financing activities 534,931 272,699 302,292
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions 198,103 258,249 256,746
Letter of credit collateralization deposit - 277,763 -
Other 13,641 22,752 18,367
-------- -------- --------
Net cash used for investing activities 211,744 558,764 275,113
-------- -------- --------
Net increase (decrease) in cash and cash
equivalents 6,539 (136,399) 145,478
Cash and cash equivalents at beginning of year 23,291 159,690 14,212
-------- -------- --------
Cash and cash equivalents at end of year $ 29,830 $ 23,291 $159,690
======== ======== ========
SUPPLEMENTAL CASH FLOWS INFORMATION:
Cash Paid During the Year--
Interest (net of amounts capitalized) $254,789 $267,319 $262,410
Income taxes 178,643 143,202 94,272
<FN>
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
</TABLE>
- 15 -
<TABLE>
OHIO EDISON COMPANY
CONSOLIDATED STATEMENTS OF TAXES
<CAPTION>
For the Years Ended December 31, 1995 1994 1993
(In thousands)
<S> <C> <C> <C>
GENERAL TAXES:
Real and personal property $ 118,707 $ 113,484 $ 124,709
State gross receipts 100,591 100,996 97,348
Social security and unemployment 15,787 14,822 15,626
Other 8,094 7,718 7,871
---------- ---------- ----------
Total general taxes $ 243,179 $ 237,020 $ 245,554
========== ========== ==========
PROVISION FOR INCOME TAXES:
Currently payable-
Federal $ 145,511 $ 161,219 $ 61,920
State 10,352 14,547 5,544
---------- ---------- ----------
155,863 175,766 67,464
---------- ---------- ----------
Deferred, net-
Federal 50,631 20,796 489
State 2,764 360 6,455
---------- ---------- ----------
53,395 21,156 6,944
---------- ---------- ----------
Investment tax credit amortization (9,951) (8,036) (8,345)
---------- ---------- ----------
Total provision for income taxes $ 199,307 $ 188,886 $ 66,063
========== ========== ==========
INCOME STATEMENT CLASSIFICATION
OF PROVISION FOR INCOME TAXES:
Operating income $ 191,972 $ 181,514 $ 166,773
Other income 7,335 7,372 (134,342)
Cumulative effect of a change in accounting -- -- 33,632
---------- ---------- ----------
Total provision for income taxes $ 199,307 $ 188,886 $ 66,063
========== ========== ==========
RECONCILIATION OF FEDERAL INCOME TAX EXPENSE
AT STATUTORY RATE TO TOTAL PROVISION FOR
INCOME TAXES:
Book income before provision for income taxes $ 516,548 $ 492,417 $ 148,787
========== ========== ==========
Federal income tax expense at statutory rate $ 180,792 $ 172,346 $ 52,075
Increases (reductions) in taxes resulting from-
Amortization of investment tax credits (9,951) (8,036) (8,345)
State income taxes net of federal income tax
benefit 8,525 9,690 7,799
Amortization of tax regulatory assets 19,690 14,503 15,412
Other, net 251 383 (878)
---------- ---------- ----------
Total provision for income taxes $ 199,307 $ 188,886 $ 66,063
========== ========== ==========
ACCUMULATED DEFERRED INCOME TAXES AT
DECEMBER 31:
Property basis differences $1,047,387 $1,024,737 $ 972,501
Allowance for equity funds used during
construction 263,465 278,172 282,525
Deferred nuclear expense 271,114 277,951 283,134
Customer receivables for future income taxes 204,978 237,826 244,540
Deferred sale and leaseback costs 82,381 87,068 90,878
Unamortized investment tax credits (77,777) (82,491) (85,459)
Other (19,114) (23,939) 10,432
---------- ---------- ----------
Net deferred income tax liability $1,772,434 $1,799,324 $1,798,551
========== ========== ==========
<FN>
The accompanying Notes to Consolidated Financial Statements are an integral part of
these statements.
</TABLE>
- 16 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The consolidated financial statements include Ohio Edison
Company (Company) and its wholly owned subsidiaries. Pennsylvania Power
Company (Penn Power) is the Company's principal subsidiary. All
significant intercompany transactions have been eliminated. The Company
and Penn Power (Companies) follow the accounting policies and practices
prescribed by the Public Utilities Commission of Ohio (PUCO), the
Pennsylvania Public Utility Commission (PPUC) and the Federal Energy
Regulatory Commission (FERC). The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets, liabilities, revenues and expenses during the reporting
period.
REVENUES-
The Companies' principal business is providing electric service
to customers in central and northeastern Ohio and western Pennsylvania.
The Companies' retail customers are metered on a cycle basis. Revenue is
recognized for unbilled electric service through the end of the year (see
Note 2).
Receivables from customers include sales to residential,
commercial and industrial customers located in the Companies' service area
and sales to wholesale customers. There was no material concentration of
receivables at December 31, 1995 or 1994, with respect to any particular
segment of the Companies' customers.
REGULATORY PLAN-
In the second half of 1995 the PUCO approved the Company's Rate
Reduction and Economic Development Plan (Regulatory Plan). As part of the
Regulatory Plan, transition rate credits were implemented for customers on
November 1, 1995, which are expected to reduce operating revenues by
approximately $600,000,000 during the Regulatory Plan period, which
expires December 31, 2005. The Regulatory Plan also established a revised
fuel recovery rate formula, which eliminated the automatic pass-through of
fuel costs to the Company's retail customers. Under the revised formula
the fuel recovery rate will be adjusted based upon annual changes in the
Gross Domestic Product Implicit Price Deflator.
All of the Company's regulatory assets are now being recovered
under provisions of the Regulatory Plan. In addition, the PUCO ordered the
Company to recognize additional depreciation expense related to its
generating assets and additional amortization of regulatory assets during
the ten-year Regulatory Plan period of at least $2,000,000,000 more than
the amount that would have been recognized if the Regulatory Plan were not
in effect. These additional amounts are being recovered through current
- 17 -
rates. Among other provisions, the Regulatory Plan also limits the
Company's annual earnings on common stock; any amounts otherwise earned in
excess of the limitation would be credited to the Company's retail
customers in a future period.
MATERIALS AND SUPPLIES-
The Companies recover fuel-related costs not otherwise included
in base rates from retail customers through separate energy rates. Penn
Power defers the difference between actual fuel-related costs incurred and
the amounts currently recovered from customers, with any over or under
collection from customers included as an adjustment to a subsequent energy
rate. The Company followed this practice until July 1, 1995, at which time
current period deferral for over or under collections ceased in accordance
with the Regulatory Plan.
In 1995, the Company sold substantially all of its materials and
supplies, except for those located at generating units not operated by the
Company. No gain or loss resulted from this transaction. The buyer now
provides all of the Company's materials and supplies under a consignment
arrangement. In accordance with Statement of Financial Accounting
Standards (SFAS) No. 49, "Accounting for Product Financing Arrangements,"
the materials and supplies continue to be reflected as assets on the
Consolidated Balance Sheet even though the supplier owns the material.
UTILITY PLANT AND DEPRECIATION-
Utility plant reflects the original cost of construction,
including payroll and related costs such as taxes, employee benefits,
administrative and general costs and financing costs (allowance for funds
used during construction).
The Companies provide for depreciation on a straight-line basis
at various rates over the estimated lives of property included in plant in
service. The annual composite rate for electric plant was approximately
3.0% in 1995, 1994 and 1993. In addition to the straight-line depreciation
recognized in 1995, the Company also recognized $27,000,000 of additional
depreciation in accordance with the Regulatory Plan.
Annual depreciation expense includes approximately $7,600,000
for future decommissioning costs applicable to the Companies' ownership
and leasehold interests in three nuclear generating units. The Companies'
share of the future obligation to decommission these units is
approximately $399,000,000 in current dollars and (using a 2.8% escalation
rate) approximately $865,000,000 in future dollars. The estimated
obligation (based on site-specific studies) and the escalation rate were
developed using information obtained from consultants. Payments for
decommissioning are expected to begin in 2016, when actual decommissioning
work begins. The Companies have recovered approximately $55,000,000 for
decommissioning through their electric rates from customers through
December 31, 1995; such amounts are reflected in the reserve for
- 18 -
depreciation on the Consolidated Balance Sheet. If the actual costs of
decommissioning the units exceed the funds accumulated from investing
amounts recovered from customers, the Companies expect that additional
amount will be recoverable from their customers. The Companies have
approximately $65,100,000 invested in external decommissioning trust funds
as of December 31, 1995. Earnings on these funds are reinvested with a
corresponding increase to the depreciation reserve. The Companies have
also recognized an estimated liability of approximately $18,000,000
related to decontamination and decommissioning of nuclear enrichment
facilities operated by the United States Department of Energy (DOE), as
required by the Energy Policy Act of 1992. The Companies recover these
costs through their respective energy rates.
The Financial Accounting Standards Board (FASB) is reviewing the
accounting for nuclear decommissioning costs. If current electric utility
industry accounting practices for decommissioning are changed: (1) annual
provisions for decommissioning could increase; (2) the full estimated cost
for decommissioning could be recorded as a liability rather than as
accumulated depreciation; and (3) income from the external decommissioning
trusts could be reported as investment income. The FASB issued its
proposed accounting standard in February 1996.
COMMON OWNERSHIP OF GENERATING FACILITIES-
The Companies and other Central Area Power Coordination Group
(CAPCO) companies own, as tenants in common, various power generating
facilities. Each of the companies is obligated to pay a share of the costs
associated with any jointly owned facility in the same proportion as its
interest. The Companies' portions of operating expenses associated with
jointly owned facilities are included in the corresponding operating
expenses on the Consolidated Statements of Income. The amounts reflected
on the Consolidated Balance Sheet under utility plant at December 31,
1995, include the following:
Companies'
Utility Accumulated Construction Ownership/
Plant Provision for Work in Leasehold
Generating Units in Service Depreciation Progress Interest
- -------------------------------------------------------------------
(In thousands)
W.H. Sammis #7 $ 303,700 $ 89,900 $ 1,700 68.80%
Bruce Mansfield
#1, #2 and #3 777,500 336,500 3,600 50.68%
Beaver Valley
#1 and #2 1,849,900 606,600 3,600 47.11%
Perry #1 1,624,500 356,000 9,600 35.24%
- -------------------------------------------------------------------
Total $4,555,600 $1,389,000 $18,500
- -------------------------------------------------------------------
- 19 -
NUCLEAR FUEL-
Nuclear fuel is recorded at original cost, which includes
material, enrichment, fabrication and interest costs incurred prior to
reactor load. The Companies amortize the cost of nuclear fuel based on the
rate of consumption. The Companies' electric rates include amounts for the
future disposal of spent nuclear fuel based upon the formula used to
compute payments to the DOE.
INCOME TAXES-
Details of the total provision for income taxes are shown on the
Consolidated Statements of Taxes. Deferred income taxes result from timing
differences in the recognition of revenues and expenses for tax and
accounting purposes. Investment tax credits, which were deferred when
utilized, are being amortized over the recovery period of the related
property. The liability method is used to account for deferred income
taxes. Deferred income tax liabilities related to tax and accounting basis
differences are recognized at the statutory income tax rates in effect
when the liabilities are expected to be paid.
RETIREMENT BENEFITS-
The Companies' trusteed, noncontributory defined benefit pension
plan covers almost all full-time employees. Upon retirement, employees
receive a monthly pension based on length of service and compensation. The
Companies use the projected unit credit method for funding purposes and
were not required to make pension contributions during the three years
ended December 31, 1995.
The following sets forth the funded status of the plan and amounts
recognized on the Consolidated Balance Sheets as of December 31:
1995 1994
- ------------------------------------------------------------------
(In thousands)
Actuarial present value of benefit obligations:
Vested benefits $546,936 $483,850
Nonnvested benefits 36,548 27,312
- ------------------------------------------------------------------
Accumulated benefit obligation $583,484 $511,162
==================================================================
Plan assets at fair value $857,961 $719,310
Actuarial present value of projected benefit
obligation 685,180 593,931
- ------------------------------------------------------------------
Plan assets in excess of projected benefit
obligation 172,781 125,379
Unrecognized net loss (gain) (43,564) 8,868
Unrecognized prior service cost 24,704 12,755
Unrecognized net transition asset (41,830) (49,775)
- ------------------------------------------------------------------
Net pension asset $112,091 $ 97,227
=================================================================
- 20 -
The assets of the plan consist primarily of common stocks,
United States government bonds and corporate bonds. Net pension costs for
the three years ended December 31, 1995, were computed as follows:
1995 1994 1993
- -------------------------------------------------------------------
(In thousands)
Service cost-benefits earned
during the period $ 12,794 $ 15,159 $ 13,171
Interest on projected benefit
obligation 48,135 45,299 42,723
Return on plan assets (194,465) 8,344 (97,849)
Net deferral (amortization) 118,672 (89,324) 14,954
Voluntary early retirement
program expense - 37,299 6,014
- ------------------------------------------------------------------
Net pension cost $ (14,864) $ 16,777 $(20,987)
==================================================================
The assumed discount rate used in determining the actuarial
present value of the projected benefit obligation was 7.5% in 1995 and
1993, and 8.5% in 1994. The assumed rate of increase in future
compensation levels used to measure this obligation was 4.5% in each year.
Expected long-term rates of return on plan assets were assumed to be 10%
in 1995 and 1994 and 11% in 1993.
The Companies provide a minimum amount of noncontributory life
insurance to retired employees in addition to optional contributory
insurance. Health care benefits, which include certain employee
deductibles and copayments, are also available to retired employees, their
dependents and, under certain circumstances, their survivors. The
Companies pay insurance premiums to cover a portion of these benefits in
excess of set limits; all amounts up to the limits are paid by the
Companies. The Companies recognize the expected cost of providing other
postretirement benefits to employees and their beneficiaries and covered
dependents from the time employees are hired until they become eligible to
receive those benefits. The following sets forth the funded status of the
plan and amounts recognized on the Consolidated Balance Sheets as of
December 31:
1995 1994
- -----------------------------------------------------------------
(In thousands)
Accumulated postretirement benefit
obligation allocation:
Retirees $148,169 $165,386
Fully eligible active plan participants 12,578 12,381
Other active plan participants 77,550 77,599
-------- --------
Accumulated postretirement benefit
obligation 238,297 255,366
Plan assets at fair value 1,269 -
- ------------------------------------------------------------------
Accumulated postretirement benefit
obligation in excess of plan assets 237,028 255,366
Unrecognized transition obligation (152,263) (183,196)
Unrecognized net loss (17,038) (23,425)
- ------------------------------------------------------------------
Net postretirement benefit liability $ 67,727 $ 48,745
==================================================================
- 21 -
Net periodic postretirement benefit costs for the three years
ended December 31, 1995, were computed as follows:
1995 1994 1993
- -------------------------------------------------------------------
(In thousands)
Service cost-benefits attributed
to the period $ 4,499 $ 4,865 $ 3,929
Interest cost on accumulated
benefit obligation 21,073 19,332 18,039
Amortization of transition
obligation 10,178 10,178 10,178
Amortization of loss 110 787 -
Voluntary early retirement program
expense - 2,815 1,533
------- ------- -------
Net periodic postretirement
benefit cost 35,860 37,977 33,679
==================================================================
The health care trend rate assumption is 6.0% in the first year
gradually decreasing to 4.0% for the year 2008 and later. The discount
rates used to compute the accumulated postretirement benefit obligation
were 7.5% in 1995 and 1993, and 8.5% in 1994. An increase in the health
care trend rate assumption by one percentage point in all years would
increase the accumulated postretirement benefit obligation by
approximately $29,400,000 and the aggregate annual service and interest
costs by approximately $3,500,000.
The Company deferred postretirement benefits until the
Regulatory Plan became effective. The costs are no longer being deferred
and are currently being recovered through rates along with the deferred
amounts.
EARNINGS PER SHARE OF COMMON STOCK-
The American Institute of Certified Public Accountants issued
its Statement of Position 93-6 (SOP) in late 1993, which changed generally
accepted accounting principles relating to employee stock ownership plans
(ESOP) for shares purchased after December 31, 1992. The Company's ESOP
shares were purchased prior to that date, but the Company elected to adopt
the SOP effective January 1, 1994. This change in accounting reduced net
income by approximately $8,700,000 in 1994; the net effect to earnings per
common share resulting from this change was an increase of six cents after
eliminating unallocated ESOP shares from the computation.
- 22 -
SUPPLEMENTAL CASH FLOWS INFORMATION-
All temporary cash investments purchased with an initial
maturity of three months or less are reported as cash equivalents on the
Consolidated Balance Sheets. The Companies reflect temporary cash
investments at cost, which approximates their market value. Noncash
financing and investing activities included capital lease transactions
amounting to $1,017,000, $3,613,000 and $1,487,000 for the years 1995,
1994 and 1993, respectively. Commercial paper transactions of OES Fuel (a
wholly owned subsidiary of the Company) have initial maturity periods of
three months or less, and accordingly are reported net within financing
activities under long-term debt and are reflected as long-term debt on the
Consolidated Balance Sheets (see Note 5F).
All borrowings with initial maturities of less than one year are
defined as financial instruments under generally accepted accounting
principles and are reported on the Consolidated Balance Sheets at cost,
which approximates their fair market value. The following sets forth the
approximate fair value and related carrying amounts of all other long-term
debt, preferred stock subject to mandatory redemption and investments
other than cash and cash equivalents as of December 31:
1995 1994
------------------ -----------------
Carrying Fair Carrying Fair
Value Value Value Value
-------- ----- -------- -----
(In Millions)
Long-term debt $3,025 $3,152 $3,224 $3,062
Preferred stock $ 160 $ 163 $ 40 $ 38
Investments other than
cash and cash equivalents $ 353 $ 394 $ 320 $ 317
The fair values of long-term debt and preferred stock reflect
the present value of the cash outflows relating to those securities based
on the current call price, the yield to maturity or the yield to call, as
deemed appropriate at the end of each respective year. The yields assumed
were based on securities with similar characteristics offered by a
corporation with credit ratings similar to the Companies' ratings.
The fair value of investments other than cash and cash
equivalents represent cost (which approximates fair value) or the present
value of the cash inflows based on the yield to maturity. The yields
assumed were based on financial instruments with similar characteristics
and terms. Investments other than cash and cash equivalents consist
primarily of decommissioning trust investments of approximately
$65,100,000 and a letter of credit collateral deposit of $277,763,000.
Unrealized gains and losses applicable to the decommissioning trust have
been recognized in the trust investment with a corresponding offset to the
reserve for depreciation. The collateral deposit is in the held-to-
- 23 -
maturity category with a maturity date of July 15, 2004. The fair value of
the deposit at December 31, 1995, was $318,383,000. The Companies have no
securities held for trading purposes.
REGULATORY ASSETS-
The Companies recognize, as regulatory assets, costs which the
FERC, PUCO and PPUC have authorized for recovery from customers in future
periods. Without such authorization, the costs would have been charged to
income as incurred. All regulatory assets are being recovered from
customers under the Company's Regulatory Plan. Penn Power's rates
currently exclude approximately $61,000,000 of deferred costs. Based on
the Company's Regulatory Plan and Penn Power's expected rate treatment
based on PPUC precedent, it is improbable that the Companies will be
required to terminate application of SFAS No. 71 "Accounting for the
Effects of Certain Types of Regulation" in the foreseeable future.
Regulatory assets on the Consolidated Balance Sheets are
comprised of the following:
1995 1994
- -------------------------------------------------------------------
(In thousands)
Nuclear unit expenses $ 758,434 $ 771,538
Customer receivables for future
income taxes 559,660 639,592
Sale and leaseback costs 231,435 242,033
Loss on reacquired debt 96,738 99,384
Employee postretirement benefit costs 32,397 27,055
Uncollectible customer accounts 32,540 44,368
Perry Unit 2 termination 39,639 38,066
DOE decommissioning and
decontamination costs 19,310 21,170
Other 16,390 15,669
- -------------------------------------------------------------------
Total $1,786,543 $1,898,875
===================================================================
2. CHANGE IN ACCOUNTING FOR UNBILLED REVENUES:
On January 1, 1993, the Companies changed their accounting
policies to recognize revenue relating to metered sales which remain
unbilled at the end of the accounting period. This change was made to more
closely match the Companies' revenues with the costs of services provided.
The cumulative effect to January 1, 1993, was $58,201,000 (net of
$33,632,000 of income taxes) or $.38 per share.
3. PERRY UNIT 2 TERMINATION:
In December 1993, the Companies announced that they would not
participate in further construction of Perry Unit 2 and abandoned Perry
Unit 2 as a possible electric generating plant. The Company determined
- 24 -
that recovery from customers of its Perry Unit 2 investment was
improbable, resulting in a $366,377,000 write-off of its investment in
1993. Penn Power expects its Perry Unit 2 investment to be recoverable
from its retail customers based on Section 520 of the Pennsylvania Public
Utility Code. Due to the anticipated delay in commencement of recovery and
taking into account the expected rate treatment, Penn Power recognized an
impairment to its Perry Unit 2 investment of $24,458,000 in 1993. As a
result, net income for the year ended December 31, 1993, was reduced by
$248,743,000 ($1.63 per share of common stock).
4. LEASES:
The Companies lease a portion of their nuclear generating
facilities, certain transmission facilities, office space and other
property and equipment under cancelable and noncancelable leases.
The Company sold portions of its ownership interests in Perry
Unit 1 and Beaver Valley Unit 2 and entered into operating leases on the
portions sold for basic lease terms of approximately 29 years. During the
terms of the leases the Company continues to be responsible, to the extent
of its combined ownership and leasehold interest, for costs associated
with the units including construction expenditures, operation and
maintenance expenses, insurance, nuclear fuel, property taxes and
decommissioning. The basic rental payments are adjusted when applicable
federal tax law changes. The Company has the right, at the end of the
respective basic lease terms, to renew the leases for up to two years. The
Company also has the right to purchase the facilities at the expiration of
the basic lease term or renewal term (if elected) at a price equal to the
fair market value of the facilities.
OES Finance, Incorporated (OES Finance), a wholly owned
subsidiary of the Company, was established in 1994 for the sole purpose of
maintaining deposits pledged as collateral to secure reimbursement
obligations relating to certain letters of credit supporting the Company's
obligations to lessors under the Beaver Valley Unit 2 sale and leaseback
arrangements. The deposits pledged to the financial institution providing
those letters of credit are the sole property of OES Finance. In the event
of liquidation, OES Finance, as a separate corporate entity, would have to
satisfy its obligations to creditors before any of its assets could be
made available to the Company as sole owner of OES Finance common stock.
Consistent with the regulatory treatment, the rental payments
for capital and operating leases are charged to operating expenses on the
Consolidated Statements of Income. Such costs for the three years ended
December 31, 1995, are summarized as follows:
1995 1994 1993
- -------------------------------------------------------------------
(In thousands)
Operating leases
Interest element $104,551 $100,980 $ 96,804
Other 13,896 14,530 15,418
Capital leases
Interest element 6,983 7,483 7,896
Other 6,636 6,960 6,843
- -------------------------------------------------------------------
Total rental payments $132,066 $129,953 $126,961
===================================================================
- 25 -
The future minimum lease payments as of December 31, 1995, are:
Capital Operating
Leases Leases
- -------------------------------------------------------------------
(In thousands)
1996 $ 15,425 $ 108,495
1997 13,916 113,873
1998 12,678 120,779
1999 11,216 125,630
2000 9,888 124,887
Years thereafter 94,228 2,237,913
- -------------------------------------------------------------------
Total minimum lease payments 157,351 $2,831,577
==========
Executory costs 40,527
- -------------------------------------------
Net minimum lease payments 116,824
Interest portion 68,603
- -------------------------------------------
Present value of net minimum
lease payments 48,221
Less current portion 5,741
- -------------------------------------------
Noncurrent portion $ 42,480
===========================================
5. CAPITALIZATION:
(A) RETAINED EARNINGS-
Under the Company's first mortgage indenture, the Company's
consolidated retained earnings unrestricted for payment of cash dividends
on the Company's common stock were $404,276,000 at December 31, 1995.
(B) EMPLOYEE STOCK OWNERSHIP PLAN-
The Companies fund the matching contribution for their 401(k)
savings plan through an ESOP Trust. All full-time employees eligible for
participation in the 401(k) savings plan are covered by the ESOP. The ESOP
borrowed $200,000,000 from the Company and acquired 10,654,114 shares of
the Company's common stock on the open market. Dividends on ESOP shares
are used to service the debt. Shares are released from the ESOP on a pro-
rata basis as debt service payments are made. In 1995, 1994 and 1993,
412,914 shares, 532,250 shares and 369,956 shares, respectively, were
- 26 -
allocated to employees with the corresponding expense recognized based on
the shares allocated method. The fair value of 8,663,575 shares
unallocated as of December 31, 1995, was approximately $203,594,000. Total
ESOP-related compensation expense was calculated as follows:
- -------------------------------------------------------------------
1995 1994 1993
- -------------------------------------------------------------------
(In thousands)
Base compensation $ 8,994 $10,179 $ 6,799
Interest on ESOP debt - - 19,985
Dividends on common stock
held by the ESOP and
used to service debt (2,503) (1,966) (15,944)
Interest earned by the ESOP - - (275)
- -----------------------------------------------------------------
Total expense $ 6,491 $ 8,213 $10,565
=================================================================
(C) PREFERRED STOCK-
Penn Power's 7.625% and 7.75% series of preferred stock have
restrictions which prevent early redemption prior to October 1997 and July
2003, respectively. The Company's 8.45% series of preferred stock has no
optional redemption provision, and its 7.75% series is not redeemable
before April 1998. All other preferred stock may be redeemed by the
Companies in whole, or in part, with 30-60 days' notice.
(D) PREFERRED STOCK SUBJECT TO MANDATORY REDEMPTION-
The Company's 8.45% series of preferred stock has an annual
sinking fund requirement for 50,000 shares beginning on September 16,
1997. Penn Power's 7.625% series has an annual sinking fund requirement
for 7,500 shares beginning on October 1, 2002.
The Companies' preferred shares are retired at $100 per share
plus accrued dividends. Sinking fund requirements for the next five years
are $5,000,000 in each year from 1997 through 2000.
(E) COMPANY OBLIGATED MANDATORILY REDEEMABLE PREFERRED SECURITIES OF
SUBSIDIARY TRUST HOLDING SOLELY COMPANY SUBORDINATED DEBENTURES-
Ohio Edison Financing Trust, a wholly owned subsidiary of the
Company, was established in 1995 and issued $120,000,000 of 9% Cumulative
Trust Preferred Capital Securities. The Company purchased all of the
Trust's Common Securities and simultaneously issued to the Trust
$123,711,350 principal amount of 9% Junior Subordinated Debentures due
2025 in exchange for the proceeds that the Trust received from its sale of
Preferred and Common Securities. The sole assets of the Trust are the
Subordinated Debentures whose interest and other payment dates coincide
- 27 -
with the distribution and other payment dates on the Trust Securities.
Under certain circumstances the Subordinated Debentures could be
distributed to the holders of the outstanding Trust Securities in the
event the Trust is liquidated. The Subordinated Debentures may be
optionally redeemed beginning December 31, 2000, by the Company at a
redemption price of $25 per Subordinated Debenture plus accrued interest,
in which event the Trust Securities will be redeemed on a pro-rata basis
at $25 per share plus accumulated distributions. The Company's obligations
under the Subordinated Debentures along with the related Indenture,
amended and restated Trust Agreement, Guarantee Agreement and the
Agreement for expenses and liabilities constitute a full and unconditional
guarantee by the Company of payments due on the Preferred Securities.
(F)LONG-TERM DEBT-
The first mortgage indentures and their supplements, which
secure all of the Companies' first mortgage bonds, serve as direct first
mortgage liens on substantially all property and franchises, other than
specifically excepted property, owned by the Companies.
Based on the amount of bonds authenticated by the Trustee
through December 31, 1995, the Company's annual sinking and improvement
fund requirement for all bonds issued under the mortgage amounts to
$30,056,000. The Company expects to deposit funds in 1996 that will be
withdrawn upon the surrender for cancellation of a like principal amount
of bonds, which are specifically authenticated for such purposes against
unfunded property additions or against previously retired bonds. This
method can result in minor increases in the amount of the annual sinking
fund requirement.
Sinking fund requirements for first mortgage bonds and maturing
long-term debt (excluding capital leases) for the next five years are:
- ----------------------------------------------------------------
1996 $370,975,000
1997 369,261,000
1998 258,683,000
1999 162,036,000
2000 116,473,000
- ----------------------------------------------------------------
Amounts shown above for 1996 include $38,300,000 of first
mortgage bonds optionally redeemed in January 1996.
The Companies' obligations to repay certain pollution control
revenue bonds are secured by several series of first mortgage bonds and,
in some cases, by subordinate liens on the related pollution control
facilities. Certain pollution control revenue bonds are entitled to the
benefit of irrevocable bank letters of credit of $338,831,000. To the
extent that drawings are made under those letters of credit to pay
principal of, or interest on, the pollution control revenue bonds, the
- 28 -
Company is entitled to a credit against its obligation to repay those
bonds. The Company pays annual fees of 0.55% to 0.875% of the amounts of
the letters of credit to the issuing banks and is obligated to reimburse
the banks for any drawings thereunder.
Nuclear fuel purchases are financed through the issuance of OES
Fuel commercial paper and loans, both of which are supported by a
$225,000,000 long-term bank credit agreement which expires March 31, 1998.
Accordingly, the commercial paper and loans are reflected as long-term
debt on the Consolidated Balance Sheets. OES Fuel must pay an annual
facility fee of 0.1875% on the total line of credit and an annual
commitment fee of 0.0625% on any unused amount.
6. SHORT-TERM BORROWINGS AND BANK LINES OF CREDIT:
Short-term borrowings outstanding at December 31, 1995,
represent debt of OES Capital, Incorporated (OES Capital), a wholly owned
subsidiary of the Company. Those borrowings are secured by customer
accounts receivable. OES Capital can borrow up to $120,000,000 under a
receivables financing agreement at rates based on certain bank commercial
paper. OES Capital is required to pay an annual fee of 0.41% on the amount
of the entire finance limit. The receivables financing agreement expires
April 23, 1996. The Company plans to negotiate an extension to this
agreement.
The Companies have lines of credit with domestic banks that
provide for borrowings of up to $52,000,000 under various interest rate
options. Short-term borrowings may be made under these lines of credit on
the Companies' unsecured notes. To assure the availability of these lines,
the Companies are required to pay annual commitment fees that vary from
0.22% to 0.50%. These lines expire at various times during 1996. The
weighted average interest rates on short-term borrowings outstanding at
December 31, 1995 and 1994, were 5.67% and 5.76%, respectively.
7. COMMITMENTS, GUARANTEES AND CONTINGENCIES:
CONSTRUCTION PROGRAM-
The Companies' current forecasts reflect expenditures of
approximately $650,000,000 for property additions and improvements from
1996-2000, of which approximately $160,000,000 is applicable to 1996.
Investments for additional nuclear fuel during the 1996-2000 period are
estimated to be approximately $180,000,000, of which approximately
$29,000,000 applies to 1996. During the same periods, the Companies'
nuclear fuel investments are expected to be reduced by approximately
$191,000,000 and $39,000,000, respectively, as the nuclear fuel is
consumed.
NUCLEAR INSURANCE-
The Price-Anderson Act limits the public liability relative to
a single incident at a nuclear power plant to $8,920,000,000. The amount
- 29 -
is covered by a combination of private insurance and an industry
retrospective rating plan. Based on their present ownership and leasehold
interests in the Beaver Valley Station and the Perry Plant, the Companies'
maximum potential assessment under the industry retrospective rating plan
(assuming the other CAPCO companies were to contribute their proportionate
share of any assessments under the retrospective rating plan) would be
$102,800,000 per incident but not more than $13,000,000 in any one year
for each incident.
The Companies are also insured as to their respective interests
in the Beaver Valley Station and the Perry Plant under policies issued to
the operating company for each plant. Under these policies, up to
$2,750,000,000 is provided for property damage and decontamination and
decommissioning costs. The Companies have also obtained approximately
$414,000,000 of insurance coverage for replacement power costs for their
respective interests in Perry and Beaver Valley. Under these policies, the
Companies can be assessed a maximum of approximately $17,400,000 for
incidents at any covered nuclear facility occurring during a policy year
which are in excess of accumulated funds available to the insurer for
paying losses.
The Companies intend to maintain insurance against nuclear risks
as described above as long as it is available. To the extent that
replacement power, property damage, decontamination, decommissioning,
repair and replacement costs and other such costs arising from a nuclear
incident at any of the Companies' plants exceed the policy limits of the
insurance in effect with respect to that plant, to the extent a nuclear
incident is determined not to be covered by the Companies' insurance
policies, or to the extent such insurance becomes unavailable in the
future, the Companies would remain at risk for such costs.
GUARANTEES-
The Companies, together with the other CAPCO companies, have
each severally guaranteed certain debt and lease obligations in connection
with a coal supply contract for the Bruce Mansfield Plant. As of December
31, 1995, the Companies' shares of the guarantees (which approximate fair
market value) were $72,851,000. The price under the coal supply contract,
which includes certain minimum payments, has been determined to be
sufficient to satisfy the debt and lease obligations. The Companies' total
payments under the coal supply contract were $120,015,000, $99,774,000 and
$114,572,000 during 1995, 1994 and 1993, respectively. Under the coal
supply contract, the Companies' minimum payments in each year during the
period 1996 through 1999 are approximately $35,000,000.
ENVIRONMENTAL MATTERS-
Various federal, state and local authorities regulate the
Companies with regard to air and water quality and other environmental
matters. The Companies have estimated additional capital expenditures for
environmental compliance of approximately $17,000,000, which is included
in the construction forecast provided under "Construction Program" for
1996 through 2000.
- 30 -
The Companies are in compliance with the sulfur dioxide (SO2)
and nitrogen oxides (NOx) reduction requirements for 1995 under the Clean
Air Act Amendments of 1990. SO2 reductions for the years 1995 through 1999
are being achieved by burning lower-sulfur fuel, generating more
electricity from lower-emitting plants, and/or purchasing emission
allowances. Plans for complying with reductions required for the year 2000
and thereafter have not been finalized. The Environmental Protection
Agency (EPA) is conducting additional studies which could indicate the
need for additional NOx reductions from the Companies' Pennsylvania
facilities by the year 2003. The cost of such reductions, if required, may
be substantial. The Companies continue to evaluate their compliance plans
and other compliance options.
The Companies are required to meet federally approved SO2
regulations. Violations of such regulations can result in shutdown of the
generating unit involved and/or civil or criminal penalties of up to
$25,000 for each day the unit is in violation. The EPA has an interim
enforcement policy for SO2 regulations in Ohio that allows for compliance
based on a 30-day averaging period. The EPA has proposed regulations that
could change the interim enforcement policy, including the method of
determining compliance with emission limits. The Companies cannot predict
what action the EPA may take in the future with respect to proposed
regulations or the interim enforcement policy.
Legislative, administrative and judicial actions will continue
to change the way that the Companies must operate in order to comply with
environmental laws and regulations. With respect to any such changes and
to the environmental matters described above, the Companies expect that
any resulting additional capital costs which may be required, as well as
any required increase in operating costs, would ultimately be recovered
from their customers.
- 31 -
8. SUMMARY OF QUARTERLY FINANCIAL DATA (UNAUDITED):
The following summarizes certain consolidated operating results
by quarter for 1995 and 1994.
March 31, June 30, September 30, December 31,
Three Months Ended 1995 1995 1995 1995
- -------------------------------------------------------------------
(In thousands, except per share amounts)
Operating Revenues $587,734 $593,838 $667,013 $617,261
Operating Expenses
and Taxes 453,921 454,424 508,024 482,859
- -------------------------------------------------------------------
Operating Income 133,813 139,414 158,989 134,402
Other Income 2,997 3,829 1,190 6,408
Net Interest and
Other Charges 65,214 66,192 67,127 65,268
- -------------------------------------------------------------------
Net Income $ 71,596 $ 77,051 $ 93,052 $ 75,542
- -------------------------------------------------------------------
Earnings on Common
Stock $ 66,237 $ 71,514 $ 87,703 $ 69,293
- -------------------------------------------------------------------
Earnings per Share
of Common Stock $.46 $.50 $.61 $.48
- -------------------------------------------------------------------
March 31, June 30, September 30, December 31,
Three Months Ended 1994 1994 1994 1994
- -------------------------------------------------------------------
(In thousands, except per share amounts)
Operating Revenues $601,248 $585,428 $614,390 $567,125
Operating Expenses
and Taxes 468,850 447,353 462,573 432,161
- -------------------------------------------------------------------
Operating Income 132,398 138,075 151,817 134,964
Other Income 2,255 3,534 5,032 5,638
Net Interest and
Other Charges 66,723 67,569 68,624 67,266
- -------------------------------------------------------------------
Net Income $ 67,930 $ 74,040 $ 88,225 $ 73,336
- -------------------------------------------------------------------
Earnings on Common
Stock $ 62,329 $ 68,681 $ 82,869 $ 67,973
- -------------------------------------------------------------------
Earnings per Share
of Common Stock $.44 $.48 $.58 $.47
- -------------------------------------------------------------------
- 32 -
Report of Independent Public Accountants
To the Stockholders and Board of Directors of Ohio Edison Company:
We have audited the accompanying consolidated balance sheets and
consolidated statements of capitalization of Ohio Edison Company (an Ohio
corporation) and subsidiaries as of December 31, 1995 and 1994, and the related
consolidated statements of income, retained earnings, capital stock and other
paid-in capital, cash flows and taxes for each of the three years in the period
ended December 31, 1995. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Ohio Edison Company and
subsidiaries as of December 31, 1995 and 1994, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1995, in conformity with generally accepted accounting principles.
As discussed in Note 2 to the consolidated financial statements, effective
January 1, 1993, the Company changed its method of accounting for unbilled
revenues.
ARTHUR ANDERSEN LLP
Cleveland, Ohio
February 8, 1996
- 33 -
EXHIBIT 21
LIST OF SUBSIDIARIES OF THE REGISTRANT
AT DECEMBER 31, 1995
Pennsylvania Power Company - Incorporated in Pennsylvania
OES Fuel, Incorporated - Incorporated in Ohio
OES Capital, Incorporated - Incorporated in Ohio
OES Finance, Incorporated - Incorporated in Ohio
OES Nuclear, Incorporated - Incorporated in Ohio
Ohio Edison Financing Trust - Incorporated in Delaware
Statement of Differences
------------------------
Exhibit Number 21, List of Subsidiaries of the
Registrant at December 31, 1995, is not included
in the printed document.
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to
the incorporation of our reports included or incorporated by reference
in this Form 8-K, into the Company's previously filed Registration
Statements, File No. 33-49135, No. 33-49259, No. 33-49413 and No.
33-51139.
ARTHUR ANDERSEN LLP
Cleveland, Ohio
February 23, 1996
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Income tax expense includes $7,335,000 related to other income.
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