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, 1993
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 1-3491
PENNSYLVANIA POWER COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
PENNSYLVANIA 25-0718810
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
1 EAST WASHINGTON STREET
P.O. BOX 891, NEW CASTLE, PENNSYLVANIA 16103
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (412) 652-5531
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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4.24% Preferred Stock, $100 par value Philadelphia Stock Exchange, Inc.
4.25% Preferred Stock, $100 par value Philadelphia Stock Exchange, Inc.
4.64% Preferred Stock, $100 par value Philadelphia Stock Exchange, Inc.
7.64% Preferred Stock, $100 par value Philadelphia Stock Exchange, Inc.
8.00% Preferred Stock, $100 par value Philadelphia Stock Exchange, Inc.
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: None
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date: $30 par value -
6,290,000 shares outstanding at March 23, 1994.
Documents incorporated by reference PART OF FORM 10-K INTO WHICH
(to extent indicated herein) DOCUMENT IS INCORPORATED
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1993 Annual Report to Stockholders Part II
(Pages 1-4 and 6-19)
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TABLE OF CONTENTS
Page
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Part I
Item 1. Business 1
The Company 1
Central Area Power Coordination Group 1
Arrangements Among the CAPCO Companies 1
Reliance on the CAPCO Companies 1
Perry Unit 2 2
Financing and Construction 2
Future Financing 2
Coverage Requirements 3
Utility Regulation 4
Nuclear Regulation 4
Nuclear Insurance 5
Environmental Matters 6
Air Regulation 6
Water Regulation 7
Waste Disposal 7
Summary 8
Fuel Supply 8
Nuclear Fuel 9
Capacity and Reserves 9
Regional Reliability 10
Competition 10
Employees 10
Item 2. Properties 10
Item 3. Legal Proceedings 11
Item 4. Submission of Matters to a Vote of Security Holders 12
Part II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters 12
Item 6. Selected Financial Data 12
Item 7. Management's Discussion and Analysis of FinancialCondition and
Results of Operations 12
Item 8. Financial Statements and Supplementary Data 12
Item 9. Changes In and Disagreements with Accountants on Accounting and
Financial Disclosure 12
Part III
Item 10. Directors and Executive Officers of the Registrant 13
Item 11. Executive Compensation 15
Summary Executive Compensation Table 15
Long-Term Incentive Plan Table 16
Supplemental Executive Retirement Plan 16
Pension Plan 17
Additional Information Regarding Compensation 17
Compensation of Directors 17
Item 12. Security Ownership of Certain Beneficial Owners and Management 18
Item 13. Certain Relationships and Related Transactions 18
Part IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K 19
<PAGE>
PART I
ITEM 1. BUSINESS
The Company
Pennsylvania Power Company (Company) was organized under the laws
of the Commonwealth of Pennsylvania in 1930 and owns property and does
business as an electric public utility in that state. The Company is
authorized to do business and owns property in the State of Ohio. It is a
wholly owned subsidiary of Ohio Edison Company (Edison), an Ohio
corporation which does business as an electric public utility in Ohio. The
Company and Edison are referred to herein collectively as Companies.
The Company furnishes electric service to communities in a 1,500
square mile area of western Pennsylvania. The Company also provides
transmission services and electric energy for resale to certain
municipalities in Pennsylvania. The area served by the Company has a
population of approximately 360,000.
Central Area Power Coordination Group (CAPCO)
In September 1967, the CAPCO companies, consisting of the Company,
Edison, 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, Unit 1 at the Beaver Valley
Power Station and Unit 1 at the Perry Nuclear Power Plant, each now in
service. Perry Unit 2, a CAPCO nuclear generating unit whose construction
had been previously suspended, has been abandoned by the CAPCO companies
(see "Perry Unit 2").
Arrangements Among the CAPCO Companies
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
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,
severally and not jointly, is obligated to pay the cost of constructing
and operating only its proportionate share of 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.
Reliance on the CAPCO Companies
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 Unit 1 and Duquesne is
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responsible for Beaver Valley Unit 1. The Companies monitor activities in
connection with these units but must rely to a significant degree on the
operating company for necessary information. The Companies in their
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 Companies
critically review the information given to them by the operating company,
but they cannot be absolutely certain that things that they would have
considered significant have been reported or that they would always 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
Companies become aware of their significance. The Company has similar
responsibilities to the other CAPCO companies with respect to Bruce
Mansfield Units 1, 2 and 3 and Edison has those responsibilities with
respect to W. H. Sammis Unit 7.
Perry Unit 2
In December 1993, the Company announced that it will not
participate in further construction of Perry Unit 2 and has abandoned
Perry Unit 2 as a possible electric generating plant. The Company expects
its Perry Unit 2 investment to be recoverable from its Pennsylvania Public
Utility Commission (PPUC) jurisdictional 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 PPUC and
Federal Energy Regulatory Commission (FERC) rate treatment, the Company
recognized an impairment to its Perry Unit 2 investment of $24,458,000 in
1993, reducing net income by $14,165,000.
Financing and Construction
The Company accesses the capital markets from time to time to
provide funds for its construction program and to refinance existing
securities.
Future Financing
The Company's total construction costs, excluding nuclear fuel,
amounted to approximately $34,000,000 in 1993. 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 1994-1998, such construction costs are
estimated to be approximately $140,000,000, of which approximately
$27,000,000 is applicable to 1994. See "Environmental Matters" below with
regard to possible environment-related expenditures not included in the
estimate for 1994-1998.
During the 1994-1998 period, maturities of, and sinking fund
requirements for, long-term debt (excluding nuclear fuel) and preferred
stock will require the expenditure by the Company of approximately
$58,000,000, of which approximately $2,000,000 is applicable to 1994. All
or a major portion of maturing debt is expected to be refunded at or prior
to maturity.
The Company leases its nuclear fuel requirements from OES Fuel,
Incorporated (a wholly owned subsidiary of Edison). Investments for
additional nuclear fuel during the 1994-1998 period are estimated to be
approximately $38,000,000, of which approximately $9,000,000 applies to
1994. During the same periods, the Company's nuclear fuel investments are
expected to be reduced by approximately $44,000,000 and $10,000,000,
respectively, as the nuclear fuel is consumed. The Company recovers the
cost of nuclear fuel consumed through its electric rates.
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Based on its present plans, the Company may provide for its cash
requirements in 1994 from: funds to be received from operations; available
cash and temporary cash investments (approximately $13,000,000 as of
December 31, 1993); funds available under short-term bank credit
arrangements presently aggregating $35,000,000; and the ability to borrow
up to $50,000,000 from Edison, if available, under a system funds pool
agreement. Additionally, the Company has $37,000,000 of unused bank
facilities which may be borrowed for up to several days at the banks'
discretion.
The Company currently expects that, for the period 1994-1998,
external financings may be necessary to provide a portion of its 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 Company to comply
with coverage requirements in order to issue first mortgage bonds and
preferred stock. The Company will continue to monitor financial market
conditions and, where appropriate, may take advantage of opportunities to
refund outstanding high-cost debt and preferred stock to the extent that
its financial resources permit.
Except as otherwise indicated, the foregoing statements with
respect to construction expenditures are based on estimates made in
February 1994 and are subject to change based upon the progress of and
changes required in the construction program, including periodic reviews
of costs, changing customer requirements for electric energy, the level of
earnings and resulting changes in applicable coverage requirements,
conditions in capital markets, changes in regulatory requirements and
other relevant factors.
Coverage Requirements
The coverage requirements contained in the first mortgage
indenture under which the Company issues first mortgage bonds provide
that, except for certain refunding purposes, the Company may not issue
first mortgage bonds unless applicable net earnings (before income taxes),
calculated as provided in the indenture, 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 outstanding first mortgage bonds, including those
being issued. The Company's 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 outstanding
immediately thereafter plus the annual dividend requirements on all
preferred stock which will be outstanding at that time.
With respect to the issuance of first mortgage bonds, other
requirements also apply and are more restrictive than the earnings test at
the present time. The Company is currently able to issue $96,000,000
principal amount of first mortgage bonds, with up to $15,000,000 of such
amount issuable against property additions; the remainder could be issued
against previously retired bonds. The Company could issue approximately
$50,000,000 of additional preferred stock before the end of the first
quarter of 1994. For the remainder of 1994, however, the earnings
coverage test contained in the Company's charter precludes the issuance of
additional preferred stock due to the inclusion of the charge for the
Perry Unit 2 impairment in the earnings test. Additional preferred stock
capability is expected to be restored in January 1995. 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 Company's ability to issue desired amounts of first mortgage
bonds or preferred stock, the Company may seek other methods of financing.
Such financings could include the sale of common stock to Edison, or of
such other types of securities as might be authorized by the PPUC 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
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incurred. In addition, the Company might, to the extent possible, reduce
its expenditures for construction and other purposes.
Utility Regulation
The Company is subject to broad regulation as to rates and other
matters by the PPUC. With respect to its wholesale and interstate electric
operations and rates, the Company is subject to regulation, including
regulation of its accounting policies and practices, by the FERC.
The Energy Policy Act of 1992 (1992 Act) amends portions of the
Public Utility Holding Company Act of 1935, providing independent power
producers and other nonregulated generating facilities easier entry into
the electric generation markets. The 1992 Act also amends portions of the
Federal Power Act, authorizing the FERC, under certain circumstances, to
mandate access to utility-owned transmission facilities. The Company is
currently unable to predict the ultimate effects on its operations
resulting from this legislation.
The Company sells power to its wholesale customers under
agreements which were accepted by the FERC in 1984. The agreements provide
that the Company's wholesale customers will be charged the applicable
prevailing retail electric rates, and will remain full requirements
customers through August 1994 as to three of these customers and through
August 1995 as to the other two customers. Negotiations are currently
underway to extend these agreements.
The Company uses a "levelized" energy cost rate (ECR) for the
recovery of fuel and net purchased power costs which are not otherwise
recovered through base rates from its customers. The ECR, which includes
adjustment for any over or under collection from customers, is
recalculated each year.
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 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 and Perry Unit 1 on July 1, 1976 and
November 13, 1986, respectively.
The construction permit and operating license issued by the NRC
applicable to Perry Unit 1 is conditioned to require, among other things:
(i) maintenance, emergency, economy and wholesale power and reserve
sharing to be made available to, (ii) interconnections to be made with,
and (iii) wheeling to be provided for, electric generating and/or
distribution systems (or municipalities or cooperatives with the right to
engage in such functions) if such entities so request and to permit such
entities to become members of CAPCO (subject to certain prerequisites with
respect to size), or to acquire a share of the capacity of Perry Unit 1 or
any other future nuclear units, if they so desire. In September 1987,
Edison asked the NRC to suspend these license conditions. In April 1991,
the NRC Staff denied Edison's application; accordingly, Edison petitioned
the NRC for a hearing. Pursuant to this request the matter was referred to
the Atomic Safety and Licensing Board (ASLB). The ASLB ruled against
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Edison in November 1992. Edison petitioned the NRC to review the ASLB
decision in December 1992. On August 3, 1993, the NRC ruled that the
license conditions will not be suspended. On October 1, 1993, Edison
appealed the NRC decision in the United States Court of Appeals for the
District of Columbia Circuit. If these license conditions are not
suspended, they could have a materially adverse but presently
undeterminable effect on the Company's future business operations.
The NRC has promulgated and continues to promulgate additional
regulations related to the safe operation of nuclear power plants. The
Company 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 Beaver Valley Unit 1
and Perry Unit 1. Although the Company has no reason to anticipate an
accident at any nuclear plant in which it has an interest, if such an
accident did happen, it could have a material but presently undeterminable
adverse effect on the Company's financial position. In addition, such an
accident at any operating nuclear plant, whether or not owned by the
Company, could result in regulations or requirements that could affect the
operation or licensing of plants that the Company does own with a
consequent but presently undeterminable adverse impact, and could affect
the Company's ability 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 $9,396,000,000 (assuming
116 units licensed to operate) for a single nuclear incident, which amount
is covered by: (i) private insurance amounting to $200,000,000; and (ii)
$9,196,000,000 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 its present ownership interest in Beaver Valley Unit 1
and Perry Unit 1, the Company's 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 $18,100,000 per incident but not more than $2,300,000 in
any one year for each incident.
In addition to the public liability insurance provided pursuant to
the Price-Anderson Act, the Company has also obtained insurance coverage
in limited amounts for economic loss and property damage arising out of
nuclear incidents. The Company is a member 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 Company has policies, renewable yearly,
corresponding to its interest in Beaver Valley Unit 1 and Perry Unit 1,
which provide an aggregate indemnity of up to approximately $53,000,000
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 Company's present maximum aggregate assessment for incidents
occurring during a policy year would be approximately $555,000.
The Company is insured as to its interest in Beaver Valley Unit 1
and the Perry Plant under property damage insurance provided by American
Nuclear Insurers (ANI) and Mutual Atomic Energy Liability Underwriters
(MAELU) to the operating company for each plant. Under the ANI/MAELU
arrangements, $500,000,000 of primary coverage and $800,000,000 of excess
coverage for decontamination costs, debris removal and repair and/or
replacement of property is provided for Beaver Valley Unit 1 and the Perry
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Plant. The Company pays annual premiums for this coverage and is not
liable for retrospective assessments.
A secondary level of coverage for Beaver Valley Unit 1 and the
Perry Plant over and above the ANI/MAELU policy is provided by a
decontamination liability, excess property and decommissioning liability
insurance policy issued to each operating company by NEIL (NEIL II). Under
NEIL II a minimum of $1,400,000,000 of coverage is available to pay costs
required for decontamination operations in excess of the $1,350,000,000
provided by the primary ANI/MAELU policy. Additionally, a maximum of
$250,000,000, as provided by NEIL II, would cover decommissioning costs in
excess of funds already collected for decommissioning. Any remaining
portion of the NEIL II proceeds after payment of decontamination costs
will be available to pay excess property damage losses.Members of NEIL II
pay annual premiums and are subject to assessments if losses exceed the
accumulated funds available to the insurer. The Company's present maximum
assessment for NEIL II coverage for accidents occurring during a policy
year would be approximately $2,100,000. The NEIL II policy is renewable
yearly.
The Company intends 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 Company's plants exceed the policy limits of the insurance from
time to time in effect with respect to that plant, to the extent a nuclear
incident is determined not to be covered by the Company's insurance
policies, or to the extent such insurance becomes unavailable in the
future, the Company 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 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
Company is unable to predict what effect these requirements may have on
the availability of insurance proceeds to the Company for the Company's
bondholders.
Environmental Matters
Various federal, state and local authorities regulate the Company
with regard to air and water quality and other environmental matters.
The Company has estimated capital expenditures for environmental
compliance of approximately $17,000,000, which is included in the
construction estimate given under "Financing and Construction - Future
Financing" for 1994 through 1998.
Air Regulation
Under the provisions of the Clean Air Act of 1970, both the
Commonwealth of Pennsylvania and the State of Ohio 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 W. H. Sammis Unit 7 in 1977. Generating plants to be
constructed in the future and some future modifications of existing
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facilities will be covered not only by the applicable state standards but
also by EPA emission performance standards for new sources. In both
Pennsylvania and Ohio 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 Clean Air Act Amendments of 1990 require significant
reductions of SO2 and oxides of nitrogen from the Company's coal-fired
generating units by 1995 and additional emission reductions by 2000.
Compliance options include, but are not limited to, installing additional
pollution control equipment, burning less polluting fuel, purchasing
emission allowances from others, operating existing facilities in a manner
which minimizes pollution and retiring facilities. In a system compliance
plan for the Company and Edison submitted to the PPUC and to the EPA, the
Company stated that reductions for the years 1995 through 1999 are likely
to be achieved by burning lower sulfur fuel, generating more electricity
at their lower emitting plants and/or purchasing emission allowances. The
Company continues to evaluate its compliance plan and other compliance
options as they arise. Plans for complying with the year 2000 reductions
are less certain at this time.
The Company is required to meet federally approved SO2
regulations, and the violation of such regulations can result in
injunctive relief, including shutdown of the generating unit involved,
and/or civil or criminal penalties of up to $25,000 per day of violation.
The EPA has an interim enforcement policy for the SO2 regulations in Ohio
which allows for compliance with the regulations based on a 30-day
averaging period. The EPA has proposed regulations which could cause
changes in the interim enforcement policy including a revision of methods
of determining compliance with emission limits. The Company cannot
predict what action the EPA may take in the future with respect to 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
Company's plants. In addition, Pennsylvania and Ohio have water quality
standards applicable to the Company's 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. Pennsylvania and Ohio have assumed such authority.
The Ohio Environmental Protection Agency (Ohio EPA) has issued an
NPDES Permit for the W.H. Sammis Plant. The plant is in compliance with
chemical limitations of the permit. The permit conditions would have
required the addition of cooling towers to the W. H. Sammis Plant,
however, the EPA and Ohio EPA have approved a variance request eliminating
the current need for cooling towers.
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 has 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
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water monitoring, leachate collection systems, closure, liability
insurance and operating matters. The Company is developing and analyzing
various compliance options and is currently unable to determine the
ultimate increase in capital and operating costs at existing sites.
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 Company cannot now estimate the precise effect of existing and
potential regulations and legislation upon any of its existing and
proposed facilities and operations or upon its ability to issue additional
first mortgage bonds under its mortgage. The mortgage contains covenants
by the Company 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 the
mortgage, in effect, also require, in the opinion of counsel for the
Company, that certification of property additions as the basis for the
issuance of bonds or other action under the mortgage 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 Company intends to
contest any requirements it deems unreasonable or impossible for
compliance or otherwise contrary to the public interest. Developments in
these and other areas of regulation may require the Company 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. The Company expects that the impact of any such costs would
eventually be reflected in its rate schedules.
Fuel Supply
The Company's sources of generation during 1993 were 76.8% coal
and 23.2% nuclear. With the 1993 expiration of a long-term coal contract,
the Company's coal supply for the New Castle Plant is currently supplied
through spot purchases of coal produced from nearby reserves.
The Company estimates its 1994 coal requirement to be 1,200,000
tons (including its share of the coal requirements of CAPCO's W. H. Sammis
Unit 7 and the Bruce Mansfield Plant). The coal requirements of W. H.
Sammis Unit 7 are furnished from mines located in Ohio, Pennsylvania and
West Virginia through spot purchases and Edison contracts which expire at
various times through February 28, 2003. See "Environmental Matters" for
factors pertaining to meeting environmental regulations affecting coal-
fired generating units.
The Company, together with the other CAPCO companies, has several
guarantees (the Company's composite percentage being approximately 6.7%)
of certain debt and lease obligations in connection with a coal supply
contract for the Bruce Mansfield Plant (see Note 8 of Notes to Financial
Statements). As of December 31, 1993, the Company's share of the
guarantees was $12,708,000. 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.
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The Company's fuel costs (excluding disposal costs) for each of
the five years ended December 31, 1993, were as follows:
1993 1992 1991 1990 1989
---- ---- ---- ---- ----
Cost of Fuel consumed per million BTU's:
Coal $1.37 $1.42 $1.41 $1.39 $1.34
Nuclear $ .97 $ .94 $1.05 $ .98 $ .98
Average fuel cost per kilowatt-hour
generated (cents) 1.36 1.34 1.41 1.38 1.39
Nuclear Fuel
OES Fuel is the sole lessor for the Company's nuclear fuel
requirements (see "Financing and Construction - Future Financing" and Note
1 of Notes to Financial Statements).
The Company 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
two reloads for Beaver Valley Unit 1 (through approximately 1996), and the
next seven reloads for Perry Unit 1 (through approximately 2003). The
CAPCO companies have a contract with the U.S. Enrichment Corporation for
enrichment services for all CAPCO nuclear units through 2014.
Prior to the expiration of existing commitments, the Company
intends 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 Company is 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 Unit 1 are expected to
be adequate through 2011. After on-site storage capacity is exhausted,
additional storage capacity will have to be obtained which could 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 Beaver Valley Unit 1 and the
Perry Plant, respectively.
Capacity and Reserves
The 1993 net maximum hourly demand on the Company of 690,000 kW
(including 63,000 kW of firm power sales which extend through 2005 as
discussed under "Competition") occurred on August 26, 1993. The seasonal
capability of the Company on that day was 901,000 kW. Of that system
capability, 23% was available to serve additional load, after giving
effect to term power sales to other utilities. Based on existing capacity,
the load forecast made in November 1993 and anticipated term power sales
to other utilities, the capacity margins during the 1994-1998 period are
expected to range from about 16% to 23%.
9
<PAGE>
Regional Reliability
The Companies participate 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 Company competes with other utilities for intersystem bulk
power sales and for sales to municipalities. The Company competes with
suppliers of natural gas and other forms of energy in connection with its
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 Company's customers.
In an effort to more fully utilize its facilities and hold down
rates to its other customers, the Company has entered into a long-term
power sales agreement with another utility. Currently, the Company is
selling 63,000 kW annually under this contract through December 31, 2005.
The Company has the option to reduce this commitment by 21,000 kW
beginning June 1, 1996.
Employees
At December 31, 1993, the Company had 1,355 employees.
ITEM 2. PROPERTIES
The Company's First Mortgage Indenture dated as of November 1,
1945, between the Company and Citibank, N.A. (successor to The First
National Bank of the City of New York), as amended and supplemented,
constitutes, in the opinion of the Company's counsel, a direct first lien
on substantially all of the Company's physical property, subject only to
excepted encumbrances, as defined in the Indenture. See Notes 5 and 6 of
Notes to the Financial Statements for information concerning leases and
financing encumbrances affecting certain of the Company's properties.
10
<PAGE>
The Company owns, individually or, together with one or more of
the other CAPCO companies as tenants in common, the generating units in
service shown below:
Net Demonstrated
Capacity (kW)
-------------------------
Company's Ownership
Plant-Location Unit Total Entitlement Interest
-------------- ---- ----- ----------- ---------
Coal-Fired Units
- ----------------
New Castle-West Pittsburg, PA 3-5 333,000 333,000 100.00%
Bruce Mansfield-Shippingport, PA 1 780,000 33,000 4.20%
2 780,000 53,000 6.80%
3 800,000 50,000 6.28%
W. H. Sammis-Stratton, OH 7 600,000 125,000 20.80%
Nuclear Units
- -------------
Beaver Valley-Shippingport, PA 1 810,000 142,000 17.50%
Perry-North Perry Village, OH 1 1,194,000 63,000 5.24%
Oil-Fired Units
- ---------------
Various 164,000 25,000 15.18%
-------
Total 824,000
=======
Prolonged outages of existing generating units might make it
necessary for the Company, depending upon the state of demand from time to
time for electric service upon its 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 Company's interruptible programs, all to an extent not
presently determinable.
The Company's 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 Company's
transmission lines aggregate 605 miles.
Its electric distribution systems include 5,002 miles of pole line
carrying primary, secondary and street lighting circuits. It owns,
individually or, together with one or more of the other CAPCO companies as
tenants in common, 84 substations with a total installed transformer
capacity of 3,710,960 kilovolt-amperes, of which 16 are transmission
substations, including 8 located at generating plants.
The Company's transmission lines also interconnect with those of
Edison, Duquesne and West Penn Power Company. These interconnections make
possible utilization by the Company of generating capacity constructed as
a part of the CAPCO program, as well as providing opportunities for the
sale of power to other utilities.
ITEM 3. LEGAL PROCEEDINGS
See "Item 1 - Business - Nuclear Regulation" for information with
respect to legal proceedings.
11
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The Company is a wholly owned subsidiary of Ohio Edison Company.
Quarterly dividends of $.85 and $1.10 per share were paid on the Company's
common stock during 1993 and 1992, respectively.
For information with respect to certain restrictions on the payment
of cash dividends on common stock, see Note 6(a) of Notes to Financial
Statements.
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 6 through 8 is incorporated
herein by reference to the Selected Financial Data, Management's
Discussion and Analysis of Results of Operations and Financial Condition,
and Financial Statements included on pages 1 through 4 and 6 through 19,
respectively, in the Company's 1993 Annual Report to Stockholders.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
12
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The present term of office of each director extends until the next
succeeding annual meeting of stockholders and until his successor is
elected and shall qualify.
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.
H. Peter Burg-Age 47
Senior Vice President and Chief Financial Officer of the Company's
parent, Ohio Edison Company, since 1989. Vice President of Ohio
Edison Company from 1986 to 1989. Director of the Company since
1988. Mr. Burg is also a director of Ohio Edison Company, Society
National Bank, Akron District, and Energy Insurance Mutual.
Robert H. Carlson-Age 67
Retired. President and Chief Executive Officer from 1988 to 1989 of
Universal-Rundle Corporation, New Castle, Pennsylvania, a manufacturer
of plumbing fixtures. Director of the Company since 1983. Mr. Carlson
is also a director of Ohio Edison Company, First Federal Savings Bank
of New Castle and its parent, First Shenango Bancorp, Inc.
J. R. Edgerly-Age 63
Vice President, Secretary and General Counsel of the Company since
1987. Director of the Company since 1973.
Willard R. Holland-Age 57
Chairman of the Board, Chief Executive Officer, and Chief Financial
Officer of the Company and President and Chief Executive Officer of the
Company's parent, Ohio Edison Company, since 1993. President and Chief
Operating Officer of Ohio Edison Company from 1991 to 1993. Senior
Vice President from 1988 to 1991 of Detroit Edison Company, an electric
utility. Director of the Company since 1991. Mr. Holland is also a
director of Ohio Edison Company.
Robert L. Kensinger-Age 59
President of the Company since 1991. Division Manager of the Company's
parent, Ohio Edison Company, from 1982 to 1991. Director of the Company
since 1991. Mr. Kensinger is also a director of First Western Bank,
N.A., New Castle, Pennsylvania, a subsidiary of First Western
Bancorp, Inc.
13
<PAGE>
Joseph J. Nowak-Age 62
Retired. Consultant during 1993 and Vice President during 1992 of Armco
Inc., and Executive Vice President-Operations from 1988 to 1992 of
Cyclops Industries, Inc., manufacturers of steel products. Cyclops
Industries, Inc. merged with Armco Inc. in 1992. Director of the
Company since 1982.
Jack E. Reed-Age 51
Vice President of the Company since 1992. Manager, Substation and
Distribution, from 1991 to 1992 and Manager, Transmission and
Distribution Maintenance, from 1988 to 1991 of the Company's parent,
Ohio Edison Company. Director of the Company since 1992.
Richard L. Werner-Age 62
Chairman of the Board, President, and Chief Executive Officer since
1980 of R. D. Werner Co., Inc., manufacturer of aluminum extrusions,
ladders and scaffolding. Director of the Company since 1993. Mr.
Werner is also a director of Integra National Bank/North, Oil City,
Pennsylvania, a subsidiary of Integra Financial Corporation.
Robert P. Wushinske-Age 54
Vice President and Treasurer of the Company since 1987.
David W. McKean-Age 41
Comptroller of the Company since 1992. Director of Financial Reporting
of the Company's parent, Ohio Edison Company, from 1985 to 1992.
14
<PAGE>
<TABLE>
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY EXECUTIVE COMPENSATION TABLE
<CAPTION>
Annual Compensation
Name and --------------------------- All Other
Principal Position Year Salary Bonus(1) Other(2) Compensation(3)
------------------ ---- ------ -------- -------- --------------
<S> <C> <C> <C> <C> <C>
Willard R. Holland (4) 1993 $67,280 $16,427 $892 $4,337
Chairman of the Board and 1992 -0- -0- -0- -0-
Chief Executive Officer 1991 -0- -0- -0- -0-
J. T. Rogers, Jr. (4) 1993 22,661 4,288 3,415 11,186
Retired Chairman of the
Board 1992 99,583 21,535 2,787 18,110
and Chief Executive
Officer 1991 86,120 9,567 2,787 20,256
R. L. Kensinger (5) 1993 151,610 18,551 588 11,214
President 1992 146,292 16,010 3,302 10,241
1991 116,083 8,836 3,408 7,882
J. E. Reed (6) 1993 103,951 5,267 7,994 6,518
Vice President 1992 99,067 5,487 215 5,448
1991 -0- -0- -0- -0-
J. R. Edgerly 1993 99,986 8,487 189 7,409
Vice President, Secretary 1992 98,516 8,769 234 7,126
and General Counsel 1991 91,040 6,478 229 6,068
R. P. Wushinske 1993 97,386 9,222 180 4,149
Vice President and
Treasurer 1992 94,966 9,225 305 3,990
1991 87,924 6,478 52 3,993
</TABLE>
(1) See Long-Term Incentive Plan Table for Incentive Compensation Plan
awards mandatorily or voluntarily deferred into the Common Stock
Equivalent Account.
(2) Consists of reimbursement for income tax obligations on Executive
Indemnity Program premium and on certain other executive
perquisites.
(3) For 1993, amount is comprised of (1) matching Edison Common Stock
contributions under the tax qualified Savings Plan: Holland - $706;
Rogers - $559; Kensinger - $5,806; Reed -$4,604; Edgerly - $4,513;
Wushinske - $2,930; (2) the current dollar value of the Executive
Supplemental Life Plan benefit at age 65 that is attributable to the
Company's portion of the premiums it paid in 1993: Holland - $1,930;
Rogers - $4,840; Kensinger - $2,797; Reed - $933; Edgerly - $2,896;
Wushinske - $1,219; (3) above market interest earned under the
Executive Deferred Compensation Plan: Holland - $1,701; Rogers -
1,989; Kensinger -$2,539; Reed -$960; Edgerly - $0; Wushinske - $0;
and (4) a portion of the Executive Indemnity Program premium
reportable as income: Holland - $0; Rogers -$3,798; Kensinger - $72;
Reed - $21; Edgerly - $0; Wushinske - $0.
(4) Mr. Holland was elected Chairman of the Board effective March 1,
1993, the day of Mr. Rogers' retirement.
(5) Mr. Kensinger was elected President effective August 24, 1991. For
1991, amounts include compensation by Edison and the Company.
(6) Mr. Reed was elected Vice President effective August 18, 1992. For
1992, amounts include compensation by Edison and the Company.
15
<PAGE>
<TABLE>
LONG-TERM INCENTIVE PLAN TABLE
AWARDS IN LAST FISCAL YEAR
<CAPTION>
Performance or Estimated Future Payouts Under
Other Period Non-Stock Price Based Plan
Dollar Number of Units (Number of Performance Shares)
Amount Performance Maturation ------------------------------
Name Deferred Shares or Payout Threshold Target Maximum
---- -------- ----------- ----------- --------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Willard R. Holland-CEO $15,332 735 4 years 699 931 1,149
R. L. Kensinger 15,378 738 4 years 701 934 1,153
J. E. Reed 4,504 216 4 years 205 238 261
J. R. Edgerly -0- -0- 4 years -0- -0- -0-
R. P. Wushinske -0- -0- 4 years -0- -0- -0-
</TABLE>
Messrs. Holland and Kensinger must defer 50% of their annual
Executive Incentive Compensation Plan award into a Common Stock Equivalent
Account. Messrs. Reed, Edgerly, and Wushinske may voluntarily defer a
portion of their annual incentive award into the Common Stock Equivalent
Account. At the end of a four-year performance period, the Common Stock
Equivalent Account attributed to the deferred award for that period will
be valued as if the compensation deferred into the account had been
invested in Edison's Common Stock and any dividends that would have been
paid on such stock were reinvested on the date paid. This value may be
increased or decreased based upon the total return of Edison's Common
Stock relative to an electric utility industry index during the period and
the Companies' price change to residential customers relative to a peer
group of twenty electric utilities. The final value of an executive's
account will be paid to the executive in cash. If an executive retires,
dies or otherwise leaves the employment of the Company prior to the end of
the four-year deferral period, the executive's account will be valued and
paid to the executive or the executive's beneficiary in the year following
such event. Mr. J. T. Rogers, Jr. retired on March 1, 1993. His account
was valued and paid on March 1, 1994.
The maximum amount in the above table will be earned if the
Companies' price change to residential customers is ranked in the lowest
(fifth) quintile of the peer group (i.e., the lowest 20 percent of the
peer group) and Edison's total shareholder return is in the top (first)
quintile compared to the index. The target amount will be earned if the
Companies' price change to residential customers is in the fourth quintile
and Edison's total shareholder return is in the second quintile. The
threshold amount will be earned if the Companies' price change to
residential customers is above the third quintile and Edison's total
shareholder return is below the third quintile.
Supplemental Executive Retirement Plan
The Company participates in the Ohio Edison System Supplemental
Executive Retirement Plan. Currently, two of the executive officers listed
above (W. R. Holland and R. L. Kensinger) are eligible to participate in
the Plan. At normal retirement, eligible senior executives of the Company
who have five or more years of service with the Ohio Edison System are
provided a retirement benefit equal to 65 percent of their highest annual
salary from the Company, reduced by the executive's pensions under tax-
qualified pension plans of the Company or other employers, any
supplementary pension under the Company's Executive Deferred Compensation
Plan, and Social Security benefits. Subject to exceptions that might be
made in specific cases, senior executives retiring prior to age 65, or
with less than five years of service, or both, may receive a similar but
reduced benefit. This Plan also provides for disability and surviving
spouse benefits. As of the end of 1993, the estimated annual retirement
benefits of W. R. Holland from all of the above sources was $49,584 and
the estimated annual retirement benefits of R. L. Kensinger from such
sources was $98,547. Mr. J. T. Rogers, Jr. retired on March 1, 1993 with
an annual retirement benefit from the above sources of $64,729.
16
<PAGE>
Pension Plan
The Company's trusteed noncontributory Pension Plan covers
substantially all full-time employees including officers of the Company.
Pension benefits are determined using a formula based on a Pension Plan
participant's years of accrued service and average rate of monthly
earnings for the highest 60 months of the last 120 months of accrued
service immediately preceding retirement or termination of service.
Compensation covered by the Pension Plan consists of basic cash
wages and compensation deferred through the Savings Plan up to the maximum
amount permitted under the Internal Revenue Code of 1986, as adjusted in
accordance with regulations. This amount was $235,840 per year for 1993
and is $150,000 per year for 1994. In addition, a supplementary pension
benefit may be payable to participants in the Executive Deferred
Compensation Plan. Compensation for 1993 covered by these two plans for
the officers shown in the Executive Compensation Table who are not
currently participants in the Ohio Edison System Supplemental Executive
Retirement Plan is shown under the Salary column of the Table. The
credited years of service for these same officers are as follows: J. E.
Reed-27 years; J. R. Edgerly-28 years and R. P. Wushinske-20 years.
The following table shows the estimated annual amounts payable
upon retirement as pension benefits under the Pension Plan and the
supplemental pension benefit under the Executive Deferred Compensation
Plan, based on specified compensation and years of credited service
classifications, assuming continuation of both such present Plans and
employment until age 65. Retirement prior to age 62 results in a reduction
of pension benefits. The amounts shown are subject to a reduction based on
an individual's covered compensation, date of birth and years of credited
service as defined by the Pension Plan and its optional survivorship
provision and to limitations based on requirements contained in the
Internal Revenue Code of 1986, as amended, which limited the maximum
annual retirement benefits under the Plans to $115,641 in 1993 and would
limit benefits to $118,800 in 1994.
Estimated Annual Retirement Payment from the
Pension Plan and the Annual Supplementary Pension
Benefit under the Executive Deferred Compensation Plan
------------------------------------------------------
Applicable 15 Years 25 Years 35 Years 45 Years
Annual Earnings Service Service Service Service
--------------- --------- --------- --------- ---------
$ 80,000 $22,800 $36,000 $ 45,600 $ 55,600
100,000 28,500 45,000 57,000 69,500
120,000 34,200 54,000 68,400 83,400
140,000 39,900 63,000 79,800 97,300
160,000 45,600 72,000 91,200 111,200
180,000 51,300 81,000 102,600 125,100
Additional Information Regarding Compensation
The Board of Directors has no compensation committee. The
Company's practice is to have the board, other than Mr. Holland, establish
the compensation of Mr. Holland as chief executive officer and have Mr.
Holland establish the compensation of the other executive officers of the
Company. J.R. Edgerly, R.L. Kensinger and J.E. Reed are executive
officers of the Company who also serve as directors. Both Mr. Holland and
Mr. Burg are directors and executive officers of Edison.
Compensation of Directors
Directors who are not employees of the Companies receive an annual
retainer of $4,200 and 100 shares of Edison Common Stock for each full
year of service. Such directors are also paid a meeting fee of $375 for
each board meeting attended and are reimbursed for expenses for the
17
<PAGE>
attendance thereof, if any. Directors who are also employees of the
Company or of Edison receive no compensation for serving as directors.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Security Ownership of Certain Beneficial Owners at March 23, 1994:
Name and Address of Amount and Nature of Percent
Title of Class Beneficial Owner Beneficial Ownership of Class
-------------- -------------------- -------------------- --------
Common Stock, Ohio Edison Company 6,290,000 shares 100%
$30 par value 76 South Main Street held directly
Akron, Ohio 44308
(b) Security Ownership of Management at January 1, 1994:
Title of Class Percent of Class
-------------- ----------------
Edison Nature of Edison
Common Stock Beneficial Common
------------ Ownership Stock
No. of Shares
-------------
H. Peter Burg 7,624 Direct or Indirect Less than one percent
Robert H. Carlson 3,069 " "
J. R. Edgerly 1,649 " "
Willard R. Holland 3,227 " "
Robert L. Kensinger 1,369 " "
Joseph J. Nowak 7,110 " "
Jack E. Reed 2,961 " "
Richard L. Werner 85
Robert P. Wushinske 1,208 " "
All directors and officers
as a group (12 persons) 34,352 " "
(c) Changes in Control: Not applicable
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
18
<PAGE>
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 1993 Annual Report to Stockholders (Exhibit 13
below) at the pages indicated.
Page No.
--------
Statements of Income-Three Years Ended December 31, 1993 6
Balance Sheets-December 31, 1993 and 1992 7
Statements of Capitalization-December 31, 1993 and 1992 8
Statements of Retained Earnings-Three Years Ended December 31, 1993 9
Statements of Capital Stock and Other Paid-In Capital-
Three Years Ended December 31, 1993 9
Statements of Cash Flows-Three Years Ended December 31, 1993 10
Statements of Taxes-Three Years Ended December 31, 1993 11
Notes to Financial Statements 12-19
Report of Independent Public Accountants 19
2. Financial Statement Schedules
Included in Part IV of this report:
Page No.
--------
Report of Independent Public Accountants on Schedules 27
Schedules - Three Years Ended December 31, 1993:
V - Property, Plant and Equipment 28-30
VI - Accumulated Depreciation, Depletion and Amortization
of Property, Plant and Equipment 31-33
VIII - Valuation and Qualifying Accounts and Reserves 34
IX - Short-Term Borrowings 35
X - Supplementary Income Statement Information 36
Schedules other than those 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.
19
<PAGE>
3. Exhibits
Exhibit
Number
- ------
3-1 - Agreement of Merger and Consolidation dated April 1, 1929, among
Pennsylvania Power Company ("Penn Power"), Harmony Electric
Company and Peoples Power Company (consummated May 31, 1930),
copies of Letters Patent issued thereon, together with the
Election Return and Treasurer's Return, relative to decrease of
capital stock; Election Return authorizing change of capital
stock and increase of indebtedness; Election Return authorizing
change of capital stock; Election Return authorizing increase
of capital stock; Election Return establishing 4.24% Preferred
Stock; Certificate with respect to the establishment of the
4.64% Preferred Stock; Election Returns and Certificates of
Actual Sale in connection with the purchase by Penn Power of all
the property of Pine-Mercer Electric Company, Industry Borough
Electric Company, Ohio Township Electric Company, and
Shippingport Borough Electric Company; Certificate of Change of
Location of Penn Power's principal office; Certificate of
Consent authorizing increase in authorized Common Stock;
Certificate of Consent with respect to the removal of
limitations on the authorized amount of indebtedness of Penn
Power; Election Returns and Certificates of Actual Sale in
connection with the purchase by Penn Power of all the property
of Borolak Public Service Company, Eastfax Public Service
Company, Norango Public Service Company, Sadwick Public Service
Company, Sosango Public Service Company, Surrick Public Service
Company, Wesango Public Service Company, and Westfax Public
Service Company; Certificate of Change of Location of Penn
Power's principal office; Amendment to the Charter extending the
territory in which Penn Power may operate in the Borough of
Shippingport, Beaver County, Pennsylvania; Certificate of
Consent authorizing increase in authorized Common Stock;
Certificate with respect to the establishment of the 8%
Preferred Stock; Certificate accepting Business Corporation Law
of Pennsylvania for government and regulation of affairs of Penn
Power; Articles of Amendment incorporating certain protective
provisions relating to Preferred Stock, increasing amount of
authorized Preferred Stock and authorizing future increases in
amounts of authorized Preferred Stock without a vote of the
holders of Preferred Stock; Articles of Amendment increasing the
authorized number of shares of Common Stock; Statement Affecting
Class or Series of Shares with respect to the establishment of
the 7.64% Preferred Stock; Articles of Amendment increasing the
authorized number of shares of Common Stock; Articles of
Amendment increasing the number of authorized shares of
Preferred Stock; Statement Affecting Class or Series of Shares
with respect to the establishment of the 8.48% Preferred Stock;
Articles of Amendment authorizing sinking fund requirements for
Preferred Stock; Statement Affecting Class or Series of Shares
with respect to the establishment of the 11% Preferred Stock;
Articles of Amendment increasing the authorized number of shares
20
<PAGE>
Exhibit
Number
- ------
of Common Stock; Statement Affecting Class or Series
of Shares with respect to the establishment of the
9.16% Preferred Stock; Articles of Amendment
increasing authorized number of shares of Common
Stock; Articles of Amendment increasing authorized
number of shares of Preferred Stock; Statement
Affecting Class or Series of Shares with respect to
the establishment of the 8.24% Preferred Stock;
Statement Affecting Class or Series of Shares with
respect to the establishment of the 10.50% Preferred
Stock; Articles of Amendment increasing authorized
number of shares of Common Stock; Articles of
Amendment increasing authorized number of shares of
Preferred Stock; Statement Affecting Class or Series
of Shares with respect to the establishment of the
15.00% Preferred Stock; Statement Affecting Class or
Series of Shares with respect to the establishment of
the 11.50% Preferred Stock; Articles of Amendment
increasing authorized number of shares of Preferred
Stock; Statement Affecting Class or Series of Shares
with respect to the establishment of the 13.00%
Preferred Stock; Statement Affecting Class or Series
of Shares with respect to the establishment of the
11.50% Preferred Stock, Series B; Articles of
Amendment effective April 2, 1987, adding a standard
of care for, and limiting the personal liability of,
officers and directors; Articles of Amendment
effective April 1, 1992, setting forth corporate
purposes of the Company; and Statement With Respect
to Shares with respect to the
establishment of the 7.625% Preferred Stock.(Physically filed
and designated respectively, as follows: in Form A-2,
Registration No. 2-3889, as Exhibit A-1; in Form 1-MD for 1938,
File No. 2-3889, as Exhibit (a)-1; in Form 1-MD for 1945, File
No. 2-3889, as Exhibit A; in Form U-1, File No. 70-2310, as
Exhibit A-3 (d); in Form 8-K for March 1951, File No. 1-3491,
as Exhibit B; in Form 8-K for June 1958, File No. 1-3491B, as
Exhibit 1; in Form 10-K for 1959 as Exhibits 1, 2, 3 and 4; in
Form 8-K for March 1960, File No. 1-3491B as Exhibit A; in Form
U-1, File No. 70-3971, as Exhibit A-2; in Form U-1, File No. 70-
4055, as Exhibit A-2; as Exhibits 1 through 8 in Form 8-K for
January 1962, File No. 1-3491; as Exhibit A in Form 8-K for
August 1963, File No. 1-3491; as Exhibits A and B in Form 8-K
for September 1969, File No. 1-3491; as Exhibit B in Form 8-K
for April 1971, File No. 1-3491; as Exhibit B in Form 8-K for
September 1971, File No. 1-3491; in Form U-1, File No. 70-5264,
as Exhibit A-2; as Exhibit A in Form 8-K for September 1972,
File No. 1-3491; as Exhibit A in Form 8-K for December 1972,
File No. 1-3491; as Exhibit A in Form 8-K for March 1973, File
No. 1-3491; as Exhibit A in Form 8-K for December 1973, File No.
1-3491; as Exhibits A and C in Form 8-K for February 1974, File
No. 1-3491; as Exhibits A and B in Form 8-K for January 1975,
File No. 1-3491; as Exhibit F in Form 8-K for May 1975, File No.
1-3491; as Exhibit A in Form 8-K for April 1976, File No. 1-
3491; as Exhibit G in Form 10-Q for quarter ended June 30, 1977,
File No. 1-3491; as Exhibit C in Form 10-K for 1977, File No.
1-3491; as Exhibit A in Form 10-K for 1977, File No. 1-3491; as
Exhibit D in Form 10-Q for quarter ended June 30, 1980, File No.
1-3491; as Exhibit (4) in Form 10-Q for quarter ended June 30,
1981, File No. 1-3491; as Exhibit 4 in Form 10-Q for quarter
ended June 30, 1982, File No. 1-3491; as Exhibit 4 in Form 10-Q
for quarter ended September 30, 1982, File No. 1-3491; as
Exhibit 4 in Form 10-Q for quarter ended September 30, 1983,
File No. 1-3491; as Exhibit 4 in Form 10-Q for quarter ended
March 31, 1984, File No. 1-3491; as Exhibit 4 in Form 10-Q for
quarter ended June 30, 1984, File No. 1-3491; as Exhibit 4 in
Form 10-Q for quarter ended September 30, 1985, File No. 1-3491;
as Exhibit 3-2 in Form 10-K for 1987 File No. 1-3491; as Exhibit
3-2 in Form 10-K for 1992 File No. 1-3491; and as Exhibit 19-2
in Form 10-K for 1992 File No. 1-3491.)
(A)3-2 - Statement With Respect to Shares with respect to the
establishment of the 7.75% Preferred Stock.
3-3 - By-Laws of the Company as amended March 25, 1992.(1992
Form 10-K, Exhibit 3-3, File No. 1-3491.)
21
Exhibit
Number
- -------
4-1* - Indenture dated as of November 1, 1945, between the
Company and The First National Bank of the City of
New York (now Citibank, N.A.), as Trustee, as
supplemented and amended by Supplemental Indentures
dated as of May 1, 1948, March 1, 1950, February 1,
1952, October 1, 1957, September 1, 1962, June 1,
1963, June 1, 1969, May 1, 1970, April 1, 1971,
October 1, 1971, May 1, 1972, December 1, 1974,
October 1, 1975, September 1, 1976, April 15, 1978,
June 28, 1979, January 1, 1980, June 1, 1981, January
14, 1982, August 1, 1982, December 15, 1982, December
1, 1983, September 6, 1984, December 1, 1984, May 30,
1985, October 29, 1985, August 1, 1987, May 1, 1988,
November 1, 1989, December 1, 1990, September 1,
1991, May 1, 1992, July 15, 1992, and August 1,
1992.(Physically filed and designated as Exhibits
2(b) (1)-1 through 2(b) (l)-15 in Registration
Statement File No. 2-60837; as Exhibits 2(b) (2),
2(b) (3), and 2 (b) (4) in Registration Statement
File No. 2-68906; as Exhibit 4-2 in Form 10-K for
1981 File No. 1-3491; as Exhibit 19-1 in Form 10-K
for 1982 File No. 1-3491; as Exhibit 19-1 in Form 10-
K for 1983 File No. 1-3491; as Exhibit 19-1 in Form
10-K for 1984 File No. 1-3491; as Exhibit 19-1 in
Form 10-K for 1985 File No. 1-3491; as Exhibit 19-1
in Form 10-K for 1987 File No. 1-3491; as Exhibit 19-
1 in Form 10-K for 1988 File No. 1-3491; as Exhibit
19 in Form 10-K for 1989 File No. 1-3491; as Exhibit
19 in Form 10-K for 1990 File No. 1-3491; as Exhibit
19 in Form 10-K for 1991 File No. 1-3491; and as
Exhibit 19-1 in Form 10-K for 1992 File No. 1-3491.)
- ----------------
* 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, but hereby agrees to furnish to the Commission
on request any such instruments.
(A)4-2 - Supplemental Indentures dated as of May 1, 1993, July 1, 1993,
August 31, 1993, September 1, 1993, September 15, 1993,
October 1, 1993, and November 1, 1993, between the Company and
Citibank, N.A., as Trustee.
10-1 - Administration Agreement between the CAPCO Group dated as of
September 14, 1967. (Registration Statement of Ohio Edison
Company, File 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 Statement No. 2-68906, Exhibit 5 (c) (3).)
10-3 - Transmission Facilities Agreement between the CAPCO Group dated
as of September 14, 1967. (Registration Statement of Ohio Edison
Company, File 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, Ohio Edison
Company.)
10-5 - Agreement for the Termination or Construction of Certain
Agreements effective September 1, 1980 among the CAPCO Group.
(Registration Statement 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, Ohio Edison Company.)
10-7 - CAPCO Basic Operating Agreement, as amended September 1, 1980.
(Physically filed and designated in Registration Statement No.
2-68906, as Exhibit 10-5.)
22
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, File No. 1-2578, of Ohio
Edison Company.)
10-9 - Amendment No. 3 dated as of July 1, 1984, to CAPCO Basic
Operating Agreement as amended September 1, 1980. (1985 Form 10-
K, Exhibit 10-7, File No. 1-2578, of Ohio Edison Company.)
10-10 - Basic Operating Agreement between the CAPCO Companies as amended
October 1, 1991. (1991 Form 10-K, Exhibit 10-8, File No. 1-2578,
of Ohio Edison Company.)
10-11 - Basic Operating Agreement between the CAPCO Companies, as
amended January 1, 1993. (1993 Form 10-K, Exhibit 10-5, Ohio
Edison Company.)
10-12 - Memorandum of Agreement effective as of September 1, 1980, among
the CAPCO Group. (1991 Form 10-K, Exhibit 19-2, Ohio Edison
Company.)
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,
File No. 1-2578, of Ohio Edison Company.)
10-14 - Construction Agreement with respect to Perry Plant between the
CAPCO Group dated as of July 22, 1974. (Registration Statement
of Toledo Edison Company, File No. 2-52251, as 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 National City Bank, as Bond Trustee. (Registration
Statement of Ohio Edison Company, File 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 Statement No.
2-68906, 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 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. (Ohio Edison
Company, File 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 Statement No.
2-68906, Exhibit 5 (e) (4).)
10-19 - Participation Agreement No. 3 relating to the financing of the
development of certain coal mines, dated as of September 15,
1978, 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 Statement No. 2-68906, Exhibit 5 (e) (5).)
23
Exhibit
Number
- -------
10-20 - Participation Agreement No. 4 relating to the financing of the
development of certain coal mines, 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 Statement No. 2-68906,
Exhibit 10-16.)
10-21 - Participation Agreement No. 5 dated as of May 1, 1986, among
Quarto Mining Company, the CAPCO Companies, the Loan
Participants listed in Schedule A thereto, and National City
Bank, as Bond Trustee. (1986 Form 10-K, Exhibit 10-22, File No.
1-2578, Ohio Edison Company.)
10-22 - Participation Agreement No. 6 dated as of December 1, 1991,
among Quarto Mining Company, the CAPCO Companies, the Loan
Participants listed in 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, File No. 1-2578,
Ohio Edison Company.)
10-23 - Agreement entered into as of October 20, 1981, among the CAPCO
Companies regarding the use of Quarto Coal at Mansfield Units
Nos. 1, 2 and 3. (1981 Form 10-K, Exhibit 20-1 Form 10-K, File
No. 1-2578, Ohio Edison Company.)
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, File No. 1-2578, Ohio
Edison Company.)
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 Statement
of Ohio Edison Company, File 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 Statement of Ohio Edison Company, File No. 2-
53059, Exhibit 5 (h) (2).)
10-27 - Amendment No. 2 dated as of September 15, 1978, to 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 Bond Guaranty dated as of October 1, 1973, as amended,
between the CAPCO Group and National City Bank, as Bond Trustee.
(Registration Statement No. 2-68906, 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 Statement No. 2-68906, Exhibit 10-16.)
10-29 - Amendment No. 4 dated as of July 1, 1985, to 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 in Form 10-K, File No. 1-2578, Ohio
Edison Company.)
10-30 - Amendment No. 5 dated as of May 1, 1986, to Trust Indenture and
Mortgage dated as of October 1, 1973, as amended, between Quarto
Mining Company and National City Bank, as Bond Trustee. (1986
Form 10-K, Exhibit 10-30, File No. 1-2578, Ohio Edison Company.)
10-31 - Amendment No. 6 dated as of December 1, 1991, to Trust Indenture
and Mortgage dated as of October 1, 1973, as amended, between
Quarto Mining Company and National City Bank, as Bond Trustee.
(1991 Form 10-K, Exhibit 10-28, File No. 1-2578, Ohio Edison
Company.)
24
Exhibit
Number
- -------
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, File No. 1-2578, Ohio Edison Company.)
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 Statement No. 2-68906, 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 , File No. 1-2578, Ohio Edison Company.)
10-35 - Amendment No. 5 dated as of May 1, 1986, to the Bond Guaranty
dated as of October 1, 1973, as amended, by the CAPCO Companies
to National City Bank, as Bond Trustee. (1986 Form 10-K, Exhibit
10-33, File No. 1-2578, Ohio Edison Company.)
10-36 - Amendment No. 6A dated as of December 1, 1991, to the Bond
Guaranty dated as of October 1, 1973, as amended, by the CAPCO
Companies to National City Bank, as Bond Trustee. (1991 Form 10-
K, Exhibit 10-33, File No. 1-2578, Ohio Edison Company.)
10-37 - Amendment No. 6B dated as of December 30, 1991, to the Bond
Guaranty dated as of October 1, 1973, as amended, by the CAPCO
Companies to National City Bank, as Bond Trustee. (1991 Form 10-
K, Exhibit 10-34, File No. 1-2578, Ohio Edison Company.)
10-38 - Bond Guaranty dated as of December 1, 1991, by the CAPCO
Companies to National City Bank, as Bond Trustee. (1991 Form 10-
K, Exhibit 10-35, File No. 1-2578, Ohio Edison Company.)
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 Statement
No. 2-68906, Exhibit 10-23.)
10-40 - Restructuring Agreement dated as of April 1, 1985, among Quarto
Mining Company, the CAPCO Companies, Energy Properties, Inc.,
General Electric Credit Corporation, the Loan Participants
listed in schedules thereto, Central National Bank of Cleveland,
as Owner Trustee, National City Bank, as Loan Trustee, and
National City Bank, as Bond Trustee. (1985 Form 10-K, Exhibit
10-33, File No. 1-2578, Ohio Edison Company.)
10-41 - 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, File No. 1-2578, Ohio Edison Company.)
10-42 - Memorandum of Understanding dated as of March 31, 1985, among
the CAPCO Companies. (1985 Form 10-K, Exhibit 10-35, File No.
1-2578, Ohio Edison Company.)
(B)10-43- Ohio Edison Company Executive Incentive Compensation Plan (which
includes, by definition, Pennsylvania Power Company). (1984 Form
10-K, Exhibit 19-2, File No. 1-2578, Ohio Edison Company.)
(B)10-44- Ohio Edison Company Executive Incentive Compensation Plan as
amended February 16, 1987. (1986 Form 10-K, Exhibit 10-40, File
No. 1-2578, Ohio Edison Company.)
(B)10-45- Ohio Edison System Restated and Amended Executive Deferred
Compensation Plan. (1989 Form 10-K, Exhibit 10-36, File No. 1-
2578, Ohio Edison Company.)
(B)10-46- Ohio Edison System Restated and Amended Supplemental Executive
Retirement Plan. (1989 Form 10-K, Exhibit 10-37, File No. 1-
2578, Ohio Edison Company.)
10-47- Operating Agreement for Perry Unit No. 1 dated March 10, 1987,
by and between the CAPCO Companies. (1987 Form 10-K, Exhibit 28-
24, File No. 1-2578, Ohio Edison Company.)
25
Exhibit
Number
- -------
10-48- 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, File No. 1-2578, Ohio Edison Company.)
10-49- 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, File No. 1-2578, Ohio Edison Company.)
10-50- 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, File No.
1-2578, of Ohio Edison Company.)
10-51- 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,
File No. 1-2578, of Ohio Edison Company.)
10-52- 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, File No. 1-2578,
of Ohio Edison Company.)
10-53- 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, File No. 1-2578, of Ohio Edison
Company.)
10-54- Pennsylvania Power Company Master Decommissioning Trust
Agreement for Beaver Valley Power Station Unit No. 1 dated as
of March 15, 1988. (1988 Form 10-K, Exhibit 10-41, File No. 1-
3491.)
10-55- Pennsylvania Power Company Qualified Decommissioning Trust
Agreement for Perry Nuclear Power Plant Unit No. 1 dated March
10, 1989. (1988 Form 10-K, Exhibit 10-42, File No. 1-3491.)
10-56- First Amendment dated May 31, 1991 to Pennsylvania Power Company
Qualified Decommissioning Trust Agreement for Perry Nuclear
Power Plant Unit No. 1. (1991 Form 10-K, Exhibit 10-46, File No.
1-3491.)
10-57- Nuclear Fuel Lease dated as of March 31, 1989, between OES Fuel,
Incorporated, as Lessor, and Pennsylvania Power Company, as
Lessee. (1989 Form 10-K, Exhibit 10-39, File No. 1-3491.)
(A)13- 1993 Annual Report to Stockholders. (Only those portions
expressly incorporated by reference in this Form 10-K are to be
deemed "filed" with the Securities and Exchange Commission.)
18 - Letter from Independent Public Accountants regarding a change
in accounting.
23 - Consent of Independent Public Accountants.
(A) Provided herein in electronic format as an exhibit.
(B) Management contract or compensatory plan contract or arrangements
filed pursuant to Item 601 of Regulation S-K.
(b) Reports on Form 8-K
The Company filed one report on Form 8-K since September 30, 1993.
A report dated December 13, 1993, reported the abandonment of
Perry Unit 2 as a possible electric generating plant.
26
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of Pennsylvania Power Company:
We have audited, in accordance with generally accepted
auditing standards, the financial statements included in Pennsylvania
Power Company's Annual Report to stockholders incorporated by reference in this
Form 10-K and have issued our report thereon dated February 1, 1994. Our
audit was made for the purpose of forming an opinion on those statements
taken as a whole. The schedules listed in Item 14 are the responsibility
of the Company's management and are presented for purposes of complying with
the Securities and Exchange Commission's rules and are not part of the
basic financial statements. These schedules have been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in
our opinion, fairly state in all material respects the financial data
required to be set forth therein in relation to the basic financial
statements taken as a whole.
ARTHUR ANDERSEN & CO.
New York, N.Y.
February 1, 1994
27
<PAGE>
<TABLE>
SCHEDULE V
Page 1
PENNSYLVANIA POWER COMPANY
PROPERTY, PLANT AND EQUIPMENT
FOR THE YEAR ENDED DECEMBER 31, 1993
<CAPTION>
Beginning Additions Other Ending
Classification Balance at Cost Retirements Changes(a) Balance
-------------- --------- --------- ----------- ---------- -------
(In Thousands)
<S> <C> <C> <C> <C> <C>
UTILITY PLANT AT ORIGINAL COST:
ELECTRIC:
Intangibles-
Organization expense $ 23 $ -- $ -- $ -- $ 23
Franchises and consents 64 -- -- -- 64
Production-
Steam 259,518 5,768 1,135 (11,014) 253,137
Nuclear 509,980 6,131 (227) 38,526 554,864
Other 3,454 7 1 11 3,471
Transmission 117,096 8,008 265 5,732 130,571
Distribution 178,172 14,675 1,945 (4,649) 186,253
General 15,323 371 498 396 15,592
Construction work in progress 60,239 (965) -- (48,278)(b) 10,996
Plant held for future use 9,390 9 -- 13,944 23,343
--------- -------- ------- ------- ----------
Total electric 1,153,259 34,004 3,617 (5,332) 1,178,314
NUCLEAR FUEL 61,193 2,248 12,194 -- 51,247
--------- -------- ------- ------- ----------
Total utility plant at original cost 1,214,452 36,252 15,811 (5,332) 1,229,561
NONUTILITY PROPERTY AT ORIGINAL COST 539 -- 126 -- 413
--------- -------- ------- ------- ----------
Total property, plant and equipment $1,214,991 $36,252 $15,937 $(5,332) $1,229,974
========== ======== ======= ======= ==========
- --------------------
<FN>
(a) Represents increases of approximately $42,557,000 and $4,839,000 to plant
in-service and construction work in progress, respectively, as a result of
adopting Statement of Financial Accounting Standards No. 109 and transfers
within property, plant and equipment, unless otherwise noted.
(b) Includes the write-off of Perry Unit 2 construction costs of approximately
$53,117,000.
</TABLE>
28
<PAGE>
<TABLE>
SCHEDULE V
Page 2
PENNSYLVANIA POWER COMPANY
PROPERTY, PLANT AND EQUIPMENT
FOR THE YEAR ENDED DECEMBER 31, 1992
<CAPTION>
Beginning Additions Other Ending
Classification Balance at Cost Retirements Changes(a) Balance
-------------- --------- --------- ----------- ---------- -------
(In Thousands)
<S> <C> <C> <C> <C> <C>
UTILITY PLANT AT ORIGINAL COST:
ELECTRIC:
Intangibles-
Organization expense $ 23 $ -- $ -- $ -- $ 23
Franchises and consents 64 -- -- -- 64
Production-
Steam 257,161 3,099 756 14 259,518
Nuclear 505,754 5,481 1,500 245 509,980
Other 3,368 106 20 -- 3,454
Transmission 114,868 4,032 1,561 (243) 117,096
Distribution 166,833 13,297 1,957 (1) 178,172
General 16,650 1,790 3,102 (15) 15,323
Construction work in progress 60,141 98 -- -- 60,239
Plant held for future use 9,406 (16) -- -- 9,390
---------- ------- ------- ------ ---------
Total electric 1,134,268 27,887 8,896 -- 1,153,259
NUCLEAR FUEL 53,773 9,965 2,545 -- 61,193
---------- ------- ------- ------ ---------
Total utility plant at original cost 1,188,041 37,852 11,441 -- 1,214,452
NONUTILITY PROPERTY AT ORIGINAL COST 498 238 197 -- 539
---------- ------- ------- ------ ---------
Total property, plant and equipment $1,188,539 $38,090 $11,638 $ -- $1,214,991
========== ======= ======= ====== ==========
- --------------------
<FN>
(a) Represents transfers within property, plant and equipment.
</TABLE>
29
<PAGE>
<TABLE>
SCHEDULE V
Page 3
PENNSYLVANIA POWER COMPANY
PROPERTY, PLANT AND EQUIPMENT
FOR THE YEAR ENDED DECEMBER 31, 1991
<CAPTION>
Beginning Additions Other Ending
Classification Balance at Cost Retirements Changes(a) Balance
-------------- --------- --------- ----------- ---------- -------
(In Thousands)
<S> <C> <C> <C> <C> <C>
UTILITY PLANT AT ORIGINAL COST:
ELECTRIC:
Intangibles-
Organization expense $ 23 $ -- $ -- $ -- $ 23
Franchises and consents 64 -- -- -- 64
Production-
Steam 254,334 4,613 1,788 2 257,161
Nuclear 502,414 7,423 4,098 15 505,754
Other 3,360 10 2 -- 3,368
Transmission 112,878 1,123 78 945(b) 114,868
Distribution 155,703 12,865 1,735 -- 166,833
General 16,088 1,452 967 77(b) 16,650
Construction work in progress 64,570 (4,429) -- -- 60,141
Plant held for future use 9,411 (5) -- -- 9,406
---------- ------- ------- ------ ----------
Total electric 1,118,845 23,052 8,668 1,039 1,134,268
NUCLEAR FUEL 67,334 3,157 16,718 -- 53,773
---------- ------- ------- ------ ----------
Total utility plant at original cost 1,186,179 26,209 25,386 1,039 1,188,041
NONUTILITY PROPERTY AT ORIGINAL COST 473 133 108 -- 498
---------- ------- ------- ------ ----------
Total property, plant and equipment $1,186,652 $26,342 $25,494 $1,039 $1,188,539
========== ======= ======= ====== ==========
- --------------------
<FN>
(a) Represents transfers within property, plant and equipment, unless
otherwise noted.
(b) Includes a $1,039,000 adjustment to previously capitalized leases.
</TABLE>
30
<PAGE>
<TABLE>
SCHEDULE VI
Page 1
PENNSYLVANIA POWER COMPANY
ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION
OF PROPERTY, PLANT AND EQUIPMENT
FOR THE YEAR ENDED DECEMBER 31, 1993
<CAPTION>
Additions
-----------------------
Provisions
Charged to
--------------------
Beginning Other Other Ending
Description Balance Income Accounts(a) Retirements Changes(b) Balance
----------- --------- ------ ----------- ----------- ---------- -------
(In Thousands)
<S> <C> <C> <C> <C> <C> <C>
UTILITY PLANT:
ELECTRIC:
Production-
Steam . . . . . . . . . . . $116,218 $ 6,889 $ 96 $ 1,302 $(12,925) $108,976
Nuclear . . . . . . . . . . 106,103 15,235 -- (373) 5,780 127,491
Other . . . . . . . . . . . 2,318 107 -- 2 6 2,429
Transmission. . . . . . . . . 38,680 2,164 474 85 2,471 43,704
Distribution. . . . . . . . . 61,373 4,546 11 2,237 (2,150) 61,543
General . . . . . . . . . . . 6,505 319 716 472 3 7,071
Plant held for future use . . 4,019 -- -- -- 13,943 17,962
-------- ------- ------- ------- -------- --------
Total electric. . . . . . . 335,216 29,260 1,297 3,725 7,128 369,176
NUCLEAR FUEL. . . . . . . . . . 30,035 -- 7,513 12,194 -- 25,354
-------- ------- ------- ------- -------- --------
Total utility plant . . . . 365,251 29,260 8,810 15,919 7,128 394,530
NONUTILITY PROPERTY. . . . . . . 15 -- 2 -- -- 17
-------- ------- ------- ------- -------- --------
Total property, plant
and equipment . . . . . . . $365,266 $29,260 $ 8,812 $15,919 $ 7,128 $394,547
======== ======= ======= ======= ======== ========
-------------------
<FN>
(a) Represents amortization of capital leases and nuclear fuel,
and depreciation charged to clearing accounts.
(b) Represents approximately $6,815,000 resulting from the
adoption of Statement of Financial Accounting Standards No.
109, transfers of provisions for depreciation within property,
plant and equipment and interest earned on external
decommissioning funds.
</TABLE>
31
<PAGE>
<TABLE>
SCHEDULE VI
Page 2
PENNSYLVANIA POWER COMPANY
ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION
OF PROPERTY, PLANT AND EQUIPMENT
FOR THE YEAR ENDED DECEMBER 31, 1992
<CAPTION>
Additions
-----------------------
Provisions
Charged to
-----------------------
Beginning Other Other Ending
Description Balance Income Accounts(a) Retirements Changes(b) Balance
----------- -------- ----- ---------- ----------- ---------- -------
(In Thousands)
<S> <C> <C> <C> <C> <C> <C>
UTILITY PLANT:
ELECTRIC:
Production-
Steam. . . . . . . . . . . $108,338 $ 8,875 $ 97 $ 1,092 $ -- $116,218
Nuclear. . . . . . . . . . 93,656 14,135 -- 1,837 149 106,103
Other. . . . . . . . . . . 2,162 176 -- 20 -- 2,318
Transmission. . . . . . . . . 37,094 2,429 431 1,274 -- 38,680
Distribution. . . . . . . . . 58,579 4,947 9 2,162 -- 61,373
General . . . . . . . . . . . 8,601 294 738 3,128 -- 6,505
Plant held for future use . . 4,019 -- -- -- -- 4,019
-------- ------- ------ ------- ---- --------
Total electric . . . . . . 312,449 30,856 1,275 9,513 149 335,216
NUCLEAR FUEL . . . . . . . . . 19,989 -- 12,591 2,545 -- 30,035
-------- ------- ------- ------- ---- --------
Total utility plant. . . . 332,438 30,856 13,866 12,058 149 365,251
NONUTILITY PROPERTY. . . . . . . 15 -- -- -- -- 15
-------- ------- ------- ------- ---- --------
Total property, plant
and equipment. . . . . . . $332,453 $30,856 $13,866 $12,058 $149 $365,266
======== ======= ======= ======= ==== ========
-------------------
<FN>
(a) Represents amortization of capital leases and nuclear fuel,
and depreciation charged to clearing accounts.
(b) Represents interest earned on external decommissioning funds.
</TABLE>
32
<PAGE>
<TABLE>
SCHEDULE VI
Page 3
PENNSYLVANIA POWER COMPANY
ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION
OF PROPERTY, PLANT AND EQUIPMENT
FOR THE YEAR ENDED DECEMBER 31, 1991
<CAPTION>
Additions
-----------------------
Provisions
Charged to
-----------------------
Beginning Other Other Ending
Description Balance Income Accounts(a) Retirements Changes(b) Balance
----------- --------- ------ ----------- ----------- ---------- -------
(In Thousands)
<S> <C> <C> <C> <C> <C> <C>
UTILITY PLANT:
ELECTRIC:
Production-
Steam . . . . . . . . . . . $101,581 $ 8,923 $ 81 $ 2,247 $ -- $108,338
Nuclear . . . . . . . . . . 84,274 13,569 -- 4,267 80 93,656
Other . . . . . . . . . . . 1,934 230 -- 2 -- 2,162
Transmission. . . . . . . . . 34,036 2,414 381 (263) -- 37,094
Distribution. . . . . . . . . 56,769 3,671 8 1,869 -- 58,579
General . . . . . . . . . . . 8,568 359 602 928 -- 8,601
Plant held for future use . . 4,019 -- -- -- -- 4,019
-------- ------- ------ ------- --- --------
Total electric. . . . . . . 291,181 29,166 1,072 9,050 80 312,449
NUCLEAR FUEL. . . . . . . . . . 26,718 -- 9,989 16,718 -- 19,989
-------- ------- ------- ------- --- --------
Total utility plant . . . . 317,899 29,166 11,061 25,768 80 332,438
NONUTILITY PROPERTY. . . . . . . 15 -- -- -- -- 15
-------- ------- ------- ------- --- --------
Total property, plant
and equipment . . . . . . . $317,914 $29,166 $11,061 $25,768 $80 $332,453
======== ======= ======= ======= === ========
-------------------
<FN>
(a) Represents amortization of capital leases and nuclear fuel,
and depreciation charged to clearing accounts.
(b) Represents interest earned on external decommissioning funds.
</TABLE>
33
<PAGE>
<TABLE>
SCHEDULE VIII
PENNSYLVANIA POWER COMPANY
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<CAPTION>
Additions
--------------------------------
Charged Charged
Beginning (Credited) to Other Ending
Description Balance to Income Accounts Deductions Balance
----------- --------- ---------- ---------- ---------- -------
(In Thousands)
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1993:
Accumulated provision for
uncollectible accounts. . . . . . . $ 429 $ 1,050 $ 288(a) $ 1,208(b) $ 559
======= ======= ===== ======= ======
Reserve for injuries and damages. . . $ 949 $ (166) $ 19(c) $ 57(d) $ 745
======= ======= ===== ======= ======
Year Ended December 31, 1992:
Accumulated provision for
uncollectible accounts. . . . . . . $ 419 $14,548 $ 264(a) $14,802(b) $ 429
======= ======= ===== ======= ======
Reserve for injuries and damages. . . $ 1,031 $ (3) $ -- $ 79(d) $ 949
======= ======= ===== ======= ======
Year Ended December 31, 1991:
Accumulated provision for
uncollectible accounts. . . . . . . $ 881 $ 1,325 $ 201(a) $ 1,988(b) $ 419
======= ======= ===== ======= ======
Reserve for injuries and damages. . . $ 1,178 $ (121) $ -- $ 26(d) $1,031
======= ======= ===== ======= ======
- -------------------
<FN>
(a) Represents recoveries and reinstatements of accounts previously
written off.
(b) Represents the write-off of accounts considered to be uncollectible.
(c) Represents net provisions to utility plant on the basis of direct
costs of construction of certain classes of property.
(d) Represents payments for claims and other related expenses.
</TABLE>
34
<PAGE>
<TABLE>
SCHEDULE IX
PENNSYLVANIA POWER COMPANY
SHORT-TERM BORROWINGS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<CAPTION>
1993 1992 1991
----------------------------- ------------------------------ ------------------------------
Notes Payable Notes Notes Payable Notes Notes Payable Notes
to Parent Payable to Parent Payable to Parent Payable
Company To Banks Company To Banks Company To Banks
<S> <C> <C> <C> <C> <C> <C>
Balance at End of Period. . . $ -- $ -- $ -- $15,000,000 $ 8,000,000 $ --
Weighted Average Interest
Rate at End of Period . . . -- -- -- 3.95% 4.93% --
Maximum Amount Outstanding
During the Period. . . . . $ -- $68,000,000 $ 8,000,000 $36,500,000 $25,000,000 $41,500,000
Average Amount Outstanding
During the Period (a). . . $ -- $13,944,000 $428,000 $ 7,807,000 $ 3,307,000 $22,930,000
Weighted Average Interest Rate
During the Period (a)(b) -- 3.64% 4.97% 3.66% 5.45% 6.76%
- -------------------
<FN>
(a) Based on the daily amounts outstanding.
(b) Excluding the effect of commitment fees.
</TABLE>
35
<PAGE>
<TABLE>
SCHEDULE X
PENNSYLVANIA POWER COMPANY
SUPPLEMENTARY INCOME STATEMENT INFORMATION
FOR THE THREE YEARS ENDED DECEMBER 31, 1993
<CAPTION>
Charged to Expense
------------------------------------------------------
Item 1993 1992 1991
---------------------------------- ---- ---- ----
<S> <C> <C> <C>
Maintenance and repairs . . . . . . . $25,160,000 $22,378,000 $28,527,000
<FN>
Other items required by this schedule are omitted due to the required
information being shown in the financial statements or being less than 1%
of total sales.
</TABLE>
36
<PAGE>
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.
PENNSYLVANIA POWER COMPANY
BY /s/Willard R.Holland
---------------------------------
Willard R. Holland
Chairman of the Board and
Chief Executive Officer
Date: March 23, 1994
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/Willard R. Holland /s/Robert P. Wushinske
- -------------------------------------- ---------------------------
Willard R. Holland Robert P. Wushinske
Chairman of the Board and Chief Vice President and Treasurer
Executive Officer (Principal Executive (Principal Accounting Officer)
Officer and Principal Financial Officer)
/s/H. Peter Burg /s/Robert L. Kensinger
- -------------------------------------- ---------------------------
H. Peter Burg Robert L. Kensinger
Director Director
/s/Robert H. Carlson /s/Joseph J. Nowak
- -------------------------------------- ---------------------------
Robert H. Carlson Joseph J. Nowak
Director Director
/s/J. R. Edgerly /s/Jack E. Reed
- -------------------------------------- ---------------------------
J. R. Edgerly Jack E. Reed
Director Director
---------------------------
Richard L. Werner
Director
Date: March 23, 1994
37
<PAGE>
Microfilm Number 9346-1591 Filed with the Department of State on June 30, 1993
--------- -------------
Entity Number 2091002
--------- Brenda K. Mitchell
-----------------------------------------------
Secretary of the Commonwealth
STATEMENT WITH RESPECT TO SHARES
Domestic Business Corporation
In compliance with the requirements of 15 Pa.C.S. 1522(b) relating to
statement with respect to shares, the undersigned corporation, desiring to
state the designation and voting rights, preferences, limitations, and special
rights, if any, of a class or series of its shares, hereby states that:
1. The name of the corporation is:
PENNSYLVANIA POWER COMPANY
2. The resolution amending the Articles under 15 Pa.C.S. 1522(b)
relating to divisions and determinations by the board, set forth in full, is as
follows:
"WHEREAS, it appears desirable to establish a new
series of Preferred Stock and to determine the rights and
preferences of the shares of such series in respect of any or
all of which there may be variations between different series
in accordance with the authority granted to and vested in the
Board of Directors by the Articles of Incorporation of the
Company;
<PAGE>
9346-1592
"RESOLVED: That 250,000 of the authorized and
unissued shares of Preferred Stock of the par value of $100
per share be and they hereby are established as a series of
Preferred Stock designated as 7.75% Preferred Stock and, for
the purpose of setting forth the rights and preferences of
the shares of said series in those respects in which the
shares thereof may vary from the shares of other series of
Preferred Stock as set forth in the Articles of
Incorporation, Article IV of said Articles of Incorporation
as heretofore amended be and hereby is amended, pursuant to
authority therein granted to and vested in the Board of
Directors, by inserting therein a new subdivision at the end
of and as part of the subdivision entitled 'Established
Series of Preferred Stock', which new subdivision shall read
as follows:
7.75% Preferred Stock
---------------------
"Without limitation of the foregoing authority conferred
upon the Board of Directors, there shall also be a series of
Preferred Stock designated as 7.75% Preferred Stock, and the
rights and preferences of the 7.75% Preferred Stock, in those
respects in which the shares thereof may vary from the shares
of other series shall be as follows:
"(a) The rate of dividend shall be 7.75% per
annum, when and as declared by the Board of Directors,
and subject to the applicable provisions of the Business
Corporation Law, and the dividend payment dates shall be
the first days of January, April, July, and October in
each year;
"(b) No shares of the 7.75% Preferred Stock shall
be redeemable on or before July 1, 2003. After July 1,
2003, the price at which shares may be optionally
redeemed shall be $100 per share plus an amount equal to
the accumulated and unpaid dividends to the date set for
redemption;
"(c) The amount payable in the event of
involuntary liquidation shall be $100 per share, plus
accrued dividends;
"(d) The amount payable in the event of voluntary
liquidation shall be $100 per share, plus accrued
dividends;
-2-
<PAGE>
9346-1593
"(e) The shares shall not be, by their terms,
convertible or exchangeable; and
"(f) There shall not be any sinking fund
requirements for the purchase or redemption of the 7.75%
Preferred Stock.
"RESOLVED FURTHER: That the Statement With Respect
to Shares submitted to this meeting be and the same hereby is
in all respects approved, authorized and adopted, subject to
such changes therein as counsel for the Company may deem
necessary or advisable; and
"RESOLVED FURTHER: That the proper officers of
this Company be and hereby are authorized and directed to
file or cause to be filed with the Department of State of the
Commonwealth of Pennsylvania said Statement and such other
papers, and any amendments to the foregoing, as may be
necessary in the premises."
3. The aggregate number of shares of such class or series
established and designated by (a) such resolution, (b) all prior statements, if
any, filed under 15 Pa.C.S. 1522 or corresponding provisions of prior law with
respect thereto, and (c) any other provisions of the Articles is 250,000
shares.
4. The resolution was adopted by the 1993 Finance Committee of the
Board of Directors on June 29, 1993.
5. The resolution shall be effective upon the filing of this
Statement in the Department of State.
-3-
<PAGE>
9346-1594
IN TESTIMONY WHEREOF, the undersigned corporation has caused this
Statement With Respect to Shares to be signed by a duly authorized officer
thereof this 29th day of June, 1993.
ATTEST: PENNSYLVANIA POWER COMPANY
Angeline Comparone By Robert P. Wushinske
- ---------------------------- -------------------------------
Assistant Secretary Vice President
[CORPORATE SEAL]
-4-
[CONFORMED COPY]
PENNSYLVANIA POWER COMPANY
to
CITIBANK, N.A.,
As Trustee
Thirty-sixth Supplemental
Indenture
Providing among other things for
FIRST MORTGAGE BONDS
Guarantee Series of 1993 Due 2018
and
Guarantee Series of 1993A Due 2018
Dated as of May 1, 1993
<PAGE>
THIRTY-SIXTH SUPPLEMENTAL INDENTURE, dated as of May 1,
1993, made and entered into by and between PENNSYLVANIA POWER
COMPANY, a corporation organized and existing under the laws of
the Commonwealth of Pennsylvania, with its principal place of
business in New Castle, Lawrence County, Pennsylvania
(hereinafter sometimes referred to as the "Company") and
CITIBANK, N.A., a national banking association incorporated and
existing under the laws of the United States of America, with its
principal office in the Borough of Manhattan, The City, County
and State of New York (hereinafter sometimes referred to as the
"Trustee"), as trustee under the Indenture dated as of
November 1, 1945 between the Company and CITIBANK, N.A.
(successor to The First National City Bank of New York), as
trustee, as supplemented and amended by Supplemental Indentures
between the Company and the Trustee, dated as of May 1, 1948, as
of March 1, 1950, as of February 1, 1952, as of October 1, 1957,
as of September 1, 1962, as of June 1, 1963, as of June 1, 1969,
as of May 1, 1970, as of April 1, 1971, as of October 1, 1971, as
of May 1, 1972, as of December 1, 1974, as of October 1, 1975, as
of September 1, 1976, as of April 15, 1978, as of June 28, 1979,
as of January 1, 1980, as of June 1, 1981, as of January 14,
1982, as of August 1, 1982, as of December 15, 1982, as of
December 1, 1983, as of September 6, 1984, as of December 1,
1984, as of May 30, 1985, as of October 29, 1985, as of August 1,
1987, as of May 1, 1988, as of November 1, 1989, as of
December 1, 1990, as of September 1, 1991, as of May 1, 1992, as
of July 15, 1992 and as of August 1, 1992 (said Indenture as so
supplemented and amended, and as hereby supplemented and amended,
being hereinafter sometimes referred to as the "Indenture");
WHEREAS, the Company and the Trustee have executed and
delivered the Indenture for the purpose of securing an issue of
bonds of the First Series described therein and such additional
bonds as may from time to time be issued under and in accordance
with the terms of the Indenture, the aggregate principal amount
of bonds to be secured thereby being not limited, and the
Indenture fully describes and sets forth the property conveyed
thereby and is filed with the Secretary of the Commonwealth of
Pennsylvania and the Secretary of State of the State of Ohio and
will be of record in the office of the recorder of deeds of each
county in the Commonwealth of Pennsylvania and the State of Ohio
in which this Thirty-sixth Supplemental Indenture is to be
recorded and is on file at the corporate trust office of the
Trustee, above referred to; and
WHEREAS the Indenture provides for the issuance of
bonds thereunder in one or more series and the Company, by
appropriate corporate action in conformity with the terms of the
Indenture, has duly determined to create two such series of bonds
under the Indenture, one such series to be designated as "First
Mortgage Bonds, Guarantee Series of 1993 due 2018" (hereinafter
sometimes referred to as the "1993 Guarantee Series"), and one
such series to be designated as "First Mortgage Bonds, Guarantee
Series of 1993A due 2018" (hereinafter sometimes referred to as
the "1993A Guarantee Series") the bonds of each series are to
bear interest at their respective annual rates specified herein
from their respective Initial Interest Accrual Dates (as defined
below) and are to mature on May 1, 2018;
AND WHEREAS each of the bonds of the 1993 Guarantee
Series and each of the bonds of the 1993A Guarantee Series and
the Trustee's Authentication Certificate thereon are to be
substantially in the following respective forms, to wit:
FORM OF BOND OF THE 1993 GUARANTEE SERIES
[FACE]
This Bond is not transferable except to a successor trustee under
the Trust Indenture, dated as of May 1, 1988, between the Ohio
Water Development Authority and PNC Bank, National Association
(formerly Pittsburgh 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.
PENNSYLVANIA POWER COMPANY
First Mortgage Bond, Guarantee Series of 1993 due 2018
$13,300,000 No. R-1
Pennsylvania Power Company, a Pennsylvania corporation
(hereinafter called the "Company"), for value received, hereby
promises to pay to PNC Bank, National Association or registered
assigns, the principal sum of $13,300,000 on May 1, 2018, and to
pay the registered holder hereof interest on said sum from the
1993 Initial Interest Accrual Date (hereinbelow defined) at the
rate of 5.90% per annum. The principal and the premium, if any,
and interest on this bond shall be payable at the office or
agency of the Company in the Borough of Manhattan, The City,
County and State of New York, designated for that purpose, 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.
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 be valid or become obligatory for
any propose unless and until it shall have been authenticated by
the execution by the Trustee or its successor in trust under the
Indenture of the certificate hereon.
-2-
IN WITNESS WHEREOF, PENNSYLVANIA POWER COMPANY has
caused this bond to be executed in its name by its President or
one of its Vice Presidents by his or her signature or a facsimile
thereof, and its corporate seal or a facsimile thereof to be
affixed hereto or imprinted hereon and attested by its Secretary
or one of its Assistant Secretaries by his or her signature or a
facsimile thereof.
Dated,
PENNSYLVANIA POWER COMPANY
By .......................
President
Attest:
.........................
Secretary
-3-
<PAGE>
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 Indenture.
CITIBANK, N.A.
AS TRUSTEE,
By ........................
Authorized Officer
-4-
<PAGE>
FORM OF BOND OF THE 1993 GUARANTEE SERIES
[REVERSE]
PENNSYLVANIA POWER COMPANY
First Mortgage Bond, Guarantee Series of 1993 due 2018
This bond is one of the bonds issued and to be issued
from time to time under and in accordance with and all secured by
an indenture of mortgage or deed of trust dated as of November 1,
1945, and indentures supplemental thereto, given by the Company
to Citibank, N.A. (successor to The First National Bank of the
City of New York), as trustee (hereinafter referred to as the
"Trustee"), to which indenture and indentures supplemental
thereto (hereinafter referred to collectively as the "Indenture")
reference is hereby made for a description of the property
mortgaged and pledged, the nature and extent of the security and
the rights, duties and immunities thereunder of the Trustee and
the rights of the holders of the bonds and coupons and of the
Trustee and of the Company in respect of such security, and the
limitations on such rights. By the terms of the Indenture, the
bonds to be secured thereby are issuable in series which may vary
as to date, amount, date of maturity, rate of interest, terms of
redemption and in other respects as in the Indenture provided.
The Indenture contains provisions permitting the
Company and the Trustee, with the consent of the holders of not
less than seventy-five per centum in principal amount of the
bonds (exclusive of bonds disqualified by reason of the Company's
interest therein) at the time outstanding, including, if more
than one series of bonds shall be at the time outstanding, not
less than sixty per centum in principal amount of each series
affected, to effect, by an indenture supplemental to the
Indenture, modifications or alterations of the Indenture and of
the rights and obligations of the Company and the rights of the
holders of the bonds and coupons; provided, however, that no such
modification or alteration shall be made without the written
approval or consent of the holder hereof which will (a) extend
the maturity of this bond or reduce the rate or extend the time
of payment of interest hereon or reduce the amount of the
principal hereof or reduce any premium payable on the redemption
hereof, or (b) permit the creation of any lien, not otherwise
permitted, prior to or on a parity with the lien of the
Indenture, or (c) reduce the percentage of the principal amount
of the bonds upon the approval or consent of the holders of which
modifications or alterations may be made as aforesaid.
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 "1988 Revenue Bond Indenture") dated as of
-5-
<PAGE>
May 1, 1988, between the Ohio Water Development Authority and PNC
Bank, National Association (formerly Pittsburgh National Bank),
as trustee (such trustee and any successor trustee being
hereinafter referred to as the "1988 Revenue Bond Trustee"),
securing $13,300,000 of Pollution Control Revenue Bonds, Series
1988 (Pennsylvania Power Company Project), stating that the
principal amount of all the pollution control revenue bonds then
outstanding under the 1988 Revenue Bond Indenture has been
declared due and payable pursuant to the provisions of Section
9.02 of the 1988 Revenue Bond Indenture, specifying the date of
the accelerated maturity of such pollution control revenue bonds
and the date from which interest on the pollution control revenue
bonds issued under the 1988 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 pollution control revenue
bonds then outstanding under the 1988 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. 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 aforesaid pollution control revenue bonds has
then accrued (as specified by the 1988 Revenue Bond Trustee)
shall become the initial interest accrual date (the "1993 Initial
Interest Accrual Date") with respect to the bonds of this series,
and the date which is six months after the 1993 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 aforesaid pollution control revenue bonds
becoming due and payable on the maturity date of the bonds of
this series, the date from which unpaid interest on the aforesaid
pollution control revenue bonds has then accrued shall become the
1993 Initial Interest Accrual Date with respect to the bonds of
this series, such date to be as stated in a written notice from
the 1988 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 the
Indenture (including the fixing of the 1993 Initial Interest
Accrual Date with respect to the bonds of this series) upon
receipt by the Trustee of written notice from the 1988 Revenue
Bond Trustee of the annulment of the acceleration of the maturity
of the pollution control 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
-6-
<PAGE>
such notice of redemption shall be effected or required. But no
such rescission shall extend to any subsequent written advice
from the 1988 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.
In case of certain defaults as specified in the
Indenture, the principal of this bond may be declared or may
become due and payable on the conditions, at the time, in the
manner and with the effect provided in the Indenture.
No recourse shall be had for the payment of the
principal of or premium, if any, or interest on this bond, or for
any claim based hereon, or otherwise in respect hereof or of the
Indenture, to or against any incorporator, stockholder, director
or officer, past, present or future, as such, of the Company, or
of any predecessor or successor company, either directly or
through the Company, or such predecessor or successor company, or
otherwise, under any constitution or statute or rule of law, or
by the enforcement of any assessment or penalty, or otherwise,
all such liability of incorporators, stockholders, directors and
officers, as such, being waived and released by the holder and
owner hereof by the acceptance of this bond and being likewise
waived and released by the terms of the Indenture.
The bonds of this series are issuable only as
registered bonds without coupons in denominations of $1,000 and
authorized multiples thereof. Except as may be stated in any
legend written on the face of this bond, this bond is
transferable by the registered holder hereof, in person or by
attorney duly authorized, at the corporate trust office of the
Trustee, in the Borough of Manhattan, The City, County and State
of New York, or at such other place or places as the Company may
designate by resolution of the Board of Directors, but only in
the manner and upon the conditions prescribed in the Indenture,
upon the surrender and cancellation of this bond and the payment
of charges for transfer, and upon any such transfer a new
registered bond or bonds, without coupons, of the same series and
maturity date and for the same aggregate principal amount, in
authorized denominations, will be issued to the transferee in
exchange herefor. The Company, the Trustee and any agent
designated to make transfers or exchanges of bonds of this series
may deem and treat the person in whose name this bond is
registered as the absolute owner for all purposes including the
purpose of the receipt of payment. Registered bonds of this
series shall be exchangeable at said corporate trust office of
the Trustee, or at such other place or places as the Company may
designate by resolution of the Board of Directors, for registered
bonds of other authorized denominations having the same
aggregate principal amount, in the manner and upon the conditions
prescribed in the Indenture. Neither the Company nor the Trustee
nor any other agent designated for such propose shall be required
-7-
<PAGE>
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.
Notwithstanding any provisions of the Indenture, 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 THE 1993 GUARANTEE SERIES]
-8-
<PAGE>
FORM OF BOND OF THE 1993A GUARANTEE SERIES
[FACE]
This Bond is not transferable except to a successor trustee under
the Trust Indenture, dated as of May 1, 1988, between the Ohio
Air Quality Development Authority and PNC Bank, National
Association (formerly Pittsburgh 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.
PENNSYLVANIA POWER COMPANY
First Mortgage Bond, Guarantee Series of 1993A due 2018
$3,500,000 No. R-1
Pennsylvania Power Company, a Pennsylvania corporation
(hereinafter called the "Company"), for value received, hereby
promises to pay to PNC Bank, National Association or registered
assigns, the principal sum of $3,500,000 on May 1, 2018, and to
pay the registered holder hereof interest on said sum from the
1993A Initial Interest Accrual Date (hereinbelow defined) at the
rate of 5.90% per annum. The principal and the premium, if any,
and interest on this bond shall be payable at the office or
agency of the Company in the Borough of Manhattan, The City,
County and State of New York, designated for that purpose, 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.
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 be valid or become obligatory for
any propose unless and until it shall have been authenticated by
the execution by the Trustee or its successor in trust under the
Indenture of the certificate hereon.
IN WITNESS WHEREOF, PENNSYLVANIA POWER COMPANY has
caused this bond to be executed in its name by its President or
one of its Vice Presidents by his or her signature or a facsimile
thereof, and its corporate seal or a facsimile thereof to be
affixed hereto or imprinted hereon and attested by its Secretary
-9-
<PAGE>
or one of its Assistant Secretaries by his or her signature or a
facsimile thereof.
Dated,
PENNSYLVANIA POWER COMPANY
By .......................
President
Attest:
.........................
Secretary
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<PAGE>
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 Indenture.
CITIBANK, N.A.
AS TRUSTEE,
By ........................
Authorized Officer
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<PAGE>
FORM OF BOND OF THE 1993A GUARANTEE SERIES
[REVERSE]
PENNSYLVANIA POWER COMPANY
First Mortgage Bond, Guarantee Series of 1993A due 2018
This bond is one of the bonds issued and to be issued
from time to time under and in accordance with and all secured by
an indenture of mortgage or deed of trust dated as of November 1,
1945, and indentures supplemental thereto, given by the Company
to Citibank, N.A. (successor to The First National Bank of the
City of New York), as trustee (hereinafter referred to as the
"Trustee"), to which indenture and indentures supplemental
thereto (hereinafter referred to collectively as the "Indenture")
reference is hereby made for a description of the property
mortgaged and pledged, the nature and extent of the security and
the rights, duties and immunities thereunder of the Trustee and
the rights of the holders of the bonds and coupons and of the
Trustee and of the Company in respect of such security, and the
limitations on such rights. By the terms of the Indenture, the
bonds to be secured thereby are issuable in series which may vary
as to date, amount, date of maturity, rate of interest, terms of
redemption and in other respects as in the Indenture provided.
The Indenture contains provisions permitting the
Company and the Trustee, with the consent of the holders of not
less than seventy-five per centum in principal amount of the
bonds (exclusive of bonds disqualified by reason of the Company's
interest therein) at the time outstanding, including, if more
than one series of bonds shall be at the time outstanding, not
less than sixty per centum in principal amount of each series
affected, to effect, by an indenture supplemental to the
Indenture, modifications or alterations of the Indenture and of
the rights and obligations of the Company and the rights of the
holders of the bonds and coupons; provided, however, that no such
modification or alteration shall be made without the written
approval or consent of the holder hereof which will (a) extend
the maturity of this bond or reduce the rate or extend the time
of payment of interest hereon or reduce the amount of the
principal hereof or reduce any premium payable on the redemption
hereof, or (b) permit the creation of any lien, not otherwise
permitted, prior to or on a parity with the lien of the
Indenture, or (c) reduce the percentage of the principal amount
of the bonds upon the approval or consent of the holders of which
modifications or alterations may be made as aforesaid.
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 "1988A Revenue Bond Indenture") dated as of
-12-
<PAGE>
May 1, 1988, between the Ohio Air Quality Development Authority
and PNC Bank, National Association (formerly Pittsburgh National
Bank), as trustee (such trustee and any successor trustee being
hereinafter referred to as the "1988A Revenue Bond Trustee"),
securing $3,500,000 of Pollution Control Revenue Bonds, Series
1988 (Pennsylvania Power Company Project), stating that the
principal amount of all the pollution control revenue bonds then
outstanding under the 1988A Revenue Bond Indenture has been
declared due and payable pursuant to the provisions of Section
9.02 of the 1988A Revenue Bond Indenture, specifying the date of
the accelerated maturity of such pollution control revenue bonds
and the date from which interest on the pollution control revenue
bonds issued under the 1988A 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 pollution control revenue
bonds then outstanding under the 1988A 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. 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 aforesaid pollution control revenue bonds has
then accrued (as specified by the 1988A Revenue Bond Trustee)
shall become the initial interest accrual date (the "1993A
Initial Interest Accrual Date") with respect to the bonds of this
series, and the date which is six months after the 1993A 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 aforesaid pollution control
revenue bonds becoming due and payable on the maturity date of
the bonds of this series, the date from which unpaid interest on
the aforesaid pollution control revenue bonds has then accrued
shall become the 1993A Initial Interest Accrual Date with respect
to the bonds of this series, such date to be as stated in a
written notice from the 1988A 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 the Indenture (including the fixing of the
1993A Initial Interest Accrual Date with respect to the bonds of
this series) upon receipt by the Trustee of written notice from
the 1988A Revenue Bond Trustee of the annulment of the
acceleration of the maturity of the pollution control revenue
bonds then outstanding under the 1988A 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
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<PAGE>
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 1988A
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.
In case of certain defaults as specified in the
Indenture, the principal of this bond may be declared or may
become due and payable on the conditions, at the time, in the
manner and with the effect provided in the Indenture.
No recourse shall be had for the payment of the
principal of or premium, if any, or interest on this bond, or for
any claim based hereon, or otherwise in respect hereof or of the
Indenture, to or against any incorporator, stockholder, director
or officer, past, present or future, as such, of the Company, or
of any predecessor or successor company, either directly or
through the Company, or such predecessor or successor company, or
otherwise, under any constitution or statute or rule of law, or
by the enforcement of any assessment or penalty, or otherwise,
all such liability of incorporators, stockholders, directors and
officers, as such, being waived and released by the holder and
owner hereof by the acceptance of this bond and being likewise
waived and released by the terms of the Indenture.
The bonds of this series are issuable only as
registered bonds without coupons in denominations of $1,000 and
authorized multiples thereof. Except as may be stated in any
legend written on the face of this bond, this bond is
transferable by the registered holder hereof, in person or by
attorney duly authorized, at the corporate trust office of the
Trustee, in the Borough of Manhattan, The City, County and State
of New York, or at such other place or places as the Company may
designate by resolution of the Board of Directors, but only in
the manner and upon the conditions prescribed in the Indenture,
upon the surrender and cancellation of this bond and the payment
of charges for transfer, and upon any such transfer a new
registered bond or bonds, without coupons, of the same series and
maturity date and for the same aggregate principal amount, in
authorized denominations, will be issued to the transferee in
exchange herefor. The Company, the Trustee and any agent
designated to make transfers or exchanges of bonds of this series
may deem and treat the person in whose name this bond is
registered as the absolute owner for all purposes including the
purpose of the receipt of payment. Registered bonds of this
series shall be exchangeable at said corporate trust office of
the Trustee, or at such other place or places as the Company may
designate by resolution of the Board of Directors, for registered
bonds of other authorized denominations having the same
aggregate principal amount, in the manner and upon the conditions
prescribed in the Indenture. Neither the Company nor the Trustee
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<PAGE>
nor any other agent designated for such propose 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.
Notwithstanding any provisions of the Indenture, 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 THE 1993A GUARANTEE SERIES]
AND WHEREAS all acts and things necessary to make the
bonds of the 1993 Guarantee Series and the bonds of the 1993A
Guarantee Series, when authenticated by the Trustee and issued as
in the Indenture provided, the valid, binding and legal
obligations of the Company, and to constitute the Indenture a
valid, binding and legal instrument for the security thereof,
have been done and performed, and the creation, execution and
delivery of the Indenture and the creation, execution and issue
of bonds of the 1993 Guarantee Series and the bonds of the 1993A
Guarantee Series subject to the terms hereof and of the
Indenture, have in all respects been duly authorized;
NOW THEREFORE, in consideration of the premises, and of
the acceptance and purchase by holders thereof of the bonds of
the 1993 Guarantee Series and the bonds of the 1993A Guarantee
Series issued and to be issued under the Indenture, and the sum
of One Dollar duly paid by the Trustee to the Company, and of
other good and valuable considerations, the receipt of which is
hereby acknowledged, and for the purpose of securing the due and
punctual payment of the principal of and premium, if any, and
interest on all bonds now outstanding under the Indenture and the
$13,300,000 principal amount of bonds of the 1993 Guarantee
Series and the $3,500,000 principal amount of bonds of the 1993A
Guarantee Series proposed presently to be issued and all other
bonds which shall be issued under the Indenture, and for the
purpose of securing the faithful performance and observance of
all covenants and conditions therein and in any supplemental
indenture set forth, the Company has given, granted, bargained,
sold, released, transferred, assigned, hypothecated, pledged,
mortgaged, confirmed, created a security interest in, set over,
warranted, aliened and conveyed and by these presents does give,
grant, bargain, sell, release, transfer, assign, hypothecate,
pledge, mortgage, confirm, create a security interest in, set
over, warrant, alien and convey unto Citibank, N.A., as Trustee
as provided in the Indenture, and its successor or successors in
the trust thereby and hereby created and to its or their assigns
forever, all the right, title and interest of the Company in and
to the property 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
(subject to the provisions of Article X of the Indenture) with
the tolls, rents, revenues, issues, earnings, income, products
-15-
<PAGE>
and profits thereof, 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 said
Article X thereof.
TOGETHER WITH all and singular the tenements,
hereditaments and appurtenances belonging or in any wise
appertaining to the premises, property, franchises and rights, or
any thereof, referred to in the Schedule A, annexed hereto with
the reversion and reversions, remainder and remainders and
(subject to the provisions of Article X of the Indenture) the
tolls, rents, revenues, issues, earnings, income, products 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 such premises,
property, franchises and rights and every part and parcel thereof
described in the aforesaid Schedule A, subject to "excepted
encumbrances" of the original Indenture.
TO HAVE AND TO HOLD all said premises, property,
franchises and rights hereby conveyed, assigned, pledged, or
mortgaged, or intended so to be, unto the Trustee, its successor
or successors in trust, and their assigns forever.
BUT IN TRUST, NEVERTHELESS, with power of sale, for the
equal and proportionate benefit and security of the holders of
all new bonds now or hereafter authenticated and delivered under
the Indenture, and interest coupons appurtenant thereto, pursuant
to the provisions thereof, and for the enforcement of the payment
of said bonds and coupons when payable and the performance of and
compliance with the covenants and conditions of the Indenture,
without any preference, distinction or priority as to lien or
otherwise of any bond or bonds over others by reason of the
difference in time of the actual authentication, delivery, issue,
sale or negotiation thereof or for any other reason whatsoever,
except as otherwise expressly provided in the Indenture; and so
that each and every bond now or hereafter authenticated and
delivered thereunder shall have the same lien, and so that the
principal of and premium, if any, and interest on every such
bond, shall subject to the terms of the Indenture, be equally and
proportionately secured thereby and hereby, as if it had been
made, executed, authenticated, delivered, sold and negotiated
simultaneously with the execution and delivery of the Indenture.
AND IT IS EXPRESSLY DECLARED that all bonds
authenticated and delivered and secured thereunder and hereunder
are to be issued, authenticated and delivered, and all said
premises, property, franchises and rights hereby and by the
Indenture conveyed, assigned, pledged or mortgaged, or intended
so to be (including all the right, title and interest of the
Company in and to any and all premises, property, franchises and
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<PAGE>
rights of every kind and description, real, personal and mixed,
tangible and intangible, thereafter acquired by the Company and
whether or not specifically described in the Indenture, except
any therein expressly excepted), are to be dealt with and
disposed of, under, upon and subject to the terms, conditions,
stipulations, covenants, agreements, trusts, uses and purposes in
the Indenture expressed, and it is hereby agreed as follows:
Section 1. There are hereby created two series of
bonds, one such series designated Guarantee Series of 1993 due
2018, which shall also bear the descriptive title "First Mortgage
Bond" (said bonds being sometimes herein referred to as the
"bonds of the 1993 Guarantee Series"), and one such Series
designated Guarantee Series of 1993A due 2018, which shall also
bear the descriptive title "First Mortgage Bond" (said bonds
being sometimes herein referred to as the "bonds of the 1993A
Guarantee Series") and the form of each such series shall be
substantially as hereinbefore set forth. Bonds of the 1993
Guarantee Series and bonds of the 1993A Guarantee Series
(collectively herein sometimes referred to as "bonds of the 1993
and 1993A Guarantee Series") shall mature on May 1, 2018, and may
be issued only as registered bonds without coupons in
denominations of $1,000 or such multiples thereof as the Board of
Directors shall approve, and delivery to the Trustee for
authentication shall be conclusive evidence of such approval.
The serial numbers of bonds of the 1993 and 1993A Guarantee
Series shall be such as may be approved by any officer of the
Company, the execution thereof by any such officer, by facsimile
signature or otherwise, to be conclusive evidence of such
approval. Bonds of the 1993 and 1993A Guarantee Series shall
bear interest from their respective Initial Interest Accrual
Dates (as defined in the respective forms of the bonds of the
1993 and 1993A Guarantee Series hereinabove set forth) at the
rate of 5.90% per annum and 5.90% per annum, respectively.
Principal and interest on said bonds 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 the
office or agency of the Company in the Borough of Manhattan, The
City, County and State of New York, designated for that purpose.
Bonds of the 1993 and 1993A Guarantee Series shall be
redeemable, exchangeable and transferable as and to the extent
set forth in their respective forms hereinbefore set forth.
The bonds of the 1993 and 1993A Guarantee Series shall
be redeemable as set forth in their respective forms hereinbefore
set forth 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 the 1993 Guarantee
Series, with respect to the bonds of the 1993 Guarantee Series,
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<PAGE>
or in the form of bond of the 1993A Guarantee Series, with
respect to the bonds of the 1993A 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 pollution control revenue bonds then
outstanding under the 1988 Revenue Bond Indenture, with respect
to the bonds of the 1993 Guarantee Series, or the 1988A Revenue
Bond Indenture, with respect to the bonds of the 1993A Guarantee
Series, 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 the 1988
Revenue Bond Trustee, with respect to the bonds of the 1993
Guarantee Series, or 1988A Revenue Bond Trustee, with respect to
the bonds of the 1993A Guarantee Series, 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 1988 Revenue Bond Trustee,
with respect to the bonds of the 1993 Guarantee Series, or 1988A
Revenue Bond Trustee, with respect to the bonds of the 1993A
Guarantee Series, of the annulment of the acceleration of the
maturity of the pollution control revenue refunding bonds then
outstanding under the 1988 Revenue Bond Indenture, with respect
to the bonds of the 1993 Guarantee Series, or the 1988A Revenue
Bond Indenture, with respect to the bonds of the 1993A Guarantee
Series, and of the rescission of the aforesaid written advice.
The terms "1988 Revenue Bond Trustee" and "1988 Revenue Bond
Indenture" as they relate to the bonds of the 1993 Guarantee
Series shall have the meanings specified in the form thereof
hereinbefore set forth and the terms "1988A Revenue Bond
Trustee" and "1988A Revenue Bond Indenture" as they relate to the
bonds of the 1993A Guarantee Series shall have the meanings
specified in the form thereof hereinabove set forth. Redemption
of the bonds of the 1993 and 1993A 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 1988 Revenue Bond Trustee, with respect to the bonds of the
1993 Guarantee Series, or the 1988A Revenue Bond Trustee, with
respect to the bonds of the 1993A Guarantee Series, that the
acceleration of the maturity of the pollution control revenue
bonds then outstanding under the 1988 Revenue Bond Indenture,
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<PAGE>
with respect to the bonds of the 1993 Guarantee Series, or the
1988A Revenue Bond Indenture, with respect to the bonds of the
1993A Guarantee Series, 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 1993 Initial Interest
Accrual Date or the 1993A Initial Interest Accrual Date as
provided in the respective forms of the bonds of the 1993 and
1993A Guarantee Series provided for herein) and no redemption of
the bonds of the 1993 Guarantee Series or the bonds of the 1993A
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 1988 Revenue Bond Trustee, with respect to the
bonds of the 1993 Guarantee Series, or the 1988A Revenue Bond
Trustee, with respect to the bonds of the 1993A Guarantee Series,
or impair any right consequent on such subsequent written advice.
SECTION 2. Bonds of the 1993 Guarantee Series or bonds
of the 1993A Guarantee Series shall be deemed to be paid and no
longer outstanding under the Indenture to the extent that
pollution control revenue bonds which are outstanding from time
to time under the 1988 Revenue Bond Indenture, with respect to
the bonds of the 1993 Guarantee Series, or the 1988A Revenue Bond
Indenture, with respect to the bonds of the 1993A Guarantee
Series, 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. The Company covenants and agrees that the
provisions of Section 3 of the Fifth Supplemental Indenture dated
as of September 1, 1962, which are to remain in effect so long as
any bonds of the Sixth Series shall be outstanding under the
Indenture, shall remain in full force and effect so long as any
bonds of the 1993 Guarantee Series or bonds of the 1993A
Guarantee Series shall be outstanding under the Indenture.
SECTION 4. The Company covenants and agrees that the
provisions of Section 3 of the Nineteenth Supplemental Indenture
dated as of January 14, 1982, which are to remain in effect so
long as any bonds of the Twentieth Series shall be outstanding
under the Indenture, shall remain in full force and effect so
long as any bonds of the 1993 Guarantee Series or bonds of the
1993A Guarantee Series shall be outstanding under the Indenture.
SECTION 5. As supplemented and amended by this
Supplemental Indenture, the Indenture is in all respects ratified
and confirmed, and the Indenture and this Supplemental Indenture
shall be read, taken and construed as one and the same
instrument.
SECTION 6. Nothing in this Supplemental Indenture
contained shall, or shall be construed to, confer upon any person
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<PAGE>
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 7. The Trustee assumes no responsibility for
or in respect of the validity or sufficiency of this Supplemental
Indenture or the due execution hereof by the Company or for or in
respect of the recitals and statements contained herein, all of
which recitals and statements are made solely by the Company.
SECTION 8. This Supplemental Indenture may be executed
in several counterparts and all such counterparts executed and
delivered, each as an original, shall constitute but one and the
same instrument.
PENNSYLVANIA POWER COMPANY hereby constitutes and
appoints Robert P. Wushinske to be its attorney for it and in its
name as and for its corporate act and deed to acknowledge this
Supplemental Indenture before any person having authority to take
such acknowledgment, to the intent that the same may be duly
recorded.
CITIBANK, N.A. hereby constitutes and appoints P.
DeFelice to be its attorney for it and in its name as and for its
corporate act and deed to acknowledge this Supplemental Indenture
before any person having authority to take such acknowledgment,
to the intent that the same may be duly recorded.
IN WITNESS WHEREOF, PENNSYLVANIA POWER COMPANY has
caused its corporate name to be hereunto affixed, and this
instrument to be signed and sealed by its President or a Vice
President, and its corporate seal to be attested by its Secretary
or an Assistant Secretary for and on its behalf, in the city of
New Castle, County of Lawrence and Commonwealth of Pennsylvania
and CITIBANK, N.A., in token of its acceptance of the trust, has
caused its corporate name to be hereunto affixed, and this
instrument to be signed by a Vice President and its corporate
seal to be affixed and attested by one of its Assistant Vice
Presidents in the City of New York, County of New York and State
of New York, all as of the day and year first above written.
PENNSYLVANIA POWER COMPANY
By: Robert P. Wushinske
------------------------
Robert P. Wushinske
Vice President
ATTEST:
By: Angeline Comparone
-----------------------
Angeline Comparone
Assistant Secretary
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<PAGE>
[Seal]
Signed, sealed and delivered by
PENNSYLVANIA POWER COMPANY
in the presence of:
Anita L. Lowry
- -------------------------------
Anita L. Lowry
Randy Scilla
- ------------------------------
Randy Scilla
CITIBANK, N.A.
as Trustee as aforesaid,
By: P. DeFelice
-----------------------
P. DeFelice
Vice President
ATTEST:
By: Carol Ng
--------------------------
Carol Ng
Assistant Vice President
[Seal]
Signed, sealed and delivered by
CITIBANK, N.A.
in the presence of:
J. Berger
- ------------------------------
J. Berger
Jose R. Gonzalez
- -----------------------------
Jose R. Gonzalez
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<PAGE>
COMMONWEALTH OF PENNSYLVANIA )
: ss.:
COUNTY OF LAWRENCE )
BE IT REMEMBERED that, on the 30th day of April, 1993,
before me, the undersigned, a Notary Public in said County of
Lawrence, Commonwealth of Pennsylvania, personally appeared
Angeline Comparone, who being duly sworn according to law, doth
depose and say that she was personally present and did see the
common or corporate seal of the above named PENNSYLVANIA POWER
COMPANY affixed to the foregoing Supplemental Indenture; that the
seal so affixed is the common or corporate seal of the said
Pennsylvania Power Company and was so affixed by the authority of
the said corporation as the act and deed thereof; that the above
named Robert P. Wushinske is a Vice President of said corporation
and did sign the said Supplemental Indenture as such in the
presence of this deponent; that this deponent is the Assistant
Secretary of Pennsylvania Power Company, and that the name of
this deponent above signed in attestation of the due execution of
the said Supplemental Indenture is in this deponent's own proper
handwriting.
Sworn to and subscribed before me this 30th day of
April, 1993.
Angeline Comparone
------------------------------
[SEAL]
Sylvia M. Rashid
------------------------------
NOTARIAL SEAL
SYLVIA M. RASHID, Notary Public
New Castle, Lawrence Co., PA
My Commission Expires March 11, 1997
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<PAGE>
COMMONWEALTH OF PENNSYLVANIA )
: ss.:
COUNTY OF LAWRENCE )
I HEREBY CERTIFY that, on this 30th day of April, 1993,
before me, the subscriber, a Notary Public in and for the State
and County aforesaid, personally appeared Robert P. Wushinske,
the attorney for PENNSYLVANIA POWER COMPANY, and the attorney
named in the foregoing Supplemental Indenture and, by virtue and
in pursuance of the authority therein conferred upon him,
acknowledged the said Supplemental Indenture to be the act and
deed of said Pennsylvania Power Company.
WITNESS my hand and notarial seal the day and year
aforesaid.
[SEAL]
Sylvia M. Rashid
------------------------------
NOTARIAL SEAL
SYLVIA M. RASHID, Notary Public
New Castle, Lawrence Co., PA
My Commission Expires March 11, 1997
COMMONWEALTH OF PENNSYLVANIA )
: ss.:
COUNTY OF LAWRENCE )
On the 30th day of April, 1993, before me, personally
came Robert P. Wushinske, to me known, who, being by me duly
sworn, did depose and say that he resides at R.D. 2, Means Road,
New Wilmington, Pennsylvania 16142; that he is a Vice President
of PENNSYLVANIA POWER 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 affixed by order
of the Board of Directors of said corporation, and that he signed
his name thereto by like authority.
WITNESS my hand and notarial seal the day and year
aforesaid.
[SEAL]
Sylvia M. Rashid
------------------------------
NOTARIAL SEAL
SYLVIA M. RASHID, Notary Public
New Castle, Lawrence Co., PA
My Commission Expires March 11, 1997
-23-
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED that, on the 28th day of April, 1993,
before me, the undersigned, a Notary Public in said County of New
York, State of New York, personally appeared Carol Ng, who being
duly sworn according to law, doth depose and say that she was
personally present and did see the common or corporate seal of
the above named CITIBANK, N.A. affixed to the foregoing
Supplemental Indenture; that the seal so affixed is the common or
corporate seal of the said CITIBANK, N.A. and was so affixed by
the authority of the said association as the act and deed
thereof; that the above named P. DeFelice is one of the Vice
Presidents of said association and did sign the said Supplemental
Indenture as such in the presence of this deponent; that this
deponent is an Assistant Vice President of said CITIBANK, N.A.,
and that the name of this deponent above signed in attestation of
the due execution of the said Supplemental Indenture is in this
deponent's own proper handwriting.
Sworn to and subscribed before me this 28th day of
April, 1993.
Carol Ng
------------------------------
[SEAL]
Peter M. Pavlyshin
------------------------------
PETER M. PAVLYSHIN
Notary Public, State of New York
No. 41-4991297
Qualified in Queens County
Cert. filed in New York County
Commission Expires January 27, 1994
-24-
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
I HEREBY CERTIFY that, on this 28th day of April, 1993,
before me, the subscriber, a Notary Public in and for the State
and County aforesaid, personally appeared P. DeFelice, the
attorney for CITIBANK, N.A., and the attorney named in the
foregoing Supplemental Indenture and, by virtue and in pursuance
of the authority therein conferred upon him, acknowledged the
execution of said Supplemental Indenture to be the act and deed
of said CITIBANK, N.A.
WITNESS my hand and notarial seal the day and year
aforesaid.
Peter M. Pavlyshin
-----------------------------
[SEAL]
PETER M. PAVLYSHIN
Notary Public, State of New York
No. 41-4991297
Qualified in Queens County
Cert. filed in New York County
Commission Expires January 27, 1994
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 28th day of April, 1993, before me, personally
came P. DeFelice, to me known, who being by me duly sworn, did
depose and say that he resides at 47-09 169th Street, Flushing,
N.Y. 11358; that he is a Vice President of CITIBANK, N.A., one of
the parties described in and which executed the above instrument;
that he knows the seal of said association; that the seal affixed
to said instrument is such corporate seal; that it was so affixed
by authority of the Board of Directors of said association, and
that he signed his name thereto by like authority.
WITNESS my hand and notarial seal the day and year
aforesaid.
Peter M. Pavlyshin
-----------------------------
[SEAL]
PETER M. PAVLYSHIN
Notary Public, State of New York
No. 41-4991297
Qualified in Queens County
Cert. filed in New York County
Commission Expires January 27, 1994
-25-
<PAGE>
Citibank, N.A. hereby certifies that its precise name
and address as Trustee hereunder are:
CITIBANK, N.A.
111 Wall Street
Borough of Manhattan
City, County and State
of New York 10043
CITIBANK, N.A.
By P. DeFelice
-----------------------
P. DeFelice
Vice President
<PAGE>
A-1
SCHEDULE A
Detailed Description of Additional Properties
STEAM PRODUCTION
New Castle Steam Plant - Solid Waste Disposal - Phase 2.
NUCLEAR PRODUCTION
Perry Nuclear Power Station - Unit No. 1 - Pennsylvania
Power Company's portion (5.24%) of feedwater heater level control
instrumentation.
Signed for identification
Angeline Comparone
--------------------------
Angeline Comparone
Assistant Secretary
PENNSYLVANIA POWER COMPANY
P. DeFelice
--------------------------
P. DeFelice
Vice President
CITIBANK, N.A.<PAGE>
[CONFORMED COPY]
PENNSYLVANIA POWER COMPANY
to
CITIBANK, N.A.,
As Trustee
Thirty-seventh Supplemental
Indenture
Providing among other things for
FIRST MORTGAGE BONDS
6-5/8% Series of 1993 Due 2004
and
7-5/8% Series of 1993 Due 2023
Dated as of July 1, 1993
<PAGE>
THIRTY-SEVENTH SUPPLEMENTAL INDENTURE, dated as of
July 1, 1993, made and entered into by and between PENNSYLVANIA
POWER COMPANY, a corporation organized and existing under the
laws of the Commonwealth of Pennsylvania, with its principal
place of business in New Castle, Lawrence County, Pennsylvania
(hereinafter sometimes referred to as the "Company") and
CITIBANK, N.A., a national banking association incorporated and
existing under the laws of the United States of America, with its
principal office in the Borough of Manhattan, The City, County
and State of New York (hereinafter sometimes referred to as the
"Trustee"), as trustee under the Indenture dated as of
November 1, 1945 between the Company and CITIBANK, N.A.
(successor to The First National City Bank of New York), as
trustee, as supplemented and amended by Supplemental Indentures
between the Company and the Trustee, dated as of May 1, 1948, as
of March 1, 1950, as of February 1, 1952, as of October 1, 1957,
as of September 1, 1962, as of June 1, 1963, as of June 1, 1969,
as of May 1, 1970, as of April 1, 1971, as of October 1, 1971, as
of May 1, 1972, as of December 1, 1974, as of October 1, 1975, as
of September 1, 1976, as of April 15, 1978, as of June 28, 1979,
as of January 1, 1980, as of June 1, 1981, as of January 14,
1982, as of August 1, 1982, as of December 15, 1982, as of
December 1, 1983, as of September 6, 1984, as of December 1,
1984, as of May 30, 1985, as of October 29, 1985, as of August 1,
1987, as of May 1, 1988, as of November 1, 1989, as of
December 1, 1990, as of September 1, 1991, as of May 1, 1992, as
of July 15, 1992, as of August 1, 1992, and as of May 1, 1993
(said Indenture as so supplemented and amended, and as hereby
supplemented and amended, being hereinafter sometimes referred to
as the "Indenture");
WHEREAS, the Company and the Trustee have executed and
delivered the Indenture for the purpose of securing an issue of
bonds of the First Series described therein and such additional
bonds as may from time to time be issued under and in accordance
with the terms of the Indenture, the aggregate principal amount
of bonds to be secured thereby being not limited, and the
Indenture fully describes and sets forth the property conveyed
thereby and is filed with the Secretary of the Commonwealth of
Pennsylvania and the Secretary of State of the State of Ohio and
will be of record in the office of the recorder of deeds of each
county in the Commonwealth of Pennsylvania and the State of Ohio
in which this Thirty-seventh Supplemental Indenture is to be
recorded and is on file at the corporate trust office of the
Trustee, above referred to; and
WHEREAS the Indenture provides for the issuance of
bonds thereunder in one or more series and the Company, by
appropriate corporate action in conformity with the terms of the
Indenture, has duly determined to create two such series of bonds
under the Indenture, one such series to be designated as "First
Mortgage Bonds, 6-5/8% Series of 1993 due 2004" (hereinafter
sometimes referred to as the "Thirty-Fifth Series"), and one such
series to be designated as "First Mortgage Bonds, 7-5/8% Series
<PAGE>
of 1993 due 2023" (hereinafter sometimes referred to as the
"Thirty-Sixth Series") the bonds of each series are to bear
interest at their respective annual rates designated in the
respective titles thereof and are to mature on January 1 and July
1, respectively, in the year stated in their respective titles.
AND WHEREAS each of the bonds of the Thirty-Fifth
Series and each of the bonds of the Thirty-Sixth Series and the
Trustee's Authentication Certificate thereon are to be
substantially in the following respective forms, to wit:
FORM OF BOND OF THE THIRTY-FIFTH SERIES
[FACE]
PENNSYLVANIA POWER COMPANY
First Mortgage Bond, 6-5/8% Series of 1993 due 2004
$ No.
Pennsylvania Power Company, a Pennsylvania corporation
(hereinafter called the "Company"), for value received, hereby
promises to pay to _____________ or registered assigns, the
principal sum of $_______ on January 1, 2004, and to pay the
registered holder hereof interest on said sum from the latest
semiannual interest payment date to which interest has been paid
on the bonds of this series preceding the date hereof, unless the
date hereof be an interest payment date to which interest is
being paid, in which case from the date hereof or unless the date
hereof is prior to January 1, 1994, in which case from July 1,
1993 (or if this bond is dated between the record date for any
interest payment date and such interest payment date, then from
such interest payment date, provided, however, that if and to the
extent the Company shall default in the payment of the interest
due on such interest payment date, then from the interest payment
date next preceding the date of such bond to which interest has
been paid on bonds of this series, or, if the Company shall be in
default with respect to the interest due on January 1, 1994, then
from July 1, 1993), at the rate, until the principal hereof shall
have become due and payable, of 6-5/8 per centum per annum,
payable on January 1, 1994 and on each January 1 and July 1
thereafter. The principal of and the premium, if any, and
interest on this bond shall be payable at the office or agency of
the Company in the Borough of Manhattan, The City, County and
State of New York, designated for that purpose, 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.
The interest so payable on any interest payment date
will, subject to certain exceptions provided in the Indenture
referred to on the reverse hereof, be paid to the person in whose
-2-
<PAGE>
name this bond is registered at the close of business on the
record date, which shall be the December 15 or June 15, as the
case may be, next preceding such interest payment date, or if
such December 15 or June 15, shall be a legal holiday or a day on
which the banking institutions in the Borough of Manhattan, The
City, County and State of New York, are authorized by law to
close, the next preceding day which shall not be a legal holiday
or a day on which such institutions are so authorized to close.
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 be valid or become obligatory for
any propose unless and until it shall have been authenticated by
the execution by the Trustee or its successor in trust under the
Indenture of the certificate hereon.
IN WITNESS WHEREOF, PENNSYLVANIA POWER COMPANY has
caused this bond to be executed in its name by its President or
one of its Vice Presidents by his or her signature or a facsimile
thereof, and its corporate seal or a facsimile thereof to be
affixed hereto or imprinted hereon and attested by its Secretary
or one of its Assistant Secretaries by his or her signature or a
facsimile thereof.
Dated,
PENNSYLVANIA POWER COMPANY
By .......................
President
Attest:
.........................
Secretary
-3-
<PAGE>
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 Indenture.
CITIBANK, N.A.
AS TRUSTEE,
By ........................
Authorized Officer
-4-
<PAGE>
FORM OF BOND OF THE THIRTY-FIFTH SERIES
[REVERSE]
PENNSYLVANIA POWER COMPANY
First Mortgage Bond, 6-5/8% Series of 1993 due 2004
This bond is one of the bonds issued and to be issued
from time to time under and in accordance with and all secured by
an indenture of mortgage or deed of trust dated as of November 1,
1945, and indentures supplemental thereto, given by the Company
to Citibank, N.A. (successor to The First National Bank of the
City of New York), as trustee (hereinafter referred to as the
"Trustee"), to which indenture and indentures supplemental
thereto (hereinafter referred to collectively as the "Indenture")
reference is hereby made for a description of the property
mortgaged and pledged, the nature and extent of the security and
the rights, duties and immunities thereunder of the Trustee and
the rights of the holders of the bonds and coupons and of the
Trustee and of the Company in respect of such security, and the
limitations on such rights. By the terms of the Indenture, the
bonds to be secured thereby are issuable in series which may vary
as to date, amount, date of maturity, rate of interest, terms of
redemption and in other respects as in the Indenture provided.
The Indenture contains provisions permitting the
Company and the Trustee, with the consent of the holders of not
less than seventy-five per centum in principal amount of the
bonds (exclusive of bonds disqualified by reason of the Company's
interest therein) at the time outstanding, including, if more
than one series of bonds shall be at the time outstanding, not
less than sixty per centum in principal amount of each series
affected, to effect, by an indenture supplemental to the
Indenture, modifications or alterations of the Indenture and of
the rights and obligations of the Company and the rights of the
holders of the bonds and coupons; provided, however, that no such
modification or alteration shall be made without the written
approval or consent of the holder hereof which will (a) extend
the maturity of this bond or reduce the rate or extend the time
of payment of interest hereon or reduce the amount of the
principal hereof or reduce any premium payable on the redemption
hereof, or (b) permit the creation of any lien, not otherwise
permitted, prior to or on a parity with the lien of the
Indenture, or (c) reduce the percentage of the principal amount
of the bonds upon the approval or consent of the holders of which
modifications or alterations may be made as aforesaid.
Bonds of this series are not redeemable prior to their
maturity.
In case of certain defaults as specified in the
Indenture, the principal of this bond may be declared or may
-5-
<PAGE>
become due and payable on the conditions, at the time, in the
manner and with the effect provided in the Indenture.
No recourse shall be had for the payment of the
principal of or premium, if any, or interest on this bond, or for
any claim based hereon, or otherwise in respect hereof or of the
Indenture, to or against any incorporator, stockholder, director
or officer, past, present or future, as such, of the Company, or
of any predecessor or successor company, either directly or
through the Company, or such predecessor or successor company, or
otherwise, under any constitution or statute or rule of law, or
by the enforcement of any assessment or penalty, or otherwise,
all such liability of incorporators, stockholders, directors and
officers, as such, being waived and released by the holder and
owner hereof by the acceptance of this bond and being likewise
waived and released by the terms of the Indenture.
The bonds of this series are issuable only as
registered bonds without coupons in denominations of $1,000 and
authorized multiples thereof. This bond is transferable by the
registered holder hereof, in person or by attorney duly
authorized, at the corporate trust office of the Trustee, in the
Borough of Manhattan, The City, County and State of New York, or
at such other place or places as the Company may designate by
resolution of the Board of Directors, but only in the manner and
upon the conditions prescribed in the Indenture, upon the
surrender and cancellation of this bond and the payment of
charges for transfer, and upon any such transfer a new registered
bond or bonds, without coupons, of the same series and maturity
date and for the same aggregate principal amount, in authorized
denominations, will be issued to the transferee in exchange
herefor. The Company, the Trustee and any agent designated to
make transfers or exchanges of bonds of this series may deem and
treat the person in whose name this bond is registered as the
absolute owner for all purposes including the purpose of the
receipt of payment. Registered bonds of this series shall be
exchangeable at said corporate trust office of the Trustee, or at
such other place or places as the Company may designate by
resolution of the Board of Directors, for registered bonds of
other authorized denominations having the same aggregate
principal amount, in the manner and upon the conditions
prescribed in the Indenture. Neither the Company nor the Trustee
nor any other agent designated for such propose 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.
Notwithstanding any provisions of the Indenture, 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.
Bonds of this series are to be issued initially under a
book-entry only system and, except as hereinafter provided,
registered in the name of the Depository Trust Company, New York,
-6-
<PAGE>
New York ("DTC") or its nominee, which shall be considered the
holder of all of the bonds of this series for all purposes of the
Indenture, including, without limitation, payment by the Company
of principal and interest on such bonds of this series and
receipt of notices and exercise of rights of holders of such
bonds of this series. There shall be a single bond of this
series which shall be immobilized in the custody of DTC with the
owners of book entry interests in bonds of this series ("Book
Entry Interests") having no right to receive bonds of this series
in the form of physical securities or certificates. Ownership of
Book-Entry Interests shall be shown by book entry on the system
maintained and operated by DTC, its participants (the
"Participants") and certain persons acting through the
Participants. Transfers of ownership of Book-Entry Interests are
to be made only by DTC and the Participants by that book entry
system, the Company and the Trustee having no responsibility
therefor so long as bonds of this series are registered in the
name of DTC or its nominee. DTC is to maintain records of the
positions of Participants are to maintain records of the
purchasers and owners of Book-Entry Interests. If DTC or its
nominee determines not to continue to act as a depository for the
bonds of this series in connection with a book-entry only system,
another depository, if available, may act, instead and the single
bond of this series will be transferred into the name of such
other depository or its nominee, in which case the above
provisions will continue to apply but to the new depository. If
the book-entry only system for bonds of this series is
discontinued for any reason upon surrender and cancellation of
the single bond of this series registered in the name of the then
depository or its nominee, new registered bonds of this series
will be issued in authorized denominations to the holders of
Book-Entry Interests in principal amounts coinciding with the
amounts of such Book-Entry Interests shown on the book-entry only
system immediately prior to the discontinuance thereof. Neither
the Trustee nor the Company shall be responsible for the accuracy
of the interests shown on that system.
[END OF FORM OF BOND OF THE THIRTY-FIFTH SERIES]
-7-
<PAGE>
FORM OF BOND OF THE THIRTY-SIXTH SERIES
[FACE]
PENNSYLVANIA POWER COMPANY
First Mortgage Bond, 7-5/8% Series of 1993 due 2023
$ No.
Pennsylvania Power Company, a Pennsylvania corporation
(hereinafter called the "Company"), for value received, hereby
promises to pay to _____________ or registered assigns, the
principal sum of $_______ on July 1, 2023, and to pay the
registered holder hereof interest on said sum from the latest
semiannual interest payment date to which interest has been paid
on the bonds of this series preceding the date hereof, unless the
date hereof be an interest payment date to which interest is
being paid, in which case from the date hereof or unless the date
hereof is prior to January 1, 1994, in which case from July 1,
1993 (or if this bond is dated between the record date for any
interest payment date and such interest payment date, then from
such interest payment date, provided, however, that if and to the
extent the Company shall default in the payment of the interest
due on such interest payment date, then from the interest payment
date next preceding the date of such bond to which interest has
been paid on bonds of this series, or, if the Company shall be in
default with respect to the interest due on January 1, 1994, then
from July 1, 1993), at the rate, until the principal hereof shall
have become due and payable, of 7-5/8 per centum per annum,
payable on January 1, 1994 and on each January 1 and July 1
thereafter. The principal of and the premium, if any, and
interest on this bond shall be payable at the office or agency of
the Company in the Borough of Manhattan, The City, County and
State of New York, designated for that purpose, 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.
The interest so payable on any interest payment date
will, subject to certain exceptions provided in the Indenture
referred to on the reverse hereof, be paid to the person in whose
name this bond is registered at the close of business on the
record date, which shall be the December 15 or June 15, as the
case may be, next preceding such interest payment date, or if
such December 15 or June 15 shall be a legal holiday or a day on
which the banking institutions in the Borough of Manhattan, The
City, County and State of New York, are authorized by law to
close, the next preceding day which shall not be a legal holiday
or a day on which such institutions are so authorized to close.
The provisions of this bond are continued on the
reverse hereof and such continued provisions shall for all
-8-
<PAGE>
purposes have the same effect as though fully set forth at this
place.
This bond shall not be valid or become obligatory for
any propose unless and until it shall have been authenticated by
the execution by the Trustee or its successor in trust under the
Indenture of the certificate hereon.
IN WITNESS WHEREOF, PENNSYLVANIA POWER COMPANY has
caused this bond to be executed in its name by its President or
one of its Vice Presidents by his or her signature or a facsimile
thereof, and its corporate seal or a facsimile thereof to be
affixed hereto or imprinted hereon and attested by its Secretary
or one of its Assistant Secretaries by his or her signature or a
facsimile thereof.
Dated,
PENNSYLVANIA POWER COMPANY
By .......................
President
Attest:
.........................
Secretary
-9-
<PAGE>
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 Indenture.
CITIBANK, N.A.
AS TRUSTEE,
By ........................
Authorized Officer
-10-
<PAGE>
FORM OF BOND OF THE THIRTY-SIXTH SERIES
[REVERSE]
PENNSYLVANIA POWER COMPANY
First Mortgage Bond, 7-5/8% Series of 1993 due 2023
This bond is one of the bonds issued and to be issued
from time to time under and in accordance with and all secured by
an indenture of mortgage or deed of trust dated as of November 1,
1945, and indentures supplemental thereto, given by the Company
to Citibank, N.A. (successor to The First National Bank of the
City of New York), as trustee (hereinafter referred to as the
"Trustee"), to which indenture and indentures supplemental
thereto (hereinafter referred to collectively as the "Indenture")
reference is hereby made for a description of the property
mortgaged and pledged, the nature and extent of the security and
the rights, duties and immunities thereunder of the Trustee and
the rights of the holders of the bonds and coupons and of the
Trustee and of the Company in respect of such security, and the
limitations on such rights. By the terms of the Indenture, the
bonds to be secured thereby are issuable in series which may vary
as to date, amount, date of maturity, rate of interest, terms of
redemption and in other respects as in the Indenture provided.
The Indenture contains provisions permitting the
Company and the Trustee, with the consent of the holders of not
less than seventy-five per centum in principal amount of the
bonds (exclusive of bonds disqualified by reason of the Company's
interest therein) at the time outstanding, including, if more
than one series of bonds shall be at the time outstanding, not
less than sixty per centum in principal amount of each series
affected, to effect, by an indenture supplemental to the
Indenture, modifications or alterations of the Indenture and of
the rights and obligations of the Company and the rights of the
holders of the bonds and coupons; provided, however, that no such
modification or alteration shall be made without the written
approval or consent of the holder hereof which will (a) extend
the maturity of this bond or reduce the rate or extend the time
of payment of interest hereon or reduce the amount of the
principal hereof or reduce any premium payable on the redemption
hereof, or (b) permit the creation of any lien, not otherwise
permitted, prior to or on a parity with the lien of the
Indenture, or (c) reduce the percentage of the principal amount
of the bonds upon the approval or consent of the holders of which
modifications or alterations may be made as aforesaid.
The bonds of the Thirty-Sixth Series will not be
redeemable prior to July 1, 2003. Thereafter, upon notice given
by mailing the same, postage prepaid, at least thirty days and
not more than forty-five days prior to the date fixed for
-11-
<PAGE>
redemption, to each registered holder of a bond to be redeemed,
in whole or in part, at the last address of such holder appearing
on the registry books, any or all of the bonds of the Thirty-
Sixth Series may be redeemed by the Company, at its option, or by
operation of various provisions of the Indenture, at any time and
from time to time by the payment of (a) if redeemed otherwise
than by the operation of the sinking and improvement fund or the
maintenance and replacement provisions of the Indenture, a
regular redemption price equal to the principal amount thereof
and accrued interest thereon to the date fixed for redemption,
together with a premium equal to a percentage of the principal
amount thereof determined as set forth in the tabulation below
under the heading "Regular Redemption Premium" or (b) if redeemed
by the use of cash deposited pursuant to the sinking and
improvement fund or the maintenance and replacement provisions of
the Indenture or by the use of proceeds of released property, as
more fully set forth in the Indenture, a special redemption price
equal to the principal amount thereof and accrued interest
thereon to the date fixed for redemption:
(If redeemed during the 12 month period ended June 30 of the year
stated)
Year Regular Redemption Premium
2004 3.32%
2005 2.98
2006 2.65
2007 2.32
2008 1.99
2009 1.66
2010 1.33
2011 0.99
2012 0.66
2013 0.33
2014 and thereafter 0.00
In case of certain defaults as specified in the
Indenture, the principal of this bond may be declared or may
become due and payable on the conditions, at the time, in the
manner and with the effect provided in the Indenture.
No recourse shall be had for the payment of the
principal of or premium, if any, or interest on this bond, or for
any claim based hereon, or otherwise in respect hereof or of the
Indenture, to or against any incorporator, stockholder, director
or officer, past, present or future, as such, of the Company, or
-12-
<PAGE>
of any predecessor or successor company, either directly or
through the Company, or such predecessor or successor company, or
otherwise, under any constitution or statute or rule of law, or
by the enforcement of any assessment or penalty, or otherwise,
all such liability of incorporators, stockholders, directors and
officers, as such, being waived and released by the holder and
owner hereof by the acceptance of this bond and being likewise
waived and released by the terms of the Indenture.
The bonds of this series are issuable only as
registered bonds without coupons in denominations of $1,000 and
authorized multiples thereof. This bond is transferable by the
registered holder hereof, in person or by attorney duly
authorized, at the corporate trust office of the Trustee, in the
Borough of Manhattan, The City, County and State of New York, or
at such other place or places as the Company may designate by
resolution of the Board of Directors, but only in the manner and
upon the conditions prescribed in the Indenture, upon the
surrender and cancellation of this bond and the payment of
charges for transfer, and upon any such transfer a new registered
bond or bonds, without coupons, of the same series and maturity
date and for the same aggregate principal amount, in authorized
denominations, will be issued to the transferee in exchange
herefor. The Company, the Trustee and any agent designated to
make transfers or exchanges of bonds of this series may deem and
treat the person in whose name this bond is registered as the
absolute owner for all purposes including the purpose of the
receipt of payment. Registered bonds of this series shall be
exchangeable at said corporate trust office of the Trustee, or at
such other place or places as the Company may designate by
resolution of the Board of Directors, for registered bonds of
other authorized denominations having the same aggregate
principal amount, in the manner and upon the conditions
prescribed in the Indenture. Neither the Company nor the Trustee
nor any other agent designated for such propose 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.
Notwithstanding any provisions of the Indenture, 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.
Bonds of this series are to be issued initially under a
book-entry only system and, except as hereinafter provided,
registered in the name of the Depository Trust Company, New York,
New York ("DTC") or its nominee, which shall be considered the
holder of all of the bonds of this series for all purposes of the
Indenture, including, without limitation, payment by the Company
of principal and interest on such bonds of this series and
receipt of notices and exercise of rights of holders of such
bonds of this series. There shall be a single bond of this
series which shall be immobilized in the custody of DTC with the
owners of book entry interests in bonds of this series ("Book
-13-
<PAGE>
Entry Interests") having no right to receive bonds of this series
in the form of physical securities or certificates. Ownership of
Book-Entry Interests shall be shown by book entry on the system
maintained and operated by DTC, its participants (the
"Participants") and certain persons acting through the
Participants. Transfers of ownership of Book-Entry Interests are
to be made only by DTC and the Participants by that book entry
system, the Company and the Trustee having no responsibility
therefor so long as bonds of this series are registered in the
name of DTC or its nominee. DTC is to maintain records of the
positions of Participants are to maintain records of the
purchasers and owners of Book-Entry Interests. If DTC or its
nominee determines not to continue to act as a depository for the
bonds of this series in connection with a book-entry only system,
another depository, if available, may act, instead and the single
bond of this series will be transferred into the name of such
other depository or its nominee, in which case the above
provisions will continue to apply but to the new depository. If
the book-entry only system for bonds of this series is
discontinued for any reason upon surrender and cancellation of
the single bond of this series registered in the name of the then
depository or its nominee, new registered bonds of this series
will be issued in authorized denominations to the holders of
Book-Entry Interests in principal amounts coinciding with the
amounts of such Book-Entry Interests shown on the book-entry only
system immediately prior to the discontinuance thereof. Neither
the Trustee nor the Company shall be responsible for the accuracy
of the interests shown on that system.
[END OF FORM OF BOND OF THE THIRTY-SIXTH SERIES]
AND WHEREAS all acts and things necessary to make the
bonds of the Thirty-Fifth Series and the bonds of the Thirty-
Sixth Series, when authenticated by the Trustee and issued as in
the Indenture provided, the valid, binding and legal obligations
of the Company, and to constitute the Indenture a valid, binding
and legal instrument for the security thereof, have been done and
performed, and the creation, execution and delivery of the
Indenture and the creation, execution and issue of the bonds of
the Thirty-Fifth Series and the bonds of the Thirty-Sixth Series
subject to the terms hereof and of the Indenture, have in all
respects been duly authorized;
NOW THEREFORE, in consideration of the premises, and of
the acceptance and purchase by holders thereof of the bonds of
the Thirty-Fifth Series and the bonds of the Thirty-Sixth Series
issued and to be issued under the Indenture, and the sum of One
Dollar duly paid by the Trustee to the Company, and of other good
and valuable considerations, the receipt of which is hereby
acknowledged, and for the purpose of securing the due and
punctual payment of the principal of and premium, if any, and
interest on all bonds now outstanding under the Indenture and the
$20,000,000 principal amount of bonds of the Thirty-Fifth Series
and the $40,000,000 principal amount of bonds of the Thirty-Sixth
-14-
<PAGE>
Series proposed presently to be issued and all other bonds which
shall be issued under the Indenture, and for the purpose of
securing the faithful performance and observance of all covenants
and conditions therein and in any supplemental indenture set
forth, the Company has given, granted, bargained, sold, released,
transferred, assigned, hypothecated, pledged, mortgaged,
confirmed, created a security interest in, set over, warranted,
aliened and conveyed and by these presents does give, grant,
bargain, sell, release, transfer, assign, hypothecate, pledge,
mortgage, confirm, create a security interest in, set over,
warrant, alien and convey unto Citibank, N.A., as Trustee as
provided in the Indenture, and its successor or successors in the
trust thereby and hereby created and to its or their assigns
forever, all the right, title and interest of the Company in and
to the property 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
(subject to the provisions of Article X of the Indenture) with
the tolls, rents, revenues, issues, earnings, income, products
and profits thereof, 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 said
Article X thereof.
TOGETHER WITH all and singular the tenements,
hereditaments and appurtenances belonging or in any wise
appertaining to the premises, property, franchises and rights, or
any thereof, referred to in Schedule A, annexed hereto with the
reversion and reversions, remainder and remainders and (subject
to the provisions of Article X of the Indenture) the tolls,
rents, revenues, issues, earnings, income, products 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 such premises, property,
franchises and rights and every part and parcel thereof described
in the aforesaid Schedule A, subject to "excepted encumbrances"
of the original Indenture.
TO HAVE AND TO HOLD all said premises, property,
franchises and rights hereby conveyed, assigned, pledged, or
mortgaged, or intended so to be, unto the Trustee, its successor
or successors in trust, and their assigns forever.
BUT IN TRUST, NEVERTHELESS, with power of sale, for the
equal and proportionate benefit and security of the holders of
all bonds now or hereafter authenticated and delivered under the
Indenture, and interest coupons appurtenant thereto, pursuant to
the provisions thereof, and for the enforcement of the payment of
said bonds and coupons when payable and the performance of and
compliance with the covenants and conditions of the Indenture,
without any preference, distinction or priority as to lien or
-15-
<PAGE>
otherwise of any bond or bonds over others by reason of the
difference in time of the actual authentication, delivery, issue,
sale or negotiation thereof or for any other reason whatsoever,
except as otherwise expressly provided in the Indenture; and so
that each and every bond now or hereafter authenticated and
delivered thereunder shall have the same lien, and so that the
principal of and premium, if any, and interest on every such
bond, shall subject to the terms of the Indenture, be equally and
proportionately secured thereby and hereby, as if it had been
made, executed, authenticated, delivered, sold and negotiated
simultaneously with the execution and delivery of the Indenture.
AND IT IS EXPRESSLY DECLARED that all bonds
authenticated and delivered and secured thereunder and hereunder
are to be issued, authenticated and delivered, and all said
premises, property, franchises and rights hereby and by the
Indenture conveyed, assigned, pledged or mortgaged, or intended
so to be (including all the right, title and interest of the
Company in and to any and all premises, property, franchises and
rights of every kind and description, real, personal and mixed,
tangible and intangible, thereafter acquired by the Company and
whether or not specifically described in the Indenture, except
any therein expressly excepted), are to be dealt with and
disposed of, under, upon and subject to the terms, conditions,
stipulations, covenants, agreements, trusts, uses and purposes in
the Indenture expressed, and it is hereby agreed as follows:
Section 1. There are hereby created two series of
bonds, one such series designated 6-5/8% Series of 1993 due 2004,
which shall also bear the descriptive title "First Mortgage Bond"
(said bonds being sometimes herein referred to as the "bonds of
the Thirty-Fifth Series"), and one such Series designated 7-5/8%
Series of 1993 due 2023, which shall also bear the descriptive
title "First Mortgage Bond" (said bonds being sometimes herein
referred to as the "bonds of the Thirty-Sixth Series") and the
form of each such series shall be substantially as hereinbefore
set forth. Bonds of the Thirty-Fifth Series shall mature on
January 1, 2004, and bonds of the Thirty-Sixth Series shall
mature on July 1, 2023. (Collectively herein the bonds of the
Thirty-Fifth Series and the bonds of the Thirty-Sixth Series are
sometimes referred to as the "bonds of the Thirty-Fifth and
Thirty-Sixth Series"). The bonds of the Thirty-Fifth and Thirty-
Sixth Series may be issued only as registered bonds without
coupons in denominations of $1,000 or such multiples thereof as
the Board of Directors shall approve, and delivery to the Trustee
for authentication shall be conclusive evidence of such approval.
The serial numbers of bonds of the Thirty-Fifth and Thirty-Sixth
Series shall be such as may be approved by any officer of the
Company, the execution thereof by any such officer, by facsimile
signature or otherwise, to be conclusive evidence of such
approval. Bonds of the Thirty-Fifth Series and bonds of the
Thirty-Sixth Series shall bear interest at the rate, until the
principal thereof shall have become due and payable, of 6-5/8%
per annum and 7-5/8% per annum, respectively, payable
-16-
<PAGE>
semiannually on January 1, 1994 and on each July 1 and January 1
thereafter, the principal of and the premium, if any, and the
interest on said bonds 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 the office or agency
of the Company in the Borough of Manhattan, The City, County and
State of New York, designated for that purpose.
Except as provided in this Section 1, bonds of the
Thirty-Fifth and Thirty-Sixth Series shall be dated and bear
interest as provided in Section 2.03 of the Indenture; provided,
however, that, so long as there is no existing default in the
payment of interest on said bonds, any bond of the Thirty-Fifth
and Thirty-Sixth Series authenticated by the Trustee between an
interest payment date for bonds of such Series and the record
date, as hereinbelow defined, for such interest payment date
shall bear interest from such interest payment date and the
holder of any such bond shall not be entitled to payment of
interest on such interest payment date and shall have no claim
against the Company with respect thereto; provided, further, that
if and to the extent the Company, shall default in the payment of
the interest due on such interest payment date, then such bond
shall bear interest from the interest payment date next preceding
the date of such bond, to which interest has been paid, or, if
the Company shall be in default with respect to the interest due
January 1, 1994, then from July 1, 1993.
Bonds of the Thirty-Fifth Series are not redeemable
prior to their maturity.
The bonds of the Thirty-Sixth Series will not be
redeemable prior to July 1, 2003. Thereafter, upon notice given
by mailing the same, postage prepaid, 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,
in whole or in part, at the last address of such holder appearing
on the registry books, any or all of the bonds of the Thirty-
Sixth Series may be redeemed by the Company, at its option, or by
operation of various provisions of the Indenture, at any time and
from time to time by the payment of (a) if redeemed otherwise
than by the operation of the sinking and improvement fund or the
maintenance and replacement provisions of the Indenture, a
regular redemption price equal to the principal amount thereof
and accrued interest thereon to the date fixed for redemption,
together with a premium equal to a percentage of the principal
amount thereof determined as set forth in the tabulation below
under the heading "Regular Redemption Premium" or (b) if redeemed
by the use of cash deposited pursuant to the sinking and
improvement fund or the maintenance and replacement provisions of
the Indenture or by the use of proceeds of released property, as
more fully set forth in the Indenture, a special redemption price
equal to the principal amount thereof and accrued interest
thereon to the date fixed for redemption:
-17-
<PAGE>
(If redeemed during the 12 month period ended June 30 of the year
stated)
Year Regular Redemption Premium
2004 3.32%
2005 2.98
2006 2.65
2007 2.32
2008 1.99
2009 1.66
2010 1.33
2011 0.99
2012 0.66
2013 0.33
2014 and thereafter 0.00
The person in whose name any bond of the Thirty-Fifth
Series or Thirty-Sixth Series is registered at the close of
business on any record date (as hereinbelow defined) with respect
to any interest payment date shall be entitled to receive the
interest payable on such interest payment date notwithstanding
the cancellation of such registered bond upon any transfer or
exchange thereof subsequent to the record date and prior to such
interest payment date, except if and to the extent the Company
shall default in the payment of the interest due on such interest
payment date, in which case such defaulted interest shall be paid
to the person in whose name such bond (or any bond or bonds)
issued, directly or after immediate transactions, upon transfer
or exchange or in substitution thereof) is registered on a
subsequent record date for such payment established as
hereinafter provided. A subsequent record date may be
established by the Company by notice mailed to the registered
holders of binds not less than ten days preceding such subsequent
record date, which shall be not less than five nor more than
thirty days prior to the subsequent interest payment date. The
term "record date" as used in this Section with respect to any
regular interest payment date shall mean the December 15 or June
15, as the case may be, next preceding such interest payment
date, or, if such December 15 or June 15 shall be a legal holiday
or a day on which the banking institutions in the Borough of
Manhattan, The City, County and State of New York, are authorized
by law to close, the next preceding day which shall not be a
legal holiday or a day on which such institutions are so
authorized to close.
-18-
<PAGE>
SECTION 2. The Company covenants and agrees that the
provisions of Section 3 of the Fifth Supplemental Indenture dated
as of September 1, 1962, which are to remain in effect so long as
any bonds of the Sixth Series shall be outstanding under the
Indenture, shall remain in full force and effect so long as any
bonds of the Thirty-Fifth Series or bonds of the Thirty-Sixth
Series shall be outstanding under the Indenture.
SECTION 3. The Company covenants and agrees that the
provisions of Section 3 of the Nineteenth Supplemental Indenture
dated as of January 14, 1982, which are to remain in effect so
long as any bonds of the Twentieth Series shall be outstanding
under the Indenture, shall remain in full force and effect so
long as any bonds of the Thirty-Fifth Series or bonds of the
Thirty-Sixth Series shall be outstanding under the Indenture.
SECTION 4. As supplemented and amended by this
Supplemental Indenture, the Indenture is in all respects ratified
and confirmed, and the Indenture and this Supplemental Indenture
shall be read, taken and construed as one and the same
instrument.
SECTION 5. 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 6. The Trustee assumes no responsibility for
or in respect of the validity or sufficiency of this Supplemental
Indenture or the due execution hereof by the Company or for or in
respect of the recitals and statements contained herein, all of
which recitals and statements are made solely by the Company.
SECTION 7. This Supplemental Indenture may be executed
in several counterparts and all such counterparts executed and
delivered, each as an original, shall constitute but one and the
same instrument.
PENNSYLVANIA POWER COMPANY hereby constitutes and
appoints Robert P. Wushinske to be its attorney for it and in its
name as and for its corporate act and deed to acknowledge this
Supplemental Indenture before any person having authority to take
such acknowledgment, to the intent that the same may be duly
recorded.
CITIBANK, N.A. hereby constitutes and appoints R. T.
Kirchner to be its attorney for it and in its name as and for its
corporate act and deed to acknowledge this Supplemental Indenture
before any person having authority to take such acknowledgment,
to the intent that the same may be duly recorded.
-19-
<PAGE>
IN WITNESS WHEREOF, PENNSYLVANIA POWER COMPANY has
caused its corporate name to be hereunto affixed, and this
instrument to be signed and sealed by its President or a Vice
President, and its corporate seal to be attested by its Secretary
or an Assistant Secretary for and on its behalf, in the city of
New Castle, County of Lawrence and Commonwealth of Pennsylvania
and CITIBANK, N.A., in token of its acceptance of the trust, has
caused its corporate name to be hereunto affixed, and this
instrument to be signed by a Vice President and its corporate
seal to be affixed and attested by one of its Assistant Vice
Presidents in the City of New York, County of New York and State
of New York, all as of the day and year first above written.
PENNSYLVANIA POWER COMPANY
By: Robert P. Wushinske
-----------------------
Robert P. Wushinske
Vice President
ATTEST:
By: J. R. Edgerly
---------------------------
J. R. Edgerly
Secretary
[Seal]
Signed, sealed and delivered by
PENNSYLVANIA POWER COMPANY
in the presence of:
F. A. Fazzone
- ------------------------------
F. A. Fazzone
R. Scilla
- ------------------------------
R. Scilla
-20-
<PAGE>
CITIBANK, N.A.
as Trustee as aforesaid,
By: R. T. Kirchner
----------------------
R. T. Kirchner
Vice President
ATTEST:
By: Carol Ng
---------------------------
Carol Ng
Assistant Vice President
[Seal]
Signed, sealed and delivered by
CITIBANK, N.A.
in the presence of:
J. Berger
- ------------------------------
J. Berger
Annie McNair
- ------------------------------
Annie McNair
-21-
<PAGE>
COMMONWEALTH OF PENNSYLVANIA )
: ss.:
COUNTY OF LAWRENCE )
BE IT REMEMBERED that, on the 12th day of July, 1993,
before me, the undersigned, a Notary Public in said County of
Lawrence, Commonwealth of Pennsylvania, personally appeared J. R.
Edgerly, who being duly sworn according to law, doth depose and
say that he was personally present and did see the common or
corporate seal of the above named PENNSYLVANIA POWER COMPANY
affixed to the foregoing Supplemental Indenture; that the seal so
affixed is the common or corporate seal of the said Pennsylvania
Power Company and was so affixed by the authority of the said
corporation as the act and deed thereof; that the above named
Robert P. Wushinske is a Vice President of said corporation and
did sign the said Supplemental Indenture as such in the presence
of this deponent; that this deponent is the Secretary of
Pennsylvania Power Company, and that the name of this deponent
above signed in attestation of the due execution of the said
Supplemental Indenture is in this deponent's own proper
handwriting.
Sworn to and subscribed before me this 12th day of
July, 1993.
J. R. Edgerly
----------------------
[SEAL]
Sylvia M. Rashid
----------------------
NOTARIAL SEAL
SYLVIA M. RASHID, Notary Public
New Castle, Lawrence Co., PA
My Commission Expires March 11, 1997
-22-
<PAGE>
COMMONWEALTH OF PENNSYLVANIA )
: ss.:
COUNTY OF LAWRENCE )
I HEREBY CERTIFY that, on this 12th day of July, 1993,
before me, the subscriber, a Notary Public in and for the State
and County aforesaid, personally appeared Robert P. Wushinske,
the attorney for PENNSYLVANIA POWER COMPANY, and the attorney
named in the foregoing Supplemental Indenture and, by virtue and
in pursuance of the authority therein conferred upon him,
acknowledged the said Supplemental Indenture to be the act and
deed of said Pennsylvania Power Company.
WITNESS my hand and notarial seal the day and year
aforesaid.
[SEAL]
Sylvia M. Rashid
----------------------
NOTARIAL SEAL
SYLVIA M. RASHID, Notary Public
New Castle, Lawrence Co., PA
My Commission Expires March 11, 1997
COMMONWEALTH OF PENNSYLVANIA )
: ss.:
COUNTY OF LAWRENCE )
On the 12th day of July, 1993, before me, personally
came Robert P. Wushinske, to me known, who, being by me duly
sworn, did depose and say that he resides at R.D. 2, Means Road,
New Wilmington, Pennsylvania 16142; that he is a Vice President
of PENNSYLVANIA POWER 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 affixed by order
of the Board of Directors of said corporation, and that he signed
his name thereto by like authority.
WITNESS my hand and notarial seal the day and year
aforesaid.
[SEAL]
Sylvia M. Rashid
----------------------
NOTARIAL SEAL
SYLVIA M. RASHID, Notary Public
New Castle, Lawrence Co., PA
My Commission Expires March 11, 1997
-23-
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED that, on the 13 day of July, 1993,
before me, the undersigned, a Notary Public in said County of New
York, State of New York, personally appeared Carol Ng, who being
duly sworn according to law, doth depose and say that she was
personally present and did see the common or corporate seal of
the above named CITIBANK, N.A. affixed to the foregoing
Supplemental Indenture; that the seal so affixed is the common or
corporate seal of the said CITIBANK, N.A. and was so affixed by
the authority of the said association as the act and deed
thereof; that the above named R.T. Kirchner is one of the Vice
Presidents of said association and did sign the said Supplemental
Indenture as such in the presence of this deponent; that this
deponent is an Assistant Vice President of said CITIBANK, N.A.,
and that the name of this deponent above signed in attestation of
the due execution of the said Supplemental Indenture is in this
deponent's own proper handwriting.
Sworn to and subscribed before me this 13 day of July,
1993.
Carol Ng
----------------------
- -
[SEAL]
Peter M. Pavlyshin
----------------------
PETER M. PAVLYSHIN
Notary Public, State of New York
No. 41-4991297
Qualified in Queens County
Certificate Filed in New York County
Commission Expires January 27, 1994
-24-
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
I HEREBY CERTIFY that, on this 13 day of July, 1993,
before me, the subscriber, a Notary Public in and for the State
and County aforesaid, personally appeared R. T. Kirchner, the
attorney for CITIBANK, N.A., and the attorney named in the
foregoing Supplemental Indenture and, by virtue and in pursuance
of the authority therein conferred upon him, acknowledged the
execution of said Supplemental Indenture to be the act and deed
of said CITIBANK, N.A.
WITNESS my hand and notarial seal the day and year
aforesaid.
Peter M. Pavlyshin
----------------------
PETER M. PAVLYSHIN
Notary Public, State of New York
[SEAL] No. 41-4991297
Qualified in Queens County
Certificate Filed in New York County
Commission Expires January 27, 1994
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 13 day of July, 1993, before me, personally came
R. T. Kirchner, to me known, who being by me duly sworn, did
depose and say that he resides at 65-24 79th Place, Middle
Village, New York; that he is a Vice President of CITIBANK, N.A.,
one of the parties described in and which executed the above
instrument; that he knows the seal of said association; that the
seal affixed to said instrument is such corporate seal; that it
was so affixed by authority of the Board of Directors of said
association, and that he signed his name thereto by like
authority.
WITNESS my hand and notarial seal the day and year
aforesaid.
Peter M. Pavlyshin
---------------------
PETER M. PAVLYSHIN
Notary Public, State of New York
[SEAL] No. 41-4991297
Qualified in Queens County
Certificate Filed in New York County
Commission Expires January 27, 1994
Citibank, N.A. hereby certifies that its precise name
and address as Trustee hereunder are:
CITIBANK, N.A.
111 Wall Street
Borough of Manhattan
City, County and State
of New York 10043
-25-
CITIBANK, N.A.
By R. T. Kirchner
--------------
R. T. Kirchner
Vice President
<PAGE>
A-1
SCHEDULE A
Detailed Description of Additional Properties
TRANSMISSION LINE
Y-10 Tap to Campbell
Substation 69,000 volts 6.8 miles
DISTRIBUTION SUBSTATION
138,000 X 69,000 - 13.090Y/7,560 X 8,720Y/5,040 volt,
20 Mva mobile substation.
OTHER REAL PROPERTY
Parcel of land containing 0.487 acres, located in
Shippingport, Beaver County, Pennsylvania, recorded in Beaver
County Deed Book 1504, page 298, on September 22, 1992.
Parcel of land containing 0.229 acres, located in West
Shenango Township, Crawford County, Pennsylvania, recorded in
Crawford County Deed Book 184, Page 108, on March 9, 1993.
Signed for identification
J. R. Edgerly
-----------------
J. R. Edgerly
Secretary
PENNSYLVANIA POWER COMPANY
R. T. Kirchner
------------------
R. T. Kirchner
Vice President
CITIBANK, N.A.
<PAGE>
[CONFORMED COPY]
PENNSYLVANIA POWER COMPANY
to
CITIBANK, N.A.,
As Trustee
Thirty-eighth Supplemental
Indenture
Providing among other things for
FIRST MORTGAGE BONDS
6.08% Series of 1993 Due 2000
Dated as of August 31, 1993
<PAGE>
THIRTY-EIGHTH SUPPLEMENTAL INDENTURE, dated as of
August 31, 1993, made and entered into by and between
PENNSYLVANIA POWER COMPANY, a corporation organized and existing
under the laws of the Commonwealth of Pennsylvania, with its
principal place of business in New Castle, Lawrence County,
Pennsylvania (hereinafter sometimes referred to as the "Company")
and CITIBANK, N.A., a national banking association incorporated
and existing under the laws of the United States of America, with
its principal office in the Borough of Manhattan, The City,
County and State of New York (hereinafter sometimes referred to
as the "Trustee"), as trustee under the Indenture dated as of
November 1, 1945 between the Company and CITIBANK, N.A.
(successor of The First National Bank of The City of New York),
as trustee, as supplemented and amended by Supplemental
Indentures between the Company and the Trustee, dated as of May
1, 1948, as of March 1, 1950, as of February 1, 1952, as of
October 1, 1957, as of September 1, 1962, as of June 1, 1963, as
of June 1, 1969, as of May 1, 1970, as of April 1, 1971, as of
October 1, 1971, as of May 1, 1972, as of December 1, 1974, as of
October 1, 1975, as of September 1, 1976, as of April 15, 1978,
as of June 28, 1979, as of January 1, 1980, as of June 1, 1981,
as of January 14, 1982, as of August 1, 1982, as of December 15,
1982, as of December 1, 1983, as of September 6, 1984, as of
December 1, 1984, as of December 1, 1984, as of May 30, 1985, as
of October 29, 1985, as of August 1, 1987, as of May 1, 1988, as
of November 1, 1989, as of December 1, 1990, as of September 1,
1991, as of May 1, 1992, as of July 15, 1992, as of August 1,
1992, as of May 1, 1993, and as of July 1, 1993 (said Indenture
as so supplemented and amended, and as hereby supplemented and
amended being hereinafter sometimes referred to as the
"Indenture");
WHEREAS, the Company and the Trustee have executed and
delivered the Indenture for the purpose of securing an issue of
bonds of the First Series described therein and such additional
bonds as may from time to time be issued under and in accordance
with the terms of the Indenture, the aggregate principal amounts
of bonds to be secured thereby being not limited, and the
Indenture fully describes and sets forth the property conveyed
thereby and is filed with the Secretary of the Commonwealth of
Pennsylvania and Secretary of the State of Ohio and will be of
record in the office of the recorder of deeds of each county in
the Commonwealth of Pennsylvania and the State of Ohio in which
this Thirty-eighth Supplemental Indenture is to be recorded and
is on file at the corporate trust office of the Trustee, above
referred to; and
WHEREAS, the Indenture provides for the issuance of
bonds thereunder in one or more series and the Company, by
appropriate corporate action in conformity with the terms of the
Indenture, has duly determined to create such a series of bonds
under the Indenture to be designated as "First Mortgage Bonds,
6.08% Series of 1993 due 2000" (hereinafter sometimes referred to
<PAGE>
as the "Thirty-Seventh Series"), the bonds of which are to mature
on August 31, 2000;
AND WHEREAS, each of the bonds of the Thirty-Seventh
Series and the Trustee's Authentication Certificate thereon are
to be substantially in the following form, to-wit:
FORM OF BOND OF THE THIRTY-SEVENTH SERIES
[FACE]
PENNSYLVANIA POWER COMPANY
First Mortgage Bond, 6.08% Series of 1993 due 2000
$23,000,000 No._______
PENNSYLVANIA POWER COMPANY, a Pennsylvania corporation
(hereinafter called the "Company"), for value received, hereby
promises to pay to ___________________________________________ or
registered assigns, the principal sum of $23,000,000 on August
31, 2000, and to pay to the registered holder hereof interest on
said sum as provided below. The principal of and interest on this
bond shall be payable at the office or agency of the Company in
the Borough of Manhattan, The City, County and State of New York,
designated for that purpose, 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.
This bond has been issued to secure the obligations of
the Company under a Loan Agreement (the "Loan Agreement"), dated
as of August 31, 1993, between the Company and The Long-Term
Credit Bank of Japan, Limited, Chicago Branch (the "Lender")
pursuant to which the Lender has loaned to the Company U.S.
$23,000,000, which loan is evidenced by the promissory note (the
"Note") of the Company in the amount of U.S. $23,000,000.
The obligation of the Company to make payments with
respect to the principal of and interest on this bond shall be
fully or partially, as the case may be, satisfied and discharged
to the extent that the principal of and interest on the Note
shall have been paid in accordance with its terms and the terms
of the Loan Agreement.
Interest on this bond is payable, subject to the
preceding paragraph, at the rate of 6.08% per annum and on the
same date as interest is payable on the Note pursuant to the
terms of the Loan Agreement, namely, March 1 and September 1 of
each year commencing March 1, 1994 and at maturity.
The provisions of this bond are continued on the
reverse hereof and such continued provisions shall for all
-2-
<PAGE>
purposes have the same effect as though fully set forth at this
place.
This bond shall not be valid or become obligatory for
any purpose unless and until it shall have been authenticated by
the execution by the Trustee or its successor in trust under the
Indenture of the certificate hereon.
IN WITNESS WHEREOF, Pennsylvania Power Company has
caused this bond to be executed in its name by its President or
one of its Vice Presidents, by his or her signature or a
facsimile thereof, and its corporate seal or a facsimile thereof
to be affixed hereto or imprinted hereon, and attested by its
Secretary or one of its Assistant Secretaries, by his or her
signature or a facsimile thereof.
Dated:
PENNSYLVANIA POWER COMPANY
By .......................
President
Attest:
.........................
Secretary
-3-
<PAGE>
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 Indenture.
CITIBANK, N.A.
AS TRUSTEE,
By ........................
Authorized Officer
-4-
<PAGE>
FORM OF BOND OF THE THIRTY-SEVENTH SERIES
[REVERSE]
PENNSYLVANIA POWER COMPANY
First Mortgage Bond, 6.08% Series of 1993 due 2000
This bond is one of the bonds issued and to be issued
from time to time under and in accordance with and all secured by
an indenture of mortgage or deed of trust, dated as of
November 1, 1945, and indentures supplemental thereto, given by
the Company to Citibank, N.A. (successor to The First National
Bank of The City of New York), as trustee (hereinafter referred
to as the "Trustee"), to which indenture and indentures
supplemental thereto (hereinafter referred to collectively as the
"Indenture") reference is hereby made for a description of the
property mortgaged and pledged, the nature and extent of the
security and the rights, duties and immunities thereunder of the
Trustee and the rights of the holders of the bonds and coupons
and of the Trustee and of the Company in respect of such
security, and the limitations on such rights. By the terms of
the Indenture, the bonds to be secured thereby are issuable in
series which may vary as to date, amount, date of maturity, rate
of interest, terms of redemption and in other respects as in the
Indenture provided.
The Indenture contains provisions permitting the
Company and the Trustee, with the consent of the holders of not
less than seventy-five per centum in principal amount of the
bonds (exclusive of bonds disqualified by reason of the Company's
interest therein) at the time outstanding, including, if more
than one series of bonds shall be at the time outstanding, not
less than sixty per centum in principal amount of each series
affected, to effect, by an indenture supplemental to the
Indenture, modifications or alterations of the Indenture and of
the rights and obligations of the Company and the rights of the
holders of the bonds and coupons; provided, however, that no such
modification or alteration shall be made without the written
approval or consent of the holder hereof which will (a) extend
the maturity of this bond or reduce the rate or extend the time
of payment of interest hereon or reduce the amount of the
principal hereof or reduce any premium payable on the redemption
hereof, or (b) permit the creation of any lien, not otherwise
permitted, prior to or on a parity with the lien of the
Indenture, or (c) reduce the percentage of the principal amount
of the bonds upon the approval or consent of the holders of which
modifications or alterations may be made as aforesaid.
In case of certain defaults as specified in the
Indenture, the principal of this bond may be declared or may
become due and payable on the conditions, at the time, in the
manner and with the effect provided in the Indenture.
-5-
<PAGE>
No recourse shall be had for the payment of the
principal of or premium, if any, or interest on this bond, or for
any claim based hereon, or otherwise in respect hereof or of the
Indenture, to or against any incorporator, stockholder, director
or officer, past, present or future, as such, of the Company, or
of any predecessor or successor company, either directly or
through the Company, or such predecessor or successor company, or
otherwise, under any constitution or statute or rule of law, or
by the enforcement of any assessment or penalty, or otherwise,
all such liability of incorporators, stockholders, directors and
officers, as such, being waived and released by the holder and
owner hereof by the acceptance of this bond and being likewise
waived and released by the terms of the Indenture.
Bonds of this series are not redeemable at the option
of the Company. In the manner provided in the Indenture, this
bond shall be redeemable in whole, by payment thereon of the
principal amount thereof plus accrued interest thereon to the
date fixed for the redemption, upon receipt by the Trustee of a
written demand for redemption from the registered holder thereof
stating that the principal amount of the Note then outstanding
has been declared immediately due and payable pursuant to the
provisions of Section 11 of the Loan Agreement. The date fixed
for such redemption shall be not more than 180 days after receipt
by the Trustee of the aforesaid written demand and shall be
specified in a notice of redemption given in accordance with the
Indenture, by mail, not less than 30 days before the date so
fixed for such redemption. As in the Indenture provided, such
notice of redemption shall be rescinded and become null and void
for all purposes under the Indenture upon receipt by the Trustee
of written notice of rescission of the aforesaid written demand
from the registered holder, and thereupon no redemption of this
bond and no payments in respect thereof as specified in such
notice of redemption shall be effected or required.
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 provisions of the
Loan Agreement, this bond is transferable as prescribed in the
Indenture by the registered holders hereof, in person or by
attorney duly authorized, at the corporate trust office of the
Trustee, in the Borough of Manhattan, The City, County and State
of New York, or at such other place or places as the Company may
designate by resolution of the Board of Directors, but only in
the manner and upon the conditions prescribed in the Indenture,
upon the surrender and cancellation of this bond and the payment
of charges for transfer, and upon any such transfer a new
registered bond or bonds, without coupons, of the same series and
maturity date and for the same aggregate principal amount, in
authorized denominations, will be issued to the transferee in
exchange herefor. The Company, the Trustee and any agent
designated to make transfers or exchanges of bonds of the
Thirty-Seventh Series may deem and treat the person in whose name
this bond is registered as the absolute owner for all purposes
-6-
<PAGE>
including the purposes of the receipt of payment. Registered
bonds of this series shall be exchangeable at said corporate
trust office of the Trustee, or at such other place or places as
the Company may designate by resolution of the Board of
Directors, for registered bonds of this series of other
authorized denominations having the same aggregate principal
amount, in the manner and upon the conditions prescribed in the
Indenture. Notwithstanding any provisions of the Indenture, 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 THE THIRTY-SEVENTH SERIES]
AND WHEREAS all acts and things necessary to make the
bonds, when authenticated by the Trustee and issued as in the
Indenture provided, the valid, binding and legal obligations of
the Company, and to constitute the Indenture a valid, binding and
legal instrument for the security thereof, have been done and
performed, and the creation, execution and delivery of the
Indenture and the creation, execution and issue of bonds subject
to the terms hereof and of the Indenture, have in all respects
been duly authorized;
NOW, THEREFORE, in consideration of the premises, and
of the acceptance and purchase by the holders thereof of the
bonds issued and to be issued under the Indenture, and of the sum
of One Dollar duly paid by the Trustee to the Company, and of
other good and valuable considerations, the receipt whereof is
hereby acknowledged, and for the purpose of securing the due and
punctual payment of the principal of and premium, if any, and
interest on all bonds now outstanding under the Indenture, and
the $23,000,000 principal amount of bonds of the Thirty-Seventh
Series proposed presently to be issued and all other bonds which
shall be issued under the Indenture, and for the purpose of
securing the faithful performance and observance of all covenants
and conditions therein and in any supplemental indenture set
forth, the Company has given, granted, bargained, sold, released,
transferred, assigned, hypothecated, pledged, mortgaged,
confirmed, created a security interest in, set over, warranted,
aliened and conveyed and by these presents does give, grant,
bargain, sell, release, transfer, assign, hypothecate, pledge,
mortgage, confirm, create a security interest in, set over,
warrant, alien and convey unto Citibank, N.A., as Trustee as
provided in the Indenture, and its successor or successors in the
trust thereby and hereby created and to its or their assigns
forever, all the right, title and interest of the Company in and
to the property 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
(subject to the provisions of Article X of the Indenture) with
the tolls, rents, revenues, issues, earnings, income, products
and profits thereof, and does hereby confirm that the Company
-7-
<PAGE>
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 said
Article X thereof.
TOGETHER WITH all and singular the tenements,
hereditaments and appurtenances belonging or in any wise
appertaining to the premises, property, franchises and rights, or
any thereof, referred to in Schedule A, annexed hereto with the
reversion and reversions, remainder and remainders and (subject
to the provisions of Article X of the Indenture) the tolls,
rents, revenues, issues, earnings, income, products 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 premises, property,
franchises, and rights and every part and parcel thereof
described in the aforesaid Schedule A, subject to "excepted
encumbrances" of the original Indenture.
TO HAVE AND TO HOLD all said premises, property,
franchises and rights hereby conveyed, assigned, pledged, or
mortgaged, or intended so to be, unto the Trustee, its successor
or successors in trust, and their assigns forever.
BUT IN TRUST, NEVERTHELESS, with power of sale, for the
equal and proportionate benefit and security of the holders of
all bonds now or hereafter authenticated and delivered under the
Indenture, and interest coupons appurtenant thereto, pursuant to
the provisions thereof, and for the enforcement of the payment of
said bonds and coupons when payable and the performance of and
compliance with the covenants and conditions of the Indenture,
without any preference, distinction or priority as to lien or
otherwise of any bond or bonds over others by reason of the
difference in time of the actual authentication, delivery, issue,
sale or negotiation thereof or for any other reason whatsoever,
except as otherwise expressly provided in the Indenture; and so
that each and every bond now or hereafter authenticated and
delivered thereunder shall have the same lien, and so that the
principal of and premium, if any, and interest on every such bond
shall, subject to the terms of the Indenture, be equally and
proportionally secured thereby and hereby, as if it had been
made, executed, authenticated, delivered, sold and negotiated
simultaneously with the execution and delivery of the Indenture.
AND IT IS EXPRESSLY DECLARED that all bonds
authenticated and delivered and secured thereunder and hereunder
are to be issued, authenticated and delivered, and all said
premises, property, franchises and rights hereby and by the
Indenture conveyed, assigned, pledged or mortgaged, or intended
so to be (including all the right, title and interest of the
Company in and to any and all premises, property, franchises and
rights of every kind and description, real, personal and mixed,
-8-
<PAGE>
tangible and intangible, thereafter acquired by the Company and
whether or not specifically described in the Indenture, except
any therein expressly excepted), are to be dealt with and
disposed of, under, upon and subject to the terms, conditions,
stipulations, covenants, agreements, trusts, uses and purposes in
the Indenture expressed, and it is hereby agreed as follows:
SECTION 1. There is hereby created a series of bonds
designated 6.08% Series of 1993 due 2000, each of which shall
also bear descriptive title "First Mortgage Bond" (said bonds
being sometimes herein referred to as the "bonds of the Thirty-
Seventh Series"), and the form thereof shall be substantially as
hereinbefore set forth. Bonds of the Thirty-Seventh Series shall
mature on August 31, 2000, and may be issued only as registered
bonds without coupons in denominations of $1,000 or such
multiples thereof as the Board of Directors shall approve, and
delivery to the Trustee for authentication shall be conclusive
evidence of such approval. The serial numbers of bonds of the
Thirty-Seventh Series shall be such as may be approved by any
officer of the Company, the execution thereof by any such
officer, by facsimile signature or otherwise, to be conclusive
evidence of such approval.
The bonds of the Thirty-Seventh Series are to be
originally issued to secure the obligations of the Company under
a Loan Agreement ("Loan Agreement") dated as of August 31, 1993,
between the Company and The Long-Term Credit Bank of Japan,
Limited, Chicago Branch (hereinafter sometimes referred to as
"Lender"), pursuant to which Lender has loaned to the Company
U.S. $23,000,000, which loan is evidenced by the promissory note
(the "Note") of the Company in the amount of U.S. $23,000,000.
Interest on the bonds of the Thirty-Seventh Series is
payable, subject to the following paragraph, at the rate of 6.08%
per annum and on the same date as interest is payable on the Note
pursuant to the terms of the Loan Agreement, namely, March 1 and
September 1 of each year commencing March 1, 1994 and at
maturity. Interest on said bonds 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 the
office or agency of the Company in the Borough of Manhattan, The
City, County and State of New York, designed for that purpose.
The obligation of the Company to make payments with
respect to the principal of or interest on any bond of the
Thirty-Seventh Series shall be fully or partially, as the case
may be, satisfied and discharged to the extent that the principal
of and interest on the Note referred to on the face of such bond
shall have been paid in accordance with its terms and the terms
of the Loan Agreement.
The bonds of the Thirty-Seventh Series are not
redeemable at the option of the Company. Each bond of the
Thirty-Seventh Series shall be subject to redemption in whole
-9-
<PAGE>
upon receipt by the Trustee of a written demand for the
redemption thereof (hereinafter called "Redemption Demand") from
the registered holder thereof stating that the principal amount
of the Note referred to on the face of such bond which is then
outstanding has been declared immediately due and payable
pursuant to the provisions of Section 11 of the Loan Agreement.
The Trustee shall within 10 days of receiving the Redemption
Demand 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 (herein called the "Demand Redemption Date") and shall
mail to the Trustee notice of such date at least 45 days prior
thereto. The Demand Redemption Date may be any day not more than
180 days after receipt by the Trustee of the Redemption Demand.
If the Trustee does not receive such notice from the Company
within 150 days after receipt by the Trustee of the Redemption
Demand, the date for Demand Redemption shall be deemed fixed at
the 180th day after such receipt. The Trustee shall mail notice
of the Demand Redemption Date (hereinafter called the "Demand
Redemption Notice") to the registered holder of the bond of the
Thirty-Seventh Series to be redeemed not less than 30 days before
the Demand Redemption Date (all other notice of such redemption
being deemed to have been waived by such registered owner);
provided, however, that the Trustee shall mail no such Demand
Redemption Notice (and no Demand Redemption shall be made) if
prior to the mailing of the Demand Redemption Notice the Trustee
shall have received written notice of rescission of the
Redemption Demand from the registered holder of the bond of the
Thirty-Seventh Series to be redeemed. Demand redemption of bonds
of the Thirty-Seventh Series shall be at the principal amount
thereof, plus accrued interest thereon to the date fixed for
redemption, and such amount shall become and be due and payable
on the Demand Redemption Date as above provided. Anything in
this paragraph contained to the contrary notwithstanding, if
after mailing of the Demand Redemption Notice and prior to the
Demand Redemption Date, the Trustee shall have been advised in
writing by the registered holder of the bond of the Thirty-
Seventh Series to be redeemed that the Redemption Demand has been
rescinded, the Demand Redemption Notice 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 such bond and no payments in respect thereof as
specified in the Demand Redemption Notice shall be effected or
required.
Bonds of the Thirty-Seventh Series shall not otherwise
be redeemable prior to maturity.
Bonds of the Thirty-Seventh Series shall be
exchangeable and transferable as and to the extent set forth in
the form of bonds of the Thirty-Seventh Series provided for
herein.
-10-
<PAGE>
SECTION 2. The Company covenants and agrees that, on
or prior to March 1 and September 1 in each year commencing March
1, 1994 and ending March 1, 2000, it will deliver written notice
to the Trustee that it has paid interest on the Note referred to
in Section 1 above at the rate of 6.08% per annum in accordance
with its terms and the terms of the Loan Agreement and that, on
or prior to August 31, 2000, it will deliver written notice to
the Trustee that it has so paid the principal of the Note
together with interest thereon at the rate of 6.08% per annum.
The Trustee shall be entitled to rely on each such notice and to
assume, if any such notice is not given, that the relevant
payment has not been made and that such payment is then due and
payable on the bonds of this series.
SECTION 3. 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 4. 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 5. The Trustee assumes no responsibility for or in
respect of the validity or sufficiency of this Supplemental Indenture
or the due execution hereof by the Company or for or in respect of the
recitals and statements contained herein, all of which recitals and
statements are made solely by the Company.
SECTION 6. This Supplemental Indenture may be executed in
several counterparts and all such counterparts executed and delivered,
each as an original, shall constitute but one and the same instrument.
PENNSYLVANIA POWER COMPANY hereby constitutes and appoints
Robert P. Wushinske to be its attorney for it and in its name as and
for its corporate act and deed to acknowledge this Supplemental
Indenture before any person having authority to take such
acknowledgement, to the intent that the same may be duly recorded.
CITIBANK, N.A. hereby constitutes and appoints P. DeFelice
to be its attorney for it and in its name as and for its corporate
act and deed to acknowledge this Supplemental Indenture before any
person having authority to take such acknowledgement, to the intent
that the same may be duly recorded.
-11-
<PAGE>
IN WITNESS WHEREOF, PENNSYLVANIA POWER COMPANY has caused
its corporate name to be hereunto affixed, and this instrument to be
signed and sealed by its President or a Vice President, and its
corporate seal to be attested by its Secretary or an Assistant
Secretary for and on its behalf, in the city of New Castle, County of
Lawrence and Commonwealth of Pennsylvania and CITIBANK, N.A., in
token of its acceptance of the trust, has caused its corporate name
to be hereunto affixed, and this instrument to be signed by a Vice
President and its corporate seal to be affixed and attested by one of
its Assistant Vice Presidents in the City of New York, County of New
York and State of New York, all as of the day and year first above
written.
PENNSYLVANIA POWER COMPANY
By: Robert P. Wushinske
-------------------------
Robert P. Wushinske
Vice President
ATTEST:
By: J. R. Edgerly
---------------------------
J. R. Edgerly
Secretary
[Seal]
Signed, sealed and delivered by
PENNSYLVANIA POWER COMPANY
in the presence of:
Angeline Comparone
- ------------------------------
Angeline Comparone
F. A. Fazzone
- ------------------------------
F. A. Fazzone
-12-
<PAGE>
CITIBANK, N.A.
as Trustee as aforesaid,
By: P. DeFelice
-------------------------
P. DeFelice
Vice President
ATTEST:
By: Carol Ng
---------------------------
Carol Ng
Assistant Vice President
[Seal]
Signed, sealed and delivered by
CITIBANK, N.A.
in the presence of:
J. Berger
- ------------------------------
J. Berger
Jose R. Gonzalez
- ------------------------------
Jose R. Gonzalez
-13-
<PAGE>
COMMONWEALTH OF PENNSYLVANIA )
: ss.:
COUNTY OF LAWRENCE )
BE IT REMEMBERED that, on the 27th day of August, 1993,
before me, the undersigned, a Notary Public in said County of
Lawrence, Commonwealth of Pennsylvania, personally appeared J. R.
Edgerly, who being duly sworn according to law, doth depose and say
that he was personally present and did see the common or corporate
seal of the above named PENNSYLVANIA POWER COMPANY affixed to the
foregoing Supplemental Indenture; that the seal so affixed is the
common or corporate seal of the said Pennsylvania Power Company and
was so affixed by the authority of the said corporation as the act
and deed thereof; that the above named Robert P. Wushinske is a Vice
President of said corporation and did sign the said Supplemental
Indenture as such in the presence of this deponent; that this
deponent is the Secretary of Pennsylvania Power Company, and that the
name of this deponent above signed in attestation of the due
execution of the said Supplemental Indenture is in this deponent's
own proper handwriting.
Sworn to and subscribed before me this 27th day of August,
1993.
J. R. Edgerly
------------------------------
[SEAL]
Sylvia M. Rashid
------------------------------
NOTARIAL SEAL
SYLVIA M. RASHID, Notary Public
New Castle, Lawrence Co., PA
My Commission Expires March 11, 1997
-14-
<PAGE>
COMMONWEALTH OF PENNSYLVANIA )
: ss.:
COUNTY OF LAWRENCE )
I HEREBY CERTIFY that, on this 27th day of August, 1993,
before me, the subscriber, a Notary Public in and for the State and
County aforesaid, personally appeared Robert P. Wushinske, the
attorney for PENNSYLVANIA POWER COMPANY, and the attorney named in
the foregoing Supplemental Indenture and, by virtue and in pursuance
of the authority therein conferred upon him, acknowledged the said
Supplemental Indenture to be the act and deed of said Pennsylvania
Power Company.
WITNESS my hand and notarial seal the day and year
aforesaid.
[SEAL]
Sylvia M. Rashid
------------------------------
NOTARIAL SEAL
SYLVIA M. RASHID, Notary Public
New Castle, Lawrence Co., PA
My Commission Expires March 11, 1997
COMMONWEALTH OF PENNSYLVANIA )
: ss.:
COUNTY OF LAWRENCE )
On the 27th day of August, 1993, before me, personally came
Robert P. Wushinske, to me known, who, being by me duly sworn, did
depose and say that he resides at R.D. 2, Means Road, New Wilmington,
Pennsylvania 16142; that he is a Vice President of PENNSYLVANIA
POWER 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 affixed by order of the Board of
Directors of said corporation, and that he signed his name thereto by
like authority.
WITNESS my hand and notarial seal the day and year
aforesaid.
[SEAL]
Sylvia M. Rashid
------------------------------
NOTARIAL SEAL
SYLVIA M. RASHID, Notary Public
New Castle, Lawrence Co., PA
My Commission Expires March 11, 1997
-15-
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED that, on the 26th day of August, 1993,
before me, the undersigned, a Notary Public in said County of New
York, State of New York, personally appeared Carol Ng, who being duly
sworn according to law, doth depose and say that she was personally
present and did see the common or corporate seal of the above named
CITIBANK, N.A. affixed to the foregoing Supplemental Indenture; that
the seal so affixed is the common or corporate seal of the said
CITIBANK, N.A. and was so affixed by the authority of the said
association as the act and deed thereof; that the above named P.
DeFelice is one of the Vice Presidents of said association and did
sign the said Supplemental Indenture as such in the presence of this
deponent; that this deponent is an Assistant Vice President of said
CITIBANK, N.A., and that the name of this deponent above signed in
attestation of the due execution of the said Supplemental Indenture
is in this deponent's own proper handwriting.
Sworn to and subscribed before me this 26th day of August,
1993.
Carol Ng
------------------------------
[SEAL]
Peter M. Pavlyshin
------------------------------
PETER M. PAVLYSHIN
Notary Public, State of New York
No. 41-4991297
Qualified in Queens County
Cert. filed in New York County
Commission Expires January 27, 1994
-16-
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
I HEREBY CERTIFY that, on this 26 day of August, 1993,
before me, the subscriber, a Notary Public in and for the State and
County aforesaid, personally appeared P. DeFelice, the attorney for
CITIBANK, N.A., and the attorney named in the foregoing Supplemental
Indenture and, by virtue and in pursuance of the authority therein
conferred upon him, acknowledged the execution of said Supplemental
Indenture to be the act and deed of said CITIBANK, N.A.
WITNESS my hand and notarial seal the day and year
aforesaid.
Peter M. Pavlyshin
-----------------------------
[SEAL] PETER M. PAVLYSHIN
Notary Public, State of New York
No. 41-4991297
Qualified in Queens County
Cert. filed in New York County
Commission Expires January 27, 1994
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 26 day of August, 1993, before me, personally came
P. DeFelice, to me known, who being by me duly sworn, did depose and
say that he resides at 47-09 169th Street, Flushing, New York; that
he is a Vice President of CITIBANK, N.A., one of the parties
described in and which executed the above instrument; that he knows
the seal of said association; that the seal affixed to said
instrument is such corporate seal; that it was so affixed by
authority of the Board of Directors of said association, and that he
signed his name thereto by like authority.
WITNESS my hand and notarial seal the day and year
aforesaid.
Peter M. Pavlyshin
-----------------------------
[SEAL] PETER M. PAVLYSHIN
Notary Public, State of New York
No. 41-4991297
Qualified in Queens County
Cert. filed in New York County
Commission Expires January 27, 1994
-17-
<PAGE>
Citibank, N.A. hereby certifies that its precise name and
address as Trustee hereunder are:
CITIBANK, N.A.
111 Wall Street
Borough of Manhattan
City, County and State
of New York 10043
CITIBANK, N.A.
By P. DeFelice
-----------------------
P. DeFelice
Vice President
<PAGE>
A-1
SCHEDULE A
Detailed Description of Additional Properties
STEAM PRODUCTION
W. H. Sammis Station - Unit No. 7 - Pennsylvania Power
Company's portion (20.8%) of a continuous emission monitor platform
and elevator.
Signed for identification
J. R. Edgerly
--------------------------
J. R. Edgerly
Secretary
PENNSYLVANIA POWER COMPANY
P. DeFelice
--------------------------
P. DeFelice
Vice President
CITIBANK, N.A.
<PAGE>
[CONFORMED COPY]
PENNSYLVANIA POWER COMPANY
to
CITIBANK, N.A.,
As Trustee
Thirty-ninth Supplemental
Indenture
Providing among other things for
FIRST MORTGAGE BONDS
6-3/8% Series of 1993 Due 2004
Dated as of September 1, 1993
<PAGE>
THIRTY-NINTH SUPPLEMENTAL INDENTURE, dated as of
September 1, 1993, made and entered into by and between
PENNSYLVANIA POWER COMPANY, a corporation organized and existing
under the laws of the Commonwealth of Pennsylvania, with its
principal place of business in New Castle, Lawrence County,
Pennsylvania (hereinafter sometimes referred to as the "Company")
and CITIBANK, N.A., a national banking association incorporated
and existing under the laws of the United States of America, with
its principal office in the Borough of Manhattan, The City,
County and State of New York (hereinafter sometimes referred to
as the "Trustee"), as trustee under the Indenture dated as of
November 1, 1945 between the Company and CITIBANK, N.A.
(successor to The First National City Bank of New York), as
trustee, as supplemented and amended by Supplemental Indentures
between the Company and the Trustee, dated as of May 1, 1948, as
of March 1, 1950, as of February 1, 1952, as of October 1, 1957,
as of September 1, 1962, as of June 1, 1963, as of June 1, 1969,
as of May 1, 1970, as of April 1, 1971, as of October 1, 1971, as
of May 1, 1972, as of December 1, 1974, as of October 1, 1975, as
of September 1, 1976, as of April 15, 1978, as of June 28, 1979,
as of January 1, 1980, as of June 1, 1981, as of January 14,
1982, as of August 1, 1982, as of December 15, 1982, as of
December 1, 1983, as of September 6, 1984, as of December 1,
1984, as of May 30, 1985, as of October 29, 1985, as of August 1,
1987, as of May 1, 1988, as of November 1, 1989, as of
December 1, 1990, as of September 1, 1991, as of May 1, 1992, as
of July 15, 1992, as of August 1, 1992, as of May 1, 1993, as of
July 1, 1993, and as of August 31, 1993 (said Indenture as so
supplemented and amended, and as hereby supplemented and amended,
being hereinafter sometimes referred to as the "Indenture");
WHEREAS, the Company and the Trustee have executed and
delivered the Indenture for the purpose of securing an issue of
bonds of the First Series described therein and such additional
bonds as may from time to time be issued under and in accordance
with the terms of the Indenture, the aggregate principal amount
of bonds to be secured thereby being not limited, and the
Indenture fully describes and sets forth the property conveyed
thereby and is filed with the Secretary of the Commonwealth of
Pennsylvania and the Secretary of State of the State of Ohio and
will be of record in the office of the recorder of deeds of each
county in the Commonwealth of Pennsylvania and the State of Ohio
in which this Thirty-ninth Supplemental Indenture is to be
recorded and is on file at the corporate trust office of the
Trustee, above referred to; and
WHEREAS the Indenture provides for the issuance of
bonds thereunder in one or more series and the Company, by
appropriate corporate action in conformity with the terms of the
Indenture, has duly determined to create such a series of bonds
under the Indenture to be designated as "First Mortgage Bonds,
6-3/8% Series of 1993 due 2004" (hereinafter sometimes referred
to as the "Thirty-Eighth Series"), the bonds of which are to bear
<PAGE>
interest at the annual rate designated in the title thereof and
are to mature on September 1, 2004;
AND WHEREAS each of the bonds of the Thirty-Eighth
Series and the Trustee's Authentication Certificate thereon are
to be substantially in the following respective forms, to wit:
FORM OF BOND OF THE THIRTY-EIGHTH SERIES
[FACE]
PENNSYLVANIA POWER COMPANY
First Mortgage Bond, 6-3/8% Series of 1993 due 2004
$ No.
Pennsylvania Power Company, a Pennsylvania corporation
(hereinafter called the "Company"), for value received, hereby
promises to pay to _____________ or registered assigns, the
principal sum of $_______ on September 1, 2004, and to pay the
registered holder hereof interest on said sum from the latest
semiannual interest payment date to which interest has been paid
on the bonds of this series preceding the date hereof, unless the
date hereof be an interest payment date to which interest is
being paid, in which case from the date hereof or unless the date
hereof is prior to March 1, 1994, in which case from September 1,
1993 (or, if this bond is dated between the record date for any
interest payment date and such interest payment date, then from
such interest payment date, provided, however, that if and to the
extent the Company shall default in the payment of the interest
due on such interest payment date, then from the interest payment
date next preceding the date of such bond to which interest has
been paid on bonds of this series, or, if the Company shall be in
default with respect to the interest due on March 1, 1994, then
from September 1, 1993), at the rate, until the principal hereof
shall have become due and payable, of 6-3/8 per centum per annum,
payable on March 1, 1994 and on each March 1 and September 1
thereafter. The principal of and interest on this bond shall be
payable at the office or agency of the Company in the Borough of
Manhattan, The City, County and State of New York, designated for
that purpose, 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.
The interest so payable on any interest payment date
will, subject to certain exceptions provided in the Indenture
referred to on the reverse hereof, be paid to the person in whose
name this bond is registered at the close of business on the
record date, which shall be the February 15 or August 15, as the
case may be, next preceding such interest payment date, or if
such February 15 or August 15, shall be a legal holiday or a day
-2-
<PAGE>
on which the banking institutions in the Borough of Manhattan,
The City, County and State of New York, are authorized by law to
close, the next preceding day which shall not be a legal holiday
or a day on which such institutions are so authorized to close.
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 be valid or become obligatory for
any purpose unless and until it shall have been authenticated by
the execution by the Trustee or its successor in trust under the
Indenture of the certificate hereon.
IN WITNESS WHEREOF, PENNSYLVANIA POWER COMPANY has
caused this bond to be executed in its name by its President or
one of its Vice Presidents by his or her signature or a facsimile
thereof, and its corporate seal or a facsimile thereof to be
affixed hereto or imprinted hereon and attested by its Secretary
or one of its Assistant Secretaries by his or her signature or a
facsimile thereof.
Dated:
PENNSYLVANIA POWER COMPANY
By .......................
President
Attest:
.........................
Secretary
-3-
<PAGE>
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 Indenture.
CITIBANK, N.A.
AS TRUSTEE,
By ........................
Authorized Officer
-4-
<PAGE>
FORM OF BOND OF THE THIRTY-EIGHTH SERIES
[REVERSE]
PENNSYLVANIA POWER COMPANY
First Mortgage Bond, 6-3/8% Series of 1993 due 2004
This bond is one of the bonds issued and to be issued
from time to time under and in accordance with and all secured by
an indenture of mortgage or deed of trust dated as of November 1,
1945, and indentures supplemental thereto, given by the Company
to Citibank, N.A. (successor to The First National Bank of the
City of New York), as trustee (hereinafter referred to as the
"Trustee"), to which indenture and indentures supplemental
thereto (hereinafter referred to collectively as the "Indenture")
reference is hereby made for a description of the property
mortgaged and pledged, the nature and extent of the security and
the rights, duties and immunities thereunder of the Trustee and
the rights of the holders of the bonds and coupons and of the
Trustee and of the Company in respect of such security, and the
limitations on such rights. By the terms of the Indenture, the
bonds to be secured thereby are issuable in series which may vary
as to date, amount, date of maturity, rate of interest, terms of
redemption and in other respects as in the Indenture provided.
The Indenture contains provisions permitting the
Company and the Trustee, with the consent of the holders of not
less than seventy-five per centum in principal amount of the
bonds (exclusive of bonds disqualified by reason of the Company's
interest therein) at the time outstanding, including, if more
than one series of bonds shall be at the time outstanding, not
less than sixty per centum in principal amount of each series
affected, to effect, by an indenture supplemental to the
Indenture, modifications or alterations of the Indenture and of
the rights and obligations of the Company and the rights of the
holders of the bonds and coupons; provided, however, that no such
modification or alteration shall be made without the written
approval or consent of the holder hereof which will (a) extend
the maturity of this bond or reduce the rate or extend the time
of payment of interest hereon or reduce the amount of the
principal hereof or reduce any premium payable on the redemption
hereof, or (b) permit the creation of any lien, not otherwise
permitted, prior to or on a parity with the lien of the
Indenture, or (c) reduce the percentage of the principal amount
of the bonds upon the approval or consent of the holders of which
modifications or alterations may be made as aforesaid.
Bonds of this series are not redeemable prior to their
maturity.
In case of certain defaults as specified in the
Indenture, the principal of this bond may be declared or may
-5-
<PAGE>
become due and payable on the conditions, at the time, in the
manner and with the effect provided in the Indenture.
No recourse shall be had for the payment of the
principal of or interest on this bond, or for any claim based
hereon, or otherwise in respect hereof or of the Indenture, to or
against any incorporator, stockholder, director or officer, past,
present or future, as such, of the Company, or of any predecessor
or successor company, either directly or through the Company, or
such predecessor or successor company, or otherwise, under any
constitution or statute or rule of law, or by the enforcement of
any assessment or penalty, or otherwise, all such liability of
incorporators, stockholders, directors and officers, as such,
being waived and released by the holder and owner hereof by the
acceptance of this bond and being likewise waived and released by
the terms of the Indenture.
The bonds of this series are issuable only as
registered bonds without coupons in denominations of $1,000 and
authorized multiples thereof. This bond is transferable by the
registered holder hereof, in person or by attorney duly
authorized, at the corporate trust office of the Trustee, in the
Borough of Manhattan, The City, County and State of New York, or
at such other place or places as the Company may designate by
resolution of the Board of Directors, but only in the manner and
upon the conditions prescribed in the Indenture, upon the
surrender and cancellation of this bond and the payment of
charges for transfer, and upon any such transfer a new registered
bond or bonds, without coupons, of the same series and maturity
date and for the same aggregate principal amount, in authorized
denominations, will be issued to the transferee in exchange
herefor. The Company, the Trustee and any agent designated to
make transfers or exchanges of bonds of this series may deem and
treat the person in whose name this bond is registered as the
absolute owner for all purposes including the purpose of the
receipt of payment. Registered bonds of this series shall be
exchangeable at said corporate trust office of the Trustee, or at
such other place or places as the Company may designate by
resolution of the Board of Directors, for registered bonds of
other authorized denominations having the same aggregate
principal amount, in the manner and upon the conditions
prescribed in the Indenture. Neither the Company nor the Trustee
nor any other agent designated for such propose 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.
Notwithstanding any provisions of the Indenture, 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.
Bonds of this series are to be issued initially under a
book-entry only system and, except as hereinafter provided,
registered in the name of The Depository Trust Company, New York,
-6-
<PAGE>
New York ("DTC") or its nominee, which shall be considered the
holder of all of the bonds of this series for all purposes of the
Indenture, including, without limitation, payment by the Company
of principal and interest on such bonds of this series and
receipt of notices and exercise of rights of holders of such
bonds of this series. There shall be a single bond of this
series which shall be immobilized in the custody of DTC with the
owners of book entry interests in bonds of this series ("Book
Entry Interests") having no right to receive bonds of this series
in the form of physical securities or certificates. Ownership of
Book-Entry Interests shall be shown by book entry on the system
maintained and operated by DTC, its participants (the
"Participants") and certain persons acting through the
Participants. Transfers of ownership of Book-Entry Interests are
to be made only by DTC and the Participants by that book entry
system, the Company and the Trustee having no responsibility
therefor so long as bonds of this series are registered in the
name of DTC or its nominee. DTC is to maintain records of the
positions of Participants are to maintain records of the
purchasers and owners of Book-Entry Interests. If DTC or its
nominee determines not to continue to act as a depository for the
bonds of this series in connection with a book-entry only system,
another depository, if available, may act, instead and the single
bond of this series will be transferred into the name of such
other depository or its nominee, in which case the above
provisions will continue to apply but to the new depository. If
the book-entry only system for bonds of this series is
discontinued for any reason upon surrender and cancellation of
the single bond of this series registered in the name of the then
depository or its nominee, new registered bonds of this series
will be issued in authorized denominations to the holders of
Book-Entry Interests in principal amounts coinciding with the
amounts of such Book-Entry Interests shown on the book-entry only
system immediately prior to the discontinuance thereof. Neither
the Trustee nor the Company shall be responsible for the accuracy
of the interests shown on that system.
[END OF FORM OF BOND OF THE THIRTY-EIGHTH SERIES]
AND WHEREAS all acts and things necessary to make the
bonds of the Thirty-Eighth Series, when authenticated by the
Trustee and issued as in the Indenture provided, the valid,
binding and legal obligations of the Company, and to constitute
the Indenture a valid, binding and legal instrument for the
security thereof, have been done and performed, and the creation,
execution and delivery of the Indenture and the creation,
execution and issue of the bonds of the Thirty-Eighth Series
subject to the terms hereof and of the Indenture, have in all
respects been duly authorized;
NOW THEREFORE, in consideration of the premises, and of
the acceptance and purchase by holders thereof of the bonds of
the Thirty-Eighth Series issued and to be issued under the
Indenture, and the sum of One Dollar duly paid by the Trustee to
-7-
<PAGE>
the Company, and of other good and valuable considerations, the
receipt of which is hereby acknowledged, and for the purpose of
securing the due and punctual payment of the principal of and
premium, if any, and interest on all bonds now outstanding under
the Indenture and the $50,000,000 principal amount of bonds of
the Thirty-Eighth Series proposed presently to be issued and all
other bonds which shall be issued under the Indenture, and for
the purpose of securing the faithful performance and observance
of all covenants and conditions therein and in any supplemental
indenture set forth, the Company has given, granted, bargained,
sold, released, transferred, assigned, hypothecated, pledged,
mortgaged, confirmed, created a security interest in, set over,
warranted, aliened and conveyed and by these presents does give,
grant, bargain, sell, release, transfer, assign, hypothecate,
pledge, mortgage, confirm, create a security interest in, set
over, warrant, alien and convey unto Citibank, N.A., as Trustee
as provided in the Indenture, and its successor or successors in
the trust thereby and hereby created and to its or their assigns
forever, all the right, title and interest of the Company in and
to the property 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
(subject to the provisions of Article X of the Indenture) with
the tolls, rents, revenues, issues, earnings, income, products
and profits thereof, 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 said
Article X thereof.
TOGETHER WITH all and singular the tenements,
hereditaments and appurtenances belonging or in any wise
appertaining to the premises, property, franchises and rights, or
any thereof, referred to in Schedule A, annexed hereto with the
reversion and reversions, remainder and remainders and (subject
to the provisions of Article X of the Indenture) the tolls,
rents, revenues, issues, earnings, income, products 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 such premises, property,
franchises and rights and every part and parcel thereof described
in the aforesaid Schedule A, subject to "excepted encumbrances"
of the original Indenture.
TO HAVE AND TO HOLD all said premises, property,
franchises and rights hereby conveyed, assigned, pledged, or
mortgaged, or intended so to be, unto the Trustee, its successor
or successors in trust, and their assigns forever.
BUT IN TRUST, NEVERTHELESS, with power of sale, for the
equal and proportionate benefit and security of the holders of
all bonds now or hereafter authenticated and delivered under the
-8-
<PAGE>
Indenture, and interest coupons appurtenant thereto, pursuant to
the provisions thereof, and for the enforcement of the payment of
said bonds and coupons when payable and the performance of and
compliance with the covenants and conditions of the Indenture,
without any preference, distinction or priority as to lien or
otherwise of any bond or bonds over others by reason of the
difference in time of the actual authentication, delivery, issue,
sale or negotiation thereof or for any other reason whatsoever,
except as otherwise expressly provided in the Indenture; and so
that each and every bond now or hereafter authenticated and
delivered thereunder shall have the same lien, and so that the
principal of and premium, if any, and interest on every such
bond, shall subject to the terms of the Indenture, be equally and
proportionately secured thereby and hereby, as if it had been
made, executed, authenticated, delivered, sold and negotiated
simultaneously with the execution and delivery of the Indenture.
AND IT IS EXPRESSLY DECLARED that all bonds
authenticated and delivered and secured thereunder and hereunder
are to be issued, authenticated and delivered, and all said
premises, property, franchises and rights hereby and by the
Indenture conveyed, assigned, pledged or mortgaged, or intended
so to be (including all the right, title and interest of the
Company in and to any and all premises, property, franchises and
rights of every kind and description, real, personal and mixed,
tangible and intangible, thereafter acquired by the Company and
whether or not specifically described in the Indenture, except
any therein expressly excepted), are to be dealt with and
disposed of, under, upon and subject to the terms, conditions,
stipulations, covenants, agreements, trusts, uses and purposes in
the Indenture expressed, and it is hereby agreed as follows:
Section 1. There is hereby created a series of bonds
designated 6-3/8% Series of 1993 due 2004, which shall also bear
the descriptive title "First Mortgage Bond" (said bonds being
sometimes herein referred to as the "bonds of the Thirty-Eighth
Series") and the form of such series shall be substantially as
hereinbefore set forth. Bonds of the Thirty-Eighth Series shall
mature on September 1, 2004. The bonds of the Thirty-Eighth
Series may be issued only as registered bonds without coupons in
denominations of $1,000 or such multiples thereof as the Board of
Directors shall approve, and delivery to the Trustee for
authentication shall be conclusive evidence of such approval.
The serial numbers of bonds of the Thirty-Eighth Series shall be
such as may be approved by any officer of the Company, the
execution thereof by any such officer, by facsimile signature or
otherwise, to be conclusive evidence of such approval. Bonds of
the Thirty-Eighth Series shall bear interest at the rate, until
the principal thereof shall have become due and payable, of
6-3/8% per annum payable semiannually on March 1, 1994 and on
each March 1 and September 1 thereafter, the principal of and the
interest on said bonds 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 the office or agency
-9-
<PAGE>
of the Company in the Borough of Manhattan, The City, County and
State of New York, designated for that purpose.
Except as provided in this Section 1, bonds of the
Thirty-Eighth Series shall be dated and bear interest as provided
in Section 2.03 of the Indenture; provided, however, that, so
long as there is no existing default in the payment of interest
on said bonds, any bond of the Thirty-Eighth Series authenticated
by the Trustee between an interest payment date for bonds of such
Series and the record date, as hereinbelow defined, for such
interest payment date shall bear interest from such interest
payment date and the holder of any such bond shall not be
entitled to payment of interest on such interest payment date and
shall have no claim against the Company with respect thereto;
provided, further, that if and to the extent the Company, shall
default in the payment of the interest due on such interest
payment date, then such bond shall bear interest from the
interest payment date next preceding the date of such bond, to
which interest has been paid, or, if the Company shall be in
default with respect to the interest due March 1, 1994, then from
September 1, 1993.
Bonds of the Thirty-Eighth Series are not redeemable
prior to their maturity.
The person in whose name any bond of the Thirty-Eighth
Series is registered at the close of business on any record date
(as hereinbelow defined) with respect to any interest payment
date shall be entitled to receive the interest payable on such
interest payment date notwithstanding the cancellation of such
registered bond upon any transfer or exchange thereof subsequent
to the record date and prior to such interest payment date,
except if and to the extent the Company shall default in the
payment of the interest due on such interest payment date, in
which case such defaulted interest shall be paid to the person in
whose name such bond (or any bond or bonds) issued, directly or
after immediate transactions, upon transfer or exchange or in
substitution thereof) is registered on a subsequent record date
for such payment established as hereinafter provided. A
subsequent record date may be established by the Company by
notice mailed to the registered holders of binds not less than
ten days preceding such subsequent record date, which shall be
not less than five nor more than thirty days prior to the
subsequent interest payment date. The term "record date" as used
in this Section with respect to any regular interest payment date
shall mean the February 15 or August 15, as the case may be, next
preceding such interest payment date, or, if such February 15 or
August 15 shall be a legal holiday or a day on which the banking
institutions in the Borough of Manhattan, The City, County and
State of New York, are authorized by law to close, the next
preceding day which shall not be a legal holiday or a day on
which such institutions are so authorized to close.
-10-
<PAGE>
SECTION 2. The Company covenants and agrees that the
provisions of Section 3 of the Fifth Supplemental Indenture dated
as of September 1, 1962, which are to remain in effect so long as
any bonds of the Sixth Series shall be outstanding under the
Indenture, shall remain in full force and effect so long as any
bonds of the Thirty-Eighth Series shall be outstanding under the
Indenture.
SECTION 3. The Company covenants and agrees that the
provisions of Section 3 of the Nineteenth Supplemental Indenture
dated as of January 14, 1982, which are to remain in effect so
long as any bonds of the Twentieth Series shall be outstanding
under the Indenture, shall remain in full force and effect so
long as any bonds of the Thirty-Eighth Series shall be
outstanding under the Indenture.
SECTION 4. As supplemented and amended by this
Supplemental Indenture, the Indenture is in all respects ratified
and confirmed, and the Indenture and this Supplemental Indenture
shall be read, taken and construed as one and the same
instrument.
SECTION 5. 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 6. The Trustee assumes no responsibility for
or in respect of the validity or sufficiency of this Supplemental
Indenture or the due execution hereof by the Company or for or in
respect of the recitals and statements contained herein, all of
which recitals and statements are made solely by the Company.
SECTION 7. This Supplemental Indenture may be executed
in several counterparts and all such counterparts executed and
delivered, each as an original, shall constitute but one and the
same instrument.
PENNSYLVANIA POWER COMPANY hereby constitutes and
appoints Robert P. Wushinske to be its attorney for it and in its
name as and for its corporate act and deed to acknowledge this
Supplemental Indenture before any person having authority to take
such acknowledgment, to the intent that the same may be duly
recorded.
CITIBANK, N.A. hereby constitutes and appoints P.
DeFelice to be its attorney for it and in its name as and for its
corporate act and deed to acknowledge this Supplemental Indenture
before any person having authority to take such acknowledgment,
to the intent that the same may be duly recorded.
-11-
<PAGE>
IN WITNESS WHEREOF, PENNSYLVANIA POWER COMPANY has
caused its corporate name to be hereunto affixed, and this
instrument to be signed and sealed by its President or a Vice
President, and its corporate seal to be attested by its Secretary
or an Assistant Secretary for and on its behalf, in the city of
New Castle, County of Lawrence and Commonwealth of Pennsylvania
and CITIBANK, N.A., in token of its acceptance of the trust, has
caused its corporate name to be hereunto affixed, and this
instrument to be signed by a Vice President and its corporate
seal to be affixed and attested by one of its Assistant Vice
Presidents in the City of New York, County of New York and State
of New York, all as of the day and year first above written.
PENNSYLVANIA POWER COMPANY
By: Robert P. Wushinske
--------------------------
Robert P. Wushinske
Vice President
ATTEST:
By: J. R. Edgerly
---------------------------
J. R. Edgerly
Secretary
[Seal]
Signed, sealed and delivered by
PENNSYLVANIA POWER COMPANY
in the presence of:
Angeline Comparone
- ------------------------------
Angeline Comparone
F. A. Fazzone
- ------------------------------
F. A. Fazzone
-12-
<PAGE>
CITIBANK, N.A.
as Trustee as aforesaid,
By: P. DeFelice
--------------------------
P. DeFelice
Vice President
ATTEST:
By: Carol Ng
---------------------------
Carol Ng
Assistant Vice President
[Seal]
Signed, sealed and delivered by
CITIBANK, N.A.
in the presence of:
J. Berger
- ------------------------------
J. Berger
Jose R. Gonzalez
- ------------------------------
Jose R. Gonzalez
-13-
<PAGE>
COMMONWEALTH OF PENNSYLVANIA )
: ss.:
COUNTY OF LAWRENCE )
BE IT REMEMBERED that, on the 27th day of August, 1993,
before me, the undersigned, a Notary Public in said County of
Lawrence, Commonwealth of Pennsylvania, personally appeared J. R.
Edgerly, who being duly sworn according to law, doth depose and
say that he was personally present and did see the common or
corporate seal of the above named PENNSYLVANIA POWER COMPANY
affixed to the foregoing Supplemental Indenture; that the seal so
affixed is the common or corporate seal of the said Pennsylvania
Power Company and was so affixed by the authority of the said
corporation as the act and deed thereof; that the above named
Robert P. Wushinske is a Vice President of said corporation and
did sign the said Supplemental Indenture as such in the presence
of this deponent; that this deponent is the Secretary of
Pennsylvania Power Company, and that the name of this deponent
above signed in attestation of the due execution of the said
Supplemental Indenture is in this deponent's own proper
handwriting.
Sworn to and subscribed before me this 27th day of
August, 1993.
J. R. Edgerly
------------------------------
[SEAL]
Sylvia M. Rashid
------------------------------
NOTARIAL SEAL
SYLVIA M. RASHID, Notary Public
New Castle, Lawrence Co., PA
My Commission Expires March 11, 1997
-14-
<PAGE>
COMMONWEALTH OF PENNSYLVANIA )
: ss.:
COUNTY OF LAWRENCE )
I HEREBY CERTIFY that, on this 27th day of August,
1993, before me, the subscriber, a Notary Public in and for the
State and County aforesaid, personally appeared Robert P.
Wushinske, the attorney for PENNSYLVANIA POWER COMPANY, and the
attorney named in the foregoing Supplemental Indenture and, by
virtue and in pursuance of the authority therein conferred upon
him, acknowledged the said Supplemental Indenture to be the act
and deed of said Pennsylvania Power Company.
WITNESS my hand and notarial seal the day and year
aforesaid.
[SEAL]
Sylvia M. Rashid
------------------------------
NOTARIAL SEAL
SYLVIA M. RASHID, Notary Public
New Castle, Lawrence Co., PA
My Commission Expires March 11, 1997
COMMONWEALTH OF PENNSYLVANIA )
: ss.:
COUNTY OF LAWRENCE )
On the 27th day of August, 1993, before me, personally
came Robert P. Wushinske, to me known, who, being by me duly
sworn, did depose and say that he resides at R.D. 2, Means Road,
New Wilmington, Pennsylvania 16142; that he is a Vice President
of PENNSYLVANIA POWER 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 affixed by order
of the Board of Directors of said corporation, and that he signed
his name thereto by like authority.
WITNESS my hand and notarial seal the day and year
aforesaid.
[SEAL]
Sylvia M. Rashid
------------------------------
NOTARIAL SEAL
SYLVIA M. RASHID, Notary Public
New Castle, Lawrence Co., PA
My Commission Expires March 11, 1997
-15-
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED that, on the 26th day of August, 1993,
before me, the undersigned, a Notary Public in said County of New
York, State of New York, personally appeared Carol Ng, who being
duly sworn according to law, doth depose and say that she was
personally present and did see the common or corporate seal of
the above named CITIBANK, N.A. affixed to the foregoing
Supplemental Indenture; that the seal so affixed is the common or
corporate seal of the said CITIBANK, N.A. and was so affixed by
the authority of the said association as the act and deed
thereof; that the above named P. DeFelice is one of the Vice
Presidents of said association and did sign the said Supplemental
Indenture as such in the presence of this deponent; that this
deponent is an Assistant Vice President of said CITIBANK, N.A.,
and that the name of this deponent above signed in attestation of
the due execution of the said Supplemental Indenture is in this
deponent's own proper handwriting.
Sworn to and subscribed before me this 26th day of
August, 1993.
Carol Ng
-----------------------------
Peter M. Pavlyshin
-----------------------------
[SEAL]
PETER M. PAVLYSHIN
Notary Public, State of New York
No. 41-4991297
Qualified in Queens County
Cert. filed in New York County
Commission Expires January 27, 1994
-16-
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
I HEREBY CERTIFY that, on this 26 day of August, 1993,
before me, the subscriber, a Notary Public in and for the State
and County aforesaid, personally appeared P. DeFelice, the
attorney for CITIBANK, N.A., and the attorney named in the
foregoing Supplemental Indenture and, by virtue and in pursuance
of the authority therein conferred upon him, acknowledged the
execution of said Supplemental Indenture to be the act and deed
of said CITIBANK, N.A.
WITNESS my hand and notarial seal the day and year
aforesaid.
Peter M. Pavlyshin
-----------------------------
[SEAL]
PETER M. PAVLYSHIN
Notary Public, State of New York
No. 41-4991297
Qualified in Queens County
Cert. filed in New York County
Commission Expires January 27, 1994
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 26 day of August, 1993, before me, personally
came P. DeFelice, to me known, who being by me duly sworn, did
depose and say that he resides at 47-09 169th Street, Flushing,
New York; that he is a Vice President of CITIBANK, N.A., one of
the parties described in and which executed the above instrument;
that he knows the seal of said association; that the seal affixed
to said instrument is such corporate seal; that it was so affixed
by authority of the Board of Directors of said association, and
that he signed his name thereto by like authority.
WITNESS my hand and notarial seal the day and year
aforesaid.
Peter M. Pavlyshin
-----------------------------
[SEAL]
PETER M. PAVLYSHIN
Notary Public, State of New York
No. 41-4991297
Qualified in Queens County
Cert. filed in New York County
Commission Expires January 27, 1994
-17-
<PAGE>
Citibank, N.A. hereby certifies that its precise name
and address as Trustee hereunder are:
CITIBANK, N.A.
111 Wall Street
Borough of Manhattan
City, County and State
of New York 10043
CITIBANK, N.A.
By P. DeFelice
-----------------------
P. DeFelice
Vice President
<PAGE>
A-1
SCHEDULE A
Detailed Description of Additional Properties
TRANSMISSION LINE
Y-218 Tap to Conneaut
Substation 69,000 volts 4.6 miles
DISTRIBUTION SUBSTATION
Conneaut Substation -- A 69,000/12,470 volt substation
and associated equipment located in Sadsbury Township,
Crawford County, Pennsylvania.
Signed for identification
J. R. Edgerly
--------------------------
J. R. Edgerly
Secretary
PENNSYLVANIA POWER COMPANY
P. DeFelice
--------------------------
P. DeFelice
Vice President
CITIBANK, N.A.<PAGE>
[CONFORMED COPY]
PENNSYLVANIA POWER COMPANY
to
CITIBANK, N.A.,
As Trustee
Fortieth Supplemental
Indenture
Providing among other things for
FIRST MORTGAGE BONDS
Guarantee Series A of 1993 due 2028
Guarantee Series A of 1993 due 2017
Dated as of September 15, 1993
<PAGE>
FORTIETH SUPPLEMENTAL INDENTURE, dated as of
September 15, 1993, made and entered into by and between
PENNSYLVANIA POWER COMPANY, a corporation organized and existing
under the laws of the Commonwealth of Pennsylvania, with its
principal place of business in New Castle, Lawrence County,
Pennsylvania (hereinafter sometimes referred to as the "Company")
and CITIBANK, N.A., a national banking association incorporated
and existing under the laws of the United States of America, with
its principal office in the Borough of Manhattan, The City,
County and State of New York (hereinafter sometimes referred to
as the "Trustee"), as trustee under the Indenture dated as of
November 1, 1945 between the Company and CITIBANK, N.A.
(successor to The First National Bank of The City of New York),
as trustee, as supplemented and amended by Supplemental
Indentures between the Company and the Trustee, dated as of May
1, 1948, as of March 1, 1950, as of February 1, 1952, as of
October 1, 1957, as of September 1, 1962, as of June 1, 1963, as
of June 1, 1969, as of May 1, 1970, as of April 1, 1971, as of
October 1, 1971, as of May 1, 1972, as of December 1, 1974, as of
October 1, 1975, as of September 1, 1976, as of April 15, 1978,
as of June 28, 1979, as of January 1, 1980, as of June 1, 1981,
as of January 14, 1982, as of August 1, 1982, as of December 15,
1982, as of December 1, 1983, as of September 6, 1984, as of
December 1, 1984, as of May 30, 1985, as of October 29, 1985, as
of August 1, 1987, as of May 1, 1988, as of November 1, 1989, as
of December 1, 1990, as of September 1, 1991, as of May 1, 1992,
as of July 15, 1992, as of August 1, 1992, as of May 1, 1993, as
of July 1, 1993, as of August 31, 1993 and as of September 1,
1993 (said Indenture as so supplemented and amended, and as
hereby supplemented and amended, being hereinafter sometimes
referred to as the "Indenture");
WHEREAS, the Company and the Trustee have executed and
delivered the Indenture for the purpose of securing an issue of
bonds of the First Series described therein and such additional
bonds as may from time to time be issued under and in accordance
with the terms of the Indenture, the aggregate principal amount
of bonds to be secured thereby being not limited, and the
Indenture fully describes and sets forth the property conveyed
thereby and is filed with the Secretary of the Commonwealth of
Pennsylvania and the Secretary of State of the State of Ohio and
will be of record in the office of the recorder of deeds of each
county in the Commonwealth of Pennsylvania and the State of Ohio
in which this Fortieth Supplemental Indenture is to be recorded
and is on file at the corporate trust office of the Trustee,
above referred to; and
WHEREAS the Indenture provides for the issuance of
bonds thereunder in one or more series and the Company, by
appropriate corporate action in conformity with the terms of the
Indenture, has duly determined to create two such series of bonds
under the Indenture to be designated as "First Mortgage Bonds,
Guarantee Series A of 1993 due 2028" (hereinafter sometimes
referred to as the "bonds of the 2028 Series") and "First
<PAGE>
Mortgage Bonds, Guarantee Series A of 1993 due 2017" (hereinafter
sometimes referred to as the "bonds of the 2017 Series") (bonds
of the 2028 and 2017 Series collectively hereinafter sometimes
referred to as the "bonds of the 1993 Guarantee Series"), the
bonds of which are to bear interest at the annual rates of 5.45%
per annum in the case of the bonds of the 2028 Series and 5.40%
per annum in the case of the bonds of the 2017 Series and are to
mature on September 15, 2028 in the case of the bonds of the 2028
Series and September 15, 2017 in the case of the bonds of the
2017 Series;
AND WHEREAS each of the bonds of the 1993 Guarantee
Series and the Trustee's Authentication Certificates thereon are
to be substantially in the following respective forms, to wit:
[FORM OF BOND OF THE 2028 SERIES]
[FACE]
This Bond is not transferable except to a successor
trustee under the Indenture, dated as of September 15, 1993,
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 Indenture referred
to herein.
PENNSYLVANIA POWER COMPANY
First Mortgage Bond, Guarantee Series A of 1993 due 2028
$6,950,000 No. R-1
Pennsylvania Power Company, a Pennsylvania corporation
(hereinafter called the "Company"), for value received, hereby
promises to pay to Society National Bank or registered assigns,
the principal sum of $6,950,000 on September 15, 2028, and to pay
the registered holder hereof interest on said sum from the
Initial Interest Accrual Date (hereinbelow defined) at the rate
of 5.45 per centum per annum. The principal of and interest on
this bond shall be payable at the office or agency of the Company
in the Borough of Manhattan, The City, County and State of New
York, designated for that purpose, 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.
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.
-2-
<PAGE>
This bond shall not be valid or become obligatory for
any purpose unless and until it shall have been authenticated by
the execution by the Trustee or its successor in trust under the
Indenture of the certificate hereon.
IN WITNESS WHEREOF, PENNSYLVANIA POWER COMPANY has
caused this bond to be executed in its name by its President or
one of its Vice Presidents by his or her signature or a facsimile
thereof, and its corporate seal or a facsimile thereof to be
affixed hereto or imprinted hereon and attested by its Secretary
or one of its Assistant Secretaries by his or her signature or a
facsimile thereof.
Dated:
PENNSYLVANIA POWER COMPANY
By .......................
President
Attest:
.........................
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 Indenture.
CITIBANK, N.A.
AS TRUSTEE,
By ........................
Authorized Officer
-3-
<PAGE>
[FORM OF BOND OF THE 2028 SERIES]
[REVERSE]
PENNSYLVANIA POWER COMPANY
First Mortgage Bond, Guarantee Series A of 1993 due 2028
This bond is one of the bonds issued and to be issued
from time to time under and in accordance with and all secured by
an indenture of mortgage or deed of trust dated as of November 1,
1945, and indentures supplemental thereto, given by the Company
to Citibank, N.A. (successor to The First National Bank of The
City of New York), as trustee (hereinafter referred to as the
"Trustee"), to which indenture and indentures supplemental
thereto (hereinafter referred to collectively as the "Indenture")
reference is hereby made for a description of the property
mortgaged and pledged, the nature and extent of the security and
the rights, duties and immunities thereunder of the Trustee and
the rights of the holders of the bonds and coupons and of the
Trustee and of the Company in respect of such security, and the
limitations on such rights. By the terms of the Indenture, the
bonds to be secured thereby are issuable in series which may vary
as to date, amount, date of maturity, rate of interest, terms of
redemption and in other respects as in the Indenture provided.
The Indenture contains provisions permitting the
Company and the Trustee, with the consent of the holders of not
less than seventy-five per centum in principal amount of the
bonds (exclusive of bonds disqualified by reason of the Company's
interest therein) at the time outstanding, including, if more
than one series of bonds shall be at the time outstanding, not
less than sixty per centum in principal amount of each series
affected, to effect, by an indenture supplemental to the
Indenture, modifications or alterations of the Indenture and of
the rights and obligations of the Company and the rights of the
holders of the bonds and coupons; provided, however, that no such
modification or alteration shall be made without the written
approval or consent of the holder hereof which will (a) extend
the maturity of this bond or reduce the rate or extend the time
of payment of interest hereon or reduce the amount of the
principal hereof or reduce any premium payable on the redemption
hereof, or (b) permit the creation of any lien, not otherwise
permitted, prior to or on a parity with the lien of the
Indenture, or (c) reduce the percentage of the principal amount
of the bonds upon the approval or consent of the holders of which
modifications or alterations may be made as aforesaid.
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
-4-
<PAGE>
by the Trustee of a written advice from the trustee under the
Trust Indenture (the "Revenue Bond Indenture") dated as of
September 15, 1993, 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 $6,950,000 of Pollution Control
Revenue Refunding Bonds, 1993 Series A (Pennsylvania Power
Company Mansfield Project), stating that the principal amount of
all the pollution control 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 pollution control revenue bonds and the date from which
interest on the pollution control 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 pollution control
revenue bonds then outstanding under the Revenue Bond Indenture
and not later than the 45th day after the 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 aforesaid pollution control 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 aforesaid pollution control revenue bonds becoming due and
payable on the maturity date of the bonds of this series, the
date from which unpaid interest on the aforesaid pollution
control 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 the Indenture (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 pollution control 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
-5-
<PAGE>
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 notice.
Bonds of this series are not otherwise redeemable prior
to their maturity.
In case of certain defaults as specified in the
Indenture, the principal of this bond may be declared or may
become due and payable on the conditions, at the time, in the
manner and with the effect provided in the Indenture.
No recourse shall be had for the payment of the
principal of or interest on this bond, or for any claim based
hereon, or otherwise in respect hereof or of the Indenture, to or
against any incorporator, stockholder, director or officer, past,
present or future, as such, of the Company, or of any predecessor
or successor company, either directly or through the Company, or
such predecessor or successor company, or otherwise, under any
constitution or statute or rule of law, or by the enforcement of
any assessment or penalty, or otherwise, all such liability of
incorporators, stockholders, directors and officers, as such,
being waived and released by the holder and owner hereof by the
acceptance of this bond and being likewise waived and released by
the terms of the Indenture.
The bonds of this series are issuable only as
registered bonds without coupons in denominations of $1,000 and
authorized multiples thereof. Except as may be stated in any
legend written on the face of this bond, this bond is
transferable by the registered holder hereof, in person or by
attorney duly authorized, at the corporate trust office of the
Trustee, in the Borough of Manhattan, The City, County and State
of New York, or at such other place or places as the Company may
designate by resolution of the Board of Directors, but only in
the manner and upon the conditions prescribed in the Indenture,
upon the surrender and cancellation of this bond and the payment
of charges for transfer, and upon any such transfer a new
registered bond or bonds, without coupons, of the same series and
maturity date and for the same aggregate principal amount, in
authorized denominations, will be issued to the transferee in
exchange herefor. The Company, the Trustee and any agent
designated to make transfers or exchanges of bonds of this series
may deem and treat the person in whose name this bond is
registered as the absolute owner for all purposes including the
purpose of the receipt of payment. Registered bonds of this
series shall be exchangeable at said corporate trust office of
the Trustee, or at such other place or places as the Company may
designate by resolution of the Board of Directors, for registered
bonds of other authorized denominations having the same aggregate
principal amount, in the manner and upon the conditions
prescribed in the Indenture. Neither the Company nor the Trustee
-6-
<PAGE>
nor any other agent designated for such purpose 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.
Notwithstanding any provisions of the Indenture, 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 THE 2028 SERIES]
[FORM OF BOND OF THE 2017 SERIES]
[FACE]
This Bond is not transferable except to a successor
trustee under the Indenture, dated as of September 15, 1993,
between the LAWRENCE COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY and
FIRST WESTERN TRUST SERVICES COMPANY, 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
Indenture referred to herein.
PENNSYLVANIA POWER COMPANY
First Mortgage Bond, Guarantee Series A of 1993 due 2017
$10,600,000 No. R-1
Pennsylvania Power Company, a Pennsylvania corporation
(hereinafter called the "Company"), for value received, hereby
promises to pay to First Western Trust Services Company or
registered assigns, the principal sum of $10,600,000 on September
15, 2017, and to pay the registered holder hereof interest on
said sum from the Initial Interest Accrual Date (hereinbelow
defined) at the rate of 5.40 per centum per annum. The principal
of and interest on this bond shall be payable at the office or
agency of the Company in the Borough of Manhattan, The City,
County and State of New York, designated for that purpose, 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.
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 be valid or become obligatory for
any purpose unless and until it shall have been authenticated by
-7-
<PAGE>
the execution by the Trustee or its successor in trust under the
Indenture of the certificate hereon.
IN WITNESS WHEREOF, PENNSYLVANIA POWER COMPANY has
caused this bond to be executed in its name by its President or
one of its Vice Presidents by his or her signature or a facsimile
thereof, and its corporate seal or a facsimile thereof to be
affixed hereto or imprinted hereon and attested by its Secretary
or one of its Assistant Secretaries by his or her signature or a
facsimile thereof.
Dated:
PENNSYLVANIA POWER COMPANY
By .......................
President
Attest:
.........................
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 Indenture.
CITIBANK, N.A.
AS TRUSTEE,
By ........................
Authorized Officer
-8-
<PAGE>
[FORM OF BOND OF THE 2017 SERIES]
[REVERSE]
PENNSYLVANIA POWER COMPANY
First Mortgage Bond, Guarantee Series A of 1993 due 2017
This bond is one of the bonds issued and to be issued
from time to time under and in accordance with and all secured by
an indenture of mortgage or deed of trust dated as of November 1,
1945, and indentures supplemental thereto, given by the Company
to Citibank, N.A. (successor to The First National Bank of The
City of New York), as trustee (hereinafter referred to as the
"Trustee"), to which indenture and indentures supplemental
thereto (hereinafter referred to collectively as the "Indenture")
reference is hereby made for a description of the property
mortgaged and pledged, the nature and extent of the security and
the rights, duties and immunities thereunder of the Trustee and
the rights of the holders of the bonds and coupons and of the
Trustee and of the Company in respect of such security, and the
limitations on such rights. By the terms of the Indenture, the
bonds to be secured thereby are issuable in series which may vary
as to date, amount, date of maturity, rate of interest, terms of
redemption and in other respects as in the Indenture provided.
The Indenture contains provisions permitting the
Company and the Trustee, with the consent of the holders of not
less than seventy-five per centum in principal amount of the
bonds (exclusive of bonds disqualified by reason of the Company's
interest therein) at the time outstanding, including, if more
than one series of bonds shall be at the time outstanding, not
less than sixty per centum in principal amount of each series
affected, to effect, by an indenture supplemental to the
Indenture, modifications or alterations of the Indenture and of
the rights and obligations of the Company and the rights of the
holders of the bonds and coupons; provided, however, that no such
modification or alteration shall be made without the written
approval or consent of the holder hereof which will (a) extend
the maturity of this bond or reduce the rate or extend the time
of payment of interest hereon or reduce the amount of the
principal hereof or reduce any premium payable on the redemption
hereof, or (b) permit the creation of any lien, not otherwise
permitted, prior to or on a parity with the lien of the
Indenture, or (c) reduce the percentage of the principal amount
of the bonds upon the approval or consent of the holders of which
modifications or alterations may be made as aforesaid.
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
-9-
<PAGE>
by the Trustee of a written advice from the trustee under the
Trust Indenture (the "Revenue Bond Indenture") dated as of
September 15, 1993, between Lawrence County Industrial
Development Authority and First Western Trust Services Company,
as trustee (such trustee and any successor trustee being
hereinafter referred to as the "Revenue Bond Trustee"), securing
$10,600,000 of Pollution Control Revenue Refunding Bonds, 1993
Series A (Pennsylvania Power Company New Castle Project), stating
that the principal amount of all the pollution control 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 pollution control revenue bonds and
the date from which interest on the pollution control 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 pollution control revenue bonds then outstanding under the
Revenue Bond Indenture and not later than the 45th day after the
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 aforesaid pollution
control 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 aforesaid pollution control
revenue bonds becoming due and payable on the maturity date of
the bonds of this series, the date from which unpaid interest on
the aforesaid pollution control 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 the
Indenture (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
pollution control 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
-10-
<PAGE>
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 notice.
Bonds of this series are not otherwise redeemable prior
to their maturity.
In case of certain defaults as specified in the
Indenture, the principal of this bond may be declared or may
become due and payable on the conditions, at the time, in the
manner and with the effect provided in the Indenture.
No recourse shall be had for the payment of the
principal of or interest on this bond, or for any claim based
hereon, or otherwise in respect hereof or of the Indenture, to or
against any incorporator, stockholder, director or officer, past,
present or future, as such, of the Company, or of any predecessor
or successor company, either directly or through the Company, or
such predecessor or successor company, or otherwise, under any
constitution or statute or rule of law, or by the enforcement of
any assessment or penalty, or otherwise, all such liability of
incorporators, stockholders, directors and officers, as such,
being waived and released by the holder and owner hereof by the
acceptance of this bond and being likewise waived and released by
the terms of the Indenture.
The bonds of this series are issuable only as
registered bonds without coupons in denominations of $1,000 and
authorized multiples thereof. Except as may be stated in any
legend written on the face of this bond, this bond is
transferable by the registered holder hereof, in person or by
attorney duly authorized, at the corporate trust office of the
Trustee, in the Borough of Manhattan, The City, County and State
of New York, or at such other place or places as the Company may
designate by resolution of the Board of Directors, but only in
the manner and upon the conditions prescribed in the Indenture,
upon the surrender and cancellation of this bond and the payment
of charges for transfer, and upon any such transfer a new
registered bond or bonds, without coupons, of the same series and
maturity date and for the same aggregate principal amount, in
authorized denominations, will be issued to the transferee in
exchange herefor. The Company, the Trustee and any agent
designated to make transfers or exchanges of bonds of this series
may deem and treat the person in whose name this bond is
registered as the absolute owner for all purposes including the
purpose of the receipt of payment. Registered bonds of this
series shall be exchangeable at said corporate trust office of
the Trustee, or at such other place or places as the Company may
designate by resolution of the Board of Directors, for registered
bonds of other authorized denominations having the same aggregate
principal amount, in the manner and upon the conditions
prescribed in the Indenture. Neither the Company nor the Trustee
-11-
<PAGE>
nor any other agent designated for such purpose 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.
Notwithstanding any provisions of the Indenture, 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 THE 2017 SERIES]
AND WHEREAS all acts and things necessary to make the
bonds of the 1993 Guarantee Series, when authenticated by the
Trustee and issued as in the Indenture provided, the valid,
binding and legal obligations of the Company, and to constitute
the Indenture a valid, binding and legal instrument for the
security thereof, have been done and performed, and the creation,
execution and delivery of the Indenture and the creation,
execution and issue of the bonds of the 1993 Guarantee Series
subject to the terms hereof and of the Indenture, have in all
respects been duly authorized;
NOW THEREFORE, in consideration of the premises, and of
the acceptance and purchase by holders thereof of the bonds of
the 1993 Guarantee Series issued and to be issued under the
Indenture, and the sum of One Dollar duly paid by the Trustee to
the Company, and of other good and valuable considerations, the
receipt of which is hereby acknowledged, and for the purpose of
securing the due and punctual payment of the principal of and
premium, if any, and interest on all bonds now outstanding under
the Indenture and the $6,950,000 principal amount of bonds of the
2028 Series and the $10,600,000 principal amount of bonds of the
2017 Series proposed presently to be issued and all other bonds
which shall be issued under the Indenture, and for the purpose of
securing the faithful performance and observance of all covenants
and conditions therein and in any supplemental indenture set
forth, the Company has given, granted, bargained, sold, released,
transferred, assigned, hypothecated, pledged, mortgaged,
confirmed, created a security interest in, set over, warranted,
aliened and conveyed and by these presents does give, grant,
bargain, sell, release, transfer, assign, hypothecate, pledge,
mortgage, confirm, create a security interest in, set over,
warrant, alien and convey unto Citibank, N.A., as Trustee as
provided in the Indenture, and its successor or successors in the
trust thereby and hereby created and to its or their assigns
forever, all the right, title and interest of the Company in and
to the property described in the Indenture (and not therein
expressly excepted), together (subject to the provisions of
Article X of the Indenture) with the tolls, rents, revenues,
issues, earnings, income, products and profits thereof, and does
hereby confirm that the Company will not cause or consent to a
-12-
<PAGE>
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 said Article X thereof.
TOGETHER WITH all and singular the tenements,
hereditaments and appurtenances belonging or in any wise
appertaining to the premises, property, franchises and rights, or
any thereof, referred to in the Indenture (and not therein
expressly excepted) with the reversion and reversions, remainder
and remainders and (subject to the provisions of Article X of the
Indenture) the tolls, rents, revenues, issues, earnings, income,
products 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 such
premises, property, franchises and rights and every part and
parcel thereof, subject to "excepted encumbrances" of the
original Indenture.
TO HAVE AND TO HOLD all said premises, property,
franchises and rights hereby conveyed, assigned, pledged, or
mortgaged, or intended so to be, unto the Trustee, its successor
or successors in trust, and their assigns forever.
BUT IN TRUST, NEVERTHELESS, with power of sale, for the
equal and proportionate benefit and security of the holders of
all bonds now or hereafter authenticated and delivered under the
Indenture, and interest coupons appurtenant thereto, pursuant to
the provisions thereof, and for the enforcement of the payment of
said bonds and coupons when payable and the performance of and
compliance with the covenants and conditions of the Indenture,
without any preference, distinction or priority as to lien or
otherwise of any bond or bonds over others by reason of the
difference in time of the actual authentication, delivery, issue,
sale or negotiation thereof or for any other reason whatsoever,
except as otherwise expressly provided in the Indenture; and so
that each and every bond now or hereafter authenticated and
delivered thereunder shall have the same lien, and so that the
principal of and premium, if any, and interest on every such
bond, shall subject to the terms of the Indenture, be equally and
proportionately secured thereby and hereby, as if it had been
made, executed, authenticated, delivered, sold and negotiated
simultaneously with the execution and delivery of the Indenture.
AND IT IS EXPRESSLY DECLARED that all bonds
authenticated and delivered and secured thereunder and hereunder
are to be issued, authenticated and delivered, and all said
premises, property, franchises and rights hereby and by the
Indenture conveyed, assigned, pledged or mortgaged, or intended
so to be (including all the right, title and interest of the
Company in and to any and all premises, property, franchises and
rights of every kind and description, real, personal and mixed,
tangible and intangible, thereafter acquired by the Company and
-13-
<PAGE>
whether or not specifically described in the Indenture, except
any therein expressly excepted), are to be dealt with and
disposed of, under, upon and subject to the terms, conditions,
stipulations, covenants, agreements, trusts, uses and purposes in
the Indenture expressed, and it is hereby agreed as follows:
Section 1. There are hereby created two series of
bonds designated Guarantee Series A of 1993 due 2028 and
Guarantee Series A of 1993 due 2017, each of which shall also
bear the descriptive title "First Mortgage Bond" (said bonds
being sometimes herein referred to respectively, as the "bonds of
the 2028 Series" and the "bonds of the 2017 Series," and
collectively, as the "bonds of the 1993 Guarantee Series") and
the form of each such series shall be substantially as
hereinbefore set forth. Bonds of the 2028 Series shall mature on
September 15, 2028 and the bonds of the 2017 Series shall mature
on September 15, 2017. The bonds of the 1993 Guarantee Series
may be issued only as registered bonds without coupons in
denominations of $1,000 or such multiples thereof as the Board of
Directors shall approve, and delivery to the Trustee for
authentication shall be conclusive evidence of such approval.
The serial numbers of bonds of the 1993 Guarantee Series shall be
such as may be approved by any officer of the Company, the
execution thereof by any such officer, by facsimile signature or
otherwise, to be conclusive evidence of such approval. Bonds of
the 1993 Guarantee Series shall bear interest from their
respective Initial Interest Accrual Dates (as defined in the
forms of the bonds of the 2028 and 2017 Series hereinabove set
forth) at the rates of 5.45% per annum and 5.40% per annum,
respectively. Principal or redemption price of and interest on
said bonds 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 the office or agency of the
Company in the Borough of Manhattan, The City, County and State
of New York, designated for that purpose.
Bonds of the 1993 Guarantee Series shall be redeemable,
exchangeable and transferable as and to the extent set forth in
their respective forms hereinbefore set forth.
The bonds of the 1993 Guarantee Series shall be
redeemable as set forth in their respective forms hereinbefore
set forth 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 the 2028 Series, with
respect to the bonds of the 2028 Series, or in the form of bond
of the 2017 Series, with respect to the bonds of the 2017 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
-14-
<PAGE>
demanded and shall mail to the Trustee notice of such date at
least thirty-five 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 pollution control revenue
bonds then outstanding under the applicable Revenue Bond
Indenture and not later than the forty-fifth day after receipt by
the Trustee of such advice, unless such forty-fifth day is
earlier than such date of accelerated maturity. If the Trustee
does not receive such notice from the Company within thirteen
days after receipt by the Trustee of the aforesaid written
advice, the redemption date shall be deemed fixed as the forty-
fifth day after such receipt. The Trustee shall mail notice of
the redemption date to the applicable not less than thirty 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 applicable Revenue Bond
Trustee of the annulment of the acceleration of the maturity of
the pollution control revenue refunding bonds then outstanding
under the applicable Revenue Bond Indenture and of the rescission
of the aforesaid written advice. The terms "Revenue Bond
Trustee" and "Revenue Bond Indenture" as they relate to the bonds
of the 2028 and 2017 Series shall have the meanings specified in
the respective forms thereof hereinabove set forth. Redemption
of the bonds of the 1993 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
applicable Revenue Bond Trustee that the acceleration of the
maturity of the pollution control revenue bonds then outstanding
under the applicable 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
applicable Initial Interest Accrual Date as provided in the
respective forms of the bonds of the 2028 and 2017 Series, as the
case may be, provided for herein) and no redemption of the bonds
of the 2028 or 2017 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 applicable Revenue Bond Trustee or impair
any right consequent on such subsequent written advice.
SECTION 2. Bonds of the 1993 Guarantee Series shall be
deemed to be paid and no longer outstanding under the Indenture
to the extent that pollution control revenue bonds which are
outstanding from time to time under the applicable Revenue Bond
Indenture are paid or deemed to be paid and are no longer
-15-
<PAGE>
outstanding and the Trustee has been notified to such effect by
the Company.
SECTION 3. The Company covenants and agrees that the
provisions of Section 3 of the Fifth Supplemental Indenture dated
as of September 1, 1962, which are to remain in effect so long as
any bonds of the Sixth Series shall be outstanding under the
Indenture, shall remain in full force and effect so long as any
bonds of the 1993 Guarantee Series shall be outstanding under the
Indenture.
SECTION 4. The Company covenants and agrees that the
provisions of Section 3 of the Nineteenth Supplemental Indenture
dated as of January 14, 1982, which are to remain in effect so
long as any bonds of the Twentieth Series shall be outstanding
under the Indenture, shall remain in full force and effect so
long as any bonds of the 1993 Guarantee Series shall be
outstanding under the Indenture.
SECTION 5. As supplemented and amended by this
Supplemental Indenture, the Indenture is in all respects ratified
and confirmed, and the Indenture and this Supplemental Indenture
shall be read, taken and construed as one and the same
instrument.
SECTION 6. 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 7. The Trustee assumes no responsibility for
or in respect of the validity or sufficiency of this Supplemental
Indenture or the due execution hereof by the Company or for or in
respect of the recitals and statements contained herein, all of
which recitals and statements are made solely by the Company.
SECTION 8. This Supplemental Indenture may be executed
in several counterparts and all such counterparts executed and
delivered, each as an original, shall constitute but one and the
same instrument.
PENNSYLVANIA POWER COMPANY hereby constitutes and
appoints Robert P. Wushinske to be its attorney for it and in its
name as and for its corporate act and deed to acknowledge this
Supplemental Indenture before any person having authority to take
such acknowledgment, to the intent that the same may be duly
recorded.
CITIBANK, N.A. hereby constitutes and appoints P.
DeFelice to be its attorney for it and in its name as and for its
corporate act and deed to acknowledge this Supplemental Indenture
-16-
<PAGE>
before any person having authority to take such acknowledgment,
to the intent that the same may be duly recorded.
IN WITNESS WHEREOF, PENNSYLVANIA POWER COMPANY has
caused its corporate name to be hereunto affixed, and this
instrument to be signed and sealed by its President or a Vice
President, and its corporate seal to be attested by its Secretary
or an Assistant Secretary for and on its behalf, in the city of
New Castle, County of Lawrence and Commonwealth of Pennsylvania
and CITIBANK, N.A., in token of its acceptance of the trust, has
caused its corporate name to be hereunto affixed, and this
instrument to be signed by a Vice President and its corporate
seal to be affixed and attested by one of its Vice Presidents in
the City of New York, County of New York and State of New York,
all as of the day and year first above written.
PENNSYLVANIA POWER COMPANY
By: Robert P. Wushinske
-------------------------
Robert P. Wushinske
Vice President
ATTEST:
By: J. R. Edgerly
---------------------------
J. R. Edgerly
Secretary
[Seal]
Signed, sealed and delivered by
PENNSYLVANIA POWER COMPANY
in the presence of:
F. A. Fazzone
- ------------------------------
F. A. Fazzone
Angeline Comparone
- ------------------------------
Angeline Comparone
-17-
<PAGE>
CITIBANK, N.A.
as Trustee as aforesaid,
By: P. DeFelice
-------------------------
P. DeFelice
Vice President
ATTEST:
By: R. T. Kirchner
---------------------------
R. T. Kirchner
Vice President
[Seal]
Signed, sealed and delivered by
CITIBANK, N.A.
in the presence of:
J. Berger
- ------------------------------
J. Berger
Jose R. Gonzalez
- ------------------------------
Jose R. Gonzalez
-18-
<PAGE>
COMMONWEALTH OF PENNSYLVANIA )
: ss.:
COUNTY OF LAWRENCE )
BE IT REMEMBERED that, on the 21st day of September,
1993, before me, the undersigned, a Notary Public in said County
of Lawrence, Commonwealth of Pennsylvania, personally appeared J.
R. Edgerly, who being duly sworn according to law, doth depose
and say that he was personally present and did see the common or
corporate seal of the above named PENNSYLVANIA POWER COMPANY
affixed to the foregoing Supplemental Indenture; that the seal so
affixed is the common or corporate seal of the said Pennsylvania
Power Company and was so affixed by the authority of the said
corporation as the act and deed thereof; that the above named
Robert P. Wushinske is a Vice President of said corporation and
did sign the said Supplemental Indenture as such in the presence
of this deponent; that this deponent is the Secretary of
Pennsylvania Power Company, and that the name of this deponent
above signed in attestation of the due execution of the said
Supplemental Indenture is in this deponent's own proper
handwriting.
Sworn to and subscribed before me this 21st day of
September, 1993.
J. R. Edgerly
------------------------------
[SEAL]
Sylvia M. Rashid
------------------------------
NOTARIAL SEAL
SYLVIA M. RASHID, Notary Public
New Castle, Lawrence Co., PA
My Commission Expires March 11, 1997
-19-
<PAGE>
COMMONWEALTH OF PENNSYLVANIA )
: ss.:
COUNTY OF LAWRENCE )
I HEREBY CERTIFY that, on this 21st day of September,
1993, before me, the subscriber, a Notary Public in and for the
State and County aforesaid, personally appeared Robert P.
Wushinske, the attorney for PENNSYLVANIA POWER COMPANY, and the
attorney named in the foregoing Supplemental Indenture and, by
virtue and in pursuance of the authority therein conferred upon
him, acknowledged the said Supplemental Indenture to be the act
and deed of said Pennsylvania Power Company.
WITNESS my hand and notarial seal the day and year
aforesaid.
[SEAL]
Sylvia M. Rashid
-----------------------------
NOTARIAL SEAL
SYLVIA M. RASHID, Notary Public
New Castle, Lawrence Co., PA
My Commission Expires March 11, 1997
COMMONWEALTH OF PENNSYLVANIA )
: ss.:
COUNTY OF LAWRENCE )
On the 21st day of September, 1993, before me,
personally came Robert P. Wushinske, to me known, who, being by
me duly sworn, did depose and say that he resides at R.D. 2,
Means Road, New Wilmington, Pennsylvania 16142; that he is a
Vice President of PENNSYLVANIA POWER 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 affixed by order of the Board of Directors of said
corporation, and that he signed his name thereto by like
authority.
WITNESS my hand and notarial seal the day and year
aforesaid.
[SEAL]
Sylvia M. Rashid
------------------------------
NOTARIAL SEAL
SYLVIA M. RASHID, Notary Public
New Castle, Lawrence Co., PA
My Commission Expires March 11, 1997
-20-
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED that, on the 28th day of September,
1993, before me, the undersigned, a Notary Public in said County
of New York, State of New York, personally appeared R. T.
Kirchner, who being duly sworn according to law, doth depose and
say that she was personally present and did see the common or
corporate seal of the above named CITIBANK, N.A. affixed to the
foregoing Supplemental Indenture; that the seal so affixed is the
common or corporate seal of the said CITIBANK, N.A. and was so
affixed by the authority of the said association as the act and
deed thereof; that the above named P. DeFelice is one of the Vice
Presidents of said association and did sign the said Supplemental
Indenture as such in the presence of this deponent; that this
deponent is a Vice President of said CITIBANK, N.A., and that the
name of this deponent above signed in attestation of the due
execution of the said Supplemental Indenture is in this
deponent's own proper handwriting.
Sworn to and subscribed before me this 28th day of
September, 1993.
R. T. Kirchner
------------------------------
[SEAL]
Nancy H. Forte
------------------------------
NANCY H. FORTE
Notary Public, State of New York
No. 41-4902389
Qualified in Queens County
Certificate Filed in New York County
Commission Expires August 3, 1995
-21-
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
I HEREBY CERTIFY that, on this 28th day of September,
1993, before me, the subscriber, a Notary Public in and for the
State and County aforesaid, personally appeared P. DeFelice, the
attorney for CITIBANK, N.A., and the attorney named in the
foregoing Supplemental Indenture and, by virtue and in pursuance
of the authority therein conferred upon him, acknowledged the
execution of said Supplemental Indenture to be the act and deed
of said CITIBANK, N.A.
WITNESS my hand and notarial seal the day and year
aforesaid.
Nancy H. Forte
-----------------------------
[SEAL] NANCY H. FORTE
Notary Public, State of New York
No. 41-4902389
Qualified in Queens County
Certificate Filed in New York County
Commission Expires August 3, 1995
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 28th day of September, 1993, before me,
personally came P. DeFelice, to me known, who being by me duly
sworn, did depose and say that he resides at 47-09 169th Street,
Flushing, New York; that he is a Vice President of CITIBANK,
N.A., one of the parties described in and which executed the
above instrument; that he knows the seal of said association;
that the seal affixed to said instrument is such corporate seal;
that it was so affixed by authority of the Board of Directors of
said association, and that he signed his name thereto by like
authority.
WITNESS my hand and notarial seal the day and year
aforesaid.
Nancy H. Forte
-----------------------------
[SEAL] NANCY H. FORTE
Notary Public, State of New York
No. 41-4902389
Qualified in Queens County
Certificate Filed in New York County
Commission Expires August 3, 1995
-22-
<PAGE>
Citibank, N.A. hereby certifies that its precise name
and address as Trustee hereunder are:
CITIBANK, N.A.
111 Wall Street
Borough of Manhattan
City, County and State
of New York 10043
CITIBANK, N.A.
By P. DeFelice
-----------------------
P. DeFelice
Vice President<PAGE>
[CONFORMED COPY]
PENNSYLVANIA POWER COMPANY
to
CITIBANK, N.A.,
As Trustee
Forty-first Supplemental
Indenture
Providing among other things for
FIRST MORTGAGE BONDS
Guarantee Series A of 1993 due 2013
Dated as of October 1, 1993
<PAGE>
FORTY-FIRST SUPPLEMENTAL INDENTURE, dated as of October 1,
1993, made and entered into by and between PENNSYLVANIA POWER
COMPANY, a corporation organized and existing under the laws of
the Commonwealth of Pennsylvania, with its principal place of
business in New Castle, Lawrence County, Pennsylvania
(hereinafter sometimes referred to as the "Company") and
CITIBANK, N.A., a national banking association incorporated and
existing under the laws of the United States of America, with its
principal office in the Borough of Manhattan, The City, County
and State of New York (hereinafter sometimes referred to as the
"Trustee"), as trustee under the Indenture dated as of
November 1, 1945 between the Company and CITIBANK, N.A.
(successor to The First National Bank of The City of New York),
as trustee, as supplemented and amended by Supplemental
Indentures between the Company and the Trustee, dated as of May
1, 1948, as of March 1, 1950, as of February 1, 1952, as of
October 1, 1957, as of September 1, 1962, as of June 1, 1963, as
of June 1, 1969, as of May 1, 1970, as of April 1, 1971, as of
October 1, 1971, as of May 1, 1972, as of December 1, 1974, as of
October 1, 1975, as of September 1, 1976, as of April 15, 1978,
as of June 28, 1979, as of January 1, 1980, as of June 1, 1981,
as of January 14, 1982, as of August 1, 1982, as of December 15,
1982, as of December 1, 1983, as of September 6, 1984, as of
December 1, 1984, as of May 30, 1985, as of October 29, 1985, as
of August 1, 1987, as of May 1, 1988, as of November 1, 1989, as
of December 1, 1990, as of September 1, 1991, as of May 1, 1992,
as of July 15, 1992, as of August 1, 1992, as of May 1, 1993, as
of July 1, 1993, as of August 31, 1993, as of September 1, 1993
and as of September 15, 1993 (said Indenture as so supplemented
and amended, and as hereby supplemented and amended, being
hereinafter sometimes referred to as the "Indenture");
WHEREAS, the Company and the Trustee have executed and
delivered the Indenture for the purpose of securing an issue of
bonds of the First Series described therein and such additional
bonds as may from time to time be issued under and in accordance
with the terms of the Indenture, the aggregate principal amount
of bonds to be secured thereby being not limited, and the
Indenture fully describes and sets forth the property conveyed
thereby and is filed with the Secretary of the Commonwealth of
Pennsylvania and the Secretary of State of the State of Ohio and
will be of record in the office of the recorder of deeds of each
county in the Commonwealth of Pennsylvania and the State of Ohio
in which this Forty-first Supplemental Indenture is to be
recorded and is on file at the corporate trust office of the
Trustee, above referred to; and
WHEREAS the Indenture provides for the issuance of
bonds thereunder in one or more series and the Company, by
appropriate corporate action in conformity with the terms of the
Indenture, has duly determined to create one such series of bonds
under the Indenture to be designated as "First Mortgage Bonds,
Guarantee Series A of 1993 due 2013" (hereinafter sometimes
referred to as the "bonds of the 2013 Series"), the bonds of
<PAGE>
which are to bear interest at the annual rate of 5.40% per annum
and are to mature on October 1, 2013.
AND WHEREAS each of the bonds of the 2013 Series and
the Trustee's Authentication Certificate thereon are to be
substantially in the following form, to wit:
[FORM OF BOND OF THE 2013 SERIES]
[FACE]
PENNSYLVANIA POWER COMPANY
First Mortgage Bond, Guarantee Series A of 1993 due 2013
$ No.
Pennsylvania Power Company, a Pennsylvania corporation
(hereinafter called the "Company"), for value received, hereby
promises to pay to or registered assigns,
the principal sum of $ on October 1, 2013, and to pay
the registered holder hereof interest on said sum from the
Initial Interest Accrual Date (hereinbelow defined) at the rate
of 5.40 per centum per annum. The principal of and interest on
this bond shall be payable at the office or agency of the Company
in the Borough of Manhattan, The City, County and State of New
York, designated for that purpose, 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.
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 be valid or become obligatory for
any purpose unless and until it shall have been authenticated by
the execution by the Trustee or its successor in trust under the
Indenture of the certificate hereon.
IN WITNESS WHEREOF, PENNSYLVANIA POWER COMPANY has
caused this bond to be executed in its name by its President or
one of its Vice Presidents by his or her signature or a facsimile
thereof, and its corporate seal or a facsimile thereof to be
affixed hereto or imprinted hereon and attested by its Secretary
-2-
<PAGE>
or one of its Assistant Secretaries by his or her signature or a
facsimile thereof.
Dated:
PENNSYLVANIA POWER COMPANY
By .......................
President
Attest:
.........................
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 Indenture.
CITIBANK, N.A.
AS TRUSTEE,
By ........................
Authorized Officer
-3-
<PAGE>
[FORM OF BOND OF THE 2013 SERIES]
[REVERSE]
PENNSYLVANIA POWER COMPANY
First Mortgage Bond, Guarantee Series A of 1993 due 2013
This bond is one of the bonds issued and to be issued
from time to time under and in accordance with and all secured by
an indenture of mortgage or deed of trust dated as of November 1,
1945, and indentures supplemental thereto, given by the Company
to Citibank, N.A. (successor to The First National Bank of The
City of New York), as trustee (hereinafter referred to as the
"Trustee"), to which indenture and indentures supplemental
thereto (hereinafter referred to collectively as the "Indenture")
reference is hereby made for a description of the property
mortgaged and pledged, the nature and extent of the security and
the rights, duties and immunities thereunder of the Trustee and
the rights of the holders of the bonds and coupons and of the
Trustee and of the Company in respect of such security, and the
limitations on such rights. By the terms of the Indenture, the
bonds to be secured thereby are issuable in series which may vary
as to date, amount, date of maturity, rate of interest, terms of
redemption and in other respects as in the Indenture provided.
The Indenture contains provisions permitting the
Company and the Trustee, with the consent of the holders of not
less than seventy-five per centum in principal amount of the
bonds (exclusive of bonds disqualified by reason of the Company's
interest therein) at the time outstanding, including, if more
than one series of bonds shall be at the time outstanding, not
less than sixty per centum in principal amount of each series
affected, to effect, by an indenture supplemental to the
Indenture, modifications or alterations of the Indenture and of
the rights and obligations of the Company and the rights of the
holders of the bonds and coupons; provided, however, that no such
modification or alteration shall be made without the written
approval or consent of the holder hereof which will (a) extend
the maturity of this bond or reduce the rate or extend the time
of payment of interest hereon or reduce the amount of the
principal hereof or reduce any premium payable on the redemption
hereof, or (b) permit the creation of any lien, not otherwise
permitted, prior to or on a parity with the lien of the
Indenture, or (c) reduce the percentage of the principal amount
of the bonds upon the approval or consent of the holders of which
modifications or alterations may be made as aforesaid.
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
-4-
<PAGE>
by the Trustee of a written advice from the trustee under the
Trust Indenture (the "Revenue Bond Indenture") dated as of
October 1, 1993, 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 $1,000,000 of Environmental
Improvement Revenue Refunding Bonds, 1993 Series A (Pennsylvania
Power Company Mansfield Project), stating that the principal
amount of all the environmental improvement revenue refunding
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 environmental improvement revenue
refunding bonds and the date from which interest on the
environmental improvement revenue refunding 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
environmental improvement revenue refunding bonds then
outstanding under the Revenue Bond Indenture and not later than
the 45th day after the 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
aforesaid environmental improvement revenue refunding 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 aforesaid environmental improvement revenue refunding
bonds becoming due and payable on the maturity date of the bonds
of this series, the date from which unpaid interest on the
aforesaid environmental improvement revenue refunding 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 the Indenture (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 environmental improvement revenue refunding bonds then
outstanding under the Revenue Bond Indenture and of the
-5-
<PAGE>
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 notice.
Bonds of this series are not otherwise redeemable prior
to their maturity.
In case of certain defaults as specified in the
Indenture, the principal of this bond may be declared or may
become due and payable on the conditions, at the time, in the
manner and with the effect provided in the Indenture.
No recourse shall be had for the payment of the
principal of or interest on this bond, or for any claim based
hereon, or otherwise in respect hereof or of the Indenture, to or
against any incorporator, stockholder, director or officer, past,
present or future, as such, of the Company, or of any predecessor
or successor company, either directly or through the Company, or
such predecessor or successor company, or otherwise, under any
constitution or statute or rule of law, or by the enforcement of
any assessment or penalty, or otherwise, all such liability of
incorporators, stockholders, directors and officers, as such,
being waived and released by the holder and owner hereof by the
acceptance of this bond and being likewise waived and released by
the terms of the Indenture.
The bonds of this series are issuable only as
registered bonds without coupons in denominations of $1,000 and
authorized multiples thereof. Except as may be stated in any
legend written on the face of this bond, this bond is
transferable by the registered holder hereof, in person or by
attorney duly authorized, at the corporate trust office of the
Trustee, in the Borough of Manhattan, The City, County and State
of New York, or at such other place or places as the Company may
designate by resolution of the Board of Directors, but only in
the manner and upon the conditions prescribed in the Indenture,
upon the surrender and cancellation of this bond and the payment
of charges for transfer, and upon any such transfer a new
registered bond or bonds, without coupons, of the same series and
maturity date and for the same aggregate principal amount, in
authorized denominations, will be issued to the transferee in
exchange herefor. The Company, the Trustee and any agent
designated to make transfers or exchanges of bonds of this series
may deem and treat the person in whose name this bond is
registered as the absolute owner for all purposes including the
purpose of the receipt of payment. Registered bonds of this
series shall be exchangeable at said corporate trust office of
the Trustee, or at such other place or places as the Company may
designate by resolution of the Board of Directors, for registered
-6-
<PAGE>
bonds of other authorized denominations having the same aggregate
principal amount, in the manner and upon the conditions
prescribed in the Indenture. Neither the Company nor the Trustee
nor any other agent designated for such purpose 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.
Notwithstanding any provisions of the Indenture, 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 THE 2013 SERIES]
AND WHEREAS all acts and things necessary to make the
bonds, when authenticated by the Trustee and issued as in the
Indenture provided, the valid, binding and legal obligations of
the Company, and to constitute the Indenture a valid, binding and
legal instrument for the security thereof, have been done and
performed, and the creation, execution and delivery of the
Indenture and the creation, execution and issue of the bonds
subject to the terms hereof and of the Indenture, have in all
respects been duly authorized;
NOW THEREFORE, in consideration of the premises, and of
the acceptance and purchase by holders thereof of the bonds
issued and to be issued under the Indenture, and the sum of One
Dollar duly paid by the Trustee to the Company, and of other good
and valuable consideration, the receipt of which is hereby
acknowledged, and for the purpose of securing the due and
punctual payment of the principal of and premium, if any, and
interest on all bonds now outstanding under the Indenture and the
$1,000,000 principal amount of bonds of the 2013 Series proposed
presently to be issued and all other bonds which shall be issued
under the Indenture, and for the purpose of securing the faithful
performance and observance of all covenants and conditions
therein and in any supplemental indenture set forth, the Company
has given, granted, bargained, sold, released, transferred,
assigned, hypothecated, pledged, mortgaged, confirmed, created a
security interest in, set over, warranted, aliened and conveyed
and by these presents does give, grant, bargain, sell, release,
transfer, assign, hypothecate, pledge, mortgage, confirm, create
a security interest in, set over, warrant, alien and convey unto
Citibank, N.A., as Trustee as provided in the Indenture, and its
successor or successors in the trust thereby and hereby created
and to its or their assigns forever, all the right, title and
interest of the Company in and to the property described in the
Indenture (and not therein expressly excepted), together (subject
to the provisions of Article X of the Indenture) with the tolls,
rents, revenues, issues, earnings, income, products and profits
thereof, and does hereby confirm that the Company will not cause
or consent to a partition, whether voluntary or through legal
-7-
<PAGE>
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 said Article
X thereof.
TOGETHER WITH all and singular the tenements,
hereditaments and appurtenances belonging or in any wise
appertaining to the premises, property, franchises and rights, or
any thereof, referred to in the Indenture (and not therein
expressly excepted) with the reversion and reversions, remainder
and remainders and (subject to the provisions of Article X of the
Indenture) the tolls, rents, revenues, issues, earnings, income,
products 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 such
premises, property, franchises and rights and every part and
parcel thereof, subject to "excepted encumbrances" of the
original Indenture.
TO HAVE AND TO HOLD all said premises, property,
franchises and rights hereby conveyed, assigned, pledged, or
mortgaged, or intended so to be, unto the Trustee, its successor
or successors in trust, and their assigns forever.
BUT IN TRUST, NEVERTHELESS, with power of sale, for the
equal and proportionate benefit and security of the holders of
all bonds now or hereafter authenticated and delivered under the
Indenture, and interest coupons appurtenant thereto, pursuant to
the provisions thereof, and for the enforcement of the payment of
said bonds and coupons when payable and the performance of and
compliance with the covenants and conditions of the Indenture,
without any preference, distinction or priority as to lien or
otherwise of any bond or bonds over others by reason of the
difference in time of the actual authentication, delivery, issue,
sale or negotiation thereof or for any other reason whatsoever,
except as otherwise expressly provided in the Indenture; and so
that each and every bond now or hereafter authenticated and
delivered thereunder shall have the same lien, and so that the
principal of and premium, if any, and interest on every such bond
shall, subject to the terms of the Indenture, be equally and
proportionately secured thereby and hereby, as if it had been
made, executed, authenticated, delivered, sold and negotiated
simultaneously with the execution and delivery of the Indenture.
AND IT IS EXPRESSLY DECLARED that all bonds
authenticated and delivered and secured thereunder and hereunder
are to be issued, authenticated and delivered, and all said
premises, property, franchises and rights hereby and by the
Indenture conveyed, assigned, pledged or mortgaged, or intended
so to be (including all the right, title and interest of the
Company in and to any and all premises, property, franchises and
rights of every kind and description, real, personal and mixed,
tangible and intangible, thereafter acquired by the Company and
-8-
<PAGE>
whether or not specifically described in the Indenture, except
any therein expressly excepted), are to be dealt with and
disposed of, under, upon and subject to the terms, conditions,
stipulations, covenants, agreements, trusts, uses and purposes in
the Indenture expressed, and it is hereby agreed as follows:
Section 1. There is hereby created a series of bonds
designated Guarantee Series A of 1993 due 2013, which shall also
bear the descriptive title "First Mortgage Bond" and the form of
such series shall be substantially as hereinbefore set forth.
Bonds of the 2013 Series shall mature on October 1, 2013. The
bonds of the 2013 Series may be issued only as registered bonds
without coupons in denominations of $1,000 or such multiples
thereof as the Board of Directors shall approve, and delivery to
the Trustee for authentication shall be conclusive evidence of
such approval. The serial numbers of bonds of the 2013 Series
shall be such as may be approved by any officer of the Company,
the execution thereof by any such officer, by facsimile signature
or otherwise, to be conclusive evidence of such approval. Bonds
of the 2013 Series shall bear interest from the Initial Interest
Accrual Date (as defined in the form of the bonds of the 2013
Series hereinabove set forth) at the rate of 5.40% per annum.
Principal or redemption price of and interest on said bonds 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 the office or agency of the Company in the
Borough of Manhattan, The City, County and State of New York,
designated for that purpose.
Bonds of the 2013 Series shall be redeemable,
exchangeable and transferable as and to the extent set forth in
the form thereof hereinbefore set forth.
The bonds of the 2013 Series shall be redeemable as set
forth in the form thereof hereinbefore set forth 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 the 2013 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 thirty-five 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 environmental improvement revenue refunding bonds
then outstanding under the Revenue Bond Indenture and not later
than the forty-fifth day after receipt by the Trustee of such
advice, unless such forty-fifth day is earlier than such date of
accelerated maturity. If the Trustee does not receive such
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<PAGE>
notice from the Company within thirteen days after receipt by the
Trustee of the aforesaid written advice, the redemption date
shall be deemed fixed as the forty-fifth day after such receipt.
The Trustee shall mail notice of the redemption date to the
Revenue Bond Trustee not less than thirty 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 environmental improvement
revenue refunding 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" as
they relate to the bonds of the 2013 Series shall have the
meanings specified in the form thereof hereinabove set forth.
Redemption of the bonds of the 2013 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
environmental improvement revenue refunding 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 the bonds of the
2013 Series provided for herein) and no redemption of the bonds
of the 2013 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 the 2013 Series shall be deemed to
be paid and no longer outstanding under the Indenture to the
extent that environmental improvement revenue refunding 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. The Company covenants and agrees that the
provisions of Section 3 of the Fifth Supplemental Indenture dated
as of September 1, 1962, which are to remain in effect so long as
any bonds of the Sixth Series shall be outstanding under the
Indenture, shall remain in full force and effect so long as any
bonds of the 2013 Series shall be outstanding under the
Indenture.
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<PAGE>
SECTION 4. The Company covenants and agrees that the
provisions of Section 3 of the Nineteenth Supplemental Indenture
dated as of January 14, 1982, which are to remain in effect so
long as any bonds of the Twentieth Series shall be outstanding
under the Indenture, shall remain in full force and effect so
long as any bonds of the 2013 Series shall be outstanding under
the Indenture.
SECTION 5. As supplemented and amended by this
Supplemental Indenture, the Indenture is in all respects ratified
and confirmed, and the Indenture and this Supplemental Indenture
shall be read, taken and construed as one and the same
instrument.
SECTION 6. 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 7. The Trustee assumes no responsibility for
or in respect of the validity or sufficiency of this Supplemental
Indenture or the due execution hereof by the Company or for or in
respect of the recitals and statements contained herein, all of
which recitals and statements are made solely by the Company.
SECTION 8. This Supplemental Indenture may be executed
in several counterparts and all such counterparts executed and
delivered, each as an original, shall constitute but one and the
same instrument.
PENNSYLVANIA POWER COMPANY hereby constitutes and
appoints Robert P. Wushinske to be its attorney for it and in its
name as and for its corporate act and deed to acknowledge this
Supplemental Indenture before any person having authority to take
such acknowledgment, to the intent that the same may be duly
recorded.
CITIBANK, N.A. hereby constitutes and appoints P.
DeFelice to be its attorney for it and in its name as and for its
corporate act and deed to acknowledge this Supplemental Indenture
before any person having authority to take such acknowledgment,
to the intent that the same may be duly recorded.
IN WITNESS WHEREOF, PENNSYLVANIA POWER COMPANY has
caused its corporate name to be hereunto affixed, and this
instrument to be signed and sealed by its President or a Vice
President, and its corporate seal to be attested by its Secretary
or an Assistant Secretary for and on its behalf, in the city of
New Castle, County of Lawrence and Commonwealth of Pennsylvania
and CITIBANK, N.A., in token of its acceptance of the trust, has
caused its corporate name to be hereunto affixed, and this
instrument to be signed by a Vice President and its corporate
-11-
<PAGE>
seal to be affixed and attested by one of its Vice Presidents in
the City of New York, County of New York and State of New York,
all as of the day and year first above written.
PENNSYLVANIA POWER COMPANY
By: Robert P. Wushinske
--------------------------
Robert P. Wushinske
Vice President
ATTEST:
By: J. R. Edgerly
---------------------------
J. R. Edgerly
Secretary
[Seal]
Signed, sealed and delivered by
PENNSYLVANIA POWER COMPANY
in the presence of:
Angeline Comparone
- ------------------------------
Angeline Comparone
F. A. Fazzone
- ------------------------------
F. A. Fazzone
-12-
<PAGE>
CITIBANK, N.A.
as Trustee as aforesaid,
By: P. DeFelice
--------------------------
P. DeFelice
Vice President
ATTEST:
By: Carol Ng
---------------------------
Carol Ng
Assistant Vice President
[Seal]
Signed, sealed and delivered by
CITIBANK, N.A.
in the presence of:
Robert T. Kirchner
- ------------------------------
Robert T. Kirchner
Jose R. Gonzalez
- ------------------------------
Jose R. Gonzalez
-13-
<PAGE>
COMMONWEALTH OF PENNSYLVANIA )
: ss.:
COUNTY OF LAWRENCE )
BE IT REMEMBERED that, on the 20th day of October,
1993, before me, the undersigned, a Notary Public in said County
of Lawrence, Commonwealth of Pennsylvania, personally appeared J.
R. Edgerly, who being duly sworn according to law, doth depose
and say that he was personally present and did see the common or
corporate seal of the above named PENNSYLVANIA POWER COMPANY
affixed to the foregoing Supplemental Indenture; that the seal so
affixed is the common or corporate seal of the said Pennsylvania
Power Company and was so affixed by the authority of the said
corporation as the act and deed thereof; that the above named
Robert P. Wushinske is a Vice President of said corporation and
did sign the said Supplemental Indenture as such in the presence
of this deponent; that this deponent is the Secretary of
Pennsylvania Power Company, and that the name of this deponent
above signed in attestation of the due execution of the said
Supplemental Indenture is in this deponent's own proper
handwriting.
Sworn to and subscribed before me this 20th day of
October, 1993.
J. R. Edgerly
------------------------------
[SEAL]
Sylvia M. Rashid
------------------------------
NOTARIAL SEAL
SYLVIA M. RASHID, Notary Public
New Castle, Lawrence Co., PA
My Commission Expires March 11, 1997
-14-
<PAGE>
COMMONWEALTH OF PENNSYLVANIA )
: ss.:
COUNTY OF LAWRENCE )
I HEREBY CERTIFY that, on this 20th day of October,
1993, before me, the subscriber, a Notary Public in and for the
State and County aforesaid, personally appeared Robert P.
Wushinske, the attorney for PENNSYLVANIA POWER COMPANY, and the
attorney named in the foregoing Supplemental Indenture and, by
virtue and in pursuance of the authority therein conferred upon
him, acknowledged the said Supplemental Indenture to be the act
and deed of said Pennsylvania Power Company.
WITNESS my hand and notarial seal the day and year
aforesaid.
[SEAL]
Sylvia M. Rashid
------------------------------
NOTARIAL SEAL
SYLVIA M. RASHID, Notary Public
New Castle, Lawrence Co., PA
My Commission Expires March 11, 1997
COMMONWEALTH OF PENNSYLVANIA )
: ss.:
COUNTY OF LAWRENCE )
On the 20th day of October, 1993, before me, personally
came Robert P. Wushinske, to me known, who, being by me duly
sworn, did depose and say that he resides at R.D. 2, Means Road,
New Wilmington, Pennsylvania 16142; that he is a Vice President
of PENNSYLVANIA POWER 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 affixed by order
of the Board of Directors of said corporation, and that he signed
his name thereto by like authority.
WITNESS my hand and notarial seal the day and year
aforesaid.
[SEAL]
Sylvia M. Rashid
------------------------------
NOTARIAL SEAL
SYLVIA M. RASHID, Notary Public
New Castle, Lawrence Co., PA
My Commission Expires March 11, 1997
-15-
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED that, on the 22nd day of October,
1993, before me, the undersigned, a Notary Public in said County
of New York, State of New York, personally appeared Carol Ng, who
being duly sworn according to law, doth depose and say that she
was personally present and did see the common or corporate seal
of the above named CITIBANK, N.A. affixed to the foregoing
Supplemental Indenture; that the seal so affixed is the common or
corporate seal of the said CITIBANK, N.A. and was so affixed by
the authority of the said association as the act and deed
thereof; that the above named P. DeFelice is one of the Vice
Presidents of said association and did sign the said Supplemental
Indenture as such in the presence of this deponent; that this
deponent is an Assistant Vice President of said CITIBANK, N.A.,
and that the name of this deponent above signed in attestation of
the due execution of the said Supplemental Indenture is in this
deponent's own proper handwriting.
Sworn to and subscribed before me this 22nd day of
October, 1993.
Carol Ng
------------------------------
[SEAL]
Jeffry Berger
------------------------------
JEFFRY BERGER
Notary Public, State of New York
No. O1BE5015814
Qualified in Kings County
Commission Expires July 26, 1995
-16-
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
I HEREBY CERTIFY that, on this 22nd day of October,
1993, before me, the subscriber, a Notary Public in and for the
State and County aforesaid, personally appeared P. DeFelice, the
attorney for CITIBANK, N.A., and the attorney named in the
foregoing Supplemental Indenture and, by virtue and in pursuance
of the authority therein conferred upon him, acknowledged the
execution of said Supplemental Indenture to be the act and deed
of said CITIBANK, N.A.
WITNESS my hand and notarial seal the day and year
aforesaid.
Jeffry Berger
-----------------------------
[SEAL]
JEFFRY BERGER
Notary Public, State of New York
No. O1BE5015814
Qualified in Kings County
Commission Expires July 26, 1995
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 22nd day of October, 1993, before me, personally
came P. DeFelice, to me known, who being by me duly sworn, did
depose and say that he resides at 47-09 169th Street, Flushing,
New York; that he is a Vice President of CITIBANK, N.A., one of
the parties described in and which executed the above instrument;
that he knows the seal of said association; that the seal affixed
to said instrument is such corporate seal; that it was so affixed
by authority of the Board of Directors of said association, and
that he signed his name thereto by like authority.
WITNESS my hand and notarial seal the day and year
aforesaid.
Jeffry Berger
-----------------------------
[SEAL]
JEFFRY BERGER
Notary Public, State of New York
No. O1BE5015814
Qualified in Kings County
Commission Expires July 26, 1995
-17-
<PAGE>
Citibank, N.A. hereby certifies that its precise name
and address as Trustee hereunder are:
CITIBANK, N.A.
111 Wall Street
Borough of Manhattan
City, County and State
of New York 10043
CITIBANK, N.A.
By P. DeFelice
-----------------------
P. DeFelice
Vice President
<PAGE>
[CONFORMED COPY]
PENNSYLVANIA POWER COMPANY
to
CITIBANK, N.A.,
As Trustee
Forty-second Supplemental
Indenture
Providing among other things for
FIRST MORTGAGE BONDS
Guarantee Series A of 1993 due 1998
Dated as of November 1, 1993
<PAGE>
FORTY-SECOND SUPPLEMENTAL INDENTURE, dated as of
November 1, 1993, made and entered into by and between
PENNSYLVANIA POWER COMPANY, a corporation organized and existing
under the laws of the Commonwealth of Pennsylvania, with its
principal place of business in New Castle, Lawrence County,
Pennsylvania (hereinafter sometimes referred to as the "Company")
and CITIBANK, N.A., a national banking association incorporated
and existing under the laws of the United States of America, with
its principal office in the Borough of Manhattan, The City,
County and State of New York (hereinafter sometimes referred to
as the "Trustee"), as trustee under the Indenture dated as of
November 1, 1945 between the Company and CITIBANK, N.A.
(successor to The First National Bank of The City of New York),
as trustee, as supplemented and amended by Supplemental
Indentures between the Company and the Trustee, dated as of May
1, 1948, as of March 1, 1950, as of February 1, 1952, as of
October 1, 1957, as of September 1, 1962, as of June 1, 1963, as
of June 1, 1969, as of May 1, 1970, as of April 1, 1971, as of
October 1, 1971, as of May 1, 1972, as of December 1, 1974, as of
October 1, 1975, as of September 1, 1976, as of April 15, 1978,
as of June 28, 1979, as of January 1, 1980, as of June 1, 1981,
as of January 14, 1982, as of August 1, 1982, as of December 15,
1982, as of December 1, 1983, as of September 6, 1984, as of
December 1, 1984, as of May 30, 1985, as of October 29, 1985, as
of August 1, 1987, as of May 1, 1988, as of November 1, 1989, as
of December 1, 1990, as of September 1, 1991, as of May 1, 1992,
as of July 15, 1992, as of August 1, 1992, as of May 1, 1993, as
of July 1, 1993, as of August 31, 1993, as of September 1, 1993,
as of September 15, 1993 and as of October 1, 1993 (said
Indenture as so supplemented and amended, and as hereby
supplemented and amended, being hereinafter sometimes referred to
as the "Indenture");
WHEREAS, the Company and the Trustee have executed and
delivered the Indenture for the purpose of securing an issue of
bonds of the First Series described therein and such additional
bonds as may from time to time be issued under and in accordance
with the terms of the Indenture, the aggregate principal amount
of bonds to be secured thereby being not limited, and the
Indenture fully describes and sets forth the property conveyed
thereby and is filed with the Secretary of the Commonwealth of
Pennsylvania and the Secretary of State of the State of Ohio and
will be of record in the office of the recorder of deeds of each
county in the Commonwealth of Pennsylvania and the State of Ohio
in which this Forty-second Supplemental Indenture is to be
recorded and is on file at the corporate trust office of the
Trustee, above referred to; and
WHEREAS the Indenture provides for the issuance of
bonds thereunder in one or more series and the Company, by
appropriate corporate action in conformity with the terms of the
Indenture, has duly determined to create one such series of bonds
under the Indenture to be designated as "First Mortgage Bonds,
Guarantee Series A of 1993 due 1998" (hereinafter sometimes
<PAGE>
referred to as the "bonds of the 1998 Series"), the bonds of
which are to bear interest at the annual rate of 4.75% per annum
and are to mature on November 1, 1998.
AND WHEREAS each of the bonds of the 1998 Series and
the Trustee's Authentication Certificate thereon are to be
substantially in the following form, to wit:
[FORM OF BOND OF THE 1998 SERIES]
[FACE]
PENNSYLVANIA POWER COMPANY
First Mortgage Bond, Guarantee Series A of 1993 due 1998
$ No.
Pennsylvania Power Company, a Pennsylvania corporation
(hereinafter called the "Company"), for value received, hereby
promises to pay to or registered assigns,
the principal sum of $ on February 1, 1998, and to pay
the registered holder hereof interest on said sum from the
Initial Interest Accrual Date (hereinbelow defined) at the rate
of 4.75 per centum per annum. The principal of and interest on
this bond shall be payable at the office or agency of the Company
in the Borough of Manhattan, The City, County and State of New
York, designated for that purpose, 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.
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 be valid or become obligatory for
any purpose unless and until it shall have been authenticated by
the execution by the Trustee or its successor in trust under the
Indenture of the certificate hereon.
IN WITNESS WHEREOF, PENNSYLVANIA POWER COMPANY has
caused this bond to be executed in its name by its President or
one of its Vice Presidents by his or her signature or a facsimile
thereof, and its corporate seal or a facsimile thereof to be
affixed hereto or imprinted hereon and attested by its Secretary
-2-
<PAGE>
or one of its Assistant Secretaries by his or her signature or a
facsimile thereof.
Dated:
PENNSYLVANIA POWER COMPANY
By .......................
President
Attest:
.........................
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 Indenture.
CITIBANK, N.A.
AS TRUSTEE,
By ........................
Authorized Officer
-3-
<PAGE>
[FORM OF BOND OF THE 1998 SERIES]
[REVERSE]
PENNSYLVANIA POWER COMPANY
First Mortgage Bond, Guarantee Series A of 1993 due 1998
This bond is one of the bonds issued and to be issued
from time to time under and in accordance with and all secured by
an indenture of mortgage or deed of trust dated as of November 1,
1945, and indentures supplemental thereto, given by the Company
to Citibank, N.A. (successor to The First National Bank of The
City of New York), as trustee (hereinafter referred to as the
"Trustee"), to which indenture and indentures supplemental
thereto (hereinafter referred to collectively as the "Indenture")
reference is hereby made for a description of the property
mortgaged and pledged, the nature and extent of the security and
the rights, duties and immunities thereunder of the Trustee and
the rights of the holders of the bonds and coupons and of the
Trustee and of the Company in respect of such security, and the
limitations on such rights. By the terms of the Indenture, the
bonds to be secured thereby are issuable in series which may vary
as to date, amount, date of maturity, rate of interest, terms of
redemption and in other respects as in the Indenture provided.
The Indenture contains provisions permitting the
Company and the Trustee, with the consent of the holders of not
less than seventy-five per centum in principal amount of the
bonds (exclusive of bonds disqualified by reason of the Company's
interest therein) at the time outstanding, including, if more
than one series of bonds shall be at the time outstanding, not
less than sixty per centum in principal amount of each series
affected, to effect, by an indenture supplemental to the
Indenture, modifications or alterations of the Indenture and of
the rights and obligations of the Company and the rights of the
holders of the bonds and coupons; provided, however, that no such
modification or alteration shall be made without the written
approval or consent of the holder hereof which will (a) extend
the maturity of this bond or reduce the rate or extend the time
of payment of interest hereon or reduce the amount of the
principal hereof or reduce any premium payable on the redemption
hereof, or (b) permit the creation of any lien, not otherwise
permitted, prior to or on a parity with the lien of the
Indenture, or (c) reduce the percentage of the principal amount
of the bonds upon the approval or consent of the holders of which
modifications or alterations may be made as aforesaid.
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
-4-
<PAGE>
by the Trustee of a written advice from the trustee under the
Trust Indenture (the "Revenue Bond Indenture") dated as of
November 1, 1993, between Lawrence County Industrial Development
Authority and First Western Trust Services Company, as trustee
(such trustee and any successor trustee being hereinafter
referred to as the "Revenue Bond Trustee"), securing $850,000 of
Environmental Improvement Revenue Refunding Bonds, 1993 Series A
(Pennsylvania Power Company New Castle Project), stating that the
principal amount of all the environmental improvement revenue
refunding 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 environmental improvement
revenue refunding bonds and the date from which interest on the
environmental improvement revenue refunding 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
environmental improvement revenue refunding bonds then
outstanding under the Revenue Bond Indenture and not later than
the 45th day after the 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
aforesaid environmental improvement revenue refunding 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 aforesaid environmental improvement revenue refunding
bonds becoming due and payable on the maturity date of the bonds
of this series, the date from which unpaid interest on the
aforesaid environmental improvement revenue refunding 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 the Indenture (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 environmental improvement revenue refunding bonds then
outstanding under the Revenue Bond Indenture and of the
-5-
<PAGE>
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 notice.
Bonds of this series are not otherwise redeemable prior
to their maturity.
In case of certain defaults as specified in the
Indenture, the principal of this bond may be declared or may
become due and payable on the conditions, at the time, in the
manner and with the effect provided in the Indenture.
No recourse shall be had for the payment of the
principal of or interest on this bond, or for any claim based
hereon, or otherwise in respect hereof or of the Indenture, to or
against any incorporator, stockholder, director or officer, past,
present or future, as such, of the Company, or of any predecessor
or successor company, either directly or through the Company, or
such predecessor or successor company, or otherwise, under any
constitution or statute or rule of law, or by the enforcement of
any assessment or penalty, or otherwise, all such liability of
incorporators, stockholders, directors and officers, as such,
being waived and released by the holder and owner hereof by the
acceptance of this bond and being likewise waived and released by
the terms of the Indenture.
The bonds of this series are issuable only as
registered bonds without coupons in denominations of $1,000 and
authorized multiples thereof. Except as may be stated in any
legend written on the face of this bond, this bond is
transferable by the registered holder hereof, in person or by
attorney duly authorized, at the corporate trust office of the
Trustee, in the Borough of Manhattan, The City, County and State
of New York, or at such other place or places as the Company may
designate by resolution of the Board of Directors, but only in
the manner and upon the conditions prescribed in the Indenture,
upon the surrender and cancellation of this bond and the payment
of charges for transfer, and upon any such transfer a new
registered bond or bonds, without coupons, of the same series and
maturity date and for the same aggregate principal amount, in
authorized denominations, will be issued to the transferee in
exchange herefor. The Company, the Trustee and any agent
designated to make transfers or exchanges of bonds of this series
may deem and treat the person in whose name this bond is
registered as the absolute owner for all purposes including the
purpose of the receipt of payment. Registered bonds of this
series shall be exchangeable at said corporate trust office of
the Trustee, or at such other place or places as the Company may
designate by resolution of the Board of Directors, for registered
-6-
<PAGE>
bonds of other authorized denominations having the same aggregate
principal amount, in the manner and upon the conditions
prescribed in the Indenture. Neither the Company nor the Trustee
nor any other agent designated for such purpose 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.
Notwithstanding any provisions of the Indenture, 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 THE 1998 SERIES]
AND WHEREAS all acts and things necessary to make the
bonds, when authenticated by the Trustee and issued as in the
Indenture provided, the valid, binding and legal obligations of
the Company, and to constitute the Indenture a valid, binding and
legal instrument for the security thereof, have been done and
performed, and the creation, execution and delivery of the
Indenture and the creation, execution and issue of the bonds
subject to the terms hereof and of the Indenture, have in all
respects been duly authorized;
NOW THEREFORE, in consideration of the premises, and of
the acceptance and purchase by holders thereof of the bonds
issued and to be issued under the Indenture, and the sum of One
Dollar duly paid by the Trustee to the Company, and of other good
and valuable consideration, the receipt of which is hereby
acknowledged, and for the purpose of securing the due and
punctual payment of the principal of and premium, if any, and
interest on all bonds now outstanding under the Indenture and the
$850,000 principal amount of bonds of the 1998 Series proposed
presently to be issued and all other bonds which shall be issued
under the Indenture, and for the purpose of securing the faithful
performance and observance of all covenants and conditions
therein and in any supplemental indenture set forth, the Company
has given, granted, bargained, sold, released, transferred,
assigned, hypothecated, pledged, mortgaged, confirmed, created a
security interest in, set over, warranted, aliened and conveyed
and by these presents does give, grant, bargain, sell, release,
transfer, assign, hypothecate, pledge, mortgage, confirm, create
a security interest in, set over, warrant, alien and convey unto
Citibank, N.A., as Trustee as provided in the Indenture, and its
successor or successors in the trust thereby and hereby created
and to its or their assigns forever, all the right, title and
interest of the Company in and to the property described in the
Indenture (and not therein expressly excepted), together (subject
to the provisions of Article X of the Indenture) with the tolls,
rents, revenues, issues, earnings, income, products and profits
thereof, and does hereby confirm that the Company will not cause
or consent to a partition, whether voluntary or through legal
-7-
<PAGE>
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 said Article
X thereof.
TOGETHER WITH all and singular the tenements,
hereditaments and appurtenances belonging or in any wise
appertaining to the premises, property, franchises and rights, or
any thereof, referred to in the Indenture (and not therein
expressly excepted) with the reversion and reversions, remainder
and remainders and (subject to the provisions of Article X of the
Indenture) the tolls, rents, revenues, issues, earnings, income,
products 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 such
premises, property, franchises and rights and every part and
parcel thereof, subject to "excepted encumbrances" of the
original Indenture.
TO HAVE AND TO HOLD all said premises, property,
franchises and rights hereby conveyed, assigned, pledged, or
mortgaged, or intended so to be, unto the Trustee, its successor
or successors in trust, and their assigns forever.
BUT IN TRUST, NEVERTHELESS, with power of sale, for the
equal and proportionate benefit and security of the holders of
all bonds now or hereafter authenticated and delivered under the
Indenture, and interest coupons appurtenant thereto, pursuant to
the provisions thereof, and for the enforcement of the payment of
said bonds and coupons when payable and the performance of and
compliance with the covenants and conditions of the Indenture,
without any preference, distinction or priority as to lien or
otherwise of any bond or bonds over others by reason of the
difference in time of the actual authentication, delivery, issue,
sale or negotiation thereof or for any other reason whatsoever,
except as otherwise expressly provided in the Indenture; and so
that each and every bond now or hereafter authenticated and
delivered thereunder shall have the same lien, and so that the
principal of and premium, if any, and interest on every such bond
shall, subject to the terms of the Indenture, be equally and
proportionately secured thereby and hereby, as if it had been
made, executed, authenticated, delivered, sold and negotiated
simultaneously with the execution and delivery of the Indenture.
AND IT IS EXPRESSLY DECLARED that all bonds
authenticated and delivered and secured thereunder and hereunder
are to be issued, authenticated and delivered, and all said
premises, property, franchises and rights hereby and by the
Indenture conveyed, assigned, pledged or mortgaged, or intended
so to be (including all the right, title and interest of the
Company in and to any and all premises, property, franchises and
rights of every kind and description, real, personal and mixed,
tangible and intangible, thereafter acquired by the Company and
-8-
<PAGE>
whether or not specifically described in the Indenture, except
any therein expressly excepted), are to be dealt with and
disposed of, under, upon and subject to the terms, conditions,
stipulations, covenants, agreements, trusts, uses and purposes in
the Indenture expressed, and it is hereby agreed as follows:
Section 1. There is hereby created a series of bonds
designated Guarantee Series A of 1993 due 1998, which shall also
bear the descriptive title "First Mortgage Bond" and the form of
such series shall be substantially as hereinbefore set forth.
Bonds of the 1998 Series shall mature on February 1, 1998. The
bonds of the 1998 Series may be issued only as registered bonds
without coupons in denominations of $1,000 or such multiples
thereof as the Board of Directors shall approve, and delivery to
the Trustee for authentication shall be conclusive evidence of
such approval. The serial numbers of bonds of the 1998 Series
shall be such as may be approved by any officer of the Company,
the execution thereof by any such officer, by facsimile signature
or otherwise, to be conclusive evidence of such approval. Bonds
of the 1998 Series shall bear interest from the Initial Interest
Accrual Date (as defined in the form of the bonds of the 1998
Series hereinabove set forth) at the rate of 4.75% per annum.
Principal or redemption price of and interest on said bonds 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 the office or agency of the Company in the
Borough of Manhattan, The City, County and State of New York,
designated for that purpose.
Bonds of the 1998 Series shall be redeemable,
exchangeable and transferable as and to the extent set forth in
the form thereof hereinbefore set forth.
The bonds of the 1998 Series shall be redeemable as set
forth in the form thereof hereinbefore set forth 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 the 1998 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 thirty-five 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 environmental improvement revenue refunding bonds
then outstanding under the Revenue Bond Indenture and not later
than the forty-fifth day after receipt by the Trustee of such
advice, unless such forty-fifth day is earlier than such date of
accelerated maturity. If the Trustee does not receive such
-9-
<PAGE>
notice from the Company within thirteen days after receipt by the
Trustee of the aforesaid written advice, the redemption date
shall be deemed fixed as the forty-fifth day after such receipt.
The Trustee shall mail notice of the redemption date to the
Revenue Bond Trustee not less than thirty 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 environmental improvement
revenue refunding 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" as
they relate to the bonds of the 1998 Series shall have the
meanings specified in the form thereof hereinabove set forth.
Redemption of the bonds of the 1998 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
environmental improvement revenue refunding 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 the bonds of the
1998 Series provided for herein) and no redemption of the bonds
of the 1998 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 the 1998 Series shall be deemed to
be paid and no longer outstanding under the Indenture to the
extent that environmental improvement revenue refunding 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. The Company covenants and agrees that the
provisions of Section 3 of the Fifth Supplemental Indenture dated
as of September 1, 1962, which are to remain in effect so long as
any bonds of the Sixth Series shall be outstanding under the
Indenture, shall remain in full force and effect so long as any
bonds of the 1998 Series shall be outstanding under the
Indenture.
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<PAGE>
SECTION 4. The Company covenants and agrees that the
provisions of Section 3 of the Nineteenth Supplemental Indenture
dated as of January 14, 1982, which are to remain in effect so
long as any bonds of the Twentieth Series shall be outstanding
under the Indenture, shall remain in full force and effect so
long as any bonds of the 1998 Series shall be outstanding under
the Indenture.
SECTION 5. As supplemented and amended by this
Supplemental Indenture, the Indenture is in all respects ratified
and confirmed, and the Indenture and this Supplemental Indenture
shall be read, taken and construed as one and the same
instrument.
SECTION 6. 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 7. The Trustee assumes no responsibility for
or in respect of the validity or sufficiency of this Supplemental
Indenture or the due execution hereof by the Company or for or in
respect of the recitals and statements contained herein, all of
which recitals and statements are made solely by the Company.
SECTION 8. This Supplemental Indenture may be executed
in several counterparts and all such counterparts executed and
delivered, each as an original, shall constitute but one and the
same instrument.
PENNSYLVANIA POWER COMPANY hereby constitutes and
appoints Robert P. Wushinske to be its attorney for it and in its
name as and for its corporate act and deed to acknowledge this
Supplemental Indenture before any person having authority to take
such acknowledgment, to the intent that the same may be duly
recorded.
CITIBANK, N.A. hereby constitutes and appoints P.
DeFelice to be its attorney for it and in its name as and for its
corporate act and deed to acknowledge this Supplemental Indenture
before any person having authority to take such acknowledgment,
to the intent that the same may be duly recorded.
IN WITNESS WHEREOF, PENNSYLVANIA POWER COMPANY has
caused its corporate name to be hereunto affixed, and this
instrument to be signed and sealed by its President or a Vice
President, and its corporate seal to be attested by its Secretary
or an Assistant Secretary for and on its behalf, in the city of
New Castle, County of Lawrence and Commonwealth of Pennsylvania
and CITIBANK, N.A., in token of its acceptance of the trust, has
caused its corporate name to be hereunto affixed, and this
instrument to be signed by a Vice President and its corporate
-11-
<PAGE>
seal to be affixed and attested by one of its Vice Presidents in
the City of New York, County of New York and State of New York,
all as of the day and year first above written.
PENNSYLVANIA POWER COMPANY
By: Robert P. Wushinske
--------------------------
Robert P. Wushinske
Vice President
ATTEST:
By: J. R. Edgerly
---------------------------
J. R. Edgerly
Secretary
[Seal]
Signed, sealed and delivered by
PENNSYLVANIA POWER COMPANY
in the presence of:
F. A. Fazzone
- ------------------------------
F. A. Fazzone
Angeline Comparone
- ------------------------------
Angeline Comparone
-12-
<PAGE>
CITIBANK, N.A.
as Trustee as aforesaid,
By: P. DeFelice
--------------------------
P. DeFelice
Vice President
ATTEST:
By: Carol Ng
---------------------------
Carol Ng
Assistant Vice President
[Seal]
Signed, sealed and delivered by
CITIBANK, N.A.
in the presence of:
Robert T. Kirchner
- ------------------------------
Robert T. Kirchner
Jose R. Gonzalez
- ------------------------------
Jose R. Gonzalez
-13-
<PAGE>
COMMONWEALTH OF PENNSYLVANIA )
: ss.:
COUNTY OF LAWRENCE )
BE IT REMEMBERED that, on the 3rd day of November,
1993, before me, the undersigned, a Notary Public in said County
of Lawrence, Commonwealth of Pennsylvania, personally appeared J.
R. Edgerly, who being duly sworn according to law, doth depose
and say that he was personally present and did see the common or
corporate seal of the above named PENNSYLVANIA POWER COMPANY
affixed to the foregoing Supplemental Indenture; that the seal so
affixed is the common or corporate seal of the said Pennsylvania
Power Company and was so affixed by the authority of the said
corporation as the act and deed thereof; that the above named
Robert P. Wushinske is a Vice President of said corporation and
did sign the said Supplemental Indenture as such in the presence
of this deponent; that this deponent is the Secretary of
Pennsylvania Power Company, and that the name of this deponent
above signed in attestation of the due execution of the said
Supplemental Indenture is in this deponent's own proper
handwriting.
Sworn to and subscribed before me this 3rd day of
November, 1993.
J. R. Edgerly
------------------------------
[SEAL]
Sylvia M. Rashid
------------------------------
NOTARIAL SEAL
SYLVIA M. RASHID, Notary Public
New Castle, Lawrence Co., PA
My Commission Expires March 11, 1997
-14-
<PAGE>
COMMONWEALTH OF PENNSYLVANIA )
: ss.:
COUNTY OF LAWRENCE )
I HEREBY CERTIFY that, on this 3rd day of November,
1993, before me, the subscriber, a Notary Public in and for the
State and County aforesaid, personally appeared Robert P.
Wushinske, the attorney for PENNSYLVANIA POWER COMPANY, and the
attorney named in the foregoing Supplemental Indenture and, by
virtue and in pursuance of the authority therein conferred upon
him, acknowledged the said Supplemental Indenture to be the act
and deed of said Pennsylvania Power Company.
WITNESS my hand and notarial seal the day and year
aforesaid.
[SEAL]
Sylvia M. Rashid
------------------------------
NOTARIAL SEAL
SYLVIA M. RASHID, Notary Public
New Castle, Lawrence Co., PA
My Commission Expires March 11, 1997
COMMONWEALTH OF PENNSYLVANIA )
: ss.:
COUNTY OF LAWRENCE )
On the 3rd day of November, 1993, before me, personally
came Robert P. Wushinske, to me known, who, being by me duly
sworn, did depose and say that he resides at R.D. 2, Means Road,
New Wilmington, Pennsylvania 16142; that he is a Vice President
of PENNSYLVANIA POWER 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 affixed by order
of the Board of Directors of said corporation, and that he signed
his name thereto by like authority.
WITNESS my hand and notarial seal the day and year
aforesaid.
[SEAL]
Sylvia M. Rashid
------------------------------
NOTARIAL SEAL
SYLVIA M. RASHID, Notary Public
New Castle, Lawrence Co., PA
My Commission Expires March 11, 1997
-15-
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED that, on the 1st day of November,
1993, before me, the undersigned, a Notary Public in said County
of New York, State of New York, personally appeared Carol Ng, who
being duly sworn according to law, doth depose and say that she
was personally present and did see the common or corporate seal
of the above named CITIBANK, N.A. affixed to the foregoing
Supplemental Indenture; that the seal so affixed is the common or
corporate seal of the said CITIBANK, N.A. and was so affixed by
the authority of the said association as the act and deed
thereof; that the above named P. DeFelice is one of the Vice
Presidents of said association and did sign the said Supplemental
Indenture as such in the presence of this deponent; that this
deponent is an Assistant Vice President of said CITIBANK, N.A.,
and that the name of this deponent above signed in attestation of
the due execution of the said Supplemental Indenture is in this
deponent's own proper handwriting.
Sworn to and subscribed before me this 1st day of
November, 1993.
Carol Ng
------------------------------
[SEAL]
Jeffry Berger
------------------------------
JEFFRY BERGER
Notary Public, State of New York
No. O1BE5015814
Qualified in Kings County
Commission Expires July 26, 1995
-16-
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
I HEREBY CERTIFY that, on this 1st day of November,
1993, before me, the subscriber, a Notary Public in and for the
State and County aforesaid, personally appeared P. DeFelice, the
attorney for CITIBANK, N.A., and the attorney named in the
foregoing Supplemental Indenture and, by virtue and in pursuance
of the authority therein conferred upon him, acknowledged the
execution of said Supplemental Indenture to be the act and deed
of said CITIBANK, N.A.
WITNESS my hand and notarial seal the day and year
aforesaid.
Jeffry Berger
-----------------------------
[SEAL]
JEFFRY BERGER
Notary Public, State of New York
No. O1BE5015814
Qualified in Kings County
Commission Expires July 26, 1995
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 1st day of November, 1993, before me, personally
came P. DeFelice, to me known, who being by me duly sworn, did
depose and say that he resides at 47-09 169th Street, Flushing,
New York; that he is a Vice President of CITIBANK, N.A., one of
the parties described in and which executed the above instrument;
that he knows the seal of said association; that the seal affixed
to said instrument is such corporate seal; that it was so affixed
by authority of the Board of Directors of said association, and
that he signed his name thereto by like authority.
WITNESS my hand and notarial seal the day and year
aforesaid.
Jeffry Berger
-----------------------------
[SEAL]
JEFFRY BERGER
Notary Public, State of New York
No. O1BE5015814
Qualified in Kings County
Commission Expires July 26, 1995
-17-
<PAGE>
Citibank, N.A. hereby certifies that its precise name
and address as Trustee hereunder are:
CITIBANK, N.A.
111 Wall Street
Borough of Manhattan
City, County and State
of New York 10043
CITIBANK, N.A.
By P. DeFelice
-----------------------
P. DeFelice
Vice President<PAGE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL DATA Pennsylvania Power Company
- ---------------------------------------------------------------------------------------------------------------
1993 1992 1991 1990 1989
---------- --------- ---------- ---------- --------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Operating Revenues $ 292,084 $ 315,458 $ 321,845 $ 318,056 $ 313,757
========== ========= ========== ========== ==========
Operating Income $ 62,777 $ 66,525 $ 81,102 $ 65,992 $ 73,588
========== ========= ========== ========== ==========
Net Income $ 21,317 $ 30,956 $ 40,197 $ 25,519 $ 34,660
========== ========= ========== ========== ==========
Earnings on Common Stock $ 15,454 $ 24,457 $ 32,475 $ 15,537 $ 23,987
========== ========= ========== ========== ==========
Return on Average Common Equity 5.9% 9.2% 12.2% 5.7% 8.6%
=== === ==== === ===
Cash Dividends on Common Stock $ 21,386 $ 27,676 $ 27,676 $ 27,676 $ 27,676
========== ========= ========== ========== ==========
Total Assets $1,180,983 $ 986,158 $1,022,099 $1,091,090 $1,065,574
========== ========= ========== ========== ==========
CAPITALIZATION:
Common Stockholder's Equity $ 254,782 $ 261,518 $ 266,058 $ 262,059 $ 274,158
Preferred Stock-
Not Subject to Mandatory Redemption 50,905 41,905 41,905 41,905 41,905
Subject to Mandatory Redemption 20,500 30,362 34,282 38,722 59,662
Long-Term Debt 440,555 398,630 408,443 431,146 411,473
---------- --------- ---------- ---------- ----------
Total Capitalization $ 766,742 $ 732,415 $ 750,688 $ 773,832 $ 787,198
========== ========= ========== ========== ==========
CAPITALIZATION RATIOS:
Common Stockholder's Equity 33.2% 35.7% 35.4% 33.9% 34.8%
Preferred Stock-
Not Subject to Mandatory Redemption 6.6 5.7 5.6 5.4 5.3
Subject to Mandatory Redemption 2.7 4.2 4.6 5.0 7.6
Long-Term Debt 57.5 54.4 54.4 55.7 52.3
----- ----- ----- ----- -----
Total Capitalization 100.0% 100.0% 100.0% 100.0% 100.0%
===== ===== ===== ===== =====
</TABLE>
-1-
<PAGE>
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
Net income decreased approximately $9,639,000 during 1993 compared
to 1992. The decrease was a result of nonrecurring charges which reflect
a $17,029,000 after-tax write-off in the fourth quarter due to the
termination of Perry Unit 2 and expected resolution of fuel cost recovery
issues. The effect on 1993 net income from these items was partially
offset by a $5,653,000 credit from the cumulative effect of a change in
accounting to accrue metered but unbilled revenue (see Note 2).
The shutdown of Sharon Steel in November 1992 significantly reduced
the Company's retail sales, which dropped 10.2% in 1993 compared to 1992.
Industrial sales were down 27.6% during the year as a result of the
shutdown. Excluding the effect of Sharon Steel, industrial and retail
sales increased 0.2% and 3.5%, respectively, during 1993. Residential and
commercial sales were up 5.2% and 6.2%, respectively, over 1992 levels
as a result of more extreme weather conditions in 1993. A 28.1% drop in
sales to other utilities had an adverse effect on total kilowatt-hour
sales, which were down 15.6% in 1993 compared to 1992. The reduction in
sales to other utilities resulted from lower sales to Ohio Edison
(Edison) coupled with decreased demand for bulk power in the spot market.
Sales to Edison decreased 40.3% and sales to non-associated utilities
fell 17.5%. Total kilowatt-hour sales were up 3.8% in 1992 compared with
1991, primarily due to a 25.6% increase in sales to other utilities.
The following summarizes the sources of changes in operating
revenues during 1993 and 1992 as compared to the previous year:
1993 1992
------ ------
(In millions)
Change in Sharon Steel revenue $(20.5) $ (6.7)
Change in retail kilowatt-hour sales 9.4 1.9
Change in average retail electric price (3.1) 1.5
Sales to utilities (7.7) 0.4
Other (1.5) (3.5)
------ ------
Net Decrease $(23.4) $ (6.4)
====== ======
-2-
<PAGE>
As discussed in Note 3, the Company will not participate in further
construction of Perry Unit 2 and has abandoned it as a possible electric
generating plant. The unit was approximately 50% complete when
construction was suspended in 1985. Based on section 520 of the
Pennsylvania Public Utility Code, the Company expects to recover its
investment in Perry 2 from its customers. However, due to the
anticipated delay in commencement of recovery and taking into account the
expected rate treatment, the Company recognized an impairment to its
Perry Unit 2 investment of $24,458,000. As a result, net income for the
year ended December 31, 1993, was reduced by $14,165,000.
The Company has taken steps to conserve cash and improve earnings
opportunities in light of the adverse effects resulting from the shutdown
of Sharon Steel. The Company closed two old coal-fired generating units
in 1993 which is expected to reduce annual operating costs by
approximately $3,200,000. This action will also eliminate the need to
make additional capital expenditures of approximately $10,000,000 over
the next five years. In February 1993, the Company's Board of Directors
reduced the quarterly common stock dividend to $.85 per share from the
previous level of $1.10 per share. This action reduced the Company's
annual cash outlay for dividends by approximately $6,300,000.
The 1993 decrease in fuel and purchased power costs was due to
reduced requirements associated with the drop in sales. The decrease was
partially offset by a nonrecurring charge of approximately $4,950,000 for
the expected resolution of fuel cost recovery issues (see Note 1).
The increase in nuclear operating costs over last year was mainly
due to increased expenses resulting from forced and scheduled outages.
Contributing to the increase were expenses associated with performance
results at Perry Unit 1 during the year. As a result of mechanical
failures, Perry produced electricity for less than half the year. The
operating company is undertaking significant corrective actions,
including additional maintenance work to be performed during the
refueling outage currently in process and for the refueling outage
scheduled for 1995. Work done during the outages is expected to enhance
systems and improve Perry's performance. The 1992 reduction in nuclear
operating costs resulted from additional costs, in 1991, of approximately
$7,000,000 related to the refueling of Beaver Valley Unit 1.
-3-
<PAGE>
The decrease in other operating costs during 1993 was due primarily
to last year's $13,900,000 increase in the provision for uncollectible
accounts. That decrease was partially offset by a $3,400,000 charge in
1993 for a voluntary early retirement program offered to production
department employees and additional costs of $4,500,000 resulting from
the January 1, 1993, adoption of Statement of Financial Accounting
Standards (SFAS) No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions." The Company is deferring incremental
costs resulting from the adoption of SFAS No. 106, which are reflected
in the change in amortization of net regulatory assets compared with the
1992 amounts.
Lower depreciation expense in 1993 reflects depreciation rates that
were reduced in 1993 as a result of an updated depreciation study filed
with the Pennsylvania Public Utility Commission (PPUC). The depreciation
study takes into consideration extended useful lives of certain
generation and distribution facilities.
Interest on long-term debt decreased in 1993 and 1992 compared to
1992 and 1991, respectively, as a result of long-term debt refinancings
at lower rates. During 1993, the Company issued approximately
$153,000,000 principal amount of new debt at a weighted average cost of
6.56% and redeemed approximately $130,000,000 principal amount of debt
with a weighted average cost of 8.84%. The Company also paid off all
short-term debt that was outstanding at the beginning of the year. The
1993 increase in other interest expense compared to last year is due
primarily to costs associated with the debt refinancings. The 1992
reduction in other interest expense, compared with 1991, reflects reduced
short-term borrowing in 1992 and the absence of a 1991 provision for
interest associated with outage-related refunds and estimated interest
payable in connection with federal income tax adjustments for prior
years.
The electric utility industry is subject to the same inflationary
pressures as those experienced by other industries. To the extent that
the Company incurs additional costs or receives benefits resulting from
the effects of inflation, those effects are generally reflected in the
Company's electric rates through the traditional rate making process.
-4-
<PAGE>
CAPITAL RESOURCES AND LIQUIDITY
Despite the decrease in sales, the Company improved its cash
position compared to the end of 1992. All cash requirements for 1993
were met with internally generated funds, with cash and cash equivalents
increasing by nearly $9,200,000 during the year. All financing
activities during the year were for refunding purposes, as discussed
above.
At December 31, 1993, the Company had approximately $13,000,000 of
cash and temporary investments and no short-term indebtedness. At the
end of the year, the Company had available $35,000,000 of bank lines of
credit and $52,000,000 of bank facilities which may be borrowed on a
short-term basis at the banks' discretion.
Capital requirements in 1993 for the Company's construction
programs, capital leases and nuclear fuel were approximately $36,000,000.
The 1994-1998 construction program and capital lease requirements are
currently estimated to be approximately $140,000,000 (excluding nuclear
fuel), of which approximately $27,000,000 applies to 1994. The Company
has additional cash requirements of approximately $58,000,000 for the
1994-1998 period to meet maturities of, and sinking fund requirements
for, long-term debt (excluding nuclear fuel) and preferred stock; of that
amount approximately $2,000,000 applies to 1994.
Investments for additional nuclear fuel during the 1994-1998 period
are estimated to be approximately $38,000,000, of which approximately
$9,000,000 applies to 1994. During the same periods, the Company's
nuclear fuel investments are expected to be reduced by approximately
$44,000,000 and $10,000,000, respectively, as the nuclear fuel is
consumed.
Sales by the Company of first mortgage bonds and of preferred stock
require that applicable earnings coverage tests be met. With respect to
the issuance of first mortgage bonds, other requirements also apply and
are more restrictive than the earnings test at the present time. The
Company is currently able to issue $96,000,000 principal amount of first
mortgage bonds, with up to $15,000,000 of such amount issuable against
property additions; the remainder could be issued against previously
retired bonds. The Company could issue approximately $50,000,000 of
additional preferred stock before the end of the first quarter of 1994.
-5-
<PAGE>
For the remainder of 1994, however, the earnings coverage test contained
in the Company's charter precludes the issuance of additional preferred
stock due to the inclusion of the charge for the Perry Unit 2 impairment
in the earnings test. Additional preferred stock capability is expected
to be restored in January 1995.
In January 1994, the Central Area Power Coordination Group (CAPCO)
companies reached a settlement in connection with a 1991 lawsuit against
General Electric Company regarding the Perry Plant. The settlement
provides for cash payments to the CAPCO companies and discounts on future
purchases from General Electric. This settlement will not materially
affect the Company's results of operations in future years.
The CAPCO companies filed suit against Westinghouse Electric
Corporation in 1991 alleging that six steam generators supplied by
Westinghouse for the Beaver Valley Plant are defective and that
replacement could be required earlier than their 40-year design life.
The operating company has no current plans to replace the steam
generators and is evaluating the feasibility of applying new technologies
to repair the generators. If the generators would need to be replaced
the capital costs to the CAPCO companies could range from $100,000,000
to $150,000,000 for Beaver Valley Unit 1 based upon the costs other
utilities have experienced. The Company has a 17.5% ownership interest
in Beaver Valley Unit 1.
The Clean Air Act Amendments of 1990 require significant reductions
of sulfur dioxide and oxides of nitrogen from the Company's coal-fired
generating units by 1995 and additional emission reductions by 2000.
Compliance options include, but are not limited to, installing additional
pollution control equipment, burning less polluting fuel, purchasing
emission allowances from others, operating existing facilities in a
manner which minimizes pollution and retiring facilities. In a system
compliance plan for the Company and Edison submitted to the PPUC and to
the Environmental Protection Agency, the Company stated that reductions
for the years 1995 through 1999 are likely to be achieved by burning
lower sulfur fuel, generating more electricity at their lower emitting
plants and/or purchasing emission allowances. The Company continues to
evaluate its compliance plan and other compliance options as they arise.
Plans for complying with the year 2000 reductions are less certain at
this time.
-6-
<PAGE>
OUTLOOK
The changing environment in the utility industry is posing
competitive challenges for the Company. Many of these challenges are a
result of the Energy Policy Act of 1992. Others result from attempts by
large users of electricity to choose their supplier. In order to meet
the competitive challenges that may lie ahead, the Company is
aggressively pursuing opportunities to reduce costs, increase revenues,
and improve operating efficiencies, which, if successful will improve its
competitive position. The Company and Edison are currently in the
process of a comprehensive review of their business operations as part
of a performance initiative, to further identify opportunities for
improvement. Operating results should improve as a result of these
activities.
-7-
<PAGE>
<TABLE>
STATEMENTS OF INCOME Pennsylvania Power Company
- --------------------------------------------------------------------------------------
<CAPTION>
For the Years Ended December 31, 1993 1992 1991
-------- -------- --------
(In thousands)
<S> <C> <C> <C>
OPERATING REVENUES $292,084 $315,458 $321,845
-------- -------- --------
OPERATING EXPENSES AND TAXES:
Fuel and purchased power 67,312 80,303 82,647
Nuclear operating costs 30,162 24,588 32,799
Other operating costs 61,125 67,578 52,054
-------- -------- --------
Total operation and maintenance expenses 158,599 172,469 167,500
Provision for depreciation 29,260 30,856 29,166
Amortization (deferral) of net regulatory assets (4,339) 2,377 (2,377)
General taxes 22,591 22,162 22,698
Income taxes 23,196 21,069 23,756
-------- -------- --------
Total operating expenses and taxes 229,307 248,933 240,743
-------- -------- --------
OPERATING INCOME 62,777 66,525 81,102
-------- -------- --------
OTHER INCOME AND EXPENSE:
Perry Unit 2 termination (Note 3) (24,458) - -
Income tax benefit from Perry Unit 2 termination 10,293 - -
Other 1,542 781 2,461
-------- -------- --------
Total other income (expense) (12,623) 781 2,461
-------- -------- --------
TOTAL INCOME 50,154 67,306 83,563
-------- -------- --------
NET INTEREST:
Interest on long-term debt 33,208 35,707 37,867
Interest on nuclear fuel obligations 401 457 1,013
Allowance for borrowed funds used during
construction (772) (678) (1,329)
Other interest expense 1,653 864 5,815
-------- -------- --------
Net interest 34,490 36,350 43,366
-------- -------- --------
INCOME BEFORE CUMULATIVE EFFECT OF A CHANGE IN
ACCOUNTING 15,664 30,956 40,197
Cumulative effect to January 1, 1993, of a change in
accounting for unbilled revenues (net of income
taxes of 4,108,000) (Note 2) 5,653 - -
-------- -------- --------
NET INCOME 21,317 30,956 40,197
PREFERRED STOCK DIVIDEND REQUIREMENTS 5,863 6,499 7,722
-------- -------- --------
EARNINGS ON COMMON STOCK $ 15,454 $ 24,457 $ 32,475
======== ======== ========
<FN>
The accompanying Notes to Financial Statements are an integral part of these statements.
</TABLE>
-8-
<PAGE>
<TABLE>
BALANCE SHEETS Pennsylvania Power Company
- -----------------------------------------------------------------------------------------
<CAPTION>
At December 31, 1993 1992
----------- -----------
(In thousands)
ASSETS
<S> <C> <C>
UTILITY PLANT:
In service, at original cost $1,209,961 $1,138,408
Less-Accumulated provision for depreciation 394,530 365,251
---------- ----------
815,431 773,157
---------- ----------
Construction work in progress-
Electric plant (Note 3) 10,996 60,239
Nuclear fuel 8,604 15,805
---------- ----------
19,600 76,044
---------- ----------
835,031 849,201
---------- ----------
OTHER PROPERTY AND INVESTMENTS 15,064 15,258
---------- ----------
CURRENT ASSETS:
Cash and cash equivalents 12,819 3,663
Accounts receivable-
Customers (less accumulated provisions of $559,000 and
$429,000, respectively, for uncollectible accounts)
(Note 2) 28,122 19,514
Parent company 19,737 15,170
Other 17,427 14,418
Materials and supplies, at average cost-
Fuel 4,350 8,547
Other 12,088 12,557
Prepayments 4,868 2,528
---------- ----------
99,411 76,397
---------- ----------
DEFERRED CHARGES:
Regulatory assets 222,301 38,984
Other 9,176 6,318
---------- ----------
231,477 45,302
---------- ----------
$1,180,983 $ 986,158
========== ==========
CAPITALIZATION AND LIABILITIES
CAPITALIZATION (See Statements of Capitalization):
Common stockholder's equity $ 254,782 $ 261,518
Preferred stock-
Not subject to mandatory redemption 50,905 41,905
Subject to mandatory redemption 20,500 30,362
Long-term debt-
Associated companies 16,401 21,567
Other 424,154 377,063
---------- ----------
766,742 732,415
---------- ----------
CURRENT LIABILITIES:
Currently payable preferred stock and long-term debt-
Associated companies 10,216 10,633
Other 1,788 30,246
Notes payable to banks (Note 7) - 15,000
Accounts payable-
Associated companies 7,755 8,329
Other 32,680 25,480
Accrued taxes 6,658 9,548
Accrued interest 9,924 8,971
Other 14,308 16,195
---------- ----------
83,329 124,402
---------- ----------
DEFERRED CREDITS:
Accumulated deferred income taxes 273,319 74,336
Accumulated deferred investment tax credits 33,560 34,921
Other 24,033 20,084
---------- ----------
330,912 129,341
---------- ----------
COMMITMENTS, GUARANTEES AND CONTINGENCIES (Notes 5 & 8)
$1,180,983 $ 986,158
========== ==========
<FN>
The accompanying Notes to Financial Statements are an integral part of these
balance sheets.
</TABLE>
-9-
<PAGE>
<TABLE>
STATEMENTS OF CAPITALIZATION Pennsylvania Power Company
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
At December 31, (Dollars in thousands, except per share amounts) 1993 1992
<S> <C> <C>
COMMON STOCKHOLDERS' EQUITY:
Common stock, $30 par value, 6,500,000 shares authorized,
6,290,000 shares outstanding $188,700 $188,700
Other paid-in capital (310) 41
Retained earnings (Note 6a) 66,392 72,777
-------- --------
Total common stockholder's equity 254,782 261,518
-------- --------
Number of Shares Optional
Outstanding Redemption Price
-------------- ---------------------
1993 1992 Per Share Aggregate
------ ------ --------- ---------
<S> <C> <C> <C> <C> <C> <C>
PREFERRED STOCK (Note 6b):
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 - 100.00 25,000 25,000 -
8.00% 58,000 58,000 102.07 5,920 5,800 5,800
8.48% - 80,000 - - - 8,000
9.16% - 80,000 - - - 8,000
------- ------- -------- -------- --------
Total not subject to mandatory
redemption 509,049 419,049 $ 51,619 50,905 41,905
======= ======= ======== -------- --------
Subject to Mandatory Redemption (Note 6c):
7.625% 150,000 150,000 $ 107.63 $ 16,144 15,000 15,000
8.24% - 45,000 - - - 4,500
11.00% 3,616 11,616 102.75 372 362 1,162
11.50% - 60,000 - - - 6,000
13.00% 60,000 70,000 107.15 6,429 6,000 7,000
Redemption within one year (862) (3,300)
------- ------- -------- -------- --------
Total subject to mandatory redemption 213,616 336,616 $ 22,945 20,500 30,362
======== ======= ======== -------- --------
LONG-TERM DEBT (Note 6d):
First mortgage bonds-
4.375% due 1993 - 9,000
9.000% due 1996 50,000 50,000
8.000% due 1999 - 12,000
9.740% due 1999-2019 20,000 20,000
7.875% due 2001 - 12,000
8.000% due 2001 - 10,000
7.625% due 2002 - 12,000
7.500% due 2003 40,000 40,000
6.375% due 2004 50,000 -
6.625% due 2004 20,000 -
8.750% due 2006 - 15,000
8.500% due 2022 50,000 50,000
7.625% due 2023 40,000 -
-------- --------
Total first mortgage bonds 270,000 230,000
-------- --------
Secured notes and obligation-
7.900% due 1993-2001 - 950
5.750% due 1993-2003 - 2,850
7.300% due 1993-2003 - 238
11.080% due 1995 - 20,000
12.450% due 1995 - 20,000
4.750% due 1998 850 -
6.750% due 1998-2007 - 10,600
6.080% due 2000 23,000 -
5.400% due 2013 1,000 -
8.980% due 2013 - 4,200
9.000% due 2013 - 1,000
12.000% due 2014 12,700 12,700
8.125% due 2015 14,250 14,250
5.400% due 2017 10,600 -
7.150% due 2017 17,925 17,925
5.900% due 2018 16,800 16,800
8.100% due 2018 10,300 10,300
8.100% due 2020 5,200 5,200
7.150% due 2021 14,482 14,482
6.450% due 2027 14,500 14,500
5.450% due 2028 6,950 -
5.950% due 2029 238 -
-------- --------
Total secured notes and obligation 148,795 165,995
-------- --------
Other obligations-
Nuclear fuel 25,893 31,158
Capital leases (Note 5) 8,690 9,862
-------- --------
Total other obligations 34,583 41,020
-------- --------
Net unamortized discount on debt (1,681) (806)
-------- --------
Long-term debt due within one year (11,142) (37,579)
-------- --------
Total long-term debt 440,555 398,630
-------- --------
TOTAL CAPITALIZATION $766,742 $732,415
======== ========
<FN>
The accompanying Notes to Financial Statements are an integral part of
these statements.
</TABLE>
-10-
<PAGE>
<TABLE>
STATEMENTS OF RETAINED EARNINGS Pennsylvania Power Company
- ---------------------------------------------------------------------------------------------------------------------
<CAPTION>
For the Years Ended December 31, 1993 1992 1991
-------- -------- --------
(In thousands)
<S> <C> <C> <C>
Balance at beginning of year $ 72,777 $ 77,317 $ 73,170
Net income 21,317 30,956 40,197
-------- -------- --------
94,094 108,273 113,367
-------- -------- --------
Cash dividends on common stock 21,386 27,676 27,676
Cash dividends on preferred stock 5,639 6,448 7,698
Premium on redemption of preferred stock 677 1,372 676
-------- -------- --------
27,702 35,496 36,050
-------- -------- --------
Balance at end of year (Note 6a) $ 66,392 $ 72,777 $ 77,317
======== ======== ========
STATEMENTS OF CAPITAL STOCK AND OTHER PAID-IN CAPITAL
- ---------------------------------------------------------------------------------------------------------------------
Preferred Stock
----------------------------------------------
Common Stock Not Subject to Subject to
-------------------------------- Mandatory Redemption Mandatory Redemption
Other -------------------- --------------------
Number Par Paid-In Number Par Number Par
of Shares Value Capital of Shares Value of Shares Value
--------- ----- ------- --------- ----- --------- -----
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1991 6,290,000 $188,700 $ 189 419,049 $ 41,905 573,416 $ 57,342
Redemptions-
8.24% Series (5,000) (500)
11.00% Series (8,000) (800)
11.50% Series (148) (165,000) (16,500)
13.00% Series (10,000) (1,000)
15.00% Series (6,400) (640)
---------- -------- ----- -------- -------- -------- --------
Balance, December 31, 1991 6,290,000 188,700 41 419,049 41,905 379,016 37,902
Sale of 7.625% Preferred Stock 150,000 15,000
Redemptions-
8.24% Series (5,000) (500)
10.50% Series (100,000) (10,000)
11.00% Series (8,000) (800)
11.50% Series (15,000) (1,500)
13.00% Series (10,000) (1,000)
15.00% Series (54,400) (5,440)
---------- -------- ----- -------- -------- -------- --------
Balance, December 31, 1992 6,290,000 188,700 41 419,049 41,905 336,616 33,662
Sale of 7.75% Preferred Stock (345) 250,000 25,000
Redemptions-
8.24% Series (45,000) (4,500)
8.48% Series (6) (80,000) (8,000)
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 6,290,000 $188,700 $(310) 509,049 $ 50,905 213,616 $ 21,362
========== ======== ====== ======== ======== ======= ========
<FN>
The accompanying Notes to Financial Statements are an integral part of
these statements.
</TABLE>
-11-
<PAGE>
<TABLE>
STATEMENTS OF CASH FLOWS Pennsylvania Power Company
- ---------------------------------------------------------------------------------------
For the Years Ended December 31, 1993 1992 1991
(In thousands)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 21,317 $ 30,956 $ 40,197
Adjustments to reconcile net income to net cash
from operating activities:
Provision for depreciation 29,260 30,856 29,166
Nuclear fuel and lease amortization 8,812 13,866 11,061
Deferred income taxes, net 10,261 (446) (8,575)
Investment tax credits, net (1,361) (959) 2,784
Deferred revenue - 19,517 37,757
Allowance for equity funds used during construction (237) (114) -
Deferred fuel costs, net 199 2,745 (930)
Cumulative effect of an accounting change for
unbilled revenues (5,653) - -
Perry Unit 2 termination 24,458 - -
Tax surcharge amortization (deferral) net - 2,377 (2,377)
-------- -------- --------
Internal cash before dividends 87,056 98,798 109,083
Receivables (5,974) 19,077 (11,983)
Materials and supplies 4,666 (3,870) 2,048
Accounts payable 4,196 (8,886) 7,449
Other (6,178) (11,560) 4,539
-------- -------- --------
Net cash provided from operating activities 83,766 93,559 111,136
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
New Financing-
Preferred stock 24,654 15,000 -
Long-term debt 149,867 102,914 31,696
Notes payable, net - 7,000 -
Redemptions and Repayments-
Preferred stock 28,970 20,612 20,223
Long-term debt 145,809 137,343 74,968
Notes payable, net 15,000 - 29,000
Dividend Payments-
Common stock 21,386 27,676 27,676
Preferred stock 5,639 6,448 7,698
-------- -------- --------
Net cash used for financing activities 42,283 67,165 127,869
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions 31,328 26,465 24,296
Loan payment from parent - - (37,000)
Other 999 344 707
-------- -------- --------
Net cash used for (provided from) investing
activities 32,327 26,809 (11,997)
-------- -------- --------
Net increase (decrease) in cash and cash equivalents 9,156 (415) (4,736)
Cash and cash equivalents at beginning of year 3,663 4,078 8,814
-------- -------- --------
Cash and cash equivalents at end of year $ 12,819 $ 3,663 $ 4,078
======== ======== ========
SUPPLEMENTAL CASH FLOWS INFORMATION:
Cash paid during the year-
Interest (net of amounts capitalized) $ 32,391 $ 37,111 $ 39,852
Income taxes 10,403 31,312 23,649
<FN>
The accompanying Notes to Financial Statements are an integral part of
these statements.
</TABLE>
-12-
<PAGE>
<TABLE>
STATEMENTS OF TAXES Pennsylvania Power Company
- ---------------------------------------------------------------------------------------
<CAPTION>
For the Years Ended December 31, 1993 1992 1991
-------- ------- -------
(In thousands)
<S> <C> <C> <C>
GENERAL TAXES:
State gross receipts $10,754 $10,623 $11,422
Real and personal property 6,712 6,762 6,702
State capital stock 2,000 2,252 2,457
Social security and unemployment 2,643 2,067 1,822
Other 482 458 295
------- ------- -------
Total general taxes $22,591 $22,162 $22,698
======= ======= =======
PROVISION FOR INCOME TAXES:
Currently payable-
Federal $ 3,292 $14,933 $20,454
State 716 7,551 10,142
------- ------- -------
4,008 22,484 30,596
------- ------- -------
Deferred, net-
Federal 10,035 254 (3,259)
State 4,291 (700) (5,316)
------- ------- -------
14,326 (446) (8,575)
------- ------- -------
Investment tax credits, net of amortization (1,361) (959) 2,784
------- ------- -------
Total provision for income taxes $16,973 $21,079 $24,805
======= ======= =======
INCOME STATEMENT CLASSIFICATION OF
PROVISION FOR INCOME TAXES:
Operating expenses $23,196 $21,069 $23,756
Other income (10,331) 10 1,049
Cumulative effect of a change in accounting 4,108 - -
------- ------- -------
Total provision for income taxes $16,973 $21,079 $24,805
======= ======= =======
RECONCILIATION OF FEDERAL INCOME TAX EXPENSE AT
STATUTORY RATE TO TOTAL PROVISION FOR INCOME TAXES:
Book income before provision for income taxes $38,290 $52,035 $65,002
======= ======= =======
Federal income tax expense at statutory rate $13,402 $17,692 $22,101
Increases (reductions) in taxes resulting from:
State income taxes, net of federal income tax
benefit 3,255 4,522 3,185
Amortization of investment tax credits (1,361) (2,279) (1,831)
Excess of book over tax depreciation, net - 2,863 2,067
Amortization of tax regulatory assets 2,376 - -
Other, net (699) (1,719) (717)
------- ------- -------
Total provision for income taxes $16,973 $21,079 $24,805
======= ======= =======
SOURCES OF DEFERRED INCOME TAXES:
Excess of tax over book depreciation, net $ 1,370 $ 6,736
Difference between tax and book revenue, net (6,835) (15,363)
Deferred fuel costs (1,042) (1,380)
Deferred loss on reacquired debt, net 1,605 359
Amortization of deferred interest on leased
nuclear fuel (1,144) (1,123)
Alternative minimum tax credits utilized 5,843 2,908
Pension costs 1,329 1,120
Recoverable tax surcharge costs (978) 978
Other, net (594) (2,810)
------- -------
Net deferred income taxes $ (446) $(8,575)
======== =======
ACCUMULATED DEFERRED INCOME TAXES AT
DECEMBER 31, 1993:
Property basis differences $163,828
Allowance for equity funds used during
construction 40,958
Deferred nuclear expense 8,914
Customer receivables for future income taxes 56,781
Unamortized investment tax credits (14,124)
Alternative minimum tax credits (9,646)
Other 26,608
--------
Net deferred income tax liability $273,319
========
<FN>
The accompanying Notes to Financial Statements are an integral part of
these statements.
</TABLE>
-13-
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES:
The Company, a wholly owned subsidiary of Ohio Edison Company
(Edison), follows the accounting policies and practices prescribed by the
Pennsylvania Public Utility Commission (PPUC) and the Federal Energy
Regulatory Commission (FERC).
REVENUES-The Company's retail customers are metered on a cycle
basis. Revenue was recognized for electric service based on meters read
through the end of the year for years prior to 1993. Beginning in 1993,
revenue is recognized to include unbilled sales through the end of the
year (see Note 2). Accounts receivable from customers include
approximately $8,378,000 relating to metered but unbilled revenues
through December 31, 1993. Reference is made to Note 4 with respect to
the Company's policy of recognizing revenues in connection with a rate
phase-in plan completed in 1992.
Receivables from customers include sales to residential, commercial
and industrial customers located in the Company's service area and sales
to wholesale customers. There was no material concentration of
receivables at December 31, 1993 or 1992, with respect to any particular
segment of the Company's customers.
On November 30, 1992, Sharon Steel Corporation, the Company's then
largest customer, filed a petition under Chapter 11 of the Federal
Bankruptcy Code. Revenues from Sharon Steel amounted to approximately
$24,518,000 and $29,354,000 in 1992 and 1991, respectively.
FUEL COSTS-The Company recovers fuel and net purchased power costs
not otherwise recovered through base rates from its customers through an
annual "levelized" energy cost rate (ECR). The ECR, which includes
adjustment for any over or under collection from customers, is
recalculated each year. Accordingly, the Company defers the difference
between actual energy costs and the amounts currently recovered from its
customers.
In December 1991, the Company was ordered by the PPUC to refund
replacement power costs recovered from customers through the ECR during
an extended outage at Beaver Valley Unit 1 in 1979. As a result, the
Company recorded a liability for the estimated refund of $4,282,000,
including $1,828,000 of interest, reducing net income by $2,519,000
during the fourth quarter of 1991. The Company expects to begin making
these refunds in 1994 or 1995.
-14-
<PAGE>
On March 17, 1993, the Office of Consumer Advocate (OCA) filed a
complaint against the Company with the PPUC regarding the Company's
current ECR. The complaint objects to the elimination of certain
contractual arrangements for the sale of generating capacity to Edison.
In the past, sales under these arrangements were included in the ECR
calculation, and the OCA alleges the elimination of the arrangements
increases the Company's recoverable energy costs. The Company recognized
an after-tax charge of approximately $2,864,000 in the fourth quarter of
1993 relating to the expected resolution of this issue.
UTILITY PLANT AND DEPRECIATION-Utility plant reflects the original
cost of construction, including payroll and related costs such as taxes,
pensions and other fringe benefits, administrative and general costs and
allowance for funds used during construction (AFUDC).
The Company provides 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 2.7% in 1993
and 3.0% in 1992 and 1991. The reduced rate in 1993 resulted from the
Company's annual depreciation study filed with the PPUC which took into
consideration extended useful lives of certain generation and
distribution facilities. This revision reduced the 1993 provision for
depreciation by approximately $2,700,000.
The Company recognizes approximately $300,000 annually (as
depreciation expense) for future decommissioning costs applicable to its
ownership interest in two nuclear generating units. The Company's share
of the future obligation to decommission these units in current dollars
is estimated to be approximately $69,000,000. The Company has recovered
approximately $2,400,000 from customers through December 31, 1993; such
amounts are reflected in the reserve for depreciation on the Balance
Sheet. If the actual costs of decommissioning the units exceed the
accumulated amounts recovered from customers, the Company expects that
difference to be recoverable from its customers. The Company has
approximately $3,500,000 invested in external decommissioning trust funds
as of December 31, 1993. Earnings on these funds are recorded as an
addition to the trust investment with a corresponding increase to the
depreciation reserve.
-15-
<PAGE>
The Company has also recognized an estimated liability of
$3,192,000 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 Company recovers
these costs through its ECR.
COMMON OWNERSHIP OF
GENERATING FACILITIES-The Company 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 ownership interest. The Company's portion of
operating expenses associated with jointly owned facilities is included
in the corresponding operating expenses on the Statements of Income. The
amounts reflected on the Balance Sheet under utility plant at December
31, 1993, include the following:
Utility Accumulated Construc- Company's
Plant Provision tion Owner-
Generating in for Work in ship
Units Service Depreciation Progress Interest
- ------------------------------------------------------------------
(In thousands)
W. H. Sammis #7 $ 56,600 $ 17,200 $ - 20.80%
Bruce Mansfield
#1, #2 and #3 89,000 37,200 1,000 5.76%
Beaver Valley #1 222,900 82,100 1,700 17.50%
Perry #1 336,400 46,600 1,500 5.24%
- ------------------------------------------------------------------
Total $704,900 $183,100 $4,200
==================================================================
NUCLEAR FUEL-OES Fuel, Incorporated (OES Fuel), a wholly owned
subsidiary of Edison, is the sole lessor for the Company's nuclear fuel
requirements.
Minimum lease payments during the next five years are estimated to
be as follows:
- -------------------------------------------------------------------------
1994 $9,845,000
1995 8,001,000
1996 4,292,000
1997 2,414,000
1998 1,114,000
- -------------------------------------------------------------------------
The Company amortizes the cost of nuclear fuel based on the rate
of consumption. The Company's electric rates include amounts for the
future disposal of spent nuclear fuel based upon the formula used to
compute payments to the DOE.
-16-
<PAGE>
ALLOWANCE FOR FUNDS USED
DURING CONSTRUCTION-AFUDC represents financing costs capitalized
to construction work in progress (CWIP) during the construction period.
The borrowed funds portion reflects capitalized interest payments, and
the equity funds portion represents the noncash capitalization of imputed
equity costs. AFUDC varies according to changes in the level of CWIP and
in the sources and costs of capital. The AFUDC rates (excluding nuclear
fuel interest) were 5.3%, 6.4% and 6.8% in 1993, 1992 and 1991,
respectively. Capitalization rates for interest on nuclear fuel were
3.4%, 4.3% and 6.7% in 1993, 1992 and 1991, respectively.
INCOME TAXES-Details of the total provision for income taxes are
shown on the Statements of Taxes. The deferred income taxes in 1992 and
1991 resulted from timing differences in the recognition of revenues and
expenses for tax and accounting purposes.
All investment tax credits which were deferred when utilized are
being amortized over the estimated life of the related property. The
Company has $9,646,000 of alternative minimum tax credits available to
offset future federal income taxes payable; such credits may be carried
forward indefinitely.
The Company adopted Statement of Financial Accounting Standards
(SFAS) No. 109, "Accounting for Income Taxes," on January 1, 1993, which
requires the liability method to be used to account for deferred income
taxes. Under this standard, deferred income tax liabilities related to
tax and accounting basis differences must be recognized at the statutory
income tax rates in effect when the liabilities are expected to be paid.
The components of accumulated deferred income taxes as of December 31,
1993, are disclosed on the Statements of Taxes.
The Company is included in Edison's consolidated federal income tax
return. The consolidated tax liability is allocated on a separate
company basis, with any tax losses or credits paid to the Company when
earned.
RETIREMENT BENEFITS-The Company's 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 Company uses the projected unit credit
method for funding purposes and was not required to make pension
contributions during the three years ended December 31, 1993.
-17-
<PAGE>
The following sets forth the funded status of the plan and amounts
recognized on the Balance Sheets as of December 31:
1993 1992
- ------------------------------------------------------------------------
(In thousands)
Actuarial present value of benefit
obligations:
Vested benefits $ 78,042 $ 57,812
Nonvested benefits 5,933 4,489
- -----------------------------------------------------------------------
Accumulated benefit obligation $ 83,975 $ 62,301
=======================================================================
Plan assets at fair value $ 123,092 $ 112,764
Actuarial present value of projected
benefit obligation 107,702 80,360
- -----------------------------------------------------------------------
Plan assets in excess of projected
benefit obligation 15,390 32,404
Unrecognized net gain (1,611) (17,062)
Unrecognized prior service cost 2,563 2,779
Unrecognized net transition asset (9,479) (10,532)
- -----------------------------------------------------------------------
Net pension asset $ 6,863 $ 7,589
=======================================================================
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, 1993, were computed as follows:
1993 1992 1991
- -----------------------------------------------------------------------
(In thousands)
Service cost-benefits earned
during the period $ 2,802 $ 2,828 $ 2,852
Interest on projected benefit
obligation 7,281 6,612 6,305
Return on plan assets (15,653) (9,336) (19,448)
Net deferral (amortization) 2,366 (3,652) 7,335
Voluntary early retirement
program expense 3,930 - -
- -----------------------------------------------------------------------
Net pension cost $ 726 $ (3,548) $ (2,956)
=======================================================================
The assumed discount rate used in determining the actuarial present
value of the projected benefit obligation was 7.5% in 1993 and 9% in
1992. 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 11% in each year.
The Company provides 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
Company pays insurance premiums to cover a portion of these benefits in
excess of set limits; all amounts up to the limits are paid by the
Company. Expenses associated with health care and life insurance benefits
for retirees were charged to income during the applicable payment periods
in 1992 and 1991, and amounted to $1,411,000 and $948,000, respectively.
-18-
<PAGE>
In 1993 the Company adopted SFAS No. 106 "Employers' Accounting for
Postretirement Benefits Other Than Pensions," which requires companies
to 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 Company does not currently fund these future benefits.
The following sets forth the accrued postretirement benefit cost
on the Balance Sheet as of December 31, 1993:
- -----------------------------------------------------------------------
Accumulated postretirement benefit
obligation $ 42,905,000
Unrecognized transition obligation (32,287,000)
Unrecognized net loss (5,357,000)
- -----------------------------------------------------------------------
Accrued postretirement benefit cost $ 5,261,000
=======================================================================
The accumulated postretirement benefit obligation is allocated to:
retirees - $20,604,000, fully eligible active plan participants -
$6,794,000, and other active plan participants - $15,507,000.
Net periodic postretirement benefit cost for 1993 included the
following components:
- -----------------------------------------------------------------------
Service cost $ 866,000
Interest cost 3,129,000
Amortization of transition obligation 1,699,000
Voluntary early retirement program expense 1,112,000
- -----------------------------------------------------------------------
Net periodic postretirement benefit cost 6,806,000
Benefits paid 1,545,000
- -----------------------------------------------------------------------
Increase in accrued postretirement
benefit cost $5,261,000
=======================================================================
The health care trend rate assumption is 8.25% in the first year
gradually decreasing to 3.5% for the year 2008 and later. The discount
rate used to compute the accumulated postretirement benefit obligation
at December 31, 1993, was 7.5%. 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 $4,400,000
and the aggregate annual service and interest costs by approximately
$500,000.
-19-
<PAGE>
The PPUC has authorized the Company to defer the incremental costs
resulting from adopting SFAS No. 106 ($4,339,000 through December 31,
1993) for future recovery from its retail customers. Similar
authorization relating to another utility is currently under appeal to
the Commonwealth Court of Pennsylvania by the Office of Consumer
Advocate.
TRANSACTIONS WITH AFFILIATED
COMPANIES-Transactions with affiliated companies are included on
the Statements of Income as follows:
1993 1992 1991
- -----------------------------------------------------------------------
(In thousands)
Operating revenues:
Electric sales to Edison $ 8,781 $22,755 $23,292
Bruce Mansfield Plant
administrative and general
charges to Edison 5,652 2,529 3,761
Other transactions with
Edison 355 371 760
- -----------------------------------------------------------------------
$14,788 $25,655 $27,813
=======================================================================
Fuel and purchased power:
Power purchased from Edison $ 8,667 $13,936 $21,339
Nuclear fuel leased from
OES Fuel 10,356 15,199 12,910
- -----------------------------------------------------------------------
$19,023 $29,135 $34,249
=======================================================================
Other operating costs:
Rental of transmission
lines from Edison $ 1,042 $ 1,172 $ 1,182
Data processing services
from Edison 3,307 2,624 2,461
Other transactions with
Edison 4,345 2,679 2,611
- -----------------------------------------------------------------------
$ 8,694 $ 6,475 $ 6,254
=======================================================================
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 Balance Sheets. The Company records temporary cash investments at
cost, which approximates their market value. Noncash financing and
investing activities included capital lease transactions amounting to
$2,357,000, $10,721,000 and $4,343,000 for the years 1993, 1992 and 1991,
respectively.
All borrowings with initial maturities of less than one year and
$4,639,000 and $4,140,000 of investments other than cash and cash
equivalents as of December 31, 1993 and 1992, respectively, which are
defined as financial instruments, are reflected at their approximate fair
market value. The approximate fair market value of all other long-term
debt exceeded the carrying cost of those financial instruments by
approximately $19,461,000 and $19,220,000, as of December 31, 1993 and
1992, respectively. The approximate fair market value of preferred stock
-20-
<PAGE>
subject to mandatory redemption was exceeded by the carrying cost by
approximately $200,000 as of December 31, 1993, while the carrying cost
was exceeded by the approximate fair market value by approximately
$900,000 as of December 31, 1992. The fair value of these instruments
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 Company's
ratings.
REGULATORY ASSETS-The Company recognizes, as regulatory assets,
costs which the FERC and PPUC have authorized for recovery from customers
in future periods. Without such authorization, the costs would have been
charged to income as incurred. Amounts shown below as being recovered
currently have a composite remaining recovery period of approximately 32
years.
Regulatory assets on the Balance Sheets were comprised of the
following:
1993 1992
- ------------------------------------------------------------------------
(In thousands)
Currently being recovered through rates:
Customer Receivables for
Future Income Taxes $135,197 $ -
Property Taxes 4,615 4,920
Loss on Reacquired Debt 12,551 5,804
DOE Decommissioning and
Decontamination Costs 3,192 3,500
Deferred Mansfield coal costs 3,590 3,428
Other - 152
- ------------------------------------------------------------------------
159,145 17,804
- ------------------------------------------------------------------------
Not currently recovered through rates:
Nuclear Unit Expenses 21,180 21,180
Employee Postretirement
Benefit Costs 4,339 -
Perry Unit 2 Termination 37,637 -
- ------------------------------------------------------------------------
63,156 21,180
- ------------------------------------------------------------------------
Total $222,301 $38,984
========================================================================
2. CHANGE IN ACCOUNTING FOR
UNBILLED REVENUES:
On January 1, 1993, the Company changed its accounting policy 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 Company's revenues with the costs of services provided. The effect
of this change decreased net income for the year ended December 31, 1993,
-21-
<PAGE>
(before the cumulative effect from periods prior to 1993) by
approximately $900,000. The cumulative effect to January 1, 1993, was
$5,653,000 (net of $4,108,000 of income taxes). The reported results of
operations for the years ended December 31, 1992 and 1991, would not have
been materially different if this new accounting policy had been in
effect during those years.
3. PERRY UNIT 2 TERMINATION:
In December 1993, the Company announced that it will not
participate in further construction of Perry Unit 2 and has abandoned
Perry Unit 2 as a possible electric generating plant. The Company
expects its Perry Unit 2 investment to be recoverable from its PPUC
jurisdictional 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 PPUC and FERC rate treatment, the
Company recognized an impairment to its Perry Unit 2 investment of
$24,458,000 in 1993, reducing net income by $14,165,000.
4. RATE PHASE-IN PLAN AND
SURCHARGE:
The PPUC granted the Company a base rate increase, effective May 4,
1988, designed to produce approximately $67,100,000 of additional annual
operating revenues. The increase was phased in over several years, with
amounts deferred during the phase-in period recovered by the end of the
fourth year. The Company recognized revenue under the phase-in plan as
if the full revenue level had been placed into effect in 1988.
On August 24, 1991, the Commonwealth of Pennsylvania increased
certain state tax rates retroactive to January 1, 1991. In conjunction
with this increase, the Company deferred the increase in taxes for
collection from customers in the form of a surcharge on electric bills.
All amounts deferred in 1991 were recovered in 1992.
5. LEASES:
The Company leases certain transmission facilities, computer
equipment, office space and other property and equipment under cancelable
and noncancelable leases. Consistent with the regulatory treatment,
rental payments for capital and operating leases are charged to operating
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<PAGE>
expenses on the Statements of Income. Such costs for the three years
ended December 31, 1993, are summarized as follows:
1993 1992 1991
- -----------------------------------------------------------------------
(In thousands)
Operating Leases
Interest element $ 171 $ 212 $ 223
Other 912 1,032 826
Capital Leases
Interest element 1,070 1,169 1,191
Other 1,273 1,231 1,277
- -----------------------------------------------------------------------
Total rental payments $3,426 $3,644 $3,517
=======================================================================
The future minimum lease payments as of December 31, 1993, are:
Capital Operating
Leases Leases
- -----------------------------------------------------------------------
(In thousands)
1994 $ 2,564 $ 216
1995 2,314 216
1996 1,765 208
1997 1,543 204
1998 1,349 199
Years thereafter 14,850 3,978
- -----------------------------------------------------------------------
Total minimum lease payments 24,385 $5,021
Executory costs 4,690 ======
- ----------------------------------------------------------
Net minimum lease payments 19,695
Interest portion 11,005
- ----------------------------------------------------------
Present value of net minimum
lease payments 8,690
Less current portion 1,297
- ----------------------------------------------------------
Noncurrent portion $ 7,393
==========================================================
6. CAPITALIZATION:
(a) RETAINED EARNINGS-Under the Company's Charter, the Company's
retained earnings unrestricted for payment of cash dividends on the
Company's common stock were $52,778,000 at December 31, 1993.
(b) PREFERRED STOCK-The Company's 7.625% and 7.75% series of
preferred stock have restrictions which prevent early redemption prior
to October 1997 and July 2003, respectively. All other preferred stock
may be redeemed by the Company in whole, or in part, with 30-60 days'
notice. The optional redemption prices shown on the Statements of
Capitalization will decline to eventual minimums per share according to
the Charter provisions that establish each series.
(c) PREFERRED STOCK SUBJECT TO
MANDATORY REDEMPTION-The Company's 13.00% series of preferred
stock has an annual sinking fund requirement for 5,000 shares in each
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year on July 1; its 7.625% series has an annual sinking fund requirement
for 7,500 shares beginning on October 1, 2002.
Preferred shares are retired at $100 per share plus accrued
dividends. The Company's sinking fund requirements for the next five
years are $862,000 in 1994 and $500,000 in each year from 1995 through
1998.
(d) LONG-TERM DEBT-The first mortgage indenture and its
supplements, which secure all of the Company's first mortgage bonds,
serve as direct first mortgage liens on substantially all property and
franchises, other than specifically excepted property, owned by the
Company. Maturing long-term debt (excluding capital leases) during the
next five years are $50,000,000 in 1996 and $850,000 in 1998.
The Company's obligations to repay certain pollution control
revenue bonds are secured by series of first mortgage bonds and, in some
cases, by subordinate liens on the related pollution control facilities.
7. SHORT-TERM FINANCING
ARRANGEMENTS:
The Company has lines of credit with banks that provide for
borrowings of up to $35,000,000 under various interest rate options.
Short-term borrowings may be made under these lines of credit on the
Company's unsecured notes. To assure the availability of these lines, the
Company is required to pay commitment fees of 0.15% to 0.5%. These lines
expire at various times during 1994.
The Company also has a credit agreement with Edison whereby either
company can borrow funds from the other by issuing unsecured notes at the
prevailing prime or similar interest rate. Under the terms of this
agreement the maximum borrowing is limited only by the availability of
funds; however, the Company's borrowing under this agreement is currently
limited by the PPUC to a total of $50,000,000. Either company can
terminate the agreement with six months' notice.
8. COMMITMENTS, GUARANTEES AND
CONTINGENCIES:
CONSTRUCTION PROGRAM-The Company's current forecast reflects
expenditures of approximately $140,000,000 for property additions and
improvements from 1994 through 1998, of which approximately $27,000,000
-24-
<PAGE>
is applicable to 1994. Investments for additional nuclear fuel during
the 1994-1998 period are estimated to be approximately $38,000,000, of
which approximately $9,000,000 applies to 1994. During the same periods,
the Company's nuclear fuel investments are expected to be reduced by
approximately $44,000,000 and $10,000,000, 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
$9,396,000,000. The amount is covered by a combination of private
insurance and an industry retrospective rating plan. Based on its present
ownership interests in Beaver Valley Unit 1 and Perry Unit 1, the
Company's 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 $18,100,000 per incident but not more than $2,300,000 in
any one year for each incident.
The Company is also insured as to its interest in Beaver Valley
Unit 1 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
Company has also obtained approximately $53,000,000 of insurance coverage
for replacement power costs for its interests in Beaver Valley Unit 1 and
Perry Unit 1. Under these policies, the Company can be assessed a maximum
of approximately $2,600,000 for accidents 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 Company intends to maintain insurance against nuclear risks as
described above so 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 Company's plants exceed the policy limits of the
insurance from time to time in effect with respect to that plant, to the
extent a nuclear incident is determined not to be covered by the
Company's insurance policies, or to the extent such insurance becomes
unavailable in the future, the Company would remain at risk for such
costs.
GUARANTEES-The Company, together with the other CAPCO companies,
has severally guaranteed certain debt and lease obligations in connection
-25-
<PAGE>
with a coal supply contract for the Bruce Mansfield Plant. As of
December 31, 1993, the Company's share of the guarantee (which
approximates fair market value) was $12,708,000. 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 Company's total payments under the coal supply contract amounted to
$13,230,000, $12,082,000 and $12,041,000 during 1993, 1992, and 1991,
respectively. Under the coal supply contract, the Company's future
minimum payments are approximately $4,000,000 each year from 1994 through
1999.
ENVIRONMENTAL MATTERS-Various federal, state and local authorities
regulate the Company with regard to air and water quality and other
environmental matters. The Company has estimated additional capital
expenditures for environmental compliance of approximately $17,000,000,
which is included in the construction forecast under "Construction
Program" for 1994 through 1998.
The Clean Air Act Amendments of 1990 require significant reductions
of sulfur dioxide and oxides of nitrogen from the Company's coal-fired
generating units by 1995 and additional emission reductions by 2000.
Compliance options include, but are not limited to, installing additional
pollution control equipment, burning less polluting fuel, purchasing
emission allowances from others, operating existing facilities in a
manner which minimizes pollution and retiring facilities. In a system
compliance plan for the Company and Edison submitted to the PPUC and to
the Environmental Protection Agency, the Company stated that reductions
for the years 1995 through 1999 are likely to be achieved by burning
lower sulfur fuel, generating more electricity at their lower emitting
plants and/or purchasing emission allowances. The Company continues to
evaluate its compliance plan and other compliance options as they arise.
Plans for complying with the year 2000 reductions are less certain at
this time.
The Pennsylvania Department of Environmental Resources has 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
-26-
<PAGE>
insurance and operating matters. The Company is developing and analyzing
various compliance options and is presently unable to determine the
ultimate increase in capital and operating costs at existing sites.
Legislative and administrative action and the effect of court
decisions can be expected in the future (as they have in the past) to
change the way that the Company 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 Company expects that
any resulting additional capital costs which may be required, as well as
any required increase in operating costs, would ultimately be recovered
from its customers.
-27-
<PAGE>
<TABLE>
9. SUMMARY OF QUARTERLY
FINANCIAL DATA (UNAUDITED):
<CAPTION>
The following summarizes certain operating results by quarter for
1993 and 1992.
March 31, June 30, Sept. 30, Dec. 31,
Three Months Ended 1993 1993 1993 1993
- -----------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C> <C>
Operating Revenues $74,274 $70,266 $76,226 $71,318
Operating Expenses
and Taxes 61,272 53,708 56,710 57,617
- -----------------------------------------------------------------------
Operating Income 13,002 16,558 19,516 13,701
Other Income (Expense) 68 200 437 (13,328)
Net Interest 8,549 8,653 8,819 8,469
- -----------------------------------------------------------------------
Income (Loss) Before
Cumulative Effect of a
Change in Accounting 4,521 8,105 11,134 (8,096)
Cumulative Effect of a
Change in Accounting 5,653 - - -
- -----------------------------------------------------------------------
Net Income (Loss) $10,174 $ 8,105 $11,134 $(8,096)
=======================================================================
Earnings (Loss) Applicable
to Common Stock $ 8,639 $ 6,571 $ 9,706 $(9,462)
=======================================================================
March 31, June 30, Sept. 30, Dec. 31,
Three Months Ended 1992 1992 1992 1992
- -----------------------------------------------------------------------
(In thousands)
Operating Revenues $82,030 $77,412 $79,370 $76,646
Operating Expenses
and Taxes 62,650 58,936 63,395 63,952
- -----------------------------------------------------------------------
Operating Income 19,380 18,476 15,975 12,694
Other Income (Expense) 368 251 174 (12)
Net Interest 8,632 9,370 9,382 8,966
- -----------------------------------------------------------------------
Net Income $11,116 $ 9,357 $ 6,767 $ 3,716
=======================================================================
Earnings on Common
Stock $ 9,295 $ 7,535 $ 5,406 $ 2,221
=======================================================================
</TABLE>
Results of operations for the first three quarters of 1993 were
restated to reflect the change in accounting for unbilled revenues as
described in Note 2. Restated net income for the first quarter includes
$5,653,000 for the cumulative effect of the change. The effect on income
from continuing operations was as follows: $(587,000), $330,000 and
$(353,000) in the first, second and third quarters, respectively.
Results of operations for the third and fourth quarters of 1992
include charges of approximately $4,300,000 ($2,500,000 net of income
taxes) and $8,500,000 ($5,000,000 net of income taxes), respectively,
relating to provisions for uncollectible customer accounts.
-28-
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of Pennsylvania Power Company:
We have audited the accompanying balance sheets and statements of
capitalization of Pennsylvania Power Company (a Pennsylvania corporation
and wholly-owned subsidiary of Ohio Edison Company) as of December 31,
1993 and 1992, and the related 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, 1993. 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 Pennsylvania
Power Company as of December 31, 1993 and 1992, and the results of its
operations and its cash flows for each of the three years in the period
ended December 31, 1993, in conformity with generally accepted accounting
principles.
As discussed in Notes 1 and 2 to the financial statements,
effective January 1, 1993, the Company changed its method of accounting
for unbilled revenues, income taxes and postretirement benefits other
than pensions.
Arthur Andersen & Co.
New York, N.Y.
February 1, 1994
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<PAGE>
EXHIBIT 18
February 1, 1994
Pennsylvania Power Company
1 East Washington Street
P.O. Box 891
New Castle, Pennsylvania 16103
RE: Form 10-K Report for the Year Ended December 31, 1993
Gentlemen:
This letter is written to meet the requirements of Regulation S-K calling for
a letter from a registrant's independent public accountants whenever there
has been a change in accounting principle or practice.
As of January 1, 1993, for certain customers, the Company changed from
recording sales when billed to these customers based on a monthly meter
reading schedule to estimating and accruing the amount of sales associated
with service provided after billing through the end of the accounting
period. According to management of the Company, this change was made to
more closely match the Company's revenues with the services provided to
customers. This change in accounting will result in the Company accruing
unbilled revenues for all customers at the end of each accounting period.
We are of the opinion that the Company's change in method of accounting is
an acceptable alternative method of accounting, which, based upon the
reason stated for the change and our discussions with you, is also
preferable under the circumstances in this particular case. In arriving at
this opinion, we have relied on the business judgment and business planning
of your management.
Very truly yours,
ARTHUR ANDERSEN & CO.
New York, N.Y.<PAGE>
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 10-K, into the Company's previously filed Registration
Statements, File No. 33-47372, 33-62450 and 33-65156.
ARTHUR ANDERSEN & CO.
New York, N.Y.
March 23, 1994
<PAGE>
