1 REGISTRATION NO. 333-05277 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON D.C. 20549 ------------------------ AMENDMENT NO. 1 TO FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------------ OHIO EDISON COMPANY (Exact name of Registrant as specified in its charter) ------------------------
OHIO 34-0437786 (State or other jurisdiction of incorporation (I.R.S. Employer Identification No.) or organization)76 SOUTH MAIN STREET, AKRON, OHIO 44308 (Address of principal executive offices) Registrant's Telephone Number Including Area Code: (330) 384-5100 ------------------------ N.C. ASHCOM, CORPORATE SECRETARY 76 SOUTH MAIN STREET AKRON, OHIO 44308 (330) 384-5504 (Name, address and telephone number of agent for service) ------------------------ The Commission is requested
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MICHAEL F. CUSICK VINCENT PAGANO, JR. WINTHROP, STIMSON, PUTNAM & ROBERTS SIMPSON THACHER & BARTLETT ONE BATTERY PARK PLAZA 425 LEXINGTON AVENUE NEW YORK, NY 10004-1490 NEW YORK, NY 10017-3954- -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------2 INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. SUBJECT TO COMPLETION, DATED MARCH 26, 1998 PROSPECTUS $50,000,000 OHIO EDISON COMPANY MORTGAGE BONDS ------------------------------ Ohio Edison Company (the "Company") intends from time to time to offer its mortgage bonds (the "New Bonds") in an aggregate principal amount not to exceed $50,000,000, in amounts, at prices and on terms to be determined at the time or times of sale. For each issue of New Bonds for whichrapidly navigate through thisProspectus is being delivered (the "Offered Bonds") there is an accompanying Prospectus Supplement (the "Prospectus Supplement") that sets forth, as applicable, the aggregate principal amount, maturity, rate and time of payment of interest, purchase price, any terms for redemption and any other special terms of the Offered Bonds. ------------------------------ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ------------------------------ The Company may sell the New Bonds through underwriters, dealers or agents, or directly to one or a limited number of purchasers. The initial public offering price, if any, and the net proceeds to Ohio Edison Company from the sale of any Offered Bonds, together with the names of any underwriters, dealers or agents relating to such sale and any applicable commissions or discounts, will be set forth in the applicable Prospectus Supplement. ------------------------------ March , 19983 NO PERSON IS AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT, AND ANY INFORMATION OR REPRESENTATION NOT CONTAINED OR INCORPORATED HEREIN MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY OHIO EDISON COMPANY OR ANY UNDERWRITER OR AGENT. THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY BY ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL FOR SUCH PERSON TO MAKE SUCH AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT AT ANY TIME NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCE, IMPLY THAT THE INFORMATION HEREIN OR THEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF OR THEREOF. AVAILABLE INFORMATION Ohio Edison Company (the "Company") is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports and other informationdocumentAs filed with the Securities and Exchange Commission
(the "Commission"). Information,on April 7, 2006Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933OHIO EDISON COMPANY
(Exact name of registrant as specified in its charter)Ohio
(State or other jurisdiction ofparticular dates, concerningincorporation or organization)34-0437786
(I.R.S. Employer Identification No.)c/o FirstEnergy Corp.
76 South Main Street
Akron, Ohio 44308-1890
(800) 736-3402
(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)Leila L. Vespoli, Esq.
Senior Vice President and General Counsel
c/o FirstEnergy Corp.
76 South Main Street
Akron, Ohio 44308-1890
(800) 736-3402
(Name, address, including zip code, and telephone number, including area code, of agent for service)Copies to:
Lucas F. Torres, Esq.
Akin Gump Strauss Hauer & Feld LLP
590 Madison Avenue
New York, NY 10022-2524
(212) 872-1000
Fax (212) 872-1002Douglas E. Davidson, Esq.
Thelen Reid & Priest LLP
875 Third Avenue
New York, NY 10022-6225
(212) 603-2000
Fax (212) 603-2001Approximate date of commencement of proposed sale to the
Company's directors and officers, their remuneration,public: From time to time after theprincipal holderseffective date of this registration statement.If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. o
If any of the
Company'ssecurities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. ýIf this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and
any material interest of such persons in transactions withlist theCompany is disclosed in proxy statements distributed to stockholdersSecurities Act registration statement number of theCompanyearlier effective registration statement for the same offering. oIf this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and
filed withlist theCommission. Such reports, proxy statements and other information filed by the Company may be inspected and copied at the public reference facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's Regional Offices located at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and 7 World Trade Center, New York, New York 10048. Copies of such materials can be obtained by mail from the Public Reference SectionSecurities Act registration statement number of theCommission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. In addition,earlier effective registration statement for theCommission maintainssame offering. oIf this Form is a
Websiteregistration statement pursuant to General Instruction I.D. or a post-effective amendment thereto thatcontains reports, proxy and information statements and other information regarding reporting companies under the Exchange Act. The address of such Internet Website is http://www.sec.gov. Such material may also be inspected and copied at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005, on which certain of the Company's securities are listed. Information relating to The Depository Trust Company ("DTC") and DTC's book-entry only system is basedshall become effective uponinformation furnished by DTC. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents, which have heretofore been filed by the Companyfiling with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box. oIf this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D. filed to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box. o
CALCULATION OF REGISTRATION FEE
Title of each class of
securities to be
registeredAmount to be
registered(1)Proposed maximum
offering price per
unit(1)(2)Proposed maximum
aggregate offering
price(1)(2)Amount of
registration fee(3)(4)Debt Securities $650,000,000 100% $650,000,000 $69,550
- (1)
- Estimated solely for the purpose of calculating the registration fee on the basis of the proposed maximum offering price.
- (2)
- Exclusive of accrued interest, if any.
- (3)
- Calculated in reliance upon Rule 457(o) of the Securities Act of 1933, as amended.
- (4)
- Pursuant to Rule 429(a) under the Securities Act of 1933, as amended, the prospectus included in this registration statement is a combined prospectus relating to (i) the securities registered hereby and (ii) $350,000,000 aggregate amount of securities registered and remaining unsold under the Registrant's Registration Statements on Form S-3 Nos. 33-49413, 33-51139 and 333-05277 (together, the "Prior Registration Statements"), for which filing fees were previously paid. Pursuant to Rule 429(b), this registration statement also constitutes a post-effective amendment to each Prior Registration Statement, which post-effective amendment shall hereafter become effective concurrently with the effectiveness of this registration statement and in accordance with Section 8(c) of the Securities Act of 1933, as amended.
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange
Act,Commission, acting pursuant to said Section 8(a), may determine.The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
Subject to Completion. Dated April 7, 2006
$1,000,000,000
OHIO EDISON COMPANY
Debt Securities
By this prospectus, we may from time to time offer our senior unsecured debt securities in one or more series with the same or different terms.
This prospectus provides a general description of our debt securities. The specific terms of each series of debt securities will be determined at the time they are sold and will be included in a prospectus supplement. This prospectus may not be used to sell debt securities unless accompanied by a prospectus supplement that describes those debt securities.
The address of our principal executive office is 76 South Main Street, Akron, Ohio 44308-1890 and our telephone number is (800) 736-3402.
See "Risk Factors" in the prospectus supplement or appearing in the documents incorporated by reference in this prospectus.
Neither the Securities and Exchange Commission nor any other state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.
Prospectus dated
Page Risk Factors 2 About this Prospectus 2 Forward-Looking Statements 2 Ohio Edison Company 4 Ratio of Earnings to Fixed Charges 4 Use of Proceeds 4 Description of Debt Securities 5 Plan of Distribution 15 Legal Matters 16 Experts 16 Where You Can Find More Information 16 Investing in our debt securities involves risks. We will include a description of the material risks relating to an investment in our debt securities in the prospectus supplement relating to a specific issue of debt securities. Before buying any debt securities, you should carefully consider the risks and
shall be deemed to be a part hereof: 1.other information we include under the heading "Risk Factors" in the prospectus supplement, our Annual Report on Form 10-K for the year ended December 31,1996. 2. Quarterly Report on Form 10-Q for the quarter ended March 31, 1997. 3. Quarterly Report on Form 10-Q for the quarter ended June 30, 1997. 4. Quarterly Report on Form 10-Q for the quarter ended September 30, 1997. 5. Current Report on Form 8-K filed on November 12, 1997. 6. Current Report on Form 8-K filed on March 23, 1998. All2005 and other documents incorporated by reference in this prospectus.This prospectus is part of a registration statement that we filed
bywith theCompany pursuantSecurities and Exchange Commission, or SEC, utilizing a shelf registration process. Under this shelf process, we may issue, from time toSection 13(a), 13(c), 14time, up to $1,000,000,000 of one or15(d)more series of our debt securities. Each time we issue a new series of debt securities under the registration statement we will provide a prospectus supplement that will contain specific information about the terms of theExchange Act subsequentoffering. The prospectus supplement may also add, update or change information contained in this prospectus. You should read this prospectus, the applicable prospectus supplement and the additional information below under the heading "Where You Can Find More Information."For more detailed information about our debt securities, you can read the exhibits to the
dateregistration statement. Those exhibits have been filed with the registration statement or incorporated by reference from our other filings with the SEC, as indicated in the registration statement's list of exhibits.In this
Prospectusprospectus, unless the context indicates otherwise, the words "Ohio Edison," "we," "our," "ours" andprior"us" refer tothe terminationOhio Edison Company.Some of the
offering of the New Bonds hereunder shall be deemed to bestatements contained in this prospectus and incorporated by reference into thisProspectusprospectus are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These statements include declarations regarding our or our management's intents, beliefs and current expectations. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of such terms or other comparable terminology. Forward-looking statements are not guarantees of future performance, and actual results could differ materially from those indicated by the forward-looking statements. Forward-looking statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements.The forward-looking statements contained and incorporated by reference herein are qualified in their entirety by reference to the following important factors, which are difficult to predict, contain uncertainties, are beyond our control and may cause actual results to differ materially from those contained in forward-looking statements:
- •
- the speed and nature of increased competition and deregulation in the electric utility industry;
- •
- economic or weather conditions affecting future sales and margins;
- •
- changes in markets for energy services;
- •
- changing energy and commodity market prices;
- •
- replacement power costs being higher than anticipated or inadequately hedged;
- •
- our ability to continue to collect transition and other charges or to recover increased transmission costs;
- •
- maintenance costs being higher than anticipated;
- •
- legislative and regulatory changes (including revised environmental requirements);
- •
- the repeal of the Public Utility Holding Company Act of 1935 and the legal and regulatory changes resulting from the implementation of the Energy Policy Act of 2005;
- •
- the uncertainty of the timing and amounts of the capital expenditures (including that such amounts could be higher than anticipated) or levels of emission reductions related to the settlement agreement resolving the New Source Review litigation;
- •
- adverse regulatory or legal decisions and outcomes (including, but not limited to, the revocation of necessary licenses or operating permits, fines or other enforcement actions and remedies) of governmental investigations and oversight, including by the SEC, the United States Attorney's Office, the Nuclear Regulatory Commission, the Public Utilities Commission of Ohio and the Pennsylvania Public Utility Commission;
- •
- the continuing availability and operation of generating units;
- •
- the ability of generating units to continue to operate at, or near full capacity;
- •
- our inability to accomplish or realize anticipated benefits from strategic goals (including employee workforce factors);
- •
- the anticipated benefits from our voluntary pension plan contributions;
- •
- our ability to improve electric commodity margins and to
be a part hereof fromexperience growth in therespective dates ofdistribution business;- •
- our ability to access the
filingpublic securities and other capital markets and the cost of suchdocuments (such documents,capital;- •
- the outcome, cost and
the documents enumerated above, being hereinafter referred to as "Incorporated Documents"; provided, however, that all documents filed by the Company pursuant to Section 13, 14 or 15other effects ofthe Exchange Act in each year during which the offering made by this Prospectus is in effect priorpresent and potential legal and administrative proceedings and claims related to thefilingAugust 14, 2003 regional power outage;- •
- the outcome of future competitive bid processes under the Ohio Rate Stabilization Plan;
- •
- the risks and other factors discussed from time to time in our filings with the
Commission of the Company'sSEC, including our Annual Report on Form 10-Kcovering suchfor the year24 shall not be incorporated by referenceended December 31, 2005, and in thisProspectus or beprospectus and the prospectus supplement relating to apart hereof fromspecific issue of debt securities, in each case, under the heading "Risk Factors"; andafter such filing- •
- other similar factors.
Any forward-looking statements speak only as of
such Annual Report on Form 10-K). Any statement contained in an Incorporated Document shall be deemed to be modified or superseded for purposesthe date of thisProspectusprospectus, and we undertake no obligation to update any forward-looking statements to reflect events or circumstances after theextent that a statement contained hereindate on which such statements are made orin any other subsequently filed Incorporated Document modifies or supersedes such statement. Any such statement so modified or superseded shallto reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is notbe deemed, except as so modified or superseded,possible for us toconstitute a part of this Prospectus. THE COMPANY HEREBY UNDERTAKES TO PROVIDE WITHOUT CHARGE TO EACH PERSON, INCLUDING ANY BENEFICIAL OWNER, TO WHOM A COPY OF THIS PROSPECTUS HAS BEEN DELIVERED, UPON THE WRITTEN OR ORAL REQUEST OF ANY SUCH PERSON, A COPY OF ANY AND ALL OF THE DOCUMENTS REFERRED TO ABOVE WHICH HAVE BEEN OR MAY BE INCORPORATED BY REFERENCE, OTHER THAN EXHIBITS TO SUCH DOCUMENTS (UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE INTO SUCH DOCUMENTS). REQUESTS FOR SUCH COPIES SHOULD BE DIRECTED TO OHIO EDISON COMPANY, INVESTOR SERVICES, 76 SOUTH MAIN STREET, AKRON, OHIO 44308, TELEPHONE NUMBER 1-800-736-3402. THE INFORMATION RELATING TO THE COMPANY CONTAINED IN THIS DOCUMENT DOES NOT PURPORT TO BE COMPREHENSIVE AND SHOULD BE READ TOGETHER WITH THE INFORMATION CONTAINED IN THE INCORPORATED DOCUMENTS. 35 SUMMARY INFORMATION The following is qualified in its entirety by the information and financial statements (including notes thereto) appearing elsewhere herein, in documents incorporated herein by reference and in any Prospectus Supplement. THE OFFERING SECURITIES Mortgage bonds in an aggregate principal amount not to exceed $50,000,000. REDEMPTION PROVISIONS To be determined at the time of sale of the Offered Bonds and set forth in the related Prospectus Supplement. USE OF PROCEEDS Proceeds are expected to be used for general corporate purposes. The use of the proceeds from any particular Offered Bonds will be set forth in the related Prospectus Supplement. PRIORITY AND SECURITY The New Bonds will be secured primarily by the First Mortgage Bonds (as defined herein) held by the New Mortgage Trustee (as defined herein) and by the lien of the New Mortgage (as defined herein) on the Company's properties used in the generation, production, transmission or distribution of electric energy. Substantiallypredict all of suchproperty, while subjectfactors, nor can we assess the impact of any such factors on our business or the extent tothe lienwhich any factor, or combination ofthe New Mortgage, willfactors, may cause results to differ materially from those contained in any forward-looking statements. The foregoing review of factors should not bealso subject to the prior lien of the First Mortgage (as defined herein) which is, in the opinion of the Company's counsel, a direct first lien on substantially all of the Company's physical property and franchises, subject only to excepted encumbrancesconstrued asdefined in the First Mortgage. 46 CERTAIN CONSOLIDATED FINANCIAL INFORMATION (THOUSANDS, EXCEPT RATIOS AND PERCENTAGES)
YEAR ENDED DECEMBER 31,(1) -------------------------------------------------------------- 1993(2) 1994 1995 1996 1997(3) ------- ---- ---- ---- -------INCOME SUMMARY: Operating Revenues............... $2,369,940 $2,368,191 $2,465,846 $2,469,785 $2,473,582 Net Income....................... $ 82,724 $ 303,531 $ 317,241 $ 315,170 293,194 Earnings on Common Stock......... $ 59,017 $ 281,852 $ 294,747 $ 302,673 280,802 Ratio of Earnings to Fixed Charges(4).................... 1.12 2.24 2.32 2.38 2.29
DECEMBER 31, 1997 ------------------- OUTSTANDING RATIO ----------- -----CAPITALIZATION SUMMARY: Common Stockholder's Equity............................... $2,724,319 48.2% Preferred Stock Not Subject to Mandatory Redemption....... 211,870 3.8% Preferred Stock Subject to Mandatory Redemption(5)........ 30,000 0.5% Company obligated mandatorily redeemable preferred securities of subsidiary trust holding solely Company subordinated debentures................................ 120,000 2.1% Long-Term Debt(6)......................................... 2,569,802 45.4% ---------- ----- Total Capitalization.............................. $5,655,991 100.0% ========== =====- --------------- (1) Derived from audited financial information. (2) Net Income and Earnings on Common Stock includes net after tax charges of $218,377,000 relating primarily to the termination of Perry Unit 2, partially offset by the cumulative effect of a change in accounting for unbilled revenues. (3) Net Income and Earnings on Common Stock includes net after tax charges of $26,434,000 relating to a voluntary retirement program and estimated severance expenses. (4) "Earnings" for purposes of these calculations have been computed by adding to "income before extraordinary items" all taxes based on income or profits, total interest charges and the estimated interest element of rentals charged to income. "Fixed charges" include total interest charges, the estimated interest element of rentals and subsidiaries' preferred stock dividend requirements, determined on a "pre-income tax" basis (computed, where applicable, at the effective income tax rates for the applicable periods). These ratios exclude fixed charges applicable to the guarantee of the debt of a coal supplier aggregating $8,565,000, $7,424,000, $6,315,000, $5,093,000 and $3,828,000 for each of the five years in the period ended December 31, 1997. (5) Excludes $5,000,000 of preferred stock subject to mandatory redemption within one year. (6) Excludes $273,492,000 of long-term debt due to be repaid or subject to put options within one year. 57exhaustive.
OHIO EDISON COMPANYThe Company wasWe are one of eight wholly-owned electric utility operating subsidiaries of FirstEnergy Corp., or FirstEnergy. We were organized under the laws of the State of Ohio in 1930 and own property and do business as an electric public utility in that state. We engage primarily in the distribution and sale of electric energy to communities in a 7,500 square mile area of central and northeastern Ohio. We also engage in the sale, purchase and interchange of electric energy with other electric companies. The area we serve has a population of approximately 2.8 million.
We own all of the outstanding common stock of Pennsylvania Power Company. Pennsylvania Power 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 became a wholly owned subsidiary of FirstEnergy Corp. on November 8, 1997. The Company also has ownership interests in certain facilities located in the Commonwealth of Pennsylvania. The Company's principal executive offices are located at 76 South Main Street, Akron, Ohio 44308, telephone number 1-800-736-3402. The Company furnishes electric service to communities in a 7,500 square mile area of central and northeastern Ohio. It also provides transmission services and electric energy for resale to certain municipalities in the Company's service area and transmission services to certain rural cooperatives. The Company also engages in the sale, purchase and interchange of electric energy with other electric companies. The area it serves has a population of approximately 2,542,000. The Company owns all of the outstanding common stock ofPennsylvania PowerCompany ("Penn Power"), a Pennsylvania corporation, whichfurnishes electric service to communities in a 1,500 square mile area of western Pennsylvania.Penn Power also provides transmission services and electric energy for resale to certain municipalities in Pennsylvania.The area served byPennPennsylvania Power has a population of approximately343,000. Sources0.3 million.
RATIO OF EARNINGS TO FIXED CHARGESOur consolidated ratios of
generationearnings to fixed charges for each of theCompany and Penn Power (the "Companies") during the twelve monthsfive fiscal years ended December 31,1997 were 76.1% coal2005 are as follows:
Year Ended December 31, 2001 2002 2003 2004 2005 Consolidated ratio of earnings to fixed charges 2.99 3.44 3.33 4.43 4.54 The ratio of earnings to fixed charges represents, on a pre-tax basis, the number of times earnings cover fixed charges. Earnings consist of income before extraordinary items, fixed charges and
23.9% nuclear. On November 8, 1997,themergerprovision for income taxes. Fixed charges consist of interest on long-term debt, other interest expense, subsidiaries' preferred stock dividend requirements and an estimate of theCompany and Centerior Energy Corporation ("Centerior") became effective pursuantinterest portion of all rentals charged tothe Merger Agreement, dated September 13, 1996 (the "Merger Agreement"). Under the Merger Agreement, the Company and Centerior formed FirstEnergy Corp., an Ohio holding company, which holds directly all of the issued and outstanding common shares of the Company and all of the issued and outstanding common shares of Centerior's direct subsidiaries, which include, among others, The Cleveland Electric Illuminating Company and The Toledo Edison Company. The Company continues to own all of the issued and outstanding common shares of Penn Power. As a result of the merger, the former common shareholders of the Company and Centerior now own all of the outstanding shares of FirstEnergy Common Stock. FirstEnergy's common shares are registered pursuant to Section 12(b) of the Securities Exchange Act of 1935. All other classes of capital stock of the Company and its subsidiaries and of the former subsidiaries of Centerior are unaffected by the merger and remain outstanding.income.
USE OF PROCEEDSThe Company proposesWe intend to use the proceeds we receive from
the saleissuance ofthe New Bondsthese debt securities for general corporatepurposes. The specific uses to which the proceeds may be applied will be set forthpurposes, unless otherwise specified in therelated Prospectus Supplement. Pending applicationprospectus supplement relating to a specific issue of debt securities. General corporate purposes may include, but are not limited to, financing and operating activities, capital expenditures, acquisitions, maintenance of our assets and refinancing our existing indebtedness.
DESCRIPTION OF DEBT SECURITIESThe following summary sets forth the general terms and provisions of the
proceeds,debt securities that we may offer by this prospectus. This summary does not purport to be complete, and is subject to, and qualified in its entirety by reference to, theCompany may make short-term cash investments. FINANCING AND CONSTRUCTION PROGRAMS The Companies' construction costs, include expenditures for the betterment of existing facilities and for the construction of transmission lines, distribution lines, substations and other additions. The Companies currently forecast expenditures of approximately $600 million for property additions and improvements for 1998-2002, of which approximately $165 million is applicable to 1998. Various Federal, state and local authorities regulate the Companies with regard to air and water quality and other environmental matters. The Companies have estimated additional capital expenditures for environmental compliance of approximately $27 million for the period 1998 through 2002, which is included in the construction forecast. During the 1998-2002 period, maturities of, and sinking fund requirements for, long-term debt and preferred stock will require expenditures by the Companies of approximately $1.01 billion, of which approximately $167 million is applicable to 1998. Approximately $165 million was paid by the Companies during the year ended December 31, 1997 for sinking fund requirements and maturing long-term debt and preferred stock. In addition, the Companies optionally redeemed or refinanced approximately $43 million of long-term debt during the year ended December 31, 1997. Nuclear fuel purchases are financed through OES Fuel, Incorporated ("OES Fuel," a wholly owned subsidiaryprovisions of theCompany) commercial paper and loans, both of which are supported by a $225,000,000 68 long-term bank credit agreement. The Companies' investments for additional nuclear fuel during the 1998-2002 period are estimated to be approximately $206 million, of which approximately $26 million applies to 1998. During the same periods, the Companies' nuclear fuel investments are expected to be reduced by approximately $182 million and $41 million, respectively, as the nuclear fuel is consumed. Also, the Companies have operating lease commitments (net of PNBV Capital Trust income) of approximately $442 million for the 1998-2002 period, of which approximately $83 million relates to 1998. The Companies recover the cost of nuclear fuel consumed and operating leases through their electric rates. Short-term borrowings outstanding at December 31, 1997 consisted of $182.2 million of bank borrowings and $120 million of OES Capital, Incorporated ("OES Capital") commercial paper. OES Capital, is a wholly owned subsidiary of the Company whose borrowings are secured by customer accounts receivable. OES Capital can borrow up to $120 million under a receivables financing agreement at rates based on certain bank commercial paper. The Companies also had $37 million available under revolving lines of creditindenture, dated as ofDecember 31, 1997. In addition, $26 million was available through bank facilities that provide for borrowings on a short-term basis at the banks' discretion. The Company had the capability to borrow $61 million as of December 31, 1997 through unused OES Fuel credit facilities. Based on their present plans, the Companies could provide for their cash requirements during the remainder of 1998 from the following sources: funds to be received from operations; available cash and temporary cash investments (approximately $4.7 million as of December 31, 1997); the issuance of long-term debt (for refunding purposes); and funds available under the short-term bank credit arrangements. For the period 1998-2002, external financings may be used to provide a portion of the Companies' cash requirements. The extent and type of future financings will depend on the need for external funds as well as market conditions, the maintenance of an appropriate capital structure and the ability of the Companies to comply with coverage requirements in order to issue first mortgage bonds and preferred stock. The Companies will continue to monitor financial market conditions and, where appropriate, may take advantage of economic opportunities to refund debt and preferred stock to the extent that their financial resources permit. DESCRIPTION OF THE NEW BONDS GENERAL The New Bonds will be authenticated and delivered under a General Mortgage Indenture and Deed of Trust,April 1, 2003, betweenthe Companyus and The Bank of New York,(the "New Mortgage Trustee"), datedasof January 1, 1998. The New Mortgage Trusteetrustee, under which the debt securities willact as indenture trustee for the purposes ofbe issued, and the Trust Indenture Act of 1939, asamended (the "Trust Indenture Act"). Such General Mortgage and Deed of Trust,amended. You should read the indenture incorporated by reference assupplemented by various supplemental indentures, including one or more supplemental indentures relatingan exhibit to theNew Bonds,registration statement of which this prospectus ishereinafter referreda part. Whenever we refer toas the "New Mortgage." The summaries herein do not purport to be complete and are subject to the detailed provisionsparticular sections or defined terms of theNew Mortgage. Capitalized terms used herein which are not otherwise definedindenture in thisProspectus shall have the meanings ascribed theretoprospectus or inthe New Mortgage. Wherever particular provisions of the New Mortgagean accompanying prospectus supplement, these sections ortermsdefinedtherein are referred to, such provisions or definitionsterms are incorporated by referenceas a part ofherein or in thestatements made hereinprospectus supplement. This summary also is subject to andsuch statements arequalifiedin their entiretybysuch reference. Referencesreference toarticle and section numbers in thisthe description of theNew Bonds, unless otherwise indicated, are referencesparticular terms of a specific issue of debt securities in the applicable prospectus supplement.General
We will issue the debt securities offered by this prospectus as one or more series of our senior unsecured debt securities under the indenture. The debt securities will rank equally with all of our other unsecured and unsubordinated debt. The indenture gives us broad authority to
article and section numbersset the particular terms of each series of debt securities, including the right to modify certain of theNew Mortgageterms contained in the indenture. The particular terms of a series of debt securities and the extent, if any, to which the particular terms of the issue modify the terms of the indenture will be described in the prospectus supplement relating to those debt securities.There is no requirement under the indenture that future issues of our debt securities be issued exclusively under the indenture. Accordingly, we will be free to use other indentures or documentation, containing provisions different from those included in the
First Mortgage (as defined herein), asindenture or applicable to one or more issues of debt securities, in connection with future issues of other debt securities.The indenture does not limit the
caseaggregate principal amount of debt securities that we maybe.issue under the indenture. TheNew Mortgageindenture provides thatadditional bondsthe debt securities may be issuedthereunder onin one or more series. The debt securities may be issued at various times and may have differing maturity dates and may bear interest at differing rates. We need not issue all debt securities of one series at thebasissame time and, unless otherwise provided, we may reopen a series, without the consent ofPledged Bonds (as hereinafter defined), property additions, retired bonds and cash. (See "Issuancethe holders ofAdditional Mortgage Bonds" below.) The New Bonds and all other bonds heretofore or hereafter issued undertheNew Mortgage are collectively referred to herein as the "Mortgage Bonds." Reference is madedebt securities of that series, for issuances of additional debt securities of that series.Prior to the
Prospectus Supplementissuance of each series of debt securities, the terms of the particular securities will be specified in a supplemental indenture, a board resolution or one or more officer's certificates authorized pursuant to a board resolution. We refer you to the applicable prospectus supplement for a description of the following terms of the particular series ofNew Bonds in respect of which this Prospectus is being delivered (the "Offered Bonds"): (i) thedebt securities offered thereby:
- •
- title
(series designation)of theOffered Bonds; (ii) thedebt securities;- •
- any limit
if any, uponon the aggregate principal amount of theOffered Bonds; (iii)debt securities;- •
- the person to whom any interest on the debt securities shall be payable, if other than the person in whose name the debt securities are registered at the close of business on the regular record date for that interest;
- •
- the date or dates on which the principal of the
Offered Bonds,debt securities will be payable orany Tranche thereof, is payable; 79 (iv)how the date or dates will be determined;- •
- the rate or rates at which the
Offered Bonds, or any Tranche thereof,debt securities will bear interest, if any, or how the rate or rates will be determined, and the date or dates from whichsuchinterest willaccrue,accrue;- •
- the dates on which
any suchinterest will bepayable ("Interest Payment Dates") andpayable;- •
- the
regularrecord dates forany interest payable onpayments of interest;
- •
- the
Interest Payment Dates; (v) the basis on which the Offered Bonds will be issued; (vi) the option,place or places, if any,of the Companyin addition toredeem the Offered Bonds and the periods within which or the dates on which, the prices at which and the terms and conditions upon which, the Offered Bonds, or any Tranche thereof, may be redeemed, in whole or in part, upon the exercise of such option; (vii) the obligation, if any, of the Company to redeem or purchase the Offered Bonds pursuant to any sinking fund or analogous provisions or at the option of the Holder and the periods within which or the dates on which, the prices at which and the terms and conditions upon which the Offered Bonds, or any Tranche thereof, will be redeemed, in whole or in part, pursuant to such obligation; (viii) the denominations in which the Offered Bonds, or any Tranche thereof, will be issuable; (ix) whether the Offered Bonds will be originally issued in book-entry only form as discussed below under "Book-Entry Only System"; and (x) any other terms of the Offered Bonds not inconsistent with the provisions of the New Mortgage. While the New Mortgage contains provisions for the maintenance of the Mortgaged Property, it does not contain any provisions for a maintenance or sinking fund and, except as may be provided in a Supplemental Indenture (and described in the applicable Prospectus Supplement), there will be no provisions for any such funds for the New Bonds. FORM AND EXCHANGE New Bonds in definitive form will be issued only as registered bonds without coupons in denominations of $1,000 or any multiple thereof authorized by the Company. New Bonds will be exchangeable for a like aggregate principal amount of New Bonds of the same series of other authorized denominations and will be transferable atthe office of theCompany in New York, New York, without service charge in either case other than for any taxes or other governmental charge imposed in connection with such exchange or transfer. See "Transfer or Exchange." REDEMPTION OF THE NEW BONDS Any terms for the optional or mandatory redemption of any Offered Bonds will be set forth in the applicable Prospectus Supplement. Except as shall otherwise be provided in the applicable Prospectus Supplement with respect to any Offered Bonds redeemable at the option of the Holder, New Bonds will be redeemable only upon notice by mail not less than 30 days nor more than 180 days prior to the date fixed for redemption, and, if less than all the New Bonds of a series, or any Tranche thereof, are to be redeemed, the particular New Bonds to be redeemed will be selected by such method as shall be provided for the particular series or Tranche, or in the absence of any such provision, by such method as the Bond Registrar deems fair and appropriate. (Sections 5.03 and 5.04.) Any notice of redemption at the option of the Company may state that such redemption shall be conditioned upon receipt by the New Mortgage Trustee or Paying Agent, on or prior to the date fixed for such redemption, of money sufficient to paytrustee, where the principal of, and premium, if any, and interest, if any, onsuch New Bonds and that if such money has not been so received, such noticethe debt securities will beof no force and effectpayable;- •
- the period or periods within which, the price or prices at which, and the
Company will notterms and conditions upon which the debt securities may berequiredredeemed, in whole or in part, at our option;- •
- any sinking fund or other provisions or options held by holders of the debt securities that would obligate us to purchase or redeem
such New Bonds. (Section 5.04.) SECURITY General. Except as discussed below, Mortgage Bonds now or hereafter issued undertheNew Mortgagedebt securities;- •
- the percentage, if less than 100%, of the principal amount of the debt securities that will be
secured primarily by: (a) bonds ("First Mortgage Bonds") issued underpayable if theCompany's Indenture dated August 1, 1930 (the "First Mortgage"), to The Bank of New York (successor trustee to Bankers Trust Company), as trustee (the "First Mortgage Trustee"), and delivered to the New Mortgage Trustee under the New Mortgage, which First Mortgage Bonds will be secured, equally and ratably with all other bonds issued under the First Mortgage, by a valid first lien on substantially allmaturity of theCompany's physical property and franchises, subject only to excepted encumbrances as defined indebt securities is accelerated;- •
- whether the
First Mortgage (Article I, Section 2); and 810 (b) the lien of the New Mortgage on the Company's properties used or to be used in or in connection with the generation, production, transmission or distribution of electric energy, which lien is junior to the lien of the First Mortgage. The First Mortgage permits, with certain limitations, the acquisition of property subject to prior liens and, under certain conditions, permits the issuance of additional indebtedness under such prior liens to the extent of 60% of net property additions made by the Company to the property subject to such prior liens. As discussed below under "Pledged Bonds," following a merger or consolidation of another corporation into the Company, the Company could deliver to the New Mortgage Trustee bonds issued under an existing mortgage on the properties of such other corporation in lieu of or in addition to bonds issued under the First Mortgage. In such event, the Mortgage Bonds would be secured, additionally, by such bonds and by the lien of the New Mortgage on the properties of such other corporation, which would be junior to the liens of such existing mortgage and the First Mortgage. The First Mortgage and all such other mortgages are hereinafter, collectively, called the "Class "A" Mortgages," and all bonds issued under the Class "A" Mortgages and delivered to the New Mortgage Trustee are hereinafter collectively called the "Pledged Bonds." If and when no Class "A" Mortgages are in effect, the New Mortgage will constitute a first mortgage lien on the Company's properties used or to be used in or in connection with the generation, production, transmission or distribution of electric energy. Pledged Bonds. The Pledged Bondsdebt securities will be issuedand delivered to,in book-entry form, represented by one or more global securities certificates deposited with, or on behalf of, a securities depositary and registered in the name of theNew Mortgage Trusteedepositary or its nominee, and if so, the identity of the depositary;- •
- any changes or additions to the events of default under the indenture or changes or additions to our covenants under the indenture;
- •
- any collateral security, assurance or guarantee for the debt securities; and
- •
- any other specific terms applicable to the debt securities.
Unless we otherwise indicate in the applicable prospectus supplement, the debt securities will be
owneddenominated in United States currency in minimum denominations of $1,000 andheldmultiples of $1,000.Unless we otherwise indicate in the applicable prospectus supplement, there are no provisions in the indenture or the debt securities that require us to redeem, or permit the holders to cause a redemption of, the debt securities or that otherwise protect the holders in the event that we incur substantial additional indebtedness, whether or not in connection with a change in control of our company.
If applicable, the prospectus supplement relating to an issue of debt securities will describe any special United States federal income tax considerations relevant to those debt securities.
Payment and Paying Agents
Unless otherwise indicated in a prospectus supplement, we will pay interest on our debt securities on each interest payment date by wire transfer to an account at a banking institution in the United States that is designated in writing to the trustee by the
New Mortgage Trustee, subjectperson entitled to that payment or by check mailed to theprovisionsperson in whose name the debt security is registered as of theNew Mortgage,close of business on the regular record date relating to the interest payment date, except that interest payable at stated maturity, upon redemption or otherwise, will be paid to the person to whom principal is paid. However, if we default in paying interest on a debt security, we may pay defaulted interest to the registered owner of the debt security as of the close of business on a special record date selected by the trustee, which will be between 10 and 15 days before the date we propose for payment of the defaulted interest, or in any other lawful manner of payment that is consistent with the requirements of any securities exchange on which the debt securities may be listed for trading, if the trustee finds it practicable.Redemption
We will set forth any terms for the
benefitredemption ofthe Holders of all Mortgage Bonds Outstanding from timedebt securities in a prospectus supplement. Unless we indicate differently in a prospectus supplement, and except with respect totime, and the Company will have no interest in such Pledged Bonds. Except as may be otherwise set forth in the supplemental indenture or board resolution or officer's certificate pursuant to a supplemental indenture or a board resolution pursuant to which any Mortgage Bonds are to be issued, Pledged Bonds issued as the basis for the authentication and delivery of such Mortgage Bonds (a) will mature on the same dates, and in the same principal amounts, as such Mortgage Bonds, and (b) will contain, in addition to any mandatory redemption provisions applicable to all Pledged Bonds Outstanding under the related Class "A" Mortgage, mandatory redemption provisions correlative to provisions for mandatory redemption, or for redemptiondebt securities redeemable at the option of theHolder,registered holder, debt securities will be redeemable upon notice by mail between 30 and 60 days prior to the redemption date. If less than all ofsuch Mortgage Bonds. Pledged Bonds issued asthebasis for authentication and deliverydebt securities of anyseries or any tranche of a series
or Tranche of Mortgage Bonds (x) may, but need not, bear interest, any such interestare to bepayable atredeemed, thesame times astrustee will select the debt securities to be redeemed and will choose the method of random selection it deems fair and appropriate.Debt securities will cease to bear interest on the
Mortgage Bondsredemption date. We will pay the redemption price and any accrued and unpaid interest to the redemption date once you surrender the debt security for redemption. If only part ofsucha debt security is redeemed, the trustee will deliver to you a new debt security of the same seriesor Tranche, and (y) may, but need not, contain provisionsfor the remaining portion without charge.We may make any redemption
thereof atconditional upon theoption of the Company, any such redemption to be made at a redemption price or prices not less than the principal amount of such Pledged Bonds. (Sections 4.02 and 7.01.) Any paymentreceipt by theCompanypaying agent, on or prior to the date fixed for redemption, ofprincipal of or premium or interest onmoney sufficient to pay thePledged Bonds heldredemption price. In this circumstance, if the paying agent has not received the money by theNew Mortgage Trusteedate fixed for redemption, we will not be required to redeem the debt securities.Registration, Transfer and Exchange
The debt securities will be
applied by the New Mortgage Trustee to the paymentissued without interest coupons and in denominations that are multiples ofany principal, premium or interest, as the case may be, in respect of the Mortgage Bonds which is then due, and, to the extent of such application, the obligation of the Company under the New Mortgage to make such payment in respect of the Mortgage Bonds will be deemed satisfied and discharged. If, at the time of any such payment of principal of Pledged Bonds, there shall be no principal then due in respect to the Mortgage Bonds, the proceeds of such payment will be deemed to constitute Funded Cash and will be held by the New Mortgage Trustee as part of the New Mortgaged Property, to be withdrawn, used or applied as provided$1,000, unless otherwise indicated in theNew Mortgage. If, at the time of any such payment of premium or interest on Pledged Bonds, there shall be no premium or interest, as the case may be, then due in respect of the Mortgage Bonds, the proceeds of such payment will be remitted to the Company at its request. Any payment by the Company of principal of or premium or interest on Mortgage Bonds authenticated and delivered on the basis of the deposit with the New Mortgage Trustee of Pledged Bonds (other than by application of the proceeds in respect of such Pledged Bonds) will, to the extent thereof, be deemed to satisfy and discharge the obligation of the Company, if any, to make a payment of principal, premium or interest, as the case may be, in respect of such Pledged Bonds which is then due. (Section 7.02; and see "Withdrawal of Cash" below.) The New Mortgage Trustee may not sell, assign or otherwise transfer any Pledged Bonds except to a successor trustee under the New Mortgage. (Section 7.04.) At the time any Mortgage Bondsapplicable prospectus supplement. Debt securities of any seriesor any Tranche thereof, which have been authenticated and delivered upon the basis of Pledged Bonds cease towill be911 Outstanding (other than as a resultexchangeable for other debt securities of theapplicationsame series ofthe proceedsany authorized denominations and ofthe payment or redemption of such Pledged Bonds), the New Mortgage Trustee shall surrender to or upon the order of the Company an equala like aggregate principal amount and tenor, unless otherwise indicated in the applicable prospectus supplement.Unless we otherwise indicate in the applicable prospectus supplement, debt securities may be presented for registration of
such Pledged Bonds havingtransfer, duly endorsed or accompanied by a duly executed written instrument of transfer, at thesame Stated Maturityoffice or agency maintained for this purpose, without service charge except for reimbursement of taxes andmandatory redemption provisionsother governmental charges assuch Mortgage Bonds. (Section 7.03.) Atdescribed in thedate of this Prospectus, the only Class "A" Mortgage is the First Mortgage and the only Pledged Bonds issuable at this time are First Mortgage Bonds issuable thereunder. The New Mortgage provides that inindenture.In the event of any redemption of debt securities of any series, the
mergertrustee will not be required to exchange orconsolidationregister a transfer ofanother company with or into the Company, an existing mortgage constituting a lien on properties of such other company prior to the lienany debt securities of theNew Mortgage may be designated byseries selected, called or being called for redemption except theCompany as an additional Class "A" Mortgage. Bonds thereafter issued under such additional mortgage would be Pledged Bonds and could provide the basis for the authentication and deliveryunredeemed portion ofMortgage Bonds under the New Mortgage. (Section 7.06.) When no Pledged Bonds are Outstanding under a Class "A" Mortgage except for Pledged Bonds held by the New Mortgage Trustee, then, at the request of the Company and subject to satisfaction of certain conditions, the New Mortgage Trustee will surrender such Pledged Bonds for cancellation, and the related Class "A" Mortgage will be satisfied and discharged, the lien of such Class "A" Mortgageany debt security being redeemed in part.Certain Covenants
Limitation on
the Company's property will cease to exist and the priority of the lien of the New Mortgage will be increased. (Section 7.07.)LiensThe
New Mortgageindenture provides that, so long as anyMortgage Bondsdebt securities areOutstanding,outstanding, we may not issue, assume, guarantee or permit to exist any Debt (as defined below) that is secured by any mortgage, security interest, pledge or lien ("Lien") of or upon any of our Operating Property (as defined below), whether owned at theCompanydate of the indenture or subsequently acquired, without effectively securing such debt securities (together with, if we so determine, any of our other indebtedness ranking equally with such debt securities) equally and ratably with that Debt (but only so long as that Debt is so secured).The foregoing restriction will not
issueapply to:
- (1)
- Liens on any
additional bonds underOperating Property existing at the time of its acquisition (which Liens may also extend to subsequent repairs, alterations and improvements to that Operating Property);- (2)
- Liens on Operating Property of a corporation existing at the time the corporation is merged into or consolidated with, or at the time the corporation disposes of its properties (or those of a division) as or substantially as an entirety to, us;
- (3)
- Liens on Operating Property to secure the costs of acquisition, construction, development or substantial repair, alteration or improvement of property or to secure Debt incurred to provide funds for any
Class "A" Mortgage except (i)of those purposes or for reimbursement of funds previously expended for any of those purposes, provided the Liens are created or assumed contemporaneously with, or within 18 months after, the acquisition or the completion of substantial repair or alteration, construction, development or substantial improvement;
- (4)
- Liens in favor of any state or any department, agency or instrumentality or political subdivision of any state, or for the benefit of holders of securities issued by any such entity (or providers of credit enhancement with respect to
replace mutilated, destroyed, lostthose securities), to secure any Debt (including, without limitation, our obligations with respect to industrial development, pollution control orstolen bonds issued undersimilar revenue bonds) incurred for the purpose of financing or refinancing all or any part of the purchase price or the cost of substantially repairing or altering, constructing, developing or substantially improving property which at the time of suchClass "A" Mortgagepurchase, repair, alteration, construction, development or(ii) Pledged Bonds issued toimprovement was owned or operated by us;- (5)
- Liens securing Debt outstanding as of the
New Mortgage Trusteedate of issuance of the debt securities as thebasis for the authentication and deliveryfirst series ofMortgage Bonds. First Mortgage Bonds may currently bedebt securities issued under theFirst Mortgageindenture;- (6)
- Liens securing Debt which matures less than 12 months from its issuance or incurrence and is not extendible at our option;
- (7)
- Liens on Operating Property which is the
basissubject ofproperty additions, retirements of bonds previously issued under the First Mortgagea lease agreement designating us as lessee andcash deposited with the First Mortgage Trustee. As of December 31, 1997, $1,115,225,000 of First Mortgage Bonds (other than Pledged Bonds) were outstanding. Lien of the New Mortgage. The properties of the Company used or to be used in or in connection with the generation, production, transmission or distribution of electric energy are subject to the lien of the New Mortgage. Substantiallyall of our right, title and interest in suchproperty, while subjectOperating Property and such lease agreement, whether or not such lease agreement is intended as security;- (8)
- Liens for taxes and similar levies, deposits to
the lien of the New Mortgage, will be also subject to the prior lien of the First Mortgage. The Mortgage Bonds will have the benefit of the prior lien of the First Mortgage on such property,secure performance or obligations under certain specified circumstances andthe benefit of the prior lien of any additional Class "A" Mortgage on any property subject thereto, to the extent of the aggregate principal amount of Pledged Bonds, issued under the respective Class "A" Mortgages, held by the New Mortgage Trustee. The lien of the New Mortgage is subject to Permitted Liens which include tax lienslaws, mechanics' and othergovernmental charges which are not delinquent and which are being contested, construction and materialmen's liens, certain judgment liens, easements, reservations and rights of others (including governmental entities) in, and defects of title in, certain property of the Company, certain leasehold interests, liens on the Company's pollution control and sewage and solid waste facilities and certain other liens and encumbrances. (Section 1.01.) There are excepted from the lien of the New Mortgage, among other things, cash and securities not paid to, deposited with or held by the New Mortgage Trustee under the New Mortgage; contracts, leases and other agreements of all kinds, contract rights, bills, notes and other instruments, accounts receivable, claims, certain intellectual property rights and other general intangibles; permits, licenses and franchises; automobiles, other vehicles, movable equipment, aircraft and vessels; all goods, wares and merchandise held for sale or leasesimilar Liens arising in the ordinary course of business,or for useLiens created by or resulting from legal proceedings being contested in good faith, and certain other similar Liens arising in the ordinary course of business;- (9)
- Liens related to moneys held in trust by the trustee for the benefit of the
Company; fuel, materials, supplies and other personal property consumable in the operationsholders of theCompany's business; computers, machinery,debt securities; or- (10)
- any extension, renewal or replacement (or successive extensions, renewals or replacements), in whole or in part, of any Lien referred to in clauses (1) through (9), provided, however, that the principal amount of Debt secured thereby and
equipment; coal, ore, gas, oil, minerals and timber minednot otherwise authorized by clauses (1) through (9), must not exceed the principal amount of Debt, plus any premium orextracted fromfee payable in connection with theland; gas transmission lines connecting wells with mainextension, renewal orbranch trunk lines or field gathering lines connecting wells with main or branch trunk lines; electric energy, gas, steam, water and other products generated, produced or purchased; leasehold interests; and all books and records. (Granting Clauses.) The First Mortgage contains similar, but not identical, exceptions. Withoutreplacement, so secured at theconsenttime of theHolders,extension, renewal or replacement.However, the
Company and the New Mortgage Trustee may enter into supplemental indenturesforegoing restriction will not apply tosubject to the lienour issuance, assumption or guarantee ofthe New Mortgage additional property, whether or not used in the electric utility business (including propertyDebt secured by a Lien which would otherwise beexcepted fromsubject to the foregoing restriction up to an aggregate amount which, together with all of our other secured Debt then outstanding (not including secured Debt permitted under any of the foregoing exceptions) and the Value (as defined below) of Sale and Lease-Back Transactions (as defined below) existing at that time (other than Sale and Lease-Back Transactions the proceeds of which have been applied to the retirement of certain indebtedness, Sale and Lease-Back Transactions in which the property involved would have been permitted to be subjected to a Lien under any of the foregoing exceptions in clauses (1) to (10) and Sale and Lease-Back Transactions that are permitted by the first sentence of "—Limitation on Sale and Lease-Back Transactions" below), does not exceed the greater of 15% of our Net Tangible Assets and 15% of Capitalization (as those terms are defined below), in each case, determined in accordance with generally accepted accounting principles ("GAAP") and as of a date not more than 60 days prior to suchlien). (Sec- 1012 tion 14.01.) Such property,issuance, assumption or guarantee of debt. As of December 31, 2005, our Net Tangible Assets were $4.3 billion and our Capitalization was $3.6 billion.
Limitation on Sale and Lease-Back Transactions
The indenture provides that so long as any debt securities are outstanding, we may not enter into or permit to exist, any Sale and Lease-Back Transaction with respect to any Operating Property (except for transactions involving leases for a term, including renewals, of not more than 48 months), if the
samepurchasers' commitment is obtained more than 18 months after the later of the completion of theacquisition, construction or development of that Operating Property or the placing in operation of that Operating Property or of that Operating Property as constructed or developed or substantially repaired, altered or improved.
This restriction will not apply if:
- •
- we would
otherwise constitutebe entitled pursuant to any of the provisions described in clauses (1) to (10) of the first sentence of the second paragraph under "—Limitation on Liens" above to issue, assume, guarantee or permit to exist Debt secured by a Lien on that Operating PropertyAdditions (as described below), would thereupon constitute Property Additionswithout equally andbe available asratably securing the debt securities;- •
- after giving effect to a
basis for the issuance of Mortgage Bonds. (See "Issuance of Additional Mortgage Bonds" below.) The New Mortgage contains provisions subjecting after-acquired propertySale and Lease-Back Transaction, we could incur pursuant to thelien thereof, subject toprovisions described in theprior liensecond sentence of theFirst Mortgage and any other Class A Mortgage. These provisions are limitedsecond paragraph under "—Limitation on Liens," at least $1.00 of additional Debt secured by Liens (other than Liens permitted by the preceding paragraph); or- •
- we apply within 180 days an amount equal to, in the case of
consolidationa sale ormerger (whether or not the Company is the surviving corporation) or sale of substantially all of the Company's assets. In the event of consolidation or merger of the Company with or into another corporation and such other corporation is the surviving corporation or thetransferof all the mortgaged property as or substantially as an entirety, the New Mortgage will not be required to be a lien upon any of the properties then owned or thereafter acquired by the surviving corporation, except properties acquired from the Company in or as a result of such transaction and improvements, extensions and additions to such properties and renewals, replacements and substitutions of orforany part or parts of such properties. In the event of a merger or consolidation of a corporation with or into the Company and the Company is the surviving corporation, unless a supplemental indenture to the New Mortgage shall otherwise provide, the New Mortgage will not be required to be a lien upon any of the properties acquired by the Company in or as a result of such transaction or any improvements, extensions or additions to such properties or any renewals, replacements or substitutions of or for any part or parts of such properties. (Article Thirteen; and see "Consolidation, Merger, Conveyance, Transfer or Lease" below.) In addition, after-acquired property may be subject to vendors' liens, purchase money mortgages and other liens thereon at the time of acquisition thereof, including the lien of any Class "A" Mortgage. The New Mortgage provides that the New Mortgage Trustee will have a lien, prior to the lien on behalf of the holders of Mortgage Bonds, upon Mortgaged Property and any money collected by the New Mortgage Trustee as proceeds of the Mortgaged Property, for the payment of its reasonable compensation and expenses and for indemnity against certain liabilities. (Section 11.07.) ISSUANCE OF ADDITIONAL MORTGAGE BONDS The principal amount of Mortgage Bonds which may be issued under the New Mortgage (Section 3.01) is not limited. Mortgage Bonds of any series may be issued from time to time under Article Four of the New Mortgage on the basis of, and in an aggregate principal amount not exceeding: (1) the aggregate principal amount of Pledged Bonds issued and delivered to the Trustee; (2) 70% of the Cost or Fair Value to the Company (whichever is less) of Property Additions (as described below) which do not constitute Bonded Property Additions (being, generally, Property Additions which have been made the basis of the authentication and delivery of Mortgage Bonds, the release of mortgaged property orcash,withdrawals) after certain deductions and additions, primarily including adjustments to offset property retirements; (3) the aggregate principal amount of Retired Bonds (which consist of Mortgage Bonds no longer Outstanding under the New Mortgage (including Mortgage Bonds deposited under any sinking or analogous funds) which have not been used for certain other purposes under the New Mortgage and which are not to be paid, redeemed or otherwise retired by the application of Funded Cash), but if Pledged Bonds have been made the basis for the authentication and delivery of such Retired Bonds, only if the related Class "A" Mortgage has been discharged; and (4) an amount of cash deposited with the Trustee. In general, the issuance of Mortgage Bonds is subject to Adjusted Net Earnings of the Company for 12 consecutive months within the preceding 18 months being at least two times the Annual Interest Requirements on all Mortgage Bonds at the time Outstanding, Mortgage Bonds then applied for, all outstanding bonds issued under a Class A Mortgage other than Pledged Bonds held by the New Mortgage Trustee under the New Mortgage, and all other indebtedness (with certain exceptions) secured by a lien prior to the lien of the New Mortgage, except that no such net earnings requirement need be met if the additional Mortgage Bonds to be issued are to have no Stated Interest Rate prior to Maturity. The Company is not required to satisfythe netearnings requirement prior to issuance of Mortgage Bonds as provided in (1) above if the Pledged Bonds issued 1113 and delivered to the New Mortgage Trustee as the basis for such issuance have been authenticated and delivered under the related Class "A" Mortgage on the basis of retired Class A Bonds. In addition, the Company is not required to satisfyproceeds (not exceeding the netearnings requirement prior to issuance of Mortgage Bonds as provided in (3) above unless (a) the Stated Maturity of the Retired Bonds is a date less than five years after the date of the Company Order requesting the authenticationbook value), and,delivery of such Mortgage Bonds and (b) the maximum Stated Interest Rate, if any, on such Retired Bonds at the time of their authentication and delivery is less than the maximum Stated Interest Rate, if any, on such Mortgage Bonds to be in effect upon the initial authentication and delivery of such Mortgage Bonds. In general, the interest requirement with respect to variable interest rate indebtedness, if any, is determined with reference to the rate or rates in effect on the date immediately preceding such determination or the rate to be in effect upon initial authentication. (Section 1.03 and Article Four). Adjusted Net Earnings are calculated before, among other things, provisions for income taxes; depreciation or amortization of property; interest on any indebtedness and amortization of debt discount and expense; any non-recurring charge to income of whatever kind or nature (including without limitation the recognition of expense or impairment due to the non-recoverability of assets or expense), whether or not recorded as a non-recurring item in the Company's books of account; and any refund of revenues previously collected or accrued by the Company subject to possible refund. With respect to Mortgage Bonds of a series subject to a Periodic Offering (such as a medium-term note program), the New Mortgage Trustee may be entitled to receive a certificate evidencing compliance with the net earnings requirements only once, at or prior to the time of the first authentication and delivery of the Mortgage Bonds of such series (unless the Company Order requesting the authentication and delivery of such Mortgage Bonds is delivered on or after the date which is two years after the most recent Net Earnings Certificate was delivered, in which case an updated certificate would be required to be delivered). (Sections 1.03 and 4.01.) Property Additions generally include any property which is owned by the Company and is subject to the lien of the New Mortgage, except any property the cost of acquisition or construction of which is properly chargeable to an operating expense account of the Company. (Section 1.04.) Unlessotherwise,provided in the applicable Prospectus Supplement, the Company will issue the Mortgage Bonds on the basis of Pledged Bonds (i.e., First Mortgage Bonds) issued under its First Mortgage. RELEASE OF PROPERTY The Company may obtain the release from the lien of the New Mortgage of any Mortgaged Property if the Fair Value, after deducting the principal amount of indebtedness secured by any Prior Liens thereon other than generally Permitted Liens, of all of the Mortgaged Property (excluding the Mortgaged Property to be released but including any Mortgaged Property to be acquired by the Company with the proceeds of, or otherwise in connection with, such release) equals or exceeds an amount equal to twenty-fourteenths (20/14ths) of the aggregate principal amount of Mortgage Bonds Outstanding and bonds issued under Class "A" Mortgages outstanding (other than Pledged Bonds). The New Mortgage provides simplified procedures for the release of property which has been released from the lien of a Class "A" Mortgage, minor properties and property taken by eminent domain, and provides for dispositions of certain obsolete property and grants or surrender of certain rights without any release or consent by the New Mortgage Trustee. If any property released from the lien of the New Mortgage continues to be owned by the Company after such release, the New Mortgage will not become a lien on any improvement, extension or addition to such property or renewals, replacements or substitutions of or for any part or parts of such property. (Article Eight.) WITHDRAWAL OF CASH Subject to certain limitations, cash held by the New Trustee may (1) be withdrawn by the Company (a) to the extent of the Cost or Fair Value to the Company (whichever is less) of Unbonded Property Additions, after certain deductions and additions primarily including adjustments to offset retirements, or (b) in an amount equal to twenty-fourteenths (20/14ths) of the aggregate principal amount of Mortgage Bonds that the Company would 1214 be entitled to issue on the basis of Retired Bonds (with the entitlement to such issuance being waived by operation of such withdrawal), or (c) in an amount equal to twenty-fourteenths (20/14ths) of the aggregate principal amount of any Outstanding Mortgage Bonds delivered to the New Trustee, or (2) upon the request of the Company, be applied to (a) the purchase of Mortgage Bonds (at prices not exceeding twenty-fourteenths (20/14ths) of the principal amount thereof) or (b) the redemption or payment at Stated Maturity of Mortgage Bonds (with any Mortgage Bonds received by the New Trustee pursuant to these provisions being canceled by the New Trustee) (Section 8.06); provided, however, that cash deposited with the New Mortgage Trustee as the basis for the authentication and delivery of Mortgage Bonds, as well as cash representing a payment of principal of Pledged Bonds, may only be withdrawn inan amount equal to theaggregate principalfair value (as determined by our Board of Directors) of the Operating Property so leased, to the retirement of debt securities or other of our Debt ranking equally with the debt securities, subject to reduction for debt securities and Debt retired during the 180-day period otherwise than pursuant to mandatory sinking fund or prepayment provisions and payments at stated maturity.The term "Capitalization," as used above, means the total of all the following items appearing on, or included in, our consolidated balance sheet: (i) liabilities for indebtedness maturing more than 12 months from the date of determination; and (ii) common stock, preferred stock, premium on capital stock, capital surplus, capital in excess of par value, and retained earnings (however the foregoing may be designated), less, to the extent not otherwise deducted, the cost of shares of our capital stock held in our treasury.
The term "Debt," as used above, means any outstanding debt for money borrowed evidenced by notes, debentures, bonds, or other securities.
The term "Net Tangible Assets," as used above, means the amount shown as total assets on our consolidated balance sheet, less the following: (i) intangible assets including, but without limitation, such items as goodwill, trademarks, trade names, patents, and unamortized debt discount and expense and other regulatory assets carried as an asset on our consolidated balance sheet; (ii) current liabilities; and (iii) appropriate adjustments, if any, on account of
Mortgage Bondsminority interests.The term "Operating Property," as used above, means (i) any interest in real property owned by us and (ii) any asset owned by us that is depreciable in accordance with GAAP.
The term "Sale and Lease-Back Transaction," as used above, means any arrangement with any person providing for the
Company wouldleasing to us of any Operating Property (except for leases for a term, including any renewals, of not more than 48 months), which Operating Property has been or is to beentitled to issue on any basis (with the entitlementsold or transferred by us to suchissuance being waived by operation of such withdrawal), or may, uponperson; provided, however, Sale and Lease-Back Transaction does not include any arrangement (i) first entered into prior to therequestdate of theCompany, be appliedindenture and (ii) involving the exchange of any Operating Property for any property subject to an arrangement first entered into prior to thepurchase, redemptiondate of the indenture.The term "Value," as used above, means, with respect to a Sale and Lease-Back Transaction, as of any particular time, the amount equal to the greater of (i) the net proceeds to us from the sale or
paymenttransfer ofMortgage Bondsthe property leased pursuant to the Sale and Lease-Back Transaction or (ii) the net book value of the property leased, as determined by us in accordance with GAAP, in either case multiplied by a fraction, the numerator of which will be equal to the number of full years of the term of the lease that is part of the Sale and Lease-Back Transaction remaining atprices not exceeding,the time of determination and the denominator of which will be equal to the number of full years of the term of the lease, without regard, in any case, to any renewal or extension options contained in theaggregate, the principal amount thereof (Sections 4.05 and 7.02). CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE The Company maylease.Consolidation, Merger, Conveyance, Sale or Transfer
We have agreed not to consolidate with or merge into any other
corporationentity or convey, sell or otherwise transferor lease the Mortgaged Property as orour properties and assets substantially as an entirety to anyperson unless (a) such transactionentity unless:
- •
- the successor is
on such terms as will fully preserve the lien and security of the New Mortgage and the rights and powers of the New Mortgage Trustee and Holders, (b) the corporation formed by such consolidation or into which the Company is merged or the person which acquires by conveyance or transfer, or which leases, the Mortgaged Property as or substantially asanentirety is a corporationentity organized and existing under the laws of the United States of America or anystate or territory thereofState of the United States or the District ofColumbia, and such corporation executes and delivers toColumbia;- •
- the
New Mortgage Trusteesuccessor expressly assumes by a supplemental indenturewhich contains an assumption by such corporation ofthe due and punctual payment of the principal of, and premium, if any, and interest, if any, on all theMortgage Bondsoutstanding debt securities under the indenture and the performance ofallevery covenant of thecovenantsindenture that we would otherwise have to perform or observe; and- •
- immediately after giving effect to the transactions, no event of default with respect to any series of debt securities and no event which after notice or lapse of time or both would become an event of default with respect to any series of debt securities will have occurred and be continuing.
Modification of the
Company underIndentureUnder the
New Mortgage and which containsindenture or any supplemental indenture, the rights of the holders of debt securities may be changed with the consent of the holders representing agrant, conveyance, transfer and mortgagemajority in principal amount of the outstanding debt securities of all series affected by thecorporation confirmingchange, voting as one class, provided that thelienfollowing changes may not be made without the consent of theNew Mortgage onholders of each outstanding debt security affected thereby:
- •
- change the
Mortgaged Property and subjecting to such lien all property thereafter acquired byfixed date upon which thecorporation which shall constitute an improvement, extension or addition to the Mortgaged Property or a renewal, replacement or substitutionprincipal of orforthe interest on anypartdebt security is due and payable, or reduce the principal amount thereofand, ator theelectionrate of interest or change the method of calculating such rate of interest or reduce any premium payable upon the redemption thereof, or reduce the amount of thecorporation, subjecting to the lienprincipal of an original issue discount security that would be payable upon a declaration of acceleration of theNew Mortgagematurity thereof, or change the currency in which, any debt security or any premium, if any, or the interest thereon is payable, or impair the right to institute suit for the enforcement of any payment on or after the date suchother property then ownedpayment is due or,thereafter acquired by the corporation as the corporation shall specify, and (c)in the case ofa lease,redemption, on or after the date fixed for suchlease will be made expressly subject to terminationredemption;- •
- reduce the stated percentage of debt securities, the consent of the holders of which is required for any modification of the applicable indenture or for waiver by the
Companyholders of certain of their rights; orthe New Mortgage Trustee at any time during the continuance of an Event of Default. (Section 13.01.) Other than the security afforded by the lien of the First Mortgage and the New Mortgage and the restrictions on the issuance of additional First Mortgage Bonds and Mortgage Bonds, there are no- •
- modify certain provisions of the
First Mortgage orindenture.An "original issue discount security" means any security authenticated and delivered under the
New Mortgageindenture whichaffordprovides for an amount less than the principal amount thereof to be due and payable upon the declaration of acceleration of the maturity thereof.The indenture also permits us and the trustee to amend the indenture without the consent of the holders of
the Mortgage Bonds protection in the event of a highly leveraged transaction, reorganization, restructuring, merger or similar transaction involving the Company. Neither the First Mortgage nor the New Mortgage contain provisions requiring the repurchase of the Mortgage Bonds upon a change in control of the Company. MODIFICATION OF NEW MORTGAGE Without the consent ofanyHolders, the Company and the New Mortgage Trustee may enter into one or more supplemental indenturesdebt securities for any of the following purposes:(a)
- •
- to evidence
the succession of another person to the Company andthe assumption by anysuchpermitted successor oftheour covenantsof the Companyin theNew Mortgageindenture and in theMortgage Bonds ("Consolidation, Merger, Conveyance, Transfer or Lease" above); or (b)debt securities;- •
- to add
one or moreto the covenantsof the Company or other provisions for the benefit of all Holders or for the benefit of the Holders of, or to remain in effect only so long as there shall be Outstanding, Mortgage Bonds of one or more specified series, or one or more specified Tranches thereof,with which we must comply or to surrender anyrightof our rights orpower conferred uponpowers under theCompany by the New Mortgage; or 1315 (c)indenture;- •
- to
correct or amplify the descriptionadd additional events ofany property at any time subject to the lien of the New Mortgage, or better to assure, convey and confirm to the New Mortgage Trustee any property subject or required to be subjected to the lien of the New Mortgage, or to subject to the lien of the New Mortgage additional property; or (d) to convey, transfer and assign to the New Mortgage Trustee and to subject to the lien of the New Mortgage with the same force and effect as if included in the New Mortgage, property of subsidiaries of the Company used or to be used for one or more purposes which if owned by the Company would constitute property used or to be used for one or more of the Primary Purposes of the Company's Business, which property shall for all purposes of the New Mortgage be deemed to be property of the Company, together with such other provisions as may be appropriate to express the respective rights of the New Mortgage Trustee and the Company in regard thereto; or (e)default;- •
- to change,
oreliminate,any provision of the New Mortgageortoadd anynewprovision to theNew Mortgage,indenture; provided,thathowever, if the change, elimination, or addition will adversely affect the interests of the holders of debt securities of any
series, other than any series the terms of which permit such change, elimination or addition,
adversely affects the interests of the Holders of the Mortgage Bonds of any series or Tranchein any material respect, such change, elimination, or addition will become effective with respect to such seriesor Tranche onlyonly:
- (1)
- when
no Mortgage Bondthe consent of the holders of debt securities of such series has been obtained in accordance with the indenture; orTranche remains- (2)
- when no debt securities of such series remain outstanding under the
New Mortgage; or (f)indenture;
- •
- to provide collateral security for all of the debt securities;
- •
- to establish the form or terms of
the Mortgage Bondsdebt securities of any other seriesor Trancheas permitted by theNew Mortgage; or (g)indenture;- •
- to provide for the authentication and delivery of bearer securities and coupons
appertainingattached theretorepresenting interest, if any, thereonandfor the proceduresfor the registration, exchange and replacement thereof and for the giving of notice to, and the solicitation of the vote or consent of the holdersthereof, and for any and all other matters incidental thereto; or (h)of the debt securities;- •
- to evidence and provide for the acceptance of appointment
byof a successortrustee or by a co-trustee or separatetrustee;or (i)- •
- to provide for the procedures required
to permit the Company to utilize, at its option,for use of a noncertificated system of registration for the debt securities of all or anyseries or Tranche of, the Mortgage Bonds; or (j)series;- •
- to change any place where
(1) theprincipal,of andpremium, if any, and interestif any, on the Mortgage Bonds of any series, or any Tranche thereof, willshall be payable,(2) any Mortgage Bonds of any series, or any Tranche thereof,debt securities may be surrendered for registration of transfer(3) any Mortgage Bonds of any series,orany Tranche thereof, may be surrendered forexchange and(4)noticesand demandstoor upon the Company in respect of the Mortgage Bonds of any series, or any Tranche thereof, and the New Mortgageus may be served; or(k)- •
- to cure any ambiguity
to correctorsupplement any provision therein which may be defective or inconsistent with any other provision therein,inconsistency or to make anychanges to the provisions thereof or to addother provisions with respect to matters and questions arising under theNew Mortgage, so long asindenture; provided that suchother changes or additions doaction shall not adversely affect the interests of theHoldersholders ofMortgage Bondsdebt securities of any seriesor Tranchein any materialrespect; or (l)respect.Events of Default
An event of default with respect to
reflect changesany series of debt securities is defined inGenerally Accepted Accounting Principles; or (m) to providetheterms and conditionsindenture as being any one of theexchangefollowing:
- •
- failure to pay interest on the debt securities of that series for 30 days after payment is due,provided,however, if applicable to that series, that a valid extension of the interest payment period by us as contemplated in the indenture will not constitute a failure to pay interest;
- •
- failure to pay principal of or
conversion,any premium on the debt securities of that series when due, whether at stated maturity or upon earlier acceleration or redemption;- •
- failure to perform other covenants in the
optionindenture for 90 days after we are given written notice from the trustee or the trustee receives written notice from the registered owners of at least 33% in principal amount of the debt securities of that series; however, the trustee or the trustee and the holders of such principal amount of debt securities of that series can agree to an extension of the 90-day period and such an agreement to extend will be automatically deemed to occur if we are diligently pursuing action to correct the default;- •
- certain events of bankruptcy, insolvency, reorganization, receivership or liquidation relating to us; and
- •
- any other event of default included in the supplemental indenture, board resolution or officer's certificate for that series of debt securities.
An event of default regarding a particular series of debt securities will not necessarily constitute an event of default for any other series of debt securities.
We will be required to file with the trustee annually an officer's certificate as to the absence of default in performance of certain covenants in the indenture. The indenture provides that the trustee may withhold notice to the holders of the debt securities of any default, except in the case of default in the payment of principal of, or premium, if any, or interest, if any, on the debt securities or in the payment of any sinking fund installment with respect to the debt securities, if the trustee in good faith determines that it is in the interest of the holders of
Mortgage Bondsthe debt securities to do so.The indenture provides that, if an event of default with respect to the debt securities of any series
ofoccurs and continues, either theMortgage Bonds of such series for or into Mortgage Bonds of other series or stock or other securities of the Company or any other corporation; or (n) to change the words "Mortgage Bonds" to "First Mortgage Bonds" in the descriptive title of all Outstanding Bonds at any time after the discharge of the First Mortgage; or (o) to comply with the rules or regulations of any national securities exchange on which any of the Mortgage Bonds may be listed. (Section 14.01.) 1416 Without limiting the generality of the foregoing, if the Trust Indenture Act is amended after the date of the New Mortgage in such a way as to require changes to the New Mortgagetrustee or theincorporation thereinholders ofadditional provisions33% orso as to permit changes to, or the elimination of, provisions which, at the date of the New Mortgage or at any time thereafter, were required by the Trust Indenture Act to be contained in the New Mortgage, the Company and the New Mortgage Trustee may, without the consent of any Holders, enter into one ormoresupplemental indentures to evidence or effect such amendment. (Section 14.01.) Except as provided above, the consent of the Holders of not less than a majorityin aggregate principal amount of theMortgage Bondsdebt securities ofallthat seriesthen Outstanding, considered as one class, is required for the purpose of adding any provisions to, or changing in any manner, or eliminating any of the provisions of, the New Mortgage pursuant to one or more supplemental indentures; provided, however, if less than all of the series of Mortgage Bonds Outstanding are directly affected by a proposed supplemental indenture, then the consent only of the Holders of a majority in aggregate principal amount of Outstanding Mortgage Bonds of all series so directly affected, considered as one class, will be required; and provided further that if the Mortgage Bonds of any series have been issued in more than one Tranche and if the proposed supplemental indenture directly affects the rights of the Holders of one or more, but less than all, of such Tranches, then the consent only of the Holders of a majority in aggregate principal amount of the Outstanding Mortgage Bonds of all Tranches so directly affected, considered as one class, will be required; and provided further that no such amendment or modification may, without the consent of each Holder of the Outstanding New Mortgage of each series or Tranche directly affected thereby, (a) change the Stated Maturity of the principal of, or any installment of principal of or interest on, any Mortgage Bond, or reduce the principal amount thereof or the rate of interest thereon (or the amount of any installment of interest thereon) or change the method of calculating such rate or reduce any premium payable upon the redemption thereof, or reduce the amount of the principal of a Discount Bond (i.e., Bond which by its terms pays less than the principal amount thereof upon an acceleration of the maturity) that would be due and payable upon a declaration of acceleration of maturity or change the coin or currency (or other property) in which any Mortgage Bond or any premium or the interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption, on or after the redemption date), (b) permit the creation of any lien ranking prior to the lien of the New Mortgage with respect to all or substantially all of the Mortgaged Property or terminate the lien of the New Mortgage on all or substantially all of the Mortgaged Property, or deprive such Holder of the benefit of the security of the lien of the New Mortgage, (c) reduce the percentage in principal amount of the Outstanding Mortgage Bonds of such series or Tranche, the consent of the Holders of which is required for any such supplemental indenture, or the consent of the Holder of which is required for any waiver of compliance with any provision of the New Mortgage or any default thereunder and its consequences, or reduce the requirements for quorum or voting, or (d) modify certain of the provisions of the New Mortgage relating to supplemental indentures, waiver of certain covenants and waivers of past defaults. A supplemental indenture which changes or eliminates any covenant or other provision of the New Mortgage which has expressly been included solely for the benefit of the Holders of, or which is to remain in effect only so long as there shall be Outstanding Mortgage Bonds of one or more specified series, or one or more Tranches thereof, or modifies the rights of the Holders of Mortgage Bonds of such series or Tranches with respect to such covenant or other provision, will be deemed not to affect the rights under the New Mortgage of the Holders of the Mortgage Bonds of any other series or Tranche. (Section 14.02.) WAIVER The Holders of at least a majority in aggregate principal amount of all Mortgage Bonds may waive the Company's obligations to comply with certain covenants, including the Company's obligation to maintain its corporate existence and properties, pay taxes and discharge liens, maintain certain insurance and to make such recordings and filings as are necessary to protect the security of the Holders and the rights of the New Mortgage Trustee, provided that such waiver occurs before the time such compliance is required. The Holders of at least a majority of the aggregate principal amount of Outstanding Mortgage Bonds of all affected series or Tranches, considered as one class, may waive, before the time for such compliance, compliance with the Company's obligation to maintain an office or agency where the Mortgage Bonds of such series or Tranches may be surrendered for payment, registration, transfer or exchange, and compliance with any other covenant specified in a supplemental indenture respecting such series or Tranches. (Section 6.09.) 1517 EVENTS OF DEFAULT Each of the following events constitutes an Event of Default under the New Mortgage: (1) failure to pay interest on any Mortgage Bond within 60 days after the same becomes due; (2) failure to pay principal or premium, if any, on any Mortgage Bond within 15 days after its Maturity; (3) failure to perform or breach of any covenant or warranty of the Company in the New Mortgage (other than a covenant or a warranty a default in the performance of which or breach of which is dealt with elsewhere under this paragraph) for a period of 60 days after there has been given to the Company by the New Mortgage Trustee, or to the Company and the New Mortgage Trustee by the Holders of at least 50% in principal amount of Outstanding Mortgage Bonds, a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default," unless the New Mortgage Trustee, or the New Mortgage Trustee and the Holders of a principal amount of Mortgage Bonds not less than the principal amount of Mortgage Bonds the Holders of which gave such notice, as the case may be, agree in writing to an extension of such period prior to its expiration; provided, however, that the New Mortgage Trustee, or the New Mortgage Trustee and such Holders, as the case may be, will be deemed to have agreed to an extension of such period if corrective action has been initiated by the Company within such period and is being diligently pursued; (4) certain events relating to reorganization, bankruptcy and insolvency of the Company and appointment of a receiver or trustee for its property; or (5) the occurrence of an Event of Default under any Class "A" Mortgage such that the maturity of amounts due thereunder may be accelerated; provided that the waiver or cure of any such Event of Default and the rescission and annulment of the consequences thereof shall constitute a waiver of the corresponding Event of Default under the New Mortgage and a rescission and annulment of the consequences thereof. (Section 10.01.) REMEDIES If an Event of Default occurs and is continuing, then the New Mortgage Trustee or the Holders of not less than a majority in principal amount of Mortgage Bonds then Outstandingmay declare the principal amount(orof all the debt securities to be due and payable immediately. However, if theMortgage Bonds are Discount Bonds, such portionevent of default is applicable to all outstanding debt securities under the indenture, or if related to certain events of bankruptcy, insolvency, reorganization, arrangement, adjustment, composition or other similar events, only the trustee or holders of at least 33% in principal amountas may be provided for such Discount Bonds pursuant to the terms of the New Mortgage)of all outstanding debt securities of all series, voting as one class, and not theMortgage Bonds together with premium, ifholders of anyand interest accrued, if any, thereon to be immediately due and payable.one series, may make such a declaration of acceleration.At any time after
sucha declaration of acceleration with respect to thematurity of the Mortgage Bonds then Outstanding, but before the saledebt securities of anyof the Mortgaged Propertyseries has been made and before a judgment or decree for payment of the moneyshall havedue has been obtained,bytheNew Mortgage Trustee as provided in the New Mortgage, the Event or Eventsevent ofDefaultdefault giving rise to such declaration of acceleration willwithout further act,bedeemed to have beenconsidered waived, and such declaration and its consequences willwithout further act,bedeemed to have beenconsidered rescinded and annulled, if:(a) the Company has
- •
- we have paid or deposited with the
New Mortgage Trusteetrustee a sum sufficient to pay:
- (1)
- all overdue interest, if any, on all
Mortgage Bonds then Outstanding;debt securities of that series,- (2)
- the principal of and premium, if any, on any
Mortgage Bonds then Outstandingdebt securities of that series which have otherwise become dueotherwise than by such declaration of accelerationand interest,thereon at the rate or rates prescribed therefor in such Mortgage Bonds;if any, that is currently due, including interest on overdue interest, if any, and- (3)
- all amounts due to the
New Mortgage Trustee as compensationtrustee under the indenture; andreimbursement as provided in the New Mortgage; and (b)- •
- any other
Event or Eventsevent ofDefaultdefault with respect to the debt securities of that series other than thenon-paymentnonpayment of principal of theprincipalsecurities ofMortgage Bondssuch series which shall have become due solely by such declaration of acceleration,shall havehas been cured or waived as provided in theNew Mortgage. (Sections 10.02 and 10.17.) 1618 The New Mortgage provides that, under certain circumstances andindenture.There is no automatic acceleration, even in the event of our bankruptcy, insolvency or reorganization.
Subject to the
extent permitted by law, if an Event of Default occurs and is continuing, the New Mortgage Trustee has the power to take possession of, and to hold, operate and manage, the Mortgaged Property, or with or without entry, sell the Mortgaged Property. If the Mortgaged Property is sold, whether by the New Mortgage Trustee or pursuant to judicial proceedings, the principalprovisions of theOutstanding Mortgage Bonds, if not previously due,indenture relating to the duties of the trustee, the trustee willbecome immediately due, togetherbe under no obligation to exercise any of its rights or powers under the indenture at the request or direction of any of the holders of the debt securities, unless the holders shall have offered to the trustee reasonable indemnity, against costs, expenses and liabilities which might be incurred by it in compliance withpremium, if any, and any accrued interest. (Sections 10.03, 10.04 and 10.05.) If an Event of Default occurs and is continuing,theHoldersrequest or direction.Subject to the provision for indemnification, the holders of a majority in principal amount of the
Mortgage Bonds then Outstandingdebt securities of any series will have the right to direct the time, method and place of conducting anyproceedingsproceeding for any remedy available to theNew Mortgage Trusteetrustee, or exercising any trust or power conferred on theNew Mortgage Trustee, provided that (a) such direction does not conflict with any rule of law or with the New Mortgage, and could not involve the New Mortgage Trustee in personal liability in circumstances where indemnity would not, in the New Mortgage Trustee's sole discretion, be adequate, (b) such direction is not unduly prejudicial to the rights of the nonassenting Holders, and (c) the New Mortgage Trustee may take any other action deemed proper by the New Mortgage Trustee which is not inconsistent with such discretion. (Section 10.16.) The New Mortgage provides that no Holder of any Mortgage Bond will have any right to institute any proceeding, judicial or otherwise,trustee with respect to theNew Mortgage, or fordebt securities of that series. However, if theappointmentevent ofa receiver or trustee, or for any other remedy thereunder, unless (a) such Holder has previously givendefault relates to more than one series of debt securities, only theNew Mortgage Trustee written notice of a continuing Event of Default; (b) the Holders of not less than a majority in aggregate principal amount of the Mortgage Bonds then Outstanding have made written request to the New Mortgage Trustee to institute proceedings in respect of such Event of Default and have offered the New Mortgage Trustee reasonable indemnity against cost and liabilities incurred in complying with such request; and (c) for 60 days after receipt of such notice, the New Mortgage Trustee has failed to institute any such proceeding and no direction inconsistent with such request has been given to the New Mortgage Trustee during such 60-day period by the Holdersholders of a majority in aggregate principal amount ofMortgage Bonds then Outstanding. Furthermore, no Holderall affected series will have the right to give this direction. However, the trustee shall have the right to decline to follow any direction if the trustee shall determine that the action so directed conflicts with any law or the provisions of the indenture or if the trustee shall determine that the action would be prejudicial to holders not taking part in the direction.Satisfaction and Discharge
We will be
entitled to institute any such action if and todischarged from our obligations on theextent that such action would disturb or prejudice the rights of other Holders. (Section 10.11.) Notwithstanding that the right of a Holder to institute a proceeding with respect to the New Mortgage is subject to certain conditions precedent, each Holder of a Mortgage Bond has the right, which is absolute and unconditional, to receive payment of the principal of and premium, if any, and interest, if any, on such Mortgage Bond when due and to institute suit for the enforcementdebt securities of anysuch payment, and such rights may not be impaired without the consent of such Holder. (Section 10.12.) The New Mortgage provides that the New Mortgage Trustee give the Holders notice of any default under the New Mortgage to the extent required by the Trust Indenture Act, unless such default shall have been cured or waived, except that no such notice to Holders of a default of the character described in paragraph (3) under "Events of Default" shall be given until at least 45 days after the occurrence thereof. (Section 11.02.) The Trust Indenture Act currently permits the New Mortgage Trustee to withhold notice of default (except for certain payment defaults) if the New Mortgage Trustee in good faith determines the withholding of such notice to be in the interests of the Holders. As a condition precedent to certain actions by the New Mortgage Trustee in the enforcement of the lien of the New Mortgage and institution of action on the Mortgage Bonds, the New Mortgage Trustee may require adequate indemnity against costs, expense and liabilities to be incurred in connection therewith. (Sections 10.11 and 11.01.) In addition to every other right and remedy provided in the New Mortgage, the New Mortgage Trustee may exercise any right or remedy available to the New Mortgage Trustee in its capacity as owner and holder of Pledged Bonds which arises as a result of a default or Matured Event of Default under any Class "A" Mortgage, whether or not an Event of Default under the New Mortgage has then occurred and is continuing. (Section 10.20.) DEFEASANCE Any Mortgage Bond or Bonds,series, or any portion of the principal amountthereof, willof the debt securities of any series, if we:
- (1)
- irrevocably deposit with the trustee sufficient cash or eligible obligations (or a combination of both) to pay any principal, or portion of principal, interest, premium and other sums when due on the debt securities at their maturity, stated maturity date, or redemption; and
- (2)
- deliver to the trustee:
- (a)
- a company order stating that the money and eligible obligations deposited in accordance with the indenture shall be
deemed toheld in trust and certain opinions of counsel and of an independent public accountant;- (b)
- if such deposit shall have been
paid for purposesmade prior to the maturity of theNew Mortgage, and the entire indebtednessdebt securities of theCompanyseries, an officer's certificate stating our intention that, upon delivery of the officer's certificate, our indebtedness in respect of those debt securities, or the portions thereof, willbe deemed tohave been satisfied and dischargedif there has been irrevocably deposited with the New Mortgage 1719 Trustee, in trust: (a) money (including Funded Cash)as contemplated in theamount whichindenture; and- (c)
- an opinion of counsel to the effect that, as a result of a change in law or a ruling of the United States Internal Revenue Service, the holders of the debt securities of the series, or portions thereof, will not recognize income, gain or loss for United States federal income tax purposes as a result of the satisfaction and discharge of our indebtedness and will be
sufficient, or (b) Eligible Obligations (as described below), which do not contain provisions permittingsubject to United States federal income tax on theredemption or other prepayment thereofsame amounts, at theoption ofsame times and in theissuer thereof, the principal ofsame manner as if we had not so satisfied andthe interest on which when due, without any regard to reinvestment thereof, will provide monies which will be sufficient, or (c) a combination of (a) and (b) which will be sufficient, to pay when due the principal of and premium, if any, and interest, if any, due and to become due on such Mortgage Bond or Bonds or portions thereof. (Section 9.01.)discharged our indebtedness.For this purpose,
Eligible Obligations"eligible obligations" include direct obligations of, or obligations unconditionally guaranteed by, the United Statesof America,entitled to the benefit of the full faith and credit thereof and certificates, depositary receipts or other instruments which evidence a direct ownership interest in such obligations or in any specific interest or principal payments due in respect thereof and which do not contain provisions permitting their redemption or other prepayment at the option of the issuer thereof.While there is no legal precedent directly on point, it is possibleIn the event that all of the conditions set forth above have been satisfied for any series of debt securities, or portions thereof, except that, for
federal income tax purposes,anydeposit contemplatedreason, we have not delivered the officer's certificate and opinion described in clauses (b) and (c) above, thepreceding paragraph couldholders of those debt securities will no longer betreated as a taxable exchangeentitled to the benefits of certain of our covenants under the indenture, including the covenant described above in "—Limitation on Liens." Our indebtedness in respect of those debt securities, however, will not be deemed to have been satisfied and discharged prior to maturity, and the holders of those debt securities may continue to look to us for payment of therelated Mortgage Bonds for an issue of obligations ofindebtedness represented thereby.The indenture will be deemed satisfied and discharged when no debt securities remain outstanding and when we have paid all other sums payable by us under the
trust or a direct interest in the cash and securities held in the trust. In that case, Holders of such Mortgage Bonds would recognize gain or loss as if the trust obligations or the cash or securities deposited, as the case may be, had actually been received by them in exchange for their Mortgage Bonds. Such Holders thereafter would be required to include in income a share of the income, gain or loss of the trust. The amount so required to be included in income could be different from the amount that would be includible in the absence of such deposit. Prospective investors are urged to consult their own tax advisors asindenture. All moneys we pay to thespecific consequencestrustee or any paying agent on debt securities which remain unclaimed at the end of two years after payments have become due will be paid tothemus or upon our order. Thereafter, the holder ofsuch deposit. RESIGNATION OF THE NEW MORTGAGE TRUSTEEthose debt securities may look only to us for payment and not the trustee or any paying agent.Resignation or Removal of Trustee
The
New Mortgage Trusteetrustee may resign at any time by giving written noticethereofto us specifying theCompany orday upon which the resignation is to take effect. The resignation will take effect immediately upon the later of the appointment of a successor trustee and the specified day.The trustee may be removed at any time by
Act ofan instrument or concurrent instruments in writing delivered to theHolders oftrustee and us and signed by the holders, or their attorneys-in-fact, representing amajority in principal amount of
Mortgage Bondsthe thenOutstanding deliveredoutstanding debt securities. In addition, under certain circumstances, we may remove the trustee upon notice to theNew Mortgage Trusteeholder of each debt security outstanding and theCompany. No resignation or removal of the New Mortgage Trusteetrustee, andnoappointment of a successortrustee will become effective untiltrustee.Concerning the
acceptance of appointment by a successor trustee in accordance with the requirements of the New Mortgage. In addition, so long as no Event of Default or event which, after notice or lapse of time, or both, would become an Event of Default has occurred and is continuing, under certain circumstances, if the Company has delivered to the New MortgageTrusteea resolution of its Board of Directors appointing a successor trustee and such successor has accepted such appointment in accordance with the terms of the New Mortgage, the New Mortgage Trustee will be deemed to have resigned and the successor will be deemed to have been appointed as trustee in accordance with the New Mortgage. (Section 11.10.) CONCERNING THE NEW MORTGAGE TRUSTEEThe Bank of New York is the
Trusteetrustee under theNew Mortgage, has been a regular depositary of funds of the Company. As trustee under both the New Mortgageindenture. We andthe First Mortgage, The Bank of New York may have a conflicting interest for purposes of the Trust Indenture Act if an Event of Default were to occur under either Mortgage. In that case, the New Mortgage Trustee may be required to eliminate such conflicting interest by resigning either as New Mortgage Trustee or as First Mortgage Trustee. There are other instances under the Trust Indenture Act which would require the resignation of the New Mortgage Trustee, such as an affiliate of the New Mortgage Trustee acting as underwriter with respect to any of the Mortgage Bonds. The Company and certain of its subsidiariesour affiliates maintaindeposit accounts and conductother bankingtransactions with The Bank of New Yorkrelationships in the ordinary course oftheir businesses. The Bank of New York also acts as trustee under certain indentures relating to borrowings by or for the benefit of the lessors to finance their acquisition of the Company's interest in the Perry Nuclear Power Plant and Beaver Valley Power Station in connectionbusiness with thesaletrustee andleaseback of certain undivided interestsits affiliates.Governing Law
The indenture and the debt securities are governed by and construed in
those plants. Underaccordance with thesale/leaseback documents, the Company is ultimately responsible for the payment of this indebtedness. The Bank of New York also acts as trustee under the trust agreement, guarantee and indenture relating to a series of preferred securities issued by a trust subsidiary of the Company. 1820 TRANSFER OR EXCHANGE The transfer of the Mortgage Bonds may be registered, and Mortgage Bonds may be exchanged for other Mortgage Bonds of the same series and Tranche, of authorized denominations and of like tenor and aggregate principal amount, at the office of the Company, as Bond Registrar for the Mortgage Bonds, in New York, New York. The Company may change the place for registration of transfer of the Mortgage Bonds, may appoint one or more additional Bond Registrars (including the Company) and may remove any Bond Registrar, all at its discretion. (Section 6.02.) The applicable Prospectus Supplement will identify any new place for registration of transfer and additional Bond Registrar appointed, and will disclose the removal of any Bond Registrar effected, prior to the date of such Prospectus Supplement. Except as otherwise provided in the applicable Prospectus Supplement, no service charge will be made for any transfer or exchange of the Mortgage Bonds, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of the Mortgage Bonds. The Company will not be required to issue, and no Bond Registrar will be required to register, the transfer of or to exchange (a) Mortgage Bonds of any series (including the Mortgage Bonds) during a period of 15 days prior to giving any notice of redemption, or (b) any Mortgage Bond selected for redemption in whole or in part, except the unredeemed portion of any Mortgage Bond being redeemed in part. (Section 3.05.) BOOK-ENTRY ONLY SYSTEM A particular series of Offered Bonds may be issued initially under a book-entry only system, registered in the name of Cede & Co., as registered bondholder and nominee for DTC. DTC will act as securities depository for such Offered Bonds. Individual purchases of Book-Entry Interests (as defined herein) in any Offered Bonds will be made in book-entry form. Purchasers of Book-Entry Interests will not receive certificates representing their interests in such Offered Bonds. So long as Cede & Co., as nominee of DTC, is the bondholder, references herein to the bondholders or registered owners of Offered Bonds will mean Cede & Co., rather than the owners of Book-Entry Interests in such Offered Bonds. DTC is a limited purpose trust company organized under the bankinglaws of the State of New York,and a "banking organization" within the meaning of that law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Exchange Act, as amended. DTC holds securities deposited by its participants (the "DTC Participants") and facilitates the settlement of securities transactions among DTC Participants in such securities through electronic computerized book-entry changes in accounts of the DTC Participants, thereby eliminating the need for physical movement of securities certificates. Direct DTC Participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations, some of whom, together with the New York Stock Exchange, Inc., the American Stock Exchange, Inc. and the National Association of Securities Dealers, Inc. own DTC. Access to the DTC system is also available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a DTC Participant, either directly or indirectly (the "Indirect Participants"). DTC Participants purchasing Book-Entry Interests (as defined below) in any Offered Bonds will not receive certificates. Each DTC Participant will receive a credit balance in the records of DTC in the amount of such DTC Participant's interest in such Offered Bonds, which will be confirmed in accordance with DTC's standard procedures. The ownership interest of each actual purchaser of a Book-Entry Interest in an Offered Bond (the "Book-Entry Interests") will be recorded through the records of the DTC Participant or through the records of the Indirect Participant. Owners of Book-Entry Interests should receive from the DTC Participant or Indirect Participant a written confirmation of their purchase providing details of the Book-Entry Interests acquired. Transfers of Book-Entry Interests will be accomplished by book entries made by the DTC Participants or Indirect Participants who act on behalf of the owners of Book-Entry Interests. Owners of Book-Entry Interests will not receive certificates representing their ownership of Book-Entry Interests with respect to any related Offered Bondsexceptas described below upon the resignation of DTC. Under the New Mortgage, payments made to DTC or its nominee with respect to the Offered Bonds will satisfy the Company's obligations under the New Mortgageto the extent that the law of any other jurisdiction shall be mandatorily applicable.We may sell the
payments so made. Owners of 1921 Book-Entry Interestsdebt securities being offered by this prospectus in theOffered Bonds will not befollowing ways:
- •
- through negotiation with one or
be considered by the Companymore underwriters;- •
- through one or
the New Mortgage Trustee to be, and will not have any rights as, holders of Offered Bonds under the New Mortgage. NEITHER THE COMPANY NOR THE NEW MORTGAGE TRUSTEE NOR ANY OF THEIR AGENTS WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO ANY DTC PARTICIPANT, INDIRECT PARTICIPANT OR ANY OWNER OF A BOOK-ENTRY INTEREST OR ANY OTHER PERSON NOT SHOWN ON THE REGISTRATION BOOKS OF THE NEW MORTGAGE TRUSTEE OR ANY BOND REGISTRAR AS BEING A BONDHOLDER WITH RESPECT TO: (1) ANY OFFERED BONDS; (2) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC OR ANY DTC PARTICIPANT OR INDIRECT PARTICIPANT; (3) THE PAYMENT BY DTC OR ANY DTC PARTICIPANT OR INDIRECT PARTICIPANT OF ANY AMOUNT DUE TO ANY OWNER OF A BOOK-ENTRY INTEREST IN RESPECT OF THE PRINCIPAL OR REDEMPTION PRICE OF OR INTEREST ON ANY OFFERED BONDS; (4) THE DELIVERY BY DTC OR ANY DTC PARTICIPANT OR INDIRECT PARTICIPANT OF ANY NOTICE TO ANY OWNER OF A BOOK-ENTRY INTEREST WHICH IS REQUIRED OR PERMITTED UNDER THE TERMS OF THE NEW MORTGAGE TO BE GIVEN TO BONDHOLDERS; (5) THE SELECTION OF THE OWNERS OF A BOOK-ENTRY INTEREST TO RECEIVE PAYMENT IN THE EVENT OF ANY PARTIAL REDEMPTION OF ANY OFFERED BONDS; OR (6) ANY CONSENT GIVEN OR OTHER ACTION TAKEN BY DTC OR ITS NOMINEE AS THE HOLDER OF ANY OFFERED BONDS. Principal and redemption price of, and interest on, Offered Bonds registered in the name of DTCmore agents orits nominee will be made to DTC or such nominee, as registered owner of such Offered Bonds. DTC is responsible for disbursing such payments to the appropriate DTC Participants and such DTC Participants, and any Indirect Participants, are in turn responsible for disbursing the same to the owners of Book-Entry Interests. Unless it has reason to believe it will not receive payment, DTC's current practice is to credit the accounts of the DTC Participants on a payment date in accordance with their respective holdings shown on the records of DTC. Payments by DTC Participants and Indirect Participants to owners of Book-Entry Interests will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such DTC Participant or Indirect Participant and not of DTC, the Company or the New Mortgage Trustee, subject to any statutory and regulatory requirements as may be in effectdealers designated from time totime. DTC Participants and Indirect Participants carry the "position"time;- •
- directly to purchasers; or
- •
- through any combination of the
ultimate Book-Entry Interest owner on their records, and willabove.The distribution of the debt securities may be
responsible for providing informationeffected from time tothe ultimate Book-Entry Interest owner as to the Offered Bondstime inwhich the Book-Entry Interest is held, debt service payments received, and other information. Each person for whomone or more transactions at aDTC Participantfixed price orIndirect Participant acquires an interest in Offered Bonds, as nominee, may desire to make arrangements with such DTC Participant or Indirect Participant to receive a credit balance in the records of such DTC Participant or Indirect Participant, to have all notices of redemption or other communications to or by DTCprices which mayaffect such persons forwarded in writing by such DTC Participantbe changed, at market prices prevailing at the time of sale, at prices related to prevailing market prices orIndirect Participant, and to have notification made of all debt service payments. Purchases, transfers and sales of Book-Entry Interests byat negotiated prices. A prospectus supplement or a supplement thereto will describe theultimate Book-Entry Interest owners may be made through book entries made by DTC Participants or Indirect Participants or others who actmethod forthe ultimate Book-Entry Interest owner. The New Mortgage Trustee, the Company and the underwriters have no role in those purchases, transfers or sales. Owners of Book-Entry Interests may be charged a sum sufficient to cover any tax, fee, or other governmental charge that may be imposed in relation to any transfer or exchange of a Book-Entry Interest. The Company, any Bond Registrar, any Paying Agent and the New Mortgage Trustee will recognize and treat DTC (or any successor securities depository) or its nominee as the holder of Offered Bonds registered in its name or the name of its nominee for all purposes, including payment of debt service, notices, enforcement of remedies and voting. Under DTC's current practice, a proxy will be given to the DTC Participants holding Book-Entry Interests in Offered Bonds in connection with any matter on which holders of such Offered Bonds are asked to vote or give their consent. Crediting of debt service payments and transmittal of notices and other communications by DTC to DTC Participants, by DTC Participants to Indirect Participants and by DTC Participants and Indirect Participants to the ultimate Book-Entry Interest owners are the responsibility of those 2022 persons and will be handled by arrangements among them and are not the responsibilitydistribution of theNew Mortgage Trustee, the Company or thedebt securities.If we use any underwriters
involvedin the sale of theOffered Bonds. The Company, any Bond Registrardebt securities, we will enter into an underwriting agreement, distribution agreement or similar agreement with theNew Mortgage Trustee, so long as a book-entry system is used for any seriesunderwriters prior to the time ofOffered Bonds, will send any notice of redemptionsale, andany other notices required bytheNew Mortgage to be sent to holders of such Offered Bonds only to DTC (or such successor securities depository) or its nominee. Any failure of DTC to advise any DTC Participant, or of any DTC Participant or Indirect Participant to notify the Book-Entry Interest owner, of any such notice and its content or effect will not affect the validitynames of theredemption of the Offered Bonds called for redemption, or any other action premised on that notice. In the event of a call for redemption, the Company's, any Bond Registrar's or the New Mortgage Trustee's notification to DTC will initiate DTC's standard call process, and, in the event of a partial call, its lottery process by which the call will be randomly allocated to DTC Participants holding positions in the Offered Bonds to be redeemed. When DTC and DTC Participants allocate the call for redemption, the owners of the Book-Entry Interests that have been called should be notified by the broker or other person responsible for maintaining the records of those interests and subsequently credited by that person with the proceeds once such Offered Bonds are redeemed. The Company, any Paying Agent, the New Mortgage Trustee and any underwriter or agent cannot and do not give any assurances that DTC, DTC Participants or others will distribute debt service on Offered Bonds made to DTC or its nominee as the registered owner, or any redemption or other notices, to the Book-Entry Interest owners, or that they will do so on a timely basis, or that DTC will serve and act in the manner described in this Prospectus. The Company understands that the current "Rules" applicable to DTC are on file with the Commission, and that the current "Procedures" of DTC to be followed in dealing with DTC Participants are on file with DTC. If DTC is at any time unwilling or unable to continue as depository, and a successor depository is not appointed by the Company within 90 days, the Company will issue individual certificates to owners of Book-Entry Interests in exchange for the Offered Bonds held by DTC or its nominee. In such instance, an owner of a Book-Entry Interest will be entitled to physical delivery of certificates equal in principal amount to such Book-Entry Interest and to have such certificates registered in its name. Individual certificates of Offered Bonds so issued will be issued in denominations of $1,000 or any multiple thereof. LEGAL OPINIONS Anthony J. Alexander, Esq., Akron, Ohio, who is Executive Vice President and General Counsel of the Company, has rendered an opinion to the Company as to the legality of the Mortgage Bonds offered hereby. Mr. Alexander and Winthrop, Stimson, Putnam & Roberts, One Battery Park Plaza, New York, N.Y. 10004-1490, also counsel for the Company, will render opinions to anyunderwritersor agents as to the legality of any Offered Bonds. Simpson Thacher & Bartlett (a partnership which includes professional corporations), 425 Lexington Avenue, New York, N.Y. 10017-3954, will act as counsel for any underwriters or agents and will render an opinion to them as to certain legal matters. EXPERTS The audited consolidated financial statements and related schedule incorporated by reference or included in the Company's Annual Report on Form 10-K for the year ended December 31, 1996, incorporated by reference in this Prospectus, have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their reports dated February 7, 1997 with respect thereto, and are incorporated by reference herein in reliance upon the authority of said firm as experts in accounting and auditing in giving said reports. The audited consolidated financial statements for the year ended December 31, 1997, included in the Form 8-K filed on March 23, 1998, and incorporated by reference in this Prospectus have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their report dated February 13, 1998 with respect thereto, and are incorporated by reference herein in reliance upon the authority of said firm as experts in accounting and auditing in giving said reports. With respect to the unaudited interim consolidated financial information for the quarterly periods ended March 31, 1996 and 1997, June 30, 1996 and 1997 and September 30, 1996 and 1997 incorporated by reference herein, Arthur Andersen LLP has applied limited procedures in accordance with professional standards for 2123 reviews of that information. However, their separate reports thereon state that they did not audit and they do not express an opinion on that interim consolidated financial information. Accordingly, the degree of reliance on their reports on that information should be restricted in light of the limited nature of the review procedures applied. In addition, the accountants are not subject to the liability provisions of Section 11 of the Securities Act of 1933 for their reports on the unaudited interim consolidated financial information because that report is not a "report" or "part" of the registration statement prepared or certified by the accountants within the meaning of Sections 7 and 11 of the Act. The statements as to matters of law and legal conclusions included in the Company's Annual Report on Form 10-K and Form 10-Q Report incorporated herein by reference, and such statements included herein, have been prepared under the supervision of, and reviewed by, Anthony J. Alexander, Esq., Akron, Ohio, who is Executive Vice President and General Counsel of the Company, and such statements have been incorporated by reference or included herein upon his authority as an expert. PLAN OF DISTRIBUTION The Company may sell the Mortgage Bonds (i) through underwriters or dealers, (ii) directly to a limited number of institutional purchasers or to a single purchaser, (iii) through agents or (iv) through any combination of the above. An accompanying Prospectus Statement will set forth the terms of the offering of the Offered Bonds, including the name or names of any underwriters, the purchase price of the Offered Bonds and the net proceeds to the Company from such sale, any underwriting discounts and other items constituting underwriters' compensation, any initial public offering price and any discounts or concessions allowed or reallowed or paid to dealers. If underwriters areused in thesale,transaction will be set forth in theMortgage Bondsprospectus supplement or supplement thereto relating to the sale. If an underwriting agreement is executed, the debt securities will be acquired by the underwriters for their own account and may be resold from time to time in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale.The Mortgage Bonds may be offered to the public either through underwriting syndicates represented by one or more managing underwriters or directly by one or more underwriting firms. The underwriter or underwriters with respect to a particular underwritten offering of Offered Bonds will be namedUnless we otherwise indicate in theProspectus Supplement relating to such offering and, if an underwriting syndicate is used,prospectus supplement, themanaging underwriter or underwriters will be set forth on the cover page of such Prospectus Supplement. Unless otherwise set forth in the Prospectus Supplement, the severalobligations oftheany underwriters to purchasethe Offered Bondsparticular debt securities will be subject to certain conditions precedent, and the underwriters will be obligated totake and pay forpurchase all of theOffered Bondsdebt securities offered in the prospectus supplement if any aretaken. The Mortgage Bonds may bepurchased.If any debt securities are sold
directly by the Company orthrough agents designated bythe Companyus from time totime. Anytime, the prospectus supplement or supplement thereto will name any agent,involved in the offer or sale of the Offered Bonds will be named, andset forth any commissions payable by us to any agent and theCompanyobligations of the agent with respect tosuch agent will be set forth, in an accompanying Prospectus Supplement.the debt securities. Unless otherwise indicated insuch Prospectus Supplement,the prospectus supplement or a supplement thereto, anysuchagent will be acting on a best efforts basis for the period of its appointment.If
so indicateda dealer is utilized in theProspectus Supplement,sale of theCompanydebt securities in respect of which this prospectus is delivered, we will sell such debt securities to the dealer, as principal. The dealer may then resell such debt securities to the public at varying prices to be determined by such dealer at the time of sale.We may sell the debt securities directly to one or more purchasers. In this case, no underwriters, dealers or agents would be involved.
Any underwriters utilized may engage in stabilizing transactions and syndicate covering transactions in accordance with Rule 104 of Regulation M under the Exchange Act. Stabilizing transactions permit bids to purchase the underlying debt securities so long as the stabilizing bids do not exceed a specified maximum. Syndicate covering transactions involve purchases of the particular offered debt securities in the open market after the distribution has been completed in order to cover syndicate short positions. These stabilizing transactions and syndicate covering transactions may cause the price of the offered debt securities to be higher than it would otherwise be in the absence of such transactions.
In connection with the sale of the debt securities, any purchasers, underwriters or agents may receive compensation from us or from purchasers in the form of concessions or commissions. The underwriters will be, and any agents and any dealers participating in the distribution of the debt securities may be deemed to be, underwriters within the meaning of the Securities Act. The agreement between us and any purchasers, underwriters or agents will contain reciprocal covenants of indemnity, and will provide for contribution by us in respect of our indemnity obligations, between us and the purchasers, underwriters, or agents against certain liabilities, including liabilities under the Securities Act.
If we so indicate in the prospectus supplement, we will authorize agents, underwriters or dealers to solicit offers by
certainthe types of purchaser specifiedinstitutionsin the prospectus supplement to purchaseMortgage Bondsoffered debt securities fromthe Companyus at the public offering price set forth in theProspectus Supplementprospectus supplement pursuant to delayed delivery contracts providing for payment and delivery on a specified date in the future.SuchThese contracts will be subject to only those conditions set forth in theProspectus Supplement,prospectus supplement, and theProspectus Supplementprospectus supplement will set forth the commission payable for solicitation of suchcontracts. Agents,offers.Underwriters, dealers and agents may engage in transactions with, or perform services for, us and our affiliates in the ordinary course of business.
Unless otherwise specified in a prospectus supplement, the debt securities will not be listed on a national securities exchange. No assurance can be given that any broker-dealer will make a market in any series of the debt securities, and, in any event, no assurance can be given as to the liquidity of the trading market for any of the debt securities. The prospectus supplement will state, if known, whether or not any broker-dealer intends to make a market in the debt securities. If no such determination has been made, the prospectus supplement will so state.
Certain legal matters in connection with the validity of the debt securities offered by this prospectus are being passed upon for us by Gary D. Benz, Esq., Associate General Counsel of our parent corporation, FirstEnergy, and by Akin Gump Strauss Hauer & Feld LLP, New York, New York, our special counsel, and for any underwriters, dealers or agents by Thelen Reid & Priest LLP, New York, New York. As of April 7, 2006, Mr. Benz owned 41,026 shares of FirstEnergy common stock. Thelen Reid & Priest LLP has in the past represented, and continues to represent, FirstEnergy and certain of its affiliates.
The financial statements incorporated in this prospectus by reference to the Annual Report on Form 10-K for the year ended December 31, 2005, have been so incorporated in reliance on the report of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATIONWe are required to file annual, quarterly and current reports and other information with the SEC. You may read and copy any documents filed by us at the SEC's public reference room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. Our filings with the SEC are also available to the public through the SEC's Internet site at http://www.sec.gov.
We have filed with the SEC a registration statement on Form S-3 relating to the securities covered by this prospectus. This prospectus is a part of the registration statement and does not contain all the information in the registration statement. Whenever a reference is made in this prospectus to a contract or other document of ours, the reference is only a summary and you should refer to the exhibits that are a part of the registration statement for a copy of the contract or other document. You may review a copy of the registration statement at the SEC's public reference room in Washington, D.C., as well as through the SEC's Internet site.
The SEC's rules allow us to incorporate by reference information into this prospectus. This means that we can disclose important information to you by referring you to another document. Any information referred to in this way is considered part of this prospectus from the date we file that document. Any reports filed by us with the SEC after the date of this prospectus and before the date
that the offering of the debt securities by means of this prospectus is terminated will automatically update and, where applicable, supersede any information contained in this prospectus or incorporated by reference in this prospectus.
We incorporate by reference into this prospectus the following documents or information filed with the SEC (other than, in each case, documents or information deemed to have been furnished and not filed in accordance with SEC rules):
- (1)
- our Annual Report on Form 10-K for the year ended December 31, 2005;
- (2)
- our Current Report on Form 8-K filed on January 10, 2006; and
- (3)
- all documents filed by us under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act on or after the date of this prospectus and before the termination of this offering.
We will provide without charge to each person, including any beneficial owner, to whom this prospectus is delivered, upon his or her written or oral request, a copy of any or all documents referred to above which have been or may be
entitled, under agreements enteredincorporated by reference intowith thethis prospectus excluding exhibits to those documents unless they are specifically incorporated by reference into those documents. You may request those documents from:Ohio Edison Company
to indemnification by the Company against certain civil liabilities, including liabilities under the Securities Act of 1933, as amended. The place and time of delivery for the Offered Bonds in respect of which this Prospectus is delivered are set forth in the accompanying Prospectus Supplement. 2224
c/o FirstEnergy Corp.
76 South Main Street
Akron, Ohio 44308-1890
Attn: Investor Services
(800) 736-3402
PARTII.II
INFORMATION NOT REQUIRED IN PROSPECTUSITEMItem 14. Other Expenses of Issuance and Distribution
The following is a statement of the expenses to be incurred by the Registrant in connection with the issuance and distribution of the securities registered under this registration statement:
Amount
to be paidSEC registration fee $ 69,550 Legal fees and expenses 150,000 * Blue sky fees and expenses 10,000 * Accounting fees and expenses 100,000 * Printing fees and expenses 50,000 * Rating agencies fees 350,000 * Trustee's fees and expenses 70,000 * Miscellaneous 13,000 * Total $ 812,550
- *
- Estimated
Item 15. Indemnification of Directors and Officers
Section 1701.13(E) of Title 17 of Page's Ohio Revised Code Annotated gives a corporation incorporated under the laws of Ohio power to indemnify any person who is or has been a director, officer or employee of that corporation, or of another corporation at the request of that corporation, against expenses, including attorney's fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with any threatened, pending or completed action, suit or proceeding to which he is or may be made a party because of being or having been such director, officer or employee, provided that in connection therewith, such person is determined to have acted in good faith in what he reasonably believed to be in or not opposed to the best interests of the corporation of which he is a director, officer or employee, without reasonable cause, in the case of a criminal matter, to believe that his conduct was unlawful. The determination as to the conditions precedent to the permitted indemnification of such person is made by the directors of the indemnifying corporation acting at a meeting at which, for the purpose, any director who is a party to or threatened with any such action, suit or proceeding may not be counted in determining the existence of a quorum and may not vote. If, because of the foregoing limitations, the directors are unable to act in this regard, such determination may be made by the majority vote of the corporation's voting shareholders (or without a meeting upon unanimous written consent of such shareholders), by judicial proceeding or by written opinion of independent legal counsel other than an attorney who has been retained by or has performed services for the corporation or any person to be indemnified during the five years preceding the date of determination.
Section 40 of the Registrant's Amended and Restated Code of Regulations provides as follows:
"The Corporation shall indemnify, to the full extent then permitted by law, any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or she is or was a member of the Board of Directors or an officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, trustee, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise. The Corporation shall
II-1
indemnify such person against expenses, including attorney's fees, judgments, fines and amounts paid in settlement, actually and reasonably incurred by him by reason of the fact that he is or was such person to the full extent to which the Corporation is empowered or authorized to indemnify any person under the Ohio General Corporation law as now in effect or as amended form time to time. The Corporation shall pay, to the full extent then permitted by law, expenses, including attorney's fees, incurred by a member of the Board of Directors in defending any such action, suit or proceeding as they are incurred, in advance of the final disposition thereof, and may pay, in the same manner and to the full extent then permitted by law, such expenses incurred by any other person.
The indemnification and payment of expenses provided hereby shall not be exclusive of, and shall be in addition to, any other rights granted to those seeking indemnification under any law, the Articles of Incorporation, any agreement, vote of shareholders or disinterested members of the Board of Directors, or otherwise, both as to action in official capacities and as to action in another capacity while he or she is a member of the Board of Directors, or an officer, employee or agent of the Corporation, and shall continue as to a person who has ceased to be a member of the Board of Directors, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person."
Section 1701.13(E) of Title 17 of Page's Ohio Revised Code Annotated provides that the indemnification thereby permitted shall not be exclusive of any other rights that directors, officers or employees may have, including rights under insurance purchased by the corporation.
Section 41 of the Registrant's Amended and Restated Code of Regulations provides as follows:
"The Corporation may, to the full extent then permitted by law and authorized by the Board of Directors, purchase and maintain insurance or furnish similar protection, including but not limited to trust funds, letters of credit or self- insurance, on behalf of or for any persons described in Section 40 against any liability asserted against and incurred by any such person in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify such person against such liability. Insurance may be purchased from or maintained with a person in which the Corporation has a financial interest."
The Registrant maintains and pays the premium on contracts insuring the Registrant (with certain exclusions) against any liability to directors and officers they may incur under the above indemnity provisions and insuring each director and officer of the Registrant (with certain exclusions) against liability and expense, including legal fees, which he or she may incur by reason of his or her relationship to the Registrant.
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Item 16.
EXHIBITS.Exhibits
EXHIBIT NUMBER - --------(4)(g) --Exhibit
No.Description Incorporated by Reference
to Filing Indicated1.1 Form of General MortgageUnderwriting Agreement*
4.1
Indenture,and Deed of Trustdated as ofJanuaryApril 1,19982003, by and betweentheOhio Edison Company and The Bank of New York, asTrustee. (12)(b) --Trustee
Exhibit 4(a) to Registration No. 333-111311
5.1
Opinion of Gary D. Benz, Esq.
**
5.2
Opinion of Akin Gump Strauss Hauer & Feld LLP
**
12.1
Statement regarding Computation ofConsolidated RatioRatios of Earnings to FixedCharges. (15)(b) -- Letter of Arthur Andersen LLP regarding unaudited interim financial information. 23 (c) --Charges
**
23.1
Consent ofArthur Andersen LLP. These Exhibits areGary D. Benz, Esq. (included inadditionExhibit 5.1)
23.2
Consent of Akin Gump Strauss Hauer & Feld LLP (included in Exhibit 5.2)
23.3
Consent of PricewaterhouseCoopers LLP
**
24.1
Power of Attorney (included on signature page)
25.1
Form T-1 Statement of Eligibility of The Bank of New York toany document previously listed or incorporated by referenceact asan Exhibit listed or referred to in Item 16 ofTrustee under theRegistration Statement filed June 5, 1996.Indenture
**II-125 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF
- *
- To be filed by amendment or incorporated by reference.
- **
- Filed herewith.
Item 17. Undertakings
(A) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and
(iii) to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;provided,however, that paragraphs (i), (ii) and (iii) do not apply if the
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information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of the registration statement.
(2) That, for the purpose of determining any liability under the Securities Act of 1933,
THE REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE REQUIREMENTS FOR FILING ON FORMeach such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initialbona fide offering thereof.(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4) That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:
(i) each prospectus filed by the Registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and
(ii) each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5) or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii) or (x) for the purpose of providing the information required by Section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initialbona fide offering thereof.Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date.
(5) That, for the purpose of determining liability of the Registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, in a primary offering of securities of the undersigned Registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned Registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i) any preliminary prospectus or prospectus of the undersigned Registrant relating to the offering required to be filed pursuant to Rule 424;
(ii) any free writing prospectus relating to the offering prepared by or on behalf of the undersigned Registrant or used or referred to by the undersigned Registrant;
(iii) the portion of any other free writing prospectus relating to the offering containing material information about the undersigned Registrant or its securities provided by or on behalf of the undersigned Registrant; and
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(iv) any other communication that is an offer in the offering made by the undersigned Registrant to the purchaser.
(6) That, for purposes of determining any liability under the Securities Act of 1933, each filing of Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(7) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, that Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.
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Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3
AND HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED THEREUNTO DULY AUTHORIZED, IN THE CITY OF AKRON AND STATE OF OHIO ON THE 26TH DAY OF MARCH, 1998. OHIO EDISON COMPANY By: /s/ H. P. BURG ------------------------------------ H. P. Burg President PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Akron, State of Ohio, on the 7th day of April, 2006.
NAME TITLE DATE ---- ----- ----H. P. BURG - ------------------------------------------ (H. P. Burg) President and Director March 26, 1998 W. R. HOLLAND - ------------------------------------------ (W. R. Holland) Director March 26, 1998Ohio Edison Company
By:
/s/ ANTHONY J. ALEXANDER- ------------------------------------------ (AnthonyName: Anthony J. Alexander)AlexanderTitle: President KNOW ALL MEN BY THESE PRESENTS that the individuals whose signatures appear below constitute and appoint A. J. Alexander, L. L. Vespoli, D. W. Whitehead and L. F. Torres, and each of them, his true and lawful attorney-in-fact and agents with full and several power of substitution, for him and his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and all documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities indicated:
Signature Title Date /s/ ANTHONY J. ALEXANDER
Anthony J. AlexanderPresident and Director March 26, 1998 R.
(Principal Executive Officer)April 7, 2006
/s/ RICHARD H. MARSH- ------------------------------------------
Richard H. Marsh
Senior Vice President(Principal (R. H. Marsh)and Chief
Financial Officer and Director
(Principal Financial Officer)March 26, 1998
April 7, 2006
/s/ HARVEY L. WAGNER- ------------------------------------------
Harvey L. Wagner
Vice President and Controller(Principal (Harvey L. Wagner)
(Principal Accounting Officer)March 26, 1998
April 7, 2006
/s/ RICHARD R. GRIGG
Richard R. Grigg
Executive Vice President and Chief
Operating Officer and Director
April 7, 2006II-226II-6
EXHIBIT NUMBER - --------(4)(g) --Exhibit
No.Description Incorporated by Reference
to Filing Indicated1.1 Form of General Mortgage Indentures and Deed of TrustUnderwriting Agreement*
4.1
Indenture, dated as ofJanuaryApril 1,19982003, by and betweentheOhio Edison Company and The Bank of New York, asTrustee. (12)(b) --Trustee
Exhibit 4(a) to Registration No. 333-111311
5.1
Opinion of Gary D. Benz, Esq.
**
5.2
Opinion of Akin Gump Strauss Hauer & Feld LLP
**
12.1
Statement regarding Computation ofConsolidated RatioRatios of Earnings to FixedCharges. (15)(b) -- Letter of Arthur Andersen LLP regarding unaudited interim financial information. 23 (c) --Charges
**
23.1
Consent ofArthur Andersen LLP.Gary D. Benz, Esq. (included in Exhibit 5.1)
23.2
Consent of Akin Gump Strauss Hauer & Feld LLP (included in Exhibit 5.2)
23.3
Consent of PricewaterhouseCoopers LLP
**
24.1
Power of Attorney (included on signature page)
25.1
Form T-1 Statement of Eligibility of The Bank of New York to act as Trustee under the Indenture
**II-3
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