-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SOCc5nqlwy5QlbYu/L68KM9ERongUDf9L0F/UbllgBT9axtPAwyvpPFjP0QPFZn2 ZuedvhoXUfwk0s7A7MMCPg== 0000950123-96-001028.txt : 19960506 0000950123-96-001028.hdr.sgml : 19960506 ACCESSION NUMBER: 0000950123-96-001028 CONFORMED SUBMISSION TYPE: S-4 PUBLIC DOCUMENT COUNT: 27 FILED AS OF DATE: 19960306 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: OHIO EDISON CO CENTRAL INDEX KEY: 0000073960 STANDARD INDUSTRIAL CLASSIFICATION: 4911 IRS NUMBER: 340437786 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-01489-01 FILM NUMBER: 96531692 BUSINESS ADDRESS: STREET 1: 76 S MAIN ST CITY: AKRON STATE: OH ZIP: 44308 BUSINESS PHONE: 2163845100 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OHIO EDISON FINANCING TRUST II CENTRAL INDEX KEY: 0001009447 STANDARD INDUSTRIAL CLASSIFICATION: 0000 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-01489-01 FILM NUMBER: 96531693 BUSINESS ADDRESS: STREET 1: 76 SOUTH MAIN ST CITY: AKRON STATE: OH ZIP: 44308 BUSINESS PHONE: 2163845100 MAIL ADDRESS: STREET 1: 76 SOUTH MAIN ST CITY: AKRON STATE: OH ZIP: 44308 S-4 1 OHIO EDISON CO & OHIO EDISON FINANCING TRUST II 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 6, 1996 REGISTRATION NO. 33-[ ] AND 33-[ ]-01 - - -------------------------------------------------------------------------------- - - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM S-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------------ OHIO EDISON FINANCING TRUST II OHIO EDISON COMPANY (EXACT NAME OF REGISTRANT AS SPECIFIED (EXACT NAME OF REGISTRANT AS IN ITS CHARTER) SPECIFIED IN ITS CHARTER)
------------------------ DELAWARE OHIO (STATE OR OTHER JURISDICTION OF (STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) INCORPORATION OR ORGANIZATION) TO BE APPLIED FOR 34-0437786 (I.R.S. EMPLOYER IDENTIFICATION NO.) (I.R.S. EMPLOYER IDENTIFICATION NO.)
76 SOUTH MAIN STREET, AKRON, OHIO 44308 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) REGISTRANTS' TELEPHONE NUMBER INCLUDING AREA CODE: (216) 384-5100 ------------------------ N.C. ASHCOM SECRETARY 76 SOUTH MAIN STREET AKRON, OHIO 44308 (216) 384-5504 (NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE) ------------------------ THE COMMISSION IS REQUESTED TO MAIL SIGNED COPIES OF ALL ORDERS, NOTICES AND COMMUNICATIONS TO: 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
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after this Registration Statement becomes effective and all other conditions to the Exchange Offer (the "Offer") described in the enclosed Prospectus have been satisfied or waived. If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box: / / CALCULATION OF REGISTRATION FEE
- - ------------------------------------------------------------------------------------------------------------ - - ------------------------------------------------------------------------------------------------------------ MAXIMUM MAXIMUM AMOUNT OF TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION SECURITIES TO BE REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE - - ------------------------------------------------------------------------------------------------------------ Preferred Securities of Ohio Edison Financing Trust II and Junior Subordinated Debentures of Ohio Edison Company......... 3,600,000(1) $24.875(2) $89,550,000(3) $30,880 - - ------------------------------------------------------------------------------------------------------------ Guarantee of the Preferred Securities by Ohio Edison Company....................... (4) - - ------------------------------------------------------------------------------------------------------------ Total....................................... 3,600,000 $24.875 $89,550,000 $30,880 - - ------------------------------------------------------------------------------------------------------------ - - ------------------------------------------------------------------------------------------------------------
(1) Estimated maximum amount of each class of securities listed above issuable by Ohio Edison Company and Ohio Edison Financing Trust II pursuant to the Offer as described herein. (2) Holders of shares of 7.75% Class A Preferred Stock, $25 par value, will receive one Preferred Security for each share tendered and accepted. (3) Calculated in accordance with Rule 457(f) under the Securities Act of 1933. (4) Includes the rights of holders of the Preferred Securities under the Guarantee and certain back-up undertakings as described in the Registration Statement. Pursuant to Rule 457(n) under the Securities Act of 1933, no fee is payable with respect to the Guarantee. ------------------------ THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. - - -------------------------------------------------------------------------------- - - -------------------------------------------------------------------------------- 2 CROSS REFERENCE SHEET OHIO EDISON COMPANY OHIO EDISON FINANCING TRUST II CROSS REFERENCE SHEET PURSUANT TO ITEM 501(B) OF REGULATION S-K SHOWING LOCATION IN PROSPECTUS OF ITEMS OF FORM S-4
FORM S-4 ITEM NO. CAPTION IN PROSPECTUS ------------------------------------------- -------------------------------------------- 1. Forepart of Registration Statement and Outside Front Cover Page of Prospectus... Outside Front Cover Page; Inside Front Cover Page 2. Inside Front and Outside Back Cover Pages of Prospectus............................ Inside Front Cover Page; Available Information; Incorporation of Certain Documents by Reference; Table of Contents 3. Risk Factors, Ratio of Earnings to Fixed Charges and Other Information............ Prospectus Summary; Risk Factors and Special Considerations Relating to the Offer; Ohio Edison Company; Certain Consolidated Financial Information of Ohio Edison; Ohio Edison Financing Trust II 4. Terms of the Transaction................... Prospectus Summary; Comparison of Preferred Securities and Class A Shares; Certain Consolidated Financial Information of Ohio Edison; The Offer; Description of the Preferred Securities; Description of the Preferred Securities Guarantee; Description of the Subordinated Debentures; Taxation 5. Pro Forma Financial Information............ Not Applicable 6. Material Contacts with the Company Being Acquired................................. Not Applicable 7. Additional Information Required for Reoffering by Persons and Parties Deemed to be Underwriters....................... Not Applicable 8. Interests of Named Experts and Counsel..... Legal Matters 9. Disclosure of Commission Position on Indemnification for Securities Act Liabilities.............................. Not Applicable 10. Information with Respect to S-3 Registrants.............................. Incorporation of Certain Documents by Reference 11. Incorporation of Certain Information by Reference................................ Incorporation of Certain Documents by Reference 12. Information with Respect to S-2 or S-3 Registrants.............................. Not Applicable 13. Incorporation of Certain Information by Reference................................ Not Applicable 14. Information with Respect to Registrants Other than S-3 or S-2 Registrants........ Not Applicable 15. Information with Respect to S-3 Companies................................ Not Applicable 16. Information with Respect to S-2 or S-3 Companies................................ Not Applicable 17. Information with Respect to Companies Other Than S-3 or S-2 Companies................ Not Applicable 18. Information if Proxies, Consents or Authorizations are to be Solicited....... Not Applicable 19. Information if Proxies, Consents or Authorizations are not to be Solicited or in an Exchange Offer..................... Incorporation of Certain Documents by Reference
3 SUBJECT TO COMPLETION PRELIMINARY PROSPECTUS DATED MARCH 6, 1996 PROSPECTUS OHIO EDISON FINANCING TRUST II OFFER TO EXCHANGE ITS [ ]% TRUST ORIGINATED PREFERRED SECURITIES(SM) ("TOPRS"(SM)) (LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY AND GUARANTEED TO THE EXTENT SET FORTH HEREIN BY OHIO EDISON COMPANY) FOR UP TO 3,600,000 OUTSTANDING SHARES OF 7.75% CLASS A PREFERRED STOCK, $25 PAR VALUE, OF OHIO EDISON COMPANY THE OFFER, THE PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON [ ], 1996, UNLESS THE OFFER IS EXTENDED. ------------------------ Ohio Edison Financing Trust II, a Delaware statutory business trust (the "Trust"), hereby offers, upon the terms and subject to the conditions set forth in this Prospectus and the accompanying Letter of Transmittal (the "Letter of Transmittal" which, together with this Prospectus, constitute the "Offer"), to exchange its [ ]% Trust Originated Preferred Securities(SM) ("TOPrS"(SM)), representing preferred undivided beneficial interests in the assets of the Trust (the "Preferred Securities"), for up to 3,600,000 of the outstanding shares of 7.75% Class A Preferred Stock, $25 par value, (the "Class A Shares") of Ohio Edison Company, an Ohio corporation ("Ohio Edison"). Exchanges will be made on the basis of one Preferred Security for each Class A Share validly tendered and accepted for exchange in the Offer. As of the date of this Prospectus, there are 4,000,000 Class A Shares outstanding. Class A Shares not accepted for exchange because of proration will be returned. Concurrent with the issuance of Preferred Securities in exchange for Class A Shares validly tendered in the Offer, Ohio Edison will deposit in the Trust as trust assets its [ ]% Junior Subordinated Debentures Due 2016 (the "Subordinated Debentures"), having an aggregate principal amount equal to the aggregate stated liquidation amount of the Preferred Securities and the Common Securities to be issued by the Trust. ------------------------ SEE "RISK FACTORS AND SPECIAL CONSIDERATIONS RELATING TO THE OFFER" STARTING ON PAGE 18 FOR A DISCUSSION OF CERTAIN FACTORS RELATING TO THE PREFERRED SECURITIES THAT SHOULD BE CONSIDERED BY INVESTORS, INCLUDING THE PERIOD AND CIRCUMSTANCES DURING AND UNDER WHICH PAYMENTS ON THE SUBORDINATED DEBENTURES AND THE PREFERRED SECURITIES MAY BE DEFERRED AND THE RELATED UNITED STATES FEDERAL INCOME TAX CONSEQUENCES. ------------------------ APPLICATION WILL BE MADE TO HAVE THE PREFERRED SECURITIES APPROVED FOR LISTING, SUBJECT TO OFFICIAL NOTICE OF ISSUANCE, ON THE NEW YORK STOCK EXCHANGE, INC. (THE "NYSE"). IF SUCH APPROVAL IS RECEIVED, TRADING OF THE PREFERRED SECURITIES ON THE NYSE IS EXPECTED TO COMMENCE WITHIN A 30-DAY PERIOD AFTER THE INITIAL DELIVERY OF THE PREFERRED SECURITIES. SEE "LISTING AND TRADING OF PREFERRED SECURITIES AND CLASS A SHARES." THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR BY ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ------------------------ Merrill Lynch & Co., has been retained as Dealer Manager to solicit exchanges of Class A Shares for Preferred Securities. See "The Offer -- Dealer Manager; Soliciting Dealers." The Bank of New York has been retained as Exchange Agent in connection with the Offer. Georgeson & Company Inc. has been retained to act as Information Agent to assist in connection with the Offer. ------------------------ The Dealer Manager for the Offer is: MERRILL LYNCH & CO. ------------------------ The date of this Prospectus is [ ], 1996. (SM) "Trust Originated Preferred Securities" and "TOPrS" are service marks of Merrill Lynch & Co. INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. 4 NEITHER THE BOARD OF DIRECTORS OF OHIO EDISON, OHIO EDISON, THE TRUSTEES NOR THE TRUST MAKES ANY RECOMMENDATION TO HOLDERS OF CLASS A SHARES AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING IN THE OFFER. HOLDERS OF CLASS A SHARES ARE URGED TO CONSULT THEIR FINANCIAL AND TAX ADVISORS IN MAKING THEIR DECISIONS ON WHAT ACTION TO TAKE IN LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES. IN ORDER TO PARTICIPATE IN THE OFFER, HOLDERS (AS DEFINED HEREIN) OF CLASS A SHARES MUST SUBMIT A LETTER OF TRANSMITTAL AND COMPLY WITH THE OTHER PROCEDURES FOR TENDERING IN ACCORDANCE WITH THE INSTRUCTIONS CONTAINED HEREIN AND IN THE LETTER OF TRANSMITTAL PRIOR TO THE EXPIRATION DATE (AS DEFINED HEREIN). SEE "THE OFFER -- PROCEDURES FOR TENDERING." For a description of the other terms of the Offer, see "The Offer -- Terms of the Offer", "-- Expiration Date; Extensions; Amendments; Termination", "-- Withdrawal of Tenders" and "-- Acceptance of Shares and Proration." Consummation of the Offer is conditioned on, among other things, receipt of at least 1,200,000 validly tendered Class A Shares, which condition may be waived. Application will be made to have the Preferred Securities approved for listing on the NYSE under the symbol "[ ]", subject to official notice of issuance. In order to satisfy the NYSE listing requirements, acceptance of Class A Shares validly tendered in the Offer is subject to the condition that as of the Expiration Date there be at least 400 record or beneficial holders of at least 1,000,000 Preferred Securities to be issued in exchange for such Class A Shares (the "Minimum Distribution Condition"), which condition may not be waived. See "The Offer -- Expiration Date; Extensions; Amendments; Termination" and "-- Conditions to the Offer." The Trust expressly reserves the right, in its sole discretion, subject to applicable law, to (i) terminate the Offer, and not accept for exchange any Class A Shares and promptly return all Class A Shares upon the failure of any of the conditions specified above or in "The Offer -- Conditions to the Offer", (ii) waive any condition to the Offer (other than the Minimum Distribution Condition) and accept all Class A Shares previously tendered pursuant to the Offer, (iii) extend the Expiration Date of the Offer and retain all Class A Shares tendered pursuant to the Offer until the Expiration Date, subject, however, to all withdrawal rights of holders, see "The Offer -- Withdrawal of Tenders", (iv) amend the terms of the Offer or (v) modify the form of the consideration to be paid pursuant to the Offer. Any amendment applicable to the Offer will apply to all Class A Shares tendered pursuant to the Offer. The minimum period during which the Offer must remain open following material changes in the terms of the Offer or the information concerning the Offer, other than a change in the percentage of securities sought or the price, depends upon the facts and circumstances, including the relative materiality of such terms or information. See "The Offer -- Expiration Date; Extensions; Amendments; Termination." Ohio Edison will own all of the securities representing common undivided beneficial interests in the assets of the Trust (the "Common Securities" and, together with the Preferred Securities, the "Trust Securities"). The Trust exists for the exclusive purposes of (a) (i) issuing its Preferred Securities in exchange for Class A Shares pursuant to the Offer and delivering such Class A Shares to Ohio Edison in consideration for the deposit by Ohio Edison in the Trust as trust assets of Subordinated Debentures having an aggregate principal amount equal to the aggregate par value of such Class A Shares so delivered, and (ii) issuing and selling its Common Securities to Ohio Edison for cash and using the proceeds thereof to purchase as trust assets an equal aggregate principal amount of Subordinated Debentures, and (b) engaging in such other activities as are necessary, convenient or incidental thereto. The Subordinated Debentures will be unsecured obligations of Ohio Edison and will be subordinate and junior in right of payment to certain other indebtedness of Ohio Edison, as described herein. Upon an event of default under the Declaration (as defined herein), the holders of the Preferred Securities will have a preference over the holder of the Common Securities with respect to payments in respect of distributions and payments upon liquidation, redemption and otherwise. See "Prospectus Summary -- Description of Preferred Securities and Subordinated Debentures." Cash distributions on the Preferred Securities will be cumulative from the first day following the Expiration Date (the "Accrual Date") at an annual rate of [ ]% of the liquidation amount of $25 per 2 5 Preferred Security, and will be payable quarterly in arrears on the last day of March, June, September and December of each year, commencing on [ ], 1996 ("distributions"). In addition, holders of the Preferred Securities will be entitled to an additional cash distribution at the rate of 7.75% per annum of the liquidation amount thereof from [ ], 1996 through the Expiration Date ("Pre-Issuance Accrued Distribution") in lieu of dividends accumulating and unpaid after [ ], 1996 on their Class A Shares accepted for exchange, such additional distribution to be made on [ ], 1996 to holders of the Preferred Securities on the record date for such distribution. The distribution payable on [ ], 1996, which will be calculated at the above rate and based on a period that is shorter than a full quarter, will be in the amount of $[ ] per Preferred Security. The distribution rate and the distribution and other payment dates for the Preferred Securities will correspond to the interest rate and interest and other payment dates on the Subordinated Debentures, which will be the sole assets of the Trust. As a result, if principal or interest is not paid on the Subordinated Debentures, no amounts will be paid on the Preferred Securities. The payment of distributions out of moneys held by the Trust, and payments on liquidation of the Trust or the redemption of Preferred Securities, as set forth below, are guaranteed by Ohio Edison (the "Preferred Securities Guarantee") if and to the extent the Trust has funds available therefor. Ohio Edison's obligations under the Preferred Securities Guarantee, taken together with its other obligations described herein, constitute a full and unconditional guarantee by Ohio Edison of payments due on the Preferred Securities. See "Effect of Obligations Under the Subordinated Debentures and the Preferred Securities Guarantee" and "Description of the Preferred Securities Guarantee." The obligations of Ohio Edison under the Preferred Securities Guarantee are subordinate and junior in right of payment to all other liabilities of Ohio Edison and will rank pari passu with the most senior preferred stock issued by Ohio Edison from time to time and with any current or future guarantee entered into by Ohio Edison in respect of any preferred stock of any subsidiary or affiliate of Ohio Edison. If Ohio Edison does not make principal or interest payments on the Subordinated Debentures, the Trust will not have sufficient funds to redeem or make distributions on the Preferred Securities, in which event the Preferred Securities Guarantee will not apply to such redemptions or distributions until the Trust has sufficient funds available therefor. The obligations of Ohio Edison under the Subordinated Debentures are subordinate and junior in right of payment to all present and future Senior Indebtedness (as defined herein) of Ohio Edison. As of December 31, 1995, Ohio Edison had approximately $3.3 billion principal amount of indebtedness for borrowed money constituting Senior Indebtedness on a consolidated basis. Ohio Edison has the right to defer payments of interest on the Subordinated Debentures by extending the interest payment period on the Subordinated Debentures, at any time, for up to 20 consecutive quarters (each an "Extension Period"). If interest payments are so deferred, distributions on the Preferred Securities will also be deferred. Despite such deferral, during an Extension Period distributions will continue to accrue with interest thereon (to the extent permitted by applicable law) at an annual rate of [ ]% per annum, and the interest so accrued at the end of each quarter and remaining unpaid will itself bear interest (to the extent permitted by applicable law) thereafter until paid on the same basis, and holders of Preferred Securities will be required to include deferred interest income in their gross income for United States federal income tax purposes in advance of receipt of the cash interest payments attributable to such deferred income. There could be multiple Extension Periods of varying lengths throughout the term of the Subordinated Debentures. See "Description of the Subordinated Debentures -- Option to Extend Interest Payment Period," "Risk Factors -- Option to Extend Interest Payment Period" and "Taxation -- Original Issue Discount" and "-- Potential Extension of Payment Period on the Subordinated Debentures." In the event of any such deferral, the holders of the Preferred Securities do not have the right to appoint a special representative or trustee or otherwise act to protect their interests. The Subordinated Debentures are redeemable by Ohio Edison (in whole or in part) from time to time, after April 1, 1998, or at any time in certain circumstances upon the occurrence of a Tax Event (as defined herein). If Ohio Edison redeems Subordinated Debentures, the Trust must redeem Trust Securities having an aggregate liquidation amount equal to the aggregate principal amount of the Subordinated Debentures so redeemed at $25 per Trust Security plus accrued and unpaid distributions thereon (the "Redemption Price") to the date fixed for redemption. See "Description of the Preferred Securities -- Mandatory Redemption." 3 6 The Preferred Securities will be redeemed upon maturity of the Subordinated Debentures. The Subordinated Debentures mature on [ ], 2016. In addition, upon the occurrence of a Special Event (as defined herein) arising from a change in law or a change in legal interpretation, unless the Subordinated Debentures are redeemed in the limited circumstances described below, the Trust shall be terminated with the result that the Subordinated Debentures will be distributed to the holders of the Trust Securities, on a pro rata basis, in lieu of any cash distribution. In the case of the occurrence of a Special Event that is a Tax Event, Ohio Edison will have the right in certain circumstances to redeem the Subordinated Debentures, which would result in the redemption by the Trust of the Trust Securities in the same amount on a pro rata basis. If the Subordinated Debentures are distributed to the holders of the Preferred Securities, Ohio Edison will use its best efforts to have the Subordinated Debentures listed on the NYSE or on such other exchange as the Preferred Securities are then listed. See "Description of the Preferred Securities -- Special Event Redemption or Distribution" and "Description of the Subordinated Debentures." In the event of the voluntary or involuntary dissolution, winding-up or termination of the Trust, the holders of the Preferred Securities will be entitled to receive, for each Preferred Security, a liquidation amount of $25 plus accrued and unpaid distributions thereon (including interest, if any, thereon) to the date of payment, unless in connection with such dissolution, winding-up or termination the Subordinated Debentures are distributed to the holders of the Preferred Securities. See "Description of the Preferred Securities -- Liquidation Distribution Upon Termination." Ohio Edison will be the sole obligor under the Subordinated Debentures and the Preferred Securities Guarantee and with respect to the other obligations of Ohio Edison described herein. The Class A Shares are listed and principally traded on the NYSE and the Chicago Stock Exchange under the symbol "OECPrM". On [ ], 1996, the last full day of trading prior to the first public announcement of the Offer, the closing sales price per Class A Share on the NYSE [and the Chicago Stock Exchange] as reported on the Composite Tape was $[ ] [and [ ]], respectively. HOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE CLASS A SHARES. To the extent that Class A Shares are tendered and accepted in the Offer, the terms on which untendered Class A Shares could subsequently be sold could be adversely affected. See "Listing and Trading of Preferred Securities and Class A Shares." Ohio Edison will pay to Soliciting Dealers (as defined herein) designated by the record or beneficial owner, as appropriate, of Class A Shares a solicitation fee of $[ ] per Class A Share validly tendered and accepted for exchange pursuant to the Offer, subject to certain conditions. Soliciting Dealers are not entitled to a solicitation fee for Class A Shares beneficially owned by such Soliciting Dealer. See "The Offer -- Dealer Manager; Soliciting Dealers." NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY OHIO EDISON, THE TRUST, THE TRUSTEES OR THE DEALER MANAGER. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY EXCHANGE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF OHIO EDISON OR THE TRUST SINCE THE RESPECTIVE DATES AS OF WHICH INFORMATION IS GIVEN HEREIN. THE OFFER IS NOT BEING MADE TO (NOR WILL TENDERS BE ACCEPTED FROM OR ON BEHALF OF) HOLDERS OF CLASS A SHARES IN ANY JURISDICTION IN WHICH THE MAKING OF THE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION. HOWEVER, OHIO EDISON AND THE TRUST MAY, AT THEIR DISCRETION, TAKE SUCH ACTION AS THEY MAY DEEM NECESSARY TO MAKE THE OFFER IN ANY SUCH JURISDICTION AND EXTEND THE OFFER TO HOLDERS OF CLASS A SHARES IN SUCH JURISDICTION. IN ANY JURISDICTION THE SECURITIES LAWS OR BLUE SKY LAWS OF WHICH REQUIRE THE OFFER TO BE MADE BY A LICENSED BROKER OR DEALER, THE 4 7 OFFER IS BEING MADE ON BEHALF OF THE TRUST BY THE DEALER MANAGER OR ONE OR MORE REGISTERED BROKERS OR DEALERS WHICH ARE LICENSED UNDER THE LAWS OF SUCH JURISDICTION. AVAILABLE INFORMATION Ohio Edison is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). Such reports, proxy statements and other information filed by Ohio Edison may be inspected and copied at the public reference facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's Regional Offices located at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and 7 World Trade Center, New York, New York 10048. Copies of such materials can be obtained by mail from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. In addition, such material may also be inspected and copied at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005, on which certain of Ohio Edison's securities are listed. Ohio Edison and the Trust have filed with the Commission a registration statement on Form S-4 (herein, together with all amendments and exhibits, referred to as the "Registration Statement") under the Securities Act of 1933, as amended (the "Act"). This Prospectus does not contain all of the information set forth in the Registration Statement, certain parts of which are omitted in accordance with the rules and regulations of the Commission. For further information, reference is hereby made to the Registration Statement. No separate financial statements of the Trust are included herein. Ohio Edison considers that such financial statements would not be material to holders of the Preferred Securities because (i) all of the Common Securities of the Trust are owned by Ohio Edison, a reporting company under the Exchange Act; (ii) the Trust has no independent operations, but exists for the sole purpose of issuing securities representing undivided beneficial interests in the assets of the Trust and investing the proceeds thereof in the Subordinated Debentures (and engaging in those activities necessary, convenient or incidental thereto); and (iii) the obligations of the Trust under the securities issued thereby, to the extent funds are available therefor, are fully and unconditionally guaranteed to the extent set forth herein by Ohio Edison. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents filed by Ohio Edison with the Commission pursuant to the Exchange Act are incorporated herein by reference: 1. Ohio Edison's Annual Report on Form 10-K for the year ended December 31, 1994; 2. Ohio Edison's Quarterly Reports on Form 10-Q for the quarters ended March 31, 1995, June 30, 1995 and September 30, 1995; and 3. Ohio Edison's Current Report on Form 8-K dated September 7, 1995 and its Current Report on Form 8-K dated February 23, 1996 which contains audited financial statements of Ohio Edison for the year ended December 31, 1995. All other documents filed by Ohio Edison pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to the Expiration Date shall be deemed to be incorporated by reference into this Prospectus and to be a part hereof from the respective dates of the filing of such documents. Any statement contained herein or in a document all or a portion of which is incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. 5 8 Ohio Edison will provide without charge to each person, including a beneficial owner, to whom a copy of this Prospectus has been delivered, upon the written or oral request of any such person, a copy of any and all of the documents which are incorporated herein by reference, other than exhibits to such information (unless such exhibits are specifically incorporated by reference into such documents). Requests for such copies should be directed to Ohio Edison Company, Investor Services, 76 South Main Street, Akron, Ohio 44308, telephone number 1-800-736-3402. The information relating to Ohio Edison contained in this document does not purport to be comprehensive and should be read together with the information contained in the incorporated documents. In order to assure timely delivery of the documents, any request should be made not later than five business days prior to the Expiration Date. ------------------------ THIS PROSPECTUS CONTAINS BRIEF SUMMARIES OF CERTAIN MORE DETAILED INFORMATION CONTAINED IN DOCUMENTS INCORPORATED HEREIN BY REFERENCE. SUCH SUMMARIES ARE QUALIFIED IN THEIR ENTIRETY BY THE DETAILED INFORMATION CONTAINED IN THE INCORPORATED DOCUMENTS. ------------------------ 6 9 TABLE OF CONTENTS
PAGE ----- Available Information................................................................ 5 Incorporation of Certain Documents by Reference...................................... 5 Prospectus Summary................................................................... 8 Risk Factors and Special Considerations Relating to the Offer........................ 18 Comparison of Preferred Securities and Class A Shares................................ 23 Ohio Edison Company.................................................................. 27 Certain Consolidated Financial Information of Ohio Edison............................ 28 Ohio Edison Financing Trust II....................................................... 29 The Offer............................................................................ 32 Listing and Trading of Preferred Securities and Class A Shares....................... 39 Transactions and Arrangements Concerning the Offer................................... 40 Fees and Expenses; Transfer Taxes.................................................... 40 Price Range of Class A Shares........................................................ 40 Description of the Preferred Securities.............................................. 41 Description of the Preferred Securities Guarantee.................................... 51 Description of the Subordinated Debentures........................................... 54 Effect of Obligations Under the Subordinated Debentures and the Preferred Securities Guarantee.......................................................................... 61 Description of the Class A Shares.................................................... 62 Taxation............................................................................. 64 Legal Matters........................................................................ 68 Experts.............................................................................. 68 ERISA Considerations................................................................. 69
7 10 PROSPECTUS SUMMARY The following summary does not purport to be complete and is qualified in its entirety by the detailed information contained elsewhere in, or incorporated by reference in, this Prospectus. OHIO EDISON FINANCING TRUST II The Trust is a statutory business trust formed under the Delaware Business Trust Act, as amended (the "Business Trust Act"), on March 5, 1996. The Trust's business is defined in a Declaration of Trust which will be amended and restated in its entirety as of the date the Trust accepts Class A Shares in the Offer (see "The Offer -- Terms of the Offer") (as so amended and restated, the "Declaration") substantially in the form filed as an exhibit to the Registration Statement of which this Prospectus forms a part. The Declaration will be qualified as an indenture under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). Upon issuance of the Preferred Securities, the holders thereof will own all of the issued and outstanding Preferred Securities. See "Description of the Preferred Securities -- Book-Entry; Delivery and Form." Ohio Edison will acquire all of the Common Securities in an aggregate liquidation amount equal to 3% of the total capital of the Trust. The Trust exists for the exclusive purposes of (a) (i) issuing its Preferred Securities in exchange for Class A Shares pursuant to the Offer and delivering such Class A Shares to Ohio Edison in consideration of the deposit by Ohio Edison in the Trust as trust assets of Subordinated Debentures having an aggregate principal amount equal to the aggregate par value of such Class A Shares so delivered, and (ii) issuing and selling its Common Securities to Ohio Edison for cash and using the proceeds thereof to purchase as trust assets an equal aggregate principal amount of Subordinated Debentures and (b) engaging in such other activities as are necessary, convenient or incidental thereto. The rights of the holders of the Preferred Securities, including economic rights, rights to information and voting rights, are set forth in the Declaration, the Business Trust Act and the Trust Indenture Act. See "Description of the Preferred Securities." The Trust's business and affairs will be conducted by the trustees (the "Company Trustees") appointed by Ohio Edison, as holder of the Common Securities. The duties and obligations of the Company Trustees shall be governed by the Declaration and the Business Trust Act and, in the case of the Property Trustee (as defined below), the Trust Indenture Act. Pursuant to the Declaration, the number of Company Trustees will initially be four. Two of the Company Trustees (the "Regular Trustees") will be persons who are employees or officers of, or affiliated with, Ohio Edison. A third trustee will be a financial institution unaffiliated with Ohio Edison that will serve as property trustee (the "Property Trustee") under the Declaration and as indenture trustee for purposes of the Trust Indenture Act. The Bank of New York will act as the Property Trustee until removed or replaced by the holder of the Common Securities. The Bank of New York will also act as indenture trustee under the Preferred Securities Guarantee (the "Preferred Guarantee Trustee"). See "Description of the Preferred Securities Guarantee." The fourth trustee of the Trust will be a financial institution or an affiliate thereof which maintains a principal place of business in the State of Delaware (the "Delaware Trustee"). The Bank of New York (Delaware) will act as the Delaware Trustee. The Property Trustee will hold title to the Subordinated Debentures for the benefit of the Trust and holders of the Trust Securities and will have the power to exercise all rights, powers and privileges under the Indenture (as defined herein) as the holder of the Subordinated Debentures. In addition, the Property Trustee will maintain exclusive control of a segregated non-interest bearing trust account (the "Property Account") to hold all payments made in respect of the Subordinated Debentures for the benefit of the Trust and holders of the Trust Securities. The Property Trustee will make payments of distributions and payments on liquidation, redemption and otherwise to the holders of the Trust Securities out of funds from the Property Account. The Preferred Guarantee Trustee will hold the Preferred Securities Guarantee for the benefit of the holders of the Preferred Securities. Ohio Edison, as the holder of all the Common Securities, will have the right to appoint, remove or replace any Company Trustee and to increase or decrease the number of Company Trustees, provided that the number of Company Trustees shall be at least three if the Property Trustee is not also the Delaware Trustee. Ohio Edison will pay all fees, expenses, debts and obligations (other than with respect to the Trust Securities) related to the Trust and the offering of the Trust Securities. 8 11 CERTAIN POTENTIAL BENEFITS AND RISKS TO INVESTORS Prospective exchanging holders of Class A Shares who plan to participate in the Offer should carefully review the information contained elsewhere in this Prospectus prior to making a decision regarding the Offer and should particularly consider the following matters: POTENTIAL BENEFITS TO EXCHANGING HOLDERS - The cash distributions rate on the Preferred Securities will be [ ] basis points greater than the dividend rate on the Class A Shares. See "Comparison of Preferred Securities and Class A Shares." - Although the obligations of Ohio Edison under the Subordinated Debentures and the Preferred Securities Guarantee are unsecured and will be subordinated and junior in right of payment to all Senior Indebtedness (as herein defined) of Ohio Edison, they will be senior to all capital stock of Ohio Edison now or hereafter issued by Ohio Edison (including the Class A Shares), except that Ohio Edison's obligations under the Preferred Securities Guarantee will rank pari passu with the most senior preferred or preference stock issued by Ohio Edison from time to time and with any current or future guarantee by Ohio Edison in respect of any preferred or preference stock of any subsidiary or affiliate of Ohio Edison. - While no dividends are required to be paid with respect to the Class A Shares, interest payments on the Subordinated Debentures and therefore distributions on the Preferred Securities may not be deferred for more than 20 consecutive quarterly interest periods. Any Extension Period with respect to payment of interest on the Subordinated Debentures will also apply to distributions with respect to the Preferred Securities. Moreover, Ohio Edison may defer interest payments on the Subordinated Debentures only if it does not declare or pay dividends on, or redeem, purchase or make a distribution or liquidation payment with respect to, any of its capital stock (except under certain circumstances). See "Description of the Preferred Securities." However, to date, Ohio Edison has made each quarterly dividend payment with respect to the Class A Shares on the scheduled dividend payment date. In addition, such dividends accrue whether or not they are declared. See "Description of the Class A Shares -- Dividends." - The Offer will allow Ohio Edison to achieve certain tax efficiencies because, in contrast to dividend payments with respect to the Class A Shares which are not deductible by Ohio Edison, Ohio Edison will be able to deduct interest payments on the Subordinated Debentures for United States federal income tax purposes. See "The Offer -- Purpose of the Offer." - So long as payments of interest and other payments are made when due on the Subordinated Debentures, such payments will be sufficient to cover cash distributions and other payments made on the Trust Securities because (i) the aggregate principal amount of Subordinated Debentures will be equal to the sum of (x) the aggregate stated liquidation amount of the Preferred Securities issued by the Trust in exchange for the Class A Shares accepted in the Offer and (y) the amount of proceeds received by the Trust from the issuance of the Common Securities to Ohio Edison, which proceeds will be used by the Trust to purchase an equal principal amount of Subordinated Debentures, (ii) the interest rate and interest and other payment dates on the Subordinated Debentures will match the distribution rate and distribution and other payment dates for the Trust Securities, (iii) Ohio Edison shall pay for all costs, expenses, debts and obligations of the Trust (other than with respect to the Trust Securities), and (iv) the Declaration further provides that the Regular Trustees shall not take any action that is inconsistent with the purposes of the Trust. See "Ohio Edison Financing Trust II," "Description of the Preferred Securities," "Description of the Subordinated Debentures" and "Effect of Obligations Under the Subordinated Debentures and the Preferred Securities Guarantee." - The Trust will have no independent operations and will exist for the sole purposes of effecting the Offer and issuing the Trust Securities as described herein and owning and holding the Subordinated Debentures. See "Ohio Edison Financing Trust II." - The Property Trustee will have the power to exercise all rights, powers and privileges under the Indenture (as defined herein) as the holder of the Subordinated Debentures, including its rights to enforce Ohio Edison's obligations under the Subordinated Debentures upon the occurrence of an Indenture Event of 9 12 Default (as defined herein). Upon the occurrence of an Event of Default under the Preferred Securities Guarantee, the Preferred Guarantee Trustee shall enforce the Preferred Securities Guarantee on behalf of the holders of the Preferred Securities. In addition, the holders of the Preferred Securities will have certain rights to direct the Property Trustee and the Preferred Guarantee Trustee with respect to certain matters under the Declaration and the Preferred Securities Guarantee, respectively. If the Preferred Guarantee Trustee fails to enforce the Preferred Securities Guarantee, any holder of Preferred Securities may institute a legal proceeding against Ohio Edison to enforce the Preferred Securities Guarantee. See "Description of the Preferred Securities" and "Description of the Preferred Securities Guarantee." POTENTIAL RISKS TO EXCHANGING HOLDERS - Participation in the Offer will be a taxable event for holders of Class A Shares. See "Risk Factors and Special Considerations Relating to the Offer -- Exchange of Class A Shares for Preferred Securities Is a Taxable Event." - The obligations of Ohio Edison under (i) the Subordinated Debentures and the Preferred Securities Guarantee are subordinate in right of payment to all Senior Indebtedness (as defined herein) of Ohio Edison, and (ii) the Preferred Securities Guarantee is also subordinate in right of payment to the Subordinated Debentures. See "Risk Factors and Special Considerations Relating to the Offer -- Ranking of Subordinated Obligations Under Preferred Securities Guarantee and Subordinated Debentures"; and "-- Trust Distributions Dependent on Ohio Edison's Payments on Subordinated Debentures." - If Ohio Edison were to default in its obligation to pay amounts payable on the Subordinated Debentures, the Trust would lack available funds for the payment of distributions or amounts payable on redemption of the Preferred Securities or otherwise. In addition, the interest payment period on the Subordinated Debentures may be extended from time to time under certain circumstances by Ohio Edison, in its sole discretion, for up to 20 consecutive quarterly interest periods. See "Risk Factors and Special Considerations Relating to the Offer -- Ranking of Subordinated Obligations Under Preferred Securities Guarantee and Subordinated Debentures"; "-- Rights Under the Preferred Securities Guarantee"; "-- Enforcement of Certain Rights by Holders of Preferred Securities"; "-- Option to Extend Interest Payment Period"; and "-- Trading Price of Preferred Securities." - Should Ohio Edison not make interest or other payments on the Subordinated Debentures for any reason, including as a result of Ohio Edison's election to defer payments of interest on the Subordinated Debentures by extending the interest payment period on the Subordinated Debentures, the Trust will not make distributions or other payments on the Trust Securities. In such an event, holders of the Preferred Securities would not be able to rely on the Preferred Securities Guarantee since the Preferred Securities Guarantee covers distributions and other payments on the Preferred Securities only if and to the extent that Ohio Edison has made a payment to the Trust of interest or principal on the Subordinated Debentures deposited in the Trust as trust assets. See "Risk Factors and Special Considerations Relating to the Offer -- Rights Under the Preferred Securities Guarantee"; and "-- Enforcement of Certain Rights by Holders of Preferred Securities." - If Ohio Edison elects to defer payments of interest on the Subordinated Debentures by extending the interest period on the Subordinated Debentures, distributions on the Preferred Securities would also be deferred but the Trust would continue to accrue interest income (as original issue discount) in respect of such Subordinated Debentures which would be taxable to beneficial owners of Preferred Securities. As a result, beneficial owners of Preferred Securities during an Extension Period would include their pro rata share of the interest in gross income in advance of the receipt of cash. See "Risk Factors and Special Considerations Relating to the Offer -- Option to Extend Interest Payment Period"; and "Taxation -- Original Issue Discount." - Holders of Preferred Securities will have limited voting rights and will not be entitled to vote to appoint, remove or replace, or to increase or decrease the number of, Company Trustees, which voting rights are vested exclusively in the holder of the Common Securities. See "Risk Factors and Special Considerations Relating to the Offer -- Limited Voting Rights" and "Description of the Preferred Securities -- Voting Rights." Holders 10 13 of Class A Shares also have limited voting rights. However, if four quarterly dividends payable on the Class A Shares or any series of Ohio Edison's Preferred Stock, $100 Par Value (the "$100 Preferred Stock") shall be in default, in whole or in part, and thereafter until all defaults have been cured, the holders of the Class A Shares and the $100 Preferred Stock shall have the exclusive right, voting separately and as a single class, each share of $100 Preferred Stock being counted as one and each Class A Share being counted as one-quarter, (i) to elect the smallest number of directors which shall constitute a majority of the directors of Ohio Edison, and (ii) to vote in all matters with respect to the governing of the affairs of Ohio Edison other than the election of directors. See "Risk Factors and Special Considerations Relating to the Offer -- Limited Voting Rights." - While the Class A Shares are not redeemable on or prior to April 1, 1998, the Subordinated Debentures (and thus the Preferred Securities), though generally not redeemable on or prior to April 1, 1998 as well, in certain circumstances will be redeemable at any time prior to their maturity upon the occurrence of a Tax Event (as defined herein). See "Risk Factors and Special Considerations Relating to the Offer -- Special Event Redemption or Distribution." - While dividends with respect to Class A Shares are eligible for the dividends received deduction for corporate holders, distributions on the Preferred Securities are not eligible for the dividends received deduction for corporate holders. - While the Preferred Securities are expected to be approved for listing on the NYSE, subject to official notice of issuance, the Preferred Securities are a new issue of securities with no established trading market. In addition, liquidity of the Preferred Securities will be affected by the number of Class A Shares exchanged in the Offer. See "Risk Factors and Special Considerations Relating to the Offer -- Lack of Established Trading Market for Preferred Securities." - Under certain circumstances, Subordinated Debentures could be distributed to holders of Trust Securities. In such event, the Trust would be dissolved and the holders would become holders of Subordinated Debentures. While Ohio Edison will use its best efforts in such a situation to have the Subordinated Debentures listed on the NYSE, there is no guarantee that such listing will take place or that a market will exist for such Subordinated Debentures. See "Risk Factors and Special Considerations Relating to the Offer -- Special Event Redemption or Distribution." POTENTIAL RISKS TO NON-EXCHANGING HOLDERS - The liquidity and trading market for untendered Class A Shares could be adversely affected to the extent Class A Shares are tendered and accepted in the Offer. See "Risk Factors and Special Considerations Relating to the Offer -- Reduced Trading Market for Class A Shares." - The Subordinated Debentures will rank senior in right of payment to the untendered Class A Shares. See "Risk Factors and Special Considerations Relating to the Offer -- Ranking of Subordinated Obligations Under Preferred Securities Guarantee and Subordinated Debentures." THE OFFER PURPOSE OF THE OFFER The purpose of the Offer is to refinance the Class A Shares with the Preferred Securities to achieve certain tax efficiencies while preserving Ohio Edison's flexibility with respect to future financings. This refinancing will permit Ohio Edison to deduct interest payable on the Subordinated Debentures for United States federal income tax purposes; dividends payable on the Class A Shares are not deductible. See "The Offer -- Purpose of the Offer." TERMS OF THE OFFER Upon the terms and subject to the conditions set forth herein and in the Letter of Transmittal, the Trust hereby offers to exchange its Preferred Securities for up to 3,600,000 of the outstanding Class A Shares of 11 14 Ohio Edison. Exchanges will be made on the basis of one Preferred Security for each Class A Share validly tendered and accepted for exchange in the Offer. See "The Offer -- Terms of the Offer." EXPIRATION DATE; WITHDRAWALS Upon the terms and conditions of the Offer, including the provisions relating to proration described herein, the Trust will accept for exchange up to 3,600,000 Class A Shares validly tendered and not withdrawn prior to 12:00 Midnight, New York City time, on [ ], 1996, or if the Offer is extended by the Trust, in its sole discretion, the latest date and time to which the Offer has been extended (the "Expiration Date"). Tenders of Class A Shares pursuant to the Offer may be withdrawn at any time prior to the Expiration Date and, unless accepted for exchange by the Trust, may be withdrawn at any time after 40 Business Days (as defined herein) after the date of this Prospectus. Class A Shares not accepted because of proration will be returned to the tendering holders at the Trust's expense as promptly as practicable following the Expiration Date. A "Business Day" shall mean any day other than a day on which banking institutions in The City of New York are authorized or required by law to close. See "The Offer -- Expiration Date; Extensions; Amendments; Termination", "-- Withdrawal of Tenders" and "-- Acceptance of Shares and Proration." Tenders must be made to the Exchange Agent in order to be valid. CONDITIONS TO THE OFFER; EXTENSIONS; AMENDMENTS; TERMINATION Consummation of the Offer is conditioned on, among other things, (i) receipt of at least 1,200,000 validly tendered Class A Shares, which condition may be waived by the Trust, and (ii) tenders by a sufficient number of holders of Class A Shares to meet the Minimum Distribution Condition, which condition may not be waived. See "The Offer -- Conditions to the Offer" and "-- Expiration Date; Extensions; Amendments; Termination." The Trust expressly reserves the right, in its sole discretion, subject to applicable law, to (i) terminate the Offer, and not accept for exchange any Class A Shares and promptly return all Class A Shares, upon the failure of any of the conditions referred to above, (ii) waive any condition to the Offer (other than the Minimum Distribution Condition) and accept all Class A Shares previously tendered pursuant to the Offer, (iii) extend the Expiration Date of the Offer and retain all Class A Shares tendered pursuant to the Offer until the Expiration Date, subject, however, to all withdrawal rights of holders, see "The Offer -- Withdrawal of Tenders", (iv) amend the terms of the Offer or (v) modify the form of the consideration to be paid pursuant to the Offer. Any amendment applicable to the Offer will apply to all Class A Shares tendered pursuant to the Offer. The minimum period during which the Offer must remain open following material changes in the terms of the Offer or the information concerning the Offer, other than a change in the percentage of securities sought or the price, depends upon the facts and circumstances, including the relative materiality of such terms or information. See "The Offer -- Conditions to the Offer" and "-- Expiration Date; Extensions; Amendments; Termination." PROCEDURES FOR TENDERING Each holder of Class A Shares wishing to participate in the Offer must (i) properly complete and sign the Letter of Transmittal or a facsimile thereof (all references in this Prospectus to the Letter of Transmittal shall be deemed to include a facsimile thereof) in accordance with the instructions contained herein and in the Letter of Transmittal, together with any required signature guarantees, and deliver the same to The Bank of New York, as Exchange Agent, at one of its addresses set forth on the back cover page hereof, prior to the Expiration Date and either (a) certificates for the Class A Shares must be received by the Exchange Agent at such address or (b) such Class A Shares must be transferred pursuant to the procedures for book-entry transfer described herein and a confirmation of such book-entry transfer must be received by the Exchange Agent, in each case prior to the Expiration Date, or (ii) comply with the guaranteed delivery procedures described herein. See "The Offer -- Procedures for Tendering." IN ORDER TO PARTICIPATE IN THE OFFER, HOLDERS OF CLASS A SHARES MUST SUBMIT A LETTER OF TRANSMITTAL AND COMPLY WITH THE OTHER PROCEDURES FOR 12 15 TENDERING IN ACCORDANCE WITH THE INSTRUCTIONS CONTAINED HEREIN AND IN THE LETTER OF TRANSMITTAL PRIOR TO THE EXPIRATION DATE. LETTERS OF TRANSMITTAL, CLASS A SHARES AND ANY OTHER REQUIRED DOCUMENTS SHOULD BE SENT ONLY TO THE EXCHANGE AGENT -- NOT TO OHIO EDISON, THE TRUST, THE TRUSTEES, THE DEALER MANAGER OR THE INFORMATION AGENT. SPECIAL PROCEDURE FOR BENEFICIAL OWNERS Any beneficial owner whose Class A Shares are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and who wishes to tender such Class A Shares should contact such registered holder promptly and instruct such registered holder to tender on such beneficial owner's behalf. If such beneficial owner wishes to tender on its own behalf, such owner must, prior to completing and executing a Letter of Transmittal and delivering its Class A Shares, either make appropriate arrangements to register ownership of the Class A Shares in such owner's name or obtain a properly completed stock power from the registered holder. The transfer of registered ownership may take considerable time and may not be able to be completed prior to the Expiration Date. See "The Offer -- Procedures for Tendering -- Special Procedure for Beneficial Owners." GUARANTEED DELIVERY PROCEDURES If a holder of Class A Shares desires to accept the Offer and time will not permit a Letter of Transmittal or Class A Shares to reach the Exchange Agent before the Expiration Date or the procedure for book-entry transfer cannot be completed on a timely basis, a tender may be effected in accordance with the guaranteed delivery procedures set forth in "The Offer -- Procedures for Tendering -- Guaranteed Delivery." ACCEPTANCE OF SHARES AND PRORATION Upon the terms and subject to the conditions of the Offer, including the Minimum Distribution Condition, if 3,600,000 or fewer Class A Shares have been validly tendered and not withdrawn prior to the Expiration Date, the Trust will accept for exchange all such Class A Shares. Upon the terms and subject to the conditions of the Offer, if more than 3,600,000 Class A Shares (or, if decreased as described herein, such lesser number as the Trust may elect to purchase pursuant to the Offer) have been validly tendered and not withdrawn prior to the Expiration Date, the Trust will accept for exchange Class A Shares from each tendering holder on a pro rata basis, subject to adjustment to avoid the acceptance for exchange of fractional shares. If the Trust decides, in its sole discretion, to increase or decrease the number of Class A Shares sought in the Offer or to increase or decrease the consideration offered to holders of Class A Shares, and if the Offer is scheduled to expire less than ten Business Days from and including the date that notice of such increase or decrease is first published, sent or given in the manner specified in "The Offer -- Terms of the Offer" and "-- Expiration Date; Extensions; Amendments; Termination," then the Offer will remain open for a minimum of ten Business Days from and including the date of such notice. All Class A Shares not accepted pursuant to the Offer, including shares not purchased because of proration, will be returned to the tendering holders at the Trust's expense as promptly as practicable following the Expiration Date. DELIVERY OF PREFERRED SECURITIES Subject to the terms and conditions of the Offer, the delivery of the Preferred Securities to be issued pursuant to the Offer will occur as promptly as practicable following the Expiration Date. See "The Offer -- Terms of the Offer" and "-- Expiration Date; Extensions; Amendments; Termination." If proration of tendered Class A Shares is required, because of the difficulty in determining the number of Class A Shares validly tendered (including shares tendered by the guaranteed delivery procedures described in 13 16 "The Offer -- Procedures for Tendering"), the Trust does not expect that it would be able to announce the final proration factor or to commence the exchange for any shares of Class A Shares pursuant to the Offer until approximately five Business Days after the Expiration Date. Preliminary results of the proration will be announced by press release as promptly as practicable after the Expiration Date. Holders of Class A Shares may obtain such preliminary information from the Dealer Manager or the Information Agent and may also be able to obtain such information from their brokers. Until the final proration factors are known, the Trust will not issue any Preferred Securities in exchange for any Class A Shares accepted for exchange pursuant to the Offer or return Class A Shares delivered to the Exchange Agent but not tendered or return Class A Shares tendered but not accepted for exchange because of proration. DESCRIPTION OF PREFERRED SECURITIES AND SUBORDINATED DEBENTURES PREFERRED SECURITIES OFFERED 3,600,000 [ ]% Trust Originated Preferred Securities evidencing preferred undivided beneficial interests in the assets of the Trust are offered hereby. Holders of the Preferred Securities are entitled to receive cumulative cash distributions at an annual rate of [ ]% of the liquidation amount of $25 per Preferred Security, accruing from [ ], 1996 and payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year, commencing on [ ], 1996. [The distribution payable on [ ], 1996, which will be calculated at the above rate and based on a period that is shorter than a full quarter, will be in the amount of $[ ] per Preferred Security.] In addition, holders of Preferred Securities will be entitled to an additional cash distribution at the rate of 7.75% per annum of the liquidation amount thereof from [ ], 1996 through the Expiration Date in lieu of dividends accumulating and unpaid after [ ], 1996 on their Class A Shares accepted for exchange, such additional distribution to be made on [ ], 1996 to holders of the Preferred Securities on the record date for such distribution. The distribution rate and the distribution and other payment dates for the Preferred Securities will correspond to the interest rate and interest and other payment dates on the Subordinated Debentures, which will be the sole assets of the Trust. As a result, if principal or interest is not paid on the Subordinated Debentures, no amounts will be paid on the Preferred Securities. See "Description of the Preferred Securities." SUBORDINATED DEBENTURES There will be deposited in the Trust as trust assets (i) Subordinated Debentures having an aggregate principal amount equal to the aggregate stated liquidation amount of the Preferred Securities issued by the Trust in exchange for the Class A Shares accepted in the Offer and (ii) Subordinated Debentures having an aggregate principal amount equal to the amount of proceeds received by the Trust from the sale of the Common Securities to Ohio Edison. The Subordinated Debentures will be subordinate and junior in right of payment to all Senior Indebtedness of Ohio Edison. See "Description of the Subordinated Debentures -- Subordination." PREFERRED SECURITIES GUARANTEE Payment of distributions out of moneys held by the Trust, and payments on liquidation of the Trust or the redemption of Preferred Securities, are guaranteed by Ohio Edison if and to the extent the Trust has funds available therefor. If Ohio Edison does not make principal or interest payments on the Subordinated Debentures, the Trust will not have sufficient funds to redeem or make distributions on the Preferred Securities, in which event the Preferred Securities Guarantee will not apply to such redemptions or distributions until the Trust has sufficient funds available therefor. Ohio Edison's obligations under the Preferred Securities Guarantee, taken together with its other obligations described herein, constitute a full and unconditional guarantee by Ohio Edison of payments due on the Preferred Securities. See "Effect of 14 17 Obligations Under the Subordinated Debentures and the Preferred Securities Guarantee" and "Description of the Preferred Securities Guarantee." The obligations of Ohio Edison under the Preferred Securities Guarantee are subordinate and junior in right of payment to all other liabilities of Ohio Edison and will rank pari passu with the most senior preferred stock issued by Ohio Edison from time to time and with any guarantee that may be entered into by Ohio Edison in respect of any preferred stock of any subsidiary or affiliate of Ohio Edison. See "Risk Factors and Special Considerations Relating to the Offer -- Ranking of Obligations Under the Preferred Securities Guarantee and the Subordinated Debentures" and "-- Rights under the Preferred Securities Guarantee" and "Description of the Preferred Securities Guarantee." INTEREST DEFERRAL Ohio Edison has the right to defer payments of interest on the Subordinated Debentures by extending the interest payment period on the Subordinated Debentures, at any time and from time to time, for up to 20 consecutive quarters. If interest payments on the Subordinated Debentures are so deferred, distributions on the Preferred Securities will also be deferred. However, the right to defer payments of interest will not apply to Pre-Issuance Accrued Distribution. During any deferral, distributions will continue to accrue interest at the rate per annum of [ ]% and the interest so accrued at the end of each quarter and remaining unpaid will itself bear interest (to the extent permitted by law) thereafter until paid on the same basis. There could be multiple Extension Periods of varying lengths throughout the term of the Subordinated Debentures. During an Extension Period, holders of Preferred Securities will be required to include deferred interest income in their gross income in advance of receipt of the cash interest payments attributable thereto. See "Description of the Preferred Securities -- Voting Rights," "Description of the Subordinated Debentures -- Option to Extend Interest Payment Period" and "Taxation -- Original Issue Discount." MANDATORY REDEMPTION OF PREFERRED SECURITIES Unless previously redeemed pursuant to the optional or special redemption provisions described below, each of the outstanding Preferred Securities will be redeemed by the Trust, in cash, on [ ], 2016, which is the maturity date of the Subordinated Debentures, at the Redemption Price, which is equal to (a) $25 per Preferred Security plus (b) accrued and unpaid distributions thereon to the date of redemption. See "Description of the Preferred Securities -- Mandatory Redemption." OPTIONAL AND SPECIAL REDEMPTION The Subordinated Debentures are redeemable by Ohio Edison in whole or in part, from time to time, after April 1, 1998, or at any time in certain circumstances upon the occurrence of a Tax Event, in each case at a price equal to (a) 100% of the principal amount of Subordinated Debentures to be redeemed plus (b) accrued and unpaid interest thereon to the date of redemption. If Ohio Edison redeems Subordinated Debentures, the Trust must redeem Trust Securities, including the Preferred Securities, having an aggregate liquidation amount equal to the aggregate principal amount of the Subordinated Debentures so redeemed at the Redemption Price. See "Description of the Preferred Securities -- Mandatory Redemption" and "-- Special Event Redemption or Distribution." VOTING RIGHTS Holders of Preferred Securities will have limited voting rights and will not be entitled to vote to appoint, remove or replace, or to increase or decrease the number of, Company Trustees, which voting rights are vested exclusively in the holder of the Common Securities. See "Description of the Preferred Securities -- Voting Rights." LISTING Application has been made to have the Preferred Securities approved for listing, subject to official notice of issuance, on the NYSE under the symbol "OECPrM." Trading of the Preferred Securities on the NYSE is expected to commence within a 30-day period after the initial delivery of the Preferred Securities. 15 18 CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS The exchange of Class A Shares for Preferred Securities pursuant to the Offer will be a taxable event. Generally, gain or loss will be recognized by an exchanging holder in an amount equal to the difference between the fair market value on the Expiration Date of the Preferred Securities received in the exchange (which will reflect the Pre-Issuance Accrued Distribution) and the holder's tax basis in the Class A Shares exchanged therefor. See "Taxation -- Exchange of Class A Shares for Preferred Securities." The Subordinated Debentures will be treated as having been issued with "original issue discount" ("OID") for United States federal income tax purposes. Because the Trust will be classified as a grantor trust for United States federal income tax purposes, each holder will be considered the owner of a pro rata portion of the Subordinated Debentures held by the Trust. As a result, holders of Preferred Securities will be required to include their pro rata share of OID in gross income as it accrues on the Subordinated Debentures in advance of the receipt of cash. Generally, all of a holder's taxable interest income with respect to the Subordinated Debentures will be accounted for as OID and actual distributions of stated interest will not be separately reported as taxable income. See "Taxation -- Classification of the Trust," "-- Original Issue Discount" and "-- Potential Extension of Payment Period on the Subordinated Debentures." While dividends on the Class A Shares are eligible for the dividends-received deduction for corporate holders, distributions on the Preferred Securities are not eligible for the dividends-received deduction for corporate holders. The Preferred Securities may trade at a price that does not fully reflect the value of accrued but unpaid interest with respect to the underlying Subordinated Debentures. A holder who disposes of Preferred Securities between record dates for payments of distributions thereon (and consequently does not receive a cash distribution from the Trust for the period prior to such disposition) will nevertheless be required to include as ordinary income accrued but unpaid interest on the Subordinated Debentures through the date of disposition and to add such amount to such holder's adjusted tax basis in the Preferred Securities disposed of. Accordingly, such a holder will recognize a capital loss to the extent the selling price of the Preferred Securities (which may not fully reflect the amount of accrued but unpaid interest) is less than the holder's adjusted tax basis in the Preferred Securities (which will reflect accrued but unpaid interest). Subject to certain limited exceptions, capital losses cannot be applied to offset ordinary income for United States federal income tax purposes. See "Taxation -- Original Issue Discount" and "-- Disposition of the Preferred Securities." ACCOUNTING FOR EXCHANGE The financial statements of the Trust will be included in the consolidated financial statements of Ohio Edison. The Preferred Securities will be disclosed in Ohio Edison's consolidated balance sheet between the liabilities and stockholders' equity sections, and supplemented by certain disclosures in Ohio Edison's notes to the financial statements. UNTENDERED SHARES Holders of Class A Shares who do not tender their Class A Shares in the Offer or whose Class A Shares are not accepted for exchange will continue to hold such Class A Shares and will be entitled to all the rights and preferences, and will be subject to all of the limitations, applicable thereto. To the extent that Class A Shares are tendered and accepted in the Offer, the terms on which untendered Class A Shares could subsequently be sold could be adversely affected. See "Risk Factors and Special Considerations Relating to the Offer -- Reduced Trading Market for Class A Shares." 16 19 EXCHANGE AGENT AND INFORMATION AGENT The Bank of New York has been appointed as Exchange Agent in connection with the Offer. Questions and requests for assistance, requests for additional copies of this Prospectus or of the Letter of Transmittal and requests for Notices of Guaranteed Delivery should be directed to Georgeson & Company Inc., which has been retained by Ohio Edison and the Trust to act as Information Agent for the Offer. The addresses and telephone numbers of the Exchange Agent and the Information Agent are set forth in "The Offer -- Exchange Agent and Information Agent" and on the outside back cover of this Prospectus. DEALER MANAGER Merrill Lynch & Co. has been retained as Dealer Manager in connection with the Offer. For information regarding fees payable to the Dealer Manager and Soliciting Dealers (as defined herein), see "The Offer -- Dealer Manager; Soliciting Dealers." 17 20 RISK FACTORS AND SPECIAL CONSIDERATIONS RELATING TO THE OFFER Prospective exchanging holders of Class A Shares who plan to participate in the Offer should carefully consider, in addition to the other information set forth elsewhere in this Prospectus, the following: EXCHANGE OF CLASS A SHARES FOR PREFERRED SECURITIES IS A TAXABLE EVENT The exchange of Class A Shares for Preferred Securities pursuant to the Offer will be a taxable event. Generally, gain or loss will be recognized by an exchanging holder in an amount equal to the difference between the fair market value on the Expiration Date of the holder's Preferred Securities received in the exchange, (which will reflect the Pre-Issuance Accrued Distribution) and the holder's tax basis in the Class A Shares exchanged therefor. See "Taxation -- Exchange of Class A Shares for Preferred Securities." All holders of Class A Shares are advised to consult their tax advisors regarding the United States federal, state, local and foreign tax consequences of the exchange of Class A Shares for Preferred Securities and the ownership and disposition of Preferred Securities. CORPORATE HOLDERS OF PREFERRED SECURITIES NOT ENTITLED TO DIVIDENDS RECEIVED DEDUCTION While dividends with respect to the Class A Shares are eligible for the dividends-received deduction for corporate holders, distributions on the Preferred Securities are not eligible for the dividends-received deduction for corporate holders. RANKING OF OBLIGATIONS UNDER THE PREFERRED SECURITIES GUARANTEE AND THE SUBORDINATED DEBENTURES Ohio Edison's obligations under the Preferred Securities Guarantee are subordinate and junior in right of payment to all liabilities of Ohio Edison and pari passu with the most senior preferred stock issued by Ohio Edison from time to time and with any current or future guarantee entered into by Ohio Edison in respect of any preferred stock of any subsidiary or affiliate of Ohio Edison. The obligations of Ohio Edison under the Subordinated Debentures are subordinate and junior in right of payment to all present and future Senior Indebtedness (as defined herein) of Ohio Edison but senior to all of Ohio Edison's capital stock (including the Class A Shares). No payment of principal of (including redemption payments), premium, if any, or interest on the Subordinated Debentures may be made if (a) any Senior Indebtedness of Ohio Edison is not paid when due and any applicable grace period with respect to such default has ended with such default not being cured or waived or ceasing to exist, or (b) the maturity of any Senior Indebtedness has been accelerated because of a default. At December 31, 1995, Ohio Edison had approximately $3.3 billion principal amount of indebtedness for borrowed money constituting Senior Indebtedness on a consolidated basis. There are no terms in the Preferred Securities, the Subordinated Debentures or the Preferred Securities Guarantee that limit Ohio Edison's ability to incur additional indebtedness, including indebtedness that ranks senior to the Subordinated Debentures or the Preferred Securities Guarantee. See "Description of the Preferred Securities Guarantee" and "Description of the Subordinated Debentures -- Subordination." RIGHTS UNDER THE PREFERRED SECURITIES GUARANTEE The Preferred Securities Guarantee guarantees to the holders of the Preferred Securities the payment of (i) any accrued and unpaid distributions which are required to be paid on the Preferred Securities, to the extent the Trust shall have funds available therefor, (ii) the Redemption Price, which includes all accrued and unpaid distributions to the date of the redemption, to the extent the Trust has funds available therefor, with respect to any Preferred Securities called for redemption by the Trust and (iii) upon a voluntary or involuntary dissolution, winding-up or termination of the Trust (other than in connection with the distribution of Subordinated Debentures to the holders of Preferred Securities), the lesser of (a) the aggregate of the liquidation amount and all accrued and unpaid distributions on the Preferred Securities to the date of payment thereof, to the extent the Trust has funds available therefor, and (b) the amount of assets of the Trust remaining available for distribution to holders of Preferred Securities in liquidation of the Trust. Holders of the Preferred Securities have the right to proceed directly against Ohio Edison to enforce Ohio Edison's obligations to make payments under the Preferred Securities Guarantee, without first instituting a legal 18 21 proceeding against the Trust, the Preferred Guarantee Trustee or any other person or entity. If Ohio Edison were to default in its obligation to pay amounts payable on the Subordinated Debentures, the Trust would lack available funds for the payment of distributions or amounts payable on redemption of the Preferred Securities or otherwise, and in such event holders of the Preferred Securities would not be able to rely upon the Preferred Securities Guarantee for payment of such amounts. Instead, holders of the Preferred Securities would rely on the enforcement by the Property Trustee of its rights as registered holder of the Subordinated Debentures against Ohio Edison, pursuant to the terms of the Subordinated Debentures. See "Description of the Preferred Securities Guarantee -- Status of the Preferred Securities Guarantee" and "Description of the Subordinated Debentures -- Subordination." The Declaration provides that each holder of Preferred Securities by acceptance thereof agrees to the provisions of the Preferred Securities Guarantee and the Indenture (as defined herein). ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES If a Declaration Event of Default (as defined herein) occurs and is continuing, then the holders of Preferred Securities would rely on the enforcement by the Property Trustee of its rights as the holder of the Subordinated Debentures against Ohio Edison. In addition, the holders of a majority in aggregate liquidation amount of the Preferred Securities will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Property Trustee or to direct the exercise of any trust or power conferred upon the Property Trustee under the Declaration, including the right to direct the Property Trustee to exercise the remedies available to it as a holder of the Subordinated Debentures. If a Declaration Event of Default occurs that results from the failure of Ohio Edison to pay principal of or interest on the Subordinated Debentures when due, during the continuance of such an event of default a holder of Preferred Securities may institute a legal proceeding directly against Ohio Edison to obtain payment of such principal or interest on Subordinated Debentures having a principal amount equal to the aggregate liquidation amount of the Preferred Securities owned of record by such holder. The holders of Preferred Securities will not be able to exercise directly against Ohio Edison any other remedy available to the Property Trustee unless the Property Trustee first fails to do so. See "Description of the Preferred Securities -- Voting Rights." OPTION TO EXTEND INTEREST PAYMENT PERIOD Ohio Edison has the right under the Indenture (as defined herein) to defer payments of interest on the Subordinated Debentures by extending the interest payment period at any time, and from time to time, on the Subordinated Debentures. As a consequence of such an extension, quarterly distributions on the Preferred Securities would be deferred (but despite such deferral would continue to accrue with interest, and the interest so accrued at the end of each quarter and remaining unpaid would itself bear interest (to the extent permitted by applicable law) thereafter until paid on the same basis) by the Trust during any such Extension Period. Such right to extend the interest payment period for the Subordinated Debentures is limited to a period not exceeding 20 consecutive quarters for any such extension. In the event that Ohio Edison exercises this right to defer payments of interest, then during such Extension Period (a) Ohio Edison shall not declare or pay any dividend on, make any distributions with respect to, or redeem, purchase or make a liquidation payment with respect to, any of its capital stock, (b) Ohio Edison shall not make any payment of interest, principal or premium, if any, on or repay, repurchase or redeem any debt securities issued by Ohio Edison which rank pari passu with or junior to the Subordinated Debentures and (c) Ohio Edison shall not make any guarantee payments (other than pursuant to the Preferred Securities Guarantee) with respect to the foregoing; provided, however, that the foregoing restriction (a) does not apply to any stock dividends paid by Ohio Edison where the dividend stock is the same as that on which the dividend is paid. Prior to the termination of any such Extension Period, Ohio Edison may further defer payments of interest by further extending the interest payment period, provided that such Extension Period, together with all such previous and further extensions thereof, may not exceed 20 consecutive quarters or extend beyond the maturity of the Subordinated Debentures. Upon the termination of any Extension Period and the payment of all amounts then due, Ohio Edison may select a new Extension Period, as if no Extension Period had previously been declared, subject to the above requirements. See "Description of the Preferred Securities -- Distributions" and "-- Voting Rights" and "Description of the Subordinated Debentures -- Option to Extend Interest Payment Period." 19 22 Should Ohio Edison exercise its right to defer payments of interest by extending the interest payment period, each holder of Preferred Securities will continue to accrue interest income (as OID) for United States federal income tax purposes in respect of the deferred interest allocable to its Preferred Securities, which deferred interest will be allocated, but not distributed, to holders of record of Preferred Securities. As a result, holders of Preferred Securities will recognize income for United States federal income tax purposes in advance of the receipt of cash and will not receive cash from the Trust related to such income if such holder disposes of its Preferred Securities prior to the record date for the date on which distributions of such amounts are made. See "Taxation -- Original Issue Discount." Ohio Edison has no current intention of exercising its right to defer payments of interest by extending the interest payment period on the Subordinated Debentures. However, should Ohio Edison determine to exercise such right in the future, the market price of the Preferred Securities is likely to be affected. A holder that disposes of its Preferred Securities during an Extension Period, therefore, might not receive the same return on its investment as a holder that continues to hold its Preferred Securities. In addition, as a result of the existence of Ohio Edison's right to defer interest payments, the market price of the Preferred Securities (which represent a preferred undivided beneficial interest in the Subordinated Debentures) may be more volatile than other securities on which OID accrues that are not subject to such right. SPECIAL EVENT REDEMPTION OR DISTRIBUTION Upon the occurrence of a Special Event, the Trust will be terminated, except in the limited circumstances described below, with the result that the Subordinated Debentures would be distributed to the holders of the Trust Securities in connection with the liquidation of the Trust. In the case of a Special Event that is a Tax Event, in certain circumstances Ohio Edison shall have the right to redeem the Subordinated Debentures, in whole or in part, in which event the Trust will redeem the Trust Securities on a pro rata basis to the same extent as the Subordinated Debentures are redeemed. See "Description of the Preferred Securities -- Special Event Redemption or Distribution" and "Taxation." Under current United States federal income tax law, a distribution of the Subordinated Debentures upon the termination of the Trust would not be a taxable event to holders of the Preferred Securities. However, a termination of the Trust in which holders of the Preferred Securities received cash would be a taxable event to such holders. See "Taxation -- Receipt of Subordinated Debentures or Cash upon Liquidation of the Trust." If Subordinated Debentures are distributed to the holders of the Preferred Securities, Ohio Edison will use its best efforts to have the Subordinated Debentures listed on the NYSE or on such other exchange as the Preferred Securities are then listed. There can be no assurance as to the market prices for the Preferred Securities, nor for the Subordinated Debentures that may be distributed in exchange for Preferred Securities if a termination of the Trust were to occur. Accordingly, the Preferred Securities that an investor may purchase, or the Subordinated Debentures that the investor may receive on dissolution and liquidation of the Trust, may trade at a discount to the price of the Class A Shares exchanged. Because holders of Preferred Securities may receive Subordinated Debentures upon the occurrence of a Special Event, prospective exchanging holders of Class A Shares who plan to participate in the Offer of Preferred Securities are also making an investment decision with regard to the Subordinated Debentures and should carefully review all the information regarding the Subordinated Debentures and Ohio Edison contained herein. See "Description of the Preferred Securities -- Special Event Redemption or Distribution" and "Description of the Subordinated Debentures." PROPOSED TAX LAW CHANGES On December 7, 1995, the U.S. Treasury Department announced a Balanced Budget Proposal containing an amendment that would classify a debt instrument issued on or after December 7, 1995 as equity if the instrument had a term exceeding 20 years and was not classified as indebtedness on the issuer's balance sheet. Because the Subordinated Debentures will have a maximum term not exceeding 20 years, the provisions of the proposed amendment are not applicable to the Subordinated Debentures. Ohio Edison cannot predict whether this proposed amendment may be modified or other legislation may be enacted that might affect the character 20 23 or treatment for United States federal income tax purposes of the Subordinated Debentures or otherwise affect the Preferred Securities offered hereby. If legislation were enacted limiting, in whole or in part, the deductibility by Ohio Edison of interest on the Subordinated Debentures for United States federal income tax purposes, such enactment would be a Tax Event. Under certain circumstances following a Tax Event, Ohio Edison may cause the Subordinated Debentures to be redeemed, which would result in a redemption by the Trust of the Preferred Securities. See "Description of the Preferred Securities -- Special Event Redemption or Distribution." It is expected that the December 7, 1995 proposed tax law changes, if enacted, would not alter the United States federal income tax consequences of the exchange of Class A Shares for Preferred Securities and the ownership and disposition of Preferred Securities. See "Taxation." LIMITED VOTING RIGHTS Holders of Preferred Securities will have limited voting rights, primarily in connection with directing the activities of the Property Trustee as the holder of the Subordinated Debentures. Such holders will not be entitled to vote to appoint, remove or replace, or to increase or decrease the number of, Company Trustees, which voting rights are vested exclusively in Ohio Edison as the holder of the Common Securities. See "Description of the Preferred Securities -- Voting Rights." Holders of Class A Shares also have limited voting rights. However, if four quarterly dividends payable on the $100 Preferred Stock shall be in default, in whole or in part, and thereafter until all defaults have been cured, the holders of the Class A Shares and the $100 Preferred Stock shall have the exclusive right, voting separately and as a single class, each share of $100 Preferred Stock being counted as one and each Class A Share being counted as one-quarter, (i) to elect the smallest number of directors which shall constitute a majority of the directors of Ohio Edison, and (ii) to vote in all matters with respect to the governing of the affairs of Ohio Edison other than the election of directors. In addition, certain actions may not be effected without the consent or vote of a specified percentage of the Class A Shares and the $100 Preferred Stock, voting as a single class and calculating votes as described above. See "Description of the Class A Shares -- Voting Rights." TRADING PRICE OF PREFERRED SECURITIES The Preferred Securities may trade at a price that does not fully reflect the value of accrued but unpaid interest with respect to the underlying Subordinated Debentures. A holder who disposes of Preferred Securities between record dates for payments of distributions thereon (and consequently does not receive a cash distribution from the Trust for the period prior to such disposition) will nevertheless be required to include as ordinary income accrued but unpaid interest on the Subordinated Debentures through the date of disposition and to add such amount to such holder's adjusted tax basis in the Preferred Securities disposed of. Accordingly, such a holder will recognize a capital loss to the extent the selling price of the Preferred Securities (which may not fully reflect the amount of accrued but unpaid interest) is less than the holder's adjusted tax basis in the Preferred Securities (which will reflect accrued but unpaid interest). Subject to certain limited exceptions, capital losses cannot be applied to offset ordinary income for United States federal income tax purposes. See "Taxation -- Original Issue Discount" and "-- Disposition of the Preferred Securities." LACK OF ESTABLISHED TRADING MARKET FOR PREFERRED SECURITIES The Preferred Securities constitute a new issue of securities of the Trust with no established trading market. While the Preferred Securities are expected to be approved for listing on the NYSE, subject to official notice of issuance, there can be no assurance that an active market for the Preferred Securities will develop or be sustained in the future on such exchange. Although the Dealer Manager has indicated to Ohio Edison and the Trust that it intends to make a market in the Preferred Securities following the Expiration Date, as permitted by applicable laws and regulations prior to the commencement of trading on the NYSE, it is not obligated to do so and may discontinue any such market-making at any time without notice. Accordingly, no assurance can be given as to the liquidity of, or trading markets for, the Preferred Securities. In order to satisfy the NYSE listing requirements, acceptance of Class A Shares validly tendered in the Offer is subject to the Minimum Distribution Condition, which condition may not be waived by Ohio Edison or the Trust. In 21 24 addition, liquidity of the Preferred Securities will be affected by the number of Class A Shares exchanged in the Offer. See "Listing and Trading of Preferred Securities and Class A Shares." REDUCED TRADING MARKET FOR CLASS A SHARES To the extent Class A Shares are tendered and accepted in the Offer, the liquidity and trading market for the Class A Shares to be outstanding following the Offer, and the terms upon which such Class A Shares could be sold, could be adversely affected. In addition, if the Offer is substantially subscribed or oversubscribed, there would be a significant risk that round lot holdings of Class A Shares outstanding following the Offer would be limited. In addition, liquidity of the Preferred Securities will be affected by the number of Class A Shares exchanged in the Offer. See "Listing and Trading of Preferred Securities and Class A Shares." The Offer is for up to 3,600,000 Class A Shares (or 90% of the 4,000,000 Class A Shares outstanding), rather than for all the outstanding Class A Shares, to reduce the risk that the Class A Shares would be subject to delisting following consummation of the Offer. Under the rules of the NYSE, preferred securities such as the Class A Shares are subject to delisting if (i) the aggregate value of publicly-held shares is less than $2 million and (ii) the number of publicly-held shares is less than 100,000. Since at least 400,000 Class A Shares will remain outstanding following consummation of the Offer, the number of outstanding Class A Shares will exceed the delisting criteria set forth in clause (ii) above. In addition, based on the market price of the Class A Shares on the NYSE ($[ ] on [ ], the closing sales price of the Class A Shares on the NYSE on the last full trading day immediately prior to Ohio Edison's first public announcement of the Offer, and $[ ] on [ ]), Ohio Edison believes that the aggregate value of the minimum number (400,000) of Class A Shares which will be outstanding following consummation of the Offer should exceed the delisting criteria set forth in clause (i) above. See "Price Range of Class A Shares." If less than 3,600,000 Class A Shares are validly tendered, then the number of Class A Shares remaining outstanding, and the market value thereof, will be even greater. 22 25 COMPARISON OF PREFERRED SECURITIES AND CLASS A SHARES The following is a brief summary of certain terms of the Preferred Securities and the Class A Shares. For a more complete description of the Preferred Securities, see "Description of the Preferred Securities." For a description of the Subordinated Debentures which will be deposited in the Trust as trust assets and will represent the sole source for the payment of distributions and other payments on the Preferred Securities, see "Description of the Subordinated Debentures." For a description of Class A Shares, see "Description of the Class A Shares." Ohio Edison's $100 Preferred Stock and Class A Shares are herein collectively referred to as the "Preferred Stock."
PREFERRED SECURITIES CLASS A SHARES ---------------------------------------- ---------------------------- Issuer................. The Trust. Payment of distributions and Ohio Edison on liquidation or redemption is guaranteed on a subordinated basis, as and to the extent described herein, by Ohio Edison. Distribution/Dividend Rate................. [ ]% per annum distribution payable 7.75% per annum dividend quarterly in arrears on the last day of payable on the first day of March, June, September and December of January, April, July and each year, commencing [ ], October of each year, when 1996, from and including the Accrual and as declared by Ohio Date, but only if, and to the extent Edison's Board of Directors that, interest payments are made in out of funds legally respect of the Subordinated Debentures available therefor. held by the Trust. During any Extension Dividends must be paid on Period on the Subordinated Debentures, all shares of Preferred distribution payments on the Preferred Stock if paid on the shares Securities will not be made but would of any series of Preferred continue to accrue, and, in the case of Stock. Dividends are distributions in arrears, would bear cumulative whether or not interest at the rate of [ ]% per there are funds legally annum, with the interest so accrued at available for the payment of the end of each quarter and remaining such dividends. unpaid itself bearing interest (to the Accumulations of dividends extent permitted by applicable law) do not bear interest. Ohio thereafter until paid on the same basis. Edison has made each quarterly dividend payment with respect to the Class A Shares on the scheduled dividend payment date. Maturity/Mandatory and Optional Redemption........... The Preferred Securities will be No maturity or mandatory redeemed upon the maturity or earlier redemption. The Class A redemption of the Subordinated Shares are redeemable at the Debentures, at a redemption price equal option of Ohio Edison after to $25 per Preferred Security to be April 1, 1998, in whole or redeemed, plus accrued and unpaid in part, at a redemption distributions, if any, to the redemption price of $25 per share plus date, including distributions accrued as accumulated and unpaid a result of Ohio Edison's election to dividends defer payments of interest on the Subordinated Debentures. The Subordinated Debentures are redeemable at the option of Ohio Edison, in whole or in part, after April 1, 1998, at a redemption price equivalent to $25 per Subordinated Debenture to be redeemed, plus accrued and unpaid interest thereon, to the redemption date. In
23 26 the event that the Subordinated Debentures are redeemed, upon the repayment of the Subordinated Debentures, upon maturity, upon redemption or otherwise, the proceeds thereof will be promptly applied to redeem the Preferred Securities and the Common Securities. The Subordinated Debentures have a final maturity of [ ], 2016. See "Description of the Preferred Securities -- Special Event Redemption or Distribution" and "-- Mandatory Redemption." See "Prospectus Summary -- Potential Risk to Non-Exchanging Holders." Holders of Preferred Securities have no right to require Ohio Edison to redeem the Preferred Securities at the option of the holders. Subordination.......... Subordinated to claims of creditors of As capital stock, the Class the Trust, if any. The Common Securities A Shares are junior to all rank pari passu, and payments will be of the debt of Ohio Edison, made thereon on a pro rata basis with including the claims of the Preferred Securities, except that creditors of Ohio Edison and (i) if an Event of Default under the the Subordinated Debentures, Declaration occurs and is continuing, but senior to the common the holders of Preferred Securities will stock of Ohio Edison and have a priority over holders of the pari passu with all other Common Securities with respect to outstanding series of payments in respect of distributions and preferred stock of Ohio payments upon liquidation, redemption or Edison. otherwise and (ii) holders of Common Securities have the exclusive right to appoint, remove or replace any Company Trustee and to increase or decrease (to a minimum of three, unless the Property Trustee and the Delaware Trustee are the same entity) the number of Company Trustees. The Trust is not permitted to incur any indebtedness for borrowed money. The Declaration provides that Ohio Edison shall pay for all debts and other obligations (other than with respect to the Trust Securities) and all costs and expenses of the Trust, including any income taxes, duties and other governmental charges, and all costs and expenses with respect thereto, to which the Trust may become subject, except for United States withholding taxes. The Subordinated Debentures will rank subordinate and junior to all Senior Indebtedness (as defined herein) of Ohio Edison and senior to all capital stock now or hereafter issued by Ohio Edison [and to any current or future guarantee entered into by Ohio Edison in respect of any of its capital stock (including the Class A Shares).] Ohio Edison's obligations under the Preferred Securities Guarantee will rank (i) subordinate and junior in right of payment to all other
24 27 liabilities of Ohio Edison, [including the Subordinated Debentures, except those liabilities of Ohio Edison made pari passu or subordinate by their terms,] (ii) pari passu with the most senior preferred or preference stock issued from time to time by Ohio Edison and with any guarantee now or hereafter entered into by Ohio Edison in respect of any preferred or preference stock of any subsidiary or affiliate of Ohio Edison and (iii) senior to Ohio Edison's common stock. At December 31, 1995, Ohio Edison had approximately $3.3 billion principal amount of indebtedness for borrowed money constituting Senior Indebtedness on a consolidated basis. Assuming 3,600,000 Class A Shares are tendered, there will be $[ ] in Subordinated Debentures senior to the Preferred Securities Guarantee in addition to the other obligations of Ohio Edison set forth above. Listing................ The Preferred Securities are expected to The Class A Shares are be approved for listing on the NYSE, listed on the NYSE and the subject to official notice of issuance, Chicago Stock Exchange under under the symbol "[ ]." In the symbol "OECPrM." order to satisfy the NYSE listing requirements, acceptance of Class A Shares validly tendered in the Offer is subject to the Minimum Distribution Condition, which condition may not be waived. Dividends Received Deduction............ Distributions on the Preferred Dividends are eligible for Securities are not eligible for the the dividends received dividends received deduction for deduction for corporate corporate holders. holders. Voting Rights/Enforcement... Holders of Preferred Securities have no Whenever and as often as voting rights other than as provided four quarterly dividends under the Business Trust Act or the payable on the Preferred Trust Indenture Act, except in the Stock of any series shall be limited circumstances discussed below. in default, in whole or in The Property Trustee has the power to part, and thereafter until exercise all rights under the Indenture all defaults have been with respect to the Subordinated cured, the holders of Debentures and is also authorized to Preferred Stock shall have enforce the Preferred Securities the exclusive right, voting Guarantee on behalf of holders of the separately and as a single Preferred Securities. If the Trust's class, each share of $100 failure to make distributions is a Preferred Stock being consequence of Ohio Edison's exercise of counted as one and each its right to extend the interest payment Class A Share being counted period for the Subordinated Debentures as one-quarter, (i) to elect as described under the smallest number of "Distribution/Dividend Rate", the directors which shall Property Trustee will have no right to constitute a majority of the enforce the payment of distributions directors of Ohio Edison, until an Event of Default under the and (ii) to vote in all Declaration shall have occurred. The matters with respect to the holders of at least a majority in governing of the affairs of liquidation amount of the Preferred Ohio Edison other than the Securities will have the right to direct election of directors. In the Property addition, certain
25 28 Trustee with respect to certain matters actions may not be effected under the Preferred Securities Guarantee without the consent or vote and, upon a Declaration Event of of a specified percentage of Default, the Declaration. If the the Preferred Stock, voting Property Trustee fails to enforce the as a single class and Preferred Securities Guarantee, any calculating votes as holder of Preferred Securities may described above. institute a legal proceeding against Ohio Edison to enforce the Preferred Securities Guarantee. See "Description of the Preferred Securities" and "Description of the Preferred Securities Guarantee."
26 29 OHIO EDISON COMPANY Ohio Edison was organized under the laws of the State of Ohio in 1930 and owns property and does business as an electric public utility in that state. Ohio Edison also has ownership interests in certain facilities located in the Commonwealth of Pennsylvania. Ohio Edison's principal executive offices are located at 76 South Main Street, Akron, Ohio 44308, telephone number 1-800-736-3402. Ohio Edison furnishes electric service to communities in a 7,500 square mile area of central and northeastern Ohio. It also provides transmission services and electric energy for resale to certain municipalities in the Company's service area and transmission services to certain rural cooperatives. Ohio Edison also engages in the sale, purchase and interchange of electric energy with other electric companies. The area it serves has a population of approximately 2,530,000. Ohio Edison owns all of the outstanding common stock of Pennsylvania Power Company ("Penn Power"), a Pennsylvania corporation, which furnishes electric service to communities in a 1,500 square mile area of western Pennsylvania. Penn Power also provides transmission services and electric energy for resale to certain municipalities in Pennsylvania. The area served by Penn Power has a population of approximately 342,000. Sources of generation for Ohio Edison and Penn Power (the "Companies") during the twelve months ended December 31, 1995 were 74.0% coal and 26.0% nuclear. 27 30 CERTAIN CONSOLIDATED FINANCIAL INFORMATION OF OHIO EDISON (THOUSANDS, EXCEPT PER SHARE AMOUNTS, RATIOS AND PERCENTAGES)
YEAR ENDED DECEMBER 31,(1) -------------------------------------------------------------- 1991 1992 1993(2) 1994 1995 ---------- ---------- ---------- ---------- ---------- Income Summary: Operating Revenues................. $2,358,946 $2,332,378 $2,369,940 $2,368,191 $2,465,846 Net Income......................... $ 264,823 $ 276,986 $ 82,724 $ 303,531 $ 317,241 Earnings on Common Stock........... $ 240,069 $ 253,060 $ 59,017 $ 281,852 $ 294,747 Earnings per share of Common Stock........................... $ 1.60 $ 1.70 $ .39 $ 1.97 $ 2.05 Ratio of Earnings to Fixed Charges(3)...................... 1.95 2.01 1.12 2.24 2.32 Ratio of Earnings to Fixed Charges plus Preferred and Preference Stock Dividend Requirements (pre-income tax basis)(3)....... 1.79 1.85 0.99(4) 2.06 2.12
DECEMBER 31, 1995 ------------------------------------------------------------------- AS ADJUSTED(5) ------------------------------------------- ACTUAL MAXIMUM MINIMUM ------------------- ------------------- ------------------- OUTSTANDING RATIO OUTSTANDING RATIO OUTSTANDING RATIO ----------- ----- ----------- ----- ----------- ----- Capitalization Summary: Common Stockholders' Equity...... $ 2,407,871 43.3% $ 2,407,871 43.3% $ 2,407,871 43.3% Preferred Stock Not Subject to Mandatory Redemption.......... 211,870 3.8% 121,870 2.2% 181,870 3.3% Preferred Stock Subject to Mandatory Redemption.......... 40,000 0.7% 40,000 0.7% 40,000 0.7% Company obligated mandatorily redeemable preferred securities of subsidiary trusts holding solely Company subordinated debentures....... 120,000 2.2% 210,000 3.8% 150,000 2.7% Long-Term Debt(6)................ 2,786,256 50.0% 2,786,256 50.0% 2,786,256 50.0% ---------- ----- ---------- ----- ---------- ----- Total Capitalization............... $ 5,565,997 100.0% $ 5,565,997 100.0% $ 5,565,997 100.0% ========== ===== ========== ===== ========== =====
- - --------------- (1) Derived from audited financial information. (2) Includes net after tax charges of $218,377,000 ($1.43 per share) relating primarily to the termination of Perry Unit 2, partially offset by the cumulative effect of a change in accounting for unbilled revenues. (3) "Earnings" for purposes of these calculations have been computed by adding to "income before extraordinary items" all taxes based on income or profits, total interest charges and the estimated interest element of rentals charged to income. "Fixed charges" include total interest charges, the estimated interest element of rentals and subsidiaries' preferred stock dividend requirements, determined on a "pre-income tax" basis (computed, where applicable, at the effective income tax rates for the applicable periods). These ratios exclude fixed charges applicable to the guarantee of the debt of a coal supplier aggregating $13,298,000, $9,762,000, $8,565,000, $7,424,000 and $6,315,000 for each of the five years in the period ended December 31, 1995, respectively. (4) Earnings, as defined, were deficient in 1993 by $5,018,000 to cover fixed charges plus preferred stock dividend requirements (pre-income tax basis). (5) The maximum and minimum "As Adjusted" capitalization columns described in the table below assume that holders of a maximum of 3,600,000 Class A Shares and a minimum of 1,200,000 Class A Shares (which minimum condition may be waived by the Trust), respectively, elect to participate in the Offer. To the extent a different number of holders of Class A Shares elect to participate in the Offer, Preferred Securities of the Trust and Class A Shares would be increased or decreased, as the case may be, by equal and offsetting amounts. (6) Excludes $376,716,000 of long-term debt due to be repaid or subject to put options within one year. 28 31 OHIO EDISON FINANCING TRUST II The Trust is a statutory business trust formed under the Business Trust Act pursuant to the filing of a certificate of trust dated March 1, 1996, filed with the Delaware Secretary of State on March 5, 1996. The Trust's business is defined in a Declaration of Trust, dated as of March 1, 1996, executed by Ohio Edison, as sponsor (the "Sponsor"), and the Company Trustees as of that date. The Declaration of Trust will be amended and restated in its entirety as of the date the Trust accepts Class A Shares in the Offer (see "The Offer -- Terms of the Offer") (as so amended and restated, the "Declaration") substantially in the form filed as an exhibit to the Registration Statement of which this Prospectus forms a part. The Declaration will be qualified as an indenture under the Trust Indenture Act. Upon issuance of the Preferred Securities, the holders thereof will own all of the issued and outstanding Preferred Securities. See "Description of the Preferred Securities -- Book-Entry; Delivery and Form." Ohio Edison will acquire all of the Common Securities in an aggregate liquidation amount equal to 3% of the total capital of the Trust. The Preferred Securities and the Common Securities will have equivalent terms; provided that (i) if an Event of Default under the Declaration occurs and is continuing, the holders of Preferred Securities will have a priority over holders of the Common Securities with respect to payments in respect of distributions and payments upon liquidation, redemption or otherwise and (ii) holders of Common Securities have the exclusive right (subject to the terms of the Declaration) to appoint, remove or replace Company Trustees and to increase or decrease the number of Company Trustees. The Trust exists for the exclusive purposes of (a)(i) issuing its Preferred Securities in exchange for Class A Shares pursuant to the Offer and delivering such Class A Shares to Ohio Edison in consideration of the deposit by Ohio Edison in the Trust as trust assets of Subordinated Debentures having an aggregate principal amount equal to the aggregate par value of such Class A Shares so delivered, and (ii) issuing and selling its Common Securities to Ohio Edison for cash and using the proceeds thereof to purchase as trust assets an equal aggregate principal amount of Subordinated Debentures and (b) engaging in such other activities as are necessary, convenient or incidental thereto. The Trust has a term of approximately [ ] years, but may terminate earlier as provided in the Declaration. The rights of the holders of the Preferred Securities, including economic rights, rights to information and voting rights, are set forth in the Declaration, the Business Trust Act and the Trust Indenture Act. See "Description of the Preferred Securities." The Trust's business and affairs will be conducted by the Company Trustees appointed by Ohio Edison, as holder of the Common Securities. The duties and obligations of the Company Trustees shall be governed by the Declaration and the Business Trust Act and, in the case of the Property Trustee, the Trust Indenture Act. Pursuant to the Declaration, the number of Company Trustees will initially be four. Two of the Company Trustees, the Regular Trustees, will be persons who are employees or officers of, or affiliated with, Ohio Edison. A third trustee will be a financial institution unaffiliated with Ohio Edison that will serve as the Property Trustee under the Declaration and as indenture trustee for purposes of the Trust Indenture Act. The Bank of New York will act as the Property Trustee until removed or replaced by the holder of the Common Securities. The Bank of New York will also act as Preferred Guarantee Trustee under the Preferred Securities Guarantee. See "Description of the Preferred Securities Guarantee." The fourth trustee, the Delaware Trustee, will be a financial institution or an affiliate thereof which maintains a principal place of business or residence in the State of Delaware. The Bank of New York (Delaware) will act as the Delaware Trustee. The Property Trustee will hold title to the Subordinated Debentures for the benefit of the Trust and holders of the Trust Securities and will have the power to exercise all rights, powers and privileges under the Indenture (as defined herein) as the holder of the Subordinated Debentures. In addition, the Property Trustee will maintain exclusive control of the Property Account to hold all payments made in respect of the Subordinated Debentures for the benefit of the Trust and holders of the Trust Securities. The Property Trustee will make payments of distributions and payments on liquidation, redemption and otherwise to the holders of the Trust Securities out of funds from the Property Account. The Preferred Guarantee Trustee will hold the Preferred Securities Guarantee for the benefit of the holders of the Preferred Securities. Ohio Edison, as the holder of all the Common Securities, will have the right to appoint, remove or replace any Company Trustee and to increase or decrease the number of Company Trustees, provided that the number of Company Trustees shall be at least three if the Property Trustee is not also the Delaware Trustee. Ohio Edison will pay 29 32 all fees, expenses, debts and obligations (other than with respect to the Trust Securities) related to the Trust and the offering of the Trust Securities. Ohio Edison has agreed that the Property Trustee and any person to whom such fees, expenses, debts and obligations are owed will have the right to enforce Ohio Edison's obligations in respect of such fees, expenses, debts and obligations directly against Ohio Edison without first proceeding against the Trust. See "Description of the Preferred Securities -- Expenses and Taxes." Under the Declaration, the Trust shall not, and the Company Trustees (including the Property Trustee) shall cause the Trust not to, engage in any activity other than in connection with the purposes of the Trust or other than as required or authorized by the Declaration. In particular, the Trust shall not and the Company Trustees (including the Property Trustee) shall not (a) invest any proceeds received by the Trust from holding the Subordinated Debentures but shall promptly distribute all such proceeds to holders of Trust Securities pursuant to the terms of the Declaration and of the Trust Securities; (b) acquire any assets other than as expressly provided in the Declaration; (c) possess Trust property for other than a Trust purpose; (d) make any investments, other than investments represented by the Subordinated Debentures; (e) possess any power or otherwise act in such a way as to vary the Trust assets or the terms of the Trust Securities in any way whatsoever; (f) issue any securities or other evidences of beneficial ownership of, or beneficial interests in, the Trust other than the Trust Securities; (g) incur any indebtedness for borrowed money or (h)(1) direct the time, method and place of exercising any trust or power conferred upon the Indenture Trustee with respect to the Subordinated Debentures, (2) waive any past default that is waivable under Section 6.04 of the Indenture, (3) exercise any right to rescind or annul any declaration that the principal of all of the Subordinated Debentures shall be due and payable or (4) consent to any amendment, modification or termination of the Indenture or the Subordinated Debentures where such consent shall be required unless the Trust shall have received an opinion of counsel to the effect that such modification or amendment will not cause more than an insubstantial risk that for United States federal income tax purposes the Trust will not be classified as a grantor trust. The books and records of the Trust will be maintained at the principal office of the Trust and will be open for inspection by a holder of Preferred Securities or the duly authorized representative of such holder for any purpose reasonably related to its interest in the Trust during normal business hours. The Trust anticipates that it will not be required to file with the Commission or distribute to holders of Preferred Securities periodic reports regarding the Trust. Except as provided below or under the Business Trust Act and the Trust Indenture Act, holders of Preferred Securities will have no voting rights. See "Description of the Preferred Securities -- Voting Rights". The Property Trustee, for the benefit of the holders of the Trust Securities, is authorized under the Declaration to exercise all rights under the Indenture with respect to the Subordinated Debentures and to enforce Ohio Edison's obligations under the Subordinated Debentures upon the occurrence of an Indenture Event of Default. The Property Trustee, as the Guarantee Trustee, shall also be authorized to enforce the rights of holders of Preferred Securities under the Preferred Securities Guarantee. If the Trust's failure to make distributions on the Preferred Securities is a consequence of Ohio Edison's exercise of its right to extend the interest payment period for the Subordinated Debentures, the Property Trustee will have no right to enforce the payment of distributions on the Preferred Securities until an Event of Default shall have occurred. Holders of at least a majority in liquidation amount of the Preferred Securities will have the right to direct the Property Trustee with respect to certain matters under the Declaration and the Preferred Securities Guarantee. Any holder of Preferred Securities may institute a legal proceeding against Ohio Edison to enforce the Preferred Securities Guarantee. See "Description of the Preferred Securities -- Voting Rights". If an Indenture Event of Default occurs and is continuing with respect to Subordinated Debentures, an Event of Default under the Declaration will occur and be continuing with respect to the Trust Securities. In such event, the Declaration provides that the holders of Common Securities will be deemed to have waived any such Event of Default with respect to the Common Securities until all Events of Default with respect to the Preferred Securities have been cured or waived. Until all such Events of Default with respect to the 30 33 Preferred Securities have been so cured or waived, the Property Trustee will be deemed to be acting solely on behalf of the holders of the Preferred Securities and only the holders of the Preferred Securities will have the right to direct the Property Trustee with respect to certain matters under the Declaration and consequently under the Indenture. If any Event of Default with respect to the Preferred Securities is waived by the holders of the Preferred Securities as provided in the Declaration, the holders of Common Securities pursuant to the Declaration have agreed that such waiver also constitutes a waiver of such Event of Default with respect to the Common Securities for all purposes under the Declaration without any further act, vote or consent of the holders of the Common Securities. See "Description of the Preferred Securities". The Declaration provides that the Company Trustees may treat the person in whose name a Preferred Security is registered on the books and records of the Trust as the sole holder thereof and of the Preferred Securities represented thereby for purposes of receiving distributions and for all other purposes and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such certificate or in the Preferred Securities represented thereby on the part of any person, whether or not the Trust shall have actual or other notice thereof. Preferred Securities will be issued in fully registered form. Investors may elect to hold their Preferred Securities directly or, subject to the rules and procedures of The Depository Trust Company and Philadelphia Depository Trust Company (each a "Depository Institution") described under "Description of the Preferred Securities -- Book-Entry; Delivery and Form", hold interests in a global certificate registered on the books and records of the Trust in the name of a Depository Institution or its nominee. Under the Declaration: (i) the Trust and the Company Trustees shall be entitled to deal with a Depository Institution (or any successor depositary) for all purposes, including the payment of distributions and receiving approvals, votes or consents under the Declaration, and except as set forth in the Declaration, shall have no obligation to persons owning Preferred Securities ("Preferred Security Beneficial Owners") registered in the name of and held by a Depository Institution or its nominee; and (ii) the rights of Preferred Security Beneficial Owners shall be exercised only through a Depository Institution (or any successor depository) and shall be limited to those established by law and agreements between such Preferred Security Beneficial Owners and a Depository Institution and/or its participants. See "Description of the Preferred Securities -- Book-Entry; Delivery and Form". With respect to Preferred Securities registered in the name of and held by a Depository Institution or its nominee, all notices and other communications required under the Declaration shall be given to, and all distributions on such Preferred Securities shall be given or made to, a Depository Institution (or its successor). In the Declaration, Ohio Edison has agreed to pay for all debts and obligations (other than with respect to the Trust Securities) and all costs and expenses of the Trust, including the fees and expenses of the Company Trustees and any taxes and all costs and expenses with respect thereto, to which the Trust may become subject, except for United States withholding taxes. See "Risk Factors and Special Considerations Relating to the Offer -- Trust Distributions Dependent on Ohio Edison's Payments on Subordinated Debentures". The foregoing obligations of Ohio Edison under the Declaration are for the benefit of, and shall be enforceable by, any person to whom any such debts, obligations, costs, expenses and taxes are owed (a "Creditor") whether or not such Creditor has received notice thereof. Any such Creditor may enforce such obligations of Ohio Edison directly against Ohio Edison and Ohio Edison has irrevocably waived any right or remedy to require that any such Creditor take any action against the Trust or any other person before proceeding against Ohio Edison. Ohio Edison has agreed in the Declaration to execute such additional agreements as may be necessary or desirable in order to give full effect to the foregoing. THE FOREGOING SUMMARY OF CERTAIN PROVISIONS OF THE DECLARATION IS A DISCUSSION OF ALL MATERIAL TERMS OF THE DECLARATION, BUT DOES NOT PURPORT TO BE COMPLETE AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE DECLARATION WHICH HAS BEEN FILED AS AN EXHIBIT TO THE REGISTRATION STATEMENT OF WHICH THIS PROSPECTUS IS A PART. The principal place of business of the Trust shall be c/o Ohio Edison Company, 76 South Main Street, Akron, Ohio 44308, telephone number (330) 384-5100. 31 34 THE OFFER PURPOSE OF THE OFFER The purpose of the Offer is to refinance the Class A Shares with the Preferred Securities and to achieve certain tax efficiencies while preserving Ohio Edison's flexibility with respect to future financings. This refinancing will permit Ohio Edison to deduct interest payable on the Subordinated Debentures for United States federal income tax purposes; dividends payable with regard to the Class A Shares are not deductible. GENERAL PARTICIPATION IN THE OFFER IS VOLUNTARY AND HOLDERS OF CLASS A SHARES SHOULD CAREFULLY CONSIDER WHETHER TO ACCEPT. NEITHER THE BOARD OF DIRECTORS OF OHIO EDISON, OHIO EDISON, THE TRUSTEES NOR THE TRUST MAKES ANY RECOMMENDATION TO HOLDERS AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING IN THE OFFER. HOLDERS OF CLASS A SHARES ARE URGED TO CONSULT THEIR FINANCIAL AND TAX ADVISORS IN MAKING THEIR DECISIONS ON WHAT ACTION TO TAKE IN LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES. SEE "PRICE RANGE OF CLASS A SHARES." Unless the context requires otherwise, the term "Holder" with respect to the Offer means (i) any person in whose name any Class A Shares are registered on the books of Ohio Edison or (ii) any other person who has obtained a properly completed stock power from the registered holder, or (iii) any person whose Class A Shares are held of record by a Depository Institution. TERMS OF THE OFFER Upon the terms and subject to the conditions set forth herein and in the Letter of Transmittal, the Trust will exchange its Preferred Securities for up to 3,600,000 of the outstanding Class A Shares. The Offer will be effected on a basis of one Preferred Security for each Class A Share validly tendered and accepted for exchange. See "-- Procedures for Tendering." Upon the terms and subject to the conditions set forth herein and in the Letter of Transmittal, the Trust will accept up to 3,600,000 Class A Shares validly tendered and not withdrawn prior to the Expiration Date and, unless the Offer has been withdrawn or terminated, will deliver Preferred Securities in exchange therefor to tendering Holders of Class A Shares as promptly as practicable following the Expiration Date. The Trust expressly reserves the right, in its sole discretion, to delay acceptance for exchange of Class A Shares tendered under the Offer and the delivery of the Preferred Securities with respect to the Class A Shares accepted for exchange (subject to Rules 13e-4 and 14e-1 under the Exchange Act, which require that the Trust consummate the Offer or return the Class A Shares deposited by or on behalf of the Holders thereof promptly after the termination or withdrawal of the Offer), or to amend, withdraw or terminate the Offer at any time prior to the Expiration Date for any of the reasons set forth in "-- Conditions to the Offer" and "-- Expiration Date; Extensions; Amendments; Termination." In all cases, except to the extent waived by the Trust, delivery of Preferred Securities issued with respect to the Class A Shares accepted for exchange pursuant to the Offer will be made only after timely receipt by the Exchange Agent of Class A Shares (or confirmation of book-entry transfer thereof), a properly completed and duly executed Letter of Transmittal and any other documents required thereby. As of the date of this Prospectus, there are 4,000,000 Class A Shares outstanding. This Prospectus, together with the Letter of Transmittal, is being sent to all registered Holders commencing on or about the date of this Prospectus. The Trust shall be deemed to have accepted validly tendered Class A Shares (or defectively tendered Class A Shares with respect to which the Trust has waived such defect) when, as and if the Trust has given oral or written notice thereof to the Exchange Agent. The Exchange Agent will act as agent for the tendering Holders for the purpose of receiving Class A Shares from, and remitting Preferred Securities to, tendering 32 35 Holders who are participating in the Offer. Upon the terms and subject to the conditions of the Offer, delivery of Preferred Securities to tendering Holders will be made as promptly as practicable following the Expiration Date. If proration of tendered Class A Shares is required, because of the difficulty in determining the number of Class A Shares validly tendered (including shares tendered by the guaranteed delivery procedures described in "-- Procedures for Tendering"), the Trust does not expect that it would be able to announce the final proration factor or to commence the exchange for any Class A Shares pursuant to the Offer until approximately five Business Days after the Expiration Date. Preliminary results of the proration will be announced by press release as promptly as practicable after the Expiration Date. Holders of Class A Shares may obtain such preliminary information from the Dealer Manager, the Information Agent or the Exchange Agent and may also be able to obtain such information from their brokers. Until the final proration factors are known, the Trust will not issue any Preferred Securities in exchange for any Class A Shares accepted for exchange pursuant to the Offer or return Class A Shares delivered to the Exchange Agent but not tendered or return Class A Shares tendered but not accepted for exchange because of proration. If any tendered Class A Shares are not accepted for exchange because of an invalid tender, proration, the occurrence of certain other events set forth herein or otherwise, unless otherwise requested by the Holder under "Special Delivery Instructions" in the Letter of Transmittal, such Class A Shares will be returned, without expense, to the tendering Holder thereof (or in the case of Class A Shares tendered by book-entry transfer into the Exchange Agent's account at a Depository Institution, such Class A Shares will be credited to an account maintained at the Depository Institution designated by the participant therein who so delivered such Class A Shares), as promptly as practicable after the Expiration Date or the withdrawal or termination of the Offer. Holders of Class A Shares will not have any appraisal or dissenters' rights under the Ohio General Corporation Law in connection with the Offer. The Trust intends to conduct the Offer in accordance with the applicable requirements of the Exchange Act and the rules and regulations of the Commission thereunder. Holders who tender Class A Shares in the Offer will not be required to pay brokerage commissions or fees or, subject to the instructions in the Letter of Transmittal, transfer taxes with respect to the exchange of Class A Shares pursuant to the Offer. See "Fees and Expenses; Transfer Taxes." Holders tendering Class A Shares held in global form shall receive Preferred Securities in global form and holders tendering Class A Shares held directly in certificated form shall receive Preferred Securities in certificated form, in each case unless otherwise specified in the Letter of Transmittal. See "-- Procedures for Tendering." CONDITIONS TO THE OFFER Notwithstanding any other provisions of the Offer, or any extension of the Offer, the Trust will not be required to deliver Preferred Securities in respect of any properly tendered Class A Shares and may terminate the Offer by oral or written notice to the Exchange Agent and the holders of Class A Shares, or, at its option, may modify or otherwise amend the Offer (other than with respect to the Minimum Distribution Condition) with respect to such Class A Shares if any of the following conditions are not satisfied at or prior to the Expiration Date in the case of clauses (a) and (b) below or if any of the events specified in clauses (c) through (e) occurs at or prior to the exchange date for the Class A Shares: (a) receipt of at least 1,200,000 validly tendered Class A Shares in the Offer; (b) tenders by a sufficient number of holders of Class A Shares to satisfy the Minimum Distribution Condition; (c) any action has been taken or threatened, or any statute, rule, regulation, judgment, order, stay, decree or injunction has been promulgated, enacted, entered, enforced or deemed applicable to the Offer, by or before any court or governmental regulatory or administrative agency or authority or tribunal, 33 36 domestic or foreign, which (i) challenges the making of the Offer, or might directly or indirectly prohibit, prevent, restrict or delay consummation of the Offer, or otherwise and adversely affect in any material manner the Offer or (ii) could materially adversely affect the business, condition (financial or otherwise), income, operations, properties, assets, liabilities or prospects of Ohio Edison and its subsidiaries, taken as a whole or materially impair the contemplated benefits of the Offer to Ohio Edison; (d) any event has occurred or is likely to occur affecting the business or financial affairs of Ohio Edison that would or might prohibit, prevent, restrict or delay consummation of the Offer or that will, or is reasonably likely to, materially impair the contemplated benefits of the Offer or might be material to holders of Class A Shares in deciding whether to accept the Offer; and (e) any of the following events shall have occurred (i) any general suspension of or limitation on trading in securities on the NYSE or in the over-the-counter market (whether or not mandatory), (ii) any significant adverse change in the price of the Class A Shares or in the United States securities or financial markets, (iii) a material impairment in the trading market for debt or equity securities, (iv) a declaration of a banking moratorium or any suspension of payments in respect of banks by federal or state authorities in the United States (whether or not mandatory), (v) a commencement of a war, armed hostilities or other national or international crisis directly or indirectly relating to the United States, (vi) any limitation (whether or not mandatory) by any governmental authority on, or other event having a reasonable likelihood of affecting, the extension of credit by banks or other lending institutions in the United States, (vii) any significant adverse change in United States securities or financial markets generally or in the case of any of the foregoing existing at the time of the commencement of the Offer, a material acceleration or worsening thereof. The foregoing conditions are for the sole benefit of the Trust and Ohio Edison and, except for the Minimum Distribution Condition, may be waived by the Trust and Ohio Edison, in whole or in part, in their sole discretion. Any determination made by Ohio Edison or the Trust concerning an event, development or circumstance described or referred to above will be final and binding on all parties. EXPIRATION DATE; EXTENSIONS; AMENDMENTS; TERMINATION The Offer will expire on the Expiration Date. The Trust expressly reserves the right, in its sole discretion, subject to applicable law, to (i) terminate the Offer, and not accept for exchange any Class A Shares and promptly return all Class A Shares upon the failure of any of the conditions specified above in "-- Conditions to the Offer", (ii) waive any condition to the Offer (other than the Minimum Distribution Condition) and accept all Class A Shares previously tendered pursuant to the Offer, (iii) extend the Expiration Date of the Offer and retain all Class A Shares tendered pursuant to the Offer until the Expiration Date, subject, however, to all withdrawal rights of holders, see "-- Withdrawal of Tenders," (iv) amend the terms of the Offer or (v) modify the form of the consideration to be paid pursuant to the Offer. Any amendment applicable to the Offer will apply to all Class A Shares tendered pursuant to the Offer. During any extension of the Offer, all Class A Shares previously tendered pursuant to the Offer and not withdrawn will remain subject to the Offer. If the Trust makes a material change in the terms of the Offer, the Trust will extend the Offer. The minimum period for which the Offer will be extended following a material change, other than a change in the amount of Class A Shares sought for exchange or an increase or decrease in the consideration offered to Holders of Class A Shares, will depend upon the facts and circumstances, including the relative materiality of the change. With respect to an increase or decrease in the number of Class A Shares sought in the Offer or an increase or decrease in the consideration offered to Holders of Class A Shares, if required, the Offer will remain open for a minimum of ten Business Days following public announcement of such change. In the case of any amendment, withdrawal or termination of the Offer, a public announcement will be issued no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date of the Offer subject to such extension. If the Trust withdraws or terminates the Offer, it will give immediate notice to the Exchange Agent, and all Class A Shares theretofore tendered pursuant to the Offer will be returned promptly to the tendering Holders thereof. See "-- Withdrawal of Tenders." In order to satisfy the 34 37 NYSE listing requirements, acceptance of Class A Shares validly tendered in the Offer is subject to the Minimum Distribution Condition, which condition may not be waived. PROCEDURES FOR TENDERING The tender of Class A Shares by a Holder thereof pursuant to one of the procedures set forth below will constitute an agreement between such Holder and the Trust in accordance with the terms and subject to the conditions set forth herein and in the Letter of Transmittal. Each Holder of Class A Shares wishing to participate in the Offer must (i) properly complete and sign the Letter of Transmittal in accordance with the instructions contained herein and in the Letter of Transmittal, together with any required signature guarantees, and deliver the same to the Exchange Agent, at one of its addresses set forth on the back cover page hereof prior to the Expiration Date and either (a) certificates for the Class A Shares must be received by the Exchange Agent at such address or (b) such Class A Shares must be transferred pursuant to the procedures for book-entry transfer described below and a confirmation of such book-entry transfer must be received by the Exchange Agent, in each case prior to the Expiration Date, or (ii) comply with the guaranteed delivery procedures described below. IN ORDER TO PARTICIPATE IN THE OFFER, HOLDERS OF CLASS A SHARES MUST SUBMIT A LETTER OF TRANSMITTAL AND COMPLY WITH THE OTHER PROCEDURES FOR TENDERING IN ACCORDANCE WITH THE INSTRUCTIONS CONTAINED HEREIN AND IN THE LETTER OF TRANSMITTAL PRIOR TO THE EXPIRATION DATE. LETTERS OF TRANSMITTAL, CLASS A SHARES AND ANY OTHER REQUIRED DOCUMENTS SHOULD BE SENT ONLY TO THE EXCHANGE AGENT -- NOT TO THE TRUST, OHIO EDISON, THE DEALER MANAGER OR THE INFORMATION AGENT. Special Procedure for Beneficial Owners. Any beneficial owner whose Class A Shares are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and who wishes to tender should contact such registered Holder promptly and instruct such registered Holder to tender on such beneficial owner's behalf. If such beneficial owner wishes to tender on its own behalf, such owner must, prior to completing and executing the Letter of Transmittal and delivering its Class A Shares, either make appropriate arrangements to register ownership of the Class A Shares in such owner's name or obtain a properly completed stock power from the registered Holder. The transfer of registered ownership may take considerable time and may not be able to be completed prior to the Expiration Date. THE METHOD OF DELIVERY OF CLASS A SHARES AND ALL OTHER DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDER. IF SENT BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, RETURN RECEIPT REQUESTED, BE USED, INSURANCE BE OBTAINED, AND THE MAILING BE MADE SUFFICIENTLY IN ADVANCE OF THE EXPIRATION DATE TO PERMIT DELIVERY TO THE EXCHANGE AGENT ON OR BEFORE THE EXPIRATION DATE. Signature Guarantees. If tendered Class A Shares are registered in the name of the signer of the Letter of Transmittal and the Preferred Securities to be issued in exchange therefor are to be issued (and any untendered Class A Shares are to be reissued) in the name of the registered Holder, the signature of such signer need not be guaranteed. If the tendered Class A Shares are registered in the name of someone other than the signer of the Letter of Transmittal, or if Preferred Securities issued in exchange therefor are to be issued in the name of any person other than the signer of the Letter of Transmittal, such tendered Class A Shares must be endorsed or accompanied by written instruments of transfer in form satisfactory to the Trust and duly executed by the registered Holder, and the signature on the endorsement or instrument of transfer must be guaranteed by a financial institution (including most banks, savings and loans associations and brokerage houses) that is a participant in the Security Transfer Agents Medallion Program or the Stock Exchange Medallion Program (any of the foregoing hereinafter referred to as an "Eligible Institution"). If the Preferred Securities (and/or any tendered Class A Shares not exchanged) are to be delivered to an address other than that of the registered Holder appearing on the register for the Class A Shares, the signature in the Letter of Transmittal must be guaranteed by an Eligible Institution. 35 38 Book-Entry Transfer. The Trust understands that the Exchange Agent will make a request promptly after the date of this Prospectus to establish accounts with respect to the Class A Shares at a Depository Institution for the purpose of facilitating the Offer, and subject to the establishment thereof, any financial institution that is a participant in a Depository Institution's system may make book-entry delivery of Class A Shares by causing the Depository Institution to transfer such Class A Shares into the Exchange Agent's account with respect to the Class A Shares in accordance with such Depository Institution's Automated Tender Offer Program ("ATOP") procedures for such book-entry transfers. However, the exchange for the Class A Shares so tendered will only be made after timely confirmation (a "Book-Entry Confirmation") of such Book-Entry Transfer of Class A Shares into the Exchange Agent's account, and timely receipt by the Exchange Agent of an Agent's Message (as such term is defined in the next sentence) and any other documents required by the Letter of Transmittal. The term "Agent's Message" means a message, transmitted by a Depository Institution and received by the Exchange Agent and forming a part of a Book-Entry Confirmation, which states that such Depository Institution has received an express acknowledgment from a participant tendering Class A Shares that is the subject of such Book-Entry Confirmation, that such participant has received and agrees to be bound by the terms of the Letter of Transmittal, and that the Trust may enforce such agreement against such participant. Guaranteed Delivery. If a Holder desires to participate in the Offer and time will not permit a Letter of Transmittal or Class A Shares to reach the Exchange Agent before the Expiration Date or the procedure for book-entry transfer cannot be completed on a timely basis, a tender may be effected if the Exchange Agent has received at one of its addresses on the back cover page hereof prior to the Expiration Date, a letter, telegram or facsimile transmission from an Eligible Institution setting forth the name and address of the tendering Holder, the name(s) in which the Class A Shares are registered and, if the Class A Shares are held in certificated form, the certificate numbers of the Class A Shares to be tendered, and stating that the tender is being made thereby and guaranteeing that within three NYSE trading days after the date of execution of such letter, telegram or facsimile transmission by the Eligible Institution, the Class A Shares in proper form for transfer together with a properly completed and duly executed Letter of Transmittal (and any other required documents), or a confirmation of book-entry transfer of such Class A Shares into the Exchange Agent's account at a Depository Institution, will be delivered by such Eligible Institution. Unless the Class A Shares being tendered by the above-described method are deposited with the Exchange Agent within the time period set forth above (accompanied or preceded by a properly completed Letter of Transmittal and any other required documents) or a confirmation of book-entry transfer of such Class A Shares into the Exchange Agent's account at the Depository Institution in accordance with such Depository Institution's ATOP procedures is received, the Trust may, at its option, reject the tender. In addition to the copy being transmitted herewith, copies of a Notice of Guaranteed Delivery which may be used by Eligible Institutions for the purposes described in this paragraph are available from the Exchange Agent and the Information Agent. Miscellaneous. All questions as to the validity, form, eligibility (including time of receipt) and acceptance for exchange of any tender of Class A Shares will be determined by the Trust, whose determination will be final and binding. The Trust reserves the absolute right to reject any or all tenders not in proper form or the acceptance for exchange of which may, in the opinion of the Trust's counsel, be unlawful. The Trust also reserves the absolute right to waive any defect or irregularity in the tender of any Class A Shares, and the Trust's interpretation of the terms and conditions of the Offer (including the instructions in the Letter of Transmittal) will be final and binding. None of the Trust, the Exchange Agent, the Dealer Manager, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in tenders or incur any liability for failure to give any such notification. Tenders of Class A Shares involving any irregularities will not be deemed to have been made until such irregularities have been cured or waived. Class A Shares received by the Exchange Agent that are not validly tendered and as to which the irregularities have not been cured or waived will be returned by the Exchange Agent to the tendering Holder (or in the case of Class A Shares tendered by book-entry transfer into the Exchange Agent's account at a Depository Institution, such Class A Shares will be credited to an account maintained at the Depository Institution designated by the participant therein who so delivered such Class A 36 39 Shares), unless otherwise requested by the Holder in the Letter of Transmittal, as promptly as practicable after the Expiration Date or the withdrawal or termination of the Offer. LETTER OF TRANSMITTAL The Letter of Transmittal contains, among other things, the following terms and conditions, which are part of the Offer. The party tendering Class A Shares for exchange (the "Transferor") exchanges, assigns and transfers the Class A Shares to the Trust, and irrevocably constitutes and appoints the Exchange Agent as the Transferor's agent and attorney-in-fact to cause the Class A Shares to be assigned, transferred and exchanged. The Transferor represents and warrants that it has full power and authority to tender, exchange, assign and transfer the Class A Shares and to acquire Preferred Securities issuable upon the exchange of such tendered Class A Shares and that, when such Transferor's Class A Shares are accepted for exchange, the Trust will acquire good and unencumbered title to such tendered Class A Shares, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claim. The Transferor also warrants that it will, upon request, execute and deliver any additional documents deemed by the Trust to be necessary or desirable to complete the exchange, assignment and transfer of tendered Class A Shares or transfer ownership of such Class A Shares on the account books maintained by the Depository Institution. All authority conferred by the Transferor will survive the death, bankruptcy or incapacity of the Transferor and every obligation of the Transferor shall be binding upon the heirs, legal representatives, successors, assigns, executors and administrators of such Transferor. WITHDRAWAL OF TENDERS Tenders of Class A Shares pursuant to the Offer may be withdrawn at any time prior to the Expiration Date and, unless accepted for exchange by the Trust, may be withdrawn at any time after 40 Business Days after the date of this Prospectus. To be effective, a written notice of withdrawal delivered by mail, hand delivery or facsimile transmission must be timely received by the Exchange Agent at one of its addresses set forth on the back cover page hereof. The method of notification is at the risk and election of the Holder. Any such notice of withdrawal must specify (i) the Holder named in the Letter of Transmittal as having tendered Class A Shares to be withdrawn, (ii) if the Class A Shares are held in certificated form, the certificate numbers of the Class A Shares to be withdrawn, (iii) that such Holder is withdrawing his election to have such Class A Shares exchanged and (iv) the name of the registered Holder of such Class A Shares, and must be signed by the Holder in the same manner as the original signature on the Letter of Transmittal (including any required signature guarantees) or be accompanied by evidence satisfactory to the Trust that the person withdrawing the tender has succeeded to the beneficial ownership of the Class A Shares being withdrawn. The Exchange Agent will return the properly withdrawn Class A Shares promptly following receipt of notice of withdrawal. If Class A Shares have been tendered pursuant to the procedure for book-entry transfer, any notice of withdrawal must specify the name and number of the account at a Depository Institution to be credited with the withdrawn Class A Shares and otherwise comply with such Depository Institution procedures. All questions as to the validity of notice of withdrawal, including time of receipt, will be determined by the Trust, and such determination will be final and binding on all parties. Withdrawals of tenders of Class A Shares may not be rescinded and any Class A Shares withdrawn will thereafter be deemed not validly tendered for purposes of the Offer. Properly withdrawn Class A Shares, however, may be retendered by following the procedures therefor described elsewhere herein at any time prior to the Expiration Date. See "-- Procedures for Tendering." ACCEPTANCE OF SHARES AND PRORATION Upon the terms and subject to the conditions of the Offer, including the Minimum Distribution Condition, if 3,600,000 or fewer Class A Shares have been validly tendered and not withdrawn prior to the Expiration Date, the Trust will accept for exchange all such Class A Shares. Upon the terms and subject to the conditions of the Offer, if more than 3,600,000 Class A Shares have been validly tendered and not 37 40 withdrawn prior to the Expiration Date, the Trust will accept for exchange Class A Shares from each tendering Holder on a pro rata basis, subject to adjustment to avoid the acceptance for exchange of fractional shares. If the Trust decides, in its sole discretion, to increase or decrease the number of Class A Shares sought in the Offer or to increase or decrease the consideration offered to Holders of Class A Shares, and if the Offer is scheduled to expire less than ten Business Days from and including the date that notice of such increase or decrease is first published, sent or given in the manner specified in "-- Expiration Date; Extensions; Amendments; Termination", then the Offer will be extended for a minimum of ten Business Days from and including the date of such notice. All Class A Shares not accepted pursuant to the Offer, including shares not accepted because of proration, will be returned to the tendering Holders at the Trust's expense as promptly as practicable following the Expiration Date. EXCHANGE AGENT AND INFORMATION AGENT The Bank of New York has been appointed as Exchange Agent for the Offer. The Exchange Agent Is: THE BANK OF NEW YORK 101 Barclay Street New York, New York 10286 (800) 507-9357 Georgeson & Company Inc. has been retained as the Information Agent to assist in connection with the Offer. Questions and requests for assistance regarding the Offer, requests for additional copies of this Prospectus, the Letter of Transmittal and requests for Notice of Guaranteed Delivery may be directed to the Information Agent. The Information Agent Is: (LOGO) Wall Street Plaza New York, New York 10005 (800) 223-2064 (Toll-Free) Banks and Brokers Call Collect: (212) 440-9800 Ohio Edison will pay the Exchange Agent and Information Agent reasonable and customary fees for their services and will reimburse them for all their reasonable out-of-pocket expenses in connection therewith. DEALER MANAGER; SOLICITING DEALERS Merrill Lynch & Co., as Dealer Manager, has agreed to solicit exchanges of Class A Shares for Preferred Securities. Ohio Edison will pay the Dealer Manager a fee of $[ ] per Class A Share accepted pursuant to the Offer. The maximum fee payable to the Dealer Manager is approximately $[ ] plus any amount that the Dealer Manager may be entitled to pursuant to the next paragraph. Ohio Edison will also reimburse the Dealer Manager for certain reasonable out-of-pocket expenses in connection with the Offer and will indemnify the Dealer Manager against certain liabilities, including liabilities under the Securities Act. The Dealer Manager engages in transactions with, and from time to time has performed services for, Ohio Edison. 38 41 Ohio Edison will pay to a Soliciting Dealer a solicitation fee of $[ ] per Class A Share validly tendered and accepted for exchange pursuant to the Offer. As used in this Prospectus, "Soliciting Dealer" includes (i) any broker or dealer in securities, including the Dealer Manager in its capacity as a broker or dealer, who is a member of any national securities exchange or of the National Association of Securities Dealers, Inc. (the "NASD"), (ii) any foreign broker or dealer not eligible for membership in the NASD who agrees to conform to the NASD's Rules of Fair Practice in soliciting tenders outside the United States to the same extent as though it were an NASD member, or (iii) any bank or trust company, any one of whom has solicited and obtained a tender pursuant to the Offer. No solicitation fee shall be payable to a Soliciting Dealer with respect to the tender of Class A Shares by a Holder unless the Letter of Transmittal accompanying such tender designates such Soliciting Dealer as such in the box captioned "Solicited Tenders." If tendered Class A Shares are being delivered by book-entry transfer made to an account maintained by the Exchange Agent with Depository Institutions, the Soliciting Dealer must return a Notice of Solicited Tenders (included in the materials provided to brokers and dealers) to the Exchange Agent within three trading days after the Expiration Date in order to receive a solicitation fee. No solicitation fee shall be payable to a Soliciting Dealer in respect of Class A Shares (i) beneficially owned by such Soliciting Dealer or (ii) registered in the name of such Soliciting Dealer unless such Class A Shares are held by such Soliciting Dealer as nominee and such Class A Shares are being tendered for the benefit of one or more beneficial owners identified on the Letter of Transmittal or the Notice of Solicited Tenders. No solicitation fee shall be payable to the Soliciting Dealer with respect to the tender of Class A Shares by the Holder of record, for the benefit of the beneficial owner, unless the beneficial owner has designated such Soliciting Dealer. No solicitation fee shall be payable to a Soliciting Dealer if such Soliciting Dealer is required for any reason to transfer any portion of such fee to a tendering Holder (other than itself). No broker, dealer, bank, trust company or fiduciary shall be deemed to be the agent of Ohio Edison, the Trust, the trustees, the Exchange Agent, the Information Agent or the Dealer Manager for purposes of the Offer. Other than as described above, Ohio Edison will not pay any solicitation fees to any broker, dealer, bank, trust company or other person for any Class A Shares exchanged in connection with the Offer. Ohio Edison will reimburse such persons for customary handling and mailing expenses incurred in connection with the Offer. Additional solicitations may be made by telephone, in person or otherwise by officers and regular employees of Ohio Edison and its affiliates. No additional compensation will be paid to any such officers and employees who engage in soliciting tenders. LISTING AND TRADING OF PREFERRED SECURITIES AND CLASS A SHARES The Preferred Securities constitute a new issue of securities with no established trading market. While the Preferred Securities are expected to be approved for listing on the NYSE, subject to official notice of issuance, there can be no assurance that an active market for the Preferred Securities will develop or be sustained in the future on such exchange. Although the Dealer Manager has indicated to the Trust that it intends to make a market in the Preferred Securities following the Expiration Date as permitted by applicable laws and regulations prior to the commencement of trading on the NYSE, it is not obligated to do so and may discontinue any such market-making at any time without notice. Accordingly, no assurance can be given as to the liquidity of, or trading markets for, the Preferred Securities. In order to satisfy the NYSE listing requirements, acceptance of Class A Shares validly tendered in the Offer is subject to the Minimum Distribution Condition, which condition may not be waived. To the extent that Class A Shares are tendered and accepted in the Offer, the terms on which untendered Class A Shares could subsequently be sold could be adversely affected. In addition, if the Offer is substantially subscribed or oversubscribed, there would be a significant risk that round lot holdings of Class A Shares outstanding following the Offer would be limited. See "Risk Factors and Special Considerations Relating to the Offer -- Lack of Established Trading Market for Preferred Securities" and "-- Reduced Trading Market for Class A Shares." 39 42 TRANSACTIONS AND ARRANGEMENTS CONCERNING THE OFFER Except as described herein, there are no contracts, arrangements, understandings or relationships in connection with the Offer between Ohio Edison or any of its directors or executive officers, the Trust or the Trustees and any person with respect to any securities of Ohio Edison or the Trust, including the Subordinated Debentures, the Class A Shares and the Preferred Securities. FEES AND EXPENSES; TRANSFER TAXES The expenses of soliciting tenders of the Class A Shares will be borne by Ohio Edison. For compensation to be paid to the Dealer Manager and Soliciting Dealers, see "The Offer -- Dealer Manager; Soliciting Dealers." The total cash expenditures to be incurred by Ohio Edison in connection with the Offer, other than fees payable to the Dealer Manager and Soliciting Dealers, but including the expenses of the Dealer Manager, printing, accounting and legal fees, and the fees and expenses of the Exchange Agent, the Information Agent, the Property Trustee, the Delaware Trustee and the Indenture Trustee, are estimated to be approximately [ ]. Ohio Edison will pay all transfer taxes, if any, applicable to the exchange of Class A Shares pursuant to the Offer. If, however, certificates representing Preferred Securities or Class A Shares not tendered or accepted for exchange, are to be delivered to, or are to be issued in the name of, any person other than the registered Holder of the Class A Shares tendered or if a transfer tax is imposed for any reason other than the exchange of Class A Shares pursuant to the Offer, then the amount of any such transfer taxes (whether imposed on the registered Holder or any other persons) will be payable by the tendering Holder. If satisfactory evidence of payment of such taxes or exemption therefrom is not submitted with the Letter of Transmittal, the amount of such transfer taxes will be billed directly to such tendering Holder. PRICE RANGE OF CLASS A SHARES The Class A Shares are listed and principally traded on the NYSE and the Chicago Stock Exchange. The following table sets forth, for each period shown, the high and low closing sales prices of the Class A Shares as reported on the NYSE Composite Tape.
HIGH LOW ------ ------ Year Ended December 31, 1993 1st Quarter.............................................. -- -- 2nd Quarter.............................................. 25.750 24.500 3rd Quarter.............................................. 26.500 25.375 4th Quarter.............................................. 26.375 24.750 Year Ended December 31, 1994 1st Quarter.............................................. 25.625 22.750 2nd Quarter.............................................. 23.250 21.875 3rd Quarter.............................................. 23.000 21.250 4th Quarter.............................................. 22.000 19.750 Year Ending December 31, 1995 1st Quarter.............................................. 23.500 21.250 2nd Quarter.............................................. 25.250 22.875 3rd Quarter.............................................. 24.875 24.125 4th Quarter.............................................. 26.125 24.875
On [ ], 1996, the last full day of trading prior to the first public announcement of the Offer, the closing sales price of Class A Shares on the NYSE as reported on the Composite Tape was $[ ] per share. Stockholders are urged to obtain a current market quotation for Class A Shares. 40 43 DESCRIPTION OF THE PREFERRED SECURITIES The Preferred Securities will be issued pursuant to the terms of the Declaration. The Declaration will be qualified as an indenture under the Trust Indenture Act. The Property Trustee will act as the indenture trustee for purposes of compliance with the provisions of the Trust Indenture Act. The terms of the Preferred Securities will include those stated in the Declaration and those made part of the Declaration by the Business Trust Act and the Trust Indenture Act. The following summary of the principal terms and provisions of the Preferred Securities does not purport to be complete and is subject to, and qualified in its entirety by reference to, the Declaration (a copy of which is filed as an exhibit to the Registration Statement, of which this Prospectus forms a part), the Business Trust Act and the Trust Indenture Act. GENERAL The Declaration authorizes the Regular Trustees, on behalf of the Trust, to issue the Preferred Securities, which represent preferred undivided beneficial interests in the assets of the Trust, and the Common Securities, which represent common undivided beneficial interests in the assets of the Trust. Upon issuance of the Preferred Securities, the holders thereof will own all of the issued and outstanding Preferred Securities. All of the Common Securities will be owned by Ohio Edison. The Common Securities rank pari passu, and payments will be made thereon on a pro rata basis with the Preferred Securities, except that upon the occurrence and during the continuation of a Declaration Event of Default, the rights of the holders of the Common Securities to receive payment of periodic distributions and payments upon liquidation, redemption and otherwise will be subordinated to the rights to payment of the holders of the Preferred Securities. The Declaration does not permit the issuance by the Trust of any securities other than the Trust Securities or the incurrence of any indebtedness by the Trust. Pursuant to the Declaration, the Property Trustee will own and hold the Subordinated Debentures for the benefit of the Trust and the holders of the Trust Securities. The payment of distributions out of money held by the Trust, and payments upon redemption of the Preferred Securities or liquidation of the Trust, are guaranteed by Ohio Edison to the extent described under "Description of the Preferred Securities Guarantee." The Preferred Guarantee Trustee will hold the Preferred Securities Guarantee for the benefit of the holders of the Preferred Securities. The Preferred Securities Guarantee does not cover payment of distributions on the Preferred Securities when the Trust does not have sufficient available funds in the Property Account to make such distributions. DISTRIBUTIONS Distributions on the Preferred Securities will be fixed at a rate per annum of [ ]% of the stated liquidation amount of $25 per Preferred Security (equivalent to $[ ] per Preferred Security). Distributions in arrears for more than one quarter will accrue interest at the rate of [ ]% per annum and the interest so accrued at the end of each quarter and remaining unpaid will itself bear interest (to the extent permitted by applicable law) thereafter until paid on the same basis. The term "distributions" as used herein includes any such interest payable unless otherwise stated. Distributions on the Preferred Securities will be cumulative, will accrue from [ ], 1996, and will be payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year, commencing [ ], 1996, to the holders of record on the applicable record date, which will be 15 calendar days prior to the relevant distribution payment date when, as and if available for payment by the Property Trustee, except as otherwise described below. The amount of distributions payable for any full quarterly period will be computed on the basis of a 360-day year of twelve 30-day months, and for any period shorter than a full quarter, on the basis of the actual number of days elapsed in such a 90-day quarter. The initial distribution, payable on [ ], 1996, will be based on a period shorter than a full quarter ([ ] to [ ], 1996) and will be in the amount of $[ ] per Preferred Security. In addition, holders of Preferred Securities will be entitled to an additional cash distribution at the rate 7.75% per annum of the liquidation amount thereof from [ ], 1996 through the Expiration Date in lieu of dividends accumulating after [ ], 1996 on their Class A Shares accepted for exchange, such 41 44 additional distribution to be made on [ ], 1996 to holders of the Preferred Securities on the record date for such distribution. Ohio Edison has the right under the Indenture to defer payments of interest on the Subordinated Debentures by extending the interest payment period from time to time on the Subordinated Debentures which, if exercised, would defer quarterly distributions on the Preferred Securities (though such distributions would continue to accrue interest since interest would continue to accrue on the Subordinated Debentures) during any such extended interest payment period. In the event that Ohio Edison exercises this right, then (a) Ohio Edison shall not declare or pay any dividend on, make any distributions with respect to, or redeem, purchase or make a liquidation payment with respect to, any of its capital stock, (b) Ohio Edison shall not make any payment of interest, principal or premium, if any, on or repay, repurchase or redeem any debt securities issued by Ohio Edison which rank pari passu with or junior to the Subordinated Debentures, and (c) Ohio Edison shall not make any guarantee payments (other than pursuant to the Preferred Securities Guarantee) with respect to the foregoing; provided, however, that the foregoing restriction (a) does not apply to any stock dividends paid by Ohio Edison where the dividend stock is the same as that on which the dividend is paid. Prior to the termination of any such Extension Period, Ohio Edison may further extend the interest payment period, provided that such Extension Period, together with all such previous and further extensions thereof, may not exceed 20 consecutive quarters or extend beyond the maturity of the Subordinated Debentures. Upon the termination of any Extension Period and the payment of all amounts then due, Ohio Edison may select a new Extension Period as if no Extension Period had previously been declared, subject to the above requirements. See "-- Voting Rights" below and "Description of the Subordinated Debentures -- Interest" and "-- Option to Extend Interest Payment Period." If distributions are deferred, the deferred distributions and accrued interest thereon shall be paid to holders of record of the Preferred Securities, if funds are available therefor, as they appear on the books and records of the Trust on the record date next following the termination of such Extension Period. Distributions on the Preferred Securities must be paid on the dates payable to the extent that the Trust has funds available for the payment of such distributions in the Property Account. The Trust's funds available for distribution to the holders of the Preferred Securities will be limited to payments received under the Subordinated Debentures. See "Description of the Subordinated Debentures." The payment of distributions out of moneys held by the Trust is guaranteed by Ohio Edison to the extent set forth under "Description of the Preferred Securities Guarantee." Distributions on the Preferred Securities will be payable to the holders thereof as they appear on the books and records of the Trust on the relevant record dates, which will be 15 calendar days prior to the relevant distribution payment date, which record dates and payment dates correspond to the record dates and interest payment dates on the Subordinated Debentures. Such distributions will be paid through the Property Trustee, who will hold amounts received in respect of the Subordinated Debentures in the Property Account for the benefit of the Trust and the holders of the Trust Securities. Subject to any applicable laws and regulations and the provisions of the Declaration, each such payment will be made at the office or agency maintained therefore pursuant to the provisions of the Declaration; provided that payment of Distributions may be made at the option of the Regular Trustees on behalf of the Trust by check mailed to the address of the persons entitled thereto. In the event that any date on which distributions are to be made on the Preferred Securities is not a Business Day, then payment of the distributions payable on such date will be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of any such delay) except that if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date. A "Business Day" shall mean any day other than a Saturday, Sunday or other day on which banking institutions in New York, New York are authorized or required by law to close. MANDATORY REDEMPTION The Subordinated Debentures will mature on [ ], 2016 and may be redeemed, in whole or in part, at any time after April 1, 1998, or at any time in certain circumstances upon the occurrence of a Tax Event. Upon the repayment of the Subordinated Debentures, whether at maturity or upon acceleration, 42 45 redemption or otherwise, the proceeds from such repayment or payment shall simultaneously be applied to redeem Trust Securities having an aggregate liquidation amount equal to the aggregate principal amount of the Subordinated Debentures so repaid or redeemed at the Redemption Price; provided, that except in the case of payments upon maturity, holders of Trust Securities shall be given not less than 30 nor more than 60 days' notice of such redemption. See "Description of the Subordinated Debentures." In the event that fewer than all of the outstanding Preferred Securities are to be redeemed, the Preferred Securities will be redeemed pro rata from each holder of Trust Securities. SPECIAL EVENT REDEMPTION OR DISTRIBUTION A "Tax Event" means the receipt by the Regular Trustees of an opinion of a nationally recognized independent tax counsel experienced in such matters (a "Dissolution Tax Opinion") to the effect that, on or after the date of this Prospectus, as a result of (a) any amendment to, or change (including any announced prospective change) in, the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein or (b) any amendment to, or change in, an interpretation or application of such laws or regulations by any legislative body, court, governmental agency or regulatory authority, in each case which amendment or change is enacted, promulgated, issued or announced on or after the date of this Prospectus, there is more than an insubstantial risk that (i) the Trust is or will be, within 90 days of the date thereof, subject to United States federal income tax with respect to interest accrued or received on the Subordinated Debentures, (ii) interest payable by Ohio Edison to the Trust on the Subordinated Debentures is not or, within 90 days of the date thereof, will not be deductible, in whole or in part, by Ohio Edison for United States federal income tax purposes, or (iii) the Trust is or will be, within 90 days of the date thereof, subject to more than a de minimis amount of taxes, duties or other governmental charges. An "Investment Company Event" means that the Regular Trustees shall have received an opinion of a nationally recognized independent counsel experienced in practice under the 1940 Act (as hereinafter defined) (an "Investment Company Event Opinion") to the effect that, as a result of the occurrence of a change in law or regulation or a written change in interpretation or application of law or regulation by any legislative body, court, governmental agency or regulatory authority (a "Change in 1940 Act Law"), there is more than an insubstantial risk that the Trust is or will be considered an "investment company" which is required to be registered under the Investment Company Act of 1940, as amended (the "1940 Act"), which Change in 1940 Act Law becomes effective on or after the date of this Prospectus. If, at any time, a Tax Event or an Investment Company Event (each, as defined above, a "Special Event") shall occur and be continuing, the Regular Trustees shall, except in the circumstances described below, dissolve the Trust and, after satisfaction of creditors, cause Subordinated Debentures, having an aggregate principal amount equal to the aggregate stated liquidation amount of, with an interest rate identical to the distribution rate of, and accrued and unpaid interest equal to accrued and unpaid distributions on, and having the same record date for payment as, the Trust Securities, to be distributed to the holders of the Trust Securities, in liquidation of such holders' interests in the Trust on a pro rata basis, within 90 days following the occurrence of such Special Event; provided, however, that in the case of the occurrence of a Tax Event, as a condition of such dissolution and distribution, the Regular Trustees shall have received an opinion of a nationally recognized independent tax counsel experienced in such matters (a "No Recognition Opinion"), which opinion may rely on published revenue rulings of the Internal Revenue Service, to the effect that neither the Trust nor the holders of the Preferred Securities will recognize any gain or loss for United States federal income tax purposes as a result of the dissolution of the Trust and the distribution of the Subordinated Debentures; and, provided, further, that, if at the time there is available to the Trust the opportunity to eliminate, within such 90-day period, the Special Event by taking some ministerial action, such as filing a form or making an election, or pursuing some other similar reasonable measure that has no adverse effect on the Trust, Ohio Edison or the holders of the Preferred Securities, the Trust will pursue such measure in lieu of dissolution. Furthermore, if in the case of the occurrence of a Tax Event (i) Ohio Edison has received an opinion of a nationally recognized independent tax counsel experienced in such matters (a "Redemption Tax Opinion") that, as a result of a Tax Event, there is more than an insubstantial risk that Ohio Edison would be 43 46 precluded from deducting the interest on the Subordinated Debentures for United States federal income tax purposes even if the Subordinated Debentures were distributed to the holders of Preferred Securities in liquidation of such holders' interests in the Trust as described above, or (ii) in the event of any Special Event, after receipt of a Dissolution Tax Opinion or Investment Company Event Opinion, as the case may be, the Regular Trustees shall have been informed by such tax counsel that a No Recognition Opinion cannot be delivered, Ohio Edison shall have the right at any time, upon not less than 30 nor more than 60 days' notice, to redeem the Subordinated Debentures in whole or in part for cash within 90 days following the occurrence of such Special Event, and, following such redemption, Trust Securities with an aggregate liquidation amount equal to the aggregate principal amount of the Subordinated Debentures so redeemed shall be redeemed by the Trust at the Redemption Price on a pro rata basis; provided, however, that, if there is available to the Trust the opportunity to eliminate, within such 90-day period, the Special Event by taking some ministerial action, such as filing a form or making an election, or pursuing some other similar reasonable measure that has no adverse effect on the Trust, Ohio Edison or the holders of the Preferred Securities, Ohio Edison or the Trust will pursue such measure in lieu of redemption. If Subordinated Debentures are distributed to the holders of the Preferred Securities, Ohio Edison will use its best efforts to have the Subordinated Debentures listed on the New York Stock Exchange or on such other exchange as the Preferred Securities are then listed. After the date for any distribution of Subordinated Debentures upon dissolution of the Trust, (i) the Preferred Securities and Preferred Securities Guarantee will no longer be deemed to be outstanding and (ii) any certificates representing Preferred Securities and the Preferred Securities Guarantee will be deemed to represent Subordinated Debentures having an aggregate principal amount equal to the aggregate stated liquidation amount of, with an interest rate identical to the distribution rate of, and accrued and unpaid interest equal to accrued and unpaid distributions on, such Preferred Securities, until such certificates are presented to Ohio Edison or its agent for transfer or reissue. There can be no assurance as to the market prices for the Preferred Securities or the Subordinated Debentures that may be distributed in exchange for the Preferred Securities if a termination and liquidation of the Trust were to occur. Accordingly, the Preferred Securities that an investor may purchase, whether pursuant to the offer hereby or in the secondary market, or the Subordinated Debentures that the investor may receive on termination and liquidation of the Trust, may trade at a discount to the price that the investor paid to purchase the Preferred Securities offered hereby. On December 7, 1995, the U.S. Treasury Department announced a Balanced Budget Proposal containing an amendment that would classify a debt instrument issued on or after December 7, 1995 as equity if the instrument had a term exceeding 20 years and was not classified as indebtedness on the issuer's balance sheet. Because the Subordinated Debentures will have a maximum term not exceeding 20 years, the provisions of the proposed amendment are not applicable to the Subordinated Debentures. Ohio Edison cannot predict whether this proposed amendment may be modified or other legislation may be enacted that might affect the character or treatment for United States federal income tax purposes of the Subordinated Debentures or otherwise affect the Preferred Securities offered hereby. If legislation were enacted limiting, in whole or in part, the deductibility by Ohio Edison of interest on the Subordinated Debentures for United States federal income tax purposes, such enactment would be a Tax Event. Under certain circumstances following a Tax Event, Ohio Edison may cause the Subordinated Debentures to be redeemed, which would result in a redemption by the Trust of the Preferred Securities. See "Description of the Preferred Securities -- Special Event Redemption or Distribution." It is expected that the December 7, 1995 proposed tax law changes, if enacted, would not alter the United States federal income tax consequences of the exchange of Class A Shares for Preferred Securities and the ownership and disposition of Preferred Securities. See "Taxation." REDEMPTION PROCEDURES The Trust may not redeem fewer than all of the outstanding Preferred Securities unless all accrued and unpaid distributions have been paid on all Trust Securities for all quarterly distribution periods terminating on or prior to the date of redemption. 44 47 If the Trust gives a notice of redemption in respect of Preferred Securities (which notice will be irrevocable), then immediately prior to the close of business on the redemption date, provided that Ohio Edison has paid to the Trust a sufficient amount of cash in connection with the related redemption or maturity of the Subordinated Debentures, distributions will cease to accrue on the Preferred Securities called for redemption, such Preferred Securities shall no longer be deemed to be outstanding and all rights of holders of such Preferred Securities so called for redemption will cease, except the right of the holders of such Preferred Securities to receive the Redemption Price, but without interest on such Redemption Price. Neither the Company Trustees nor the Trust shall be required to register or cause to be registered the transfer of any Preferred Securities which have been so called for redemption. If any date fixed for redemption of Preferred Securities is not a Business Day, then payment of the Redemption Price payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay) except that, if such Business Day falls in the next calendar year, such payment will be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date fixed for redemption. If Ohio Edison fails to repay Subordinated Debentures on maturity or on the date fixed for a redemption or if payment of the Redemption Price in respect of Preferred Securities is improperly withheld or refused and not paid by the Trust or by Ohio Edison pursuant to the Preferred Securities Guarantee described under "Description of the Preferred Securities Guarantee", distributions on such Preferred Securities will continue to accrue from the original redemption date of the Preferred Securities to the date of payment in which case the actual payment date will be considered the date fixed for redemption for purposes of calculating the Redemption Price. In the event that fewer than all of the outstanding Preferred Securities are to be redeemed, the Preferred Securities will be redeemed pro rata as described under "-- Book-Entry; Delivery and Form" below. Subject to the foregoing and to applicable law (including, without limitation, United States federal securities laws), Ohio Edison or its affiliates may, at any time and from time to time, purchase outstanding Preferred Securities by tender, in the open market or by private agreement. LIQUIDATION DISTRIBUTION UPON TERMINATION In the event of any voluntary or involuntary termination, dissolution or winding-up of the Trust, the holders of the Preferred Securities at that time will be entitled to receive out of the assets of the Trust, after satisfaction of liabilities to creditors, distributions in an amount equal to the aggregate of the stated liquidation amount of $25 per Preferred Security plus accrued and unpaid distributions thereon to the date of payment (the "Liquidation Distribution"), unless, in connection with such termination, dissolution or winding-up Subordinated Debentures in an aggregate principal amount equal to the aggregate stated liquidation amount of, with an interest rate identical to the distribution rate of, and accrued and unpaid interest equal to accrued and unpaid distributions on, the Preferred Securities, have been distributed on a pro rata basis to the holders of Preferred Securities in exchange for such Preferred Securities. If, upon any such termination, dissolution or winding-up the Liquidation Distribution can be paid only in part because the Trust has insufficient assets available to pay in full the aggregate Liquidation Distribution, then the amounts payable directly by the Trust on the Preferred Securities shall be paid on a pro rata basis. The holders of the Common Securities will be entitled to receive distributions upon any such dissolution pro rata with the holders of the Preferred Securities, except that if a Declaration Event of Default has occurred and is continuing, the Preferred Securities shall have a preference over the Common Securities with regard to such distributions. Pursuant to the Declaration, the Trust shall terminate (i) on [ ], 20[ ], the expiration of the term of the Trust, (ii) upon the bankruptcy of Ohio Edison or the holder of the Common Securities, (iii) upon the filing of a certificate of dissolution or its equivalent with respect to Ohio Edison or the holder of the Common Securities, the filing of a certificate of cancellation with respect to the Trust, or the revocation of the charter of Ohio Edison or the holder of the Common Securities and the expiration of 90 days after the date of revocation without a reinstatement thereof, (iv) upon the distribution of the Subordinated Debentures following the occurrence of a Special Event, (v) upon the entry of a decree of a judicial dissolution of Ohio 45 48 Edison or the holder of the Common Securities or the Trust, (vi) upon the redemption of all of the Trust Securities or (vii) before the issuance of any Trust Securities, with the consent of all of the Regular Trustees and the Sponsor. DECLARATION EVENTS OF DEFAULT An event of default under the Indenture (an "Indenture Event of Default") (see "Description of the Subordinated Debentures -- Indenture Events of Default") constitutes an event of default under the Declaration with respect to the Trust Securities (a "Declaration Event of Default"); provided, that pursuant to the Declaration, the holder of the Common Securities will be deemed to have waived any Declaration Event of Default with respect to the Common Securities or its consequences until all Declaration Events of Default with respect to the Preferred Securities have been cured, waived or otherwise eliminated. Until such Declaration Events of Default with respect to the Preferred Securities have been so cured, waived or otherwise eliminated, the Property Trustee will be deemed to be acting solely on behalf of the holders of the Preferred Securities and only the holders of the Preferred Securities will have the right to direct the Property Trustee with respect to certain matters under the Declaration, and therefore the Indenture. Upon the occurrence of a Declaration Event of Default, the Property Trustee, as the sole holder of the Subordinated Debentures, will have the right under the Indenture to declare the principal of, and interest on, the Subordinated Debentures to be immediately due and payable. If a Declaration Event of Default occurs that results from the failure of Ohio Edison to pay principal of or interest on the Subordinated Debentures when due, during the continuance of such an event of default a holder of Preferred Securities may institute a legal proceeding directly against Ohio Edison to obtain payment of such principal or interest on Subordinated Debentures having a principal amount equal to the aggregate liquidation amount of the Preferred Securities owned of record by such holder. The holders of Preferred Securities will not be able to exercise directly against Ohio Edison any other remedy available to the Property Trustee unless the Property Trustee first fails to do so. See "-- Voting Rights." VOTING RIGHTS Except as provided below and except as provided under the Business Trust Act, the Trust Indenture Act and under "Description of the Preferred Securities Guarantee -- Amendments and Assignment" below, and except as otherwise required by law and the Declaration, the holders of the Preferred Securities will have no voting rights. In the event that Ohio Edison elects to defer payments of interest on the Subordinated Debentures as described above under "-- Distributions," the holders of the Preferred Securities do not have the right to appoint a special representative or trustee or otherwise act to protect their interests. Subject to the requirement of the Property Trustee obtaining a tax opinion as set forth in the last sentence of this paragraph, the holders of a majority in aggregate liquidation amount of the Preferred Securities have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Property Trustee, or to direct the exercise of any trust or power conferred upon the Property Trustee under the Declaration, including to (i) direct the time, method and place of conducting any proceeding for any remedy available to the Debenture Trustee (as hereinafter defined) under the Indenture with respect to the Subordinated Debentures or exercising any trust or power conferred on the Debenture Trustee, (ii) waive any past Indenture Event of Default which is waivable under the Indenture, (iii) exercise any right to rescind or annul a declaration that the principal of all the Subordinated Debentures shall be due and payable, or (iv) consent to any amendment, modification or termination of the Indenture or the Subordinated Debentures, where such consent shall be required, provided that where a consent under the Indenture would require the consent of the holders of greater than a majority in principal amount of Subordinated Debentures affected thereby (a "Super-Majority"), only the holders of at least the proportion in liquidation amount of the Preferred Securities which the relevant Super-Majority represents of the aggregate principal amount of the Subordinated Debentures may direct the Property Trustee to give such consent. If the Property Trustee fails to enforce its rights under the Declaration (including, without limitation, its rights, powers and privileges as the holder of the Subordinated Debentures under the Indenture), a holder of Preferred Securities may, to the 46 49 extent permitted by law, institute a legal proceeding directly against any person to enforce the Property Trustee's rights under the Declaration without first instituting any legal proceeding against the Property Trustee or any other person or entity. Following and during the continuance of a Declaration Event of Default that results from the failure of Ohio Edison to pay principal of or interest on the Subordinated Debentures when due, a holder may also proceed directly against Ohio Edison, without first waiting to determine if the Property Trustee has enforced its rights under the Declaration, to obtain payment of such principal or interest on Subordinated Debentures having a principal amount equal to the aggregate liquidation amount of the Preferred Securities owned of record by such holder. The Property Trustee shall notify all holders of the Preferred Securities of any notice of default received from the Debenture Trustee with respect to the Subordinated Debentures. Such notice shall state that such Indenture Event of Default also constitutes a Declaration Event of Default. The Property Trustee shall not take any action described in clause (ii), (iii) or (iv) above unless the Property Trustee has obtained an opinion of independent tax counsel to the effect that, as a result of such action, the Trust will not be classified as other than a grantor trust for United States federal income tax purposes. In the event the consent of the Property Trustee, as the holder of the Subordinated Debentures, is required under the Indenture with respect to any amendment, modification or termination of the Indenture, the Property Trustee shall request the direction of the holders of the Trust Securities with respect to such amendment, modification or termination. The Property Trustee shall vote with respect to such amendment, modification or termination as directed by a majority in liquidation amount of the Preferred Securities and, if no Declaration Event of Default has occurred and is continuing, a majority in liquidation amount of the Common Securities, voting together as a single class, provided that where a consent under the Indenture would require the consent of a Super-Majority, the Property Trustee may only give such consent at the direction of the holders of at least the proportion in liquidation amount of the Preferred Securities and Common Securities, respectively, which the relevant Super-Majority represents of the aggregate principal amount of the Subordinated Debentures outstanding. The Property Trustee shall not take any such action in accordance with the directions of the holders of the Trust Securities unless the Property Trustee has obtained an opinion of independent tax counsel to the effect that, as a result of such action, the Trust will not be classified as other than a grantor trust for United States federal income tax purposes. A waiver of an Indenture Event of Default will constitute a waiver of the corresponding Declaration Event of Default. Any required approval or direction of holders of Preferred Securities may be given at a separate meeting of holders of Preferred Securities convened for such purpose, at a meeting of all of the holders of Trust Securities or pursuant to written consent. The Regular Trustees will cause a notice of any meeting at which holders of Preferred Securities are entitled to vote, or of any matter upon which action by written consent of such holders is to be taken, to be mailed to each holder of record of Preferred Securities. Each such notice will include a statement setting forth (i) the date of such meeting or the date by which such action is to be taken, (ii) a description of any resolution proposed for adoption at such meeting on which such holders are entitled to vote or of such matter upon which written consent is sought and (iii) instructions for the delivery of proxies or consents. No vote or consent of the holders of Preferred Securities will be required for the Trust to redeem and cancel Preferred Securities or distribute Subordinated Debentures in accordance with the Declaration. Notwithstanding that holders of Preferred Securities are entitled to vote or consent under any of the circumstances described above, any of the Preferred Securities that are owned at such time by Ohio Edison or any entity directly or indirectly controlling or controlled by, or under direct or indirect common control with, Ohio Edison, shall not be entitled to vote or consent and shall, for purposes of such vote or consent, be treated as if they were not outstanding. The procedures by which holders of Preferred Securities registered in the name of and held by a Depository Institution or its nominee may exercise their voting rights are described below. See "-- Book-Entry; Delivery and Form." Holders of the Preferred Securities will have no rights to appoint or remove the Company Trustees, who may be appointed, removed or replaced solely by Ohio Edison, as the holder of all the Common Securities. 47 50 MODIFICATION OF THE DECLARATION The Declaration may be amended or modified if approved and executed by a majority of the Regular Trustees, provided that if any proposed amendment provides for, or the Regular Trustees otherwise propose to effect, (i) any action that would adversely affect the powers, preferences or special rights of the Trust Securities, whether by way of amendment to the Declaration or otherwise or (ii) the dissolution, winding-up or termination of the Trust other than pursuant to the terms of the Declaration, then the holders of the Trust Securities as a single class will be entitled to vote on such amendment or proposal and such amendment or proposal shall not be effective except with the approval of at least a majority in liquidation amount of the Trust Securities affected thereby. In the event any amendment or proposal referred to in clause (i) above would adversely affect only the Preferred Securities or the Common Securities, then only the affected class will be entitled to vote on such amendment or proposal and such amendment or proposal shall not be effective except with the approval of a majority in liquidation amount of such class of Trust Securities. Notwithstanding the foregoing, no amendment or modification may be made to the Declaration if such amendment or modification would (i) cause the Trust to be classified for purposes of United States federal income taxation as other than a grantor trust, (ii) reduce or otherwise adversely affect the powers of the Property Trustee or (iii) cause the Trust to be deemed to be an "investment company" which is required to be registered under the 1940 Act. EXPENSES AND TAXES In the Declaration, Ohio Edison has agreed to pay for all debts and other obligations (other than with respect to the Trust Securities) and all costs and expenses of the Trust (including costs and expenses relating to the organization of the Trust, the fees and expenses of the Company Trustees and the costs and expenses relating to the operation of the Trust) and to pay any and all taxes and all costs and expenses with respect thereto (other than United States withholding taxes) to which the Trust might become subject. The foregoing obligations of the Trust under the Declaration are for the benefit of, and shall be enforceable by, the Property Trustee and any person to whom any such debts, obligations, costs, expenses and taxes are owed (a "Creditor") whether or not such Creditor has received notice thereof. The Property Trustee and any such Creditor may enforce such obligations of the Trust directly against Ohio Edison, and Ohio Edison has irrevocably waived any right or remedy to require that the Property Trustee or any such Creditor take any action against the Trust or any other person before proceeding against Ohio Edison. Ohio Edison has also agreed in the Declaration to execute such additional agreements as may be necessary or desirable to give full effect to the foregoing agreement of Ohio Edison. MERGERS, CONSOLIDATIONS OR AMALGAMATIONS The Trust may not consolidate, amalgamate, merge with or into, or be replaced by, or convey, transfer or lease its properties and assets substantially as an entirety to any corporation or other body, except as described below. The Trust may, with the consent of a majority of the Regular Trustees and without the consent of the holders of the Trust Securities, consolidate, amalgamate, merge with or into, or be replaced by a trust organized as such under the laws of any State; provided, that (i) such successor entity either (x) expressly assumes all of the obligations of the Trust with respect to the Trust Securities or (y) substitutes for the Trust Securities other securities having substantially the same terms as the Trust Securities (the "Successor Securities") so long as the Successor Securities rank the same as the Trust Securities rank in priority with respect to distributions and payments upon termination, liquidation, redemption, maturity and otherwise, (ii) Ohio Edison expressly acknowledges a trustee of such successor entity which possesses the same powers and duties as the Property Trustee as the holder of the Subordinated Debentures, (iii) the Preferred Securities or any Successor Securities are listed, or any Successor Securities will be listed upon notification of issuance, on any national securities exchange or other organization on which the Preferred Securities are then listed, (iv) such merger, consolidation, amalgamation or replacement does not cause the Preferred Securities (including any Successor Securities) to be downgraded by any nationally recognized statistical rating organization, (v) such merger, consolidation, amalgamation or replacement does not adversely affect the rights, preferences and privileges of the holders of the Trust Securities (including any Successor Securities) in 48 51 any material respect (other than with respect to any dilution of the holders' interest in the new entity), (vi) such successor entity has a purpose identical to that of the Trust, (vii) prior to such merger, consolidation, amalgamation or replacement, Ohio Edison has received an opinion from independent counsel to the Trust experienced in such matters to the effect that (A) such merger, consolidation, amalgamation or replacement does not adversely affect the rights, preferences and privileges of the holders of the Trust Securities (including any Successor Securities) in any material respect (other than with respect to any dilution of the holders' interest in the new entity), and (B) following such merger, consolidation, amalgamation or replacement, neither the Trust nor such successor entity will be required to register as an investment company under the 1940 Act and (viii) Ohio Edison guarantees the obligations of such successor entity under the Successor Securities at least to the extent provided by the Preferred Securities Guarantee. Notwithstanding the foregoing, the Trust shall not, except with the consent of holders of 100% in liquidation amount of the Trust Securities, consolidate, amalgamate, merge with or into, or be replaced by any other entity or permit any other entity to consolidate, amalgamate, merge with or into, or replace it if such consolidation, amalgamation, merger or replacement would cause the Trust or the successor entity to be classified for United States federal income tax purposes as other than a grantor trust. BOOK-ENTRY; DELIVERY AND FORM Preferred Securities will be issued in fully registered form. Investors may elect to hold their Preferred Securities directly or, subject to the rules and procedures of a Depository Institution described below, hold interests in a global certificate (the "Preferred Securities Global Certificate") registered in the name of a Depository Institution or its nominee. However, tendering holders of Depositary Shares held in global form shall initially receive an interest in the Preferred Securities Global Certificate and tendering holders of Depositary Shares held directly in certificated form shall initially receive Preferred Securities in certificated form, in each case unless otherwise specified in the Letter of Transmittal. See "The Offer -- Procedures for Tendering". The laws of some jurisdictions require that certain purchasers of securities take physical delivery of securities in definitive form. Such laws may impair the ability to transfer beneficial interests in a global Preferred Security. A Depository Institution holds securities that its participants ("Participants") deposit with the Depository Institution. A Depository Institution also facilitates the settlement among Participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in Participants' accounts, thereby eliminating the need for physical movement of securities certificates. Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations ("Direct Participants"). A Depository Institution is owned by a number of its Direct Participants and by the NYSE, the American Stock Exchange, Inc., and the National Association of Securities Dealers, Inc. Access to the Depository Institution's system is also available to others such as securities brokers and dealers, banks and trust companies that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). The rules applicable to a Depository Institution and its Participants are on file with the Commission. Upon issuance of a Preferred Securities Global Certificate, the Depository Institution will credit on its book-entry registration and transfer system the number of Preferred Securities represented by such Preferred Securities Global Certificate to the accounts of institutions that have accounts with the Depository Institution. Ownership of beneficial interests in a Preferred Securities Global Certificate will be limited to Participants or persons that may hold interests through Participants. The ownership interest of each actual purchaser of each Preferred Security ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from the Depository Institution of their purchases, but Beneficial Owners are expected to receive written confirmations providing details of the transactions, as well as periodic statements of their holdings, from the Direct or Indirect Participants through which the Beneficial Owners purchased Preferred Securities. Transfers of ownership interests in the Preferred Securities are to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. 49 52 A Depository Institution has no knowledge of the actual Beneficial Owners of the Preferred Securities; a Depository Institution's records reflect only the identity of the Direct Participants to whose accounts such Preferred Securities are credited, which may or may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers. So long as a Depository Institution, or its nominee, is the owner of a Preferred Securities Global Certificate, a Depository Institution or such nominee, as the case may be, will be considered the sole owner and holder of record of the Preferred Securities represented by such Preferred Securities Global Certificate for all purposes. Conveyance of notices and other communications by a Depository Institution to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Redemption notices shall be sent to the Depository Institution. If less than all of the Preferred Securities are being redeemed, the Depository Institution will reduce pro rata (subject to adjustment to eliminate fractional Preferred Securities) the amount of interest of each Direct Participant in the Preferred Securities to be redeemed. Although voting with respect to the Preferred Securities is limited, in those instances in which a vote is required, the Depository Institution will not consent or vote with respect to Preferred Securities. Under its usual procedures, the Depository Institution would mail an Omnibus Proxy to the Trust as soon as possible after the record date. The Omnibus Proxy assigns the Depository Institution's consenting or voting rights to those Direct Participants to whose accounts the Preferred Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy). Distribution payments on the Preferred Securities represented by a Preferred Securities Global Certificate will be made by the Trust to the Depository Institution. The Depository Institution's practice is to credit Direct Participants' accounts on the relevant payment date in accordance with their respective holdings shown on a Depository Institution's records unless the Depository Institution has reason to believe that it will not receive payments on such payment date. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices and will be the responsibility of such Participants and not of a Depository Institution, the Trust or Ohio Edison, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of distributions to a Depository Institution is the responsibility of the Trust, disbursement of such payments to Direct Participants is the responsibility of the Depository Institution, and disbursement of such payments to the Beneficial Owners is the responsibility of Direct and Indirect Participants. A Depository Institution may discontinue providing its services as securities depository with respect to the Preferred Securities at any time by giving reasonable notice to the Trust. Under such circumstances, if a successor securities depository is not obtained, Preferred Security certificates will be required to be printed and delivered. Additionally, the Trust may decide to discontinue use of the system of book-entry transfers through the Depository Institution (or a successor depository). In that event, certificates for the Preferred Securities will be printed and delivered. The information in this section concerning the Depository Institution and the Depository Institution's book-entry system has been obtained from sources that the Trust and Ohio Edison believe to be reliable, but the Trust and Ohio Edison take no responsibility for the accuracy thereof. INFORMATION CONCERNING THE PROPERTY TRUSTEE The Property Trustee, prior to the occurrence of a default with respect to the Trust Securities and after the curing of all such defaults that may have occurred, undertakes to perform only such duties as are specifically set forth in the Declaration and, after default, shall exercise the same degree of care as a prudent individual would exercise in the conduct of his or her own affairs. Subject to such provisions, the Property Trustee is under no obligation to exercise any of the powers vested in it by the Declaration at the request of any holder of Preferred Securities, unless offered reasonable indemnity by such holder against the costs, 50 53 expenses and liabilities which might be incurred thereby; but the foregoing shall not relieve the Property Trustee, upon the occurrence of a Declaration Event of Default, from exercising the rights and powers vested in it by the Declaration. The Property Trustee also serves as the Debenture Trustee under the Indenture and as the Preferred Guarantee Trustee under the Preferred Securities Guarantee. Ohio Edison and certain of its subsidiaries maintain deposit accounts and conduct other banking transactions with the Property Trustee in the ordinary course of their businesses. The Property Trustee also acts as trustee under certain indentures relating to borrowings by or for the benefit of the lessors to finance their acquisition of Ohio Edison's interest in the Perry Nuclear Power Plant and Beaver Valley Power Station in connection with the sale and leaseback of certain undivided interests in those plants. Under the sale/leaseback documents, Ohio Edison is ultimately responsible for the payment of this indebtedness. The Property Trustee also acts as trustee under the trust agreement, guarantee and indenture relating to a series of preferred securities issued by another Ohio Edison trust subsidiary. REGISTRAR AND TRANSFER AGENT The Property Trustee will act as initial paying agent and initial transfer agent and registrar and may designate an additional paying agent at any time. The Regular Trustees have the right to appoint and replace any paying agent or transfer agent and registrar. Registration of transfers of Preferred Securities will be effected without charge by or on behalf of the Trust, but upon payment (with the giving of such indemnity as the Regular Trustees may require) in respect of any tax or other government charges which may be imposed in relation to it. The Trust will not be required to register or cause to be registered the transfer of Preferred Securities after such Preferred Securities have been called for redemption. GOVERNING LAW The Declaration and the Preferred Securities will be governed by, and construed in accordance with, the internal laws of the State of Delaware. MISCELLANEOUS The Regular Trustees are authorized and directed to operate the Trust in such a way so that the Trust will not be deemed to be an "investment company" required to be registered under the 1940 Act or characterized for United States federal income tax purposes as other than a grantor trust. Ohio Edison is authorized and directed to conduct its affairs so that the Subordinated Debentures will be treated as indebtedness of Ohio Edison for United States federal income tax purposes. In this connection, the Regular Trustees and Ohio Edison are authorized to take any action, not inconsistent with applicable law, the Declaration or the Restated Articles of Incorporation of Ohio Edison, that each of the Regular Trustees and Ohio Edison determines in their discretion to be necessary or desirable for such purposes, as long as such action does not materially and adversely affect the interests of the holders of the Preferred Securities. Holders of the Preferred Securities will have no preemptive rights. DESCRIPTION OF THE PREFERRED SECURITIES GUARANTEE Set forth below is a summary of information concerning the Preferred Securities Guarantee that will be executed and delivered by Ohio Edison for the benefit of the holders from time to time of the Preferred Securities. The Preferred Securities Guarantee will be qualified as an indenture under the Trust Indenture Act. The Bank of New York will act as the Preferred Guarantee Trustee. The terms of the Preferred Securities Guarantee will be those set forth therein and those made part thereof by the Trust Indenture Act. The following summary does not purport to be complete and is subject in all respects to the provisions of, and is qualified in its entirety by reference to, the Preferred Securities Guarantee (which is filed as an exhibit to the Registration Statement of which this Prospectus forms a part) and the Trust Indenture Act. The Preferred Securities will be held by the Preferred Guarantee Trustee for the benefit of the holders of the Preferred Securities. 51 54 GENERAL Pursuant to the Preferred Securities Guarantee, Ohio Edison will irrevocably and unconditionally agree, to the extent set forth therein, to pay in full to the holders of the Preferred Securities the Guarantee Payments (as defined herein) (without duplication of amounts theretofore paid by the Trust), to the extent not paid by the Trust, regardless of any defense, right of set-off or counterclaim that the Trust may have or assert. The following payments or distributions with respect to the Preferred Securities to the extent not paid or made by the Trust (the "Guarantee Payments") will be subject to the Preferred Securities Guarantee (without duplication): (i) any accrued and unpaid distributions that are required to be paid on the Preferred Securities, to the extent the Trust has funds available therefor, (ii) the Redemption Price, which includes all accrued and unpaid distributions to the date of the redemption, to the extent the Trust has funds available therefor, with respect to any Preferred Securities called for redemption by the Trust and (iii) upon a voluntary or involuntary termination, dissolution or winding-up of the Trust (other than in connection with the distribution of Subordinated Debentures to the holders of Preferred Securities in exchange for Preferred Securities), the lesser of (a) the aggregate of the liquidation amount and all accrued and unpaid distributions on the Preferred Securities to the date of payment, to the extent the Trust has funds available therefor, and (b) the amount of assets of the Trust remaining available for distribution to holders of Preferred Securities in liquidation of the Trust. Ohio Edison's obligation to make a Guarantee Payment may be satisfied by direct payment of the required amounts by Ohio Edison to the holders of Preferred Securities or by causing the Trust to pay such amounts to such holders. The Preferred Securities Guarantee will be a full and unconditional guarantee of the Guarantee Payments with respect to the Preferred Securities from the time of issuance of the Preferred Securities, but will not apply to the payment of distributions and other payments on the Preferred Securities when the Property Trustee does not have sufficient funds in the Property Account to make such distributions or other payments. If Ohio Edison does not make interest payments on the Subordinated Debentures held by the Property Trustee, the Trust will not make distributions on the Preferred Securities issued by the Trust and will not have funds available therefor. See "Risk Factors and Special Considerations Relating to the Offer -- Rights Under the Preferred Securities Guarantee" and "Description of the Subordinated Debentures -- Certain Covenants." Ohio Edison has also agreed separately to guarantee the obligations of the Trust with respect to the Common Securities (the "Common Securities Guarantee") to the same extent as the Preferred Securities Guarantee, except that upon the occurrence and during the continuation of an Indenture Event of Default, holders of Preferred Securities shall have priority over holders of Common Securities with respect to distributions and payments on liquidation, redemption or otherwise. CERTAIN COVENANTS OF OHIO EDISON In the Preferred Securities Guarantee, Ohio Edison will covenant that, so long as the Preferred Securities remain outstanding, if there shall have occurred and is continuing any event that would constitute an event of default under the Preferred Securities Guarantee or the Declaration, then (a) Ohio Edison shall not declare or pay any dividend on, or make any distribution with respect to, or redeem, purchase, acquire or make a liquidation payment with respect to, any of its capital stock, (b) Ohio Edison shall not make any payment of interest, principal or premium, if any, on or repay, repurchase or redeem any debt securities issued by Ohio Edison which rank pari passu with or junior to the Subordinated Debentures and (c) Ohio Edison shall not make any guarantee payments (other than pursuant to the Preferred Securities Guarantee) with respect to the foregoing. However, neither the foregoing restriction (a) nor any other language in the Preferred Securities Guarantee shall prevent Ohio Edison from paying stock dividends where the dividend stock is the same as that on which the dividend is paid. AMENDMENTS AND ASSIGNMENT Except with respect to any changes which do not materially adversely affect the rights of holders of Preferred Securities (in which case no vote will be required), the Preferred Securities Guarantee may be 52 55 amended only with the prior approval of the holders of not less than a majority in liquidation amount of the outstanding Preferred Securities. The manner of obtaining any such approval of holders of the Preferred Securities is set forth under "Description of the Preferred Securities -- Voting Rights." All guarantees and agreements contained in the Preferred Securities Guarantee shall bind the successors, assigns, receivers, trustees and representatives of Ohio Edison and shall inure to the benefit of the Preferred Guarantee Trustee and the holders of the Preferred Securities then outstanding. TERMINATION OF THE PREFERRED SECURITIES GUARANTEE The Preferred Securities Guarantee will terminate and be of no further force and effect as to the Preferred Securities upon full payment of the Redemption Price of all Preferred Securities, or upon distribution of the Subordinated Debentures to the holders of the Preferred Securities, and will terminate completely upon full payment of the amounts payable upon liquidation of the Trust. The Preferred Securities Guarantee will continue to be effective or will be reinstated, as the case may be, if at any time any holder of Preferred Securities must repay to the Trust or Ohio Edison, or their successors, any sums paid to them under such Preferred Securities or the Preferred Securities Guarantee. EVENTS OF DEFAULT An event of default under the Preferred Securities Guarantee will occur upon the failure of Ohio Edison to perform any of its payment or other obligations thereunder. The holders of a majority in liquidation amount of the Preferred Securities have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Preferred Guarantee Trustee in respect of the Preferred Securities Guarantee or to direct the exercise of any trust or power conferred upon the Preferred Guarantee Trustee under the Preferred Securities Guarantee. If the Preferred Guarantee Trustee fails to enforce the Preferred Securities Guarantee, any holder of Preferred Securities may institute a legal proceeding directly against Ohio Edison to enforce the Preferred Guarantee Trustee's rights under the Preferred Securities Guarantee, without first instituting a legal proceeding against the Trust, the Preferred Guarantee Trustee or any other person or entity. In addition, any record holder of Preferred Securities shall have the right, which is absolute and unconditional, to proceed directly against Ohio Edison to obtain Guarantee Payments, without first waiting to determine if the Preferred Guarantee Trustee has enforced the Preferred Security Guarantee or instituting a legal proceeding against the Trust, the Preferred Guarantee Trustee or any other person or entity. STATUS OF THE PREFERRED SECURITIES GUARANTEE Ohio Edison's obligations under the Preferred Securities Guarantee to make the Guarantee Payments will constitute an unsecured obligation of Ohio Edison and will rank (i) subordinate and junior in right of payment to all other liabilities of Ohio Edison, including the Subordinated Debentures, (ii) pari passu with the most senior preferred stock issued from time to time by Ohio Edison and with any current or future guarantee entered into by Ohio Edison in respect of any preferred stock of any subsidiary or affiliate of Ohio Edison and (iii) senior to Ohio Edison's common stock. The terms of the Preferred Securities provide that each holder of Preferred Securities by acceptance thereof agrees to the subordination provisions and other terms of the Preferred Securities Guarantee. The Preferred Securities Guarantee will constitute a guarantee of payment and not of collection (that is, the guaranteed party may institute a legal proceeding directly against the guarantor to enforce its rights under the guarantee without instituting a legal proceeding against any other person or entity). The Preferred Securities Guarantee will be deposited with the Preferred Guarantee Trustee to be held for the benefit of the holders of the Preferred Securities. Except as otherwise noted herein, the Preferred Guarantee Trustee has the right to enforce the Preferred Securities Guarantee on behalf of the holders of the Preferred Securities. The Preferred Securities Guarantee will not be discharged except by payment of the Guarantee Payments in full (without duplication of amounts theretofore paid by the Trust). 53 56 Ohio Edison's obligations under the Preferred Securities Guarantee, taken together with its obligations under the Declaration, the Subordinated Debentures and the Indenture, in the aggregate provide a full and unconditional guarantee by Ohio Edison of payments due on the Preferred Securities. INFORMATION CONCERNING THE PREFERRED GUARANTEE TRUSTEE The Preferred Guarantee Trustee, prior to the occurrence of a default with respect to the Preferred Securities Guarantee and after the curing of all such defaults that may have occurred, undertakes to perform only such duties as are specifically set forth in the Preferred Securities Guarantee and, after default, shall exercise the same degree of care as a prudent individual would exercise in the conduct of his or her own affairs. Subject to such provisions, the Preferred Guarantee Trustee is under no obligation to exercise any of the powers vested in it by the Preferred Securities Guarantee at the request of any holder of Preferred Securities, unless offered reasonable indemnity against the costs, expenses and liabilities which might be incurred thereby; but the foregoing shall not relieve the Preferred Guarantee Trustee, upon the occurrence of an event of default under the Preferred Securities Guarantee, from exercising the rights and powers vested in it by the Preferred Securities Guarantee. The Preferred Guarantee Trustee also serves as Property Trustee under the Declaration and as Debenture Trustee under the Indenture. GOVERNING LAW The Preferred Securities Guarantee will be governed by, and construed in accordance with, the internal laws of the State of New York. DESCRIPTION OF THE SUBORDINATED DEBENTURES Set forth below is a description of the terms of the Subordinated Debentures. The following description does not purport to be complete and is subject to, and is qualified in its entirety by reference to, the Indenture, to be dated as of [ ], 1996, as supplemented by a First Supplemental Indenture (as so supplemented, the "Indenture"), between Ohio Edison and The Bank of New York, as Trustee (the "Debenture Trustee"), the form of which is filed as an exhibit to the Registration Statement of which this Prospectus forms a part. The terms of the Subordinated Debentures will include those stated in the Indenture and those made a part of the Indenture by reference to the Trust Indenture Act. Certain capitalized terms used herein are defined in the Indenture. Under certain circumstances involving the termination of the Trust following the occurrence of a Special Event, Subordinated Debentures may be distributed to the holders of Trust Securities in liquidation of the Trust. See "Description of the Preferred Securities -- Special Event Redemption or Distribution." If the Subordinated Debentures are distributed to the holders of the Trust Securities, Ohio Edison will use its best efforts to have the Subordinated Debentures listed on the New York Stock Exchange or on such other exchange as the Preferred Securities are then listed. GENERAL The Subordinated Debentures will be issued as unsecured subordinated debt securities under the Indenture. The Subordinated Debentures will be limited in aggregate principal amount to (i) the aggregate liquidation preference of the Preferred Securities issued by the Trust in the Offer and (ii) the proceeds received by the Trust upon issuance of the Common Securities to Ohio Edison (which proceeds will be used to purchase an equal principal amount of Subordinated Debentures). The Subordinated Debentures are not subject to any sinking fund provision. The entire principal amount of the Subordinated Debentures will mature and become due and payable, together with any accrued and unpaid interest thereon, including Additional Interest (as defined herein), if any, on [ ], 2016. 54 57 If Subordinated Debentures are distributed to holders of Trust Securities in dissolution of the Trust, such Subordinated Debentures will be so issued in fully registered certificated form without coupons in denominations of $25 and integral multiples thereof and may be transferred or exchanged at the offices described below. Payments of principal and interest on Subordinated Debentures will be payable, the transfer of the Subordinated Debentures will be registrable, and Subordinated Debentures will be exchangeable for Subordinated Debentures of other denominations of a like aggregate principal amount, at the corporate trust office of the Debenture Trustee in The City of New York; provided that payments of interest may be made at the option of Ohio Edison by check mailed to the address of the persons entitled thereto and that the payment of principal with respect to any Subordinated Debenture will be made only upon surrender of such Subordinated Debenture to the Indenture Trustee. The Indenture does not contain provisions that afford holders of the Subordinated Debentures protection in the event of a highly leveraged transaction involving Ohio Edison or a decline in the credit quality of Ohio Edison resulting from a change of control transaction. SUBORDINATION The Indenture provides that the Subordinated Debentures are subordinated and junior in right of payment to all Senior Indebtedness of Ohio Edison, whether now existing or hereafter incurred. No payment of principal of (including redemption payments, if any), premium, if any, or interest on, the Subordinated Debentures may be made if (a) any Senior Indebtedness of Ohio Edison is not paid when due and any applicable grace period with respect to such default has ended with such default not being cured or waived or ceasing to exist, or (b) the maturity of any Senior Indebtedness has been accelerated because of a default. Upon any distribution of assets of Ohio Edison to creditors upon any dissolution, winding-up, liquidation or reorganization, whether voluntary or involuntary, or in bankruptcy, insolvency, receivership or other proceedings, all principal of, premium, if any, and interest due or to become due on, all Senior Indebtedness must be paid in full before the holders of the Subordinated Debentures are entitled to receive or retain any payment. The rights of the holders of the Subordinated Debentures will be subrogated to the rights of the holders of Senior Indebtedness to receive payments or distributions applicable to such Senior Indebtedness until all amounts owing on the Subordinated Debentures are paid in full. The term "Senior Indebtedness" shall mean the principal of, premium, if any, interest on and any other payment due pursuant to any of the following, whether outstanding at the date of execution of the Indenture or thereafter incurred, created or assumed: (a) all indebtedness of Ohio Edison on a consolidated basis (other than any obligations to trade creditors) evidenced by notes, debentures, bonds, other securities or other instruments issued by Ohio Edison for money borrowed and capitalized lease obligations; (b) all indebtedness of others of the kinds described in the preceding clause (a) assumed or guaranteed in any manner by Ohio Edison or in effect guaranteed by Ohio Edison; and (c) all renewals, extensions or refundings of indebtedness of the kinds described in either of the preceding clauses (a) or (b), unless, in the case of any particular indebtedness, renewal, extension or refunding, the instrument creating or evidencing the same or the assumption or guarantee of the same expressly provides that such indebtedness, renewal, extension or refunding is not superior in right of payment to or is pari passu with the Subordinated Debentures. The Indenture does not limit the aggregate amount of Senior Indebtedness that may be issued. At December 31, 1995, Ohio Edison had approximately $3.3 billion principal amount of indebtedness for borrowed money constituting Senior Indebtedness on a consolidated basis. CERTAIN COVENANTS If (i) there shall have occurred any event that would constitute an Indenture Event of Default or (ii) Ohio Edison shall be in default with respect to its payment of any obligations under the Preferred 55 58 Securities Guarantee, then (a) Ohio Edison shall not declare or pay any dividend on, make any distributions with respect to, or redeem, purchase or make a liquidation payment with respect to, any of its capital stock, (b) Ohio Edison shall not make any payment of interest, principal or premium, if any, on or repay, repurchase or redeem any debt securities issued by Ohio Edison which rank pari passu with or junior to the Subordinated Debentures and (c) Ohio Edison shall not make any guarantee payments (other than pursuant to the Preferred Securities Guarantee) with respect to the foregoing. If Ohio Edison shall have given notice of its election of an Extension Period as provided in the Indenture and such period, or any extension thereof, shall be continuing, then (a) Ohio Edison shall not declare or pay any dividend on, make any distributions with respect to, or redeem, purchase or make a liquidation payment with respect to, any of its capital stock, (b) Ohio Edison shall not make any payment of interest, principal or premium, if any, on or repay, repurchase or redeem any debt securities issued by Ohio Edison which rank pari passu with or junior to the Subordinated Debentures and (c) Ohio Edison shall not make any guarantee payments (other than pursuant to the Preferred Securities Guarantee) with respect to the foregoing. Notwithstanding the foregoing restrictions, Ohio Edison will be permitted, in any event, to pay any stock dividend where the dividend stock is the same as that on which the dividend is paid. For so long as the Trust Securities remain outstanding, Ohio Edison will covenant (i) to directly or indirectly maintain 100% direct or indirect ownership of the Common Securities of the Trust; provided, however, that any permitted successor of Ohio Edison under the Indenture may succeed to Ohio Edison's ownership of such Common Securities, (ii) not to cause, as sponsor of the Trust, or to permit, as holder of the Common Securities, the termination, dissolution or winding-up of the Trust, except in connection with a distribution of the Subordinated Debentures as provided in the Declaration and in connection with certain mergers, consolidations or amalgamations, (iii) to use its reasonable efforts to cause the Trust (a) to remain a statutory business trust, except in connection with the distribution of Subordinated Debentures to the holders of Trust Securities in liquidation of the Trust, the redemption of all of the Trust Securities of the Trust, or certain mergers, consolidations or amalgamations, each as permitted by the Declaration, and (b) to otherwise continue to be classified as a grantor trust for United States federal income purposes and (iv) to use reasonable efforts to cause each holder of Trust Securities to be treated as owning an undivided beneficial interest in the Subordinated Debentures. OPTIONAL REDEMPTION Ohio Edison shall have the right to redeem the Subordinated Debentures, in whole or in part, from time to time, after April 1, 1998, or at any time in certain circumstances upon the occurrence of a Tax Event as described under "Description of the Preferred Securities -- Special Event Redemption or Distribution," upon not less than 30 nor more than 60 days' notice, at a redemption price equal to 100% of the principal amount to be redeemed plus any accrued and unpaid interest, including Additional Interest, if any, to the redemption date. If a partial redemption of the Preferred Securities resulting from a partial redemption of the Subordinated Debentures would result in the delisting of the Preferred Securities, Ohio Edison may only redeem the Subordinated Debentures in whole. INTEREST Each Subordinated Debt Security shall bear interest at the rate of [ ]% per annum from [ ], 1996, payable quarterly in arrears on March 31, June 30, September 30, December 31 of each year (each, an "Interest Payment Date"), commencing [ ], 1996, to the person in whose name such Subordinated Debenture is registered on the relevant record date, which shall be not less than fifteen calendar days prior to each Interest Payment Date. In addition, holders of the Subordinated Debentures will be entitled to Pre- Issuance Accrued Distribution at the rate of 7.75% per annum of the principal amount thereof from [ ], 1996 through the Expiration Date, payable on [ ], 1996 to holders of the Preferred Securities on the record date for such distributions. The amount of interest payable for any period will be computed on the basis of a 360-day year of twelve 30-day months. The amount of interest payable for any period shorter than a full quarterly period will be 56 59 computed on the basis of the actual number of days elapsed in such 90-day quarter. In the event that any date on which interest is payable on the Subordinated Debentures is not a Business Day, then payment of the interest payable on such date will be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of any such delay), except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date. OPTION TO EXTEND INTEREST PAYMENT PERIOD Ohio Edison shall have the right at any time, and from time to time, during the term of the Subordinated Debentures to defer payments of interest by extending the interest payment period for a period not exceeding 20 consecutive quarters, at the end of which Extension Period Ohio Edison shall pay all interest then accrued and unpaid (including any Additional Interest), together with interest thereon at the rate specified for the Subordinated Debentures to the extent permitted by applicable law; provided, that, during any such Extension Period, (a) Ohio Edison shall not declare or pay any dividend on, make any distributions with respect to, or redeem, purchase or make a liquidation payment with respect to, any of its capital stock, (b) Ohio Edison shall not make any payment of interest, principal or premium, if any, on or repay, repurchase or redeem any debt securities issued by Ohio Edison which rank pari passu with or junior to the Subordinated Debentures and (c) Ohio Edison shall not make any guarantee payments (other than pursuant to the Preferred Securities Guarantee) with respect to the foregoing; provided, however, the foregoing restrictions will not prevent Ohio Edison, in any event, from paying any stock dividend where the dividend stock is the same as that on which the dividend is paid. Prior to the termination of any such Extension Period, Ohio Edison may further defer payments of interest by extending the interest payment period, provided that such Extension Period together with all such previous and further extensions thereof may not exceed 20 consecutive quarters or extend beyond the maturity of the Subordinated Debentures. Upon the termination of any Extension Period and the payment of all amounts then due, Ohio Edison may select a new Extension Period, as if no Extension Period had previously been declared, subject to the above requirements. No interest during an Extension Period, except at the end thereof, shall be due and payable. Ohio Edison has no present intention of exercising its rights to defer payments of interest by extending the interest payment period on the Subordinated Debentures. The right to defer payments of interest will not apply to the Pre-Issuance Accrued Distribution. If the Property Trustee shall be the sole holder of the Subordinated Debentures, Ohio Edison shall give the Regular Trustees and the Property Trustee notice of its selection of an Extension Period one Business Day prior to the earlier of (i) the next succeeding date on which distributions on the Preferred Securities are payable or (ii) the date the Trust is required to give notice to the New York Stock Exchange or other applicable self-regulatory organization or to holders of the Preferred Securities of the record date or the date such distribution is payable, but in any event not less than one Business Day prior to such record date. The Regular Trustees shall give notice of Ohio Edison's selection of such Extension Period to the holders of the Preferred Securities. If the Property Trustee shall not be the sole holder of the Subordinated Debentures, Ohio Edison shall give the holders of the Subordinated Debentures notice of its selection of such Extension Period ten Business Days prior to the earlier of (i) the relevant Interest Payment Date or (ii) the date Ohio Edison is required to give notice to the New York Stock Exchange or other applicable self-regulatory organization or to holders of the Subordinated Debentures of the record or payment date of such related interest payment. ADDITIONAL INTEREST If at any time the Trust shall be required to pay any taxes, duties, assessments or governmental charges of whatever nature (other than withholding taxes) imposed by the United States, or any other taxing authority, then, in any such case, Ohio Edison will pay as additional interest ("Additional Interest") such additional amounts as shall be required so that the net amounts received and retained by the Trust after paying such taxes, duties, assessments or other governmental charges will be equal to the amounts the Trust would have received had no such taxes, duties, assessments or other governmental charges been imposed. 57 60 INDENTURE EVENTS OF DEFAULT In case any Indenture Event of Default shall occur and be continuing, the Property Trustee, as the holder of the Subordinated Debentures, may declare the principal of and the interest on the Subordinated Debentures (including Additional Interest, if any) to be forthwith due and payable and to enforce its other rights as a creditor with respect to the Subordinated Debentures. The Indenture provides that any one or more of the following described events constitutes an "Event of Default" with respect to the Subordinated Debentures: (a) failure for 30 days to pay interest on the Subordinated Debentures, including any Additional Interest in respect thereof, when due; provided, however, that a valid extension of the interest payment period by Ohio Edison shall not constitute a default in the payment of interest for this purpose; or (b) failure to pay principal on the Subordinated Debentures when due whether at maturity, upon earlier redemption or otherwise; or (c) failure to comply with any of its other agreements (other than those specifically relating to another series of subordinated debt securities) contained in the Indenture for 90 days after written notice to Ohio Edison from the Debenture Trustee or the holders of at least 25% in aggregate principal amount of the outstanding Subordinated Debentures; or (d) certain events of bankruptcy, insolvency or reorganization of Ohio Edison; or (e) the voluntary or involuntary dissolution, winding-up or termination of the Trust, except in connection with the distribution of Subordinated Debentures to holders of Preferred Securities in liquidation or redemption of their interests in the Trust, the redemption of all outstanding Preferred Securities or certain mergers, consolidations or amalgamations permitted by the Declaration. The holders of a majority in aggregate outstanding principal amount of the Subordinated Debentures may direct the time, method and place of conducting any proceeding for any remedy available to the Debenture Trustee. The Debenture Trustee or the holders of not less than 25% in aggregate outstanding principal amount of the Subordinated Debentures may declare the principal due and payable immediately on default, but the holders of a majority in aggregate outstanding principal amount may rescind such acceleration if all existing Events of Default (other than the non-payment of the principal of and accrued interest, if any, due solely by such acceleration) have been cured or waived and if the rescission would not conflict with any judgment or decree. The holders of a majority in aggregate outstanding principal amount of the Subordinated Debentures may, on behalf of the holders of all the Subordinated Debentures, waive certain past defaults, which shall not include (i) a default in the payment of principal of or accrued interest on the Subordinated Debentures (unless a sum sufficient to pay all matured installments of interest and principal due otherwise than by acceleration has been deposited with the Debenture Trustee), or (ii) a default that arises out of a breach by Ohio Edison of any of the covenants described in the first two paragraphs of "-- Certain Covenants," above. An Indenture Event of Default also constitutes a Declaration Event of Default. The holders of Preferred Securities in certain circumstances have the right to direct the Property Trustee to exercise its rights as the holder of the Subordinated Debentures. See "Description of the Preferred Securities -- Declaration Events of Default" and "-- Voting Rights." In addition, if an Indenture Event of Default results from the failure of Ohio Edison to pay principal of or interest on the Subordinated Debentures when due, during the continuance of such an event of default a holder of Preferred Securities may directly institute proceedings against Ohio Edison to obtain payment of such principal or interest on Subordinated Debentures having a principal amount equal to the aggregate liquidation amount of the Preferred Securities owned by such holder. 58 61 BOOK-ENTRY AND SETTLEMENT If any Subordinated Debentures are distributed to holders of Trust Securities (see "Description of the Preferred Securities"), such Subordinated Debentures will be issued in fully registered form without coupons. In such event, investors may elect to hold their Subordinated Debentures directly or, subject to the rules and procedures of a Depository Institution, hold interests in a book-entry certificate registered in the name of a Depository Institution or its nominee. For a description of a Depository Institution's book-entry system, see "Description of the Preferred Securities -- Book-Entry; Delivery and Form." As of the date of this Prospectus, the description herein of a Depository Institution's book-entry system and a Depository Institution's practices as they relate to purchases, transfers, notices and payments with respect to the Preferred Securities apply in all material respects to any Subordinated Debentures registered in the name of and held by a Depository Institution or its nominee. PAYMENT AND PAYING AGENTS Payment of principal of and premium, if any, on the Subordinated Debentures will be made only against surrender to the Paying Agent (as defined in the Indenture) of the Subordinated Debentures. Principal of and premium, if any, and interest on Subordinated Debentures will be payable, subject to any applicable laws and regulations, at the office of the Paying Agent (as defined in the Indenture) or such additional paying agents as Ohio Edison may designate, except that (i) at the option of Ohio Edison payment of any interest may be made by check mailed to the address of the person entitled thereto as such address shall appear in the security register with respect to the Subordinated Debentures and (ii) so long as the registered Holder (as defined in the Indenture) of any Subordinated Debentures is the Property Trustee, the payment of the principal of and interest (including Additional Interest, if any) on such Subordinated Debentures will be made at such place and to such account as the Property Trustee may designate. Payment of interest on the Subordinated Debentures on any Interest Payment Date will be made to the person in whose name the Subordinated Debenture (or predecessor security) is registered at the close of business on the relevant record date for such interest payment. The Debenture Trustee will initially act as Paying Agent with respect to the Subordinated Debentures. Ohio Edison may at any time have one or more additional paying agents, except that if Ohio Edison fails to maintain a Paying Agent, the Debenture Trustee shall act as such. The Debenture Trustee and the Paying Agent shall pay to Ohio Edison upon written request any money or securities held by them for the payment of principal or interest, if any, that remains unclaimed for two years. After that, Holders entitled to the money or securities must look to Ohio Edison for payment unless an applicable abandoned property law dictates otherwise. MODIFICATION OF THE INDENTURE The Indenture contains provisions permitting Ohio Edison and the Debenture Trustee, with the consent of the holders of not less than a majority in principal amount of the Subordinated Debentures, to amend, supplement or waive compliance with any provision of the Indenture or any supplemental indenture affecting that series or the rights of the holders of the Subordinated Debentures; provided that no such amendment, supplement or waiver may, without the consent of the holder of each outstanding Subordinated Debenture affected thereby, (i) extend the fixed maturity of the Subordinated Debentures, or reduce the principal amount thereof, or reduce the rate or extend the time of payment of interest thereon, or reduce any premium payable upon the redemption thereof, (ii) waive a default in the payment of the principal of, or interest, if any, on any Subordinated Debenture, unless Ohio Edison has paid or deposited with the Debenture Trustee a sum sufficient to pay all matured installments of interest upon all of the Subordinated Debentures and the principal of the Subordinated Debentures that shall have become due otherwise than by acceleration, (iii) make any Subordinated Debenture payable in money or securities other than that stated in the terms thereof, or (iv) reduce the percentage of Subordinated Debentures the holders of which are required to consent to any such amendment, supplement or waiver. 59 62 In addition, Ohio Edison and the Debenture Trustee may execute, without the consent of or notice to holders of the Subordinated Debentures, any amendment or supplemental indenture for certain other usual purposes including the creation of any new series of subordinated debt securities. SUCCESSOR CORPORATION Ohio Edison may not consolidate with or merge into, or transfer its properties and assets substantially as an entirety to, another corporation unless (i) the successor corporation, which shall be a corporation organized and existing under the laws of the United States or a State thereof, assumes by supplemental indenture all the obligations of Ohio Edison under the Subordinated Debentures and the Indenture, and (ii) immediately after giving effect to such transaction, no Indenture Event of Default shall have occurred and be continuing. The Indenture does not otherwise contain any covenant which restricts the ability of Ohio Edison to merge or consolidate with or into any other corporation, sell or convey all or substantially all of its assets to any person, firm or corporation or otherwise engage in restructuring transactions. DEFEASANCE AND DISCHARGE Under the terms of the Indenture, Ohio Edison will be discharged from any and all obligations in respect of the Subordinated Debentures (except in each case for certain obligations with respect to provisions for payment of the Subordinated Debentures and obligations to maintain records, register the transfer or exchange of Subordinated Debentures, replace stolen, lost or mutilated Subordinated Debentures, maintain paying agencies, compensate and indemnify the Debenture Trustee, and replace the Debenture Trustee under certain circumstances) if Ohio Edison (i) irrevocably deposits with the Debenture Trustee, in trust, moneys or U.S. Government Obligations (as defined in the Indenture) sufficient to pay the principal of, and interest on, all Subordinated Debentures not theretofore cancelled, replaced or paid, all in accordance with their terms and (ii) delivers to the Debenture Trustee an opinion of counsel to the effect that, based upon Ohio Edison's receipt from, or the publication by, the Internal Revenue Service of a ruling or a change in law, the holders of the Subordinated Debentures will not recognize income, gain or loss for United States federal income tax purposes as a result of the deposit, defeasance and discharge and will be subject to United States federal income tax on the same amount and in the same manner and at the same times as would have been the case if such deposit, defeasance or discharge had not occurred. GOVERNING LAW The Indenture (for all purposes relating to the Subordinated Debentures) and the Subordinated Debentures will be governed by, and construed in accordance with, the internal laws of the State of New York. INFORMATION CONCERNING THE DEBENTURE TRUSTEE The Debenture Trustee, prior to default, undertakes to perform only such duties as are specifically set forth in the Indenture and the Trust Indenture Act and, after default, shall exercise the same degree of care and skill as a prudent individual would exercise under the circumstances in the conduct of his or her own affairs. Subject to such provision, the Debenture Trustee is under no obligation to perform any duty or exercise any right or power, unless it receives indemnity satisfactory to it against any loss, liability or expense. The Debenture Trustee also serves as Property Trustee under the Declaration and as the Preferred Guarantee Trustee under the Preferred Securities Guarantee. Ohio Edison and certain of its subsidiaries maintain deposit accounts and conduct other banking transactions with the Debenture Trustee in the ordinary course of their businesses. The Debenture Trustee also acts as trustee under certain indentures relating to borrowings by or for the benefit of the lessors to finance their acquisition of Ohio Edison's interest in the Perry Nuclear Power Plant and Beaver Valley Power Station in connection with the sale and leaseback of certain undivided interests in those plants. Under the sale/leaseback documents, Ohio Edison is ultimately responsible for the payment of this indebtedness. The Debenture Trustee also acts as trustee under the trust agreement, guarantee and indenture relating to a series of preferred securities issued by another Ohio Edison trust subsidiary. 60 63 MISCELLANEOUS Ohio Edison will have the right at all times to assign any of its rights or obligations under the Indenture to a direct or indirect wholly owned subsidiary of Ohio Edison; provided, that in the event of any such assignment, Ohio Edison will remain liable for all such obligations. Subject to the foregoing, the Indenture will be binding upon the parties thereto and their respective successors. The Indenture provides that Ohio Edison will pay all costs and expenses of the Trust. EFFECT OF OBLIGATIONS UNDER THE SUBORDINATED DEBENTURES AND THE PREFERRED SECURITIES GUARANTEE As set forth in the Declaration, the Trust exists for the purpose of (a) issuing (i) its Preferred Securities in exchange for Class A Shares validly tendered in the Offer and delivering such Class A Shares to Ohio Edison in consideration of the deposit by Ohio Edison in the Trust, as Trust assets, of Subordinated Debentures having an aggregate stated principal amount equal to the aggregate stated liquidation amount of such Preferred Securities, and (ii) its Common Securities to Ohio Edison in exchange for cash and investing the proceeds thereof in an equivalent amount of Subordinated Debentures and (b) engaging in such other activities as are necessary, convenient or incidental thereto. As long as payments of interest and other payments are made when due on the Subordinated Debentures, such payments will be sufficient to cover distributions and payments due on the Trust Securities primarily because (i) the aggregate principal amount of the Subordinated Debentures will be equal to the aggregate stated liquidation amount of the Trust Securities; (ii) the interest rate and interest and other payment dates on the Subordinated Debentures will match the distribution rate and distribution and other payment dates for the Preferred Securities; (iii) Ohio Edison shall pay for all costs, expenses, debts and obligations of the Trust (other than with respect to the Trust Securities); and (iv) the Declaration provides that Ohio Edison Trustees shall not cause or permit the Trust to, among other things, engage in any activity that is not consistent with the purposes of the Trust. Payments of distributions (to the extent funds therefor are available) and other payments due on the Preferred Securities (to the extent funds therefor are available) are guaranteed by Ohio Edison as and to the extent set forth under "Description of the Preferred Securities Guarantee." If Ohio Edison does not make interest payments on the Subordinated Debentures purchased by the Trust, it is expected that the Trust will not have sufficient funds to pay distributions on the Preferred Securities. The Preferred Securities Guarantee does not apply to any payment of distributions unless and until the Trust has sufficient funds for the payment of such distributions. If Ohio Edison fails to make interest or other payments on the Subordinated Debentures when due (taking into account any Extension Period), the Declaration provides a mechanism whereby the holders of the Preferred Securities, using the procedures described in "Description of the Preferred Securities -- Voting Rights," may direct the Property Trustee to enforce its rights under the Subordinated Debentures or may proceed directly against Ohio Edison to enforce the Subordinated Debentures. If the Property Trustee fails to enforce its rights under the Declaration, a holder of Preferred Securities may institute a legal proceeding directly against Ohio Edison to enforce the Property Trustee's rights under the Declaration without first instituting any legal proceeding against the Property Trustee or any other person or entity, including the Trust. In addition, during the continuance of a Declaration Event of Default that results from the failure of Ohio Edison to pay principal of or interest on the Subordinated Debentures when due, a holder may proceed directly against Ohio Edison to obtain payment of such principal or interest on Subordinated Debentures having a principal amount equal to the aggregate liquidation amount of the Preferred Securities owned of record by such holder. If Ohio Edison fails to make payments under the Preferred Securities Guarantee, the Preferred Securities Guarantee provides a mechanism whereby the holders of a majority in liquidation amount of the Preferred Securities may direct the Preferred Guarantee Trustee to enforce its rights thereunder. If the Preferred Guarantee Trustee fails to enforce the Preferred Securities Guarantee, any holder of Preferred Securities may 61 64 institute a legal proceeding directly against Ohio Edison to enforce the Preferred Guarantee Trustee's rights under the Preferred Securities Guarantee, without first instituting a legal proceeding against the Trust, the Preferred Guarantee Trustee or any other person or entity. In addition, any record holder of Preferred Securities shall have the right, which is absolute and unconditional, to proceed directly against Ohio Edison to obtain Guarantee Payments, without first waiting to determine if the Preferred Guarantee Trustee has enforced the Preferred Security Guarantee or instituting a legal proceeding against the Trust, the Preferred Guarantee Trustee or any other person or entity. Ohio Edison's obligations under the Preferred Securities Guarantee, the Declaration, the Subordinated Debentures and the Indenture, in the aggregate, provide a full and unconditional guarantee by Ohio Edison of payments due on the Preferred Securities. DESCRIPTION OF THE CLASS A SHARES The description set forth below of certain provisions of the Preferred Stock and Ohio Edison's Amended Articles of Incorporation, as amended (the "Amended Articles of Incorporation"), do not purport to be complete and are subject to and qualified in their entirety by reference to the Amended Articles of Incorporation and do not relate or give effect to provisions of statutory or common law. Unless otherwise indicated, whenever particular headings or paragraph designations are referred to, they are headings and paragraph designations in Article Fourth of the Amended Articles of Incorporation. Ohio Edison's Preferred Stock, $100 Par Value (the "$100 Preferred Stock"), and Class A Shares are herein collectively referred to as the "Preferred Stock." GENERAL The Preferred Stock is issuable in series of equal rank except that shares of different series may vary in certain respects, which will be determined by the Board of Directors of Ohio Edison and set forth in an amendment to the Amended Articles of Incorporation prior to the issuance such stock. The currently authorized Preferred Stock consists of 6,000,000 shares of Preferred Stock, $100 Par Value ("$100 Preferred Stock"), of which 859,650 shares were issued and outstanding as of December 31, 1995 as shares of various series heretofore established and 8,000,000 shares of Class A Preferred Stock, $25 Par Value ("Class A Preferred Stock"), of which 4,000,000 shares are issued and outstanding. DIVIDENDS Holders of Class A Shares, pari passu with each other series of the Preferred Stock, will be entitled to receive, when and as declared by the Board of Directors out of funds legally available therefor, in preference to the common stock and any other stock which by its terms is junior to the Preferred Stock, to cumulative dividends at the rate of 7.75% per annum, payable quarterly on January 1, April 1, July 1 and October 1 of each year. Dividends must be paid on all shares of Preferred Stock if paid on the shares of any series of Preferred Stock. After payment in full of all dividends accrued on the Preferred Stock, dividends on the Common Stock or any other junior stock of Ohio Edison may be declared and paid as the Board of Directors may determine, subject to certain conditions. (General Provisions (A) and (B).) REDEMPTION The Class A Shares are not redeemable on or before April 1, 1998. However, a redemption price of $25 per share plus an amount equal to accumulated and unpaid dividends would be applicable during this period in the event of a voluntary liquidation, dissolution or winding up of Ohio Edison, as described in the first sentence under "-- Liquidation." After April 1, 1998, Ohio Edison may redeem the Class A Shares in whole or in part upon not less than 30 days' notice at a price of $25 per share plus an amount equal to the accumulated and unpaid dividends thereon, if any, to the date set for redemption. The Class A Shares are not subject to a sinking fund. 62 65 LIQUIDATION Upon any dissolution, liquidation or winding up of Ohio Edison, whether voluntary or involuntary, the holders of Preferred Stock are entitled to receive the par value of their particular series, plus dividends accrued to the date of distribution, before any distribution shall be made to holders of Common Stock or any other class of stock of Ohio Edison which is junior to the Preferred Stock by its terms. Distributions of assets on liquidation must be pro rata in proportion to the amount fixed for each series of Preferred Stock, if the available assets are insufficient to provide for the full payment of such amount. After payment of the full distributive amount to which they are entitled, the holders of such series of the Preferred Stock will have no right or claim to any of the remaining assets of Ohio Edison. Neither the sale of all or substantially all of the property of Ohio Edison nor the merger or consolidation of Ohio Edison into or with any other corporation shall be deemed to be a dissolution, liquidation or winding up of Ohio Edison. VOTING RIGHTS The Amended Articles of Incorporation provides that at all elections of directors of Ohio Edison, and on all other matters, except as otherwise required by the Amended Articles of Incorporation or by the laws of the State of Ohio, the holders of Common Stock shall have the exclusive right to vote; provided, however, that whenever and as often as four quarterly dividends payable on the Preferred Stock of any series shall be in default, in whole or in part, and thereafter until all defaults have been cured, the holders of Preferred Stock shall have the exclusive right, voting separately and as a single class, each share of $100 Preferred Stock being counted as one and each Class A Share being counted as one-quarter, to elect the smallest number of directors which shall constitute a majority of the directors of Ohio Edison, and, in all matters with respect to the governing of the affairs of Ohio Edison other than the election of directors, each share of the $100 Preferred Stock shall be counted as one and each Class A Share shall be counted as one-quarter so that each holder of $100 Preferred Stock shall be entitled to one vote for each share of such stock held, and each holder of Class A Shares shall be entitled to one-quarter vote for each share of such stock held. In the event of defaults entitling the holders of Preferred Stock to vote, the holders of the Common Stock, subject to the rights, if any, existing at the time of the holders of Ohio Edison's Preference Stock, shall have the exclusive right, voting separately and as a class, to elect the greatest number of directors which shall constitute a minority of the directors of Ohio Edison, and, on all other matters, each holder of Common Stock shall be entitled to one vote for each such share of stock held. At all elections of directors of Ohio Edison, each stockholder entitled to vote may cast the whole number of his votes for one candidate or distribute them among two or more candidates as he may prefer. (Voting Powers and Other Rights.) The Amended Articles of Incorporation also provides that certain actions may not be effected without the consent or vote of a specified percentage of the Preferred Stock, voting as a single class; in each such instance, for the purpose of determining the total number of outstanding shares of Preferred Stock (as well as the number of shares voted for or against the questions presented), each share of $100 Preferred Stock shall be counted as one share and each Class A Share shall be counted as one-quarter share. RESTRICTIONS ON ISSUANCE OF PRIOR PREFERRED STOCK AND ALTERING TERMS OF PREFERRED STOCK The Amended Articles of Incorporation requires the affirmative vote of holders of 66 2/3% of outstanding shares of the Preferred Stock voting as a single class (1) before any substantially prejudicial change of any rights or preferences of any outstanding shares of the Preferred Stock, (2) before the creation or authorization of shares of stock preferred as to dividends or assets over the Preferred Stock, and (3) within 180 days before the issuance of any such shares so preferred or any securities convertible into such shares. (General Provisions (E).) RESTRICTIONS ON MERGER OR SALE OF ASSETS, ISSUE OF UNSECURED DEBT AND SALE OF ADDITIONAL PREFERRED STOCK The Amended Articles of Incorporation requires the affirmative vote of the holders of a majority of outstanding shares of the Preferred Stock, voting as a single class, each share of $100 Preferred Stock being 63 66 counted as one share and each share of Class A Preferred Stock being counted as one-quarter share, for the following corporate actions. (1) Merger, consolidation, or any disposition of substantially all of Ohio Edison's property, unless such action has been approved or directed by a Federal regulatory authority. (2) The issue or assumption of unsecured indebtedness in excess of 20% of capital, surplus and secured indebtedness (not counting certain long-term unsecured indebtedness not in excess of 20% of capital, surplus and secured indebtedness), except to redeem all outstanding shares of [$100] Preferred Stock or to refund or retire indebtedness. (3) The issue or other disposition of shares of Preferred Stock (a) when current gross income available for payment of interest, as defined, is less than one and one-half times the aggregate of the annual dividend requirements on all shares of the Preferred Stock and of all classes of senior or equal ranking stock thereupon to be outstanding and annual interest requirements on all indebtedness of Ohio Edison or (b) when the aggregate of capital applicable to common stock and of surplus is less than the amount payable on involuntary liquidation to all shares of the Preferred Stock and of all classes of senior or equal ranking stock thereupon to be outstanding. (General Provisions (E).) The issue or other disposition of shares of the Preferred Stock when current net income available for payment of dividends, as defined, is less than twice the annual dividend requirements on all shares of Preferred Stock and of all classes of senior or equal ranking stock thereupon to be outstanding is prohibited without amendment of the Amended Articles of Incorporation, so long as any shares of the 4.40% Preferred Stock, $100 Par Value ("4.40% Preferred Stock") or of the 3.90% Preferred Stock, $100 Par Value ("3.90% Preferred Stock"), are outstanding, but when no such shares are outstanding, such an issue or disposition would be permitted if approved by the affirmative vote of the holders of at least a majority of the outstanding shares of the Preferred Stock, voting as a single class, each share of $100 Preferred Stock being counted as one share and each share of Class A Preferred Stock being counted as one-quarter share. The issue or disposition of shares of the Preferred Stock, so long as any shares of the 4.40% Preferred Stock or of the 3.90% Preferred Stock are outstanding, is prohibited unless the par or stated value of outstanding Common Stock exceeds $14,366,776 by an amount at least equal to $75 times the number of shares of $100 Preferred Stock, and $18.75 times the number of Class A Shares, thereupon to be outstanding in excess of 200,000 shares thereof (such number of shares to be calculated on the basis of each share of $100 Preferred Stock being counted as one share and each share of Class A Preferred Stock being counted as one-quarter share). No provision is made by which either of the foregoing prohibitions can be waived (without amendments to the Amended Articles of Incorporation) by any vote of holders of shares of the Preferred Stock. (General Provisions (E) and (F).) PREEMPTIVE RIGHTS The holders of the Preferred Stock do not have any preemptive rights. (Article Twelfth.) LISTING The Class A Shares are listed on the NYSE and the Chicago Stock Exchange under the symbol "OECPrM". TRANSFER AGENT AND REGISTRAR Ohio Edison, is the transfer agent and registrar for the Class A Shares. TAXATION The following discussion describes certain United States federal income tax consequences of the acquisition, ownership and disposition of Preferred Securities as of the date hereof and represents the opinion of Winthrop, Stimson, Putnam & Roberts, counsel to Ohio Edison, insofar as it relates to matters of law or 64 67 legal conclusions. Except where noted, it addresses only Preferred Securities held as capital assets and acquired pursuant to the Offer and does not address special situations, such as those of dealers in securities or currencies, financial institutions, life insurance companies, persons holding Preferred Securities as part of a hedging or conversion transaction or a straddle, or United States Holders (as defined below) whose "functional currency" is not the United States dollar. The following discussion is based upon the provisions of the Internal Revenue Code of 1986, as amended (the "Code"), Treasury Regulations promulgated thereunder, rulings and judicial decisions as of the date hereof, which authorities may be repealed, revoked or modified (possibly on a retroactive basis) so as to result in United States federal tax consequences different from those discussed below. ALL HOLDERS OF CLASS A SHARES ARE ADVISED TO CONSULT THEIR TAX ADVISORS AS TO THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE OF CLASS A SHARES FOR PREFERRED SECURITIES AND OF THE OWNERSHIP AND DISPOSITION OF PREFERRED SECURITIES IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES, AS WELL AS THE EFFECT OF ANY STATE, LOCAL OR OTHER TAX LAWS. UNITED STATES HOLDERS As used herein, a "United States Holder" is a holder that is a citizen or resident of the United States, a corporation, partnership or other entity created or organized in or under the law of the United States or any state, or an estate or trust the income of which is subject to United States federal income taxation regardless of its source. A "Non-United States Holder" is a holder that is not a United States Holder. EXCHANGE OF CLASS A SHARES FOR PREFERRED SECURITIES The exchange of Class A Shares for Preferred Securities pursuant to the Offer will be a taxable transaction. In the case of a United States Holder who owns (actually or constructively) solely Class A Shares, or not more than one percent of the Class A Shares outstanding and not more than one percent of any other class of Ohio Edison stock, gain or loss will be recognized in an amount equal to the difference between the fair market value on the Expiration Date of the Preferred Securities received in the exchange (which will reflect the Pre-Issuance Accrued Distribution) and the exchanging holder's tax basis in the Class A Shares exchanged therefor, and such gain or loss will be long-term capital gain or loss if the Class A Shares have been held for more than one year as of such date. Holders of Class A Shares who own (actually or constructively) more than one percent of any class of Ohio Edison stock are advised to consult their tax advisors as to the income tax consequences of exchanging Class A Shares for Preferred Securities. CLASSIFICATION OF THE TRUST In the opinion of Winthrop, Stimson, Putnam & Roberts, under current law and assuming full compliance with the terms of the Declaration, the Trust will be classified for United States federal income tax purposes as a grantor trust and not as an association taxable as a corporation. Accordingly, each holder will be considered the owner of a pro rata portion of the Subordinated Debentures held by the Trust and will be required to include in gross income his or her pro rata share of the income accrued on the Subordinated Debentures. ORIGINAL ISSUE DISCOUNT Under the terms of the Subordinated Debentures, Ohio Edison has the right to defer payments of interest for up to 20 consecutive quarterly interest payment periods. This option to defer interest payments will cause the Subordinated Debentures to be treated as having been issued with OID. As a result, United States Holders will be required to accrue their pro rata share of OID (as interest income) on an economic accrual basis over the term of the Subordinated Debentures regardless of whether they receive a cash payment with respect to the period to which such income is attributable and even if they use the cash method of accounting, 65 68 and actual distributions on the Preferred Securities will not be separately reported as taxable income. The amount of OID will be increased or decreased if the "issue price" of a Preferred Security (the fair market value on the Expiration Date, which will reflect the Pre-Issuance Accrued Distribution) is less than or greater than $25. It is anticipated that the issue price of a Preferred Security will equal or exceed $25. In the event that the issue price of a Preferred Security is less than $25, however, the Treasury Regulations may require a recalculation of the amount of OID for each period that Ohio Edison does not exercise its right to defer payments of interest. This recalculation could result in minor adjustments to the amount of OID taxable to holders for such period. POTENTIAL EXTENSION OF PAYMENT PERIOD ON THE SUBORDINATED DEBENTURES In the event that Ohio Edison elects to defer interest payments, a United States Holder will continue to accrue OID during an Extension Period, and any Holders who dispose of Preferred Securities prior to the record date for the payment of interest following such extended interest payment period will not receive from the Trust any cash related thereto. See "-- Disposition of the Preferred Securities." RECEIPT OF SUBORDINATED DEBENTURES OR CASH UPON LIQUIDATION OF THE TRUST Under current law, a distribution of the Subordinated Debentures as described under the caption "Description of the Preferred Securities -- Special Event Redemption or Distribution" would be a non-taxable event to holders for United States federal income tax purposes. In the event of such a distribution, a holder would receive an aggregate tax basis and a holding period in the Subordinated Debentures equal to the adjusted tax basis and holding period such holder had in his or her Preferred Securities. Under current law, a redemption of the Subordinated Debentures for cash as described under the caption "Description of the Preferred Securities -- Special Event Redemption or Distribution" would be a taxable event to holders for United States federal income tax purposes. In the event of such a redemption, a holder would recognize gain or loss as if he or she had sold such redeemed Preferred Securities for cash. See "-- Disposition of the Preferred Securities." MARKET DISCOUNT AND BOND PREMIUM Holders other than holders who acquire Preferred Securities pursuant to the Offer may be considered to have acquired their Preferred Securities with market discount, acquisition premium or amortizable bond premium. Such holders are advised to consult their tax advisors as to the tax consequences of the acquisition, ownership and disposition of Preferred Securities. DISPOSITION OF THE PREFERRED SECURITIES Upon a sale, exchange or other disposition of Preferred Securities (including a redemption for cash, but excluding a distribution of Subordinated Debentures), a holder will recognize gain or loss equal to the difference between the amount realized and the holder's adjusted tax basis in his or her Preferred Securities. A holder's adjusted tax basis in his or her Preferred Securities will generally equal the holder's initial tax basis (the fair market value on the Expiration Date, which will reflect the Pre-Issuance Accrued Distribution) increased by accrued OID and decreased by the amount of cash distributions. Gain or loss will be capital gain or loss and will be long-term capital gain or loss if, at the time of the sale, exchange or other disposition, the Preferred Securities have been held for more than one year. The Preferred Securities may trade at a price that does not fully reflect the value of accrued but unpaid interest with respect to the underlying Subordinated Debentures. In such event, a holder who disposes of Preferred Securities between record dates for payments of distributions thereon (and consequently does not receive a cash distribution from the Trust for the period prior to such disposition) will nevertheless be required to include as ordinary income accrued but unpaid interest on the Subordinated Debentures through the date of disposition and to add such amount to such holder's adjusted tax basis in the Preferred Securities disposed of. 66 69 Accordingly, such a holder will recognize a capital loss to the extent the selling price of the Preferred Securities (which may not fully reflect the amount of accrued but unpaid interest) is less than the holder's adjusted tax basis in the Preferred Securities (which will reflect accrued but unpaid interest). Subject to certain limited exceptions, capital losses cannot be applied to offset ordinary income for United States federal income tax purposes. NON-UNITED STATES HOLDERS Under present United States federal income tax law, and subject to the discussion below concerning backup withholding: (i) no withholding of United States federal income tax will be required with respect to a Non-United States Holder upon the exchange of Class A Shares for Preferred Securities pursuant to the Offer, provided such holder certifies to Ohio Edison or its agents, that such holder owns (actually or constructively) solely Class A Shares, or not more than one percent of the Class A Shares outstanding and not more than one percent of any other class of Ohio Edison stock, or that the exchange of Class AShares for Preferred Securities otherwise qualifies as a sale or exchange for United States federal income tax purposes. If a Non-United States Holder does not provide the certification described in the preceding sentence, Ohio Edison will withhold federal income tax at a rate of 30% of the gross proceeds paid to such holder pursuant to the Offer; (ii) payments by the Trust or any of its paying agents to any Non-United States Holder will not be subject to United States federal withholding tax, provided that (a) the beneficial owner of the Preferred Security does not actually or constructively own 10% or more of the total combined voting power of all classes of stock of Ohio Edison entitled to vote, (b) the beneficial owner of the Preferred Security is not a controlled foreign corporation that is related to Ohio Edison through stock ownership, and (c) either (A) the beneficial owner of the Preferred Security certifies to the Trust or its agent, under penalties of perjury, that it is not a United States Holder and provides its name and address or (B) a securities clearing organization, bank or other financial institution that holds customers' securities in the ordinary course of its trade or business (a "Financial Institution") and holds the Preferred Security in such capacity certifies to the Trust or its agent, under penalties of perjury, that such statement has been received from the beneficial owner by it, or by a Financial Institution between it and the beneficial owner, and furnishes the Trust or its agent with a copy thereof; and (iii) a Non-United States Holder will generally not be subject to United States federal income or withholding tax on any gain realized upon the sale or other disposition of a Preferred Security, except that a Non-United States Holder will be subject to United States federal income tax on any gain if such holder (a) is engaged in a trade or business in the United States and such gain is effectively connected with the conduct of such trade or business or (b) is an individual present in the United States for 183 days or more during the taxable year, and certain other conditions are met. INFORMATION REPORTING TO HOLDERS The Property Trustee will report the OID that accrued during the year with respect to the Subordinated Debentures, and any gross proceeds received by the Trust from the retirement or redemption of the Subordinated Debentures, annually to the holders of record of the Preferred Securities and the Internal Revenue Service. The Property Trustee currently intends to deliver such reports to holders of record prior to January 31 following each calendar year. It is anticipated that persons who hold Preferred Securities as nominees for beneficial holders will report the required tax information to beneficial holders on Form 1099. BACKUP WITHHOLDING Payments made in respect of, and proceeds from the sale of, Preferred Securities, or Subordinated Debentures distributed to holders of Preferred Securities, may be subject to a "backup" withholding tax of 31% unless the holder complies with certain identification requirements. Any withheld amounts will generally 67 70 be allowed as a credit against the holder's federal income tax liability, provided the required information is timely provided to the Internal Revenue Service. PROPOSED TAX LAW CHANGES On December 7, 1995, the U.S. Treasury Department announced a Balanced Budget Proposal containing an amendment that would classify a debt instrument issued on or after December 7, 1995 as equity if the instrument had a term exceeding 20 years and was not classified as indebtedness on the issuer's balance sheet. Because the Subordinated Debentures will have a maximum term not exceeding 20 years, the provisions of the proposed amendment are not applicable to the Subordinated Debentures. Ohio Edison cannot predict whether this proposed amendment may be modified or other legislation may be enacted that might affect the character or treatment for United States federal income tax purposes of the Subordinated Debentures or otherwise affect the Preferred Securities offered hereby. If legislation were enacted limiting, in whole or in part, the deductibility by Ohio Edison of interest on the Subordinated Debentures for United States federal income tax purposes, such enactment would be a Tax Event. Under certain circumstances following a Tax Event, Ohio Edison may cause the Subordinated Debentures to be redeemed, which would result in a redemption by the Trust of the Preferred Securities. See "Description of the Preferred Securities -- Special Event Redemption or Distribution." It is expected that the December 7, 1995 proposed tax law changes, if enacted, would not alter the United States federal income tax consequences of the exchange of Class A Shares for Preferred Securities and the ownership and disposition of Preferred Securities. See "Taxation." LEGAL MATTERS Certain matters of Delaware law relating to the validity of the Preferred Securities will be passed upon for the Trust by Richards, Layton & Finger, special Delaware counsel to the Trust. The validity of the Preferred Securities Guarantee and the Subordinated Debentures, and certain legal matters in connection with the Preferred Securities, the Preferred Securities Guarantee and the Subordinated Debentures, will be passed upon for the Trust and Ohio Edison by Anthony J. Alexander, Esq., Akron, Ohio, who is Senior Vice President and General Counsel of Ohio Edison, and Winthrop, Stimson, Putnam & Roberts, New York, New York, counsel to Ohio Edison and the Trust. Any tax matters with respect to the Preferred Securities, the Subordinated Debentures, and the Preferred Securities Guarantee will be passed on for Ohio Edison and the Trust by Winthrop, Stimson, Putnam & Roberts, New York, New York, counsel to Ohio Edison and the Trust. Certain legal matters in connection with the Preferred Securities will be passed upon for the Dealer Manager by Simpson Thacher & Bartlett (a partnership which includes professional corporations), New York, New York. EXPERTS [The consolidated financial statements and related schedule(s) incorporated by reference or included in Ohio Edison's Annual Report on Form 10-K and Ohio Edison's Current Report on Form 8-K dated February 23, 1996, incorporated by reference in this Prospectus, have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their reports dated February 3, 1995 and February 8, 1996, respectively, with respect thereto, and are incorporated by reference herein in reliance upon the authority of said firm as experts in accounting and auditing in giving said reports. Reference is made to said reports which include an explanatory paragraph with respect to certain changes in accounting methods as discussed in the Notes to the consolidated financial statements.] With respect to the unaudited interim consolidated financial information for the quarters ended March 31, 1995 and 1994, June 30, 1995 and 1994 and September 30, 1995 and 1994, Arthur Andersen LLP has applied limited procedures in accordance with professional standards for 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 Act for their reports on the 68 71 unaudited interim consolidated financial information because those reports are not "reports" or "parts" of the registration statement prepared or certified by the accountants within the meaning of Sections 7 and 11 of the Act. ERISA CONSIDERATIONS Generally, employee benefit plans that are subject to the Employee Retirement Income Security Act of 1974 ("ERISA"), or Section 4975 of the Code ("Plans"), may purchase Preferred Securities, subject to the investing fiduciary's determination that the investment in Preferred Securities satisfies ERISA's fiduciary standards and other requirements applicable to investments by the Plan. In any case, Ohio Edison and/or any of its affiliates may be considered a "party in interest" (within the meaning of ERISA) or a "disqualified person" (within the meaning of Section 4975 of the Code) with respect to certain plans (generally, Plans maintained or sponsored by, or contributed to by Ohio Edison or any of its affiliates). The acquisition and ownership of Preferred Securities by a Plan (or by an individual retirement arrangement or other Plans described in Section 4975(e)(1) of the Code) with respect to which Ohio Edison or any of its affiliates is considered a party in interest or a disqualified person, may constitute or result in a prohibited transaction under ERISA or Section 4975 of the Code, unless such Preferred Securities are acquired pursuant to and in accordance with an applicable exemption. As a result, Plans with respect to which Ohio Edison or any of its affiliates is a party in interest or a disqualified person should not acquire Preferred Securities. Any other Plans or other entities whose assets include Plan assets subject to ERISA proposing to acquire Preferred Securities should consult with their own ERISA counsel. 69 72 Facsimile copies of the Letter of Transmittal will be accepted. Letters of Transmittal, certificates representing Class A Shares and any other required documents should be sent by each Holder of Class A Shares or his broker, dealer, commercial bank, trust company or other nominee to the Exchange Agent at one of the addresses as set forth below: THE EXCHANGE AGENT IS: THE BANK OF NEW YORK By Mail: By Hand or By Overnight Courier: Tender and Exchange Department Tender & Exchange Department P.O. Box 11248 101 Barclay Street Church Street Station Receive and Deliver Window New York, NY 10286-1248 New York, New York 10286
By Facsimile Transmission: (For Eligible Institutions Only) (212) 815-6213 Confirm by Telephone: (800) 507-9357 The Information Agent Is: (LOGO) Wall Street Plaza New York, New York 10005 (800) 223-2064 (Toll-Free) Banks and Brokers Call Collect: (212) 440-9800 Any questions or requests for assistance or additional copies of this Prospectus, the Letter of Transmittal or for copies of the Notice of Guaranteed Delivery may be directed to the Information Agent at its telephone number and location set forth above. You may also contact your broker, dealer, commercial bank or trust company or other nominee for assistance concerning the Offer. The Dealer Manager for the Offer Is: MERRILL LYNCH & CO. World Financial Center North Tower -- Seventh Floor New York, New York 10281 (212) 236-4565 (Collect) 70 73 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 20. 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, 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, criminal or civil, 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 interest 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 two-thirds written consent of such shareholders), by judicial proceeding or by written opinion of legal counsel not retained by the corporation or any person to be indemnified during the five years preceding the date of determination. Section 36 of Ohio Edison Company's Code of Regulations provides as follows: "The Corporation shall indemnify any person who is or was a director, officer, employee or agent of the Corporation or any person who is or has served at the request of the Corporation as a director, officer, employee, agent or trustee of another corporation, joint venture, trust or other enterprise (as his heirs, executors and administrators) against expenses, including attorneys' 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 director, officer, employee, agent or trustee in connection with any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative to the full extent and according to the procedures and requirements set forth in any applicable law as the same may be in effect from time to time." The following resolution was adopted by the Board of Directors of Ohio Edison Company on December 15, 1992 and made applicable to this registration statement at meetings held on March 16, 1993, September 21, 1993 and October 19, 1993: "RESOLVED, FURTHER: That, in addition to and not in derogation of any other indemnity that may be available, with respect to the preparation and filing of registration statement or registration statements with the Securities and Exchange Commission in connection with the proposed issuance and sale of the Long-term Indebtedness and/or the Equity Securities of the Company authorized at this meeting, this Company indemnify and save harmless each and every officer and employee of the Company executing and preparing any such registration statement in its original or amended form and every director of the Company who was a director thereof at the time of the filing of any such registration statement in its original or amended form, against any and all expenses reasonably incurred by them or any of them in connection with any action, suit or proceeding arising out of the preparation, filing or use of any such registration statement or the related prospectus whether brought under the Securities Act of 1933 as amended, or under any other applicable law where such action, suit or proceeding is finally adjudicated in favor of such director, officer or employee and the time to appeal has expired;" Similar indemnity resolutions were adopted with respect to the Common Stock and various issues of First Mortgage Bonds, Preferred Stock and Preference Stock currently outstanding. II-1 74 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. Ohio Edison Company has insurance covering, subject to certain deductible provisions, its liabilities and expenses which might arise in connection with its lawful indemnification of its directors and officers for certain of their liabilities and expenses and also covering, subject to certain deductible provisions, its officers against certain other liabilities. Section 11.11 of the Form of Indenture filed as Exhibit 4.1 to this Registration Statement provides that no past, present or future director, officer, employee or stockholder, as such, of Ohio Edison or any successor thereof shall have any liability for any obligations of Ohio Edison or for any claim based on, in respect of, or by reason of, such obligations or their creation, all such liability being expressly waived and released as part of the consideration for the issue of securities under such Indenture. Section 10.4 of the Form of Amended and Restated Declaration of Trust filed as Exhibit 4.5 to this Registration Statement sets forth that Ohio Edison shall indemnify any Company Trustee (or any affiliates, officers, directors, shareholders, members, partners, employees, representatives or agents thereof) or any employee or agent of the Trust or its affiliates against certain liabilities incurred by such indemnified person, other than through gross negligence or willful misconduct, by reason of the creation, operation or termination of the Trust, and shall also advance expenses incurred by such an indemnified person in defending claims. II-2 75 ITEM 21. EXHIBITS.
EXHIBIT NO. - - ----------- 1 -- Form of Dealer Manager Agreement (to be filed by amendment) 4.1 -- Form of Indenture between Ohio Edison and The Bank of New York, as Trustee 4.2 -- Form of First Supplemental Indenture to Indenture 4.3 -- Declaration of Trust of Ohio Edison Financing Trust II 4.4 -- Certificate of Trust of Ohio Edison Financing Trust II 4.5 -- Form of Amended and Restated Declaration of Trust of Ohio Edison Financing Trust II 4.6 -- Form of Preferred Security (included in Exhibit 4.5 above) 4.7 -- Form of Junior Subordinated Debenture (included in Exhibit 4.2 above) 4.8 -- Form of Guarantee Agreement with respect to Preferred Securities 5.1 -- Opinion of Anthony J. Alexander, Esq., Senior Vice President and General Counsel of Ohio Edison Company 5.2 -- Opinion of Richards, Layton & Finger 8 -- Tax Opinion of Winthrop, Stimson, Putnam & Roberts 12 -- Ohio Edison Company Computations of Ratio of Earnings to Fixed Charges and Ratio of Earnings to Fixed Charges Plus Preferred and Preference Stock Dividend Requirements (Pre-Income Tax Basis) 15 -- Letter of Arthur Andersen LLP regarding unaudited interim financial information 23.1 -- Consent of Arthur Andersen LLP 23.2 -- Consents of Anthony J. Alexander, Esq. and Winthrop, Stimson, Putnam & Roberts (included in Exhibits 5.1 and 8 above, respectively) 23.3 -- Consent of Richards, Layton & Finger (included in Exhibit 5.2 above) 24.1 -- Powers of Attorney for Ohio Edison Company 24.2 -- Power of Attorney for Ohio Edison Company, as sponsor, to sign this Registration Statement on behalf of Ohio Edison Financing Trust II (included in Exhibit 4.3 above) 25.1 -- Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Bank of New York, as Trustee under the Indenture 25.2 -- Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Bank of New York, as Property Trustee, under the Amended and Restated Declaration of Trust 25.3 -- Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Bank of New York, as Indenture Trustee, under the Preferred Securities Guarantee 99.1 -- Form of Letter of Transmittal 99.2 -- Form of Notice of Guaranteed Delivery 99.3 -- Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees 99.4 -- Form of Letter to Clients 99.5 -- Form of Exchange Agent Agreement 99.6 -- Form of Information Agent Agreement 99.7 -- Form of Newspaper Announcement 99.8 -- Form of Ohio Edison Company Letter to Holders of 7.75% Class A Preferred Stock 99.9 -- Questions and Answers Regarding Preferred Securities 99.10 -- Form of Designation of Soliciting Dealers
ITEM 22. UNDERTAKINGS. Each of the Registrants hereby undertakes: (1) That, for purposes of determining any liability under the Securities Act of 1933, each filing of Ohio Edison's Annual Report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to II-3 76 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 therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (2) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrants pursuant to the foregoing provisions, or otherwise, the Registrants have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrants of expenses incurred or paid by a director, officer or controlling person of the Registrants 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, the Registrants will, unless in the opinion of their 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 Act and will be governed by the final adjudication of such issue. (3) To respond to requests for information that is incorporated by reference into the Prospectus pursuant to Item 4, 10(b), 11 or 13 of Form S-4, within one business day of receipt of such request, and to send the incorporated documents by first-class mail or equally prompt means. This includes information contained in documents filed subsequent to the effective date of the Registration Statement through the date responding to the request. (4) To supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the Registration Statement when it became effective. II-4 77 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, Ohio Edison Company certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-4 and has duly caused this 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 6th day of March, 1996. OHIO EDISON COMPANY By: W. R. HOLLAND -------------------------------------- W.R. Holland President and Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.
NAME TITLE DATE - - ------------------------------------- ----------------------------------- -------------- W. R. HOLLAND President and Chief Executive March 6, 1996 - - ------------------------------------- Officer and Director (Principal (W.R. Holland) Executive Officer) H.P. BURG* Senior Vice President and Director March 6, 1996 - - ------------------------------------- (Principal Financial Officer and (H.P. Burg) Principal Accounting Officer) DONALD C. BLASIUS* Director March 6, 1996 - - ------------------------------------- (Donald C. Blasius) ROBERT H. CARLSON* Director March 6, 1996 - - ------------------------------------- (Robert H. Carlson) ROBERT M. CARTER* Director March 6, 1996 - - ------------------------------------- (Robert M. Carter) CAROL A. CARTWRIGHT* Director March 6, 1996 - - ------------------------------------- (Carol A. Cartwright) R.L. LOUGHHEAD* Director March 6, 1996 - - ------------------------------------- (R.L. Loughhead) RUSSELL W. MAIER* Director March 6, 1996 - - ------------------------------------- (Russell W. Maier)
II-5 78
NAME TITLE DATE - - ------------------------------------- ----------------------------------- -------------- GLENN H. MEADOWS* Director March 6, 1996 - - ------------------------------------- (Glenn H. Meadows) PAUL J. POWERS* Director March 6, 1996 - - ------------------------------------- (Paul J. Powers) CHARLES W. RAINGER* Director March 6, 1996 - - ------------------------------------- (Charles W. Rainger) GEORGE M. SMART* Director March 6, 1996 - - ------------------------------------- (George M. Smart) JESSE T. WILLIAMS, SR.* Director March 6, 1996 - - ------------------------------------- (Jesse T. Williams, Sr.) *By: JOHN H. BYINGTON, JR. March 6, 1996 - - ------------------------------------- (Attorney-in-fact)
Pursuant to the requirements of the Securities Act of 1933, Ohio Edison Financing Trust II certifies that it has reasonable grounds to believe that it meets all of the requirement for filing on Form S-4 and has duly caused this 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 6th day of March, 1996. OHIO EDISON FINANCING TRUST II By: Ohio Edison Company, as Sponsor By: T.F. STRUCK, II ---------------------------------- T.F. Struck, II Assistant Treasurer II-6 79 EXHIBIT INDEX
EXHIBIT NO. DOCUMENT - - ----------- ------------------------------------------------------------------------------ 1 -- Form of Dealer Manager Agreement (to be filed by amendment) 4.1 -- Form of Indenture between Ohio Edison and The Bank of New York, as Trustee 4.2 -- Form of First Supplemental Indenture to Indenture 4.3 -- Declaration of Trust of Ohio Edison Financing Trust II 4.4 -- Certificate of Trust of Ohio Edison Financing Trust II 4.5 -- Form of Amended and Restated Declaration of Trust of Ohio Edison Financing Trust II 4.6 -- Form of Preferred Security (included in Exhibit 4.5 above) 4.7 -- Form of Junior Subordinated Debenture (included in Exhibit 4.2 above) 4.8 -- Form of Guarantee Agreement with respect to Preferred Securities 5.1 -- Opinion of Anthony J. Alexander, Esq., Senior Vice President and General Counsel of Ohio Edison Company 5.2 -- Opinion of Richards, Layton & Finger 8 -- Tax Opinion of Winthrop, Stimson, Putnam & Roberts 12 -- Ohio Edison Company Computations of Ratio of Earnings to Fixed Charges and Ratio of Earnings to Fixed Charges Plus Preferred and Preference Stock Dividend Requirements (Pre-Income Tax Basis) 15 -- Letter of Arthur Andersen LLP regarding unaudited interim financial information 23.1 -- Consent of Arthur Andersen LLP 23.2 -- Consents of Anthony J. Alexander, Esq. and Winthrop, Stimson, Putnam & Roberts (included in Exhibits 5.1 and 8 above, respectively) 23.3 -- Consent of Richards, Layton & Finger (included in Exhibit 5.2 above) 24.1 -- Powers of Attorney for Ohio Edison Company 24.2 -- Power of Attorney for Ohio Edison Company, as sponsor, to sign this Registration Statement on behalf of Ohio Edison Financing Trust II (included in Exhibit 4.3 above) 25.1 -- Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Bank of New York, as Trustee under the Indenture 25.2 -- Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Bank of New York, as Property Trustee, under the Amended and Restated Declaration of Trust 25.3 -- Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Bank of New York, as Indenture Trustee, under the Preferred Securities Guarantee 99.1 -- Form of Letter of Transmittal 99.2 -- Form of Notice of Guaranteed Delivery 99.3 -- Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees 99.4 -- Form of Letter to Clients 99.5 -- Form of Exchange Agent Agreement 99.6 -- Form of Information Agent Agreement 99.7 -- Form of Newspaper Announcement 99.8 -- Form of Ohio Edison Company Letter to Holders of 7.75% Class A Preferred Stock 99.9 -- Questions and Answers Regarding Preferred Securities 99.10 -- Form of Designation of Soliciting Dealers
EX-4.1 2 FORM OF INDENTURE 1 EXHIBIT 4.1 =============================================================================== OHIO EDISON COMPANY AND THE BANK OF NEW YORK, Trustee --------------------------- INDENTURE Dated as of , 1996 --------------------------- Subordinated Securities =============================================================================== 2 INDENTURE dated as of __________, 1996, between OHIO EDISON COMPANY, an Ohio corporation ("Company"), and THE BANK OF NEW YORK, a New York banking corporation ("Trustee"). The Company has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of its unsecured subordinated debentures, notes, bonds or other evidences of subordinated indebtedness ("Securities"), to be issued in one or more series as provided in this Indenture. Each party agrees as follows for the benefit of the other party and for the equal and ratable benefit of the respective Holders from time to time of Securities or of series thereof: ARTICLE ONE Definitions and Incorporation by Reference Section 1.01. Definitions. "Affiliate" of any Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such Person. "Agent" means any Registrar, Paying Agent or co-Registrar. See Section 2.05. "Board of Directors" means the Board of Directors of the Company or any authorized committee thereof. "Board Resolution", when used with reference to the Company, means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification and delivered to the Trustee. "Business Day" means any day which is not a Legal Holiday. "Company" means the party named as such in this Indenture until a successor replaces it pursuant to the applicable provisions of this Indenture and thereafter means the successor. "Holder or Securityholder" means the person in whose name a Security is registered on the Registrar's books. "Indenture" means this Indenture as amended or supplemented from time to time and, unless the context indicates otherwise, shall include the form and terms of a particular series of Securities established as contemplated hereunder. "interest", when used with respect to an Original Issue Discount Security which by its terms bears interest only after maturity or upon default in any other payment due on such Security, means interest payable after maturity or upon such default, as the case may be. 3 "Interest Payment Date" means the date, if any, specified in the Securities of any series as the fixed date on which any installment of interest on the Securities of that series is due and payable. "Officer" means the Chairman of the Board, the President, any Vice President, the Treasurer or the Secretary of the Company. "Officers' Certificate" means a certificate signed by two Officers or by an Officer and an Assistant Treasurer or an Assistant Secretary of the Company and delivered to the Trustee. See Sections 11.04 and 11.05. "Opinion of Counsel" means a written opinion from legal counsel who is acceptable to the Trustee. The counsel may be an employee of or counsel to the Company or the Trustee. See Sections 11.04 and 11.05. "original issue discount" of any debt security, including any Original Issue Discount Security, means the difference between the principal amount of such debt security and the initial issue price of such debt security (as set forth, in the case of an Original Issue Discount Security, on the face of such Security). "Original Issue Discount Security" means any Security which provides for an amount less than the principal amount thereof to be due and payable upon acceleration of the maturity thereof pursuant to Section 6.02. "Person" means any individual, corporation, partnership, limited liability company, joint venture, joint-stock company, unincorporated association or government or any agency or political subdivision thereof. "Predecessor Securities" means, with respect to any Security, every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security, and, for the purpose of this definition, any Security authenticated and delivered under Section 2.09 in exchange for or in lieu of a mutilated, lost, destroyed or wrongfully-taken Security shall be deemed to evidence the same debt as the mutilated, lost, destroyed or wrongfully-taken Security. "principal" of a debt security, including any Security, means the amount (including, without limitation, if and to the extent applicable, any premium and, in the case of an Original Issue Discount Security, any accrued original issue discount, but excluding interest) that is payable with respect to such debt security as of any date and for any purpose (including, without limitation, in connection with any sinking fund, upon any redemption at the option of the Company, upon any purchase or exchange at the option of the Company or the holder of such debt security and upon any acceleration of the maturity of such debt security). "principal amount" of a debt security, including any Security, means the principal amount as set forth on the face of such debt security. -2- 4 "Regular Record Date" means the date, if any, specified in the Securities of any series as the record date for the determination of Securityholders to whom interest is payable on the next succeeding Interest Payment Date. "SEC" means the Securities and Exchange Commission. "Securities" means the Securities that are issued from time to time in one or more series under this Indenture as such Securities are amended or supplemented from time to time. "Subsidiary" means a corporation a majority of whose voting stock is owned by the Company and/or one or more Subsidiaries. Voting stock is capital stock having voting power under ordinary circumstances to elect directors. "TIA" means the Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb) as in effect on the date of this Indenture, except as provided in Section 9.03. "Trustee" means the party named as such in this Indenture until a successor replaces it and thereafter means the successor and if at any time there is more than one such party, "Trustee" as used with respect to the Securities of any series shall mean the Trustee with respect to Securities of that series. "Trust Officer" means any officer or assistant officer in the corporate trust department of the Trustee assigned by the Trustee to administer its corporate trust matters. "United States" means the United States of America. "U.S. Government Obligations" means direct obligations of, or obligations entitled to the full faith and credit of, the United States. Section 1.02. Other Definitions.
Term Defined in Section Bankruptcy Law 6.01 Code 9.01 Custodian 6.01 Event of Default 6.01 Legal Holiday 11.08 Paying Agent 2.05 Registrar 2.05
Section 1.03. Incorporation by Reference of Trust Indenture Act. Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings: -3- 5 Commission means the SEC. indenture securities means the Securities. indenture security holder means a Securityholder. indenture to be qualified means this Indenture. indenture trustee or institutional trustee means the Trustee. obligor on the indenture securities means the Company and any other obligor thereon. Section 1.04. Rules of Construction. Unless the context otherwise requires: (1) a term has the meaning assigned to it; (2) an accounting term not otherwise defined has the meaning assigned to it in accordance with generally accepted accounting principles in effect on the date of this Indenture; (3) "or" is not exclusive; and (4) words in the singular include the plural, and in the plural include the singular. ARTICLE TWO The Securities Section 2.01. Forms Generally and Dating. The Securities of each series may be issued in whole or in part in the form of one or more global Securities as shall be specified as contemplated by Section 2.02. The Securities of each series (including any temporary global Securities) shall be in one of the forms established from time to time by or pursuant to a resolution of the Board of Directors or in or pursuant to one or more indentures supplemental hereto, which shall set forth the information required by Section 2.02. The Securities shall have such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture or by a resolution of the Board of Directors or indenture supplemental hereto and may have such notations, legends or endorsements as the Company may deem appropriate and as are not inconsistent with the provisions of this Indenture, or as may be required by law, stock exchange rule or usage. The Company shall approve the forms of the Securities -4- 6 and any notation, legend or endorsement on them. If the form or forms of Securities of any series is established by action taken pursuant to a resolution of the Board of Directors or indenture supplemental hereto, a copy of an appropriate record of such action shall be certified by the Secretary or an Assistant Secretary of the Company and delivered to the Trustee at or prior to the delivery of the written order of the Company contemplated by Section 2.04 for the authentication and delivery of such Securities. Each Security shall be dated the date of its authentication. The form of the Trustee's certificate of authentication to be borne by the Securities shall be substantially as follows: CERTIFICATE OF AUTHENTICATION This is one of the Securities of the series designated herein referred to in the within-mentioned Indenture. THE BANK OF NEW YORK as Trustee By: --------------------------------------- Authorized Signatory Section 2.02. Amount Unlimited; Issuable in Series. The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is unlimited. The Securities may be issued in one or more series. There shall be established in or pursuant to a resolution of the Board of Directors or established in or pursuant to one or more indentures supplemental hereto, prior to the issuance of Securities of any series: (1) the title of the Securities of the Series (which shall distinguish Securities of the series from all other Securities); (2) any limit upon the aggregate principal amount of Securities of the series which may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of the series pursuant to Sections 2.08, 2.09, 2.11, 3.07 or 9.05 and except for any Securities which pursuant to Section 2.04 are deemed not to have been authenticated and delivered hereunder); (3) (A) whether any of the Securities of the series are to be issuable in global form and, if so, (i) the identity of the depositary with respect to any such -5- 7 global Security and (ii) whether beneficial owners of interests in any such global Security may exchange such interests for Securities of the same series and of like tenor and of any authorized form and denomination, and, if so, the circumstances under which and the manner in which any such exchanges may occur, if other than as specified in Section 2.08; (B) if any of the Securities of the series are to be issuable in global form, the date as of which any global Security shall be dated (if other than the date of original issuance of the first of such Securities to be issued); and (C) if Securities of the series are to be issuable in definitive form (whether upon original issue, upon exchange of a temporary Security of such series, or in exchange for a beneficial ownership interest in a permanent global Security) only upon receipt of certain certificates or other documents or satisfaction of other conditions, or if Securities of the series are initially issuable in temporary global form and if owners of beneficial interests therein may exchange such interest for an interest in a permanent global Security only upon receipt of certain certificates or other documents or satisfaction of other conditions, then the form and/or terms of such certificates, documents or conditions; (4) the date or dates (and whether fixed or extendible) on which the principal of Securities of the series is payable; (5) the rate or rates at which Securities of the series shall bear interest, or the method of determining the same, if any, the date or dates from which such interest shall accrue, or the method of determining the same, if any, the Interest Payment Dates (and whether fixed or extendible) and the Regular Record Dates; (6) the place or places where the principal of and any interest on Securities of the series shall be payable; (7) any provisions relating to the issuance of Securities of such series at an original issue discount (including, without limitation, the issue price thereof, the rate or rates at which such original issue discount shall accrue, if any, and the date or dates from or to which or period or periods during which such original issue discount shall accrue at such rate or rates); (8) the price or prices at which, the period or periods within which and the terms and conditions upon which Securities of the series may be redeemed or otherwise purchased, in whole or in part, at the option of the Company, pursuant to any sinking fund or otherwise (including, without limitation, the form or method of payment thereof if other than in cash); (9) the obligation, if any, of the Company to redeem, purchase or repay Securities of the series pursuant to any sinking fund or analogous provisions or at the option of a Securityholder thereof and the price or prices at which and the period or periods within which and the terms and conditions upon which Securities of the series shall be redeemed, purchased or repaid, in whole or in part, pursuant to such obligation (including, without limitation, the form or method of payment thereof, if other than in cash); -6- 8 (10) if other than denominations of $25 and any integral multiple thereof, the denominations in which Securities of the series shall be issuable; (11) if other than the principal amount thereof, the principal which shall be payable upon acceleration of the maturity of Securities of the series pursuant to Section 6.02 or provable in bankruptcy pursuant to Section 6.09; (12) any Events of Default with respect to the Securities of a particular series in lieu of or in addition to those set forth herein and the remedies therefor; (13) the terms of the subordination of Securities of the series; and (14) any other terms of a particular series and any other provisions expressing or referring to the terms and conditions upon which the Securities of that series are to be issued under this Indenture, which terms and provisions are not in conflict with the provisions of this Indenture; provided, however, the addition to or subtraction from or variation of Articles Four, Five, Six and Eight (and Sections 1.01 and 1.02, insofar as they relate to the definition of certain terms as used in such Articles) with regard to the Securities of a particular series shall not be deemed to constitute a conflict with the provisions of those Articles. All Securities of any one series shall be substantially identical except as to denomination and except as may otherwise be provided in or pursuant to such resolution of the Board of Directors or in any such indenture supplemental hereto. Not all Securities of any one series need be issued at the same time, and, unless otherwise so provided, a series may be reopened for issuances of additional Securities of such series. If any of the terms of the Securities of a series are established by action taken pursuant to a resolution of the Board of Directors or indenture supplemental hereto, a copy of an appropriate record of such action shall be certified by the Secretary or an Assistant Secretary of the Company and delivered to the Trustee with an Officers' Certificate setting forth the terms or the manner of determining the terms of the Securities of such series. With respect to Securities of a series which are not to be issued at one time, such resolution of the Board of Directors or action may provide general terms or parameters for Securities of such series and provide either that the specific terms of particular Securities of such series shall be specified in a written order of the Company or that such terms shall be determined by the Company or its agents in accordance with a written order of the Company as contemplated by the proviso clause of the fourth paragraph of Section 2.04. Section 2.03. Denominations. The Securities of each series shall be issuable in registered form without coupons in such denominations as shall be specified as contemplated by Section 2.02. In the absence of any such provisions with respect to the Securities of any series, the securities of such series shall be issuable in denominations of $25 and any integral multiple thereof. -7- 9 Section 2.04. Execution and Authentication. Two Officers shall sign the Securities for the Company by manual or facsimile signature. The Company's seal shall be reproduced on the Securities. If an Officer whose signature is on a Security no longer holds that office at the time the Trustee authenticates the Security, the Security shall be valid nevertheless. A Security shall not be entitled to any benefit under this Indenture or be valid for any purpose until the Trustee manually signs the certificate of authentication on the Security. The signature shall be conclusive evidence that the Security has been authenticated under this Indenture. Notwithstanding the foregoing, if any Security shall have been duly authenticated and delivered hereunder but never issued and sold by the Company, and the Company shall deliver such Security to the Trustee for cancellation as provided in Section 2.12 together with a written statement (which need not comply with Sections 11.04 and 11.05 and need not be accompanied by an Opinion of Counsel) stating that such Security has not been issued and sold by the Company, for all purposes of this Indenture such Security shall be deemed not to have been authenticated and delivered hereunder and shall not be entitled to the benefits of this Indenture. At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities of any series executed by the Company to the Trustee for authentication, and the Trustee shall authenticate and deliver said Securities to or upon the written order of the Company, signed by two Officers or by an Officer and an Assistant Treasurer of the Company, without any further action by the Company. Such written order shall specify the date on which said Securities shall be authenticated; provided, however, that if not all the Securities of a series are to be issued at one time and if the resolution of the Board of Directors or indenture supplemental hereto establishing such series as contemplated by Sections 2.01 and 2.02 shall so permit, such written order may set forth procedures acceptable to the Trustee for the issuance of such Securities and for determining the form or terms of particular Securities of such series including, but not limited to, interest rate, maturity date, date of issuance and date from which interest shall accrue. If the form or forms or terms of the Securities of the series have been established in or pursuant to one or more resolutions of the Board of Directors or indentures supplemental hereto as permitted by Sections 2.01 and 2.02, in authenticating such Securities, and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive, and (subject to Section 7.01) shall be fully protected in relying upon, an Opinion of Counsel stating: (1) if the form or forms of such Securities has been established by or pursuant to a resolution of the Board of Directors or indenture supplemental hereto, that such form or forms has been established in conformity with the provisions of this Indenture; -8- 10 (2) if the terms of such Securities have been established by or pursuant to a resolution of the Board of Directors or indenture supplemental hereto, that such terms have been established in conformity with the provisions of this Indenture; and (3) that such Securities, when authenticated and delivered by the Trustee and issued by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will have been duly issued and will constitute valid and legally binding obligations of the Company, enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent conveyance, reorganization and other laws of general applicability relating to or affecting the enforcement of creditors' rights and to general equitable principles; provided, however, that, with respect to Securities of a series which are not to be issued at one time, the Trustee shall be entitled to receive such Opinion of Counsel only once at or prior to the time of the first authentication of Securities of such series and that the opinions described in clauses (2) and (3) above may state, respectively, (a) that, when the terms of such Securities shall have been established pursuant to a written order of the Company or pursuant to such procedures as may be specified from time to time by a written order of the Company, all as contemplated by and in accordance with a resolution of the Board of Directors or an Officers' Certificate pursuant to a resolution of the Board of Directors or indenture supplemental hereto, as the case may be, such terms will have been established in conformity with the provisions of this Indenture; and (b) that such Securities, when (i) executed by the Company, (ii) completed, authenticated and delivered by the Trustee in accordance with this Indenture, (iii) issued and delivered by the Company and (iv) paid for, all as contemplated by and in accordance with the aforesaid written order of the Company or specified procedures, as the case may be, will have been duly issued and will constitute valid and legally binding obligations of the Company, enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent conveyance, reorganization and other laws of general applicability relating to or affecting the enforcement of creditors' rights and to general equitable principles. Notwithstanding the provisions of Sections 2.01, 2.02, 11.04 and this Section, if all the Securities of a series are not to be originally issued at one time, the resolution of the Board of Directors or indenture supplemental hereto, and certified copy of the record of action taken pursuant to such resolution or supplemental indenture, the Officers' Certificate, the written order of the Company and any other documents otherwise required pursuant to such Sections need not be delivered at or prior to the time of authentication of each Security of such series if such documents are delivered at or prior to the authentication upon original issuance of the first Security of such series to be issued; provided, however, that any subsequent request by the Company to the Trustee to authenticate Securities of such series shall constitute a representation and warranty by the Company that as of the date of such request, the statements made in the Officers' Certificate delivered pursuant to Section 11.04 -9- 11 at or prior to authentication of the first such Security shall be true and correct on the date thereof as if made on and as of the date thereof. The Trustee shall have the right to decline to authenticate and make available for delivery any Securities under this Section if the issuance of such Securities pursuant to this Indenture will affect the Trustee's own rights, duties or immunities under the Securities and this Indenture or otherwise in a manner which is not reasonably acceptable to the Trustee. With respect to Securities of a series which are not all issued at one time, the Trustee may conclusively rely, as to the authorization by the Company of any of such Securities, the form and terms thereof and the legality, validity, binding effect and enforceability thereof, upon the Opinion of Counsel, Officers' Certificate and other documents delivered pursuant to Sections 2.01, 2.02, 11.04 and this Section, as applicable, at or prior to the time of the first authentication of Securities of such series unless and until such opinion, certificate or other documents have been superseded or revoked. In connection with the authentication and delivery of Securities of a series which are not all issued at one time, the Trustee shall be entitled to assume that the Company's instructions to authenticate and deliver such Securities do not violate any rules, regulations or orders of any governmental agency or commission having jurisdiction over the Company. Section 2.05. Registrar and Paying Agent. The Company shall maintain an office or agency where Securities of each series may be presented for registration of transfer or for exchange ("Registrar"), and an office or agency where Securities of each series may be presented for payment ("Paying Agent"). The Registrar shall keep a register of the Securities of each series issued hereunder and of their transfer and exchange. The Company may have one or more co-Registrars (provided that there shall be only one register, which shall be maintained by the principal Registrar) and one or more additional paying agents with respect to any series. The term "Paying Agent" includes any additional paying agent. The Company shall enter into an appropriate agency agreement with any Agent not a party to this Indenture. The agreement shall implement the provisions of this Indenture that relate to such Agent. The Company shall promptly notify the Trustee of the name and address of any such Agent. If the Company fails to maintain a Registrar or Paying Agent, the Trustee shall act as such. The Company initially appoints The Bank of New York Registrar and Paying Agent for each series. Section 2.06. Paying Agent to Hold Money and Securities in Trust. Subject to any applicable terms of the Securities of the relevant series relating to subordination (as contemplated by Article Ten and Section 2.02), each Paying Agent shall hold in trust for the benefit of Securityholders of such series or the Trustee all money and securities held by the Paying Agent for the payment of any amount in respect of the Securities of such series, and shall notify the Trustee of any default by the Company in -10- 12 making any such payment. If the Company or a Subsidiary acts as Paying Agent, it shall segregate such money and securities and hold it as a separate trust fund. The Company at any time may require a Paying Agent to pay all money and securities held by it to the Trustee and account for any funds or securities disbursed. Upon doing so the Paying Agent shall have no further liability for the money or securities. Section 2.07. Securityholder Lists. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders ("List of Holders"). If the Trustee is not the Registrar or a Paying Agent, the Company shall furnish to the Trustee (i) as of February 15 and August 15 of each year, within one Business Day thereafter, and (ii) at any other time within 30 days of receipt by the Company of a written request from the Trustee for a List of Holders, which shall be as of a date no more than 14 days before such List of Holders is given to the Trustee; provided, that the Company shall not be obligated to provide such List of Holders at any time the List of Holders does not differ from the most recent List of Holders given to the Trustee by the Company. The Trustee may destroy any List of Holders previously given to it on receipt of a new List of Holders. Section 2.08. Transfer and Exchange. Where a Security is presented to the Registrar or a co-Registrar with a request to register a transfer, the Registrar shall register the transfer as requested if its requirements for such transfer are met. Notwithstanding any other provision of this Section, unless and until it is exchanged in whole or in part for Securities in definitive form, a global Security representing all or a portion of the Securities of or within a series may not be transferred except as a whole by the depositary for such series to a nominee of such depositary or by a nominee of such depositary to such depositary or another nominee of such depositary or by such depositary or any such nominee to a successor depositary for such series or a nominee of such successor depositary. Where Securities are presented to the Registrar or a co-Registrar with a request to exchange them for an equal aggregate principal amount of Securities of the same series of other authorized denominations, the Registrar shall make the exchange as requested (other than with respect to a global Security, except as provided below or as otherwise specified as contemplated by Section 2.02) if its requirements for such exchange are met. The Registrar shall require, among other things, that any Security presented or surrendered for transfer or exchange be duly endorsed, or be accompanied by appropriate transfer documents duly endorsed, or be accompanied by appropriate transfer documents duly executed, by the Holder thereof or his attorney duly authorized in writing. To permit transfers and exchanges, the Trustee shall authenticate Securities at the Registrar's request. Any exchange or transfer shall be without charge, except that the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto. The Registrar need not transfer or exchange any Security selected for redemption or purchase (except, in the case of Securities to be redeemed or purchased in part, the portion -11- 13 thereof not to be redeemed or purchased), any Security in respect of which a notice requiring the purchase or redemption thereof by the Company at the option of the Holder has been given and not withdrawn by the Holder thereof in accordance with the terms of such Securities (except in the case of Securities to be so purchased or redeemed in part, the portion thereof not to be so purchased or redeemed), or transfer or exchange Securities of any particular series during a period of 15 days prior to the mailing of any notice of redemption. Except as otherwise provided with respect to the Securities of any series as contemplated by Section 2.02, a global Security may be exchanged only as provided below in this Section. If at any time the depositary with respect to a global Security representing all or a portion of the Securities of or within a series notifies the Company that it is unwilling, unable or ineligible to continue as such depositary, the Company shall appoint a successor depositary with respect to such Securities. Unless otherwise provided with respect to a series of Securities as contemplated by Section 2.02, if a successor depositary is not so appointed by the Company within 90 days after the Company receives such notice, the Company will execute and the Trustee, upon receipt of a written order of the Company as contemplated by Section 2.04 for the authentication and delivery of definitive Securities of such series (or, if such written order has previously been delivered, then upon receipt of written instructions from the person or persons specified in such written order), will authenticate and deliver Securities of such series in definitive form equal in aggregate principal amount to the principal amount of the global Security or Securities representing such series in exchange for such global Security or Securities. The Company may at any time and in its sole discretion determine that the Securities of any series issued in the form of one or more global Securities shall no longer be represented by such global Security or Securities. In such event the Company will execute and the Trustee, upon receipt of a written order of the Company as contemplated by Section 2.04 for the authentication and delivery of definitive Securities of such series (or, if such written order has previously been delivered, then upon receipt of written instructions from the person or persons specified in such written order), will authenticate and deliver Securities of such series in definitive form equal in aggregate principal amount to the principal amount of the global Security or Securities representing such series in exchange for such global Security or Securities. If a global Security is otherwise exchangeable as specified by the Company pursuant to Section 2.02(3) with respect to a series of Securities, the depositary with respect to a global Security representing all or a portion of the Securities of or within such series may surrender such global Security to the Trustee, as the Company's agent for such purpose, to be exchanged in whole or in part for Securities of such series in definitive form in the manner and under the circumstances so specified and on such terms as are acceptable to the Company and such depositary. In such event, the Company shall execute and the Trustee shall authenticate and deliver or make available for delivery: -12- 14 (i) to each Person specified by such depositary a new Security or Securities of the same series and of like tenor, of any authorized form and denomination as requested by such Person in aggregate principal amount equal to and in exchange for such Person's beneficial interest in the global Security; and (ii) unless endorsement of the surrendered global Security as contemplated by Section 2.15 or another procedure is specified for the Securities of such series as contemplated by Section 2.02, to such depositary a new global Security in a denomination equal to the difference, if any, between the principal amount of the surrendered global Security and the aggregate principal amount of Securities delivered pursuant to clause (i) above in exchange for beneficial interests in such surrendered global Security. In any exchange provided for in any of the preceding three paragraphs, the Company will execute and the Trustee will authenticate and deliver Securities in definitive registered form in authorized denominations. Upon the exchange of a global Security for Securities in definitive form, such global Security shall be cancelled by the Trustee, unless endorsement of the surrendered global Security as contemplated by Section 2.15 or another procedure is specified for the Securities of such series as contemplated by Section 2.02. Securities issued in exchange for a global Security pursuant to this Section shall be registered in such names and in such authorized denominations as the depositary for such global Security, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee. The Trustee shall deliver such Securities to the persons in whose names such Securities are so registered. If a Security is issued in exchange for any portion of a global Security after the close of business at the office or agency where such exchange occurs (i) on any Regular Record Date and before the opening of business at such office or agency on the relevant Interest Payment Date, or (ii) on any special record date and before the opening of business at such office or agency on the related date for payment of defaulted interest, interest or defaulted interest, as the case may be, will not be payable on such Interest Payment Date or proposed date for payment, as the case may be, in respect of such Security, but will be payable on such Interest Payment Date or proposed date for payment, as the case may be, only to the Person to whom interest in respect of such portion of such global Security is payable in accordance with the provisions of this Indenture. All Securities issued upon any registration of transfer or exchange of Securities shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such registration of transfer or exchange. Section 2.09. Replacement Securities. If a mutilated Security is surrendered to the Registrar or if the Holder of a Security claims that the Security has been lost, destroyed or wrongfully taken, then in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide -13- 15 purchaser, the Company shall issue and the Trustee shall authenticate a replacement Security if the Trustee's requirements are met. If required, such Holder shall furnish an indemnity bond sufficient in the judgment of the Company and the Trustee to protect the Company, the Trustee or any Agent from any loss which any of them may suffer if a Security is replaced. Upon the issuance of any new Security under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. In case any such lost, destroyed or wrongfully-taken Security has become or is about to become due and payable, or is about to be purchased by the Company pursuant to any provision of the Securities of such series providing for the purchase thereof at the option of the Holder or the Company, the Company in its discretion may, instead of issuing a new Security, pay or purchase such Security. Every new Security issued pursuant to this Section in lieu of any lost, destroyed or wrongfully-taken Security shall constitute a separate obligation of the Company, whether or not the lost, destroyed or wrongfully-taken Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities of such series duly issued hereunder. The provisions of this Section, as amended or supplemented pursuant to this Indenture with respect to particular Securities or generally, shall be exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, lost, destroyed or wrongfully-taken Securities. Section 2.10. Outstanding Securities. Securities outstanding at any time are all Securities authenticated by the Trustee except for those cancelled by it, those delivered to it for cancellation and those described in this Section as not being outstanding. A Security does not cease to be outstanding because the Company or one of its Affiliates holds the Security. If a Security is replaced pursuant to Section 2.09, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Security is held by a bona fide purchaser. If the Paying Agent holds on a redemption date or maturity date or on the Business Day following a date on which Securities of such series are to be purchased by the Company pursuant to any provision thereof providing for such purchase at the option of the Holder or the Company, money (or securities if permitted by the terms of such Securities) in trust or, if the Company, acting as its own Paying Agent, sets aside and segregates money (or securities if permitted by the terms of such Securities) in trust, sufficient to pay Securities payable on that date, then, on and after that date such Securities cease to be outstanding and interest, if any (and original issue discount, if Original Issue Discount Securities), on them ceases to accrue, unless the Paying Agent is restricted under the terms of the Securities of such series (specified as contemplated by Section 2.02) in applying such money. -14- 16 Section 2.11. Temporary Securities. Pending the preparation of a permanent global Security or definitive Securities of any series, the Company may execute and the Trustee, upon the written order of the Company pursuant to Section 2.04, shall authenticate and deliver temporary Securities. Temporary Securities of any series shall be in authorized denominations and substantially of the tenor of the definitive Securities of that series in lieu of which they are issued, but may have variations that the Company considers appropriate for temporary Securities. In the case of Securities of any series, such temporary Securities may be in global form. If temporary Securities of any series are issued, the Company will cause definitive Securities of that series to be prepared without unreasonable delay. After the preparation of definitive Securities of such series, and upon surrender for cancellation of any one or more temporary Securities of such series, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a like aggregate principal amount of definitive Securities of authorized denominations of the same series and containing identical terms and provisions. Until so exchanged, the temporary Securities of any series shall, except as otherwise specified as contemplated by Section 2.02 (including with respect to the payment of interest on temporary Securities), in all respects be entitled to the same benefits under this Indenture as definitive Securities of the same series and of like tenor authenticated and delivered hereunder. Section 2.12. Cancellation. The Company at any time may deliver Securities to the Trustee for cancellation, including Securities authenticated which the Company has not issued and sold. The Company and each Agent shall forward to the Trustee any Securities surrendered to them for transfer, exchange, payment, redemption, or purchase by the Company pursuant to any provision thereof providing for such purchase at the option of the Holder. The Trustee and no one else shall cancel all Securities surrendered for transfer, exchange, payment, redemption, purchase, or cancellation, and may dispose of cancelled Securities as the Company directs; provided, however, that the Trustee shall not be required to destroy such cancelled Securities. Except as otherwise provided in the resolution of the Board of Directors or indenture supplemental hereto establishing such series as contemplated by Section 2.02, the Company may not issue new Securities of a series to replace Securities of the same series that it has paid or that have been delivered to the Trustee for cancellation. Section 2.13. Payment of Interest; Defaulted Interest. Unless otherwise provided with respect to the Securities of any series as contemplated by Section 2.02, interest (except defaulted interest) on any Security of any series which is payable on any Interest Payment Date shall be paid to the Holder in whose name that Security (or one or more Predecessor Securities) is registered on the security register at the close of business on the Regular Record Date for such interest payment. At the option of the Company, payment of interest on any Security may be made (i) by check mailed to the address of the Person entitled thereto as such address appears in the security register, or (ii) if so specified with respect to the Securities of such series as contemplated by Section 2.02, by wire transfer to any account designated by such Person. -15- 17 If the Company defaults in a payment of interest on the Securities of any series on any Interest Payment Date, it shall pay the defaulted interest to the Persons who are Securityholders of such series at the close of business on a subsequent special record date. The Company shall fix the special record date and payment date. At least 15 days before the record date, the Company shall mail to each Securityholder of such series a notice that states the special record date, the payment date and the amount of defaulted interest proposed to be paid. The Company shall notify the Trustee in writing of the amount of the defaulted interest proposed to be paid on each Security of such series and the date of the proposed payment, and at the same time the Company shall deposit with the Paying Agent an amount of money equal to the aggregate amount proposed to be paid in respect of such defaulted interest or shall make arrangements satisfactory to the Paying Agent for such deposit prior to the date of the proposed payment. The Company may pay defaulted interest in any other lawful manner. Section 2.14. Persons Deemed Owners. Prior to due presentment of a Security for registration of transfer, the Company, the Trustee and any Agent may treat the person in whose name such Security is registered as the owner of such Security for the purpose of receiving payment of principal of and (subject to Section 2.13) interest on such Security and for all other purposes whatsoever, and neither the Company, the Trustee nor any Agent shall be affected by notice to the contrary. No holder of any beneficial interest in any global Security held on its behalf by a depositary shall have any rights under this Indenture with respect to such global Security, and such depositary (or its nominee, if such global Security is registered in the name of a nominee) may be treated by the Company, the Trustee, and any Agent as the owner of such global Security for all purposes whatsoever. None of the Company, the Trustee, or any Agent will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a global Security or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. Notwithstanding the foregoing, with respect to any global Security, nothing herein shall prevent the Company, the Trustee, or any Agent from giving effect to any written certification, proxy or other authorization furnished by any depositary, as a Holder, with respect to such global Security or impair, as between such depositary and owners of beneficial interests in such global Security, the operation of customary practices governing the exercise of the rights of such depositary (or its nominee) as Holder of such global Security. Section 2.15. Securities in Global Form. If the Company shall establish pursuant to Section 2.02 that the Securities of or within a series are to be issued in whole or in part in global form, then the Company shall execute, and the Trustee shall, in accordance with Section 2.04 and the written order of the Company contemplated thereby, authenticate and deliver one or more global Securities in temporary or permanent form that (i) shall be registered in the name of the depositary for such global -16- 18 Security or Securities or the nominee of such depositary, (ii) shall be delivered by the Trustee to such depositary or pursuant to such depositary's instructions, and (iii) shall bear a legend substantially to the following effect: "Unless and until it is exchanged in whole or in part for Securities in definitive form, this Security may not be transferred except as a whole by the depositary to a nominee of the depositary or by a nominee of the depositary to the depositary or another nominee of the depositary or by the depositary or any such nominee to a successor depositary or a nominee of such successor depositary." Each depositary designated pursuant to Section 2.02 for a global Security in registered form must be, to the extent required by applicable law or regulation, a clearing agency registered under the Securities Exchange Act of 1934, as amended, and any other applicable statute or regulation, at the time of its designation and at all times that it serves as depositary. Notwithstanding clause (14) of Section 2.02 and the provisions of Section 2.03, any such global Security shall represent such of the outstanding Securities of such series as shall be specified therein and may provide that it shall represent the aggregate amount of outstanding Securities of such series from time to time endorsed thereon and that the aggregate amount of outstanding Securities represented thereby may from time to time be increased or decreased to reflect exchanges. Any endorsement of a Security in a global form to reflect the amount, or any increase or decrease in the amount, or changes in the rights of Holders, of outstanding Securities represented thereby shall be made in such manner and upon instructions given by such Person or Persons as shall be specified therein or in the written order of the Company to be delivered to the Trustee pursuant to Section 2.04. Subject to the provisions of Section 2.04 and, if applicable, Section 2.11, the Trustee shall deliver and redeliver any Security in permanent global form in the manner and upon instructions given by the Person or Persons specified therein or in the applicable written order of the Company. If a written order of the Company pursuant to Section 2.04 has been, or simultaneously is, delivered, any instructions with respect to a Security in global form shall be in writing but need not comply with Sections 11.04 and 11.05 and need not be accompanied by an Opinion of Counsel. The provisions of the last sentence of the third paragraph of Section 2.04 shall apply to any Security represented by a Security in global form if such Security was never issued and sold by the Company and the Company delivers to the Trustee the Security in global form together with written instructions (which need not comply with Sections 11.04 and 11.05 and need not be accompanied by an Opinion of Counsel) with regard to the reduction in the principal amount of Securities represented thereby, together with the written statement contemplated by the last sentence of the third paragraph of Section 2.04. Section 2.16. CUSIP Numbers. The Company in issuing the Securities may use "CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers. -17- 19 ARTICLE THREE Redemption Section 3.01. Applicability of Article. Securities of any series which are redeemable before their stated maturity at the election of the Company or through the operation of any sinking fund for the retirement of Securities of such series shall be redeemable in accordance with their terms and (except as otherwise specified as contemplated by Section 2.02 for Securities of any series) in accordance with this Article. Section 3.02. Notices to Trustee. If the Company elects to redeem all or less than all the Securities of any series, it shall notify the Trustee of the redemption date, the principal amount of Securities to be redeemed, the specific provision of the Securities pursuant to which the Securities being called for redemption are being redeemed and the redemption price. In the case of any redemption of Securities prior to the expiration of any restriction on such redemption provided in the terms of such Securities or elsewhere in this Indenture, the Company shall furnish the Trustee with an Officers' Certificate evidencing compliance with such restriction. If the Company wants to make any permitted optional sinking fund payment, it shall notify the Trustee of the principal amount of the Securities to be redeemed. The Company (1) may deliver outstanding Securities of a series (other than any previously called for redemption) and (2) may apply as a credit Securities of a series which have been redeemed or otherwise purchased either at the election of the Company pursuant to the terms of such Securities or through the application of permitted optional sinking fund payments pursuant to the terms of such Securities in satisfaction of all or any part of any sinking fund payment required to be made pursuant to the terms of the Securities of such series as provided for by the terms of such series: provided that such Securities have not been previously so credited. Such Securities shall be received and credited for such purpose by the Trustee at the redemption price specified in such Securities for redemption through operation of the sinking fund and the amount of such sinking fund payment shall be reduced accordingly. The Company shall notify the Trustee of its intention to so reduce the amount of such sinking fund payment, the amount of the reduction and the basis for it. The Company shall deliver to the Trustee with such notice any Securities to be credited for such purpose that it has not previously delivered to the Trustee for cancellation. The Company shall give each notice and Officers' Certificate provided for in this Section together with the securities to be credited as provided in the immediately preceding paragraph at least 45 days before the redemption date (unless a shorter notice shall be satisfactory to the Trustee or is otherwise specified as contemplated by Section 2.02 for Securities of any series). -18- 20 Section 3.03. Selection of Securities to be Redeemed. Except as otherwise specified as contemplated by Section 2.02 for Securities of any series, if less than all the Securities of any series are to be redeemed, the particular Securities to be redeemed shall be selected from Securities of the same series outstanding not previously called for redemption by such method as the Trustee considers fair and appropriate (and in such manner as complies with applicable requirements of any stock exchange on which Securities of such series are listed) and which may provide for the selection for redemption of portions (equal to the minimum authorized denomination for Securities of that series or any integral multiple thereof) of the principal amount of Securities of such series that have denominations larger than the minimum authorized denomination for Securities of that series. Provisions of this Indenture that apply to Securities called for redemption also apply to portions of Securities called for redemption. Section 3.04. Notice of Redemption. At least 30 days but no more than 60 days before a redemption date (unless a shorter notice is specified as contemplated by Section 2.02 for Securities of any series), the Company shall mail a notice of redemption by first-class mail to each Holder of Securities of the series to be redeemed. The notice shall identify the Securities, including CUSIP number, if any (and, in the case of partial redemption, the principal amount of the Securities), to be redeemed and shall state: (1) the redemption date; (2) the redemption price and method of payment, if other than in cash; (3) the name and address of the Paying Agent; (4) that Securities called for redemption must be surrendered to the Paying Agent to collect the redemption price; (5) that interest, if any (or original issue discount, if Original Issue Discount Securities), on Securities called for redemption ceases to accrue on and after the redemption date, unless the Company defaults in making such redemption payment; and (6) that the redemption is for a sinking fund or at the election of the Company, whichever is the case. At the Company's request, the Trustee shall give the notice of redemption in the Company's name and at the Company's expense, provided that the Company shall have furnished to the Trustee the Officers' Certificate and Opinion of Counsel required pursuant to Section 11.04 at least 15 days prior to the date that the Trustee is required to take any action in connection with a redemption. -19- 21 Section 3.05. Effect of Notice of Redemption. Once notice of redemption is mailed, Securities of the series called for redemption become due and payable on the redemption date and at the redemption price therein specified and on and after such date (unless the Company shall default in the payment of the redemption price and accrued interest, if any) such Securities shall cease to bear interest, if any (and original issue discount, if such Securities are Original Issue Discount Securities, shall cease to accrue). Upon surrender to the Paying Agent, such Securities shall be paid at the redemption price, plus, if applicable, accrued interest, if any, to the redemption date: provided, however, that installments of interest the Interest Payment Date for which is on or prior to the redemption date shall be payable to the persons who are Holders of such Securities (or one or more Predecessor Securities) on the relevant record dates for such interest according to their terms and Section 2.13. If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal shall, until paid, bear interest from the redemption date at the rate prescribed therefor in the Security. Section 3.06. Deposit of Redemption Price. On or before 11:00 a.m., New York time, on the redemption date, the Company shall deposit with the Paying Agent money (or securities if permitted by the terms of such Securities) sufficient to pay the redemption price of, and (except if the redemption date is an Interest Payment Date) accrued interest, if any, on, all Securities to be redeemed on that date other than Securities or portions thereof called for redemption on that date which are delivered by the Company to the Trustee for cancellation. Section 3.07. Securities Redeemed in Part. Any Security that is to be redeemed only in part shall be surrendered at a place of payment therefor (with, if the Company, the Registrar or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company, the Registrar and the Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such Security without service charge, a new Security or Securities of the same series, containing identical terms and provisions, of any authorized denomination as requested by such Holder in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal amount of the Security so surrendered, and, unless otherwise specified as contemplated by Section 2.02, if a global Security is so surrendered, the Company shall execute, and the Trustee shall authenticate and deliver to the depositary for such global Security, without service charge, a new global Security in a denomination equal to and in exchange for the unredeemed portion of the principal amount of the global Security so surrendered. -20- 22 ARTICLE FOUR Covenants Section 4.01. Payment of Securities. The Company shall pay the principal of and any interest on the Securities of each series in accordance with the terms of the Securities of such series and this Indenture. To the extent enforceable under applicable law, the Company shall pay interest on overdue principal at the rate borne by the Securities of such series (unless a different rate is specified as contemplated by Section 2.02 for Securities of such series). Section 4.02. SEC Reports. The Company shall file with the Trustee within 15 days after it files them with the SEC copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may by rules and regulations prescribe) which the Company is required to file with the SEC pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. The Company also shall comply with the other provisions of TIA Section 314(a). A copy of each report at the time of its mailing to Securityholders shall be filed by the Company with the SEC and each stock exchange on which the Securities are listed. The Company will promptly notify the Trustee if and when the Securities of any series are listed on any stock exchange. Section 4.03. Compliance Certificate. The Company will, within 120 days after the close of each fiscal year of the Company, commencing with the first fiscal year following the issuance of Securities of any series under this Indenture (but in any event within the time required by TIA section 314(a)), file with the Trustee a certificate of the principal executive officer, the principal financial officer or the principal accounting officer of the Company, covering the period from the date of issuance of such Securities to the end of the fiscal year in which such Securities were issued, in the case of the first such certificate, and covering the preceding fiscal year in the case of each subsequent certificate, and stating whether or not, to the knowledge of the signer, the Company has complied with all conditions and covenants on its part contained in this Indenture, and, if the signer has obtained knowledge of any default by the Company in the performance, observance or fulfillment of any such condition or covenant, specifying each such default and the nature thereof. For the purposes of this Section 4.03, compliance shall be determined without regard to any grace period or requirement of notice provided pursuant to the terms of this Indenture. The certificate need not comply with Section 11.05. -21- 23 Section 4.04. Corporate Existence. Subject to the provisions of Section 5.01, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence. Section 4.05. Calculation of Original Issue Discount. [The Company shall file with the Trustee promptly at the end of each calendar year written notice specifying the aggregate amount of original issue discount (including daily rates and accrual periods), if any, accrued on outstanding Securities as of the end of such year.] ARTICLE FIVE Successor Corporation Section 5.01. When Company May Merge, etc. The Company shall not consolidate with or merge into, or transfer its properties and assets substantially as an entirety to, another corporation unless (1) the successor corporation, which shall be a corporation organized and existing under the laws of the United States or a State thereof, assumes by supplemental indenture all the obligations of the Company under the Securities and this Indenture; and (2) immediately after giving effect to such transaction, no Event of Default shall have occurred and be continuing. Thereafter, unless otherwise specified as contemplated by Section 2.02 for the Securities of any series, all such obligations of the predecessor corporation shall terminate. ARTICLE SIX Defaults and Remedies Section 6.01. Events of Default. An "Event of Default" with respect to Securities of any series means each of the events specified below in this Section 6.01, unless it is either inapplicable to a particular series or is specifically deleted or modified as contemplated by Section 2.02 for the Securities of such series, and any other events as may be specified as contemplated by Section 2.02 for the Securities of such series: (1) the Company defaults in the payment of any interest on any Security of that series when the same becomes due and payable and the default continues for a period of 30 days; (2) the Company defaults in the payment of the principal of any Security of that series when the same becomes due and payable at maturity, upon redemption -22- 24 (including default in the making of any mandatory sinking fund payment), upon purchase by the Company at the option of the Holder pursuant to the terms of such Security or otherwise; (3) the Company fails to comply with any of its other agreements in Securities of that series or this Indenture (other than an agreement which has expressly been included in this Indenture solely for the benefit of Securities of any series other than that series or is expressly made inapplicable to the Securities of such series as contemplated by Section 2.02) and the default continues for the period and after the notice specified below; (4) the Company pursuant to or within the meaning of any Bankruptcy Law: (A) commences a voluntary case, or consents to the commencement of a case against it, (B) consents to the entry of an order for relief against it in an involuntary case, (C) consents to the appointment of a Custodian of it or for all or substantially all of its property, or (D) makes a general assignment for the benefit of its creditors; (5) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (A) is for relief against the Company in an involuntary case or adjudicates the Company insolvent or bankrupt, (B) appoints a Custodian of the Company or for all or substantially all of its property, or (C) orders the winding up or liquidation of the Company, and the order or decree remains unstayed and in effect for 90 days; or (6) any other Event of Default provided with respect to Securities of that series occurs. The term "Bankruptcy Law" means Title 11, U.S. Code or any similar Federal or State law for the relief of debtors. The term "Custodian" means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law. A default under clause (3) is not an Event of Default until the Trustee notifies the Company or the Holders of at least 25% in aggregate principal amount of the outstanding Securities of that series notify the Company and the Trustee of the default and the Company -23- 25 does not cure the default within 90 days after receipt of the notice. The notice must specify the default, demand that it be remedied and state that the notice is a "Notice of Default." Section 6.02. Acceleration. If an Event of Default (other than an Event of Default specified in Section 6.01(4) or (5)) occurs and is continuing with respect to Securities of any series at the time outstanding, the Trustee by notice to the Company, or the Holders of at least 25% in aggregate principal amount of the outstanding Securities of that series by notice to the Company and the Trustee, may declare to be due and payable immediately (1) the principal amount (or, if the Securities of that series are Original Issue Discount Securities, such portion of the principal amount as may be specified in the terms of the Securities of that series) of all of the Securities of that series then outstanding and (2) interest, if any, accrued to the date of acceleration. Upon such declaration, such principal amount (or specified amount) and interest, if any, shall be due and payable immediately. If an Event of Default specified in Section 6.01 (4) or (5) occurs and is continuing, (1) the principal amount (or, if the Securities of that series are Original Issue Discount Securities, such portion of the principal amount as may be specified in the terms of the Securities of that series) of all of the Securities of that series then outstanding and (2) interest, if any, accrued to the date of such acceleration shall become and be immediately due and payable without any declaration or other act on the part of the Trustee or Securityholders. The Holders of a majority in aggregate principal amount of the outstanding Securities of the series with respect to which an acceleration applies by notice to the Trustee may rescind an acceleration and its consequences with respect to such series if all existing Events of Default (other than the non-payment of the principal of and accrued interest, if any, on Securities that have become due solely by such acceleration) with respect to Securities of that series have been cured or waived and if the rescission would not conflict with any judgment or decree. No such rescission shall affect any subsequent default or impair any right consequence thereon. Section 6.03. Other Remedies. If an Event of Default with respect to Securities of any series occurs and is continuing, the Trustee may pursue any available remedy by proceeding at law or in equity to collect the payment of the whole amount which then shall have become due and remain unpaid for principal or interest, if any, on the Securities of that series or to enforce the performance of any provision of the Securities of that series or this Indenture. The Trustee may maintain a proceeding even if it does not possess any of the Securities of that series or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Securityholder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative. -24- 26 Section 6.04. Waiver of Existing Defaults. Subject to Section 9.02, the Holders of a majority in aggregate principal amount of the outstanding Securities of any series by notice to the Trustee may waive on behalf of the Holders of all the Securities of such series an existing Default or Event of Default and its consequences. When a Default or Event of Default is waived, it is cured and stops continuing. Section 6.05. Control by Majority. The Holders of a majority in aggregate principal amount of the outstanding Securities of any series may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on it, with respect to the Securities of such series. The Trustee, however, may refuse to follow any direction that conflicts with law or this Indenture, that is unduly prejudicial to the rights of another Securityholder or that would involve the Trustee in personal liability. Section 6.06. Limitation of Suits. No Holder of any Security of any series shall have the right to pursue any remedy with respect to this Indenture or the Securities unless: (1) the Holder gives to the Trustee written notice of a continuing Event of Default with respect to the Securities of that series; (2) the Holders of at least 25% in aggregate principal amount of the outstanding Securities of that series make a written request to the Trustee to pursue the remedy; (3) such Holder or Holders offer and provide to the Trustee indemnity satisfactory to the Trustee against any loss, liability or expense; (4) the Trustee does not comply with the request within 60 days after receipt of the request and the offer of indemnity; and (5) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in aggregate principal amount of the outstanding Securities of such series. A Securityholder of any series may not use this Indenture to prejudice the rights of another Securityholder of such series or to obtain a preference or priority over another Securityholder of such series, except in the manner herein provided and for the equal and ratable benefit of all Securityholders of such series. -25- 27 Section 6.07. Rights of Holders to Receive Payment and to Convert. Subject to the terms of the Securities of any series relating to subordination (as contemplated by Article Ten and Section 2.02) and notwithstanding any other provision of this Indenture, the right of any Holder of a Security to receive payment of principal of and (subject to Section 2.13) interest, if any, on the Security, on or after the respective due dates with respect to such payments expressed in such Security, and, if applicable, to convert such Security on the terms and subject to the conditions applicable to Securities of such series, or to bring suit for the enforcement of any such payment on or after such respective dates or of such right to convert, if any, shall not be impaired or affected without the consent of the Holder. Section 6.08. Collection Suit by Trustee. If an Event of Default specified in Section 6.01(1) or (2) occurs and is continuing with respect to the Securities of any series, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company for the whole amount which then shall have become due and remain unpaid for principal and interest, if any, on the Securities of such series. Section 6.09. Trustee May File Proofs of Claim. The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and the Securityholders allowed in any judicial proceedings relative to the Company, its creditors or its property and to collect and receive money, property or securities payable or deliverable on any such claims and to distribute the same. Section 6.10. Priorities. If the Trustee collects any money pursuant to this Article, it shall pay out the money in the following order: First: to the Trustee for amounts due under Section 7.07; Second: to the payment of items to which the Securities have been subordinated as contemplated by Article Ten and Section 2.02; Third: to the payment of amounts due and unpaid for principal and interest, if any, on the Securities in respect of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts which then shall have become due and payable on such Securities for principal and interest, respectively; and Fourth: to the Company. -26- 28 The Trustee may fix a record date and payment date for any payment to Securityholders pursuant to this Section, notice of which shall be mailed to each Securityholder by the Company at least 15 days before such record date. Section 6.11. Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees and expenses, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by Holders of more than 10% in aggregate principal amount of the outstanding Securities of any series. ARTICLE SEVEN Trustee All the provisions of this Article Seven apply to the Trustee acting in all its appointed capacities pursuant to this Indenture unless any provision specifically applies to the Trustee only in its capacity as Trustee. Section 7.01. Duties of Trustee. (a) If an Event of Default with respect to Securities of any series has occurred and is continuing, the Trustee shall with respect to such series exercise such of the rights and powers vested in it by this Indenture with respect to such series and use the same degree of care and skill in their exercise as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. (b) With respect to Securities of any series, except during the continuance of an Event of Default with respect to Securities of such series: (1) The Trustee need perform those duties and only those duties that are specifically set forth in this Indenture or are mandated by the TIA and no implied covenants or obligations shall be read into this Indenture against the Trustee. (2) In the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. The Trustee, however, shall, with respect to certificates or opinions which by any provision hereof are required to be provided to the Trustee, examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture. -27- 29 (c) The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that: (1) This paragraph does not limit the effect of paragraph (b) of this Section. (2) The Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts. (3) The Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05. (4) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (5) Notwithstanding anything contained in this Indenture to the contrary, the duties and responsibilities of the Trustee under this Indenture shall be subject to the protections, exculpations and limitations on liability afforded to the Trustee under the provisions of the TIA. (d) Every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b) and (c) of this Section. (e) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. Section 7.02. Rights of Trustee. (a) The Trustee may rely and shall be protected in acting or refraining from acting on any document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in such document. (b) Before the Trustee acts or refrains from acting, it may consult with counsel or require, in its discretion, an Officers' Certificate, an Opinion of Counsel, and/or an accountant's certificate. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on the Officers' Certificate, Opinion of Counsel or accountant's certificate. -28- 30 (c) The Trustee may act hereunder either directly or through agents or counsel and shall not be responsible for the misconduct or negligence of any agent or counsel appointed with due care. (d) The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers. (e) Any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution. (f) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any Holder pursuant to this Indenture, unless such Holder shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction. (g) The Trustee shall not be charged with knowledge of any default or Event of Default, as the case may be, with respect to the Securities of any series for which it is acting as Trustee unless either (1) a Trust Officer of the Trustee shall have actual knowledge of the default or Event of Default, as the case may be, or (2) written notice of such default or Event of Default, as the case may be, shall have been given to the Trustee by the Company, any other obligor on such Securities or by any Holder of such Securities. (h) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, coupon or other paper or document but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney. Section 7.03. Individual Rights of Trustee. The Trustee in its individual or any other capacity may become the owner or pledgee of Securities and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights. The Trustee, however, must comply with Sections 7.10 and 7.11. Section 7.04. Trustee's Disclaimer. The Trustee makes no representation as to the validity or adequacy of this Indenture or the Securities; it shall not be accountable for the Company's use of the proceeds from the Securities; and it shall not be responsible for any statement in the Indenture or the Securities other than its certificate of authentication. -29- 31 Section 7.05. Notice of Defaults. If a Default occurs and is continuing with respect to Securities of any series and if it is known to a Trust Officer of the Trustee, the Trustee shall transmit by mail to each Securityholder or such series in the manner and to the extent provided in TIA Section 313(c) notice of the Default within 90 days after its occurs or as soon as reasonably practicable thereafter. Except in the case of a default in payment of principal of or interest on any Security of such series (including default in the making of any mandatory sinking fund or mandatory repurchase payment), the Trustee may withhold the notice if and so long as a committee of its Trust Officers in good faith determines that withholding the notice is in the interests of Securityholders of such series. Section 7.06. Reports by Trustee to Holders. Within 60 days after each July 31 beginning with the July 31 following the date on which Securities are originally issued under this Indenture, the Trustee shall transmit by mail to each Securityholder in the manner and to the extent provided in TIA Section 313(c) a brief report dated as of such July 31 that complies with TIA Section 313(a) if such report is required by TIA Section 313(a). The Trustee also shall comply with TIA Section 313(b). Section 7.07. Compensation and Indemnity. The Company shall pay to the Trustee such compensation for its services as shall be agreed upon in a writing between the Company and the Trustee. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee upon request for all reasonable out-of-pocket expenses incurred by it. Such expenses shall include the reasonable compensation and expenses of the Trustee's agents and counsel. The Company shall indemnify the Trustee against any loss or liability incurred by it arising out of or in connection with the acceptance or administration of this trust and its duties hereunder. The Trustee shall notify the Company promptly of any claims asserted against the Trustee for which it may seek indemnity. Failure of the Trustee to so notify the Company shall not relieve the Company of its obligations hereunder. The Company shall have the right to elect to defend the claim and the Trustee shall cooperate in the defense. The Trustee may have separate counsel and the Company shall pay the reasonable fees and expenses of such counsel. The Company need not pay for any settlement made without its written consent, which consent shall not be unreasonably withheld. The Company need not reimburse any expense or indemnify against any loss or liability incurred by the Trustee through negligence or bad faith. To secure the Company's payment obligations in this Section, the Trustee shall have a lien prior to the Securities on all money or property held or collected by the Trustee, except that held in trust to pay principal of or interest on particular Securities. -30- 32 In addition to any other rights to payment herein, when the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(4) or (5) occurs, the expenses and the compensation for the services are intended to constitute expenses of administration under any Bankruptcy Law. The provisions of this Section shall survive the termination of this Indenture. Section 7.08. Replacement of Trustee. The Trustee may resign at any time with respect to Securities of one or more series by so notifying the Company. The Holders of a majority in aggregate principal amount of the outstanding Securities of any series may remove the Trustee with respect to the Securities of such series by so notifying the removed Trustee and may appoint a successor Trustee with the Company's consent. The Company shall remove the Trustee if: (1) the Trustee fails to comply with Section 7.10; (2) the Trustee is adjudged a bankrupt or an insolvent; (3) a receiver or other public officer takes charge of the Trustee or its property; or (4) the Trustee becomes incapable of acting. If the Trustee resigns or is removed, or if a vacancy exists in the office of the Trustee for any reason, with respect to the Securities of one or more series, the Company shall promptly appoint a successor Trustee or Trustees (it being understood that any such successor Trustee may be appointed with respect to the Securities of one or more or all of such series and that at any time there shall be only one Trustee with respect to the Securities of any particular series). A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Immediately after that, the retiring Trustee shall transfer all property held by it as Trustee to the successor Trustee (subject to its lien, if any, provided for in Section 7.07), the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. A successor Trustee shall mail notice of its succession to each Securityholder. If a successor Trustee with respect to Securities of any series does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company or the Holders of a majority in aggregate principal amount of the outstanding Securities of such series may petition any court of competent jurisdiction for the appointment of a successor Trustee. -31- 33 If the Trustee fails to comply with Section 7.10, any Securityholder may petition any court of competent jurisdiction for the removal of the Trustee with respect to all Securities and the appointment of a successor Trustee. Section 7.09. Successor Trustee by Merger, etc. If the Trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust assets to, another corporation or national banking association, the successor corporation or national banking association without any further act shall be the successor Trustee. Section 7.10. Eligibility; Disqualification. This Indenture shall always have a Trustee who satisfies the requirements of TIA Section 310(a). The Trustee shall always have a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of condition. With respect to the Securities of each series, the Trustee shall comply with TIA Section 310(b). In determining whether the Trustee has a conflicting interest as defined in TIA Section 310(b) with respect to the Securities of any series, there shall be excluded this Indenture with respect to the Securities of any series other than that series. Nothing herein shall prevent the Trustee from filing with the SEC the application referred to in the second to last paragraph of TIA Section 310(b). Section 7.11. Preferential Collection of Claims Against Company. The Trustee shall comply with TIA Section 311(a), excluding any creditor relationship listed in TIA Section 311(b). A Trustee who has resigned or been removed shall be subject to TIA Section 311(a) to the extent indicated. ARTICLE EIGHT Discharge of Indenture Section 8.01. Termination of Company's Obligations. The Company may terminate all of its obligations under the Securities of any series and this Indenture with respect to the Securities of such series if either (1) all Securities of such series previously authenticated and delivered (other than destroyed, lost or stolen Securities which have been replaced or paid or Securities for whose payment money (or, if permitted by the terms of such Securities, securities) has theretofore been held in trust and thereafter repaid to the Company, as provided in Section 8.03) have been delivered to the Trustee for cancellation; or (2) (i) the Company irrevocably deposits in trust with the Trustee money or U.S. Government Obligations sufficient to pay the principal of and interest, if any, on all Securities of such series not theretofore cancelled or delivered to the Trustee for cancellation (other than destroyed, lost or stolen Securities which have been replaced or paid or Securities for whose payment money (or, if permitted by the terms of such Securities, -32- 34 securities) has theretofore been held in trust and thereafter repaid to the Company, as provided in Section 8.03) to maturity or redemption, as the case may be and (ii) the Company delivers to the Trustee an opinion of counsel to the effect that, based upon the Company's receipt from, or the publication by, the Internal Revenue Service of a ruling or a change in law, the holders of the Securities will not recognize income, gain or loss for United States federal income tax purposes as a result of the deposit, defeasance and discharge and will be subject to United States federal income tax on the same amount in the same manner and at the same times as would have been the case if such deposit, defeasance or discharge had not occurred. The Company's obligations in Sections 2.05, 2.06, 2.07, 2.08, 2.09, 4.01, 7.07, 7.08 and 8.03 of this Indenture, however, shall survive until the Securities of such series are no longer outstanding. Thereafter, the Company's obligations in Sections 7.07 and 8.03 shall survive. Notwithstanding the satisfaction and discharge of this Indenture with respect to the Securities of any series, if money or U.S. Government Obligations shall have been deposited with the Trustee pursuant to clause (2) of the first paragraph of this Section, the obligations of the Trustee under Section 8.02 and the second sentence of Section 8.03 shall survive. After a deposit and if all other conditions thereto are met, the Trustee for the Securities of such series shall be required to execute an instrument acknowledging satisfaction and discharge of this Indenture with respect to such Securities, except for those surviving obligations specified above; provided, however, that the Trustee shall not be required to execute such instrument until the expiration of 90 days after the date of a deposit and that such instrument may be made subject to the condition that such deposit had been in compliance with any applicable terms of the Securities of such series relating to subordination (as contemplated by Article Ten and Section 2.02). In order to have money available on a payment date to pay the principal of or interest, if any, on the Securities, the U.S. Government Obligations shall be payable as to principal or interest on or before such payment date in such amounts as will provide the necessary money. U.S. Government Obligations shall not be callable at the issuer's opinion. Section 8.02. Application of Trust Fund. The Trustee shall hold in trust money and U.S. Government Obligations deposited with it pursuant to Section 8.01. Subject to any applicable terms of the Securities of any series relating to subordination (as contemplated by Article Ten and Section 2.02), the Trustee shall apply the deposited money and the money from the U.S. Government Obligations through the Paying Agent and in accordance with the provisions of the Securities of such series and this Indenture to the payment of principal of and interest, if any, on the Securities of such series for the payment of which such money or U.S. Government Obligations has been deposited with the Trustee. The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the Government Obligations deposited pursuant to Section 8.01 or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of outstanding Securities. -33- 35 Section 8.03. Repayment to Company. The Trustee and the Paying Agent shall promptly pay to the Company upon written request any excess money or securities held by them at any time. The Trustee and the Paying Agent shall pay to the Company upon written request any money or securities held by them for the payment of principal or interest, if any, that remains unclaimed for two years. After that, Holders entitled to the money or securities must look to the Company for payment unless an applicable abandoned property law designates another Person. ARTICLE NINE Amendments, Supplements and Waivers Section 9.01. Without Consent of Holders. The Company and the Trustee may amend or supplement this Indenture or the Securities of any series without notice to or consent of any Securityholder: (1) to cure any ambiguity, defect or inconsistency; (2) to comply with Section 5.01; (3) to establish the form or terms of Securities of any series as permitted by Sections 2.01 and 2.02; (4) to add to the covenants of the Company for the benefit of the Holders of all or any series of Securities (and if such covenants are to be for the benefit of less than all series of Securities, stating that such covenants are expressly being included solely for the benefit of such series) or to surrender any right or power herein conferred upon the Company; (5) to add any additional Events of Default (and if such Events of Default are to be applicable to less than all series of Securities, stating that such Events of Default are expressly being included solely to be applicable to such series); (6) to change or eliminate any of the provisions of this Indenture, provided that, except as otherwise contemplated by Section 2.02(14), any such change or elimination shall become effective only when there is no Security outstanding of any series created prior thereto which is entitled to the benefit of such provision; (7) to add or change any of the provisions of this Indenture to such extent as shall be necessary to permit or facilitate the issuance of Securities in bearer form, registrable or not registrable as to principal, and with or without interest coupons, or to provide for uncertificated Securities in addition to certificated Securities (so long as any "registration-required obligation" within the meaning of Section 163(f)(2) of the -34- 36 Internal Revenue Code of 1986, as amended (the "Code") is in registered form for purposes of the Code); (8) to make any change that, in the opinion of the Board of Directors, does not materially adversely affect the rights of any Securityholder; or (9) to comply with any requirement of the SEC in connection with the qualification of this Indenture under the TIA. Section 9.02. With Consent of Holders. The Company and the Trustee may amend or supplement this Indenture or the Securities of any series without notice to any Securityholder but with the written consent of the Holders of a majority in aggregate principal amount of the outstanding Securities of each series affected by such amendment or supplement. The Holders of a majority in aggregate principal amount of the outstanding Securities of any series may on behalf of the Holders of all Securities of such series waive compliance by the Company with any provision of this Indenture or of Securities of such series without notice to any Securityholder. Without the consent of each Securityholder affected, however, the amendment, supplement or waiver, including a waiver pursuant to Section 6.04, may not: (1) reduce the amount of Securities of any series whose Holders must consent to an amendment, supplement or waiver; (2) reduce the rate of or extend the time for payment of interest on any Security (or, in the case of an Original Issue Discount Security, reduce the rate of accrual of original issue discount); (3) reduce the principal of (or any premium payable upon the redemption of) or extend the fixed maturity of any Security (or, in the case of an Original Issue Discount Security, reduce the portion of the principal amount that would be due and payable upon acceleration of the maturity thereof pursuant to Section 6.02); (4) change the amount or time of any payment required by any sinking fund provisions of the Securities of any series; (5) make any change that materially adversely affects the rights of a Holder to require the Company to purchase a Security in accordance with the terms thereof and this Indenture; (6) waive a default in the payment of the principal of or interest, if any, on any Security; or (7) make any Security payable in money or securities other than that stated in the Security. -35- 37 It shall not be necessary for the consent of the Holders under this Section to approve the particular form of any proposed supplement, but it shall be sufficient if such consent approves the substance thereof. An amendment to or supplement of this Indenture which changes or eliminates any covenant or other provision of this Indenture which has expressly been included solely for the benefit of one or more particular series of Securities, or which modifies the rights of the Holders of Securities of such series with respect to such covenant or other provision, shall be deemed not to affect the rights under this Indenture of the Holders of Securities of any other series. Section 9.03. Compliance with the Trust Indenture Act. Every amendment to or supplement of this Indenture or the Securities shall comply with the TIA as then in effect. Section 9.04. Revocation and Effect of Consents. A consent to an amendment, supplement, waiver or other action by a Holder of a Security shall bind the Holder and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the consenting Holder's Security, even if notation of the consent is not made on any Security. Any such Holder or subsequent Holder, however, may revoke the consent as to his Security or portion of a Security. Such revocation shall be effective only if the Trustee receives the notice of revocation before the date the amendment, supplement, waiver or other action becomes effective. An amendment, supplement, waiver or other action shall become effective on receipt by the Trustee of written consents from the Holders of the requisite percentage in aggregate principal amount of the outstanding Securities of the relevant series. After an amendment, supplement or waiver becomes effective, it shall bind every Securityholder of each series of Securities so affected. Section 9.05. Notation on or Exchange of Securities. If an amendment, supplement or waiver changes the terms of a Security, the Trustee may require the Holder of the Security to deliver it to the Trustee. The Trustee may place an appropriate notation on the Security about the changed terms and return it to the Holder. Alternatively, if the Company or the Trustee so determines, the Company in exchange for the Security shall issue and the Trustee shall authenticate a new Security that reflects the changed terms. Section 9.06. Trustee to Sign Amendments, etc. The Trustee shall sign any amendment, supplement or waiver authorized pursuant to this Article if the amendment, supplement or waiver does not adversely affect the rights, duties, immunities or liabilities of the Trustee. If it does, the Trustee may but need not sign it. The Company may not sign an amendment or supplement until the Board of Directors approves it. -36- 38 In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modification thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. ARTICLE TEN SUBORDINATION Section 10.01. Subordination Terms. The payment by the Company of the principal of, premium, if any, and interest on the Securities of any series shall be subordinated in the manner and to the extent provided in the Securities of such series, as contemplated by Sections 2.01 and 2.02. ARTICLE ELEVEN MISCELLANEOUS Section 11.01. Trust Indenture Act Controls. If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by any of TIA Sections 310 to 317, inclusive, through operation of TIA Section 318(c), such imposed duties shall control. Section 11.02. Notices. Any notice or communication shall be sufficiently given if in writing and delivered in person or mailed by first-class mail addressed as follows: If to the Company: Ohio Edison Company 76 South Main Street Akron, Ohio 44308 Attention: Treasurer -37- 39 If to the Trustee: The Bank of New York 101 Barclay Street Floor 21W New York, New York 10286 Attention: Corporate Trust Administration The Company or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications. Any notice or communication mailed to a Securityholder shall be mailed to him by first-class mail, postage prepaid, at his address as it appears on the registration books of the Registrar and shall be sufficiently given to him if so mailed within the time prescribed. Failure to mail a notice or communication to a Securityholder or any defect in it shall not affect its sufficiency with respect to other Securityholders. Except for a notice to the Trustee, which is deemed given only when received, if a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be equivalent of such notice. Waivers of notice by Holders of Securities shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. Section 11.03. Communication by Holders with Other Holders. Securityholders may communicate pursuant to TIA Section 312(b) with other Securityholders with respect to their rights under this Indenture or the Securities. The Company, the Trustee, the Registrar and anyone else shall have the protection of TIA Section 312(c). Section 11.04. Certificate and Opinion as to Conditions Precedent. Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee: (1) an Officers' Certificate stating that, in the opinion of the signers, all conditions precedent (including any covenants compliance with which constitutes a condition precedent), if any, provided for in this Indenture relating to the proposed action have been complied with; and (2) an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent (including any covenants compliance with which constitutes a condition precedent) have been complied with. -38- 40 Section 11.05. Statements Required in Certificate or Opinion. Each Officers' Certificate or Opinion of Counsel with respect to compliance with a condition or covenant provided for in this Indenture (other than certificates provided pursuant to Section 4.03) shall include: (1) a statement that the person making such certificate or opinion has read such covenant or condition; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of such person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with. Section 11.06. When Treasury Securities Disregarded. In determining whether the Holders of the required aggregate principal amount of Securities of any series have concurred in any direction, waiver or consent, Securities of such series owned by the Company or by any Affiliate of the Company shall be disregarded and treated as not outstanding, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Securities of such series which the Trustee actually knows are so owned shall be so disregarded. Section 11.07. Rules by Trustee and Agents. The Trustee may make reasonable rules for action by or a meeting of the Securityholders of all series or any series. The Registrar and Paying Agent may make reasonable rules for its functions. Section 11.08. Legal Holidays. A "Legal Holiday" is a Saturday, a Sunday, or a day on which banking institutions in the City of New York, New York, are not required to be open. If a specified date (including a date for giving notice) is a Legal Holiday, any action to be taken on such date pursuant to this Indenture or the Securities (including such conversion) may be taken on the next succeeding day that is not a Legal Holiday, and, to the extent applicable, no interest, or original issue discount, as the case may be, shall accrue for the intervening period. -39- 41 Section 11.09. Governing Law. The internal laws of the State of New York shall govern this Indenture and the Securities. Section 11.10. No Adverse Interpretation of Other Agreements. This Indenture may not be used to interpret another indenture, loan or debt agreement of the Company or a Subsidiary. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. Section 11.11. No Recourse Against Others. No past, present or future director, officer, employee or stockholder, as such, of the Company or the Trustee or any successor of either thereof shall have any liability for any obligations of the Company or the Trustee under the Securities or this Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation and all such liability is hereby waived and released. Such waiver and release are part of the consideration for the issue of the Securities. Section 11.12. Successors. All agreements of the Company in this Indenture and the Securities shall bind its successor. All agreements of the Trustee in this Indenture shall bind its successor. Section 11.13. Duplicate Originals. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. Section 11.14. Table of Contents, Headings, Etc. The table of contents and the titles and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part hereof, and shall in no way modify or restrict any of the terms or provisions hereof. Section 11.15. Acts of Holders. (a) Any direction, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing. Except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Company. Proof of execution of any such instrument or of a writing appointing any such agent, or of the holding by any person of a Security, shall be sufficient for any purpose of this Indenture and (subject to Section 7.01) -40- 42 conclusive in favor of the Trustee, the Company and any Agent, if made in the manner provided in this Section. (b) The fact and date of the execution by any Person of any such instrument may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee deems sufficient. (c) The ownership, principal amount and serial numbers of outstanding Securities held by any person, and the date of holding the same, shall be provided by the security register. (d) If the Company shall solicit from the Holders of any Securities any direction, consent, waiver or other authorization, the Company may at its option (but is not obligated to), by or pursuant to a resolution of the Board of Directors, fix in advance a record date for the determination of Holders of Securities entitled to give such direction, consent, waiver or other authorization. Notwithstanding TIA Section 316(c), such record date shall be the record date specified in or pursuant to such resolution of the Board of Directors, which shall be a date not earlier than 30 days prior to the first solicitation of Holders generally in connection therewith and not later than the date such solicitation is completed. If such a record date is fixed, such direction, consent, waiver or other authorization may be given before or after such record date, but only the Holders of Securities of record at the close of business on such record date shall be deemed to be Holders for the purpose of determining whether Holders of the requisite proportion of outstanding Securities have authorized or agreed or consented to such direction, consent, waiver or other authorization, and for that purpose the outstanding Securities shall be computed as of such record date; provided that no such consent or other authorization by the Holders shall be deemed effective unless it shall become effective pursuant to the provisions of this Indenture not later than eleven months after the record date. (e) Any consent, waiver or other authorization by the Holder of any Security shall bind such Holder and every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee, any Agent or the Company in reliance thereon, whether or not notation of such action is made upon such Security. Section 11.16. Assignment. The Company shall have the right at all times to assign any of its rights or obligations under this Indenture to a direct or indirect wholly owned Subsidiary of the Company; provided, that, in the event of any such assignment, the Company shall remain liable for all such obligations. -41- 43 SIGNATURES Dated: OHIO EDISON COMPANY By: ------------------------------------ Title: (SEAL) ATTEST: - - ------------------------------------ Assistant Secretary Dated: THE BANK OF NEW YORK By: ------------------------------------ Title: (SEAL) ATTEST: - - ------------------------------------ Assistant Treasurer -42- 44 CROSS-REFERENCE TABLE
TIA INDENTURE SECTION SECTION 310 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . 7.10 (a)(2) . . . . . . . . . . . . . . . . . . . . . . . . 7.10 (a)(3) . . . . . . . . . . . . . . . . . . . . . . . . N.A. (a)(4) . . . . . . . . . . . . . . . . . . . . . . . . N.A. (b) . . . . . . . . . . . . . . . . . . . . . . . . . . 7.08; 7.10 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . N.A. 311 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . N.A. 312 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.07 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . N.A. (c) . . . . . . . . . . . . . . . . . . . . . . . . . . N.A. 313 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06 (b)(1) . . . . . . . . . . . . . . . . . . . . . . . . N.A. (b)(2) . . . . . . . . . . . . . . . . . . . . . . . . 7.06 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . N.A. (d) . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06 314 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . 4.02 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . N.A. (c)(1) . . . . . . . . . . . . . . . . . . . . . . . . 11.04 (c)(2) . . . . . . . . . . . . . . . . . . . . . . . . 11.04 (c)(3) . . . . . . . . . . . . . . . . . . . . . . . . N.A. (d) . . . . . . . . . . . . . . . . . . . . . . . . . . N.A. (e) . . . . . . . . . . . . . . . . . . . . . . . . . . 11.05 (f) . . . . . . . . . . . . . . . . . . . . . . . . . . N.A. 315 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01(b) (b) . . . . . . . . . . . . . . . . . . . . . . . . . . 7.05 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01(a) (d) . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01(c) (e) . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11 316 (a)(last sentence) . . . . . . . . . . . . . . . . . . N.A. (a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . 6.05 (a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . 6.04 (a)(2) . . . . . . . . . . . . . . . . . . . . . . . . N.A. (b) . . . . . . . . . . . . . . . . . . . . . . . . . . 6.07 317 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . 6.08 (a)(2) . . . . . . . . . . . . . . . . . . . . . . . . 6.09 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.06 318 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
- - -------------------- N.A. means Not Applicable. This Cross-Reference Table does not constitute part of the Indenture -43- 45 TABLE OF CONTENTS
Page ---- ARTICLE ONE DEFINITIONS AND INCORPORATION BY REFERENCE Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . 1 Section 1.02. Other Definitions . . . . . . . . . . . . . . . . . . . . . 3 Section 1.03. Incorporation by Reference of Trust Indenture Act. . . . . 3 Section 1.04. Rules of Construction . . . . . . . . . . . . . . . . . . . 4 ARTICLE TWO THE SECURITIES Section 2.01. Forms Generally and Dating . . . . . . . . . . . . . . . . 4 Section 2.02. Amount Unlimited; Issuable in Series . . . . . . . . . . . 5 Section 2.03. Denominations . . . . . . . . . . . . . . . . . . . . . . . 7 Section 2.04. Execution and Authentication . . . . . . . . . . . . . . . 8 Section 2.05. Registrar and Paying Agent . . . . . . . . . . . . . . . . 10 Section 2.06. Paying Agent to Hold Money and Securities in Trust . . . . 10 Section 2.07. Securityholder Lists . . . . . . . . . . . . . . . . . . . 11 Section 2.08. Transfer and Exchange . . . . . . . . . . . . . . . . . . . 11 Section 2.09. Replacement Securities . . . . . . . . . . . . . . . . . . 13 Section 2.10. Outstanding Securities . . . . . . . . . . . . . . . . . . 14 Section 2.11. Temporary Securities . . . . . . . . . . . . . . . . . . . 14 Section 2.12. Cancellation . . . . . . . . . . . . . . . . . . . . . . . 15 Section 2.13. Payment of Interest; Defaulted Interest . . . . . . . . . . 15 Section 2.14. Persons Deemed Owners . . . . . . . . . . . . . . . . . . . 16 Section 2.15. Securities in Global Form . . . . . . . . . . . . . . . . . 16 Section 2.16. CUSIP Numbers . . . . . . . . . . . . . . . . . . . . . . . 17 ARTICLE THREE REDEMPTION Section 3.01. Applicability of Article . . . . . . . . . . . . . . . . . 18 Section 3.02. Notices to Trustee . . . . . . . . . . . . . . . . . . . . 18 Section 3.03. Selection of Securities to be Redeemed . . . . . . . . . . 19 Section 3.04. Notice of Redemption . . . . . . . . . . . . . . . . . . . 19 Section 3.05. Effect of Notice of Redemption . . . . . . . . . . . . . . 20 Section 3.06. Deposit of Redemption Price . . . . . . . . . . . . . . . . 20 Section 3.07. Securities Redeemed in Part . . . . . . . . . . . . . . . . 20
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Page ---- ARTICLE FOUR COVENANTS Section 4.01. Payment of Securities . . . . . . . . . . . . . . . . . . . 21 Section 4.02. SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . 21 Section 4.03. Compliance Certificate . . . . . . . . . . . . . . . . . . 21 Section 4.04. Corporate Existence . . . . . . . . . . . . . . . . . . . . 22 Section 4.05. Calculation of Original Issue Discount . . . . . . . . . . 22 ARTICLE FIVE SUCCESSOR CORPORATION Section 5.01. When Company May Merge, etc . . . . . . . . . . . . . . . . 22 ARTICLE SIX DEFAULTS AND REMEDIES Section 6.01. Events of Default . . . . . . . . . . . . . . . . . . . . . 22 Section 6.02. Acceleration . . . . . . . . . . . . . . . . . . . . . . . 24 Section 6.03. Other Remedies . . . . . . . . . . . . . . . . . . . . . . 24 Section 6.04. Waiver of Existing Defaults . . . . . . . . . . . . . . . . 25 Section 6.05. Control by Majority . . . . . . . . . . . . . . . . . . . . 25 Section 6.06. Limitation of Suits . . . . . . . . . . . . . . . . . . . . 25 Section 6.07. Rights of Holders to Receive Payment and to Convert . . . . 26 Section 6.08. Collection Suit by Trustee . . . . . . . . . . . . . . . . 26 Section 6.09. Trustee May File Proofs of Claim . . . . . . . . . . . . . 26 Section 6.10. Priorities . . . . . . . . . . . . . . . . . . . . . . . . 26 Section 6.11. Undertaking for Costs . . . . . . . . . . . . . . . . . . . 27 ARTICLE SEVEN TRUSTEE Section 7.01. Duties of Trustee . . . . . . . . . . . . . . . . . . . . . 27 Section 7.02. Rights of Trustee . . . . . . . . . . . . . . . . . . . . . 28 Section 7.03. Individual Rights of Trustee . . . . . . . . . . . . . . . 29 Section 7.04. Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . 29 Section 7.05. Notice of Defaults . . . . . . . . . . . . . . . . . . . . 30 Section 7.06. Reports by Trustee to Holders . . . . . . . . . . . . . . . 30 Section 7.07. Compensation and Indemnity . . . . . . . . . . . . . . . . 30 Section 7.08. Replacement of Trustee . . . . . . . . . . . . . . . . . . 31 Section 7.09. Successor Trustee by Merger, etc . . . . . . . . . . . . . 32 Section 7.10. Eligibility; Disqualification . . . . . . . . . . . . . . . 32 Section 7.11. Preferential Collection of Claims Against Company . . . . . 32
-ii- 47
Page ---- ARTICLE EIGHT DISCHARGE OF INDENTURE Section 8.01. Termination of Company's Obligations . . . . . . . . . . . 32 Section 8.02. Application of Trust Fund . . . . . . . . . . . . . . . . . 33 Section 8.03. Repayment to Company . . . . . . . . . . . . . . . . . . . 34 ARTICLE NINE AMENDMENTS, SUPPLEMENTS AND WAIVERS Section 9.01. Without Consent of Holders . . . . . . . . . . . . . . . . 34 Section 9.02. With Consent of Holders . . . . . . . . . . . . . . . . . . 35 Section 9.03. Compliance with the Trust Indenture Act . . . . . . . . . . 36 Section 9.04. Revocation and Effect of Consents . . . . . . . . . . . . . 36 Section 9.05. Notation on or Exchange of Securities . . . . . . . . . . . 36 Section 9.06. Trustee to Sign Amendments, etc . . . . . . . . . . . . . . 36 ARTICLE TEN SUBORDINATION Section 10.01. Subordination Terms. . . . . . . . . . . . . . . . . . . . 37 ARTICLE ELEVEN MISCELLANEOUS Section 11.01. Trust Indenture Act Controls . . . . . . . . . . . . . . . 37 Section 11.02. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Section 11.03. Communication by Holders with Other Holders . . . . . . . . 38 Section 11.04. Certificate and Opinion as to Conditions Precedent . . . . 38 Section 11.05. Statements Required in Certificate or Opinion . . . . . . . 39 Section 11.06. When Treasury Securities Disregarded . . . . . . . . . . . 39 Section 11.07. Rules by Trustee and Agents . . . . . . . . . . . . . . . . 39 Section 11.08. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . 39 Section 11.09. Governing Law . . . . . . . . . . . . . . . . . . . . . . . 40 Section 11.10. No Adverse Interpretation of Other Agreements . . . . . . . 40 Section 11.11. No Recourse Against Others . . . . . . . . . . . . . . . . 40 Section 11.12. Successors . . . . . . . . . . . . . . . . . . . . . . . . 40 Section 11.13. Duplicate Originals . . . . . . . . . . . . . . . . . . . . 40 Section 11.14. Table of Contents, Headings, Etc . . . . . . . . . . . . . 40 Section 11.15. Acts of Holders . . . . . . . . . . . . . . . . . . . . . . 40 Section 11.16. Assignment . . . . . . . . . . . . . . . . . . . . . . . . 41
-iii- EX-4.2 3 FORM OF FIRST SUPPLEMENTAL INDENTURE TO INDENTURE 1 EXHIBIT 4.2 - - -------------------------------------------------------------------------------- OHIO EDISON COMPANY AND THE BANK OF NEW YORK, Trustee ------------------------------- FIRST SUPPLEMENTAL INDENTURE TO INDENTURE Dated as of , 1996 -------- ------------------------------- % Junior Subordinated Debentures Due 2016 ----- - - -------------------------------------------------------------------------------- 2 THIS FIRST SUPPLEMENTAL INDENTURE, dated as of ________, 1996 (this "First Supplemental Indenture"), between Ohio Edison Company, an Ohio corporation (the "Company"), and The Bank of New York, a New York banking corporation, not in its individual capacity but solely as trustee (the "Trustee"), under the Indenture dated as of ________, 1996 between the Company and the Trustee (the "Indenture"). W I T N E S S E T H: WHEREAS, the Company executed and delivered the Indenture to the Trustee to provide for the future issuance of the Company's unsecured subordinated Securities, to be issued from time to time in one or more series as might be determined by the Company in accordance with the Indenture, in an unlimited aggregate principal amount which may be authenticated and delivered as provided in the Indenture; and WHEREAS, pursuant to the terms of the Indenture, the Company desires to provide for the establishment of a new series of its Securities to be known as its _____% Junior Subordinated Debentures Due 2016 (the "Debentures"), the form and substance of such Debentures and the terms, provisions and conditions thereof to be as set forth in the Indenture and this First Supplemental Indenture; and WHEREAS, Ohio Edison Financing Trust II, a Delaware statutory business trust (the "Trust"), has offered to issue $__________ aggregate stated liquidation amount of its _____% Trust Originated Preferred Securities (the "Preferred Securities") in exchange for a like aggregate par value of the Company's 7.75% Class A Preferred Stock, $25 par value per share (the "Class A Preferred Stock") and has offered to the Company $__________ aggregate stated liquidation amount of its common securities (the "Common Securities" and, together with the Preferred Securities, the "Trust Securities"), such Trust Securities representing undivided beneficial interests in the assets of the Trust, and proposes to invest the proceeds from such offering and the Class A Preferred Stock received in the exchange in $___________ aggregate principal amount of the Debentures; and WHEREAS, the Company has requested the Trustee to execute and deliver this First Supplemental Indenture, and all requirements necessary to make this First Supplemental Indenture a valid instrument, in accordance with its terms, and to make the Debentures, when executed by the Company and authenticated and delivered by the Trustee, the valid obligations of the Company, have been performed, and the execution and delivery of this First Supplemental Indenture has been duly authorized in all respects. NOW THEREFORE, in consideration of the purchase and acceptance of the Debentures by the holders thereof, and for the purpose of setting forth, as provided in the Indenture, the form and substance of the Debentures and the terms, provisions and conditions thereof, the Company covenants and agrees with the Trustee as follows: 3 ARTICLE I DEFINITIONS Section 1.1. Definition of Terms. Unless the context otherwise requires, (a) a term defined in the Indenture has the same meaning when used in this First Supplemental Indenture, (b) a term defined anywhere in this First Supplemental Indenture has the same meaning throughout and (c) the following terms have the meanings given to them in the Declaration (including, without limitation, Annex I thereto): Class A Preferred Stock Clearing Agency Dealer Manager Agreement Delaware Trustee No Recognition Opinion Preferred Securities Guarantee Preferred Security Certificate Pro Rata Property Trustee Regular Trustee Special Event Tax Event Tax Event Opinion In addition, the following terms have the following respective meanings: "Declaration" means the Amended and Restated Declaration of Trust of Ohio Edison Financing Trust II, a Delaware business trust, dated as of ________, 1996. "Dissolution Event" means that, as a result of the occurrence and continuation of a Special Event, the Trust is to be dissolved in accordance with the Declaration and the Debentures held by the Property Trustee are to be distributed to the holders of the Trust Securities Pro Rata in accordance with the Declaration. "Maturity Date" means the date on which the Debentures mature and on which the principal shall be due and payable together with all accrued and unpaid interest thereon including Additional Interest, if any. "Senior Indebtedness" means the principal of, premium, if any, interest on and any other payment due pursuant to any of the following, whether outstanding at the date hereof or hereafter incurred, created or assumed: (i) all indebtedness of the Company on a consolidated basis (other than any obligations to trade creditors) evidenced by notes, debentures, bonds, other Securities or other instruments issued by the Company for money borrowed and capitalized lease obligations; (ii) all indebtedness of others of the kinds described in the preceding clause (i) assumed or guaranteed in any manner by the Company or in effect guaranteed by the Company; and (iii) all renewals, extensions or refundings of -2- 4 indebtedness of the kinds described in either of the preceding clauses (i) or (ii), unless, in the case of any particular indebtedness, renewal, extension or refunding, the instrument creating or evidencing the same or the assumption or guarantee of the same expressly provides that such indebtedness, renewal, extension or refunding is not superior in right of payment to or is pari passu with the Debentures. Section 1.2. Interpretation. Each definition in this First Supplemental Indenture includes the singular and the plural, and references to the neuter gender include the masculine and feminine where appropriate. Terms which relate to accounting matters shall be interpreted in accordance with generally accepted accounting principles in effect from time to time. References to any statute mean such statute as amended at the time and include any successor legislation. The word "or" is not exclusive, and the words "herein," "hereof" and "hereunder" refer to this First Supplemental Indenture as a whole. References to Articles and Sections are to the Articles and Sections of this First Supplemental Indenture. The headings to the Articles and Sections are for convenience of reference and shall not affect the meaning or interpretation of this First Supplemental Indenture. ARTICLE II GENERAL TERMS AND CONDITIONS OF THE DEBENTURES Section 2.1. Designation and Principal Amount. There is hereby authorized a series of Securities designated the "_____% Junior Subordinated Debentures Due 2016." The aggregate principal amount of Debentures which may be authenticated and delivered under the Indenture is limited to $____________ (except for Debentures authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Debentures pursuant to Sections 2.08, 2.09, 2.11, 3.07 or 9.05 of the Indenture and except for any Debentures which pursuant to Section 2.04 of the Indenture are deemed not to have been authenticated and delivered pursuant to the Indenture). Section 2.2. Maturity. The Maturity Date will be __________, 2016. Section 2.3. Form and Payment. Except as provided in Section 2.4, the Debentures shall be issued in fully registered certificated form without interest coupons. Principal and interest on the Debentures issued in certificated form will be payable, the transfer of such Debentures will be registrable and such Debentures will be exchangeable for Debentures bearing identical terms and provisions at the office or agency of the Trustee in New York, New York, provided, however, that payment of interest may be made at the option of the Company by check mailed to the registered Holder at such address as shall appear in the security register maintained by the Registrar. Notwithstanding the foregoing, so long as the registered Holder of any Debentures is the Property Trustee, the payment of the principal of and interest (including Additional Interest, if any) on such Debentures held by the Property Trustee will be made at such place and to such account as may be designated by the Property Trustee. -3- 5 Section 2.4. Debenture Form Upon Dissolution Event. In connection with a Dissolution Event, Debentures in certificated form may be presented to the Trustee by the Property Trustee and any Preferred Security Certificate which represents Preferred Securities will be deemed to represent beneficial interests in Debentures in certificated form presented to the Trustee by the Property Trustee having an aggregate principal amount equal to the aggregate stated liquidation amount of such Preferred Securities until such Preferred Security Certificates are presented to the Registrar for transfer or reissuance, at which time such Preferred Security Certificates will be canceled and a Debenture, registered in the name of the holder of such Preferred Security Certificate or the transferee of the holder of such Preferred Security Certificate, as the case may be, with an aggregate principal amount equal to the aggregate stated liquidation amount of the Preferred Security Certificate canceled, will be executed by the Company and delivered to the Trustee for authentication and delivery in accordance with the Indenture and this First Supplemental Indenture. On issue of such Debentures, Debentures in certificated form with an equivalent aggregate principal amount that were presented by the Property Trustee to the Trustee will be deemed to have been canceled. Section 2.5. Interest. (a) Each Debenture will bear interest at the rate of _____% per annum (the "Coupon Rate") from the original date of issuance until the principal thereof becomes due and payable, and on any overdue principal and (without duplication and to the extent that payment of such interest is enforceable under applicable law) on any interest installment in arrears for more than one quarter and on any interest on such overdue interest at the Coupon Rate, payable (subject to the provisions of Article IV) quarterly in arrears on March 31, June 30, September 30 and December 31 of each year (each, an "Interest Payment Date"), commencing on __________, 1996, to the Person in whose name such Debenture or any predecessor Debenture is registered, at the close of business on the regular record date (each, a "Regular Record Date") for such interest installment, which shall be the close of business on the day 15 calendar days prior to that Interest Payment Date. In addition, each Debenture will bear interest from _______, 1996 through ____, 1996 at the rate of 7.75% per annum of the principal amount thereof (the "Pre-Issuance Accrued Distribution"), payable on ____________, 1996 to to the Person in whose name such Debenture is registered at the close of business on the Regular Record Date for such interest installment. (b) The amount of interest payable for any period will be computed on the basis of a 360-day year of twelve 30-day months. In the event that any date on which interest is payable on the Debentures is not a Business Day, then payment of interest payable on such date will be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of any such delay), except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date. The amount of interest payable for any period shorter than a full quarterly period for which interest is computed will be computed on the basis of the actual number of days elapsed in such a 90-day quarter. -4- 6 (c) If at any time while the Property Trustee is the Holder of any Debentures, the Trust or the Property Trustee is required to pay any taxes, duties, assessments or governmental charges of whatever nature (other than withholding taxes) imposed by the United States, or any other taxing authority, then, in any case, the Company will pay as additional interest ("Additional Interest") on the Debentures held by the Property Trustee, such additional amounts as shall be required so that the net amounts received and retained by the Trust and the Property Trustee after paying such taxes, duties, assessments or other governmental charges will be equal to the amounts the Trust and the Property Trustee would have received had no such taxes, duties, assessments or other governmental charges been imposed. ARTICLE III REDEMPTION OF THE DEBENTURES Section 3.1. Special Event Redemption. If a Tax Event has occurred and is continuing and: (a) the Company has received a Redemption Tax Opinion; or (b) after receiving a Dissolution Tax Opinion, the Regular Trustees shall have been informed by tax counsel rendering the Dissolution Tax Opinion that a No Recognition Opinion cannot be delivered to the Trust, then, notwithstanding Section 3.2(a) but subject to Section 3.2(b), the Company shall have the right, upon not less than 30 nor more than 60 days notice to the registered Holders of the Debentures, to redeem the Debentures, in whole or in part, for cash within 90 days following the occurrence of such Tax Event (the "90 Day Period") at a redemption price equal to 100% of the principal amount to be redeemed plus any accrued and unpaid interest thereon to the date of such redemption (the "Special Redemption Price"), provided that, if at the time there is available to the Company the opportunity to eliminate, within the 90 Day Period, the Tax Event by taking some ministerial action ("Ministerial Action"), such as filing a form or making an election, or pursuing some other similar reasonable measure that has no adverse effect on the Company, the Trust or the holders of the Trust Securities, the Company shall pursue such Ministerial Action in lieu of redemption; and provided further, that the Company shall have no right to redeem the Debentures while the Trust is pursing any Ministerial Action pursuant to its obligations under the Declaration. The Special Redemption Price shall be paid (or wire transfer instructions in respect thereof shall have been irrevocably given) prior to 12:00 noon, New York time, on the date of such redemption or at such earlier time as the Company determines and specifies in the notice of redemption, provided the Company shall deposit with the Trustee an amount sufficient to pay the Special Redemption Price by 11:00 a.m. on the date such Special Redemption Price is to be paid. Section 3.2. Optional Redemption by Company. (a) Subject to the provisions of Article Three of the Indenture and to Section 3.2(b), the Company shall have the right to -5- 7 redeem the Debentures, in whole or in part, from time to time, on or after __________, 20__, at a redemption price equal to 100% of the principal amount to be redeemed plus any accrued and unpaid interest thereon to the date of such redemption (the "Optional Redemption Price"). Any redemption pursuant to this paragraph will be made upon not less than 30 nor more than 60 days notice to the registered Holder of the Debentures, at the Optional Redemption Price. If the Debentures are only partially redeemed pursuant to this Section 3.2, the Debentures will be redeemed pro rata or by lot or by any other method utilized by the Trustee. The Optional Redemption Price shall be paid prior to 12:00 noon, New York time, on the date of such redemption or at such earlier time as the Company determines and specifies in the notice of redemption, provided the Company shall deposit with the Trustee an amount sufficient to pay the Optional Redemption Price by 11:00 a.m. on the date such Optional Redemption Price is to be paid. (b) If a partial redemption of the Debentures would result in the delisting of the Preferred Securities issued by the Trust from any national securities exchange or other organization on which the Preferred Securities are then listed, the Company shall not be permitted to effect such partial redemption and may only redeem the Debentures in whole. Section 3.3. No Sinking Fund. The Debentures are not entitled to the benefit of any sinking fund. ARTICLE IV EXTENSION OF INTEREST PAYMENT PERIOD Section 4.1. Extension of Interest Payment Period. Except with respect to the Pre-Issuance Accrued Distribution, the Company shall have the right, at any time and from time to time prior to the Maturity Date, to extend the interest payment period of such Debentures for up to twenty (20) consecutive quarters (the "Extended Interest Payment Period"). Interest that is in arrears for more than one quarter (whether due to an extension of the interest payment period pursuant to this Section 4.1 or otherwise) will accrue interest at the Coupon Rate and the interest so accrued at the end of each quarter and remaining unpaid will itself bear interest thereafter at the Coupon Rate (to the extent permitted by applicable law) until paid on the same basis. At the end of the Extended Interest Payment Period, the Company shall pay all interest accrued and unpaid on the Debentures, including any Additional Interest ("Deferred Interest"), which shall be payable to the Holders of the Debentures in whose names the Debentures are registered in the security register maintained by the Registrar on the first Regular Record Date after the end of the Extended Interest Payment Period. Before the termination of any Extended Interest Payment Period, the Company may further extend such period, provided that such period together with all such further extensions thereof shall not exceed twenty (20) consecutive quarters or extend beyond the Maturity Date. Upon the termination of any Extended Interest Payment Period and upon the payment of all Deferred Interest then due, the Company may select a new Extended Interest Payment Period, subject to the foregoing requirements. No interest shall be due and payable during an Extended Interest Payment Period, except at the end thereof. -6- 8 Section 4.2. Notice of Extension. (a) If the Property Trustee is the only registered Holder of the Debentures at the time the Company selects an Extended Interest Payment Period, the Company shall give written notice to both the Regular Trustees and the Property Trustee of its selection of such Extended Interest Payment Period one Business Day before the earlier of (i) the next succeeding date on which Distributions on the Trust Securities are payable, or (ii) the date the Trust is required to give notice of the record or payment date for such Distributions to the New York Stock Exchange or other applicable self-regulatory organization or to holders of the Preferred Securities, but in any event at least one Business Day before such record date. (b) If the Property Trustee is not the only Holder of the Debentures at the time the Company selects an Extended Interest Payment Period, the Company shall give the Holders of the Debentures and the Trustee written notice of its selection of such Extended Interest Payment Period ten (10) Business Days before the earlier of (i) the next succeeding Interest Payment Date, or (ii) the date the Company is required to give notice of the record or payment date of such interest payment to the New York Stock Exchange or other applicable self-regulatory organization or to Holders of the Debentures. (c) The quarter in which any notice is given pursuant to paragraphs (a) or (b) of this Section 4.2 shall be counted as one of the twenty quarters permitted in the maximum Extended Interest Payment Period permitted under Section 4.1. ARTICLE V EXPENSES Section 5.1. Payment of Expenses. In connection with the offering, sale and issuance of the Debentures to the Property Trustee in connection with the issuance of the Preferred Securities by the Trust in exchange for Class A Preferred Stock and the sale of the Common Securities by the Trust to the Company, and in connection with the maintenance of the Trust for so long as the Trust Securities are outstanding, the Company shall: (a) pay all costs and expenses relating to the offering, sale and issuance of the Debentures, and compensation of the Trustee under the Indenture in accordance with the provisions of Section 7.07 of the Indenture; (b) pay all costs and expenses of the Trust (including, but not limited to, costs and expenses relating to the organization of the Trust, the offering, sale and issuance of the Trust Securities (including commissions and expenses of the dealer manager payable pursuant to the Dealer Manager Agreement), the fees and expenses of the Property Trustee and the Delaware Trustee, the costs and expenses relating to the operation of the Trust, including without limitation, costs and expenses of accountants, attorneys, statistical or bookkeeping services, expenses for printing and engraving and computing or accounting equipment, paying agent(s), registrar(s), transfer agent(s), any Clearing Agency for the Debentures, duplicating, travel and telephone and other telecommunications expenses and costs and -7- 9 expenses incurred in connection with the acquisition, financing, and disposition of Trust assets); (c) be primarily liable for any indemnification obligations arising with respect to the Declaration; (d) pay any and all taxes, duties, assessments or governmental charges of whatever nature (other than United States withholding taxes attributable to the Trust or its assets) imposed on the Trust or its assets and all liabilities, costs and expenses of the Trust with respect to such taxes, duties, assessments or governmental charges; and (e) pay any and all fees and expenses related to the enforcement by the Property Trustee of the rights of the holders of the Preferred Securities. ARTICLE VI SUBORDINATION Section 6.1. Agreement to Subordinate. The Company covenants and agrees, and each holder of Debentures issued hereunder by such holder's acceptance thereof likewise covenants and agrees, that all Debentures shall be issued subject to the provisions of this Article VI; and each holder of a Debenture, whether upon original issue or upon transfer or assignment thereof, accepts and agrees to be bound by such provisions. The payment by the Company of the principal of, premium, if any, and interest on all Debentures issued hereunder shall, to the extent and in the manner hereinafter set forth, be subordinated and subject in right of payment to the prior payment in full of all Senior Indebtedness, whether outstanding at the date of this First Supplemental Indenture or thereafter incurred. This Article shall constitute a continuing offer to all Persons who, in reliance upon such provisions, become holders of, or continue to hold, Senior Indebtedness, and such provisions are made for the benefit of the holders of Senior Indebtedness and such holders are made obligees hereunder and they and/or each of them may enforce such provisions. No provision of this Article VI shall prevent the occurrence of any default or Event of Default with respect to the Debentures. Section 6.2. Default on Senior Indebtedness. In the event and during the continuation of any default by the Company in the payment of principal, premium, interest or any other amount due on any Senior Indebtedness, or in the event that the maturity of any Senior Indebtedness has been accelerated because of a default, then, in either case, no payment shall be made by the Company to the Holders of the Debentures with respect to the principal (including redemption and sinking fund payments) of, or premium, if any, or interest on, or any other amount owing in respect of, the Debentures. -8- 10 In the event that, notwithstanding the foregoing, any payment shall be received by the Trustee or any Holder of the Debentures when such payment is prohibited by the preceding paragraph of this Section 6.2, such payment shall be held in trust for the benefit of, and shall be paid over or delivered to, the holders of Senior Indebtedness or their respective representatives, or to the trustee or trustees under any indenture pursuant to which any of such Senior Indebtedness may have been issued, as their respective interests may appear, but only to the extent that the holders of the Senior Indebtedness (or their representative or representatives or a trustee) notify the Trustee within 90 days of such payment of the amounts then due and owing on the Senior Indebtedness and only the amounts specified in such notice to the Trustee shall be paid to the holders of Senior Indebtedness. Section 6.3. Liquidation; Dissolution; Bankruptcy. Upon any payment by the Company, or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to creditors upon any dissolution or winding-up or liquidation or reorganization of the Company, whether voluntary or involuntary or in bankruptcy, insolvency, receivership or other proceedings, all amounts due upon all Senior Indebtedness shall first be paid in full, or payment thereof provided for in money in accordance with its terms, before any payment or distribution is made by the Company to the Holders of the Debentures on account of the principal of, premium, if any, or interest on, or any other amount owing in respect of, the Debentures; and upon any such dissolution or winding-up or liquidation or reorganization, any payment by the Company, or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to which the Holders of the Debentures or the Trustee would be entitled to receive from the Company, except for the provisions of this Article VI, shall be paid by the Company or by any receiver, trustee in bankruptcy, liquidating trustee, agent or other Person making such payment or distribution, or by the Holders of the Debentures or by the Trustee under this Indenture if received by them or it, directly to the holders of Senior Indebtedness (pro rata to such holders on the basis of the respective amounts of Senior Indebtedness held by such holders, as calculated by the Company) or their representative or representatives, or to the trustee or trustees under any indenture pursuant to which any instruments evidencing such Senior Indebtedness may have been issued, as their respective interests may appear, to the extent necessary to pay such Senior Indebtedness in full, in money or money's worth, after giving effect to any concurrent payment or distribution to or for the holders of such Senior Indebtedness, before any payment or distribution is made to the Holders of Debentures or to the Trustee. In the event that, notwithstanding the foregoing, any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, prohibited by the foregoing, shall be received by the Trustee or the Holders of the Debentures before all Senior Indebtedness is paid in full, or provision is made for such payment in money in accordance with its terms, such payment or distribution shall be held in trust for the benefit of and shall be paid over or delivered to the holders of such Senior Indebtedness or their representative or representatives, or to the trustee or trustees under any indenture pursuant to which any instruments evidencing such Senior Indebtedness may have been issued, as their respective interests may appear, as calculated by the Company, for application to the payment of all Senior Indebtedness remaining unpaid to the extent necessary to pay such Senior Indebtedness in full in money in accordance with its terms, after giving effect to any -9- 11 concurrent payment or distribution to or for the benefit of the holders of such Senior Indebtedness. For purposes of this Article VI, the words "cash, property or securities" shall not be deemed to include shares of stock of the Company as reorganized or readjusted, or securities of the Company or any other corporation provided for by a plan of reorganization or readjustment, the payment of which is subordinated at least to the extent provided in this Article VI with respect to the Debentures to the payment of all Senior Indebtedness that may at the time be outstanding, provided that (i) such Senior Indebtedness is assumed by the new corporation, if any, resulting from any such reorganization or readjustment, and (ii) the rights of the holders of such Senior Indebtedness are not, without the consent of such holders, altered by such reorganization or readjustment. The consolidation of the Company with, or the merger of the Company into, another corporation or the liquidation or dissolution of the Company following the conveyance or transfer of its property as an entirety, or substantially as an entirety, to another corporation upon the terms and conditions provided for in Article Five of the Indenture shall not be deemed a dissolution, winding-up, liquidation or reorganization for the purposes of this Section 6.3 if such other corporation shall, as a part of such consolidation, merger, conveyance or transfer, comply with the conditions stated in Article Five of the Indenture. Nothing in Section 6.2 or in this Section 6.3 shall apply to claims of, or payments to, the Trustee under or pursuant to Section 7.07 of the Indenture. Section 6.4. Subrogation. Subject to the payment in full of all Senior Indebtedness, the rights of the Holders of the Debentures shall be subrogated to the rights of the holders of such Senior Indebtedness to receive payments or distributions of cash, property or securities of the Company applicable to such Senior Indebtedness until the principal of, premium, if any, and interest on, and all other amounts owing in respect of, the Debentures shall be paid in full; and, for the purposes of such subrogation, no payments or distributions to the holders of such Senior Indebtedness of any cash, property or securities to which the Holders of the Debentures or the Trustee would be entitled except for the provisions of this Article VI, and no payment over pursuant to the provisions of this Article VI, to or for the benefit of the holders of such Senior Indebtedness by Holders of the Debentures or the Trustee, shall, as between the Company, its creditors other than holders of Senior Indebtedness, and the Holders of the Debentures be deemed to be a payment by the Company to or on account of such Senior Indebtedness. It is understood that the provisions of this Article VI are and are intended solely for the purposes of defining the relative rights of the Holders of the Debentures, on the one hand, and the holders of Senior Indebtedness on the other hand. Nothing contained in this Article VI or elsewhere in this First Supplemental Indenture or the Indenture or in the Debentures is intended to or shall impair, as between the Company, its creditors other than the holders of Senior Indebtedness, and the Holders of the Debentures, the obligation of the Company, which is absolute and unconditional, to pay to the Holders of the Debentures the principal of (and premium, if any) and interest on and all other amounts owing in respect of the Debentures as and when the same shall become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of the Holders of the Debentures and creditors of the Company, other than the holders of Senior Indebtedness, nor shall anything herein or therein prevent the Trustee or the Holder of -10- 12 any Debenture from exercising all remedies otherwise permitted by applicable law upon default under the Indenture, as amended and supplemented by this First Supplemental Indenture, subject to the rights, if any, under this Article VI of the holders of such Senior Indebtedness in respect of cash, property or securities of the Company received upon the exercise of any such remedy. Upon any payment or distribution of assets of the Company referred to in this Article VI, the Trustee, subject to the provisions of Section 7.01 of the Indenture, and the Holders of the Debentures, shall be entitled to rely upon any order or decree made by any court of competent jurisdiction in which such dissolution, winding-up, liquidation or reorganization proceedings are pending, or a certificate of the receiver, trustee in bankruptcy, liquidation trustee, agent or other Person making such payment or distribution, delivered to the Trustee or to the Holders of the Debentures, for the purposes of ascertaining the Persons entitled to participate in such distribution, the holders of Senior Indebtedness and other indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article VI. Section 6.5. Trustee to Effectuate Subordination. Each Holder of a Debenture by such holder's acceptance thereof authorizes and directs the Trustee on such holder's behalf to take such action as may be necessary or appropriate to effectuate the subordination provided in this Article VI and appoints the Trustee such holder's attorney-in-fact for any and all such purposes. Section 6.6. Notice by the Company. The Company shall give prompt written notice to a Trust Officer of any fact known to the Company that would prohibit the making of any payment of monies to or by the Trustee in respect of the Debentures pursuant to the provisions of this Article VI. Notwithstanding the provisions of this Article VI or any other provision of the Indenture and this First Supplemental Indenture, the Trustee shall not be charged with knowledge of the existence of any facts that would prohibit the making of any payment of monies to or by the Trustee in respect of the Debentures pursuant to the provisions of this Article VI unless and until a Trust Officer shall have received written notice thereof from the Company or a holder or holders of Senior Indebtedness or from any representative or trustee therefor; and before the receipt of any such written notice, the Trustee, subject to the provisions of Section 7.01 of the Indenture, shall be entitled in all respects to assume that no such facts exist; provided, however, that if the Trustee shall not have received the notice provided for in this Section 6.6 at least two Business Days prior to the date upon which by the terms hereof any money may become payable for any purpose (including, without limitation, the payment of the principal of (or premium, if any) or interest on any Debenture) then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such money and to apply the same to the purposes for which they were received, and shall not be affected by any notice to the contrary that may be received by it within two Business Days prior to such date. The Trustee, subject to the provisions of Section 7.01 of the Indenture, shall be entitled to rely on the delivery to it of a written notice by a Person representing himself to be a holder of Senior Indebtedness (or a representative or trustee on behalf of such holder) to -11- 13 establish that such notice has been given by a holder of such Senior Indebtedness or a representative or trustee on behalf of any such holder or holders. In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder of such Senior Indebtedness to participate in any payment or distribution pursuant to this Article VI, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of such Senior Indebtedness held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article VI, and if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. Section 6.7. Rights of the Trustee; Holders of Senior Indebtedness. The Trustee in its individual capacity shall be entitled to all the rights set forth in this Article VI in respect of any Senior Indebtedness at any time held by it, to the same extent as any other holder of Senior Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder. With respect to the holders of Senior Indebtedness, the Trustee undertakes to perform or to observe only such of its covenants and obligations as are specifically set forth in this Article VI, and no implied covenants or obligations with respect to the holders of such Senior Indebtedness shall be read into the Indenture or this First Supplemental Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness and, subject to the provisions of Section 7.01 of the Indenture, the Trustee shall not be liable to any holder of Senior Indebtedness if it shall pay over or deliver to Holders of Debentures, the Company or any other Person money or assets to which any holder of Senior Indebtedness shall be entitled by virtue of this Article VI or otherwise. Section 6.8. Subordination May Not Be Impaired. No right of any present or future holder of any Senior Indebtedness to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the terms, provisions and covenants of the Indenture or this First Supplemental Indenture, regardless of any knowledge thereof that any such holder may have or otherwise be charged with. Without in any way limiting the generality of the foregoing paragraph, the holders of Senior Indebtedness may, at any time and from time to time, without the consent of or notice to the Trustee or the Holders of the Debentures, without incurring responsibility to the Holders of the Debentures and without impairing or releasing the subordination provided in this Article VI or the obligations hereunder of the Holders of the Debentures to the holders of such Senior Indebtedness, do any one or more the following: (i) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, such Senior Indebtedness, or otherwise amend or supplement in any manner such Senior Indebtedness or any instrument evidencing the same or any agreement under which such Senior Indebtedness is outstanding; (ii) sell, exchange, release or otherwise deal with any property pledged, -12- 14 mortgaged or otherwise securing such senior Indebtedness; (iii) release any Person liable in any manner for the collection of such Senior Indebtedness; and (iv) exercise or refrain from exercising any rights against the Company and any other Person. ARTICLE VII COVENANT TO LIST ON EXCHANGE Section 7.1. Listing on Exchange. If the Debentures are to be issued as a global Security in connection with the distribution of the Debentures to the holders of the Preferred Securities upon a Dissolution Event, the Company will use its best efforts to list such Debentures on the New York Stock Exchange or on such other exchange as the Preferred Securities are then listed. ARTICLE VIII FORM OF DEBENTURE Section 8.1. Form of Debenture. The Debentures and the Trustee's Certificate of Authentication to be endorsed thereon are to be substantially in the following forms: (FORM OF FACE OF DEBENTURE) [IF THE DEBENTURE IS TO BE A GLOBAL SECURITY, INSERT: This Debenture is a global Debenture within the meaning of the Indenture hereinafter referred to and is registered in the name of a depositary or a nominee of a depositary. Unless and until it is exchanged in whole or in part for Debentures in definitive form, this Debenture may not be transferred except as a whole by the depositary to a nominee of the depositary or by a nominee of the depositary to the depositary or another nominee of the depositary or by the depositary or any such nominee to a successor depositary or a nominee of such successor depositary. Unless this Debenture is presented by an authorized representative of The Depository Trust Company (55 Water Street, New York, New York) to the issuer or its agent for registration of transfer, exchange or payment, and any Debenture issued is registered in the name of Cede & Co. or such other name as requested by an authorized representative of The Depository Trust Company and any payment hereon is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL since the registered owner hereof, Cede Co., has an interest herein.] No. $ CUSIP No.
-13- 15 Ohio Edison Company _____% JUNIOR SUBORDINATED DEBENTURE DUE 2016 Ohio Edison Company, an Ohio corporation (the "Company", which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to ________________ or registered assigns, the principal sum of ________________ Dollars on __________, 2016, and to pay interest on said principal sum from ________, 1996, or from the most recent interest payment date (each such date, an "Interest Payment Date") to which interest has been paid or duly provided for, quarterly (subject to deferral as set forth herein) in arrears on March 31, June 30, September 30 and December 31 of each year, commencing _________, 1996, at the rate of _____% per annum until the principal hereof shall have become due and payable, and on any overdue principal and premium, if any, and (without duplication and to the extent that payment of such interest is enforceable under applicable law) on any interest installment in arrears for more than one quarter and on any interest on such overdue interest at the same rate per annum. In addition, this Debenture will bear interest from _______, 1996 through ____, 1996 at the rate of 7.75% per annum of the principal amount thereof, payable on ____________, 1996 to the Person in whose name this Debenture is registered at the close of business on the Regular Record Date for such interest installment. The amount of interest payable on any Interest Payment Date shall be computed on the basis of a 360-day year of twelve 30-day months. In the event that any date on which interest is payable on this Debenture is not a Business Day, then payment of interest payable on such date will be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of any such delay), except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date. The interest installment so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Debenture (or one or more Predecessor Securities, as defined in said Indenture) is registered at the close of business on the Regular Record Date for such interest installment, which shall be 15 calendar days prior to the relevant Interest Payment Date. Any such interest installment not punctually paid or duly provided for shall forthwith cease to be payable to the registered Holders on such Regular Record Date, and may be paid to the Person in whose name this Debenture (or one or more Predecessor Securities) is registered at the close of business on a special record date to be fixed by the Company for the payment of such defaulted interest, notice whereof shall be given to the registered Holders of the Debentures not less than fifteen (15) days prior to such special record date, or may be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Debentures may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture. The principal of (and premium, if any) and the interest on this Debenture shall be payable at the office or agency of the Trustee maintained for that purpose in New York, New York, in any coin or currency of the United States of America which at the time of payment is legal tender for payment of public and private debts; provided, however, that payment of interest may be made at the option of the Company by check mailed to the registered Holder -14- 16 at such address as shall appear in the security register maintained by the Registrar. Notwithstanding the foregoing, so long as the Holder of this Debenture is the Property Trustee, the payment of the principal of (and premium, if any) and interest on this Debenture will be made at such place and to such account as may by designated by the Property Trustee. The indebtedness evidenced by this Debenture is, to the extent provided in the Indenture, subordinate and junior in right of payment to the prior payment in full of all Senior Indebtedness, and this Debenture is issued subject to the provisions of the Indenture with respect thereto. Each Holder of this Debenture, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Trustee on his behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination so provided and (c) appoints the Trustee his attorney-in-fact for any and all such purposes. Each Holder hereof, by his acceptance hereof, hereby waives all notice of the acceptance of the subordination provisions contained herein and in the Indenture by each holder of Senior Indebtedness, whether now outstanding or hereafter incurred, and waives reliance by each such holder upon said provisions. This Debenture shall not be entitled to any benefit under the Indenture hereinafter referred to, be valid or become obligatory for any purpose until the Certificate of Authentication hereon shall have been signed by or on behalf of the Trustee. The provisions of this Debenture are continued on the reverse side hereof and such continued provisions shall for all purposes have the same effect as though fully set forth at this place. IN WITNESS WHEREOF, the Company has caused this instrument to be executed. OHIO EDISON COMPANY By ------------------------------ [Title] Attest: By --------------------------------- Name: Title: (FORM OF CERTIFICATE OF AUTHENTICATION) Date: CERTIFICATE OF AUTHENTICATION -15- 17 This is one of the Securities of the series designated herein referred to in the within-mentioned Indenture. THE BANK OF NEW YORK as Trustee By --------------------------------- Authorized Signatory (FORM OF REVERSE OF DEBENTURE) This Debenture is one of a duly authorized series of Securities of the Company designated its " % Junior Subordinated Debentures Due 2016" (herein sometimes referred to as the "Debentures"), issued under and pursuant to an Indenture dated as of , 1996, duly executed and delivered between the Company and The Bank of New York, not in its individual capacity but solely as trustee (the "Trustee"), as supplemented by a First Supplemental Indenture dated as of , 1996, between the Company and the Trustee (such Indenture as so supplemented, the "Indenture"), to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Company and the Holders of the Debentures. The terms of the Debentures include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as in effect on the date of the Indenture (the "TIA"). This Debenture is subject to all such terms and the Holder of this Debenture is referred to the Indenture and the TIA for a statement of those terms. The Debentures are general unsecured obligations of the Company and are limited (except as otherwise provided in the Indenture) to $ in aggregate principal amount. Upon the occurrence and continuation of a Tax Event, in certain circumstances this Debenture may be redeemed by the Company at a redemption price equal to 100% of the principal amount hereof, plus any accrued but unpaid interest thereon to the date of such redemption (the "Special Redemption Price"). The Special Redemption Price shall be paid prior to 12:00 noon, New York time, on the date of such redemption or at such earlier time as the Company determines. The Company shall also have the right to redeem this Debenture at the option of the Company, without premium or penalty, in whole or in part at any time on or after , 20 (an "Optional Redemption"), at a redemption price equal to 100% of the principal amount hereof, plus any accrued but unpaid interest thereon to the date of such redemption (the "Optional Redemption Price"). Any optional redemption pursuant to this paragraph will be made upon not less than 30 nor more than 60 days notice, at the Optional Redemption Price. If the Debentures are only partially redeemed by the -16- 18 Company pursuant to an Optional Redemption, the Debentures will be redeemed pro rata or by lot or by any other method utilized by the Trustee. In the event of redemption of this Debenture in part only, a new Debenture or Debentures of this series for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof. In case an Event of Default, as defined in the Indenture, shall have occurred and be continuing, the principal of all of the Debentures may be declared, and upon such declaration shall become, due and payable, in the manner, with the effect and subject to the conditions provided in the Indenture. The Indenture contains provisions permitting the Company and the Trustee, with the consent of the Holders of a majority in aggregate principal amount of the Securities of each series affected at the time outstanding, as defined in the Indenture, to amend or supplement the Indenture or the Securities of any series (including the Debentures) for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the Indenture or of modifying in any manner the rights of the Holders of the Securities (including the Debentures); provided, however, that no such amendment or supplement shall (i) extend the fixed maturity of any Securities of any series, or reduce the principal amount thereof, or reduce the rate or extend the time for payment of interest thereon, without the consent of the Holder of each Security of such series so affected or (ii) reduce the aforesaid percentage in aggregate principal amount of Securities, the Holders of which are required to consent to any such amendment or supplement, without the consent of the Holders of each Security then outstanding and affected thereby. The Indenture also contains provisions permitting the Holders of a majority in aggregate principal amount of the Securities of any series at the time outstanding affected thereby, on behalf of all of the Holders of the Securities of such series, to waive any past default in the performance of any of the covenants contained in the Indenture, or established pursuant to the Indenture with respect to such series, and its consequences, except a default in the payment of the principal of or interest, if any, on any of the Securities of such series. Any such consent or waiver by the registered Holder of this Debenture (unless revoked as provided in the Indenture) shall be conclusive and binding upon such Holder and upon all future Holders and owners of this Debenture and of any Debenture issued in exchange herefor or in place hereof (whether by registration of transfer or otherwise), irrespective of whether or not any notation of such consent or waiver is made upon this Debenture. No reference herein to the Indenture and no provision of this Debenture or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and premium, if any, and interest on this Debenture at the time and place and at the rate and in the money herein prescribed. The Company shall have the right at any time during the term of the Debentures, and from time to time, to extend the interest payment period of the Debentures for up to twenty -17- 19 (20) consecutive quarters (an "Extended Interest Payment Period"), at the end of which period the Company shall pay all interest then accrued and unpaid (including interest accrued on unpaid interest as described above at the rate specified for the Debentures to the extent that payment of such interest is permitted by applicable law). Before the termination of any such Extended Interest Payment Period, the Company may further extend such Extended Interest Payment Period, provided that such Extended Interest Payment Period together with all such further extensions thereof shall not exceed twenty (20) consecutive quarters or extend beyond the maturity of the Debentures. At the termination of any such Extended Interest Payment Period and upon the payment of all accrued and unpaid interest and any additional amounts then due, the Company may select a new Extended Interest Payment Period, subject to the foregoing requirements. As provided in the Indenture and subject to certain limitations therein set forth, this Debenture is transferable by the registered Holder hereof on the security register of the Company maintained by the Registrar, upon surrender of this Debenture for registration of transfer at the office or agency of the Trustee in New York, New York accompanied by a written instrument or instruments of transfer in form satisfactory to the Company or the Trustee duly executed by the registered Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Debentures of authorized denominations and for the same aggregate principal amount will be issued to the designated transferee or transferees. No service charge will be made for any such transfer, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in relation thereto. Prior to due presentment for registration of transfer of this Debenture, the Company, the Trustee, any Paying Agent and the Registrar may deem and treat the registered Holder hereof as the absolute owner hereof (whether or not this Debenture shall be overdue and notwithstanding any notice of ownership or writing hereon made by anyone other than the Registrar) for the purpose of receiving payment of principal of and interest due hereon and for all other purposes, and neither the Company nor the Trustee nor any Paying Agent nor the Registrar shall be affected by any notice to the contrary. No past, present or future director, officer, employee or stockholder, as such, of the Company or the Trustee or any successor of either thereof shall have any liability for any obligations of the Company or the Trustee under the Debentures or this Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation, all such liability being, by the acceptance hereof and as part of the consideration for the issuance hereof, expressly waived and released. The Debentures of this series are issuable only in registered form without coupons in denominations of $25 and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, Debentures so issued are exchangeable for a like aggregate principal amount of Debentures of a different authorized denomination, as requested by the Holder surrendering the same. -18- 20 This Debenture shall be governed by the internal laws of the State of New York. All terms used in this Debenture which are defined in the Indenture shall have the meanings assigned to them in the Indenture. ARTICLE IX ORIGINAL ISSUE OF DEBENTURES Section 9.1. Original Issue of Debentures. Debentures in the aggregate principal amount of $___________ may, upon execution of this First Supplemental Indenture, be executed by the Company and delivered to the Trustee for authentication, and the Trustee shall thereupon authenticate and deliver said Debentures to or upon the written order of the Company, signed by its Chairman, its President, or any Vice President and its Treasurer, an Assistant Treasurer, or Secretary without any further action by the Company. ARTICLE X CERTAIN COVENANTS The following covenants shall apply to the Debentures (but not with respect to any other series of Securities), and are in addition to the covenants set forth in Article Four of the Indenture. Section 10.1. Limitation on Dividends and Other Payments. If (i) there shall have occurred any event that constitutes an Event of Default or (ii) the Company shall be in default with respect to its payment of any obligations under the Preferred Securities Guarantee, then (a) the Company shall not declare or pay any dividend on, make any distributions with respect to, or redeem, purchase or make a liquidation payment with respect to, any of its capital stock, (b) the Company shall not make any payment of interest, principal or premium, if any, on or repay, repurchase or redeem any debt securities issued by the Company which rank pari passu with or junior to the Debentures, and (c) the Company shall not make any guarantee payments with respect to the foregoing (other than pursuant to the Preferred Securities Guarantee). If the Company shall have given notice of its election to defer payments of interest on the Debentures by extending the interest payment period as provided in Article IV and such period, or any extension thereof, shall be continuing, then (i) the Company shall not declare or pay any dividend or, make any distributions with respect to, or redeem, purchase or make a liquidation payment with respect to, any of its capital stock, (ii) the Company shall not make any payment of interest, principal, premium, if any, on or repay, repurchase or redeem any debt securities issued by the Company which rank pari passu with or junior to -19- 21 the Debentures, and (iii) the Company shall not make any guarantee payments with respect to the foregoing (other than pursuant to the Preferred Securities Guarantee). Notwithstanding the foregoing restrictions, nothing in this Section 10.1 shall prevent the Company, in any event, from paying any stock dividend where the dividend stock is the same as that on which the dividend is paid. Section 10.2. Covenants as to the Trust. For so long as the Trust Securities remain outstanding, the Company will (i) maintain 100% direct or indirect ownership of the Common Securities; provided, however, that any permitted successor of the Company under the Indenture may succeed to the Company's ownership of the Common Securities, (ii) not cause, as sponsor of the Trust, or permit, as the holder of the Common Securities of the Trust, the termination, dissolution or winding-up of the Trust, except in connection with a distribution of the Debentures as provided in the Declaration and in connection with certain mergers, consolidations or amalgamations as permitted by the Declaration, (iii) use its reasonable efforts to cause the Trust (a) to remain a statutory business trust, except in connection with a distribution of Debentures to the holders of the Preferred Securities in liquidation of the Trust, or certain mergers, consolidations or amalgamations, each as permitted by the Declaration, and (b) to otherwise continue to be treated as a grantor trust for United States federal income tax purposes and (iv) use its reasonable efforts to cause each holder of Trust Securities to be treated as owning an individual beneficial interest in the Debentures. ARTICLE XI CERTAIN EVENTS OF DEFAULT Section 11.1. Additional Events of Default. An Event of Default with respect to the Debentures shall include those events described in Section 6.01 of the Indenture and, with respect to the Debentures only, the occurrence of any of the following events: the voluntary or involuntary dissolution, winding up or termination of the Trust, except in connection with (i) the distribution of Debentures to holders of Preferred Securities in liquidation or redemption of their interests in the Trust, (ii) the redemption of all of the outstanding Preferred Securities, or (iii) certain mergers, consolidations or amalgamations, each as permitted by the provisions of the Declaration. Section 11.2. Waiver of Existing Defaults. Notwithstanding Section 6.04 of the Indenture, the Holders of a majority in aggregate principal amount of the Debentures may not waive an a Default or an existing Event of Default (i) in the payment of the principal of or accrued interest on the Debentures, unless the Company has paid or deposited with the Trustee a sum sufficient to pay all matured installments of interest (with interest on overdue interest at the rate specified in Section 2.5(a)) upon all of the Debentures and the principal of the Debentures that shall have become due otherwise than by acceleration or (ii) that arise -20- 22 out of a breach by the Company of Section 10.1. Section 6.02 of the Indenture shall, in all other respects and as modified by this Section 11.2, apply to the Debentures. Section 11.3. Additional Interest Included. For purposes of Sections 6.01(1), 6.01(2) and 6.03 of the Indenture, references to "interest" shall be deemed to include Additional Interest, if any, payable. ARTICLE XII MISCELLANEOUS Section 12.1. Supplemental Indenture Incorporated Into Indenture. This First Supplemental Indenture is executed by the Company and the Trustee pursuant to the provisions of Sections 2.01 and 2.02 of the Indenture, and the terms and conditions hereof shall be deemed to be part of the Indenture for all purposes relating to the Debentures. The provisions of the Indenture, as modified by this First Supplemental Indenture, are effective with respect to the Debentures, and are not effective with respect to any series of Securities to be issued pursuant to any subsequent supplemental indenture or resolution of the Board of Directors. The Indenture, as supplemented by this First Supplemental Indenture, is in all respects adopted, ratified and confirmed. Section 12.2. Trustee Not Responsible for Recitals; Disclaimer. The recitals herein contained are made by the Company and not by the Trustee, and the Trustee assumes no responsibility for the correctness thereof. The Trustee makes no representation as to the validity or sufficiency of this First Supplemental Indenture. Section 12.3. Governing Law. This First Supplemental Indenture and each Debenture shall be deemed to be a contract made under the internal laws of the State of New York, and for all purposes shall be construed in accordance with the laws of said State. Section 12.4. Separability. In case any one or more of the provisions contained in this First Supplemental Indenture or in the Debentures shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this First Supplemental Indenture or of the Debentures, but this First Supplemental Indenture and the Debentures shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein or therein. Section 12.5. Counterparts. This First Supplemental Indenture may be executed in any number of counterparts each of which shall be an original; but such counterparts shall together constitute but one and the same instrument. Section 12.6. Acknowledgment of Rights of Holders of Preferred Securities. The Company hereby acknowledges the right of each holder of Preferred Securities, upon and -21- 23 during the continuance of an Event of Default under the Declaration that results from the failure of the Company to pay principal of or interest on the Debentures when due, to directly institute proceedings against the Company to obtain payment to such holder of an amount equal to the principal or interest so defaulted on with respect to Debentures in a principal amount equal to the aggregate liquidation amount of the Preferred Securities owned by such holder. -22- 24 IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, as of the day and year first above written. OHIO EDISON COMPANY By ----------------------- Name: Title: Attest: --------------------- Title: THE BANK OF NEW YORK, as Trustee By ----------------------- Name: Title: Attest: --------------------- Title: -23- 25 STATE OF ) COUNTY OF ) ss: On the day of , 1996 before me personally came , to me known, who, being by me duly sworn, did depose and say that he is of Ohio Edison Company, one of the corporations described in and which executed the above instrument; that he knows the corporate seal of said corporation; that the seal affixed to the said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation, and that he signed his name thereto by like authority. NOTARY PUBLIC [seal] Commission expires STATE OF ) COUNTY OF ) ss: On the day of , 1996 before me personally came , to me known, who, being by me duly sworn, did depose and say that he is of THE BANK OF NEW YORK, one of the corporations described in and which executed the above instrument; that he knows the corporate seal of said corporation; that the seal affixed to the said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation, and that he signed his name thereto by like authority. NOTARY PUBLIC [seal] Commission expires -24- 26 TABLE OF CONTENTS
Page ---- ARTICLE I DEFINITIONS Section 1.1. Definition of Terms. . . . . . . . . . . . . . . . . . . . 2 Section 1.2. Interpretation. . . . . . . . . . . . . . . . . . . . . . . 3 ARTICLE II GENERAL TERMS AND CONDITIONS OF THE DEBENTURES Section 2.1. Designation and Principal Amount. . . . . . . . . . . . . . 3 Section 2.2. Maturity. . . . . . . . . . . . . . . . . . . . . . . . . . 3 Section 2.3. Form and Payment. . . . . . . . . . . . . . . . . . . . . . 3 Section 2.4. Global Debenture. . . . . . . . . . . . . . . . . . . . . . 3 Section 2.5. Interest. . . . . . . . . . . . . . . . . . . . . . . . . . 4 ARTICLE III REDEMPTION OF THE DEBENTURES Section 3.1. Special Event Redemption. . . . . . . . . . . . . . . . . . 5 Section 3.2. Optional Redemption by Company. . . . . . . . . . . . . . . 6 Section 3.3. No Sinking Fund. . . . . . . . . . . . . . . . . . . . . . 6 ARTICLE IV EXTENSION OF INTEREST PAYMENT PERIOD Section 4.1. Extension of Interest Payment Period. . . . . . . . . . . . 6 Section 4.2. Notice of Extension. . . . . . . . . . . . . . . . . . . . 7 ARTICLE V EXPENSES Section 5.1. Payment of Expenses. . . . . . . . . . . . . . . . . . . . 8 ARTICLE VI SUBORDINATION Section 6.1. Agreement to Subordinate. . . . . . . . . . . . . . . . . . 8 Section 6.2. Default on Senior Indebtedness. . . . . . . . . . . . . . . 8 Section 6.3. Liquidation; Dissolution; Bankruptcy. . . . . . . . . . . . 8
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Page Section 6.4. Subrogation. . . . . . . . . . . . . . . . . . . . . . . . 10 Section 6.5. Trustee to Effectuate Subordination. . . . . . . . . . . . 11 Section 6.6. Notice by the Company. . . . . . . . . . . . . . . . . . . 11 Section 6.7. Rights of the Trustee; Holders of Senior Indebtedness. . . 12 Section 6.8. Subordination May Not Be Impaired. . . . . . . . . . . . . 13 ARTICLE VII COVENANT TO LIST ON EXCHANGE Section 7.1. Listing on Exchange. . . . . . . . . . . . . . . . . . . . 13 ARTICLE VIII FORM OF DEBENTURE Section 8.1. Form of Debenture. . . . . . . . . . . . . . . . . . . . . 13 ARTICLE IX ORIGINAL ISSUE OF DEBENTURES Section 9.1. Original Issue of Debentures. . . . . . . . . . . . . . . . 19 ARTICLE X CERTAIN COVENANTS Section 10.1. Limitation on Dividends and Other Payments. . . . . . . . . 20 Section 10.2. Covenants as to the Trust . . . . . . . . . . . . . . . . . 20 ARTICLE XI CERTAIN EVENTS OF DEFAULT Section 11.1. Additional Events of Default. . . . . . . . . . . . . . . . 21 Section 11.2. Waiver of Existing Defaults. . . . . . . . . . . . . . . . 21 ARTICLE XII MISCELLANEOUS Section 12.1. Supplemental Indenture Incorporated Into Indenture. . . . . 21 Section 12.2. Trustee Not Responsible for Recitals; Disclaimer. . . . . . 22 Section 12.3. Governing Law. . . . . . . . . . . . . . . . . . . . . . . 22 Section 12.4. Separability. . . . . . . . . . . . . . . . . . . . . . . . 22 Section 12.5. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . 22 Section 12.6. Acknowledgment of Rights of Holders of Preferred Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
-ii- EX-4.3 4 DECLARATION OF TRUST 1 EXHIBIT 4.3 EXECUTION COPY DECLARATION OF TRUST DECLARATION OF TRUST, dated as of March 1, 1996, between Ohio Edison Company, an Ohio corporation, as Sponsor, and The Bank of New York, a New York banking corporation, and The Bank of New York (Delaware), a Delaware banking corporation, as Trustees. The Sponsor and the Trustees hereby agree as follows: 1. The trust created hereby shall be known as "Ohio Edison Financing Trust II", in which name the Trustees, or the Sponsor to the extent provided herein, may conduct the business of the Trust, make and execute contracts, and sue and be sued. 2. The Sponsor hereby assigns, transfers, conveys and sets over to the Trustees the sum of $10. The Trustees hereby acknowledge receipt of such amount in trust from the Sponsor, which amount shall constitute the initial trust estate. The Trustees hereby declare that they will hold the trust estate in trust for the Sponsor. It is the intention of the parties hereto that the Trust created hereby constitute a business trust under Chapter 38 of Title 12 of the Delaware Code, 12 Del. C. Section 3801 et seq. (the "Business Trust Act"), and that this document constitute the governing instrument of the Trust. The Trustees are hereby authorized and directed to execute and file a certificate of trust with the Delaware Secretary of State in the form attached hereto. The Trust is hereby established by the Sponsor and the Trustees for the purposes of (i) issuing preferred securities representing undivided beneficial interests in the assets of the Trust in exchange for outstanding shares of the Sponsor's 7.75% Class A Preferred Stock and delivering such shares to the Sponsor in consideration for the deposit by the Sponsor as trust assets of subordinated debentures of the Sponsor, (ii) issuing and selling common securities representing undivided beneficial interests in the assets of the Trust to the Sponsor in exchange for cash and investing the proceeds thereof in additional subordinated debentures of the Sponsor to be held as assets of the Trust and (iii) engaging in such other activities as are necessary, convenient or incidental thereto. 3. The Sponsor and the Trustees will enter into an amended and restated Declaration of Trust, satisfactory to each such party and substantially in the form to be included as Exhibit 4.5 to the Registration Statement referred to below, to 2 provide for the contemplated operation of the Trust created hereby and the issuance of the preferred securities (the "Preferred Securities") and common securities referred to therein and herein. Prior to the execution and delivery of such amended and restated Declaration of Trust, the Trustees shall not have any duty or obligation hereunder or with respect to the trust estate, except as otherwise required by applicable law or as may be necessary to obtain prior to such execution and delivery any licenses, consents or approvals required by applicable law or otherwise. 4. The Sponsor and the Trustees hereby authorize and direct the Sponsor, as the sponsor of the Trust, (i) to prepare and file with the Securities and Exchange Commission (the "Commission") and execute, in each case on behalf of the Trust, (a) a Registration Statement on Form S-4 (the "Registration Statement") and any pre-effective or post-effective amendments to such Registration Statement, relating to the registration under the Securities Act of 1933, as amended, of the Preferred Securities of the Trust, (b) a Registration Statement on Form 8-A (the "1934 Act Registration Statement") (including all pre-effective and post-effective amendments thereto) relating to the registration of the Preferred Securities of the Trust under Section 12(b) of the Securities Exchange Act of 1934, as amended and (c) an Issuer Tender Offer Statement on Schedule 13E-4 and any other tender offer statement required to be filed by the Trust with the Commission (including, if necessary, Schedule 14D-1) relating to the exchange offer (the "Offer") described in the Registration Statement (collectively, the "Tender Offer Schedules") and any amendment or supplement thereto; (ii) to prepare and file with the New York Stock Exchange and execute on behalf of the Trust a listing application and all other applications, statements, certificates, agreements and other instruments as shall be necessary or desirable to cause the Preferred Securities to be listed on the New York Stock Exchange; (iii) to prepare and file and execute on behalf of the Trust such applications, reports, surety bonds, irrevocable consents, appointments of attorneys for service of process and other papers and documents as shall be necessary or desirable to register the Preferred Securities under the securities or "Blue Sky" laws of such jurisdictions as the Sponsor, on behalf of the Trust, may deem necessary or desirable and (iv) to negotiate the terms of and execute on behalf of the Trust that certain Dealer Manager Agreement among the Trust, the Sponsor and Merrill Lynch, Pierce, Fenner & Smith Incorporated relating to the Offer, substantially in the form to be included as Exhibit 1 to the Registration Statement. In the event that any filing referred to in clauses (i)-(iii) above is required by the rules and regulations of the Commission, the New York Stock Exchange or state securities or blue sky laws, to be executed on behalf of the Trust by the Trustees, the Sponsor is hereby authorized and directed to join -2- 3 in any such filing and to execute on behalf of the Trust any and all of the foregoing, it being understood that The Bank of New York and The Bank of New York (Delaware), in their capacities as Trustees of the Trust shall not be required to join in any such filing or execute on behalf of the Trust any such document unless required by the rules and regulations of the Commission, the New York Stock Exchange or state securities or blue sky laws. In connection with all of the foregoing, the Sponsor and each Trustee, solely in its capacity as Trustee of the Trust, hereby constitutes and appoints John H. Byington, Jr. and Michael F. Cusick, and each of them, as his, her or its, as the case may be, true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for the Sponsor or such Trustee or in the Sponsor's or such Trustee's name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to the Registration Statement, the 1934 Act Registration Statement and the Tender Offer Schedules and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as the Sponsor or such Trustee might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or their substitute or substitutes, shall do or cause to be done by virtue hereof. 5. This Declaration of Trust may be executed in one or more counterparts. 6. The number of Trustees initially shall be two (2) and thereafter the number of Trustees shall be such number as shall be fixed from time to time by a written instrument signed by the Sponsor which may increase or decrease the number of Trustees; provided that to the extent required by the Business Trust Act, one Trustee shall either be a natural person who is a resident of the State of Delaware or, if not a natural person, an entity which has its principal place of business in the State of Delaware. Subject to the foregoing, the Sponsor is entitled to appoint or remove without cause any Trustee at any time. The Trustees may resign upon thirty days prior notice to the Sponsor. 7. The Trust shall terminate before the issuance of any Preferred Securities at the election of the Sponsor. -3- 4 IN WITNESS WHEREOF, the parties hereto have caused this Declaration of Trust to be duly executed as of the day and year first above written. OHIO EDISON COMPANY, as Sponsor By: /s/ Ted F. Struck, II ----------------------------- Name: Ted F. Struck, II Title: Assistant Treasurer THE BANK OF NEW YORK, as Trustee By: /s/ Lucille Firrincieli ----------------------------- Name: Lucille Firrincieli Title: Assistant Vice President THE BANK OF NEW YORK (Delaware), as Trustee By: /s/ Donald C. Wrobel ----------------------------- Name: Donald C. Wrobel Title: Executive Vice President -4- EX-4.4 5 CERTIFICATE OF TRUST 1 EXHIBIT 4.4 CERTIFICATE OF TRUST OF OHIO EDISON FINANCING TRUST II This Certificate of Trust of Ohio Edison Financing Trust II (the "Trust"), dated March 1, 1996, is being duly executed and filed by the undersigned, as trustees, to form a business trust under the Delaware Business Trust Act (12 Del. C. Section 3801 et seq.). 1. Name. The name of the business trust being formed hereby is Ohio Edison Financing Trust II. 2. Delaware Trustee. The name and business address of the trustee of the Trust with a principal place of business in the State of Delaware is The Bank of New York (Delaware), a Delaware banking corporation, 400 White Clay Center, Newark, Delaware 19711. 3. Effective Date. This Certificate of Trust shall be effective as of its filing. 4. Counterparts. This Certificate of Trust may be executed in more than one counterpart with the same effect as if all signatories had signed the same document, and all counterparts shall be construed together and shall constitute one Certificate of Trust. IN WITNESS WHEREOF, the undersigned, being the sole trustees of the Trust, have executed this Certificate of Trust as of the date first above written. THE BANK OF NEW YORK, as trustee By: /s/ Lucille Firrincieli ----------------------------- Name: Lucille Firrincieli Title: Assistant Vice President THE BANK OF NEW YORK (Delaware), as trustee By: /s/ Donald C. Wrobel ----------------------------- Name: Donald C. Wrobel Title: EX-4.5 6 FORM OF AMENDED AND RESTATED DECLARATION OF TRUST 1 EXHIBIT 4.5 AMENDED AND RESTATED DECLARATION OF TRUST OF OHIO EDISON FINANCING TRUST II Dated as of ___________, 1996 2 AMENDED AND RESTATED DECLARATION OF TRUST OF OHIO EDISON FINANCING TRUST II __________, 1996 AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration"), dated and effective as of ___________, 1996, by the Trustees (as defined herein), the Sponsor (as defined herein) and by the holders, from time to time, of undivided beneficial interests in the assets of the Trust to be issued pursuant to this Declaration. W I T N E S S E T H: WHEREAS, the Trustees and the Sponsor established Ohio Edison Financing Trust II (the "Trust"), as a business trust under the Business Trust Act (as defined herein) pursuant to a Declaration of Trust dated as of ___________, 1996 (the "Original Declaration") and a Certificate of Trust filed with the Secretary of State of the State of Delaware on ___________, 1996, for the sole purposes of (i) issuing Preferred Securities (as hereinafter defined) representing undivided beneficial interests in the assets of the Trust in exchange for shares ("Class A Shares") of Class A Preferred Stock (as hereinafter defined) of the Sponsor pursuant to the Offer (as hereinafter defined) and delivering such Class A Shares to the Sponsor in consideration for the deposit by the Sponsor as trust assets of Subordinated Debentures (as hereinafter defined) of the Subordinated Debenture Issuer (as hereinafter defined) issued under the Indenture (as hereinafter defined), (ii) issuing and selling Common Securities (as hereinafter defined) representing undivided beneficial interests in the assets of the Trust to the Sponsor in exchange for cash and investing the proceeds thereof in additional Subordinated Debentures of the Sponsor issued under the Indenture to be held as assets of the Trust and (iii) engaging in such other activities as are necessary, convenient or incidental thereto; WHEREAS, as of the date hereof, no interests in the Trust have been issued; and WHEREAS, all of the Trustees and the Sponsor, by this Declaration, amend and restate each and every term and provision of the Original Declaration. 3 NOW, THEREFORE, it being the intention of the parties hereto to continue the Trust as a business trust under the Business Trust Act and that this Declaration constitute the governing instrument of such business trust, the Trustees declare that all assets contributed to the Trust will be held in trust for the benefit of the holders, from time to time, of the securities representing undivided beneficial interests in the assets of the Trust issued hereunder, subject to the provisions of this Declaration. ARTICLE I INTERPRETATION AND DEFINITIONS SECTION 1.1 Definitions. Unless the context otherwise requires: (a) capitalized terms used in this Declaration but not defined in the preamble above have the respective meanings assigned to them in this Section 1.1; (b) a term defined anywhere in this Declaration has the same meaning throughout; (c) all references to "the Declaration" or "this Declaration" are to this Declaration as modified, supplemented or amended from time to time; (d) all references in this Declaration to Articles and Sections and Annexes and Exhibits are to Articles and Sections of and Annexes and Exhibits to this Declaration unless otherwise specified; (e) a term defined in the Trust Indenture Act has the same meaning when used in this Declaration unless otherwise defined in this Declaration or unless the context otherwise requires; and (f) a reference in this Declaration to the singular includes the plural and vice versa. "Affiliate" has the same meaning as given to that term in Rule 405 of the Securities Act or any successor rule thereunder. "Authorized Officer" of a Person means any Person that is authorized to bind such Person. "Book Entry Interest" means a beneficial interest in a Certificate registered in the name of a Clearing Agency or its nominee, ownership and transfers of which shall be maintained and -2- 4 made through book entries by a Clearing Agency as described in Section 9.4. "Business Day" means any day other than a Saturday, a Sunday or any other day on which banking institutions in New York, New York are authorized or required by law to close. "Business Trust Act" means Chapter 38 of Title 12 of the Delaware Code, 12 Del. Code ss.3801 et seq., as it may be amended from time to time. "Certificate" means a Common Security Certificate or a Preferred Security Certificate. "Class A Preferred Stock" means the 7.75% Class A Preferred Stock, par value $25 per share, of the Sponsor. "Clearing Agency" means an organization registered as a "clearing agency" pursuant to Section 17A of the Exchange Act that is acting as depositary for the Preferred Securities and in whose name or in the name of a nominee of that organization shall be registered a Certificate for which it shall undertake to effect book entry transfers and pledges of the Book Entry Interests in the Preferred Securities represented by such Certificate. "Clearing Agency Participant" means a broker, dealer, bank or other financial institution or other Person for whom from time to time the Clearing Agency effects book entry transfers and pledges of securities deposited with the Clearing Agency. "Closing Date" means ___________, 1996. "Code" means the Internal Revenue Code of 1986, as amended from time to time, or any successor legislation. "Commission" means the Securities and Exchange Commission. "Common Securities Guarantee" means the guarantee agreement, dated as of ___________, 1996, of the Sponsor in respect of the Common Securities. "Common Security" has the meaning specified in Section 7.1. "Common Security Certificate" means a definitive certificate in fully registered form representing a Common Security substantially in the form of Exhibit A-2. "Covered Person" means: (a) any officer, director, shareholder, partner, member, representative, employee or agent of (i) the Trust or (ii) the Trust's Affiliates; and (b) any Holder of Securities. -3- 5 "Dealer Manager Agreement" means the dealer manager agreement entered into among the Sponsor, the Trust and Merrill Lynch, Pierce, Fenner & Smith Incorporated with respect to, among other things, the Offer and the Preferred Securities, in the form of Exhibit C hereto. "Delaware Trustee" has the meaning set forth in Section 5.2. "Direction" by a Person means a written direction signed: (a) if the Person is a natural Person, by that Person; or (b) in any other case, in the name of such Person by one or more Authorized Officers of that Person. "Distribution" means a distribution payable to Holders of Securities in accordance with Section 6.1. "DTC" means the Depository Trust Company, as Clearing Agency. "Event of Default" in respect of the Securities means an Event of Default (as defined in the Indenture) has occurred and is continuing in respect of the Subordinated Debentures. "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, or any successor legislation. "Holder" means a Person in whose name a Certificate representing a Security is registered, such Person being a beneficial owner within the meaning of the Business Trust Act. "Indemnified Person" means (a) any Trustee; (b) any Affiliate of any Trustee; (c) any officers, directors, shareholders, members, partners, employees, representatives or agents of any Trustee; or (d) any employee or agent of the Trust or its Affiliates. "Indenture" means the Indenture dated as of ___________, 1996, as amended and supplemented by a First Supplemental Indenture, dated as of ___________, 1996, among the Subordinated Debenture Issuer and the Subordinated Debenture Trustee, and any further indenture supplemental thereto relating to the Subordinated Debentures. "Investment Company" means an investment company (as defined in the Investment Company Act) that is required to register as such under the Investment Company Act. -4- 6 "Investment Company Act" means the Investment Company Act of 1940, as amended from time to time, or any successor legislation. "Investment Company Event" has the meaning set forth in Annex I hereto. "Legal Action" has the meaning set forth in Section 3.6(g). "Majority in liquidation amount of the Securities" means, except as provided in the terms of the Preferred Securities as set forth in Annex I and by the Trust Indenture Act, Holder(s) of outstanding Securities voting together as a single class or, as the context may require, Holders of outstanding Preferred Securities or Holders of outstanding Common Securities voting separately as a class, who are the record owners of more than 50% of the aggregate liquidation amount (including the stated amount that would be paid on redemption, liquidation or otherwise, plus accrued and unpaid Distributions to the date upon which the voting percentages are determined) of all outstanding Securities of the relevant class. "Ministerial Action" has the meaning set forth in the terms of the Securities as set forth in Annex I. "Offer" means the offer by the Trust to exchange Preferred Securities of the Trust for outstanding Class A Shares of the Sponsor in consideration for the deposit by the Sponsor as trust assets of Subordinated Debentures issued under the Indenture, all as described in the Prospectus. "Officers' Certificate" means, with respect to any Person, a certificate signed by two Authorized Officers of such Person. Any Officers' Certificate delivered with respect to compliance with a condition or covenant provided for in this Declaration shall include: (a) a statement that each officer signing the Certifi- cate has read the covenant or condition and the definitions relating thereto; (b) a brief statement of the nature and scope of the examination or investigation undertaken by each officer in rendering the Certificate; (c) a statement that each such officer has made such examination or investigation as, in such officer's opinion, is necessary to enable such officer to express an informed opinion as to whether or not such covenant or condition has been complied with; and -5- 7 (d) a statement as to whether, in the opinion of each such officer, such condition or covenant has been complied with. "Paying Agent" means any paying agent or co-paying agent appointed pursuant to Section 9.10 and shall initially be The Bank of New York. "Person" means a legal person, including any individual, corporation, estate, partnership, joint venture, association, joint stock company, limited liability company, trust, unincorporated association or government or any agency or political subdivision thereof, or any other entity of whatever nature. "Preferred Securities Guarantee" means the guarantee agreement, dated as of ___________, 1996, of the Sponsor in respect of the Preferred Securities. "Preferred Security" has the meaning specified in Section 7.1. "Preferred Security Beneficial Owner" means, with respect to a Book Entry Interest, a Person who is the beneficial owner of such Book Entry Interest, as reflected on the books of the Clearing Agency, or on the books of a Person maintaining an account with such Clearing Agency (directly as a Clearing Agency Participant or as an indirect participant, in each case in accordance with the rules of such Clearing Agency). "Preferred Security Certificate" means a certificate representing a Preferred Security substantially in the form of Exhibit A-1. "Property Trustee" means the Trustee meeting the eligibility requirements set forth in Section 5.3. "Property Trustee Account" has the meaning set forth in Section 3.8(c). "Prospectus" means the Prospectus dated __________, 1996 relating to the Offer. "Quorum" means a majority of the Regular Trustees or, if there are only two Regular Trustees, both of them. "Regular Trustee" means any Trustee other than the Property Trustee and the Delaware Trustee. "Related Party" means, with respect to the Sponsor, any direct or indirect wholly owned subsidiary of the Sponsor or any other Person that owns, directly or indirectly, 100% of the outstanding voting securities of the Sponsor. -6- 8 "Responsible Officer" means, with respect to the Property Trustee, any vice president, any assistant vice president, the secretary, any assistant secretary, the treasurer, any assistant treasurer, any trust officer or assistant trust officer or any other officer in the corporate trust department of the Property Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of that officer's knowledge of and familiarity with the particular subject. "Rule 3a-7" means Rule 3a-7 under the Investment Company Act. "Securities" means the Common Securities and the Preferred Securities. "Securities Act" means the Securities Act of 1933, as amended from time to time, or any successor legislation. "Securities Guarantees" means the Preferred Securities Guarantee and the Common Securities Guarantee. "Special Event" has the meaning set forth in Annex I hereto. "Sponsor" means Ohio Edison Company, an Ohio corporation, or any successor entity in a merger, consolidation or amalgamation, in its capacity as sponsor of the Trust. "Subordinated Debenture Issuer" means the Sponsor in its capacity as issuer of the Subordinated Debentures. "Subordinated Debenture Trustee" means The Bank of New York, as trustee under the Indenture until a successor is appointed thereunder, and thereafter means such successor trustee. "Subordinated Debentures" means the ___% Junior Subordinated Debentures, Due 2016 to be issued by the Subordinated Debenture Issuer under the Indenture and held by the Property Trustee. A specimen certificate representing a Subordinated Debenture is attached hereto as Exhibit B. The Subordinated Debentures will be subordinate and junior in right of payment to certain other indebtedness of the Subordinated Debenture Issuer as set forth in the Indenture. "Super Majority" has the meaning set forth in Section 2.6(a)(ii). "Tax Event" has the meaning set forth in Annex I hereto. -7- 9 "10% in liquidation amount of the Securities" means, except as provided in the terms of the Preferred Securities or by the Trust Indenture Act, Holders of outstanding Securities voting together as a single class or, as the context may require, Holders of outstanding Preferred Securities or Holders of outstanding Common Securities, voting separately as a class, representing 10% of the aggregate liquidation amount (including the stated amount that would be paid on redemption, liquidation or otherwise, plus accrued and unpaid Distributions to the date upon which the voting percentages are determined) of all outstanding Securities of the relevant class. "Transfer Agent and Registrar" has the meaning specified in Section 3.6(l). "Treasury Regulations" means the income tax regulations, including temporary and proposed regulations, promulgated under the Code by the United States Treasury, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations). "Trustee" or "Trustees" means each Person who has signed this Declaration as a trustee, so long as such Person shall continue in office in accordance with the terms hereof, and all other Persons who may from time to time be duly appointed, qualified and serving as Trustees in accordance with the provisions hereof, and references herein to a Trustee or the Trustees shall refer to such Person or Persons solely in their capacity as trustees hereunder. "Trust Indenture Act" means the Trust Indenture Act of 1939, as amended to the date hereof. ARTICLE II TRUST INDENTURE ACT SECTION 2.1 Trust Indenture Act; Application. (a) This Declaration is subject to the provisions of the Trust Indenture Act that are required or deemed to be part of this Declaration and shall, to the extent applicable, be governed by such provisions. (b) The Property Trustee shall be the only Trustee that is a Trustee for the purposes of the Trust Indenture Act. (c) If and to the extent that any provision of this Declaration limits, qualifies or conflicts with the duties imposed by sections 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties shall control. (d) The application of the Trust Indenture Act to this Declaration shall not affect the nature of the Securities as -8- 10 equity securities representing undivided beneficial interests in the assets of the Trust. SECTION 2.2 Lists of Holders of Securities. (a) The Property Trustee shall preserve, in as current a form as is reasonably practicable, all information contained in Lists of Holders given to it or which it receives in the capacity of Paying Agent (if acting in such capacity). If the Property Trustee is not the Registrar or a Paying Agent, each of the Sponsor and the Regular Trustees on behalf of the Trust shall provide the Property Trustee (i) within 1 day after each February 15 and August 15 of each year, a list, in such form as the Property Trustee may reasonably require, of the names and addresses of the Holders of the Securities as of said February 15 or August 15, as the case may be ("List of Holders") as of such record date, provided that neither the Sponsor nor the Regular Trustees on behalf of the Trust shall be obligated to provide such List of Holders at any time the List of Holders does not differ from the most recent List of Holders given to the Property Trustee by the Sponsor and the Regular Trustees on behalf of the Trust, and (ii) at any other time, within 30 days of receipt by the Trust of a written request therefor, a List of Holders as of a date no more than 14 days before such List of Holders is given to the Property Trustee. The Property Trustee may destroy any List of Holders previously given to it on receipt of a new List of Holders. (b) The Property Trustee shall comply with its obligations under sections 311(a), 311(b) and 312(b) of the Trust Indenture Act. SECTION 2.3 Reports by the Property Trustee. Within 60 days after July 31 of each year or at such other time as required under section 313(b) of the Trust Indenture Act, the Property Trustee shall provide to the Holders of the Preferred Securities such reports as are required by section 313 of the Trust Indenture Act, if any, in the form and in the manner provided by section 313 of the Trust Indenture Act. The Property Trustee shall also comply with the requirements of section 313(d) of the Trust Indenture Act. SECTION 2.4 Periodic Reports to Property Trustee. Each of the Sponsor and the Regular Trustees on behalf of the Trust shall provide to the Property Trustee such documents, reports and information as required by section 314 (if any) and the compliance certificate required by section 314 of the Trust Indenture Act in the form, in the manner and at the times required by section 314 of the Trust Indenture Act. -9- 11 SECTION 2.5 Evidence of Compliance with Conditions Precedent. Each of the Sponsor and the Regular Trustees on behalf of the Trust shall provide to the Property Trustee such evidence of compliance with any conditions precedent, if any, provided for in this Declaration that relate to any of the matters set forth in section 314(c) of the Trust Indenture Act. Any certificate or opinion required to be given by an officer pursuant to section 314(c)(1) may be given in the form of an Officers' Certificate. SECTION 2.6 Events of Default; Waiver. (a) The Holders of a Majority in liquidation amount of Preferred Securities may, by vote, on behalf of the Holders of all of the Preferred Securities, waive any past Event of Default in respect of the Preferred Securities and its consequences, provided that, if the underlying Event of Default under the Indenture: (i) is not waivable under the Indenture, the Event of Default under the Declaration shall also not be waivable; or (ii) requires the consent or vote of greater than a majority in principal amount of the holders of the Subordinated Debentures (a "Super Majority") to be waived under the Indenture, the Event of Default under the Declaration may only be waived by the vote of the Holders of at least the proportion in liquidation amount of the Preferred Securities outstanding that the relevant Super Majority represents of the aggregate principal amount of the Subordinated Debentures outstanding. The foregoing provisions of this Section 2.6(a) shall be in lieu of section 316(a)(1)(B) of the Trust Indenture Act and such section 316(a)(1)(B) of the Trust Indenture Act is hereby expressly excluded from this Declaration and the Securities, as permitted by the Trust Indenture Act. Upon such waiver, any such default shall cease to exist, and any Event of Default with respect to the Preferred Securities arising therefrom shall be deemed to have been cured, for every purpose of this Declaration, but no such waiver shall extend to any subsequent or other default or Event of Default with respect to the Preferred Securities or impair any right consequent thereon. Any waiver by the Holders of the Preferred Securities of an Event of Default with respect to the Preferred Securities shall also be deemed to constitute a waiver by the Holders of the Common Securities of any such Event of Default with respect to the Common Securities for all purposes of this Declaration without any further act, vote, or consent of the Holders of the Common Securities. (b) The Holders of a Majority in liquidation amount of the Common Securities may, by vote, on behalf of the Holders -10- 12 of all of the Common Securities, waive any past Event of Default with respect to the Common Securities and its consequences, provided that, if the underlying Event of Default under the Indenture: (i) is not waivable under the Indenture, except where the Holders of the Common Securities are deemed to have waived such Event of Default under the Declaration as provided below in this Section 2.6(b), the Event of Default under the Declaration shall also not be waivable; or (ii) requires the consent or vote of a Super Majority to be waived, except where the Holders of the Common Securities are deemed to have waived such Event of Default under the Declaration as provided below in this Section 2.6(b), the Event of Default under the Declaration may only be waived by the vote of the Holders of at least the proportion in liquidation amount of the Common Securities outstanding that the relevant Super Majority represents of the aggregate principal amount of the Subordinated Debentures outstanding; provided further, each Holder of Common Securities will be deemed to have waived any such Event of Default and all Events of Default with respect to the Common Securities and the consequences thereof until all Events of Default with respect to the Preferred Securities have been cured, waived or otherwise eliminated, and until such Events of Default have been so cured, waived or otherwise eliminated, the Property Trustee will be deemed to be acting solely on behalf of the Holders of the Preferred Securities and only the Holders of the Preferred Securities will have the right to direct the Property Trustee in accordance with the terms of the Securities. The foregoing provisions of this Section 2.6(b) shall be in lieu of sections 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act and such sections 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act are hereby expressly excluded from this Declaration and the Securities, as permitted by the Trust Indenture Act. Subject to the foregoing provisions of this Section 2.6(b), upon such waiver and, in the case of a deemed waiver, until such waiver shall no longer be deemed to exist, any such default shall cease to exist and any Event of Default with respect to the Common Securities arising therefrom shall be deemed to have been cured for every purpose of this Declaration, but no such waiver shall extend to any subsequent or other default or Event of Default with respect to the Common Securities or impair any right consequent thereon. (c) A waiver of an Event of Default under the Indenture by the Property Trustee at the direction of the Holders of the Preferred Securities constitutes a waiver of the corresponding Event of Default under this Declaration. The foregoing provisions of this Section 2.6(c) shall be in lieu of section 316(a)(1)(B) of the Trust Indenture Act and such section 316(a)(1)(B) of the Trust Indenture Act is hereby expressly excluded from this -11- 13 Declaration and the Securities, as permitted by the Trust Indenture Act. SECTION 2.7 Event of Default; Notice. (a) The Property Trustee shall, within 90 days after the occurrence of an Event of Default, transmit by mail, first class postage prepaid, to the Holders of the Securities, notices of all defaults with respect to the Securities known to the Property Trustee, unless such defaults have been cured before the giving of such notice (the term "defaults" for the purposes of this Section 2.7(a) being hereby defined to be an Event of Default as defined in the Indenture, not including any periods of grace provided for therein and irrespective of the giving of any notice provided therein); provided that, except for a default in the payment of principal of (or premium, if any) or interest on any of the Subordinated Debentures, the Property Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee, or a trust committee of directors and/or Responsible Officers of the Property Trustee in good faith determines that the withholding of such notice is in the interests of the Holders of the Securities. (b) the Property Trustee shall not be deemed to have knowledge of any default except: (i) a default under Sections 6.01(1) and 6.01(2) of the Indenture; or (ii) any default as to which the Property Trustee shall have received written notice or a Responsible Officer charged with the administration of the Declaration shall have obtained written notice. ARTICLE III ORGANIZATION SECTION 3.1 Name. The Trust is named "Ohio Edison Financing Trust II," as such name may be modified from time to time by the Regular Trustees following written notice to the Holders of the Securities. The Trust's activities may be conducted under the name of the Trust or any other name deemed advisable by the Regular Trustees. SECTION 3.2 Office. The address of the principal office of the Trust is c/o Ohio Edison Company, 76 South Main Street, Akron, Ohio 44308. On ten Business Days written notice to the Holders of the Securities, the Regular Trustees may designate another principal office. -12- 14 SECTION 3.3 Purpose. The exclusive purposes and functions of the Trust are (a) (i) to issue Preferred Securities in exchange for Class A Shares pursuant to the Offer and to deliver such Class A Shares to the Sponsor in consideration for the deposit by the Sponsor in the Trust as trust assets of Subordinated Debentures issued under the Indenture having an aggregate principal amount equal to the aggregate par value of the Class A Shares so delivered; (ii) to enter into such agreements and arrangements as may be necessary in connection with the Offer and to take all action, and exercise such discretion, as may be necessary or desirable in connection with the Offer and to file such registration statements or make such other filings under the Securities Act, the Exchange Act or state securities or "Blue Sky" laws as may be necessary or desirable in connection with the Offer and the issuance of the Preferred Securities; and (iii) to issue and sell Common Securities to the Sponsor for cash and use the proceeds of such sale to purchase as trust assets an equal aggregate principal amount of Subordinated Debentures issued under the Indenture, and (b) except as otherwise limited herein, to engage in only those other activities necessary, convenient or incidental thereto. The Trust shall not borrow money, issue debt or reinvest proceeds derived from investments, pledge any of its assets, or otherwise undertake (or permit to be undertaken) any activity that would cause the Trust not to be classified for United States federal income tax purposes as a grantor trust. SECTION 3.4 Authority. Subject to the limitations provided in this Declaration and to the specific duties of the Property Trustee, the Regular Trustees shall have exclusive and complete authority to carry out the purposes of the Trust. An action taken by the Regular Trustees in accordance with their powers shall constitute the act of and serve to bind the Trust and an action taken by the Property Trustee in accordance with its powers shall constitute the act of and serve to bind the Trust. In dealing with the Trustees acting on behalf of the Trust, no person shall be required to inquire into the authority of the Trustees to bind the Trust. Persons dealing with the Trust are entitled to rely conclusively on the power and authority of the Trustees as set forth in this Declaration. SECTION 3.5 Title to Property of the Trust. Except as provided in Section 3.8 with respect to the Subordinated Debentures and the Property Trustee Account or as otherwise provided in this Declaration, legal title to all assets of the Trust shall be vested in the Trust. The Holders shall not have legal title to any part of the assets of the Trust, but shall have an undivided beneficial interest in the assets of the Trust. -13- 15 SECTION 3.6 Powers and Duties of the Regular Trustees. The Regular Trustees shall have the exclusive power, duty and authority to cause the Trust to engage in the following activities: (a) to issue the Preferred Securities and the Common Securities in accordance with this Declaration; provided, however, that the Trust may issue no more than one series of Preferred Securities and no more than one series of Common Securities, and, provided further, that there shall be no interests in the Trust other than the Securities, and the issuance of Securities shall be limited to a one-time, simultaneous issuance of both Preferred Securities and Common Securities on the Closing Date; (b) in connection with the Offer and the issuance of the Preferred Securities, at the direction of the Sponsor, to: (i) file and execute on behalf of the Trust such applications, reports, surety bonds, irrevocable consents, appointments of attorney for service of process and other papers and documents as shall be necessary or desirable to register the Preferred Securities under the securities or "Blue Sky" laws of such jurisdictions as the Sponsor on behalf of the Trust, may deem necessary or desirable; and (ii) execute on behalf of the Trust such other agreements and arrangements as may be necessary or desirable in connection with the Offer and the consummation thereof, and to take all action, and exercise all discretion, as may be necessary or desirable in connection with the Offer or the consummation thereof. In connection with all of the foregoing, the Sponsor and each Trustee, solely in its capacity as Trustee of the Trust, have constituted and appointed, and hereby confirm the appointment of, John H. Byington, Jr. and Michael F. Cusick, and each of them, as his, her or its, as the case may be, true and lawful attorneys-in-fact, and agents, with full power of substitution and resubstitution, for the Sponsor or such Trustee or in the Sponsor's or such Trustee's name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to the 1933 Act Registration Statement, the 1934 Act Registration Statement and the Tender Offer Schedules and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as the Sponsor or such Trustee might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their -14- 16 or his or her substitute or substitutes, shall do or cause to be done by virtue hereof; (c) to acquire Subordinated Debentures and, on behalf of the Holders of Preferred Securities, the Preferred Securities Guarantee upon consummation of the Offer in connection with the exchange of Preferred Securities for Class A Shares pursuant to the Offer and to acquire additional Subordinated Debentures and, on behalf of the Holders of the Common Securities, the Common Securities Guarantee with the proceeds of the sale of the Common Securities; provided, however, that the Regular Trustees shall cause legal title to the Subordinated Debentures to be held of record in the name of the Property Trustee for the benefit of the Holders of the Preferred Securities and the Holders of the Common Securities; (d) to give the Sponsor and the Property Trustee prompt written notice of the occurrence of a Special Event; provided that the Regular Trustees shall consult with the Sponsor and the Property Trustee before taking or refraining from taking any Ministerial Action in relation to a Special Event; (e) to establish a record date with respect to all actions to be taken hereunder that require a record date be established, including and with respect to, for the purposes of ss.316(c) of the Trust Indenture Act, Distributions, voting rights, redemptions and exchanges, and to issue relevant notices to the Holders of Preferred Securities and Holders of Common Securities as to such actions and applicable record dates; (f) to take all actions and perform such duties as may be required of the Regular Trustees pursuant to this Declaration or the terms of the Securities as set forth in Annex I; (g) to bring or defend, pay, collect, compromise, arbitrate, resort to legal action, or otherwise adjust claims or demands of or against the Trust ("Legal Action"), unless pursuant to Section 3.8(e), the Property Trustee is charged with bringing such Legal Action; (h) to employ or otherwise engage employees and agents (who may be designated as officers with titles) and managers, contractors, advisors, and consultants and pay reasonable compensation for such services; (i) to cause the Trust to comply with the Trust's obligations under the Trust Indenture Act; (j) to give the certificate required by section 314(a)(4) of the Trust Indenture Act to the Property Trustee, which certificate may be executed by any Regular Trustee; -15- 17 (k) to incur expenses that are necessary or incidental to carry out any of the purposes of the Trust; (l) to act as, or appoint another Person to act as, registrar and transfer agent for the Securities (the "Transfer Agent and Registrar") and to appoint any Person to act as successor Paying Agent for the Securities in accordance with Section 9.10 of this Declaration; (m) to take all action that may be necessary or appropriate for the preservation and the continuation of the Trust's valid existence, rights, franchises and privileges as a statutory business trust under the laws of the State of Delaware and of each other jurisdiction in which such existence is necessary to protect the limited liability of the Holders of the Preferred Securities or to enable the Trust to effect the purposes for which the Trust was created; (n) to execute all documents or instruments, perform all duties and powers, and do all things for and on behalf of the Trust in all matters necessary, convenient or incidental to the foregoing; (o) to take any action, not inconsistent with this Declaration or with applicable law, that the Regular Trustees determine in their discretion to be necessary, convenient or desirable in carrying out the activities of the Trust as set out in this Section 3.6, including, but not limited to: (i) causing the Trust not to be deemed to be an Investment Company required to be registered under the Investment Company Act; (ii) causing the Trust to be classified for United States federal income tax purposes as a grantor trust; and (iii) cooperating with the Subordinated Debenture Issuer to ensure that the Subordinated Debentures will be treated as indebtedness of the Subordinated Debenture Issuer for United States federal income tax purposes, provided that such action does not adversely affect the interests of Holders; and (p) to take all action necessary to cause all applicable tax returns that are required to be filed by them pursuant to Section 11.2(c) with respect to the Trust to be duly prepared and filed on behalf of the Trust. The Regular Trustees must exercise the powers set forth in this Section 3.6 in a manner that is consistent with the purposes and functions of the Trust set out in Section 3.3, and the Regular Trustees shall not take any action that is inconsis- -16- 18 tent with the purposes and functions of the Trust set forth in Section 3.3. Subject to this Section 3.6, the Regular Trustees shall have none of the powers or the authority of the Property Trustee set forth in Section 3.8. SECTION 3.7 Prohibition of Actions by the Trust and the Trustees. (a) The Trust shall not, and the Trustees (including the Property Trustee) shall not, engage in any activity other than as required or authorized by this Declaration. In particular, the Trust shall not and the Trustees (including the Property Trustee) shall cause the Trust not to: (i) invest any proceeds received by the Trust from holding the Subordinated Debentures, but shall distribute all such proceeds to Holders of Securities pursuant to the terms of this Declaration and of the Securities; (ii) acquire any assets other than as expressly provided herein; (iii) possess Trust property for other than a Trust purpose; (iv) make any loans or incur any indebtedness other than loans represented by the Subordinated Debentures; (v) possess any power or otherwise act in such a way as to vary the Trust assets or the terms of the Securities in any way whatsoever; (vi) issue any securities or other evidences of beneficial ownership of, or beneficial interest in, the Trust other than the Securities; or (vii) other than as provided in this Declaration, (A) direct the time, method and place of exercising any trust or power conferred upon the Subordinated Debenture Trustee with respect to the Subordinated Debentures, (B) waive any past default that is waivable under Section 6.04 of the Indenture, (C) exercise any right to rescind or annul any declaration that the principal of all the Subordinated Debentures shall be due and payable, or (D) consent to any amendment, modification or termination of the Indenture or the Subordinated Debentures where such consent shall be required unless the Trust shall have received an opinion of counsel to the effect that such modification or amendment will not cause more than an insubstantial risk that for United States federal income tax purposes the Trust will not be classified as a grantor trust. -17- 19 SECTION 3.8 Powers and Duties of the Property Trustee. (a) The legal title to the Subordinated Debentures shall be owned by and held of record in the name of the Property Trustee in trust for the benefit of the Trust and the Holders of the Securities. The right, title and interest of the Property Trustee to the Subordinated Debentures shall vest automatically in each Person who may hereafter be appointed as Property Trustee in accordance with Section 5.6. Such vesting (and cessation as to the resigning Property Trustee) of title shall be effective whether or not conveyancing documents with regard to the Subordinated Debentures have been executed and delivered. (b) The Property Trustee shall not transfer its right, title and interest in the Subordinated Debentures to the Regular Trustees or to the Delaware Trustee (if the Property Trustee does not also act as Delaware Trustee). (c) The Property Trustee shall: (i) establish and maintain a segregated non-interest bearing trust account (the "Property Trustee Account") in the name of and under the exclusive control of the Property Trustee on behalf of the Holders of the Securities and, upon the receipt of payments of funds made in respect of the Subordinated Debentures held by the Property Trustee, deposit such funds into the Property Trustee Account and make payments to the Holders of the Preferred Securities and Holders of the Common Securities from the Property Trustee Account in accordance with Section 6.1; provided, that with respect to payments to the Holders of the Common Securities, the Sponsor and the Property Trustee may elect to make other arrangements as may be satisfactory to each of them and as evidenced by a separate written agreement to such effect. Funds in the Property Trustee Account shall be held uninvested until disbursed in accordance with this Declaration. The Property Trustee Account shall be an account that is maintained with a banking institution the rating on whose long-term unsecured indebtedness is at least equal to the rating assigned to the Preferred Securities by a "nationally recognized statistical rating organization", as that term is defined for purposes of Rule 436(g)(2) under the Securities Act; (ii) engage in such ministerial activities as shall be necessary or appropriate to effect the redemption of the Preferred Securities and the Common Securities to the extent the Subordinated Debentures are redeemed or mature; and (iii) upon notice of distribution issued by the Regular Trustees in accordance with the terms of the Securities, engage in such ministerial activities as shall be necessary or appropriate to effect the distribution of the Subordinated Debentures to Holders of Securities upon the -18- 20 occurrence of certain Special Events (as defined in the terms of the Securities) arising from a change in law or a change in legal interpretation or other specified circumstances pursuant to the terms of the Securities. (d) The Property Trustee shall take all actions and perform such duties as may be specifically required of the Property Trustee pursuant to this Declaration or the terms of the Securities set forth in Annex I. (e) The Property Trustee may take any Legal Action which arises out of or in connection with an Event of Default or the Property Trustee's duties and obligations under this Declaration or the Trust Indenture Act. (f) The Property Trustee shall not resign as a Trustee unless either: (i) The Trust has been completely liquidated and the proceeds of the liquidation distributed to the Holders of Securities pursuant to the terms of the Securities; or (ii) a Successor Property Trustee (as defined herein) has been appointed and has accepted that appointment in accordance with Section 5.6. (g) The Property Trustee shall give prompt written notice to the Holders of the Securities of any notice received by it from the Subordinated Debentures Issuer of its election to defer payments of interest on the Subordinated Debentures by extending the interest payment period under the Indenture. (h) The Property Trustee shall have the legal power to exercise all of the rights, powers and privileges of a holder of Subordinated Debentures under the Indenture and if an Event of Default occurs and is continuing, the Property Trustee shall, for the benefit of Holders of the Securities, be entitled to enforce its rights as holder of the Subordinated Debentures subject to the rights of the Holders pursuant to the terms of such Securities. (i) The Property Trustee shall take all action necessary to cause all applicable tax information reports that are required to be prepared and furnished by it pursuant to Section 11.2(b) with respect to the Trust to be duly prepared and furnished on behalf of the Trust. (j) Subject to this Section 3.8, the Property Trustee shall have none of the duties, liabilities, powers or the authority of the Regular Trustees set forth in Section 3.6. In exercising any of the powers granted to it in Sections 3.8 and 3.9, the Property Trustee shall exercise such powers in a manner that is consistent with the purposes and -19- 21 functions of the Trust set out in Section 3.3, and the Property Trustee shall not take any action that is inconsistent with the purposes and functions of the Trust set out in Section 3.3. SECTION 3.9 Certain Duties and Responsibilities of the Property Trustee. (a) The Property Trustee, before the occurrence of any Event of Default and after the curing of all Events of Default that may have occurred, shall undertake to perform only such duties as are specifically set forth in this Declaration and no implied covenants shall be read into this Declaration against the Property Trustee. In case an Event of Default has occurred (that has not been cured or waived pursuant to Section 2.6), the Property Trustee shall exercise such of the rights and powers vested in it by this Declaration, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. (b) No provision of this Declaration shall be construed to relieve the Property Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (i) prior to the occurrence of an Event of Default and after the curing or waiving of all such Events of Default that may have occurred: (A) the duties and obligations of the Property Trustee shall be determined solely by the express provisions of this Declaration and the Property Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Declaration, and no implied covenants or obligations shall be read into this Declaration against the Property Trustee; and (B) in the absence of bad faith on the part of the Property Trustee, the Property Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Property Trustee and conforming to the requirements of this Declaration; but in the case of any such certificates or opinions that by any provision hereof are specifically required to be furnished to the Property Trustee, the Property Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Declaration; (ii) the Property Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer of the Property Trustee, unless it shall be proved -20- 22 that the Property Trustee was negligent in ascertaining the pertinent facts; (iii) the Property Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than a Majority in liquidation amount of the Securities relating to the time, method and place of conducting any proceeding for any remedy available to the Property Trustee, or exercising any trust or power conferred upon the Property Trustee under this Declaration; (iv) no provision of this Declaration shall require the Property Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that the repayment of such funds or liability is not reasonably assured to it under the terms of this Declaration or adequate indemnity against such risk or liability is not reasonably assured to it; (v) the Property Trustee's sole duty with respect to the custody, safe keeping and physical preservation of the Subordinated Debentures and the Property Trustee Account shall be to deal with such property in a similar manner as the Property Trustee deals with similar property for its own account, subject to the protections and limitations on liability afforded to the Property Trustee under this Declaration, the Trust Indenture Act and Rule 3a-7; (vi) the Property Trustee shall have no duty or liability for or with respect to the value, genuineness, existence or sufficiency of the Subordinated Debentures or the payment of any taxes or assessments levied thereon or in connection therewith; (vii) the Property Trustee shall not be liable for any interest on any money received by it except as it may otherwise agree in writing with the Sponsor. Money held by the Property Trustee need not be segregated from other funds held by it except in relation to the Property Trustee Account maintained by the Property Trustee pursuant to Section 3.8(c)(i) and except to the extent otherwise required by law; (viii) the Property Trustee shall not be responsible for monitoring the compliance by the Regular Trustees or the Sponsor with their respective duties under this Declaration, nor shall the Property Trustee be liable for the default or misconduct of the Regular Trustees or the Sponsor; and (ix) the Property Trustee shall not be charged with knowledge of any default or Event of Default with respect to -21- 23 the Securities unless either (1) a Responsible Officer of the Property Trustee shall have actual knowledge of the default or Event of Default or (2) written notice of such default or Event of Default shall have been given to the Property Trustee by the Sponsor, the Regular Trustees or by any Holder of the Securities. SECTION 3.10 Certain Rights of the Property Trustee. (a) Subject to the provisions of Section 3.9: (i) the Property Trustee may rely and shall be fully protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed, sent or presented by the proper party or parties; (ii) any direction or act of the Sponsor or the Regular Trustees contemplated by this Declaration shall be sufficiently evidenced by a Direction or an Officers' Certificate; (iii) whenever in the administration of this Declaration, the Property Trustee shall deem it desirable that a matter be proved or established before taking, suffering or omitting any action hereunder, the Property Trustee (unless other evidence is herein specifically prescribed) may, in the absence of bad faith on its part, request and rely upon an Officers' Certificate which, upon receipt of such request, shall be promptly delivered by the Sponsor or the Regular Trustees; (iv) the Property Trustee shall have no duty to see to any recording, filing or registration of any instrument (including any financing or continuation statement or any filing under securities laws) or any rerecording, refiling or reregistration thereof; (v) the Property Trustee may consult with counsel or other experts of its selection and the advice or opinion of such counsel and experts with respect to legal matters or advice within the scope of such experts' area of expertise shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in accordance with such advice or opinion. Such counsel may be counsel to the Sponsor or any of its Affiliates, and may include any of the Sponsor's or its Affiliates' employees. The Property Trustee shall have the right at any time to seek instructions concerning the administration of this Declaration from any court of competent jurisdiction; -22- 24 (vi) the Property Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Declaration at the request or direction of any Holder, unless such Holder shall have provided to the Property Trustee adequate security and indemnity, which would satisfy a reasonable person in the position of the Property Trustee, against the costs, expenses (including attorneys' fees and expenses) and liabilities that might be incurred by it in complying with such request or direction, including such reasonable advances as may be requested by the Property Trustee provided, that, nothing contained in this Section 3.10(a)(vi) shall be taken to relieve the Property Trustee, upon the occurrence of an Event of Default, of its obligation to exercise the rights and powers vested in it by this Declaration; (vii) the Property Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Property Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit; (viii) the Property Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Property Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; (ix) any action taken by the Property Trustee or its agents hereunder shall bind the Trust and the Holders, and the signature of the Property Trustee or its agents alone shall be sufficient and effective to perform any such action and no third party shall be required to inquire as to the authority of the Property Trustee to so act or as to its compliance with any of the terms and provisions of this Declaration, both of which shall be conclusively evidenced by the Property Trustee's or its agent's taking such action; (x) whenever in the administration of this Declaration the Property Trustee shall deem it desirable to receive instructions with respect to enforcing any remedy or right or taking any other action hereunder, the Property Trustee (i) may request instructions from the Holders of the Securities which instructions may only be given by the Holders of the same proportion in liquidation amount of the Securities as would be entitled to direct the Property Trustee under the terms of the Securities in respect of such remedy, right or action, (ii) may refrain from enforcing such remedy or right or taking such other action until such instructions -23- 25 are received, and (iii) shall be protected in acting in accordance with such instructions; (xi) except as otherwise expressly provided by this Declaration, the Property Trustee shall not be under any obligation to take any action that is discretionary under the provisions of this Declaration; and (xii) the Property Trustee shall not be liable for any action taken, suffered, or omitted to be taken by it in good faith and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Declaration. (b) No provision of this Declaration shall be deemed to impose any duty or obligation on the Property Trustee to perform any act or acts or exercise any right, power, duty or obligation conferred or imposed on it, in any jurisdiction in which it shall be illegal, or in which the Property Trustee shall be unqualified or incompetent in accordance with applicable law, to perform any such act or acts, or to exercise any such right, power, duty or obligation. No permissive power or authority available to the Property Trustee shall be construed to be a duty. SECTION 3.11 Delaware Trustee. Notwithstanding any other provision of this Declaration other than Section 5.2, the Delaware Trustee shall not be entitled to exercise any powers, nor shall the Delaware Trustee have any of the duties and responsibilities, of the Regular Trustees or the Property Trustee described in this Declaration. Except as set forth in Section 5.2, the Delaware Trustee shall be a Trustee for the sole and limited purpose of fulfilling the requirements of section 3807 of the Business Trust Act. SECTION 3.12 Execution of Documents. Unless otherwise determined by the Regular Trustees, and except as otherwise required by the Business Trust Act, a majority of or, if there are only two, any Regular Trustee or, if there is only one, such Regular Trustee is authorized to execute on behalf of the Trust any documents that the Regular Trustees have the power and authority to execute pursuant to Section 3.6. SECTION 3.13 Not Responsible for Recitals or Issuance of Securities. The recitals contained in this Declaration and in the Securities shall be taken as the statements of the Sponsor, and the Trustees do not assume any responsibility for their correctness. The Trustees make no representations as to the value or condition of the property of the Trust or any part thereof or as to the title of the Trust thereto or as to the security afforded -24- 26 thereby or hereby, or as to the validity or genuineness of any securities at any time pledged and deposited with any of the Trustees hereunder. The Trustees make no representations as to the validity or sufficiency of this Declaration or the Securities. The Trustees shall not be accountable for the use or application by the Sponsor of the Securities or the proceeds thereof or of any money paid to the Sponsor under any provisions hereof. SECTION 3.14 Duration of Trust. The Trust, unless terminated pursuant to the provisions of Article VIII hereof, shall have existence for ____________ (__) years from the Closing Date. SECTION 3.15 Mergers. (a) The Trust may not consolidate, amalgamate, merge with or into, or be replaced by, or convey, transfer or lease its properties and assets substantially as an entirety to any corporation or other body, except as described in Section 3.15(b) and (c). (b) The Trust may, with the consent of the Regular Trustees or, if there are more than two, a majority of the Regular Trustees and without the consent of the Holders, the Delaware Trustee or the Property Trustee, consolidate, amalgamate, merge with or into, or be replaced by a trust organized as such under the laws of any State; provided that: (i) such successor entity (the "Successor Entity") either: (A) expressly assumes all of the obligations of the Trust under the Securities; or (B) substitutes for the Securities other securities having substantially the same terms as the Securities (the "Successor Securities") so long as the Successor Securities rank the same as the Preferred Securities rank with respect to Distributions and payments upon termination, liquidation, redemption, maturity and otherwise; (ii) the Subordinated Debenture Issuer expressly acknowledges a trustee of the Successor Entity that possesses the same powers and duties as the Property Trustee as the Holder of the Subordinated Debentures; (iii) the Preferred Securities or any Successor Securities replacing the Preferred Securities (the "Successor Preferred Securities") are listed, or any Successor Preferred Securities will be listed upon notification of issuance, on any national securities -25- 27 exchange or with an other organization on which the Preferred Securities are then listed or quoted; (iv) such merger, consolidation, amalgamation or replacement does not cause the Preferred Securities (including any Successor Preferred Securities) to be downgraded by any nationally recognized statistical rating organization; (v) such merger, consolidation, amalgamation or replacement does not adversely affect the rights, preferences and privileges of the Holders of the Securities (including any Successor Securities) in any material respect (other than with respect to any dilution of such Holders' interests in the Securities as a result of such merger, consolidation, amalgamation or replacement); (vi) such Successor Entity has a purpose identical to that of the Trust; (vii) prior to such merger, consolidation, amalgamation or replacement, the Sponsor has received an opinion of a nationally recognized independent counsel to the Trust experienced in such matters to the effect that: (A) such merger, consolidation, amalgamation or replacement does not adversely affect the rights, preferences and privileges of the Holders of the Securities (including any Successor Securities) in any material respect (other than with respect to any dilution of the Holders' interest in the new entity); and (B) following such merger, consolidation, amalgamation or replacement, neither the Trust nor the Successor Entity will be required to register as an Investment Company; and (viii) the Sponsor guarantees the obligations of such Successor Entity under the Successor Securities at least to the extent provided by the Preferred Securities Guarantee. (c) Notwithstanding Section 3.15(b), the Trust shall not, except with the consent of Holders of 100% in liquidation amount of the Securities, consolidate, amalgamate, merge with or into, or be replaced by any other entity or permit any other entity to consolidate, amalgamate, merge with or into, or replace it if such consolidation, amalgamation, merger or replacement would cause the Trust or Successor Entity to be classified as other than a grantor trust for United States federal income tax purposes. -26- 28 SECTION 3.16 May Hold Securities. Except as provided in the definition of the term "Outstanding" in Article I, any Trustee or any other agent of any Trustee or the Trust, in its individual or any other capacity, may become the owner or pledgee of Trust Securities and may otherwise deal with the Trust with the same rights it would have if it were not a Trustee or such other agent. ARTICLE IV SPONSOR SECTION 4.1 Sponsor's Purchase of Common Securities. On the Closing Date the Sponsor will purchase all of the Common Securities issued by the Trust, in an amount equal to 3% of the capital of the Trust, at the same time as the Preferred Securities are issued in exchange for Class A Shares pursuant to the Offer. SECTION 4.2 Responsibilities of the Sponsor. In connection with the issuance of the Preferred Securities in exchange for Class A Shares pursuant to the Offer, the Sponsor shall have the exclusive right and responsibility to engage in the following activities: (a) to prepare and file with the Commission and execute, in each case on behalf of the Trust, (i) a Registration Statement on Form S-4 (the "Registration Statement") and any pre-effective or post-effective amendments to such Registration Statement, relating to the registration under the Securities Act of the Preferred Securities of the Trust, (ii) a Registration Statement on Form 8-A (the "1934 Act Registration Statement") (including all pre-effective and post-effective amendments thereto) relating to the registration of the Preferred Securities of the Trust under Section 12(b) of the Exchange Act and (iii) an Issuer Tender Offer Statement on Schedule 13E-4 and any other tender offer statement required to be filed by the Trust with the Commission (including, if necessary, Schedule 14D-1) relating to the Offer (collectively, the "Tender Offer Schedules") and any amendment or supplement thereto; (b) to determine the States in which to take appropriate action to qualify or register for sale all or part of the Preferred Securities and to do any and all such acts, other than actions which must be taken by the Trust, and advise the Trust of actions it must take, and prepare for execution and filing any documents to be executed and filed by the Trust, as the Sponsor deems necessary or advisable in order to comply with the applicable laws of any such States; -27- 29 (c) to prepare and file with the New York Stock Exchange or any other national stock exchange or the Nasdaq National Market an application for listing thereon upon notice of issuance of any Preferred Securities; and to file or cause the Regular Trustees to file, thereafter with such exchange such notifications and documents as may be necessary from time to time to maintain such listing; and (d) to negotiate the terms of and execute on behalf of the Trust the Dealer Manager Agreement providing for the issuance of the Preferred Securities in exchange for Class A Shares pursuant to the Offer. SECTION 4.3 Expenses. (a) The Sponsor shall be responsible for and shall pay for all debts and obligations (other than with respect to the Securities) and all costs and expenses of the Trust (including, but not limited to, costs and expenses relating to the organization of the Trust, the issuance and sale of the Preferred Securities, the fees and expenses (including reasonable counsel fees and expenses) of the Trustees (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust), the costs and expenses of accountants, attorneys, statistical or bookkeeping services, expenses for printing and engraving and computing or accounting equipment, Paying Agent(s), registrar(s), transfer agent(s), duplication, travel and telephone and other telecommunications expenses and costs and expenses incurred in connection with the disposition of Trust assets). (b) The Sponsor will pay any and all taxes (other than United States withholding taxes attributable to the Trust or its assets) and all liabilities, costs and expenses with respect to such taxes of the Trust. (c) The Sponsor's obligations under this Section 4.3 shall be for the benefit of, and shall be enforceable by, the Property Trustee and any Person to whom any such debts, obligations, costs, expenses and taxes are owed (a "Creditor") whether or not such Creditor has received notice hereof. The Property Trustee and any such Creditor may enforce the Sponsor's obligations under this Section 4.3 directly against the Sponsor and the Sponsor irrevocably waives any right or remedy to require that the Property Trustee or any such Creditor take any action against the Trust or any other Person before proceeding against the Sponsor. The Sponsor agrees to execute such additional agreements as may be necessary or desirable in order to give full effect to the provisions of this Section 4.3. As security for the performance of the obligations of the Sponsor under this Section, the Property Trustee shall have a lien prior to the Securities upon all property and funds held or collected by the Property Trustee as such, except funds held in -28- 30 trust for the payment of principal of, and premium (if any) or interest on, particular Securities. Should the Property Trustee incur expenses or render services in connection with an Event of Default specified in Sections 6.01(5) and (6) of the Indenture, those expenses (including the reasonable charges and expenses of its counsel) and the compensation for the services are intended to constitute expenses of administration under any applicable Federal or state bankruptcy, insolvency, reorganization or other similar law. The provisions of this Section shall survive the termination of this Declaration. ARTICLE V TRUSTEES SECTION 5.1 Number of Trustees. The number of Trustees initially shall be four (4), and: (a) at any time before the issuance of any Securities, the Sponsor may, by written instrument, increase or decrease the number of Trustees; and (b) after the issuance of any Securities, the number of Trustees may be increased or decreased by vote of the Holders of a majority in liquidation amount of the Common Securities voting as a class at a meeting of the Holders of the Common Securities, provided that, if the Property Trustee does not also act as Delaware Trustee, the number of Trustees shall be at least three (3). SECTION 5.2 Delaware Trustee. If required by the Business Trust Act, one Trustee (the "Delaware Trustee") shall be: (a) a natural person who is a resident of the State of Delaware; or (b) if not a natural person, an entity which has its principal place of business in the State of Delaware, and otherwise meets the requirements of applicable law, provided that, if the Property Trustee has its principal place of business in the State of Delaware and otherwise meets the requirements of applicable law, then the Property Trustee shall also be the Delaware Trustee and Section 3.11 shall have no application. The Delaware Trustee may be an Affiliate of the Property Trustee. -29- 31 SECTION 5.3 Property Trustee; Eligibility. (a) There shall at all times be one Trustee which shall act as Property Trustee which shall: (i) not be an Affiliate of the Sponsor; (ii) be a corporation organized and doing business under the laws of the United States of America or any State or Territory thereof or of the District of Columbia, or a corporation or Person permitted by the Commission to act as an institutional trustee under the Trust Indenture Act, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least 50 million U.S. dollars ($50,000,000), and subject to supervision or examination by federal, State, Territorial or District of Columbia authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the supervising or examining authority referred to above, then for the purposes of this Section 5.3(a)(ii), the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published; and (iii) if the Trust is excluded from the definition of an Investment Company solely by means of Rule 3a-7 and to the extent Rule 3a-7 requires a trustee having certain qualifications to hold title to the "eligible assets" of the Trust, the Property Trustee shall possess those qualifications. (b) If at any time the Property Trustee shall cease to be eligible to so act under Section 5.3(a), the Property Trustee shall immediately resign in the manner and with the effect set forth in Section 5.6(c). (c) If the Property Trustee has or shall acquire any "conflicting interest" within the meaning of section 310(b) of the Trust Indenture Act, the Property Trustee and the Holder of the Common Securities (as if it were the obligor referred to in section 310(b) of the Trust Indenture Act) shall in all respects comply with the provisions of section 310(b) of the Trust Indenture Act. (d) The Preferred Securities Guarantee shall be deemed to be specifically described in this Declaration for purposes of clause (i) of the first provision contained in Section 310(b) of the Trust Indenture Act. SECTION 5.4 Qualifications of Regular Trustees and Delaware Trustee Generally. Each Regular Trustee and the Delaware Trustee (unless the Property Trustee also acts as Delaware Trustee) shall be -30- 32 either a natural person who is at least 21 years of age or a legal entity that shall act through one or more Authorized Officers. SECTION 5.5 Initial Trustees. The initial Regular Trustees shall be: R.H. Marsh T.F. Struck, II The initial Delaware Trustee shall be: The Bank of New York (Delaware) The initial Property Trustee shall be: The Bank of New York SECTION 5.6 Appointment, Removal and Resignation of Trustees. (a) Subject to Section 5.6(b), Trustees, or any of them, may be appointed or removed without cause at any time: (i) until the issuance of any Securities, by written instrument executed by the Sponsor; and (ii) after the issuance of any Securities, by vote of the Holders of a Majority in liquidation amount of the Common Securities voting as a class at a meeting of the Holders of the Common Securities or by unanimous written consent. (b)(i) The Trustee that acts as Property Trustee shall not be removed in accordance with Section 5.6(a) until a successor Property Trustee ("Successor Property Trustee") has been appointed and has accepted such appointment by written instrument executed by such Successor Property Trustee and delivered to the Regular Trustees and the Sponsor; and (ii) the Trustee that acts as Delaware Trustee shall not be removed in accordance with Section 5.6(a) until a successor Trustee possessing the qualifications to act as Delaware Trustee under Sections 5.2 and 5.4 (a "Successor Delaware Trustee") has been appointed and has accepted such appointment by written instrument executed by such Successor Delaware Trustee and delivered to the Regular Trustees and the Sponsor. (c) A Trustee appointed to office shall hold office until his successor shall have been appointed or until his death, -31- 33 removal or resignation. Any Trustee may resign from office (without need for prior or subsequent accounting) by an instrument in writing signed by the Trustee and delivered to the Sponsor and the Trust, which resignation shall take effect upon such delivery or upon such later date as is specified therein; provided, however, that: (i) No such resignation of the Trustee that acts as the Property Trustee shall be effective: (A) until a Successor Property Trustee has been appointed and has accepted such appointment by instrument executed by such Successor Property Trustee and delivered to the Trust, the Sponsor and the resigning Property Trustee; or (B) if the Trust is deemed not to be an Investment Company solely by reason of Rule 3a-7, until the assets of the Trust have been completely liquidated and the proceeds thereof distributed to the Holders of the Securities; and (ii) no such resignation of the Trustee that acts as the Delaware Trustee shall be effective until a Successor Delaware Trustee has been appointed and has accepted such appointment by instrument executed by such Successor Delaware Trustee and delivered to the Trust, the Sponsor and the resigning Delaware Trustee. (d) The Holders of the Common Securities shall use their best efforts to promptly appoint a Successor Property Trustee or Successor Delaware Trustee, as the case may be, if the Property Trustee or the Delaware Trustee delivers an instrument of resignation in accordance with this Section 5.6. (e) If no Successor Property Trustee or Successor Delaware Trustee shall have been appointed and accepted appointment as provided in this Section 5.6 within 60 days after delivery to the Sponsor and the Trust of an instrument of resignation, the resigning Property Trustee or Delaware Trustee, as applicable, may petition any court of competent jurisdiction for appointment of a Successor Property Trustee or Successor Delaware Trustee. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, appoint a Successor Property Trustee or Successor Delaware Trustee, as the case may be. SECTION 5.7 Vacancies among Trustees. If a Trustee ceases to hold office for any reason and the number of Trustees is not reduced pursuant to Section 5.1, or if the number of Trustees is increased pursuant to Section 5.1, a vacancy shall occur. A resolution certifying the existence of such vacancy by the Regular Trustees or, if there are more than two, a majority of the Regular Trustees shall be conclusive (but -32- 34 not exclusive) evidence of the existence of such vacancy. The vacancy shall be filled with a Trustee appointed in accordance with Section 5.6. SECTION 5.8 Effect of Vacancies. The death, resignation, retirement, removal, bankruptcy, dissolution, liquidation, incompetence or incapacity to perform the duties of a Trustee shall not operate to annul the Trust. Whenever a vacancy in the number of Regular Trustees shall occur, until such vacancy is filled by the appointment of a Regular Trustee in accordance with Section 5.6, the Regular Trustees in office, regardless of their number, shall have all the powers granted to the Regular Trustees and shall discharge all the duties imposed upon the Regular Trustees by this Declaration. SECTION 5.9 Meetings. If there is more than one Regular Trustee, meetings of the Regular Trustees shall be held from time to time upon the call of any Regular Trustee. Regular meetings of the Regular Trustees may be held at a time and place fixed by resolution of the Regular Trustees. Notice of any in-person meetings of the Regular Trustees shall be hand delivered or otherwise delivered in writing (including by facsimile, with a hard copy by overnight courier) not less than 48 hours before such meeting. Notice of any telephonic meetings of the Regular Trustees or any committee thereof shall be hand delivered or otherwise delivered in writing (including by facsimile, with a hard copy by overnight courier) not less than 24 hours before such meeting. Notices shall contain a brief statement of the time, place and anticipated purposes of the meeting. The presence (whether in person or by telephone) of a Regular Trustee at a meeting shall constitute a waiver of notice of such meeting except where a Regular Trustee attends a meeting for the express purpose of objecting to the transaction of any activity on the ground that the meeting has not been lawfully called or convened. Unless provided otherwise in this Declaration, any action of the Regular Trustees may be taken at a meeting by vote of a majority of the Regular Trustees present (whether in person or by telephone) and eligible to vote with respect to such matter, provided that a Quorum is present, or without a meeting by the unanimous written consent of the Regular Trustees. In the event there is only one Regular Trustee, any and all action of such Regular Trustee shall be evidenced by a written consent of such Regular Trustee. SECTION 5.10 Delegation of Power. (a) Any Regular Trustee may, by power of attorney consistent with applicable law, delegate to any other natural person over the age of 21 his or her power for the purpose of executing any documents contemplated in Section 3.6, including -33- 35 any registration statement or amendment thereto filed with the Commission, or making any other governmental filing; and (b) the Regular Trustees shall have power to delegate from time to time to such of their number or to officers of the Trust the doing of such things and the execution of such instruments either in the name of the Trust or the names of the Regular Trustees or otherwise as the Regular Trustees may deem expedient, to the extent such delegation is not prohibited by applicable law or contrary to the provisions of the Trust, as set forth herein. ARTICLE VI DISTRIBUTIONS SECTION 6.1 Distributions. Holders shall receive Distributions (as defined herein) in accordance with the applicable terms of the relevant Holder's Securities. Distributions shall be made on the Preferred Securities and the Common Securities in accordance with the preferences set forth in their respective terms. If and to the extent that the Subordinated Debenture Issuer makes a payment of interest (including Additional Interest (as defined in the Indenture)), premium and/or principal on the Subordinated Debentures held by the Property Trustee (the amount of any such payment being a "Payment Amount"), the Property Trustee shall and is directed, to the extent funds are available for that purpose, to make a distribution (a "Distribution") of the Payment Amount to the Holders. ARTICLE VII ISSUANCE OF SECURITIES SECTION 7.1 General Provisions Regarding Securities. (a) The Regular Trustees shall on behalf of the Trust issue one class of preferred securities representing undivided beneficial interests in the assets of the Trust having such terms as are set forth in Annex I (the "Preferred Securities") and one class of common securities representing undivided beneficial interests in the assets of the Trust having such terms as are set forth in Annex I (the "Common Securities.") The Trust shall not issue any securities or other interests in respect of the assets of the Trust other than the Preferred Securities and the Common Securities. (b) The Certificates shall be signed on behalf of the Trust by a Regular Trustee. Such signature shall be the manual or facsimile signature of any present or any future Regular Trustee. In case any Regular Trustee of the Trust who shall have signed any of the Certificates shall cease to be such -34- 36 Regular Trustee before the Certificates so signed shall be delivered by the Trust, such Certificates nevertheless may be delivered as though the person who signed such Certificates had not ceased to be such Regular Trustee; and any Certificate may be signed on behalf of the Trust by any person who, at the actual date of execution of such Certificate, shall be a Regular Trustee of the Trust, although at the date of the execution and delivery of the Declaration any such person was not such a Regular Trustee. Certificates shall be printed, lithographed or engraved or may be produced in any other manner as is reasonably acceptable to the Regular Trustees, as evidenced by their execution thereof, and may have such letters, numbers or other marks of identification or designation and such legends or endorsements as the Regular Trustees may deem appropriate, or as may be required to comply with any law or with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange on which Securities may be listed, or to conform to usage. (c) The consideration received by the Trust for the issuance of the Securities shall constitute a contribution to the capital of the Trust and shall not constitute a loan to the Trust. (d) Upon issuance of the Securities as provided in this Declaration, the Securities so issued shall be deemed to be validly issued, fully paid and non-assessable. (e) Every Person, by virtue of having become a Holder or a Preferred Security Beneficial Owner in accordance with the terms of this Declaration, shall be deemed to have expressly assented and agreed to the terms of, and shall be bound by, this Declaration. ARTICLE VIII TERMINATION OF TRUST SECTION 8.1 Termination of Trust. (a) The Trust shall terminate: (i) upon the bankruptcy of the Holder of the Common Securities or the Sponsor; (ii) upon the filing of a certificate of dissolution or its equivalent with respect to the Holder of the Common Securities or the Sponsor; the filing of a certificate of cancellation with respect to the Trust or the revocation of the Holder of the Common Securities or the Sponsor's charter and the expiration of 90 days after the date of revocation without a reinstatement thereof; -35- 37 (iii) upon the entry of a decree of judicial dissolution of the Holder of the Common Securities, the Sponsor or the Trust; (iv) when all of the Securities shall have been called for redemption and the amounts necessary for redemption thereof shall have been paid to the Holders in accordance with the terms of the Securities; (v) upon the occurrence and continuation of a Special Event pursuant to which the Trust shall have been dissolved in accordance with the terms of the Securities and all of the Subordinated Debentures in accordance with the terms thereof shall have been distributed to the Holders of Securities in exchange for all of the Securities; (vi) before the issuance of any Securities, at the election of the Sponsor; or (vii) in accordance with Section 3.14 of this Declaration. (b) As soon as is practicable after the occurrence of an event referred to in Section 8.1(a), the Regular Trustees shall file a certificate of cancellation with the Secretary of State of the State of Delaware; provided that upon the occurrence of an event referred to in Section 8.1(a)(vi) such certificate shall be filed by the Sponsor. (c) The provisions of Section 3.9 and 4.3, and Article X shall survive the termination of the Trust. ARTICLE IX TRANSFER OF INTERESTS SECTION 9.1 Transfer of Securities. (a) Securities may only be transferred, in whole or in part, in accordance with the terms and conditions set forth in this Declaration (including Annex I) and in the Securities. Any transfer or purported transfer of any Security not made in accordance with this Declaration and such Securities shall be null and void. (b) Subject to this Article IX, Preferred Securities shall be freely transferable. (c) Subject to this Article IX, (x) the Sponsor may only transfer Common Securities to a Related Party and (y) a Related Party may only transfer Common Securities to the Sponsor or another Related Party; provided that, any such transfer is subject to the condition precedent that the transferor obtain the written opinion of nationally recognized independent counsel -36- 38 experienced in such matters that such transfer would not cause more than an insubstantial risk that: (i) the Trust would no longer be classified for United States federal income tax purposes as a grantor trust; or (ii) the Trust would become an Investment Company or the transferee would become an Investment Company. SECTION 9.2 Registration of Transfer and Exchange of Preferred Security Certificates. The Transfer Agent and Registrar shall keep or cause to be kept, at the office or agency maintained pursuant to Section 9.9, a securities register in which, subject to such reasonable regulations as it may prescribe, the Transfer Agent and Registrar shall provide for the registration of Certificates (subject to Section 9.1(c) in the case of the Common Security Certificates) and registration of transfers and exchanges of Preferred Security Certificates as herein provided. Until such time as they have appointed another Person to act as Transfer Agent and Registrar under Section 3.6(l) hereof, The Bank of New York shall be the initial Transfer Agent and Registrar. Upon surrender for registration of transfer of any Preferred Security Certificate at the office or agency maintained pursuant to Section 9.9, the Regular Trustees or any one of them shall execute and deliver, in the name of the designated transferee or transferees, one or more new Preferred Security Certificates in authorized denominations of a like aggregate liquidation amount dated the date of execution by the Regular Trustee or Trustees. The Transfer Agent and Registrar shall not be required to register the transfer of or exchange (i) Preferred Securities during a period of 15 days immediately preceding the date on which notice identifying the serial numbers for the Preferred Securities called for redemption is mailed, or (ii) any Preferred Securities that have been called for redemption. At the option of a Holder, Preferred Security Certificates may be exchanged for other Preferred Security Certificates in authorized denominations of the same class and of a like aggregate liquidation amount upon surrender of the Preferred Security Certificates to be exchanged at the office or agency maintained pursuant to Section 9.9. Every Preferred Security Certificate presented or surrendered for registration of transfer or exchange shall be accompanied by a written instrument of transfer in form satisfactory to the Regular Trustees and the Transfer Agent and Registrar duly executed by the Holder or such Holder's attorney duly authorized in writing. Each Preferred Security Certificate surrendered for registration of transfer or exchange shall be canceled and subsequently disposed of by the Regular Trustees in accordance with customary practice by trustees generally. -37- 39 No service charge shall be made for any registration of transfer or exchange of Preferred Security Certificates, but the Transfer Agent and Registrar may require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer or exchange of Preferred Security Certificates. SECTION 9.3 Deemed Security Holders. The Trust, the Trustees and the Transfer Agent and Registrar may treat the Person in whose name any Certificate shall be registered in the securities register kept in accordance with Section 9.2 as the sole holder of such Certificate and of the Securities represented by such Certificate for purposes of receiving Distributions and for all other purposes whatsoever and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such Certificate or in the Securities represented by such Certificate on the part of any Person, whether or not the Trust shall have actual or other notice thereof. SECTION 9.4 Book Entry Interests. The Preferred Securities Certificates, on original issuance, will be issued in fully registered form. With respect to any Certificates registered in the name of a Clearing Agency or its nominee: (a) the Trust, the Trustees and the Transfer Agent and Registrar shall be entitled to deal with the Clearing Agency for all purposes of this Declaration (including the payment of Distributions on the Global Certificates and receiving approvals, votes or consents hereunder) as the Holder of the Preferred Securities and the sole holder of the Global Certificates and shall have no obligation to the Preferred Security Beneficial Owners; (b) to the extent that the provisions of this Section 9.4 conflict with any other provisions of this Declaration, the provisions of this Section 9.4 shall control; and (c) the rights of the Preferred Security Beneficial Owners shall be exercised only through the Clearing Agency and shall be limited to those established by law and agreements between such Preferred Security Beneficial Owners and the Clearing Agency and/or the Clearing Agency Participants. The Clearing Agency will make book entry transfers among Clearing Agency Participants and receive and transmit payments of Distributions on such Certificates to such Clearing Agency Participants. -38- 40 SECTION 9.5 Notices to Clearing Agency. Whenever a notice or other communication to the Holders is required under this Declaration, the relevant Trustees shall give all such notices and communications to the Holders, and, with respect to any Preferred Security Certificate registered in the name of a Clearing Agency or the nominee of a Clearing Agency, the Trustees shall, except as set forth herein, have no notice obligations to the Preferred Security Beneficial Owners. SECTION 9.6 Appointment of Successor Clearing Agency. If any Clearing Agency elects to discontinue its services as securities depositary with respect to any Preferred Securities held in the book entry system of such Clearing Agency, the Regular Trustees may, in their sole discretion, appoint a successor Clearing Agency with respect to the Preferred Securities. SECTION 9.7 Definitive Preferred Security Certificates. If, with respect to any Certificates representing Book Entry Interests: (a) a Clearing Agency elects to discontinue its services as securities depositary with respect to the Preferred Securities represented by such Certificates and a successor Clearing Agency is not appointed within 90 days after such election pursuant to Section 9.6; or (b) the Regular Trustees elect after consultation with the Sponsor to terminate the book entry system through the Clearing Agency with respect to the Preferred Securities represented by such Certificates, then: (c) Definitive Preferred Security Certificates shall be prepared by the Regular Trustees on behalf of the Trust with respect to the Preferred Securities; and (d) upon surrender of the such Certificates by the Clearing Agency, accompanied by registration instructions, the Regular Trustees shall cause fully registered definitive Preferred Security Certificates to be delivered to Preferred Security Beneficial Owners in accordance with the instructions of the Clearing Agency. Neither the Trustees nor the Trust shall be liable for any delay in delivery of such instructions and each of them may conclusively rely on and shall be protected in relying on, said instructions of the Clearing Agency. -39- 41 SECTION 9.8 Mutilated, Destroyed, Lost or Stolen Certificates. If: (a) any mutilated Certificate should be surrendered to the Transfer Agent and Registrar, or if the Transfer Agent and Registrar shall receive evidence to its satisfaction of the destruction, loss or theft of any Certificate; and (b) there shall be delivered to the Transfer Agent and Registrar and the Regular Trustees such security or indemnity as may be required by them to keep each of them harmless, then, in the absence of notice that such Certificate shall have been acquired by a bona fide purchaser, any Regular Trustee on behalf of the Trust shall execute and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new Certificate of like denomination. In connection with the issuance of any new Certificate under this Section 9.8, the Regular Trustees or the Transfer Agent and Registrar may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith. Any duplicate Certificate issued pursuant to this Section shall constitute conclusive evidence of an ownership interest in the relevant Securities, as if originally issued, whether or not the lost, stolen or destroyed Certificate shall be found at any time. SECTION 9.9 Maintenance of Office or Agency. The Regular Trustees shall designate and cause to be maintained in the Borough of Manhattan, The City of New York, an office or offices or agency or agencies where Preferred Security Certificates may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Trustees in respect of the Certificates may be served. The Regular Trustees initially designate The Bank of New York, 101 Barclay Street, Floor 21 West, New York, New York 10286 as their principal trust office for such purposes. The Regular Trustees shall give prompt written notice to the Sponsor, the Property Trustee and the Holders of any change in the location of the securities register or any such office or agency. SECTION 9.10 Appointment of Paying Agent. The Paying Agent shall make Distributions with respect to all Securities and shall report the amounts of such payments to the Property Trustee and the Regular Trustees. Any Paying Agent shall have the revocable power to withdraw funds from the Property Trustee Account for the purpose of making the payments referred to above. The Regular Trustees may revoke such power and remove the Paying Agent if such Trustees determine in their sole discretion that the Paying Agent shall have failed to perform its obligations under this Declaration in any material -40- 42 respect. The Paying Agent shall initially be The Bank of New York, and it may choose any co-paying agent that is acceptable to the Regular Trustees and the Sponsor. The Paying Agent shall comply with section 317(b) of the Trust Indenture Act. Any Person acting as a Paying Agent shall be permitted to resign as Paying Agent upon 30 days' written notice to the Regular Trustees, the Property Trustee and the Sponsor. In the event that The Bank of New York shall no longer be the Paying Agent or a successor Paying Agent shall resign or its authority to act be revoked, the Regular Trustees shall appoint a successor that is acceptable to the Property Trustee and the Sponsor to act as Paying Agent (which shall be a bank or trust company). The Regular Trustees shall cause such successor Paying Agent or any additional Paying Agent appointed by the Regular Trustees to execute and deliver to the Trustees an instrument in which such successor Paying Agent or additional Paying Agent shall agree with the Trustees that as Paying Agent, such successor Paying Agent or additional Paying Agent will hold all sums, if any, held by it for payment to the Holders in trust for the benefit of the Holders entitled thereto until such sums shall be paid to such Holders. The Paying Agent shall return all unclaimed funds to the Property Trustee and upon removal of a Paying Agent such Paying Agent shall also return all funds in its possession to the Property Trustee. Any reference in this Declaration to the Paying Agent shall include any co-paying agent unless the context requires otherwise. ARTICLE X LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES OR OTHERS SECTION 10.1 Liability. (a) Except as expressly set forth in this Declaration, the Securities Guarantees and the terms of the Securities, the Sponsor shall not be: (i) personally liable for the return of any portion of the capital contributions (or any return thereon) of the Holders, which shall be made solely from assets of the Trust; or (ii) required to pay to the Trust or to any Holder any deficit upon dissolution of the Trust or otherwise. (b) The Sponsor shall be liable for all of the debts and obligations of the Trust (other than with respect to the Securities) to the extent not satisfied out of the Trust's assets. (c) Pursuant to section 3803(a) of the Business Trust Act, the Holders of the Preferred Securities shall be entitled to the same limitation of personal liability extended to stockholders of -41- 43 private corporations for profit organized under the General Corporation Law of the State of Delaware. SECTION 10.2 Exculpation. (a) No Indemnified Person shall be liable, responsible or accountable in damages or otherwise to the Trust or any Covered Person for any loss, damage or claim incurred by reason of any act or omission performed or omitted by such Indemnified Person in good faith on behalf of the Trust and in a manner such Indemnified Person reasonably believed to be within the scope of the authority conferred on such Indemnified Person by this Declaration or by law, except that an Indemnified Person shall be liable for any such loss, damage or claim incurred by reason of such Indemnified Person's gross negligence (or, in the case of the Property Trustee, negligence) or willful misconduct with respect to such acts or omissions. (b) An Indemnified Person shall be fully protected in relying in good faith upon the records of the Trust and upon such information, opinions, reports or statements presented to the Trust by any Person as to matters the Indemnified Person reasonably believes are within such other Person's professional or expert competence and who has been selected with reasonable care by or on behalf of the Trust, including information, opinions, reports or statements as to the value and amount of the assets, liabilities, profits, losses, or any other facts pertinent to the existence and amount of assets from which Distributions to Holders of Securities might properly be paid. SECTION 10.3 Fiduciary Duty. (a) To the extent that, at law or in equity, an Indemnified Person has duties (including fiduciary duties) and liabilities relating thereto to the Trust or to any other Covered Person, an Indemnified Person acting under this Declaration shall not be liable to the Trust or to any other Covered Person for its good faith reliance on the provisions of this Declaration. The provisions of this Declaration, to the extent that they restrict the duties and liabilities of an Indemnified Person otherwise existing at law or in equity (other than the duties imposed on the Property Trustee under the Trust Indenture Act), are agreed by the parties hereto to replace such other duties and liabilities of such Indemnified Person. (b) Unless otherwise expressly provided herein: (i) whenever a conflict of interest exists or arises between any Covered Persons; or (ii) whenever this Declaration or any other agreement contemplated herein or therein provides that an Indemnified Person shall act in a manner that is, or provide terms that are, fair and reasonable to the Trust or any Holder, -42- 44 the Indemnified Person shall resolve such conflict of interest, take such action or provide such terms, considering in each case the relative interest of each party (including its own interest) to such conflict, agreement, transaction or situation and the benefits and burdens relating to such interests, any customary or accepted industry practices, and any applicable generally accepted accounting practices or principles. In the absence of bad faith by the Indemnified Person, the resolution, action or term so made, taken or provided by the Indemnified Person shall not constitute a breach of this Declaration or any other agreement contemplated herein or of any duty or obligation of the Indemnified Person at law or in equity or otherwise. (c) Whenever in this Declaration an Indemnified Person is permitted or required to make a decision: (i) in its "discretion" or under a grant of similar authority, the Indemnified Person shall be entitled to consider such interests and factors as it desires, including its own interests, and shall have no duty or obligation to give any consideration to any interest of or factors affecting the Trust or any other Person; or (ii) in its "good faith" or under another express standard, the Indemnified Person shall act under such express standard and shall not be subject to any other or different standard imposed by this Declaration or by applicable law. SECTION 10.4 Indemnification. (a) To the fullest extent permitted by applicable law, the Sponsor shall indemnify and hold harmless each Indemnified Person from and against any loss, damage, liability, tax, penalty, expense or claim of any kind or nature whatsoever incurred by such Indemnified Person by reason of the creation, operation or termination of the Trust or any act or omission performed or omitted by such Indemnified Person in good faith on behalf of the Trust and in a manner such Indemnified Person reasonably believed to be within the scope of authority conferred on such Indemnified Person by this Declaration, except that no Indemnified Person shall be entitled to be indemnified in respect of any loss, damage or claim incurred by such Indemnified Person by reason of gross negligence (or, in the case of the Property Trustee, negligence) or willful misconduct with respect to such acts or omissions. (b) To the fullest extent permitted by applicable law, expenses (including legal fees and expenses) incurred by an Indemnified Person in defending any claim, demand, action, suit or proceeding (whether such claim, demand, action, suit or proceeding arises between the parties hereto or results from suits involving third parties) shall, from time to time, be advanced by the Sponsor prior to the final disposition of such claim, demand, -43- 45 action, suit or proceeding upon receipt by the Sponsor of an undertaking by or on behalf of the Indemnified Person to repay such amount if it shall be determined that the Indemnified Person is not entitled to be indemnified as authorized in Section 10.4(a). The indemnification shall survive the termination of this Declaration. SECTION 10.5 Outside Businesses. Any Covered Person, the Sponsor, the Delaware Trustee and the Property Trustee may engage in or possess an interest in other business ventures of any nature or description, independently or with others, similar or dissimilar to the business of the Trust, and the Trust and the Holders shall have no rights by virtue of this Declaration in and to such independent ventures or the income or profits derived therefrom, and the pursuit of any such venture, even if competitive with the business of the Trust, shall not be deemed wrongful or improper. No Covered Person, the Sponsor, the Delaware Trustee, or the Property Trustee shall be obligated to present any particular investment or other opportunity to the Trust even if such opportunity is of a character that, if presented to the Trust, could be taken by the Trust, and any Covered Person, the Sponsor, the Delaware Trustee and the Property Trustee shall have the right to take for its own account (individually or as a partner or fiduciary) or to recommend to others any such particular investment or other opportunity. Any Covered Person, the Delaware Trustee and the Property Trustee may engage or be interested in any financial or other transaction with the Sponsor or any Affiliate of the Sponsor, or may act as depositary for, trustee or agent for, or act on any committee or body of holders of, securities or other obligations of the Sponsor or its Affiliates. ARTICLE XI ACCOUNTING SECTION 11.1 Fiscal Year. The fiscal year ("Fiscal Year") of the Trust shall be the calendar year, or such other year as is required by the Code. SECTION 11.2 Certain Accounting Matters. (a) At all times during the existence of the Trust, the Regular Trustees shall keep, or cause to be kept, full books of account, records and supporting documents which shall reflect, in reasonable detail, each transaction of the Trust. The books of account shall be maintained on the accrual method of accounting, in accordance with generally accepted accounting principles, consistently applied. The Trust shall use the accrual method of accounting for United States federal income tax purposes. -44- 46 (b) The Property Trustee shall cause to be duly prepared and furnished to each Holder any Internal Revenue Service Forms 1099, or any successor forms, containing such information with regard to the Securities held by such Holder as is required by the Code and the Treasury Regulations. Notwithstanding any right under the Code to deliver any such Form 1099 at a later date, the Property Trustee shall endeavor to deliver all such statements within 30 days after the end of each Fiscal Year of the Trust. (c) The Regular Trustees shall cause to be duly prepared and filed with the appropriate taxing authority an annual United States federal income tax return, on a Form 1041 or such other form required by United States federal income tax law, and any other annual income tax returns required to be filed by or on behalf of the Trust with any state or local taxing authority. SECTION 11.3 Banking. The [Regular Trustees] shall maintain one or more bank accounts in the name and for the sole benefit of the Trust; provided, however, that all payments of funds in respect of the Subordinated Debentures held by the Property Trustee shall be made directly to the Property Trustee Account and no other funds of the Trust shall be deposited in the Property Trustee Account. The sole signatories for such accounts shall be designated by the Regular Trustees; provided, however, that the Property Trustee shall designate the signatories for the Property Trustee Account. SECTION 11.4 Withholding. The Trust and the Property Trustee shall comply with all withholding requirements under United States federal, state and local law. The Trust shall request, and the Holders shall provide to the Trust, such forms or certificates as are necessary to establish an exemption from withholding with respect to each Holder, and any representations and forms as shall reasonably be requested by the Trust to assist it in determining the extent of, and in fulfilling, its withholding obligations. The Property Trustee shall file required forms with applicable jurisdictions and, unless an exemption from withholding is properly established by a Holder, shall remit amounts withheld with respect to such Holder to applicable jurisdictions. To the extent that the Trust is required to withhold and pay over any amounts to any authority with respect to distributions or allocations to any Holder, the amount withheld shall be deemed to be a distribution in the amount of the withholding to such Holder. In the event of any claimed overwithholding, Holders shall be limited to an action against the applicable jurisdiction. If the amount required to be withheld was not withheld from actual Distributions made, the Trust may reduce subsequent Distributions by the amount of such withholding. -45- 47 ARTICLE XII AMENDMENTS AND MEETINGS SECTION 12.1 Amendments. (a) Except as otherwise provided in this Declaration or by any applicable terms of the Securities, this Declaration may only be amended by a written instrument approved and executed by: (i) the Regular Trustees (or, if there are more than two Regular Trustees, a majority of the Regular Trustees); (ii) if the amendment affects the rights, powers, duties, obligations or immunities of the Property Trustee, the Property Trustee; and (iii) if the amendment affects the rights, powers, duties, obligations or immunities of the Delaware Trustee, the Delaware Trustee. (b) No amendment shall be made, and any purported amendment shall be void and ineffective: (i) unless, in the case of any proposed amendment, the Property Trustee shall have first received an Officers' Certificate from each of the Trust and the Sponsor that such amendment is permitted by, and conforms to, the terms of this Declaration (including the terms of the Securities set forth in Annex I); (ii) unless, in the case of any proposed amendment which affects the rights, powers, duties, obligations or immunities of the Property Trustee, the Property Trustee shall have first received: (A) an Officers' Certificate from each of the Trust and the Sponsor that such amendment is permitted by, and conforms to, the terms of this Declaration (including the terms of the Securities); and (B) an opinion of counsel (who may be counsel to the Sponsor or the Trust) that such amendment is permitted by, and conforms to, the terms of this Declaration (including the terms of the Securities); and (iii) to the extent the result of such amendment would be to: (A) cause the trust to fail to continue to be classified for purposes of United States federal income taxation as a grantor trust; -46- 48 (B) reduce or otherwise adversely affect the powers of the Property Trustee in contravention of the Trust Indenture Act; or (C) cause the Trust to be deemed to be an Investment Company required to be registered under the Investment Company Act. (c) If the Trust has any Securities outstanding, any amendment that would adversely affect the rights, privileges or preferences of any Holder of such Securities may be effected only with such additional requirements as may be set forth in the terms of such Securities set forth in Annex I. (d) Section 9.1(c) and this Section 12.1 shall not be amended without the consent of all of the Holders of the Securities. (e) Article IV shall not be amended without the consent of the Holders of a Majority in liquidation amount of the Common Securities. (f) The rights of the Holders of the Common Securities under Article V to increase or decrease the number of, and appoint and remove, Trustees shall not be amended without the consent of the Holders of a Majority in liquidation amount of the Common Securities. (g) Notwithstanding Section 12.1(c), this Declaration may be amended without the consent of the Holders of the Securities to: (i) cure any ambiguity; (ii) correct or supplement any provision in this Declaration that may be defective or inconsistent with any other provision of this Declaration; (iii) add to the covenants, restrictions or obligations of the Sponsor; (iv) in the event the Trust is deemed not to be an Investment Company solely by reason of Rule 3a-7, conform to any change in Rule 3a-7 or written change in interpretation or application of Rule 3a-7 by any legislative body, court, government agency or regulatory authority which amendment does not have a material adverse effect on the rights, preferences or privileges of the Holders; and (v) cause the Trust to continue to be classified for purposes of United States federal income taxation as a grantor trust; provided, such amendment does not have a material adverse effect on the rights, preferences or privileges of the Holders. -47- 49 SECTION 12.2 Meetings of the Holders; Action by Written Consent. (a) Meetings of the Holders of any class of Securities may be called at any time by the Regular Trustees (or as provided in the terms of the Securities) to consider and act on any matter on which Holders of such class of Securities are entitled to act under the terms of this Declaration, the terms of the Securities or the rules of any stock exchange on which the Preferred Securities are listed or admitted for trading. The Regular Trustees shall call a meeting of the Holders of such class if directed to do so by the Holders of at least 10% in liquidation amount of such class of Securities. Such direction shall be given by delivering to the Regular Trustees one or more calls in a writing stating that the signing Holders wish to call a meeting and indicating the general or specific purpose for which the meeting is to be called. Any Holders calling a meeting shall specify in writing the Certificates held by the Holders exercising the right to call a meeting and only those Securities specified shall be counted for purposes of determining whether the required percentage set forth in the second sentence of this paragraph has been met. (b) Except to the extent otherwise provided in the terms of the Securities, the following provisions shall apply to meetings of Holders of any class of Securities: (i) notice of any such meeting shall be given to all the Holders of Securities having a right to vote thereat at least 7 days and not more than 60 days before the date of such meeting. Whenever a vote, consent or approval of Holders is permitted or required under this Declaration or the rules of any stock exchange on which the Preferred Securities are listed or admitted for trading, such vote, consent or approval may be given at a meeting of such Holders. Any action that may be taken at a meeting of Holders may be taken without a meeting if a consent in writing setting forth the action so taken is signed by Holders owning not less than the minimum amount of Securities in liquidation amount that would be necessary to authorize or take such action at a meeting at which all Holders of Securities having a right to vote thereon were present and voting. Prompt notice of the taking of action without a meeting shall be given to the Holders of Securities entitled to vote who have not consented in writing. The Regular Trustees may specify that any written consent submitted to Holders for the purpose of taking any action without a meeting shall be returned to the Trust within the time specified by the Regular Trustees; (ii) each Holder may authorize any Person to act for it by proxy on all matters in which such Holder is entitled to participate, including waiving notice of any meeting, or voting or participating at a meeting. No proxy shall be -48- 50 valid after the expiration of 11 months from the date thereof unless otherwise provided in the proxy. Except as otherwise required by law, every proxy shall be revocable at the pleasure of the Holder executing it. Except as otherwise provided herein, all matters relating to the giving, voting or validity of proxies shall be governed by the General Corporation Law of the State of Delaware relating to proxies, and judicial interpretations thereunder, as if the Trust were a Delaware corporation and the Holders were stockholders of a Delaware corporation; (iii) each meeting of Holders shall be conducted by the Regular Trustees or by such other Person that the Regular Trustees may designate; and (iv) unless the Business Trust Act, this Declaration, the terms of the Securities, the Trust Indenture Act or the listing rules of any stock exchange on which the Preferred Securities are then listed or trading otherwise provides, the Regular Trustees, in their sole discretion, shall establish all other provisions relating to meetings of Holders, including notice of the time, place or purpose of any meeting at which any matter is to be voted on by any Holders, waiver of any such notice, action by consent without a meeting, the establishment of a record date, quorum requirements, voting in person or by proxy or any other matter with respect to the exercise of any such right to vote. ARTICLE XIII REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE SECTION 13.1 Representations and Warranties of Property Trustee. The Trustee that acts as initial Property Trustee represents and warrants to the Trust and to the Sponsor at the date of this Declaration, and each Successor Property Trustee represents and warrants to the Trust and the Sponsor at the time of the Successor Property Trustee's acceptance of its appointment as Property Trustee, that: (a) the Property Trustee is a banking corporation or association with trust powers, duly organized, validly existing and in good standing under the laws of a state of the United States or of the United States, with trust power and authority to execute and deliver, and to carry out and perform its obligations under the terms of, the Declaration; (b) the execution, delivery and performance by the Property Trustee of the Declaration has been duly authorized by all necessary corporate action on the part of the Property -49- 51 Trustee. The Declaration has been duly executed and delivered by the Property Trustee, and it constitutes a legal, valid and binding obligation of the Property Trustee, enforceable against it in accordance with its terms, subject to applicable bankruptcy, reorganization, moratorium, insolvency, and other similar laws affecting creditors' rights generally and to general principles of equity and the discretion of the court (regardless of whether the enforcement of such remedies is considered in a proceeding in equity or at law); (c) the execution, delivery and performance of the Declaration by the Property Trustee does not conflict with or constitute a breach of the charter or by-laws of the Property Trustee; and (d) no consent, approval or authorization of, or registration with or notice to, any State or federal banking authority is required for the execution, delivery or performance by the Property Trustee of the Declaration. SECTION 13.2 Representations and Warranties of Delaware Trustee. The Trustee that acts as initial Delaware Trustee represents and warrants to the Trust and to the Sponsor at the date of this Declaration, and each Successor Delaware Trustee represents and warrants to the Trust and the Sponsor at the time of the Successor Delaware Trustee's acceptance of its appointment as Delaware Trustee, that: (a) the Delaware Trustee is a Delaware banking corporation with trust powers, duly organized, validly existing and in good standing under the laws of the State of Delaware, with trust power and authority to execute and deliver, and to carry out and perform its obligations under the terms of, the Declaration; (b) the Delaware Trustee has been authorized to perform its obligations under the Certificate of Trust and the Declaration. The Declaration under Delaware law constitutes a legal, valid and binding obligation of the Delaware Trustee, enforceable against it in accordance with its terms, subject to applicable bankruptcy, reorganization, moratorium, insolvency, and other similar laws affecting creditors' rights generally and to general principles of equity and the discretion of the court (regardless of whether the enforcement of such remedies is considered in a proceeding in equity or at law); (c) no consent, approval or authorization of, or registration with or notice to, any State or Federal banking authority is required for the execution, delivery or performance by the Delaware Trustee of the Declaration; and -50- 52 (d) the Delaware Trustee has its principal place of business in the State of Delaware. ARTICLE XIV MISCELLANEOUS SECTION 14.1 Notices. All notices provided for in this Declaration shall be in writing, duly signed by the party giving such notice, and shall be delivered, telecopied or mailed by first-class mail, as follows: (a) if given to the Trust, in care of the Regular Trustees at the Trust's mailing address set forth below (or such other address as the Trust may give notice of to the Holders): Ohio Edison Financing Trust II c/o Ohio Edison Company 76 South Main Street Akron, Ohio 44308 Attention: Trustees Facsimile No: (330) 384-3772 (b) if given to the Delaware Trustee, at the mailing address set forth below (or such other address as the Delaware Trustee may give notice of to the Holders): The Bank of New York (Delaware) 400 White Clay Center Newark, Delaware 19711 Attention: (c) if given to the Property Trustee, at the mailing address set forth below (or such other address as the Property Trustee may give notice of to the Holders): The Bank of New York 101 Barclay Street, Floor 21 West New York, New York 10286 Attention: Corporate Trust Administration (d) if given to the Holder of the Common Securities, at the mailing address of the Sponsor set forth below (or such other address as the Holder of the Common Securities may give notice of to the Trust): Ohio Edison Company 76 South Main Street Akron, Ohio 44308 Attention: Treasurer Facsimile No: (330) 384-3772 -51- 53 (e) if given to any other Holder, at the address set forth on the books and records of the Trust. All such notices shall be deemed to have been given when received in person, telecopied with receipt confirmed, or mailed by first class mail, postage prepaid, except that if a notice or other document is refused delivery or cannot be delivered because of a changed address of which no notice was given, such notice or other document shall be deemed to have been delivered on the date of such refusal or inability to deliver. SECTION 14.2 Governing Law. This Declaration and the rights of the parties hereunder shall be governed by and interpreted in accordance with the laws of the State of Delaware and all rights and remedies shall be governed by such laws without regard to principles of conflict of laws. SECTION 14.3 Intention of the Parties. It is the intention of the parties hereto that the Trust be classified for United States federal income tax purposes as a grantor trust. The provisions of this Declaration shall be interpreted to further this intention of the parties. SECTION 14.4 Headings. Headings contained in this Declaration are inserted for convenience of reference only and do not affect the interpretation of this Declaration or any provision hereof. SECTION 14.5 Successors and Assigns Whenever in this Declaration any of the parties hereto is named or referred to, the successors and assigns of such party shall be deemed to be included, and all covenants and agreements in this Declaration by the Sponsor and the Trustees shall bind and inure to the benefit of their respective successors and assigns, whether so expressed. SECTION 14.6 Partial Enforceability. If any provision of this Declaration, or the application of such provision to any Person or circumstance, shall be held invalid, the remainder of this Declaration, or the application of such provision to persons or circumstances other than those to which it is held invalid, shall not be affected thereby. SECTION 14.7 Counterparts. This Declaration may contain more than one counterpart of the signature page and this Declaration may be executed by the affixing of the signature of each of the Trustees to one of such -52- 54 counterpart signature pages. All of such counterpart signature pages shall be read as though one, and they shall have the same force and effect as though all of the signers had signed a single signature page. -53- 55 IN WITNESS WHEREOF, the undersigned has caused this Declaration to be executed as of the day and year first above written. ----------------------------------- R.H. Marsh, as Regular Trustee ----------------------------------- T.F. Struck, II, as Regular Trustee THE BANK OF NEW YORK (DELAWARE), as Delaware Trustee By: -------------------------------- Name: Title: THE BANK OF NEW YORK, as Property Trustee By: -------------------------------- Name: Title: OHIO EDISON COMPANY, as Sponsor By: -------------------------------- Name: Title: -54- 56 ANNEX I TERMS OF _____% TRUST ORIGINATED PREFERRED SECURITIES _____% TRUST ORIGINATED COMMON SECURITIES Further to Section 7.1 of the Amended and Restated Declaration of Trust, dated as of ___________, 1996 (as amended from time to time, the "Declaration"), the designation, rights, privileges, restrictions, preferences and other terms and provisions of the Preferred Securities and the Common Securities are set out below (each capitalized term used but not defined herein has the meaning set forth in the Declaration or, if not defined in such Declaration, as defined in the Prospectus referred to below): 1. Designation and Number. (a) Preferred Securities. __________ Preferred Securities of the Trust with an aggregate liquidation amount with respect to the assets of the Trust of ____________________ dollars ($___________) and a liquidation amount with respect to the assets of the Trust of $25 per preferred security, are hereby designated for the purposes of identification only as "_____% Trust Originated Preferred Securities(sm) ('TOPrS'(sm))" (the "Preferred Securities"). The Preferred Security Certificates evidencing the Preferred Securities shall be substantially in the form of Exhibit A-1 to the Declaration, with such changes and additions thereto or deletions therefrom as may be required by ordinary usage, custom or practice or to conform to the rules of any stock exchange on which the Preferred Securities are listed. (b) Common Securities. ____________ Common Securities of the Trust with an aggregate liquidation amount with respect to the assets of the Trust of ___________________ dollars ($___________) and a liquidation amount with respect to the assets of the Trust of $25 per common security, are hereby designated for the purposes of identification only as "_____% Trust Originated Common Securities" (the "Common Securities"). The Common Security Certificates evidencing the Common Securities shall be substantially in the form of Exhibit A-2 to the Declaration, with such changes and additions thereto or deletions therefrom as may be required by ordinary usage, custom or practice. 2. Distributions. (a) Distributions payable on each Security will be fixed at a rate per annum of _____% (the "Coupon Rate") of the stated liquidation amount of $25 per Security, such rate being the rate of interest payable on the Subordinated Debentures to be I-1 57 held by the Property Trustee. Distributions that are in arrears for more than one quarter (whether due to an extension of the interest payment period for the Subordinated Debentures under the Indenture or otherwise) will accrue interest at the Coupon Rate and the interest so accrued at the end of each quarter and remaining unpaid will itself bear interest thereafter at the Coupon Rate (to the extent permitted by applicable law) until paid on the same basis. The term "Distributions" as used herein includes such cash distributions and any such interest payable unless otherwise stated. A Distribution is payable only to the extent that payments are made in respect of the Subordinated Debentures held by the Property Trustee and to the extent the Property Trustee has funds available therefor. The amount of Distributions payable (and the amount, if any, of interest payable, including interest on overdue interest) for any period will be computed for any full quarterly Distribution period on the basis of a 360-day year of twelve 30-day months, and for any period shorter than a full quarterly Distribution period for which Distributions are computed, Distributions will be computed on the basis of the actual number of days elapsed per 90-day quarter. (b) Distributions on the Securities will be cumulative, will accrue from the date of original issuance, and will be payable quarterly in arrears on March 31, June 30, September 30, and December 31 of each year, commencing on ________, 1996, except as otherwise described below. [The initial Distribution on the Securities, payable on ________, 1996, will be based on a period shorter than a full quarter (_______ to _______, 1996) and will be in the amount of $___ per Security.] In addition, holders of Securities will be entitled to an additional cash distribution at the rate of 7.75% per annum of the liquidation amount thereof from ___________, 1996 through ____________, 1996, payable on ___________, 1996 to holders of the Preferred Securities on the record date for such Distribution payment date ("Pre-Issuance Interest"). With the exception of interest on the Subordinated Debentures corresponding to Pre-Issuance Interest, so long as the Subordinated Debenture Issuer is not in default under the Indenture, the Subordinated Debenture Issuer has the right under the Indenture to defer payments of interest by extending the interest payment period from time to time on the Subordinated Debentures for a period not exceeding 20 consecutive quarters (each an "Extension Period"), provided that no Extension Period shall last beyond the date of maturity of the Subordinated Debentures. As a consequence of such deferral, Distributions will also be deferred. Despite such deferral, quarterly Distributions will continue to accrue with interest thereon (to the extent permitted by applicable law) at the Coupon Rate, and the interest so accrued at the end of each quarter and remaining unpaid will itself bear interest thereafter (to the extent permitted by applicable law) until paid on the same basis, during any such Extension Period. Prior to the termination of any such Extension Period, the Subordinated Debenture Issuer may further extend such Extension Period; provided that such Extension Period I-2 58 together with all such previous and further extensions thereof may not exceed 20 consecutive quarters or last beyond the date of maturity of the Subordinated Debentures. Payments of accrued Distributions will be payable to Holders as they appear on the books and records of the Trust on the first record date for the payment of Distributions after the end of the Extension Period. Upon the termination of any Extension Period and the payment of all amounts then due, the Subordinated Debenture Issuer may commence a new Extension Period, subject to the above requirements. (c) Distributions on the Securities will be payable to the Holders thereof as they appear in the securities register kept by the Transfer Agent and Registrar pursuant to Section 9.2 of the Declaration on the relevant record dates, which will be 15 calendar days prior to the applicable payment dates, which payment dates and record dates correspond to the interest payment dates and record dates on the Subordinated Debentures. The relevant record dates for the Common Securities shall be the same record dates as for the Preferred Securities. Payment of Distributions will be payable at the office or agency maintained pursuant to Section 9.9 of the Declaration; provided that payment of Distributions may be made at the option of the Regular Trustees on behalf of the Trust by check mailed to the address of the persons entitled thereto. Distributions payable on any Securities that are not punctually paid on any Distribution payment date, as a result of the Subordinated Debenture Issuer having failed to make a payment under the Subordinated Debentures, will cease to be payable to the Person in whose name such Securities are registered on the relevant regular record date, and such defaulted Distribution will instead be payable to the Person in whose name such Securities are registered on the special record date or other specified date determined in accordance with the Indenture for the making of such payment. If any date on which Distributions are payable on the Securities is not a Business Day, then payment of the Distribution payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay) except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date. (d) In the event that there is any money or other property held by or for the Trust that is not accounted for hereunder, such property shall be distributed Pro Rata (as defined herein) among the Holders of the Securities. 3. Liquidation Distribution Upon Dissolution. In the event of any voluntary or involuntary dissolution, winding-up or termination of the Trust, the Holders on the date of the dissolution, winding-up or termination, as the case may be, will be entitled to receive out of the assets of the I-3 59 Trust available for distribution to Holders after satisfaction of liabilities of creditors an amount equal to the aggregate of the stated liquidation amount of $25 per Security plus accrued and unpaid Distributions thereon to the date of payment (such amount being the "Liquidation Distribution"), unless, in connection with such dissolution, winding-up or termination, Subordinated Debentures in an aggregate principal amount equal to the aggregate stated liquidation amount of such Securities, with an interest rate equal to the Coupon Rate of, and bearing accrued and unpaid interest in an amount equal to the accrued and unpaid Distributions on, such Securities, shall be distributed on a Pro Rata basis to the Holders of the Securities in exchange for such Securities. If, upon any such dissolution, the Liquidation Distribution can be paid only in part because the Trust has insufficient assets available to pay in full the aggregate Liquidation Distribution, then the amounts payable directly by the Trust on the Securities shall be paid on a Pro Rata basis. 4. Redemption and Distribution. (a) Upon the repayment of the Subordinated Debentures in whole or in part, whether at maturity or upon redemption, the proceeds from such repayment or payment shall be simultaneously applied to redeem Securities having an aggregate liquidation amount equal to the aggregate principal amount of the Subordinated Debentures so repaid or redeemed at a redemption price of $25 per Security plus an amount equal to accrued and unpaid Distributions thereon at the date of the redemption, payable in cash (the "Redemption Price"). Holders will be given not less than 30 nor more than 60 days notice of such redemption. (b) If fewer than all the outstanding Securities are to be so redeemed, the Common Securities and the Preferred Securities will be redeemed Pro Rata and the procedure for redeeming Preferred Securities will be as described in Section 4(f)(ii) below. (c) If, at any time, a Tax Event or an Investment Company Event (each as defined below, and each a "Special Event") shall occur and be continuing, the Regular Trustees shall, except in certain limited circumstances in relation to a Tax Event described in this Section 4(c), dissolve the Trust and, after satisfaction of creditors, cause Subordinated Debentures held by the Property Trustee, having an aggregate principal amount equal to the aggregate stated liquidation amount of, with an interest rate identical to the Coupon Rate of, and accrued and unpaid interest equal to accrued and unpaid Distributions on, and having the same record date for payment as, the Securities, to be distributed to the Holders in liquidation of such Holders' interests in the Trust on a Pro Rata basis, within 90 days following the occurrence of such Special Event (the "90 Day Period"); provided, however, that in the case of the occurrence I-4 60 of a Tax Event, as a condition of such dissolution and distribution, the Regular Trustees shall have received an opinion of a nationally recognized independent tax counsel experienced in such matters (a "No Recognition Opinion"), which opinion may rely on published revenue rulings of the Internal Revenue Service, to the effect that neither the Trust nor the Holders will recognize any gain or loss for United States federal income tax purposes as a result of the dissolution of the Trust and the distribution of Subordinated Debentures, and provided, further, that, if at the time there is available to the Trust the opportunity to eliminate, within the 90 Day Period, the Special Event by taking some ministerial action, such as filing a form or making an election, or pursuing some other similar reasonable measure that has no adverse effect on the Trust, the Subordinated Debenture Issuer, the Sponsor or the Holders ("Ministerial Action"), the Trust will pursue such Ministerial Action in lieu of dissolution. If (i) in the event of a Tax Event, after receipt of a Tax Event Opinion (as defined hereinafter) by the Regular Trustees, the Subordinated Debenture Issuer has received an opinion (a "Redemption Tax Opinion") of a nationally recognized independent tax counsel experienced in such matters that, as a result of a Tax Event, there is more than an insubstantial risk that the Subordinated Debenture Issuer would be precluded from deducting the interest on the Subordinated Debentures for United States federal income tax purposes even if the Subordinated Debentures were distributed to the Holders in liquidation of such Holders' interests in the Trust as described in this Section 4(c), or (ii) in the event of any Special Event, after receipt of a Tax Event Opinion or Investment Company Event Opinion (as defined hereinafter), as the case may be, the Regular Trustees shall have been informed by such tax counsel that a No Recognition Opinion cannot be delivered to the Trust, the Subordinated Debenture Issuer shall have the right at any time, upon not less than 30 nor more than 60 days' notice, to redeem the Subordinated Debentures in whole or in part for cash within 90 days following the occurrence of such Special Event, and, following such redemption, Securities with an aggregate liquidation amount equal to the aggregate principal amount of the Subordinated Debentures so redeemed shall be redeemed by the Trust at the Redemption Price on a Pro Rata basis; provided, however, that, if at the time there is available to the Trust the opportunity to eliminate, within such 90 day period, the Special Event by taking some Ministerial Action, the Trust or the Subordinated Debenture Issuer will pursue such Ministerial Action in lieu of redemption. "Tax Event" means the receipt by the Regular Trustees of an opinion of a nationally recognized independent tax counsel experienced in such matters (a "Tax Event Opinion") to the effect that, on or after the date of the Prospectus, as a result of (a) any amendment to, or change (including any announced prospective change) in, the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority I-5 61 thereof or therein or (b) any amendment to, or change in, an interpretation or application of such laws or regulations by any legislative body, court, governmental agency or regulatory authority, in each case which amendment or change is enacted, promulgated, issued or announced on or after the date of the Prospectus, there is more than an insubstantial risk that (i) the Trust is, or will be, within 90 days of the date thereof, subject to United States federal income tax with respect to interest accrued or received on the Subordinated Debentures, (ii) interest payable by the Subordinated Debenture Issuer to the Trust on the Subordinated Debentures is not, or within 90 days of the date thereof will not be, deductible, in whole or in part, by the Subordinated Debenture Issuer for United States federal income tax purposes or (iii) the Trust is, or will be, within 90 days of the date thereof, subject to more than a de minimis amount of taxes, duties or other governmental charges. "Investment Company Event" means that the Regular Trustees shall have received an opinion of a nationally recognized independent counsel experienced in practice under the Investment Company Act (an "Investment Company Event Opinion") to the effect that, as a result of the occurrence of a change in law or regulation or a written change in interpretation or application of law or regulation by any legislative body, court, governmental agency or regulatory authority (a "Change in 1940 Act Law"), there is more than an insubstantial risk that the Trust is or will be considered an Investment Company which is required to be registered under the Investment Company Act, which Change in 1940 Act Law becomes effective on or after the date of the Prospectus. On and from the date fixed by the Regular Trustees for any distribution of Subordinated Debentures and dissolution of the Trust: (i) the Securities will no longer be deemed to be outstanding and (ii) the Certificates representing Securities will be deemed to represent beneficial interests in the Subordinated Debentures having an aggregate principal amount equal to the aggregate stated liquidation amount of, with an interest rate identical to the Coupon Rate of, and accrued and unpaid interest equal to accrued and unpaid Distributions on, such Securities until such certificates are surrendered or presented to the Subordinated Debenture Issuer or its agent for transfer or reissue. (d) The Trust may not redeem fewer than all the outstanding Securities unless all accrued and unpaid Distributions have been paid on all Securities for all quarterly Distribution periods terminating on or before the date of redemption. (e) If the Subordinated Debentures are distributed to Holders of the Securities, pursuant to the terms of the Indenture the Subordinated Debenture Issuer will use its best efforts to have the Subordinated Debentures listed on the New York Stock Exchange or on such other exchange or the Nasdaq I-6 62 National Market as the Preferred Securities were listed immediately prior to the distribution of the Subordinated Debentures. (f) The following provisions shall apply to any call for redemption of Securities or any distribution of Subordinated Debentures to Holders: (i) Notice of any redemption of, or notice of distribution of Subordinated Debentures in exchange for, Securities (a "Redemption/Distribution Notice") will be given by the Trust by mail to each Holder of Securities to be redeemed or exchanged not fewer than 30 nor more than 60 days before the date fixed for redemption or exchange thereof which, in the case of a redemption, will be the date fixed for redemption of the Subordinated Debentures. For purposes of the calculation of the date of redemption or exchange and the dates on which notices are given pursuant to this Section 4(f)(i), a Redemption/Distribution Notice shall be deemed to be given on the day such notice is first mailed by first-class mail, postage prepaid, to Holders. Each Redemption/Distribution Notice shall be addressed to each Holder at the address of such Holder appearing in the books and records of the Trust. No defect in the Redemption/Distribution Notice or in the mailing of either thereof with respect to any Holder shall affect the validity of the redemption or exchange proceedings with respect to any other Holder. (ii) In the event that fewer than all the outstanding Securities are to be redeemed, the Securities to be redeemed shall be redeemed Pro Rata from each Holder of Securities. (iii) If Securities are to be redeemed and the Trust gives a Redemption/Distribution Notice, which notice may only be issued if the Subordinated Debentures are redeemed as set out in this Section 4 (which notice will be irrevocable), then (A) with respect to the Preferred Securities in book-entry form, by 12:00 noon, New York City time, on the redemption date, the Property Trustee will deposit irrevocably with the appropriate Clearing Agency or its nominee funds sufficient to pay the applicable Redemption Price with respect to such Preferred Securities and will give such Clearing Agency irrevocable instructions and authority to pay the Redemption Price to the Holders of such Preferred Securities, provided that the Subordinated Debenture Issuer has deposited with the Property Trustee a sufficient amount of cash in connection with the related redemption or maturity of the Subordinated Debentures prior to such time, and (B) with respect to Preferred Securities issued in definitive form and Common Securities, the Property Trustee will pay the relevant Redemption Price to the Holders of such Securities by check mailed to the address of the relevant Holder appearing on the books and I-7 63 records of the Trust on the redemption date, provided that the Subordinated Debenture Issuer has deposited with the Property Trustee a sufficient amount of cash in connection with the related redemption or maturity of the Subordinated Debentures, prior to such mailing. If a Redemption/Distribution Notice shall have been given and funds deposited with the Property Trustee on or before the redemption date as required, then immediately prior to the close of business on the redemption date Distributions will cease to accrue on the Securities so called for redemption and all rights of Holders of such Securities so called for redemption will cease, except the right of the Holders of such Securities to receive the Redemption Price, but without interest on such Redemption Price. Neither the Regular Trustees nor the Trust shall be required to register or cause to be registered the transfer of any Securities that have been so called for redemption. If any date fixed for redemption of Securities is not a Business Day, then payment of the Redemption Price payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay) except that, if such Business Day falls in the next calendar year, such payment will be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date fixed for redemption. If payment of the Redemption Price in respect of any Securities is improperly withheld or refused and not paid on the redemption date either by the Property Trustee or by the Sponsor as guarantor pursuant to the relevant Securities Guarantee, Distributions on such Securities will continue to accrue from the original redemption date to the actual date of payment, in which case the actual payment date will be considered the date fixed for redemption for purposes of calculating the Redemption Price. (iv) Redemption/Distribution Notices shall be sent by the Regular Trustees on behalf of the Trust to (A) in respect of the Preferred Securities, the Depository or its nominee (or any successor Clearing Agency or its nominee) if the Global Certificates have been issued or, if Definitive Preferred Security Certificates have been issued, to the Holders thereof at their addresses appearing on the books and records of the Trust, and (B) in respect of the Common Securities to the Holder thereof. (v) Subject to the foregoing and applicable law (including, without limitation, United States federal securities laws), provided the acquiror is not the Holder of the Common Securities or the obligor under the Indenture, the Sponsor or any of its subsidiaries may at any time and from time to time purchase outstanding Preferred Securities by tender, in the open market or by private agreement. I-8 64 5. Voting Rights - Preferred Securities. (a) Except as provided under Sections 5(b) and 7 and as otherwise required by law and the Declaration, the Holders of the Preferred Securities will have no voting rights. (b) Subject to the requirements set forth in this paragraph, the Holders of a Majority in liquidation amount of the Preferred Securities, voting separately as a class, may direct the time, method, and place of conducting any proceeding for any remedy available to the Property Trustee, or exercising any trust or power conferred upon the Property Trustee under the Declaration, including (i) directing the time, method, place of conducting any proceeding for any remedy available to the Subordinated Debenture Trustee, or exercising any trust or power conferred on the Subordinated Debenture Trustee with respect to the Subordinated Debentures, (ii) waive any past default and its consequences that is waivable under Section 6.04 of the Indenture, or (iii) exercise any right to rescind or annul a declaration that the principal of all the Subordinated Debentures shall be due and payable, provided, however, that, where a consent under the Indenture would require the consent or act of the Holders of greater than a majority in principal amount of Subordinated Debentures affected thereby (a "Super Majority"), the Property Trustee may only give such consent or take such action at the direction of the Holders of at least the proportion in liquidation amount of the Preferred Securities outstanding which the relevant Super Majority represents of the aggregate principal amount of the Subordinated Debentures outstanding. The Property Trustee shall not revoke any action previously authorized or approved by a vote of the Holders of the Preferred Securities. Other than with respect to directing the time, method and place of conducting any remedy available to the Property Trustee or the Subordinated Debenture Trustee as set forth above, the Property Trustee shall not take any action in accordance with the directions of the Holders of the Preferred Securities under this paragraph unless the Property Trustee has obtained an opinion of tax counsel to the effect that for the purposes of United States federal income tax the Trust will not be classified as other than a grantor trust on account of such action. If the Property Trustee fails to enforce its rights under the Declaration, any Holder of Preferred Securities may, to the extent permitted by applicable law, institute a legal proceeding directly against any Person to enforce the Property Trustee's rights under the Declaration without first instituting a legal proceeding against the Property Trustee or any other Person. If an Event of Default occurs that results from the failure of the Subordinated Debenture Issuer to pay principal of or interest on the Subordinated Debentures when due, then during the continuance of such Event of Default each Holder of Preferred Securities may directly institute proceedings against the Subordinated Debenture Issuer to obtain payment to such Holder of an amount equal to the principal or interest so defaulted on with respect to Subordinated Debentures in a principal amount equal to I-9 65 the aggregate liquidation amount of the Preferred Securities owned by such Holder. No Holder of Preferred Securities will be entitled to exercise directly against the Subordinated Debenture Issuer any other remedy available to the Property Trustee, as the record holder of the Subordinated Debentures, unless the Property Trustee first fails to exercise such remedy. Any approval or direction of Holders of Preferred Securities may be given at a separate meeting of Holders of Preferred Securities convened for such purpose, at a meeting of all of the Holders of Securities in the Trust or pursuant to written consent. The Regular Trustees will cause a notice of any meeting at which Holders of Preferred Securities are entitled to vote, or of any matter upon which action by written consent of such Holders is to be taken, to be mailed to each Holder of record of Preferred Securities. Each such notice will include a statement setting forth (i) the date of such meeting or the date by which such action is to be taken, (ii) a description of any resolution proposed for adoption at such meeting on which such Holders are entitled to vote or of such matter upon which written consent is sought and (iii) instructions for the delivery of proxies or consents. No vote or consent of the Holders of the Preferred Securities will be required for the Trust to redeem and cancel Preferred Securities or to distribute the Subordinated Debentures in accordance with the Declaration and the terms of the Securities. Notwithstanding that Holders of Preferred Securities are entitled to vote or consent under any of the circumstances described above, any of the Preferred Securities that are owned by the Sponsor or any Affiliate of the Sponsor shall not be entitled to vote or consent and shall, for purposes of such vote or consent, be treated as if they were not outstanding. 6. Voting Rights - Common Securities. (a) Except as provided under Sections 6(b), (c) and 7 or as otherwise required by law and the Declaration, the Holders of the Common Securities will have no voting rights. (b) The Holders of the Common Securities are entitled, in accordance with Article V of the Declaration, to vote to appoint, remove or replace any Trustee or to increase or decrease the number of Trustees. (c) Subject to Section 2.6 of the Declaration and only after all Events of Default with respect to the Preferred Securities have been cured, waived, or otherwise eliminated, the Holders of a Majority in liquidation amount of the Common Securities, voting separately as a class, may direct the time, method, and place of conducting any proceeding for any remedy available to the Property Trustee, or exercising any trust or I-10 66 power conferred upon the Property Trustee under the Declaration, including (i) directing the time, method, place of conducting any proceeding for any remedy available to the Subordinated Debenture Trustee, or exercising any trust or power conferred on the Subordinated Debenture Trustee with respect to the Subordinated Debentures, (ii) waive any past default and its consequences that is waivable under Section 6.04 of the Indenture, or (iii) exercise any right to rescind or annul a declaration that the principal of all the Subordinated Debentures shall be due and payable, provided that, where a consent or action under the Indenture would require the consent or act of the Holders of a Super Majority, the Property Trustee may only give such consent or take such action at the direction of the Holders of at least the proportion in liquidation amount of the Common Securities outstanding which the relevant Super Majority represents of the aggregate principal amount of the Subordinated Debentures outstanding. Notwithstanding any vote pursuant to this Section 6(c), the Property Trustee shall not revoke any action previously authorized or approved by a vote of the Holders of the Preferred Securities. Other than with respect to directing the time, method and place of conducting any remedy available to the Property Trustee or the Subordinated Debenture Trustee as set forth above, the Property Trustee shall not take any action in accordance with the directions of the Holders of the Common Securities under this paragraph unless the Property Trustee has obtained an opinion of tax counsel to the effect that for the purposes of United States federal income tax the Trust will not be classified as other than a grantor trust on account of such action. If the Property Trustee fails to enforce its rights under the Declaration, any Holder of Common Securities may, to the extent permitted by applicable law, institute a legal proceeding directly against any Person to enforce the Property Trustee's rights under the Declaration, without first instituting a legal proceeding against the Property Trustee or any other Person. Any approval or direction of Holders of Common Securities may be given at a separate meeting of Holders of Common Securities convened for such purpose, at a meeting of all of the Holders of Securities in the Trust or pursuant to written consent. The Regular Trustees will cause a notice of any meeting at which Holders of Common Securities are entitled to vote, or of any matter upon which action by written consent of such Holders is to be taken, to be mailed to each Holder of record of Common Securities. Each such notice will include a statement setting forth (i) the date of such meeting or the date by which such action is to be taken, (ii) a description of any resolution proposed for adoption at such meeting on which such Holders are entitled to vote or of such matter upon which written consent is sought and (iii) instructions for the delivery of proxies or consents. No vote or consent of the Holders of the Common Securities will be required for the Trust to redeem and cancel Common I-11 67 Securities or to distribute the Subordinated Debentures in accordance with the Declaration and the terms of the Securities. 7. Amendments to Declaration and Indenture. (a) In addition to any requirements under Section 12.1 of the Declaration, if any proposed amendment to the Declaration provides for, or the Regular Trustees otherwise propose to effect, (i) any action that would adversely affect the powers, preferences or special rights of the Securities, whether by way of amendment to the Declaration or otherwise, or (ii) the dissolution, winding-up or termination of the Trust, other than under the circumstances described in Section 8.1 of the Declaration, then the Holders of outstanding Securities will be entitled to vote on such amendment or proposal (but not on any other amendment or proposal) and such amendment or proposal shall not be effective except with the approval of the Holders of at least a Majority in liquidation amount of the Securities, voting together as a single class; provided, however, if any amendment or proposal referred to in clause (i) above would adversely affect only the Preferred Securities or only the Common Securities, then only the affected class will be entitled to vote on such amendment or proposal and such amendment or proposal shall not be effective except with the approval of a Majority in liquidation amount of such class of Securities. (b) In the event the consent of the Property Trustee as the holder of the Subordinated Debentures is required under the Indenture with respect to any amendment, modification or termination of the Indenture or the Subordinated Debentures, the Property Trustee shall request the direction of the Holders of the Securities with respect to such amendment, modification or termination and shall vote with respect to such amendment, modification or termination as directed by a Majority in liquidation amount of the Securities voting together as a single class; provided, however, that where a consent under the Indenture would require the consent of the holders of a Super Majority, the Property Trustee may only give such consent at the direction of the Holders of at least the proportion in liquidation amount of the Securities which the relevant Super Majority represents of the aggregate principal amount of the Subordinated Debentures outstanding; provided, further, that the Property Trustee shall not take any action in accordance with the directions of the Holders of the Securities under this Section 7(b) unless the Property Trustee has obtained an opinion of tax counsel to the effect that for the purposes of United States federal income tax the Trust will not be classified as other than a grantor trust on account of such action. 8. Pro Rata. A reference in these terms of the Securities to any payment, distribution or treatment as being "Pro Rata" shall mean pro rata to each Holder of Securities according to the aggregate I-12 68 liquidation amount of the Securities held by the relevant Holder in relation to the aggregate liquidation amount of all Securities outstanding unless, in relation to a payment, an Event of Default under the Declaration in respect of the Preferred Securities has occurred and is continuing, in which case any funds available to make such payment shall be paid first to each Holder of the Preferred Securities pro rata according to the aggregate liquidation amount of Preferred Securities held by the relevant Holder relative to the aggregate liquidation amount of all Preferred Securities outstanding, and only after satisfaction of all amounts owed to the Holders of the Preferred Securities, then to each Holder of Common Securities pro rata according to the aggregate liquidation amount of Common Securities held by the relevant Holder relative to the aggregate liquidation amount of all Common Securities outstanding. 9. Ranking. The Preferred Securities rank pari passu, and payment thereon shall be made Pro Rata, with the Common Securities except that, where an Event of Default occurs and is continuing under the Indenture in respect of the Subordinated Debentures held by the Property Trustee, the rights of Holders of the Common Securities to payment in respect of Distributions and payments upon liquidation, redemption and otherwise are subordinated to the rights to payment of the Holders of the Preferred Securities. 10. Listing. The Regular Trustees shall use their best efforts to cause the Preferred Securities to be listed for quotation on the New York Stock Exchange, Inc. 11. Acceptance of Securities Guarantee and Indenture. Each Holder of Preferred Securities and Common Securities, by the acceptance thereof, agrees to the provisions of the Preferred Securities Guarantee and the Common Securities Guarantee, respectively, including the subordination provisions therein and to the provisions of the Indenture. 12. No Preemptive Rights. The Holders of the Securities shall have no preemptive rights to subscribe for any additional securities. 13. Miscellaneous. These terms constitute a part of the Declaration. The Sponsor will provide a copy of the Declaration, the Preferred Securities Guarantee or the Common Securities Guarantee (as may be appropriate) and the Indenture to a Holder without I-13 69 charge on written request to the Sponsor at its principal place of business. I-14 70 EXHIBIT A-1 FORM OF PREFERRED SECURITY CERTIFICATE [IF THE PREFERRED SECURITY IS TO BE A GLOBAL CERTIFICATE INSERT - This Preferred Security is a Global Certificate within the meaning of the Declaration hereinafter referred to and is registered in the name of The Depository Trust Company (the "Depositary") or a nominee of the Depositary. This Preferred Security is exchangeable for Preferred Securities registered in the name of a person other than the Depositary or its nominee only in the limited circumstances described in the Declaration and no transfer of this Preferred Security (other than a transfer of this Preferred Security as a whole by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary) may be registered except in limited circumstances. Unless this Preferred Security is presented by an authorized representative of The Depository Trust Company (55 Water Street, New York, New York) to the Trust or its agent for registration of transfer, exchange or payment, and any Preferred Security issued is registered in the name of Cede & Co. or such other name as requested by an authorized representative of The Depository Trust Company and any payment hereon is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein.] Certificate Number Number of Preferred Securities CUSIP NO. __________ Certificate Evidencing Preferred Securities of Ohio Edison Financing Trust II _____% Trust Originated Preferred Securities (liquidation amount $25 per Preferred Security) Ohio Edison Financing Trust II, a statutory business trust formed under the laws of the State of Delaware (the "Trust"), hereby certifies that (the "Holder") is the registered owner of _______ preferred securities of the Trust representing an undivided beneficial interest in the assets of the Trust designated the _____% Trust Originated Preferred Securities (liquidation amount $25 per Preferred Security) (the "Preferred Securities"). The Preferred A-1-1 71 Securities are transferable on the books and records of the Trust, in person or by a duly authorized attorney, upon surrender of this certificate duly endorsed and in proper form for transfer. The designations, rights, privileges, restrictions, preferences and other terms and provisions of the Preferred Securities are set forth in, and this certificate and the Preferred Securities represented hereby are issued and shall in all respects be subject to the terms and provisions of, the Amended and Restated Declaration of Trust of the Trust dated as of ___________, 1996, as the same may be amended from time to time (the "Declaration") including the designation of the terms of Preferred Securities as set forth in Annex I to the Declaration. The Preferred Securities and the Common Securities issued by the Trust pursuant to the Declaration represent undivided beneficial interests in the assets of the Trust, including the Subordinated Debentures (as defined in the Declaration) issued by Ohio Edison Company, an Ohio corporation ("Ohio Edison"), to the Trust pursuant to the Indenture referred to in the Declaration. The Holder is entitled to the benefits of the Preferred Securities Guarantee Agreement of Ohio Edison dated as of ___________, 1996 (the "Guarantee") to the extent provided therein. The Trust will furnish a copy of the Declaration, the Guarantee and the Indenture to the Holder without charge upon written request to the Trust at its principal place of business or registered office. The Holder of this certificate, by accepting his certificate, is deemed to have (i) agreed to the terms of the Indenture and the Subordinated Debentures, including that the Subordinated Debentures are subordinate and junior in right to payment to all Senior Indebtedness (as defined in the Indenture) as and to the extent provided in the Indenture and (ii) agreed to the terms of the Guarantee, including that the Guarantee is (x) subordinate and junior in right to payment to all other liabilities of Ohio Edison, including the Subordinated Debentures, except those made pari passu or subordinated by their terms, and (y) pari passu with the most senior preferred or preference stock now or hereafter issued by Ohio Edison and with any guarantee now or hereafter entered into by Ohio Edison in respect of any preferred or preference stock of any affiliate of Ohio Edison. Upon receipt of this certificate, the Holder is bound by the Declaration and is entitled to the benefits thereunder. A-1-2 72 IN WITNESS WHEREOF, the regular trustees of the Trust have executed this certificate for and on behalf of the Trust. Dated: OHIO EDISON FINANCING TRUST II By: ---------------------------- as Regular Trustee A-1-3 73 The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM --as tenants in common UNIF GIFT ACT -- ______ Custodian ______ TEN ENT --as tenants by the entireties (Cust) (Minor) JT TEN --as joint tenants with right of Under Uniform Gifts to Minors survivorship and not as tenants Act__________________________ in common (State) Additional abbreviations may also be used though not in the above list. A-1-4 74 --------------------- ASSIGNMENT FOR VALUE RECEIVED, the undersigned assigns and transfers this to: - - -------------------------------------------------------------------------------- - - -------------------------------------------------------------------------------- - - -------------------------------------------------------------------------------- PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFICATION NUMBER - - -------------------------------------------------------------------------------- - - -------------------------------------------------------------------------------- - - -------------------------------------------------------------------------------- - - -------------------------------------------------------------------------------- Please print or typewrite name(s) and address(es) including postal zip code(s), of assignee(s) and irrevocably appoints of the Preferred Securities represented by this Certificate - - -------------------------------------------------------------------------------- - - -------------------------------------------------------------------------------- - - -------------------------------------------------------------------------------- - - -------------------------------------------------------------------------------- attorney to transfer such Preferred Securities on the books of the Trust. The attorney may substitute another to act for him or her. Date: ------------------------ Signature: ------------------- (Sign exactly as your name appears on the other side of this Preferred Security Certificate) Signature: ------------------- (Sign exactly as your name appears on the other side of this Preferred Security Certificate) *IMPORTANT READ CAREFULLY! The signature(s) to this assignment must correspond with the name(s) as written upon the face of the certificate in every particular without alteration, enlargement or change whatsoever. The signature(s) of the person(s) executing this power must be guaranteed by an eligible guarantor institution which, at the time of issuing the guarantee, is a member of, or a participant in the medallion signature guarantee program recognized by the Securities Transfer Association. A-1-5 75 EXHIBIT A-2 FORM OF COMMON SECURITY CERTIFICATE Certificate Number Number of Common Securities Certificate Evidencing Common Securities of Ohio Edison Financing Trust II _____% Trust Originated Common Securities (liquidation amount $25 per Common Security) Ohio Edison Financing Trust II, a statutory business trust formed under the laws of the State of Delaware (the "Trust"), hereby certifies that (the "Holder") is the registered owner of common securities of the Trust representing undivided beneficial interests in the assets of the Trust designated the _____% Trust Originated Common Securities (liquidation amount $25 per Common Security) (the "Common Securities"). Subject to Section 9.1 of the Declaration (as hereinafter defined), the Common Securities are transferable on the books and records of the Trust, in person or by a duly authorized attorney, upon surrender of this certificate duly endorsed and in proper form for transfer. The designation, rights, privileges, restrictions, preferences and other terms and provisions of the Common Securities represented hereby are issued and shall in all respects be subject to the provisions of the Amended and Restated Declaration of Trust of the Trust dated as of ___________, 1996, as the same may be amended from time to time (the "Declaration"), including the designation of the terms of the Common Securities as set forth in Annex I to the Declaration. Capitalized terms used herein but not defined shall have the meaning given them in the Declaration. The Holder is entitled to the benefits of the Common Securities Guarantee to the extent provided therein. The Sponsor will provide a copy of the Declaration, the Common Securities Guarantee and the Indenture to a Holder without charge upon written request to the Sponsor at its principal place of business. Upon receipt of this certificate, the Sponsor is bound by the Declaration and is entitled to the benefits thereunder. By acceptance, the Holder agrees to treat, for United States federal income tax purposes, the Subordinated Debentures as indebtedness and the Common Securities as evidence of indirect beneficial ownership in the Subordinated Debentures. IN WITNESS WHEREOF, the Trust has executed this certificate this __ day of _________________, 199_. OHIO EDISON FINANCING TRUST II By: --------------------------- as Regular Trustee A-2-1 76 --------------------- ASSIGNMENT FOR VALUE RECEIVED, the undersigned assigns and transfers this Common Security Certificate to: - - -------------------------------------------------------------------------------- - - -------------------------------------------------------------------------------- - - -------------------------------------------------------------------------------- (Insert assignee's name and social security or tax identification number) - - -------------------------------------------------------------------------------- - - -------------------------------------------------------------------------------- - - -------------------------------------------------------------------------------- - - -------------------------------------------------------------------------------- (Insert address and zip code of assignee) and irrevocably appoints - - -------------------------------------------------------------------------------- - - -------------------------------------------------------------------------------- - - -------------------------------------------------------------------------------- agent to transfer this Common Security Certificate on the books of the Trust. The agent may substitute another to act for him or her. Date: ------------------------ Signature: ------------------- (Sign exactly as your name appears on the other side of this Common Security Certificate) A-2-2 77 EXHIBIT B SPECIMEN OF SUBORDINATED DEBENTURE B-1 78 EXHIBIT C DEALER MANAGER AGREEMENT C-1 79 CROSS-REFERENCE TABLE* Section of
Trust Indenture Act Section of of 1939, as amended Declaration - - ------------------- ----------- 310(a)...................................................... 5.3(a) 310(b)...................................................... 5.3(c), 5.3(d) 310(c)...................................................... Inapplicable 311(a)...................................................... 2.2(b) 311(b)...................................................... 2.2(b) 311(c)...................................................... Inapplicable 312(a)...................................................... 2.2(a) 312(b)...................................................... 2.2(b) 313......................................................... 2.3 314(a)...................................................... 2.4 314(b)...................................................... Inapplicable 314(c)...................................................... 2.5 314(d)...................................................... Inapplicable 314(e)...................................................... 1.1, 2.5 314(f)...................................................... Inapplicable 315(a)...................................................... 3.9(b) 315(c)...................................................... 3.9(a) 315(d)...................................................... 3.9(a) 316(a)...................................................... Annex I 316(c)...................................................... 3.6(e) 317(a)...................................................... 3.8(d) 317(b)...................................................... 3.8(h)
- - --------------- * This Cross-Reference Table does not constitute part of the Declaration and shall not affect the interpretation of any of its terms or provisions. 80 TABLE OF CONTENTS
Page ---- ARTICLE I INTERPRETATION AND DEFINITIONS SECTION 1.1 Definitions............................................... 2 ARTICLE II TRUST INDENTURE ACT SECTION 2.1 Trust Indenture Act; Application.......................... 8 SECTION 2.2 Lists of Holders of Securities............................ 9 SECTION 2.3 Reports by the Property Trustee........................... 9 SECTION 2.4 Periodic Reports to Property Trustee...................... 9 SECTION 2.5 Evidence of Compliance with Conditions Precedent................................................. 10 SECTION 2.6 Events of Default; Waiver................................. 10 SECTION 2.7 Event of Default; Notice.................................. 12 ARTICLE III ORGANIZATION SECTION 3.1 Name...................................................... 12 SECTION 3.2 Office.................................................... 12 SECTION 3.3 Purpose................................................... 13 SECTION 3.4 Authority................................................. 13 SECTION 3.5 Title to Property of the Trust............................ 13 SECTION 3.6 Powers and Duties of the Regular Trustees.................................................. 14 SECTION 3.7 Prohibition of Actions by the Trust and the Trustees.............................................. 17 SECTION 3.8 Powers and Duties of the Property Trustee................................................... 18 SECTION 3.9 Certain Duties and Responsibilities of the Property Trustee...................................... 20 SECTION 3.10 Certain Rights of the Property Trustee.................... 22 SECTION 3.11 Delaware Trustee.......................................... 24 SECTION 3.12 Execution of Documents.................................... 24 SECTION 3.13 Not Responsible for Recitals or Issuance of Securities............................................. 24 SECTION 3.14 Duration of Trust......................................... 25 SECTION 3.15 Mergers................................................... 25 SECTION 3.16 May Hold Securities....................................... 26
i 81
ARTICLE IV SPONSOR SECTION 4.1 Sponsor's Purchase of Common Securities..................... 27 SECTION 4.2 Responsibilities of the Sponsor............................. 27 SECTION 4.3 Expenses.................................................... 28 ARTICLE V TRUSTEES SECTION 5.1 Number of Trustees.......................................... 29 SECTION 5.2 Delaware Trustee............................................ 29 SECTION 5.3 Property Trustee; Eligibility............................... 29 SECTION 5.4 Qualifications of Regular Trustees and Delaware Trustee Generally.................................. 30 SECTION 5.5 Initial Trustees............................................ 30 SECTION 5.6 Appointment, Removal and Resignation of Trustees.................................................... 31 SECTION 5.7 Vacancies among Trustees.................................... 32 SECTION 5.8 Effect of Vacancies......................................... 32 SECTION 5.9 Meetings.................................................... 33 SECTION 5.10 Delegation of Power......................................... 33 ARTICLE VI DISTRIBUTIONS SECTION 6.1 Distributions............................................... 34 ARTICLE VII ISSUANCE OF SECURITIES SECTION 7.1 General Provisions Regarding Securities..................... 34 ARTICLE VIII TERMINATION OF TRUST SECTION 8.1 Termination of Trust........................................ 35 ARTICLE IX TRANSFER OF INTERESTS SECTION 9.1 Transfer of Securities...................................... 36 SECTION 9.2 Registration of Transfer and Exchange of Preferred Security Certificates.......................... 37 SECTION 9.3 Deemed Security Holders..................................... 38 SECTION 9.4 Book Entry Interests........................................ 38 SECTION 9.5 Notices to Clearing Agency.................................. 38 SECTION 9.6 Appointment of Successor Clearing Agency...................................................... 39 SECTION 9.7 Definitive Preferred Security Certificates................................................ 39 SECTION 9.8 Mutilated, Destroyed, Lost or Stolen Certificates................................................ 39 SECTION 9.9 Maintenance of Office or Agency............................. 40 SECTION 9.10 Appointment of Paying Agent................................. 40
ii 82 ARTICLE X LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES OR OTHERS SECTION 10.1 Liability...................................... 41 SECTION 10.2 Exculpation.................................... 41 SECTION 10.3 Fiduciary Duty................................. 42 SECTION 10.4 Indemnification................................ 43 SECTION 10.5 Outside Businesses............................. 43 ARTICLE XI ACCOUNTING SECTION 11.1 Fiscal Year.................................... 44 SECTION 11.2 Certain Accounting Matters..................... 44 SECTION 11.3 Banking........................................ 45 SECTION 11.4 Withholding.................................... 45 ARTICLE XII AMENDMENTS AND MEETINGS SECTION 12.1 Amendments..................................... 45 SECTION 12.2 Meetings of the Holders; Action by Written Consent................................ 47 ARTICLE XIII REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE SECTION 13.1 Representations and Warranties of Property Trustee............................... 49 SECTION 13.2 Representations and Warranties of Delaware Trustee............................... 50 ARTICLE XIV MISCELLANEOUS SECTION 14.1 Notices........................................ 50 SECTION 14.2 Governing Law.................................. 52 SECTION 14.3 Intention of the Parties....................... 52 SECTION 14.4 Headings....................................... 52 SECTION 14.5 Successors and Assigns......................... 52 SECTION 14.6 Partial Enforceability......................... 52 SECTION 14.7 Counterparts................................... 52 ANNEX I TERMS OF SECURITIES.............................I-1 EXHIBIT A-1 FORM OF PREFERRED SECURITY CERTIFICATE.................................A-1-1 EXHIBIT A-2 FORM OF COMMON SECURITY CERTIFICATE...........A-2-1 EXHIBIT B SPECIMEN OF SUBORDINATED DEBENTURE..............B-1 EXHIBIT C DEALER MANAGER AGREEMENT........................C-1
iii EX-4.8 7 FORM OF GUARANTEE AGREEMENT 1 EXHIBIT 4.8 ==================================================================== PREFERRED SECURITIES GUARANTEE AGREEMENT Ohio Edison Company Dated as of ___________, 1996 ==================================================================== 2 PREFERRED SECURITIES GUARANTEE AGREEMENT This GUARANTEE AGREEMENT (the "Preferred Securities Guarantee"), dated as of ___________, 1996, is executed and delivered by Ohio Edison Company, an Ohio corporation (the "Guarantor"), and The Bank of New York, a New York banking corporation, as trustee (the "Preferred Guarantee Trustee"), for the benefit of the Holders (as defined herein) from time to time of the Preferred Securities (as defined herein) of Ohio Edison Financing Trust II, a Delaware statutory business trust (the "Issuer"). WITNESSETH: WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the "Declaration"), dated as of ___________, 1996, among the trustees of the Issuer named therein, the Guarantor, as sponsor, and the holders from time to time of undivided beneficial interests in the assets of the Issuer, the Issuer is issuing on the date hereof _____________ preferred securities, having an aggregate liquidation amount of $_____________, designated the ____% Trust Originated Preferred Securities (the "Preferred Securities"); WHEREAS, as incentive for the Holders to purchase the Preferred Securities, the Guarantor desires irrevocably and unconditionally to agree, to the extent set forth in this Preferred Securities Guarantee, to pay to the Holders the Guarantee Payments (as defined herein) and to make certain other payments on the terms and conditions set forth herein; WHEREAS, the Guarantor is also executing and delivering a guarantee agreement (the "Common Securities Guarantee") with substantially identical terms as this Preferred Securities Guarantee for the benefit of the holders of the Common Securities (as defined herein), except that if an Indenture Event of Default (as defined herein), has occurred and is continuing, the rights of holders of the Common Securities to receive Guarantee Payments under the Common Securities Guarantee are subordinated to the rights of Holders to receive Guarantee Payments under this Preferred Securities Guarantee. NOW, THEREFORE, in consideration of the purchase by each Holder, which purchase the Guarantor hereby agrees shall benefit the Guarantor, the Guarantor executes and delivers this Preferred Securities Guarantee for the benefit of the Holders. 3 ARTICLE I DEFINITIONS AND INTERPRETATION SECTION 1.1 Definitions and Interpretation In this Preferred Securities Guarantee, unless the context otherwise requires: (a) Capitalized terms used in this Preferred Securities Guarantee but not defined in the preamble above have the respective meanings assigned to them in this Section 1.1; (b) a term defined anywhere in this Preferred Securities Guarantee has the same meaning throughout; (c) all references to "the Preferred Securities Guarantee" or "this Preferred Securities Guarantee" are to this Preferred Securities Guarantee as modified, supplemented or amended from time to time; (d) all references in this Preferred Securities Guarantee to Articles and Sections are to Articles and Sections of this Preferred Securities Guarantee, unless otherwise specified; (e) a term defined in the Trust Indenture Act has the same meaning when used in this Preferred Securities Guarantee, unless otherwise defined in this Preferred Securities Guarantee or unless the context otherwise requires; and (f) a reference to the singular includes the plural and vice versa. "Affiliate" has the same meaning as given to that term in Rule 405 of the Securities Act of 1933, as amended, or any successor rule thereunder. "Business Day" means any day other than a Saturday, Sunday or other day on which banking institutions in The City of New York, New York are authorized or required by any applicable law to close. "Common Securities" means the securities representing common undivided beneficial interests in the assets of the Issuer. "Covered Person" means any Holder or beneficial owner of Preferred Securities. 2 4 "Event of Default" means a default by the Guarantor on any of its payment or other obligations under this Preferred Securities Guarantee. "Guarantee Payments" means the following payments or distributions, without duplication, with respect to the Preferred Securities, to the extent not paid or made by the Issuer: (i) any accrued and unpaid Distributions (as defined in the Declaration) that are required to be paid on such Preferred Securities to the extent the Issuer has funds available therefor, (ii) the redemption price, including all accrued and unpaid Distributions to the date of redemption (the "Redemption Price"), to the extent the Issuer has funds available therefor, with respect to any Preferred Securities called for redemption by the Issuer, and (iii) upon a voluntary or involuntary dissolution, winding-up or termination of the Issuer (other than in connection with the distribution of Subordinated Notes to the Holders in exchange for Preferred Securities as provided in the Declaration), the lesser of (a) the aggregate of the liquidation amount and all accrued and unpaid Distributions on the Preferred Securities to the date of payment, to the extent the Issuer shall have funds available therefor, and (b) the amount of assets of the Issuer remaining available for distribution to Holders in liquidation of the Issuer (in either case, the "Liquidation Distribution"). If an Indenture Event of Default has occurred and is continuing, the rights of holders of the Common Securities to receive payments under the Common Securities Guarantee Agreement are subordinated to the rights of Holders to receive Guarantee Payments. "Holder" shall mean any holder, as registered on the books and records of the Issuer, of any Preferred Securities; provided, however, that, in determining whether the holders of the requisite percentage of Preferred Securities have given any request, notice, consent or waiver hereunder, "Holder" shall not include the Guarantor or any Affiliate of the Guarantor. "Indemnified Person" means the Preferred Guarantee Trustee, any Affiliate of the Preferred Guarantee Trustee, or any officers, directors, shareholders, members, partners, employees, representatives or agents of the Preferred Guarantee Trustee. "Indenture" means the Indenture dated as of ___________, 1996, among the Guarantor and The Bank of New York, as trustee, and the First Supplemental Indenture thereto pursuant to which certain subordinated debt securities of the Guarantor are to be issued to the Property Trustee (as defined in the Declaration). "Indenture Event of Default" has the same meaning as that given to the term "Event of Default" in the Indenture. 3 5 "Majority in liquidation amount of the Securities" means, except as provided by the Trust Indenture Act, a vote by Holder(s), voting separately as a class, of more than 50% of the liquidation amount (including the stated amount that would be paid on redemption, liquidation or otherwise, plus accrued and unpaid Distributions to the date upon which the voting percentages are determined) of all Preferred Securities outstanding as of the date of determination. "Officers' Certificate" means, with respect to any Person, a certificate signed by two Authorized Officers (as defined in the Declaration) of such Person. Any Officers' Certificate delivered with respect to compliance with a condition or covenant provided for in this Preferred Securities Guarantee shall include: (a) a statement that each officer signing the Officers' Certificate has read the covenant or condition and the definition relating thereto; (b) a brief statement of the nature and scope of the examination or investigation undertaken by each officer in rendering the Officers' Certificate; (c) a statement that each such officer has made such examination or investigation as, in such officer's opinion, is necessary to enable such officer to express an informed opinion as to whether or not such covenant or condition has been complied with; and (d) a statement as to whether, in the opinion of each such officer, such condition or covenant has been complied with. "Person" means a legal person, including any individual, corporation, estate, partnership, joint venture, association, joint stock company, limited liability company, trust, unincorporated association, or government or any agency or political subdivision thereof, or any other entity of whatever nature. "Preferred Guarantee Trustee" means The Bank of New York, until a Successor Preferred Guarantee Trustee has been appointed and has accepted such appointment pursuant to the terms of this Preferred Securities Guarantee and thereafter means each such Successor Preferred Guarantee Trustee. "Responsible Officer" means, with respect to the Preferred Guarantee Trustee, any vice president, any assistant vice president, the secretary, any assistant secretary, the treasurer, any assistant treasurer, any trust officer or assistant trust officer or any other officer of the corporate trust department of the Preferred Guarantee Trustee customarily per- 4 6 forming functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of that officer's knowledge of and familiarity with the particular subject. "Subordinated Notes" means the series of subordinated debt securities of the Guarantor, designated the ____% Junior Subordinated Debentures Due 2016, held by the Property Trustee. "Successor Preferred Guarantee Trustee" means a successor Preferred Guarantee Trustee possessing the qualifications to act as Preferred Guarantee Trustee under Section 4.1. "Trust Indenture Act" means the Trust Indenture Act of 1939, as amended. ARTICLE II TRUST INDENTURE ACT SECTION 2.1 Trust Indenture Act; Application (a) This Preferred Securities Guarantee is subject to the provisions of the Trust Indenture Act that are required or deemed to be part of this Preferred Securities Guarantee and shall, to the extent applicable, be governed by such provisions; and (b) if and to the extent that any provision of this Preferred Securities Guarantee limits, qualifies or conflicts with the duties imposed by Section 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties shall control. SECTION 2.2 Lists of Holders of Securities (a) The Guarantor shall provide the Preferred Guarantee Trustee with a list, in such form as the Preferred Guarantee Trustee may reasonably require, of the names and addresses of the Holders ("List of Holders") (i) as of February 15 and August 15 of each year, within one Business Day thereafter, and (ii) at any other time within 30 days of receipt by the Guarantor of a written request from the Preferred Guarantee Trustee for a List of Holders, which shall be as of a date no more than 14 days before such List of Holders is given to the Preferred Guarantee Trustee; provided, that the Guarantor shall not be obligated to provide such List of Holders at any time the List of Holders does not differ from the most recent List of Holders given to the Preferred Guarantee Trustee by the Guarantor. The Preferred Guarantee Trustee may destroy any List of Holders previously given to it on receipt of a new List of Holders. 5 7 b) The Preferred Guarantee Trustee shall comply with its obligations under Section 311(a) of the Trust Indenture Act (subject to the provisions of Section 311(b) of the Trust Indenture Act) and Section 312(b) of the Trust Indenture Act. SECTION 2.3 Reports by the Preferred Guarantee Trustee Within 60 days after July 31 of each year, commencing with July 31, 1996, the Preferred Guarantee Trustee shall provide to the Holders such reports as are required by Section 313(a) of the Trust Indenture Act, if any, in the form and in the manner provided by Section 313(a) of the Trust Indenture Act. The Preferred Guarantee Trustee shall also comply with the requirements of Section 313(b), 313(c) and 313(d) of the Trust Indenture Act. SECTION 2.4 Periodic Reports to Preferred Guarantee Trustee The Guarantor shall provide to the Preferred Guarantee Trustee such documents, reports and information as required by Section 314 (if any) and the compliance certificate required by Section 314 of the Trust Indenture Act in the form, in the manner and at the times required by Section 314 of the Trust Indenture Act. SECTION 2.5 Evidence of Compliance with Conditions Precedent The Guarantor shall provide to the Preferred Guarantee Trustee such evidence of compliance with any conditions precedent, if any, provided for in this Preferred Securities Guarantee that relate to any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any certificate or opinion required to be given by an officer pursuant to Section 314(c)(1) may be given in the form of an Officers' Certificate. SECTION 2.6 Events of Default; Waiver The Holders of a Majority in liquidation amount of the Securities may, by vote, on behalf of all of the Holders, waive any past Event of Default and its cosequences. Upon such waiver, any such Event of Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Preferred Securities Guarantee, but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon. SECTION 2.7 Events of Default; Notice (a) The Preferred Guarantee Trustee shall, within 90 days after the occurrence of an Event of Default, transmit by mail, first class postage prepaid, to the Holders, notices of all Events of Default known to the Preferred Guarantee Trustee, 6 8 unless such defaults have been cured before the giving of such notice; provided, that the Preferred Guarantee Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee, or a trust committee of directors and/or Responsible Officers of the Preferred Guarantee Trustee in good faith determines that the withholding of such notice is in the interests of the Holders. (b) The Preferred Guarantee Trustee shall not be deemed to have knowledge of any Event of Default unless the Preferred Guarantee Trustee shall have received written notice, or a Responsible Officer charged with the administration of the Declaration shall have obtained written notice, of such Event of Default. SECTION 2.8 Conflicting Interests The Declaration shall be deemed to be specifically described in this Preferred Securities Guarantee for the purposes of clause (i) of the first proviso contained in Section 310(b) of the Trust Indenture Act. ARTICLE III POWERS, DUTIES AND RIGHTS OF PREFERRED GUARANTEE TRUSTEE SECTION 3.1 Powers and Duties of the Preferred Guarantee Trustee (a) This Preferred Securities Guarantee shall be held by the Preferred Guarantee Trustee for the benefit of the Holders, and the Preferred Guarantee Trustee shall not transfer this Preferred Securities Guarantee to any Person except a Holder exercising his or her rights pursuant to Section 5.4(b) or to a Successor Preferred Guarantee Trustee on acceptance by such Successor Preferred Guarantee Trustee of its appointment to act as Successor Preferred Guarantee Trustee. The right, title and interest of the Preferred Guarantee Trustee shall automatically vest in any Successor Preferred Guarantee Trustee, and such vesting (and cessation as to the Preferred Guarantee Trustee) of title shall be effective whether or not conveyancing documents have been executed and delivered pursuant to the appointment of such Successor Preferred Guarantee Trustee. (b) If an Event of Default has occurred and is continuing, the Preferred Guarantee Trustee shall enforce this Preferred Securities Guarantee for the benefit of the Holders. (c) The Preferred Guarantee Trustee, before the occurrence of any Event of Default and after the curing of all Events of Default that may have occurred, shall undertake to 7 9 perform only such duties as are specifically set forth in this Preferred Securities Guarantee, and no implied covenants shall be read into this Preferred Securities Guarantee against the Preferred Guarantee Trustee. In case an Event of Default has occurred (that has not been cured or waived pursuant to Section 2.6), the Preferred Guarantee Trustee shall exercise such of the rights and powers vested in it by this Preferred Securities Guarantee, and use the same degree of care and skill in its exercise thereof, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. (d) No provision of this Preferred Securities Guarantee shall be construed to relieve the Preferred Guarantee Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (i) prior to the occurrence of any Event of Default and after the curing or waiving of all such Events of Default that may have occurred: (A) the duties and obligations of the Preferred Guarantee Trustee shall be determined solely by the express provisions of this Preferred Securities Guarantee, and the Preferred Guarantee Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Preferred Securities Guarantee, and no implied covenants or obligations shall be read into this Preferred Securities Guarantee against the Preferred Guarantee Trustee; and (B) in the absence of bad faith on the part of the Preferred Guarantee Trustee, the Preferred Guarantee Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Preferred Guarantee Trustee and conforming to the requirements of this Preferred Securities Guarantee; but in the case of any such certificates or opinions that by any provision hereof are specifically required to be furnished to the Preferred Guarantee Trustee, the Preferred Guarantee Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Preferred Securities Guarantee; (ii) the Preferred Guarantee Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer of the Preferred Guarantee Trustee, unless it shall be proved that the Preferred Guarantee Trustee was negligent in ascertaining the pertinent facts upon which such judgment was made; 8 10 (iii) the Preferred Guarantee Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than a Majority in liquidation amount of the Securities relating to the time, method and place of conducting any proceeding for any remedy available to the Preferred Guarantee Trustee, or exercising any trust or power conferred upon the Preferred Guarantee Trustee under this Preferred Securities Guarantee; and (iv) no provision of this Preferred Securities Guarantee shall require the Preferred Guarantee Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if the Preferred Guarantee Trustee shall have reasonable grounds for believing that the repayment of such funds or liability is not reasonably assured to it under the terms of this Preferred Securities Guarantee or adequate indemnity against such risk or liability is not reasonably assured to it. SECTION 3.2 Certain Rights of Preferred Guarantee Trustee (a) Subject to the provisions of Section 3.1: (i) The Preferred Guarantee Trustee may rely, and shall be fully protected in acting or refraining from acting upon, any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed, sent or presented by the proper party or parties. (ii) Any direction or act of the Guarantor contemplated by this Preferred Securities Guarantee shall be sufficiently evidenced by a Direction (as defined in the Declaration) or an Officers' Certificate. (iii) Whenever, in the administration of this Preferred Securities Guarantee, the Preferred Guarantee Trustee shall deem it desirable that a matter be proved or established before taking, suffering or omitting any action hereunder, the Preferred Guarantee Trustee (unless other evidence is herein specifically prescribed) may, in the absence of bad faith on its part, request and rely upon an Officers' Certificate which, upon receipt of such request, shall be promptly delivered by the Guarantor. (iv) The Preferred Guarantee Trustee shall have no duty to see to any recording, filing or registration of any 9 11 instrument (or any rerecording, refiling or reregistration thereof). (v) The Preferred Guarantee Trustee may consult with counsel of its selection, and the advice or opinion of such counsel with respect to legal matters shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in accordance with such advice or opinion. Such counsel may be counsel to the Guarantor or any of its Affiliates and may include any of its employees. The Preferred Guarantee Trustee shall have the right at any time to seek instructions concerning the administration of this Preferred Securities Guarantee from any court of competent jurisdiction. (vi) The Preferred Guarantee Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Preferred Securities Guarantee at the request or direction of any Holder, unless such Holder shall have provided to the Preferred Guarantee Trustee such adequate security and indemnity as would satisfy a reasonable person in the position of the Preferred Guarantee Trustee, against the costs, expenses (including attorneys' fees and expenses) and liabilities that might be incurred by it in complying with such request or direction, including such reasonable advances as may be requested by the Preferred Guarantee Trustee; provided that, nothing contained in this Section 3.2(a)(vi) shall be taken to relieve the Preferred Guarantee Trustee, upon the occurrence of an Event of Default, of its obligation to exercise the rights and powers vested in it by this Preferred Securities Guarantee. (vii) The Preferred Guarantee Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Preferred Guarantee Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit. (viii) The Preferred Guarantee Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys, and the Preferred Guarantee Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder. 10 12 (ix) Any action taken by the Preferred Guarantee Trustee or its agents hereunder shall bind the Holders, and the signature of the Preferred Guarantee Trustee or its agents alone shall be sufficient and effective to perform any such action. No third party shall be required to inquire as to the authority of the Preferred Guarantee Trustee to so act or as to its compliance with any of the terms and provisions of this Preferred Securities Guarantee, both of which shall be conclusively evidenced by the Preferred Guarantee Trustee's or its agent's taking such action. (x) Whenever in the administration of this Preferred Securities Guarantee the Preferred Guarantee Trustee shall deem it desirable to receive instructions with respect to enforcing any remedy or right or taking any other action hereunder, the Preferred Guarantee Trustee (i) may request instructions from the Holders of a Majority in liquidation amount of the Securities, (ii) may refrain from enforcing such remedy or right or taking such other action until such instructions are received, and (iii) shall be protected in acting in accordance with such instructions. (b) No provision of this Preferred Securities Guarantee shall be deemed to impose any duty or obligation on the Preferred Guarantee Trustee to perform any act or acts or exercise any right, power, duty or obligation conferred or imposed on it in any jurisdiction in which it shall be illegal, or in which the Preferred Guarantee Trustee shall be unqualified or incompetent in accordance with applicable law, to perform any such act or acts or to exercise any such right, power, duty or obligation. No permissive power or authority available to the Preferred Guarantee Trustee shall be construed to be a duty. SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee The recitals contained in this Preferred Securities Guarantee shall be taken as the statements of the Guarantor, and the Preferred Guarantee Trustee does not assume any responsibility for their correctness. The Preferred Guarantee Trustee makes no representation as to the validity or sufficiency of this Preferred Securities Guarantee. ARTICLE IV PREFERRED GUARANTEE TRUSTEE SECTION 4.1 Preferred Guarantee Trustee; Eligibility (a) There shall at all times be a Preferred Guarantee Trustee which shall: 11 13 (i) not be an Affiliate of the Guarantor; and (ii) be a corporation organized and doing business under the laws of the United States of America or any State or Territory thereof or of the District of Columbia, or a corporation or Person permitted by the Securities and Exchange Commission to act as an institutional trustee under the Trust Indenture Act, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least 50 million U.S. dollars ($50,000,000), and subject to supervision or examination by Federal, State, Territorial or District of Columbia authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the supervising or examining authority referred to above, then, for the purposes of this Section 4.1(a)(ii), the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. (b) If at any time the Preferred Guarantee Trustee shall cease to be eligible to so act under Section 4.1(a), the Preferred Guarantee Trustee shall immediately resign in the manner and with the effect set out in Section 4.2(c). (c) If the Preferred Guarantee Trustee has or shall acquire any "conflicting interest" within the meaning of Section 310(b) of the Trust Indenture Act, the Preferred Guarantee Trustee and Guarantor shall in all respects comply with the provisions of Section 310(b) of the Trust Indenture Act. SECTION 4.2 Compensation and Reimbursement The Guarantor agrees: (a) to pay the Preferred Guarantee Trustee from time to time such reasonable compensation as the Guarantor and the Preferred Guarantee Trustee shall from time to time agree in writing for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (b) except as otherwise expressly provided herein, to reimburse the Preferred Guarantee Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Preferred Guarantee Trustee in accordance with the provisions of the Preferred Securities Guarantee (including the reasonable compensation and expenses of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith; and 12 14 (c) to indemnify each of the Preferred Guarantee Trustee and any predecessor Preferred Guarantee Trustee for, and to hold it harmless from and against any and all loss, damage, claim, liability or expense, including taxes (other than taxes based upon the income of the Preferred Guarantee Trustee) incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance of the administration of this Preferred Securities Guarantee, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any its powers or duties hereunder. As security for the performance of the obligations of the Guarantor under this Section, the Preferred Guarantee Trustee shall have a lien prior to the Securities upon all the property and funds held or collected by the Preferred Guarantee Trustee as such, except funds held in trust for the payment of principal of, and premium (if any) or interest on, particular obligations of the Guarantor under this Guarantee Agreement. The provisions of this Section shall survive the termination of this Preferred Securities Guarantee. SECTION 4.3 Appointment, Removal and Resignation of Preferred Guarantee Trustees (a) Subject to Section 4.3(b), unless an Event of Default shall have occurred and be continuing the Preferred Guarantee Trustee may be appointed or removed without cause at any time by the Guarantor. (b) The Preferred Guarantee Trustee shall not be removed in accordance with Section 4.3(a) until a Successor Preferred Guarantee Trustee has been appointed and has accepted such appointment by written instrument executed by such Successor Preferred Guarantee Trustee and delivered to the Guarantor. (c) The Preferred Guarantee Trustee appointed to office shall hold office until a Successor Preferred Guarantee Trustee shall have been appointed or until its removal or resignation. The Preferred Guarantee Trustee may resign from office (without need for prior or subsequent accounting) by an instrument in writing executed by the Preferred Guarantee Trustee and delivered to the Guarantor, which resignation shall not take effect until a Successor Preferred Guarantee Trustee has been appointed and has accepted such appointment by instrument in writing executed by such Successor Preferred Guarantee Trustee and delivered to the Guarantor and the resigning Preferred Guarantee Trustee. (d) If no Successor Preferred Guarantee Trustee shall have been appointed and accepted appointment as provided in this 13 15 Section 4.3 within 60 days after delivery to the Guarantor of an instrument of resignation, the resigning Preferred Guarantee Trustee may petition any court of competent jurisdiction for appointment of a Successor Preferred Guarantee Trustee. Such court may thereupon, after prescribing such notice, if any, as it may deem proper, appoint a Successor Preferred Guarantee Trustee. (e) The Guarantor shall give notice of each resignation and each removal of the Preferred Guarantee Trustee and each appointment of a successor Trustee to all Holders in the manner provided in Section 8.03 hereof. Each notice shall include the name of the successor Preferred Guarantee Trustee and the address of its Corporate Trust Office. ARTICLE V GUARANTEE SECTION 5.1 Guarantee The Guarantor irrevocably and unconditionally agrees to pay in full to the Holders the Guarantee Payments (without duplication of amounts theretofore paid by the Issuer), as and when due, regardless of any defense, right of set-off or counterclaim that the Issuer may have or assert. The Guarantor's obligation to make a Guarantee Payment may be satisfied by direct payment of the required amounts by the Guarantor to the Holders or by causing the Issuer to pay such amounts to the Holders. SECTION 5.2 Waiver of Notice and Demand The Guarantor hereby waives notice of acceptance of this Preferred Securities Guarantee and of any liability to which it applies or may apply, presentment, demand for payment, any right to require a proceeding first against the Issuer or any other Person before proceeding against the Guarantor, protest, notice of nonpayment, notice of dishonor, notice of redemption and all other notices and demands. SECTION 5.3 Obligations Not Affected The obligations, covenants, agreements and duties of the Guarantor under this Preferred Securities Guarantee shall in no way be affected or impaired by reason of the happening from time to time of any of the following: (a) the release or waiver, by operation of law or otherwise, of the performance or observance by the Issuer of any express or implied agreement, covenant, term or condition relating to the Preferred Securities to be performed or observed by the Issuer; 14 16 (b) the extension of time for the payment by the Issuer of all or any portion of the Distributions, Redemption Price, Liquidation Distribution or any other sums payable under the terms of the Preferred Securities or the extension of time for the performance of any other obligation under, arising out of, or in connection with, the Preferred Securities (other than an extension of time for payment of Distributions or other sum payable that results from the extension of any interest payment period on the Subordinated Notes permitted by the Indenture); (c) any failure, omission, delay or lack of diligence on the part of the Holders to enforce, assert or exercise any right, privilege, power or remedy conferred on the Holders pursuant to the terms of the Preferred Securities, or any action on the part of the Issuer granting indulgence or extension of any kind; (d) the voluntary or involuntary liquidation, dissolution, sale of any collateral, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of debt of, or other similar proceedings affecting, the Issuer or any of the assets of the Issuer; (e) any invalidity of, or defect or deficiency in, the Preferred Securities; (f) the settlement or compromise of any obligation guaranteed hereby or hereby incurred; or (g) any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or defense of a guarantor, it being the intent of this Section 5.3 that the obligations of the Guarantor hereunder shall be absolute and unconditional under any and all circumstances. There shall be no obligation of the Holders to give notice to, or obtain consent of, the Guarantor with respect to the happening of any of the foregoing. SECTION 5.4 Rights of Holders (a) The Guarantor expressly acknowledges that: (i) this Preferred Securities Guarantee will be deposited with the Preferred Guarantee Trustee to be held for the benefit of the Holders; (ii) the Preferred Guarantee Trustee has the right to enforce the Preferred Securities Guarantee on behalf of the Holders; and (ii) the Holders of a Majority in liquidation amount of the Securities have the right to direct the time, method and place of conducting of any proceeding for any remedy available to the Preferred Guarantee Trustee in respect of this Preferred Securities Guarantee or exercising any trust or power conferred 15 17 upon the Preferred Guarantee Trustee under this Preferred Securities Guarantee. (b) If the Preferred Guarantee Trustee fails to enforce this Preferred Securities Guarantee, any Holder may institute a legal proceeding directly against the Guarantor to enforce its rights under this Preferred Securities Guarantee, without first instituting a legal proceeding against the Issuer, the Preferred Guarantee Trustee or any other Person. (c) Notwithstanding subsection 5.4(b), any Holder may directly institute proceedings against the Guarantor to obtain Guarantee Payments in respect of the Preferred Securities owned by such Holder, without first waiting to determine if the Preferred Guarantee Trustee has enforced this Preferred Securities Guarantee or first instituting a legal proceeding against the Issuer, the Preferred Guarantee Trustee or any other Person. SECTION 5.5 Guarantee of Payment This Preferred Securities Guarantee creates a guarantee of payment and not of collection. SECTION 5.6 Subrogation The Guarantor shall be subrogated to all (if any) rights of the Holders against the Issuer in respect of any amounts paid to such Holders by the Guarantor under this Preferred Securities Guarantee; provided, however, that the Guarantor shall not (except to the extent required by mandatory provisions of law) be entitled to enforce or exercise any right that it may acquire by way of subrogation or any indemnity, reimbursement or other agreement, in all cases as a result of payment under this Preferred Securities Guarantee, if, at the time of any such payment, any amounts are due and unpaid under this Preferred Securities Guarantee. If any amount shall be paid to the Guarantor in violation of the preceding sentence, the Guarantor agrees to hold such amount in trust for the Holders and to pay over such amount to the Holders. SECTION 5.7 Independent Obligations The Guarantor acknowledges that its obligations hereunder are independent of the obligations of the Issuer with respect to the Preferred Securities, and that the Guarantor shall be liable as principal and as debtor hereunder to make Guarantee Payments pursuant to the terms of this Preferred Securities Guarantee notwithstanding the occurrence of any event referred to in subsections (a) through (g), inclusive, of Section 5.3 hereof. 16 18 ARTICLE VI LIMITATION OF TRANSACTIONS; SUBORDINATION SECTION 6.1 Limitation of Transactions (a) So long as any Preferred Securities remain outstanding, if there shall have occurred an Event of Default or Indenture Event of Default, then (i) the Guarantor shall not declare or pay any dividend on, or make any distribution with respect to, or redeem, purchase, acquire or make a liquidation payment with respect to, any of its capital stock, (ii) the Guarantor shall not make any payment of interest, principal or premium, if any, on or repay, repurchase or redeem any debt securities issued by the Guarantor which rank pari passu with or junior to the Subordinated Notes and (iii) the Guarantor shall not make any guarantee payments with respect to any of the foregoing. (b) Notwithstanding subsection 6.1(a)(i) or any other language to the contrary contained in this Preferred Securities Guarantee, nothing shall prevent the Guarantor from paying stock dividends where the dividend stock is the same as that on which the dividend is paid. SECTION 6.2 Ranking This Preferred Securities Guarantee constitutes an unsecured obligation of the Guarantor and will rank (i) subordinate and junior in right of payment to all other liabilities of the Guarantor, (ii) pari passu with the most senior preferred or preference stock issued by the Guarantor from time to time and with any guarantee now or hereafter entered into by the Guarantor in respect of any preferred or preference stock of any subsidiary or Affiliate of the Guarantor, and (iii) senior to the Guarantor's common stock. Nothing in this Section 6.01 shall apply to claims of, or payments to, the Preferred Guarantee Trustee under or pursuant to Section 4.2 hereof. ARTICLE VII TERMINATION SECTION 7.1 Termination This Preferred Securities Guarantee shall terminate upon the earliest to occur of (i) the full payment of the Redemption Price of all Preferred Securities, (ii) the distribution of Subordinated Notes to all of the Holders or (iii) full payment of the amounts payable in accordance with the Declaration upon liquidation of the Issuer. Notwithstanding the foregoing, this Preferred Securities Guarantee will continue to be effective or will be reinstated, as the case may be, if at any 17 19 time any Holder must restore payment of any sums paid under the Preferred Securities or under this Preferred Securities Guarantee. ARTICLE VIII INDEMNIFICATION SECTION 8.1 Exculpation (a) No Indemnified Person shall be liable, responsible or accountable in damages or otherwise to the Guarantor or any Covered Person for any loss, damage or claim incurred by reason of any act or omission performed or omitted by such Indemnified Person in good faith in accordance with this Preferred Securities Guarantee and in a manner that such Indemnified Person reasonably believed to be within the scope of the authority conferred on such Indemnified Person by this Preferred Securities Guarantee or by law, except that an Indemnified Person shall be liable for any such loss, damage or claim incurred by reason of such Indemnified Person's negligence or willful misconduct with respect to such acts or omission. (b) An Indemnified Person shall be fully protected in relying in good faith upon the records of the Guarantor and upon such information, opinions, reports or statements presented to the Guarantor by any Person as to matters the Indemnified Person reasonably believes are within such other Person's professional or expert competence and who has been selected with reasonable care by or on behalf of the Guarantor, including information, opinions, reports or statements as to the value and amount of the assets, liabilities, profits, losses, or any other facts pertinent to the existence and amount of assets from which Distributions, the Redemption Price or the Liquidation Distribution to Holders might properly be paid. (c) The provisions of this Section 8.1 shall survive the termination of this Preferred Securities Guarantee. SECTION 8.2 Indemnification (a) To the fullest extent permitted by applicable law, the Guarantor shall indemnify and hold harmless each Indemnified Person from and against any loss, damage or claim incurred by such Indemnified Person by reason of any act or omission performed or omitted by such Indemnified Person in good faith in accordance with this Preferred Securities Guarantee and in a manner such Indemnified Person reasonably believed to be within the scope of authority conferred on such Indemnified Person in accordance with this Preferred Securities Guarantee, except that no Indemnified Person shall be entitled to be indemnified in respect of any loss, damage or claim incurred by such Indemnified 18 20 Person by reason of negligence or willful misconduct with respect to such acts or omissions. (b) To the fullest extent permitted by applicable law, expenses (including legal fees and expenses) incurred by an Indemnified Person in defending any claim, demand, action, suit or proceeding (whether such claim, demand, action, suit or proceeding arises between the parties hereto or results from suits involving third parties) shall, from time to time, be advanced by the Guarantor prior to the final disposition of such claim, demand, action, suit or proceeding upon receipt by the Guarantor of an undertaking by or on behalf of the Indemnified Person to repay such amount if it shall be determined that the Indemnified Person is not entitled to be indemnified as authorized in Section 8.2(a). (c) The provisions of this Section 8.2 shall survive the termination of this Preferred Securities Guarantee. ARTICLE IX MISCELLANEOUS SECTION 9.1 Successors and Assigns All guarantees and agreements contained in this Preferred Securities Guarantee shall bind the successors, assigns, receivers, trustees and representatives of the Guarantor and shall inure to the benefit of the Holders of the Preferred Securities then outstanding. SECTION 9.2 Amendments Except with respect to any changes that do not adversely affect the rights of Holders (in which case no consent of Holders will be required), this Preferred Securities Guarantee may only be amended with the prior approval of the Holders of at least a Majority in liquidation amount of the Securities. The provisions of Section 12.2 of the Declaration with respect to meetings of Holders of the Securities apply to the giving of such approval. SECTION 9.3 Notices All notices provided for in this Preferred Securities Guarantee shall be in writing, duly signed by the party giving such notice, and shall be delivered, telecopied or mailed by first class mail, as follows: (a) If given to the Preferred Guarantee Trustee, at the Preferred Guarantee Trustee's mailing address set forth below 19 21 (or such other address as the Preferred Guarantee Trustee may give notice of to the Holders): The Bank of New York 101 Barclay Street, Floor 21 West New York, New York 10256 Attention: Corporate Trust Trustee Administration (b) If given to the Guarantor, at the Guarantor's mailing address set forth below (or such other address as the Guarantor may give notice of to the Holders): Ohio Edison Company 76 South Main Street Akron, Ohio 44308 Attention: Treasurer (c) If given to any Holder, at the address set forth on the books and records of the Issuer. All such notices shall be deemed to have been given when received in person, telecopied with receipt confirmed, or mailed by first class mail, postage prepaid, except that if a notice or other document is refused delivery or cannot be delivered because of a changed address of which no notice was given, such notice or other document shall be deemed to have been delivered on the date of such refusal or inability to deliver. SECTION 9.4 Benefit This Preferred Securities Guarantee is solely for the benefit of the Holders and, subject to Section 3.1(a), is not separately transferable from the Preferred Securities. 20 22 SECTION 9.5 Governing Law THIS PREFERRED SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. SECTION 9.6 No Recourse Against Certain Persons. No past, present or future director, officer, employee or stockholder, as such, of the Guarantor or any successor thereof shall have any liability for any obligations of the Guarantor under this Preferred Securities Guarantee or for any claim based on, in respect of, or by reason of, such obligations or their creation and all such liability is hereby waived and released. Such waiver and release are part of the consideration for the issue of this Preferred Securities Guarantee and the Preferred Securities. 21 23 THIS PREFERRED SECURITIES GUARANTEE is executed as of the day and year first above written. OHIO EDISON COMPANY, as Guarantor By: ---------------------------- Name: Title: THE BANK OF NEW YORK, as Preferred Guarantee Trustee By: ---------------------------- Name: Title: 22 24 TABLE OF CONTENTS Page ARTICLE I DEFINITIONS AND INTERPRETATION SECTION 1.1 Definitions and Interpretation.............................. 2 ARTICLE II TRUST INDENTURE ACT SECTION 2.1 Trust Indenture Act; Application............................ 5 SECTION 2.2 Lists of Holders of Securities.............................. 5 SECTION 2.3 Reports by the Preferred Guarantee Trustee..................................................... 6 SECTION 2.4 Periodic Reports to Preferred Guarantee Trustee..................................................... 6 SECTION 2.5 Evidence of Compliance with Conditions Precedent................................................... 6 SECTION 2.6 Events of Default; Waiver................................... 6 SECTION 2.7 Events of Default; Notice................................... 6 SECTION 2.8 Conflicting Interests....................................... 7 ARTICLE III POWERS, DUTIES AND RIGHTS OF PREFERRED GUARANTEE TRUSTEE SECTION 3.1 Powers and Duties of the Preferred Guarantee Trustee........................................... 7 SECTION 3.2 Certain Rights of Preferred Guarantee Trustee..................................................... 9 SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee................................................ 11 ARTICLE IV PREFERRED GUARANTEE TRUSTEE SECTION 4.1 Preferred Guarantee Trustee; Eligibility................................................. 11 SECTION 4.2 Compensation and Reimbursement.............................. 12 SECTION 4.3 Appointment, Removal and Resignation of Preferred Guarantee Trustees.................................................... 13 ARTICLE V GUARANTEE 25 SECTION 5.1 Guarantee................................................... 14 SECTION 5.2 Waiver of Notice and Demand................................. 14 SECTION 5.3 Obligations Not Affected.................................... 14 SECTION 5.4 Rights of Holders........................................... 15 SECTION 5.5 Guarantee of Payment........................................ 16 SECTION 5.6 Subrogation................................................. 16 SECTION 5.7 Independent Obligations..................................... 16 ARTICLE VI LIMITATION OF TRANSACTIONS; SUBORDINATION SECTION 6.1 Limitation of Transactions.................................. 17 SECTION 6.2 Ranking..................................................... 17 ARTICLE VII TERMINATION SECTION 7.1 Termination................................................. 17 ARTICLE VIII INDEMNIFICATION SECTION 8.1 Exculpation................................................. 18 SECTION 8.2 Indemnification............................................. 18 ARTICLE IX MISCELLANEOUS SECTION 9.1 Successors and Assigns...................................... 19 SECTION 9.2 Amendments.................................................. 19 SECTION 9.3 Notices..................................................... 19 SECTION 9.4 Benefit..................................................... 20 SECTION 9.5 Governing Law............................................... 21 SECTION 9.6 No Recourse Against Certain Persons......................... 21 EX-5.1 8 OPINION OF ANTHONY J. ALEXANDER, ESQ. 1 EXHIBIT 5.1 March 5, 1996 Ohio Edison Company 76 South Main Street Akron, OH 44308 and Ohio Edison Financing Trust II 76 South Main Street Akron, OH 44308 Re: Registration Statement on Form S-4 Dear Ladies and Gentlemen: I am Senior Vice President and General Counsel for Ohio Edison Company, an Ohio corporation (the "Company"). In connection with the preparation and filing with the Securities Exchange Commission (the "Commission") of the registration statement on Form S-4 (the "Registration Statement") to register under the Securities Act of 1933, as amended (the "Act"), up to $90,000,000 aggregate principal amount of the Company's junior subordinated debentures (the "Subordinated Debentures") to be issued under the indenture (the "Indenture") to be entered into between the Company and The Bank of New York, as Trustee, up to 3,600,000 preferred securities (the "Preferred Securities") to be issued by Ohio Edison Financing Trust II, a Delaware statutory business trust sponsored by the Company (the "Trust") and created by a declaration of trust dated as of March 1, 1996 (the "Original Declaration") which is to be amended and restated by an amended and restated declaration of trust agreement (together with the Original Declaration, the "Declaration") providing for the issuance and exchange of the Preferred Securities in connection with the offer by the Trust to exchange such Preferred Securities for up to 3,600,000 outstanding shares of 7.75% Class A Preferred Stock ("Class A Shares") of Ohio Edison, and the related guarantee to be delivered concurrently therewith by Ohio Edison and The Bank of New York, as Trustee under the preferred securities guarantee (the "Guarantee"), I have examined (i) the Registration Statement and exhibits thereto, including the prospectus comprising a part thereof (the "Prospectus"); (ii) the Company's Articles of Incorporation and Code of Regulations, both as amended; (iii) documents issued by public officials as to the existence of the Company and the Trust under the laws of the States of Ohio and Delaware; (iv) the Indenture and the First Supplemental Indenture, in substantially the forms filed as 2 Ohio Edison Company and -2- Ohio Edison Financing Trust II March 5, 1996 Exhibits 4.1 and 4.2, respectively, to the Registration Statement; (v) the Guarantee, in substantially the form filed as Exhibit 4.8 to the Registration Statement; (vi) a certificate of trust of the Trust, as filed with the Secretary of State of the State of Delaware (the "Certificate"); (vii) the Declaration, in substantially the form filed as Exhibits 4.3 and 4.5 to the Registration Statement; and (viii) such other documents and records of the Company and the Trust, and such matters of law, as I considered to be necessary to enable me to render this opinion. For purposes of this opinion, I have assumed (i) the Declaration and the Certificate are in full force and effect and have not been amended, (ii) the due organization or due formation, as the case may be, and valid existence in good standing of each party to the documents examined by me under the laws of the jurisdiction governing its organization or formation, (iii) the legal capacity of natural persons who are parties to the documents examined by me, (iv) the power and authority of each of the parties to the documents examined by me to execute and deliver, and to perform its obligation under, such documents, (v) the due authorization, execution and delivery by all parties thereto of all documents examined by me, (vi) the receipt by each person to whom a Preferred Security is to be issued by the Trust (collectively, the "Preferred Security Holders") of a Preferred Securities Certificate for such Preferred Security and the payment for the Preferred Security acquired by it, in accordance with the Declaration, the Registration Statement and the Prospectus, and (vii) the issuance and sale of the Preferred Securities to the Preferred Security Holders in accordance with the Declaration, the Registration Statement and the Prospectus. I have not participated in the preparation of the Registration Statement or the Prospectus and assume no responsibility for their contents. Based on the foregoing, I am of the opinion that: 1. The Company is a corporation duly incorporated and validly existing in good standing under the laws of the State of Ohio. 2. Subject to final approval by the Board of Directors of the Company (or by the committee or person to whom the board delegates the authority to grant such final approval) of (i) the terms of the Subordinated Debentures and the Guarantee, as well as the final terms of the Declaration and (ii) the terms of issuance of the Preferred Securities and the authorized Subordinated Debentures, the Company has duly and validly authorized the issuance of the Subordinated Debentures, and the execution and delivery of the Indenture and the Guarantee. 3 Ohio Edison Company and -3- Ohio Edison Financing Trust II March 5, 1996 3. Subject to clauses (i) and (ii) of paragraph 2 above, the Subordinated Debentures, when issued and delivered as contemplated in the Registration Statement and the Prospectus and in accordance with the authorization thereof by the Board of Directors of the Company (or by the committee or person to whom the Board delegates such authority) and executed and authenticated in accordance with the Indenture, will be valid, legal and binding obligations of the Company, enforceable in accordance with their terms against the Company, except as may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws now or hereafter in effect relating to or affecting the enforcement of creditors' rights generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). 4. Subject to clauses (i) and (ii) of paragraph 2 above, the Guarantee will be a valid, legal and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws now or hereafter in effect relating to or affecting the enforcement of creditors' rights generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law), provided (i) the Preferred Securities have been issued in accordance with the terms and provisions of the Declaration and (ii) the Preferred Securities and the Guarantee have each been issued and delivered as contemplated in the Registration Statement and the Prospectus. Paragraphs 3 and 4 of this opinion are subject to the Registration Statement's becoming effective with no stop order with respect thereto having been issued by the Commission, and to the order which has been issued by The Public Utilities Commission of Ohio remaining in effect, authorizing the issuance of the Preferred Securities, the Subordinated Debentures and the Guarantee on the terms contemplated in the Registration Statement and the Prospectus. I hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the use of my name under the caption "Legal Matters" in the Prospectus. In rendering this opinion, I have relied as to all matters governed by the laws of the State of Delaware upon the opinion of Richards, Layton & Finger, P.A., special Delaware counsel for the Company and the Trust, which is being filed as an exhibit to the Registration Statement. 4 Ohio Edison Company and -4- Ohio Edison Financing Trust II March 5, 1996 Very truly yours, Anthony J. Alexander Senior Vice President & General Counsel of Ohio Edison Company EX-5.2 9 OPINION OF RICHARDS, LAYTON & FINGER 1 EXHIBIT 5.2 [Letterhead of Richards, Layton & Finger] March 6, 1996 Ohio Edison Financing Trust II c/o Ohio Edison Company 76 South Main Street Akron, OH 44308 Attn: Treasurer Re: Ohio Edison Financing Trust II Ladies and Gentlemen: We have acted as special Delaware counsel for Ohio Edison Company, an Ohio corporation (the "Company"), and Ohio Edison Financing Trust II, a Delaware business trust (the "Trust"), in connection with the matters set forth herein. At your request, this opinion is being furnished to you. For purposes of giving the opinions hereinafter set forth, our examination of documents has been limited to the examination of originals or copies of the following: (a) The Certificate of Trust of the Trust, dated as of March 1, 1996 (the "Certificate"), as filed in the office of the Secretary of State of the State of Delaware (the "Secretary of State") on March 5, 1996; (b) The Declaration of Trust of the Trust, dated as of March __, 1996, among the Company, as Sponsor, and the trustees of the Trust named therein; (c) The Registration Statement (the "Registration Statement") on Form S-4, including a preliminary prospectus (the "Prospectus") relating to the Offer and the __% Trust Originated Preferred Securities of the Trust representing preferred undivided beneficial interests in the assets of the Trust (each, a "Preferred Security" and collectively, the "Preferred Securities"), as proposed to be filed by the Company and the 2 Ohio Edison Financing Trust II March 6, 1996 Page 2 Trust with the Securities and Exchange Commission on or about March 6, 1996; (d) A form of Amended and Restated Declaration of Trust of the Trust, to be entered into among the Company, as Sponsor, the trustees of the Trust named therein, and the holders, from time to time, of undivided beneficial interests in the assets of the Trust (including Annex I and Exhibits A-1 and A-2 thereto) (the "Trust Agreement"), attached as an exhibit to the Registration Statement; and (e) A Certificate of Good Standing for the Trust, dated March 6, 1996, obtained from the Secretary of State. Initially capitalized terms used herein and not otherwise defined are used as defined in the Trust Agreement. For purposes of this opinion, we have not reviewed any documents other than the documents listed in paragraph (a) through (e) above. In particular, we have not reviewed any document (other than the documents listed in paragraph (a) through (e) above) that is referred to in or incorporated by reference into the documents reviewed by us. We have assumed that there exists no provision in any document that we have not reviewed that is inconsistent with the opinions stated herein. We have conducted no independent factual investigation of our own but rather have relied solely upon the foregoing documents, the statements and information set forth therein and the additional matters recited or assumed herein, all of which we have assumed to be true, complete and accurate in all material respects. With respect to all documents examined by us, we have assumed (i) the authenticity of all documents submitted to us as authentic originals, (ii) the conformity with the originals of all documents submitted to us as copies or forms, and (iii) the genuineness of all signatures. For purposes of this opinion, we have assumed (i) that the Trust Agreement and the Certificate are in full force and effect and have not been amended, (ii) except to the extent provided in paragraph 1 below, the due creation or due organization or due formation, as the case may be, and valid existence in good standing of each party to the documents examined by us under the laws of the jurisdiction governing its creation, organization or formation, (iii) the legal capacity of natural persons who are parties to the documents examined by us, 3 Ohio Edison Financing Trust II March 6, 1996 Page 3 (iv) that each of the parties to the documents examined by us has the power and authority to execute and deliver, and to perform its obligations under, such documents, (v) the due authorization, execution and delivery by all parties thereto of all documents examined by us, (vi) the receipt by each Person to whom a Preferred Security is to be issued by the Trust (collectively, the "Preferred Security Holders") of a Preferred Security Certificate for such Preferred Security and the acceptance by the Trust of the Class A Preferred Stock of the Company validly tendered for such Preferred Security pursuant to the Offer, in accordance with the Trust Agreement and the Registration Statement, and (vii) that the Preferred Securities are issued and sold to the Preferred Security Holders in accordance with the Trust Agreement and the Registration Statement. We have not participated in the preparation of the Registration Statement and assume no responsibility for its contents. This opinion is limited to the laws of the State of Delaware (excluding the securities laws of the State of Delaware), and we have not considered and express no opinion on the laws of any other jurisdiction, including federal laws and rules and regulations relating thereto. Our opinions are rendered only with respect to Delaware laws and rules, regulations and orders thereunder which are currently in effect. Based upon the foregoing, and upon our examination of such questions of law and statutes of the State of Delaware as we have considered necessary or appropriate, and subject to the assumptions, qualifications, limitations and exceptions set forth herein, we are of the opinion that: 1. The Trust has been duly created and is validly existing in good standing as a business trust under the Business Trust Act. 2. The Preferred Securities will represent valid and, subject to the qualifications set forth in paragraph 3 below, fully paid and nonassessable undivided beneficial interests in the assets of the Trust. 3. The Preferred Security Holders, as beneficial owners of the Trust, will be entitled to the same limitation of personal liability extended to stockholders of private corporations for profit organized under the General Corporation Law of the State of Delaware. We note that the Preferred 4 Ohio Edison Financing Trust II March 6, 1996 Page 4 Security Holders may be obligated to make payments as set forth in the Trust Agreement. We consent to the filing of this opinion with the Securities and Exchange Commission as an exhibit to the Registration Statement. In addition, we hereby consent to the use of our name under the heading "Legal Matters" in the Prospectus. In giving the foregoing consents, we do not thereby admit that we come within the category of Persons whose consent is required under Section 7 of the Securities Act of 1933, as amended, or the rules and regulations of the Securities and Exchange Commission thereunder. Except as stated above, without our prior written consent, this opinion may not be furnished or quoted to, or relied upon by, any other Person for any purpose. Very truly yours, EX-8 10 TAX OPINION OF WINTHROP, STIMSON 1 EXHIBIT 8 March __, 1996 Ohio Edison Company 76 South Main Street Akron, Ohio 44308 Ohio Edison Financing Trust II c/o Ohio Edison Company 76 South Main Street Akron, Ohio 44308 Re: Ohio Edison Financing Trust II ___% Trust Originated Preferred Securities Ladies and Gentlemen: As counsel to Ohio Edison Company (the "Company") and Ohio Edison Financing Trust II (the "Issuer"), we have assisted in the preparation of the prospectus (the "Prospectus") that forms a part of the registration statement on Form S-4 (File No. 33- _________) under the Securities Act of 1933 (the "Act"), as filed with the Securities and Exchange Commission on the date hereof (the "Registration Statement"), in connection with the Issuer's offer (the "Offer") to exchange up to 3,600,000 of its __% Trust Originated Preferred Securities (the "Preferred Securities") for a like number of shares of its outstanding 7.75% Class A Preferred Stock, $25 par value (the "Class A Shares"), and the issuance of a like aggregate principal amount of ___% Junior Subordinated Debentures Due 2016, by the Company to the Issuer. Unless otherwise defined herein, all terms used herein shall have the meanings ascribed to them in the Prospectus. We have examined and relied upon the Registration Statement and, in each case as filed as an exhibit to the Registration Statement, (i) the form of Amended and Restated Declaration of Trust among the Company, as Sponsor, and the several trustees named therein, (ii) the form of Indenture between the Company and The Bank of New York, as Trustee, and (iii) the form of Preferred Securities Guarantee Agreement 2 between the Company, as Guarantor, and The Bank of New York, as Preferred Guarantee Trustee. Based on the foregoing and on our consideration of such other information as we have deemed necessary and appropriate, we hereby confirm, subject to the qualifications contained therein, our opinion as set forth in the Prospectus under the caption "Taxation." We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to our firm under the heading "Taxation" in the Prospectus. In giving such consent, we do not thereby admit that we are included in the category of persons whose consent is required under Section 7 of the Act. Very truly yours, EX-12 11 COMPUTATION OF EARNINGS TO FIXED CHARGES/DIVIDENDS 1 EXHIBIT 12 Page 1 OHIO EDISON COMPANY CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
Year Ended December 31, ----------------------- 1991 1992 1993 1994 1995 ---- ---- ---- ---- ---- (Dollars in Thousands) EARNINGS AS DEFINED IN REGULATION S-K Income before extraordinary items .................................... $264,823 $276,986 $ 24,523 $303,531 $317,241 Interest and other charges, before reduction for amounts capitalized.. 324,017 296,292 285,169 283,849 273,719 Provision for income taxes ........................................... 173,725 147,407 32,431 188,886 199,307 Interest element of rentals charged to income (a) .................... 125,777 117,224 104,700 108,463 111,534 -------- -------- -------- -------- -------- Earnings as defined .................................................. $888,342 $837,909 $446,823 $884,729 $901,801 ======== ======== ======== ======== ======== FIXED CHARGES AS DEFINED IN REGULATION S-K: Interest on long-term debt ........................................... $288,599 $275,835 $262,861 $259,554 $243,570 Other interest expense ............................................... 27,696 13,958 16,445 18,931 22,944 Subsidiaries' preferred stock dividend requirements .................. 7,722 6,499 5,863 5,364 7,205 Adjustment to subsidiaries' preferred stock dividends to state on a pre-income tax basis .................................. 5,018 3,420 7,659 3,294 2,956 Interest element of rentals charged to income (a) .................... 125,777 117,224 104,700 108,463 111,534 -------- -------- -------- -------- -------- Fixed charges as defined ............................................. $454,812 $416,936 $397,528 $395,606 $388,209 ======== ======== ======== ======== ======== CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES (b) ........................................................ 1.95 2.01 1.12 2.24 2.32 ======== ======== ======== ======== ========
- - ------------------------- (a) Includes the interest element of rentals where determinable plus 1/3 of rental expense where no readily defined interest element can be determined. (b) These ratios exclude fixed charges applicable to the guarantee of the debt of a coal supplier aggregating $13,298,000, $9,762,000, $8,565,000, $7,424,000 and $6,315,000 for each of the five years ended December 31, 1995, respectively. 2 EXHIBIT 12 Page 2 OHIO EDISON COMPANY CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES PLUS PREFERRED AND PREFERENCE STOCK DIVIDEND REQUIREMENTS (PRE-INCOME TAX BASIS)
Year Ended December 31, ----------------------- 1991 1992 1993 1994 1995 ---- ---- ---- ---- ---- (Dollars in Thousands) EARNINGS AS DEFINED IN REGULATION S-K: Income before extraordinary items .................................. $264,823 $276,986 $ 24,523 $303,531 $317,241 Add- Interest and other charges, before reduction for amounts capitalized .................................................... 324,017 296,292 285,169 283,849 273,719 Provision for income taxes ....................................... 173,725 147,407 32,431 188,886 199,307 Interest element of rentals charged to income (a) ................ 125,777 117,224 104,700 108,463 111,534 -------- -------- -------- -------- -------- Earnings as defined ........................................... $888,342 $837,909 $446,823 $884,729 $901,801 ======== ======== ======== ======== ======== FIXED CHARGES AS DEFINED IN REGULATION S-K PLUS PREFERRED AND PREFERENCE STOCK DIVIDEND REQUIREMENTS (PRE-INCOME TAX BASIS): Interest on long-term debt ......................................... $288,599 $275,835 $262,861 $259,554 $243,570 Other interest expense ............................................. 27,696 13,958 16,445 18,931 22,944 Preferred and preference stock dividend requirements ............... 32,476 30,425 29,570 27,043 29,699 Adjustment to preferred and preference stock dividends to state on a pre-income tax basis ................................ 20,887 15,854 38,265 16,444 16,745 Interest element of rentals charged to income (a) .................. 125,777 117,224 104,700 108,463 111,534 -------- -------- -------- -------- -------- Fixed charges as defined plus preferred and preference stock dividend requirements (pre-income tax basis) ........................................ $495,435 $453,296 $451,841 $430,435 $424,492 ======== ======== ======== ======== ======== CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES (b) ........................................................ 1.79 1.85 0.99(c) 2.06 2.12 ======== ======== ======== ======== ========
- - ------------------------- (a) Includes the interest element of rentals where determinable plus 1/3 of rental expense where no readily defined interest element can be determined. (b) These ratios exclude fixed charges applicable to the guarantee of the debt of a coal supplier aggregating $13,298,000, $9,762,000, $8,565,000, $7,424,000 and $6,315,000 for each of the five years ended December 31, 1995, respectively. (c) Earnings as defined were deficient in 1993 by $5,018,000 to cover fixed charges plus preferred stock dividend requirements (pre-income tax basis). EX-15 12 LETTER OF ARTHUR ANDERSEN LLP 1 EXHIBIT 15 March 5, 1996 Ohio Edison Company and Ohio Edison Financing Trust II: We are aware that Ohio Edison Company and Ohio Edison Financing Trust II have incorporated by reference in this Registration Statement, Ohio Edison Company's Form 10-Q for the quarters ended March 31, 1995, June 30, 1995 and September 30, 1995 which include our reports dated May 4, 1995, August 2, 1995 and November 3, 1995, respectively, covering the unaudited interim consolidated financial information contained therein. Pursuant to Regulation C of the Securities Act of 1933, those reports are not considered a part of this Registration Statement prepared or certified by our firm or reports prepared or certified by our firm within the meaning of Sections 7 and 11 of the Act. Very truly yours, ARTHUR ANDERSEN LLP EX-23.1 13 CONSENT OF ARTHUR ANDERSEN LLP 1 EXHIBIT 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference in this Registration Statement of our reports dated February 3, 1995 and February 8, 1996, incorporated by reference or included in Ohio Edison Company's Annual Report on Form 10-K for the year ended December 31, 1994 and Ohio Edison's Current Report on Form 8-K dated February 23, 1996, and to all references to our Firm included in this Registration Statement. ARTHUR ANDERSEN LLP Cleveland, Ohio March 5, 1996 EX-24.1 14 POWERS OF ATTORNEY 1 EXHIBIT 24.1 February 20, 1996 POWER OF ATTORNEY H. P. Burg N. C. Ashcom c/o Ohio Edison Company 76 South Main Street Akron, Ohio 44308 J. H. Byington M. F. Cusick c/o Winthrop, Stimson, Putnam & Roberts One Battery Park Plaza New York, New York 10004 Dear Sirs: Ohio Edison Company (the "Company") and Ohio Edison Financing Trust II (the "Issuer") propose to file with the Securities and Exchange Commission a registration statement or registration statements on Form S-4 under the Securities Act of 1933 with respect to the issuance of ___% Trust Originated Preferred Securities by the Issuer and the issuance of ___% Junior Subordinated Debentures Due 2016 by the Company to the Issuer in connection with an exchange offer for outstanding shares of the Company's 7.75% Class A Preferred Stock. The undersigned directors and officers of said Company, individually as a director and/or as an officer of said Company, hereby make, constitute and appoint each of you the true and lawful attorney for each of the undersigned, and in each of the names, places and steads of the undersigned, and hereby authorize 2 you or any one of you to execute, as such attorney-in-fact for each of the undersigned directors and officers, and cause to be filed with said Commission, said registration statement and any appropriate amendment or amendments thereto, to be accompanied by a prospectus and any appropriately amended prospectus and by any necessary exhibits. Very truly yours, /s/ WILLARD R. HOLLAND /s/ CAROL A. CARTWRIGHT WILLARD R. HOLLAND CAROL A. CARTWRIGHT /s/ DONALD C. BLASIUS /s/ ROBERT L. LOUGHHEAD DONALD C. BLASIUS ROBERT L. LOUGHHEAD /s/ ROBERT H. CARLSON /s/ GLENN H. MEADOWS ROBERT H. CARLSON GLENN H. MEADOWS /s/ ROBERT M. CARTER /s/ PAUL J. POWERS ROBERT M. CARTER PAUL J. POWERS /s/ CHARLES W. RAINGER /s/ GEORGE M. SMART CHARLES W. RAINGER GEORGE M. SMART /s/ JESSE T. WILLIAMS, SR. /s/ H. PETER BURG JESSE T. WILLIAMS, SR. H. PETER BURG /s/ RUSSELL W. MAIER RUSSELL W. MAIER -2- EX-25.1 15 FORM T-1, AS TRUSTEE UNDER THE INDENTURE 1 EXHIBIT 25.1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------- FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) ____________ ----------------- THE BANK OF NEW YORK (Exact name of trustee as specified in its charter) New York 13-5160382 (Jurisdiction of incorporation (I.R.S. Employer if not a U.S. national bank) Identification No.) 48 Wall Street, New York, New York 10286 (Address of principal executive offices) (Zip code) ----------------- OHIO EDISON COMPANY (Exact name of obligor as specified in its charter) Ohio 34-0437786 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 76 South Main Street Akron, Ohio 44308 (Address of principal executive offices) (Zip code) ----------------- Ohio Edison Company [ ]% Junior Subordinated Debentures Due 2016* (Title of the indenture securities) - - ---------------- *Specific title to be determined in connection with sale of Junior Subordinated Debentures Due 2016. 2 ITEM 1. GENERAL INFORMATION.* Furnish the following information as to the Trustee: (a) Name and address of each examining or supervising authority to which it is subject. Superintendent of Banks of the 2 Rector Street, New York, N.Y. 10006 State of New York and Albany, N.Y. 12203 Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045 Federal Deposit Insurance Corporation 550 17th Street, N.W., Washington, D.C. 20429 New York Clearing House Association New York, N.Y.
(b) Whether it is authorized to exercise corporate trust powers. Yes. ITEM 2. AFFILIATIONS WITH OBLIGOR. If the obligor is an affiliate of the trustee, describe each such affiliation. None. (See Note on page 2.) ITEM 16. LIST OF EXHIBITS. Exhibits identified in parentheses below, on file with the Commission, are incorporated herein by reference as an exhibit hereto, pursuant to Rule 7a-29 under the Trust Indenture Act of 1939 (the "Act") and Rule 24 of the Commission's Rules of Practice. 1. - A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.) 4. - A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019.) 6. - The consent of the Trustee required by Section 321(b) of the Act. (Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.) 7. - A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or examining authority. - - -------- *Pursuant to General Instruction B, the Trustee has responded only to Items 1, 2 and 16 of this form since to the best of the knowledge of the Trustee the obligor is not in default under any indenture under which the Trustee is a trustee. 3 NOTE Inasmuch as this Form T-1 is being filed prior to the ascertainment by the Trustee of all facts on which to base a responsive answer to Item 2, the answer to said Item is based on incomplete information. Item 2 may, however, be considered as correct unless amended by an amendment to this Form T-1. SIGNATURE Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of New York, and State of New York, on the 4th day of March, 1996. THE BANK OF NEW YORK By: /s/ LUCILLE FIRRINCIELI ------------------------- Lucille Firrincieli Assistant Vice President - 2 - 4 EXHIBIT 7 (Page 1 of 3) Consolidated Report of Condition of THE BANK OF NEW YORK of 48 Wall Street, New York, N.Y. 10286 And Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business September 30, 1995, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts ASSETS in Thousands - - ------ -------------- Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin ................... $ 1,736,715 Interest-bearing balances ................. 891,776 Securities: Held-to-maturity securities ............... 1,326,964 Available-for-sale securities ............. 1,690,688 Federal funds sold in domestic offices of the bank ....................... 3,304,789 Loans and lease financing receivables: Loans and leases, net of unearned income ....................... 27,623,140 LESS: Allowance for loan and lease losses......................528,419 Loans and leases, net of unearned income and allowance .................. 27,094,721 Assets held in trading accounts ............. 1,002,519 Premises and fixed assets (including capitalized leases) ....................... 609,515 Other real estate owned ..................... 72,559 Investments in unconsolidated subsid- iaries and associated companies ........... 211,296 Customers' liability to this bank on acceptances outstanding ................... 894,050 Intangible assets ........................... 103,081 Other assets ................................ 1,193,025 ----------- Total assets ................................ $40,131,698 ===========
5 EXHIBIT 7 (Page 2 of 3) LIABILITIES - - ----------- Deposits: In domestic offices ................................................ $ 18,120,409 Noninterest-bearing ...................................... 6,529,790 Interest-bearing ........................................ 11,590,619 In foreign offices, Edge and Agreement subsidiaries, and IBFs ................................... 10,327,057 Noninterest-bearing ..........................................58,060 Interest-bearing ........................................ 10,268,997 Federal funds purchased and securities sold under agreements to repurchase in domestic offices of the bank and of its Edge and Agreement subsid- iaries, and in IBFs: Federal funds purchased ............................................ 2,479,694 Securities sold under agreements to repurchase .................................................... 27,450 Demand notes issued to the U.S. Treasury ........................................................... 197,998 Trading liabilities .................................................. 631,973 Other borrowed money: With original maturity of one year or less ......................... 1,339,183 With original maturity of more than one year ......................................................... 120,863 Bank's liability on acceptances executed and outstanding ......................................... 899,417 Subordinated notes and debentures .................................... 1,053,860 Other liabilities .................................................... 1,554,647 ------------ Total liabilities .................................................... 36,752,551 ------------ EQUITY CAPITAL - - -------------- Common stock ......................................................... 942,284 Surplus .............................................................. 525,666 Undivided profits and capital reserves ........................................................... 1,911,248 Net unrealized holding gains (losses) on available-for-sale securities ................................... 4,994 Cumulative foreign currency translation adjustments ............................................ (5,045) ------------ Total equity capital ................................................. 3,379,147 ------------ Total liabilities and equity capital ................................. $ 40,131,698 ============
6 EXHIBIT 7 (Page 3 of 3) I, Robert E. Keilman, Senior Vice President and Comptroller of the above-named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. Robert E. Keilman We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. J. Carter Bacot ) Thomas A. Renyi ) Directors Alan R. Griffith ) EX-25.2 16 FORM T-1, AS PROPERTY TRUSTEE 1 EXHIBIT 25.2 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------- FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) ____________ ----------------- THE BANK OF NEW YORK (Exact name of trustee as specified in its charter) New York 13-5160382 (Jurisdiction of incorporation (I.R.S. Employer if not a U.S. national bank) Identification No.) 48 Wall Street, New York, New York 10286 (Address of principal executive offices) (Zip code) ----------------- OHIO EDISON FINANCING TRUST II (Exact name of obligor as specified in its charter) Delaware To Be Applied For (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 76 South Main Street Akron, Ohio 44308 (Address of principal executive offices) (Zip code) ----------------- Ohio Edison Financing Trust II [ ]% Trust Originated Preferred Securities* (Title of the indenture securities) - - ---------- *Specific title to be determined in connection with sale of Ohio Edison Financing Trust II Trust Originated Preferred Securities. 2 ITEM 1. GENERAL INFORMATION.* Furnish the following information as to the Trustee: (a) Name and address of each examining or supervising authority to which it is subject. Superintendent of Banks of the 2 Rector Street, New York, N.Y. 10006 State of New York and Albany, N.Y. 12203 Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045 Federal Deposit Insurance Corporation 550 17th Street, N.W., Washington, D.C. 20429 New York Clearing House Association New York, N.Y.
(b) Whether it is authorized to exercise corporate trust powers. Yes. ITEM 2. AFFILIATIONS WITH OBLIGOR. If the obligor is an affiliate of the trustee, describe each such affiliation. None. (See Note on page 2.) ITEM 16. LIST OF EXHIBITS. Exhibits identified in parentheses below, on file with the Commission, are incorporated herein by reference as an exhibit hereto, pursuant to Rule 7a-29 under the Trust Indenture Act of 1939 (the "Act") and Rule 24 of the Commission's Rules of Practice. 1. - A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.) 4. - A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019.) 6. - The consent of the Trustee required by Section 321(b) of the Act. (Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.) 7. - A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or examining authority. - - ---------- *Pursuant to General Instruction B, the Trustee has responded only to Items 1, 2 and 16 of this form since to the best of the knowledge of the Trustee the obligor is not in default under any indenture under which the Trustee is a trustee. 3 NOTE Inasmuch as this Form T-1 is being filed prior to the ascertainment by the Trustee of all facts on which to base a responsive answer to Item 2, the answer to said Item is based on incomplete information. Item 2 may, however, be considered as correct unless amended by an amendment to this Form T-1. SIGNATURE Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of New York, and State of New York, on the 4th day of March, 1996. THE BANK OF NEW YORK By: /s/ LUCILLE FIRRINCIELI ---------------------------- Lucille Firrincieli Assistant Vice President - 2 - 4 EXHIBIT 7 (Page 1 of 3) Consolidated Report of Condition of THE BANK OF NEW YORK of 48 Wall Street, New York, N.Y. 10286 And Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business September 30, 1995, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts ASSETS in Thousands - - ------ -------------- Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,736,715 Interest-bearing balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 891,776 Securities: Held-to-maturity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,326,964 Available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,690,688 Federal funds sold in domestic offices of the bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,304,789 Loans and lease financing receivables: Loans and leases, net of unearned income. . . . . . . 27,623,140 LESS: Allowance for loan and lease losses. . . . . . 528,419 Loans and leases, net of unearned income and allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,094,721 Assets held in trading accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,002,519 Premises and fixed assets (including capitalized leases) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 609,515 Other real estate owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72,559 Investments in unconsolidated subsid- iaries and associated companies . . . . . . . . . . . . . . . . . . . . . . . . . . 211,296 Customers' liability to this bank on acceptances outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 894,050 Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103,081 Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,193,025 ----------- Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $40,131,698 ===========
5 EXHIBIT 7 (Page 2 of 3) LIABILITIES - - ----------- Deposits: In domestic offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $18,120,409 Noninterest-bearing. . .6,529,790 Interest-bearing. . . .11,590,619 In foreign offices, Edge and Agreement subsidiaries, and IBFs . . . . . . . . . . . . . . . . . . . . . . . . . . 10,327,057 Noninterest-bearing. . . . 58,060 Interest-bearing. . . .10,268,997 Federal funds purchased and securities sold under agreements to repurchase in domestic offices of the bank and of its Edge and Agreement subsid- iaries, and in IBFs: Federal funds purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,479,694 Securities sold under agreements to repurchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,450 Demand notes issued to the U.S. Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197,998 Trading liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 631,973 Other borrowed money: With original maturity of one year or less . . . . . . . . . . . . . . . . . . . . . 1,339,183 With original maturity of more than one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120,863 Bank's liability on acceptances executed and outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 899,417 Subordinated notes and debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,053,860 Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,554,647 ----------- Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36,752,551 ----------- EQUITY CAPITAL - - -------------- Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 942,284 Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 525,666 Undivided profits and capital reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,911,248 Net unrealized holding gains (losses) on available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,994 Cumulative foreign currency translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( 5,045) ----------- Total equity capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,379,147 ----------- Total liabilities and equity capital . . . . . . . . . . . . . . . . . . . . . . . . . $40,131,698 ===========
6 EXHIBIT 7 (Page 3 of 3) I, Robert E. Keilman, Senior Vice President and Comptroller of the above-named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. Robert E. Keilman We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. J. Carter Bacot ) Thomas A. Renyi ) Directors Alan R. Griffith ) EX-25.3 17 FORM T-1, AS INDENTURE TRUSTEE 1 EXHIBIT 25.3 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------- FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) ____________ ----------------- THE BANK OF NEW YORK (Exact name of trustee as specified in its charter) New York 13-5160382 (Jurisdiction of incorporation (I.R.S. Employer if not a U.S. national bank) Identification No.) 48 Wall Street, New York, New York 10286 (Address of principal executive offices) (Zip code) ----------------- OHIO EDISON COMPANY (Exact name of obligor as specified in its charter) Ohio 34-0437786 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 76 South Main Street Akron, Ohio 44308 (Address of principal executive offices) (Zip code) ----------------- Ohio Edison Company Guarantee with respect to Ohio Edison Financing Trust II [ ]% Trust Originated Preferred Securities* (Title of the indenture securities) - - ---------------- *Specific title to be determined in connection with sale of Ohio Edison Financing Trust II Trust Originated Preferred Securities. 2 ITEM 1. GENERAL INFORMATION.* Furnish the following information as to the Trustee: (a) Name and address of each examining or supervising authority to which it is subject. Superintendent of Banks of the 2 Rector Street, New York, N.Y. 10006 State of New York and Albany, N.Y. 12203 Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045 Federal Deposit Insurance Corporation 550 17th Street, N.W., Washington, D.C. 20429 New York Clearing House Association New York, N.Y.
(b) Whether it is authorized to exercise corporate trust powers. Yes. ITEM 2. AFFILIATIONS WITH OBLIGOR. If the obligor is an affiliate of the trustee, describe each such affiliation. None. (See Note on page 2.) ITEM 16. LIST OF EXHIBITS. Exhibits identified in parentheses below, on file with the Commission, are incorporated herein by reference as an exhibit hereto, pursuant to Rule 7a-29 under the Trust Indenture Act of 1939 (the "Act") and Rule 24 of the Commission's Rules of Practice. 1. - A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.) 4. - A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019.) 6. - The consent of the Trustee required by Section 321(b) of the Act. (Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.) 7. - A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or examining authority. - - -------- *Pursuant to General Instruction B, the Trustee has responded only to Items 1, 2 and 16 of this form since to the best of the knowledge of the Trustee the obligor is not in default under any indenture under which the Trustee is a trustee. 3 NOTE Inasmuch as this Form T-1 is being filed prior to the ascertainment by the Trustee of all facts on which to base a responsive answer to Item 2, the answer to said Item is based on incomplete information. Item 2 may, however, be considered as correct unless amended by an amendment to this Form T-1. SIGNATURE Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of New York, and State of New York, on the 4th day of March, 1996. THE BANK OF NEW YORK By: /s/ LUCILLE FIRRINCIELI --------------------- Lucille Firrincieli Assistant Vice President - 2 - 4 EXHIBIT 7 (Page 1 of 3) Consolidated Report of Condition of THE BANK OF NEW YORK of 48 Wall Street, New York, N.Y. 10286 And Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business September 30, 1995, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts ASSETS in Thousands - - ------ ------------ Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin ........................................ $ 1,736,715 Interest-bearing balances ...................................... 891,776 Securities: Held-to-maturity securities .................................... 1,326,964 Available-for-sale securities .................................. 1,690,688 Federal funds sold in domestic offices of the bank ............................................ 3,304,789 Loans and lease financing receivables: Loans and leases, net of unearned income ...................................... 27,623,140 LESS: Allowance for loan and lease losses................................. 528,419 Loans and leases, net of unearned income and allowance ....................................... 27,094,721 Assets held in trading accounts .................................. 1,002,519 Premises and fixed assets (including capitalized leases) ............................................ 609,515 Other real estate owned .......................................... 72,559 Investments in unconsolidated subsid- iaries and associated companies ................................ 211,296 Customers' liability to this bank on acceptances outstanding ........................................ 894,050 Intangible assets ................................................ 103,081 Other assets ..................................................... 1,193,025 ----------- Total assets ..................................................... $40,131,698 ===========
5 EXHIBIT 7 (Page 2 of 3) LIABILITIES - - ----------- Deposits: In domestic offices .................................................. $ 18,120,409 Noninterest-bearing ................................ 6,529,790 Interest-bearing ................................... 11,590,619 In foreign offices, Edge and Agreement subsidiaries, and IBFs ..................................... 10,327,057 Noninterest-bearing ................................ 58,060 Interest-bearing ................................... 10,268,997 Federal funds purchased and securities sold under agreements to repurchase in domestic offices of the bank and of its Edge and Agreement subsid- iaries, and in IBFs: Federal funds purchased .............................................. 2,479,694 Securities sold under agreements to repurchase ...................................................... 27,450 Demand notes issued to the U.S. ........................................ Treasury ............................................................. 197,998 Trading liabilities .................................................... 631,973 Other borrowed money: With original maturity of one year or less ........................... 1,339,183 With original maturity of more than one year ........................................................... 120,863 Bank's liability on acceptances executed and outstanding ........................................... 899,417 Subordinated notes and debentures ...................................... 1,053,860 Other liabilities ...................................................... 1,554,647 ------------ Total liabilities ...................................................... 36,752,551 ------------ EQUITY CAPITAL - - -------------- Common stock ........................................................... 942,284 Surplus ................................................................ 525,666 Undivided profits and capital reserves ............................................................. 1,911,248 Net unrealized holding gains (losses) on available-for-sale securities ..................................... 4,994 Cumulative foreign currency translation adjustments .............................................. (5,045) ------------ Total equity capital ................................................... 3,379,147 ------------ Total liabilities and equity capital ................................... $ 40,131,698 ============
6 EXHIBIT 7 (Page 3 of 3) I, Robert E. Keilman, Senior Vice President and Comptroller of the above-named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. Robert E. Keilman We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. J. Carter Bacot ) Thomas A. Renyi ) Directors Alan R. Griffith ) EX-99.1 18 FORM OF LETTER OF TRANSMITTAL 1 EXHIBIT 99.1 LETTER OF TRANSMITTAL To Tender Shares of 7.75% Class A Preferred Stock, $25 par value per share (CUSIP 677347 76 7), (the "Class A Shares"), of Ohio Edison Company Pursuant to the offer by Ohio Edison Financing Trust II to exchange its [___]% Trust Originated Preferred Securities(SM) ("TOPrS(SM)") for up to 3,600,000 outstanding Class A Shares The Offer, Proration Period and Withdrawal Rights Will Expire at 12:00 Midnight, New York City Time, on [___________], 1996, Unless the Offer is Extended. The Exchange Agent for the Offer is: THE BANK OF NEW YORK By Mail: By Hand: Tender and Exchange Department Tender and Exchange Department P.O. Box 11248 101 Barclay Street Church Street Station Receive and Deliver Window New York, New York 10286-1248 New York, New York 10286 By Overnight Courier: By Facsimile Transmission: (for Eligible Institutions Only) Tender and Exchange Department (212) 815-6213 101 Barclay Street Receive and Deliver Window For Information Call: New York, New York 10286 (800) 507-9357) 2 DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. Subject to the terms and conditions set forth in the Prospectus and herein, Ohio Edison Financing Trust II (the "Trust") will accept for exchange up to 3,600,000 Class A Shares validly tendered and not withdrawn. This Letter of Transmittal is to be completed by holders of Class A Shares, either (i) if certificates for Class A Shares are to be forwarded herewith or (ii) unless an Agent's Message (as defined in the accompanying Prospectus of Ohio Edison Company ("Ohio Edison") and the Trust (as amended or supplemented (including documents incorporated by reference), the "Prospectus")) is utilized, if tenders of Class A Shares are to be made by book-entry transfer into the account of The Bank of New York, as Exchange Agent (the "Exchange Agent"), at The Depository Trust Company and Philadelphia Depository Trust Company (together, the "Depository Institutions") pursuant to the procedures described under "The Offer -- Procedures for Tendering" in the Prospectus. Holders of Class A Shares who tender Class A Shares by book-entry transfer are referred to herein as "Book-Entry Shareholders." Any holder of Class A Shares who submits this Letter of Transmittal and tenders Class A Shares in accordance with the instructions contained herein prior to the Expiration Date (as defined in the Prospectus) will thereby have directed the Trust to deliver its [___]% Trust Originated Preferred Securities(SM) ("TOPrS(SM)") (the "Preferred Securities") in exchange for such holder's Class A Shares and in consideration of the deposit by Ohio Edison with the Trust as trust assets of its [___]% Junior Subordinated Debentures due 2016 (the "Junior Subordinated Debentures") as set forth in the Prospectus. Tenders of Class A Shares pursuant to this Letter of Transmittal are subject to withdrawal as described in the Prospectus under the caption "The Offer -- Withdrawal of Tenders". - - -------------- (SM) "Trust Originated Preferred Securities" and "TOPrS" are service marks of Merrill Lynch & Co. -2- 3
- - ----------------------------------------------------------------------------------------------------------------------- DESCRIPTION OF SHARES TENDERED - - ----------------------------------------------------------------------------------------------------------------------- NAMES(S) AND ADDRESS(ES) OF REGISTERED OWNER(S) SHARES TENDERED (PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) APPEAR (ATTACH ADDITIONAL LIST IF NECESSARY) ON CERTIFICATE(S)) - - ------------------------------------------------------------------------------------------------------------------------ TOTAL NUMBER OF SHARES CERTIFICATE REPRESENTED BY NUMBER OF SHARES NUMBER(S)(1) CERTIFICATE(S)(1) TENDERED(2) ------------------------------------------------------------ ------------------------------------------------------------ ------------------------------------------------------------ ------------------------------------------------------------ ------------------------------------------------------------ ------------------------------------------------------------ TOTAL SHARES - - -----------------------------------------------------------------------------------------------------------------------
(1) Need not be completed by Book-Entry Stockholders. (2) Unless otherwise indicated, it will be assumed that all Shares described above are being tendered. See Instruction 4. - - -------------------------------------------------------------------------------- / / CHECK HERE IF TENDERED CLASS A SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE EXCHANGE AGENT'S ACCOUNT AT A DEPOSITORY INSTITUTION AND COMPLETE THE FOLLOWING: Name of Tendering Institution: ---------------------------------------- Check Box of Book-Entry Transfer Facility: / / The Depository Trust Company / / Philadelphia Depository Trust Company Account No. ----------------------------------------------------------- Transaction Code No. -------------------------------------------------- / / CHECK HERE IF TENDERED CLASS A SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING: Name(s) of Tendering Shareholder(s) ----------------------------------- Date of Execution of Notice of Guaranteed Delivery -------------------- Name of Institution which Guaranteed Delivery ------------------------- If delivery is by book-entry transfer: ----------------------------------------- Name of Tendering Institution ----------------------------------------- -3- 4 Check Box of Book-Entry Transfer Facility: / / The Depository Trust Company / / Philadelphia Depository Trust Company Account No. ----------------------------------------------------------- Transaction Code No. -------------------------------------------------- -4- 5 SOLICITED TENDERS (SEE INSTRUCTION 11) Ohio Edison will pay to any Soliciting Dealer, as defined in Instruction 11, a solicitation fee of $[___] per Class A Share validly tendered and accepted for exchange pursuant to the Offer (as herein defined). The undersigned represents that the Soliciting Dealer which solicited and obtained this tender is: Name of Firm: ------------------------------------------------------------------- (PLEASE PRINT) Name of Individual Broker or Financial Consultant: ------------------------------ Identification Number (if known): ----------------------------------------------- Address: ------------------------------------------------------------------------ ------------------------------------------------------------------------ (Include Zip Code) The acceptance of compensation by such Soliciting Dealer will constitute a representation by it that: (i) it has complied with the applicable requirements of the Securities Exchange Act of 1934 and the applicable rules and regulations thereunder in connection with such solicitations; (ii) it is entitled to such compensation for such solicitation under the terms and conditions of the Offer; (iii) in soliciting tenders of Class A Shares, it has used no soliciting materials other than those furnished by Ohio Edison and the Trust; and (iv) if it is a foreign broker or dealer not eligible for membership in the National Association of Securities Dealers, Inc. (the "NASD"), it has agreed to conform to the NASD's Rules of Fair Practice in making solicitations outside the United States to the same extent as though it were an NASD member. If tendered Class A Shares are being delivered by book-entry transfer made to an account maintained by the Exchange Agent with a Depository Institution, the Soliciting Dealer must return a Notice of Solicited Tenders to the Exchange Agent to receive a solicitation fee. SOLICITING DEALERS ARE NOT ENTITLED TO A FEE FOR CLASS A SHARES BENEFICIALLY OWNED BY SUCH SOLICITING DEALER. NOTE: SIGNATURES MUST BE PROVIDED BELOW PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY Ladies and Gentlemen: -5- 6 The undersigned hereby tenders to Ohio Edison Financing Trust II, a Delaware statutory business trust (the "Trust"), the above-described Class A Shares, pursuant to the offer by the Trust to exchange its [___]% Trust Originated Preferred Securities(SM) ("TOPrS(SM)") ("Preferred Securities") for up to 3,600,000 shares 7.75% Class A Preferred Stock (the "Class A Shares") of Ohio Edison Company ("Ohio Edison"), upon the terms and subject to the conditions set forth in the Prospectus, receipt of which is hereby acknowledged, and in this Letter of Transmittal (which, together with the Prospectus, constitute the "Offer"). Class A Shares not accepted for exchange because of proration will be returned. Subject to and effective upon acceptance for exchange of the Class A Shares tendered herewith, the undersigned hereby exchanges, assigns and transfers to or upon the order of the Trust all right, title and interest in and to all the Class A Shares that are being tendered hereby and irrevocably constitutes and appoints the Exchange Agent the true and lawful agent and attorney-in-fact of the undersigned with respect to such Class A Shares, with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest), to (a) deliver certificates for such Class A Shares or transfer ownership of such Class A Shares on the account books maintained by a Depository Institution, together, in any such case, with all accompanying evidences of transfer and authenticity, to the Exchange Agent for the account of the Trust, (b) present such Class A Shares for transfer on the books of Ohio Edison and (c) receive all benefits and otherwise exercise all rights of beneficial ownership of such Class A Shares, all in accordance with the terms of the Offer. The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, exchange, assign and transfer the Class A Shares and the underlying Preferred tendered hereby and to acquire Preferred Securities issuable upon the exchange of such tendered Class A Shares and that, when the undersigned's Class A Shares are accepted for exchange, the Trust will acquire good and unencumbered title to such tendered Class A Shares and the underlying Preferred, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claim. The undersigned will, upon request, execute and deliver any additional documents deemed by the Trust to be necessary or desirable to complete the exchange, assignment and transfer of tendered Class A Shares or transfer ownership of such Class A Shares. All authority herein conferred or agreed to be conferred shall survive the death, bankruptcy or incapacity of the undersigned and every obligation of the undersigned hereunder shall be binding upon the heirs, legal representatives, successors, assigns, executors and administrators of the undersigned. Except as stated in the Offer, this tender is irrevocable. The undersigned understands that tenders of Class A Shares pursuant to any one of the procedures described in "The Offer -- Procedures for Tendering" in the Prospectus and in the instructions hereto will constitute agreements between the undersigned and the Trust upon the terms and subject to the conditions of the Offer. -6- 7 Unless otherwise indicated under "Special Exchange Instructions", please cause Preferred Securities to be issued, and return any Class A Shares not tendered or not accepted for exchange, in the name(s) of the undersigned (and, in the case of Class A Shares tendered by book-entry transfer, by credit to the account at a Depository Institution). Similarly, unless otherwise indicated under "Special Delivery Instructions", please mail any certificates for Class A Shares not tendered or not accepted for exchange (and accompanying documents, as appropriate), and any certificates for Class A Shares, to the undersigned at the address shown below the undersigned's signature(s). If both "Special Exchange Instructions" and "Special Delivery Instructions" are completed, please cause Preferred Securities to be issued, and return any Class A Shares not tendered or not accepted for exchange, in the name(s) of, and deliver any certificates for such Class A Shares to, the person(s) so indicated (and in the case of Class A Shares tendered by book-entry transfer, by credit to the account at the Depository Institution so indicated). The undersigned recognizes that the Trust has no obligation, pursuant to the "Special Exchange Instructions", to transfer any Class A Shares from the name of the registered holder(s) thereof if the Trust does not accept for exchange any of the Class A Shares so tendered. -7- 8
- - ---------------------------------------------------------------------------------------------------------------------------- SPECIAL EXCHANGE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS (See Instructions 1, 5, 6 and 7) (See Instructions 1, 5 and 7) To be completed ONLY if certificates for Preferred To be completed ONLY if certificates for Class A Shares not Securities are to be issued, or beneficial interest in tendered and certificates for Preferred Securities are to be certificates representing Preferred Securities are to be mailed to someone other than the undersigned, or to an recorded, or certificates for Class A Shares not tendered address other than that shown below the undersigned's or not accepted for exchange are to be issued in the name signature(s). of someone other than the undersigned. Mail certificates for Class A Shares and certificates for Issue certificates for Preferred Securities and Preferred Securities to: certificates for Class A Shares in the name of: Name: ------------------------------------------------------- Name: (Please Print) --------------------------------------------------- (Please Print) Address: ---------------------------------------------------- Address: ------------------------------------------------ ------------------------------------------------------------ (Zip Code) -------------------------------------------------------- (Zip Code) -------------------------------------------------------- (Taxpayer Identification No.) - - ----------------------------------------------------------------------------------------------------------------------------
SIGN HERE (Please complete Substitute Form W-9 below) X ------------------------------------------------------------------------------- X ------------------------------------------------------------------------------- Signature(s) of Owner(s) Dated , 1996 ------------------ Name(s) ------------------------------------------------------------------------- - - -------------------------------------------------------------------------------- (Please Print) Capacity (full title) ----------------------------------------------------------- Address ------------------------------------------------------------------------- (Include Zip Code) Area Code and Telephone No. ----------------------------------------------------- Taxpayer Identification No. ----------------------------------------------------- (Must be signed by registered holder(s) exactly as name(s) appear(s) on certificate(s) for Class A Shares or on a security position listing or by person(s) authorized to become registered holder(s) by certificates and documents transmitted herewith. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, please set forth full title and see Instruction 5.) - - -------------------------------------------------------------------------------- -8- 9 Guarantee of Signature(s) (See Instructions 1 and 5) Authorized Signature___________________________________ Name___________________________________________________ Title__________________________________________________ Address________________________________________________ Name of Firm___________________________________________ Area Code and Telephone Number_________________________ Dated _______________, 1996 -9- 10 INSTRUCTIONS Forming Part of the Terms and Conditions of the Offer 1. GUARANTEE OF SIGNATURES. No signature guarantee is required on this Letter of Transmittal (i) if tendered Class A Shares are registered in the name(s) of the undersigned and the Preferred Securities to be issued in exchange therefor are to be issued (and any Class A Shares not tendered or not accepted for exchange are to be returned) in the name of the registered holder(s) (which term, for the purposes described herein, shall include any participant in a Depository Institution whose name appears on a security listing as the owner of Class A Shares) and (ii) such holder(s) have not completed the instruction entitled "Special Exchange Instructions" or "Special Delivery Instructions" on this Letter of Transmittal. If the tendered Class A Shares are registered in the name(s) of someone other than the undersigned or if the Preferred Securities to be issued in exchange therefor are to be issued (or Class A Shares not tendered or not accepted for exchange are to be returned) in the name of any other person, such tendered Class A Shares must be endorsed or accompanied by written instruments of transfer in form satisfactory to the Trust and duly executed by the registered holder, and the signature on the endorsement or instrument of transfer must be guaranteed by a financial institution (including most banks, savings and loan associations and brokerage houses) that is a participant in the Security Transfer Agents Medallion Program or the Stock Exchange Medallion Program (any of the foregoing hereinafter referred to as an "Eligible Institution"). See Instruction 5. 2. DELIVERY OF LETTER OF TRANSMITTAL AND CLASS A SHARES. This Letter of Transmittal is to be completed by holders of Class A Shares either if certificates are to be forwarded herewith or, unless an Agent's Message (as defined in the Prospectus) is utilized, if tenders are to be made pursuant to the procedure for tender by book-entry transfer set forth under "The Offer -- Procedures for Tendering" and "-- Book-Entry Transfer" in the Prospectus. Certificates for Class A Shares, or timely confirmation (a "Book-Entry Confirmation") of a book-entry transfer of such Class A Shares into the Exchange Agent's account at a Depository Institution, as well as this Letter of Transmittal (or a facsimile hereof), properly completed and duly executed, with any required signature guarantees, or an Agent's Message in the case of a book-entry delivery, and any other documents required by this Letter of Transmittal, must be received by the Exchange Agent at one of its addresses set forth herein prior to the Expiration Date. If a holder of Class A Shares desires to participate in the Offer and time will not permit this Letter of Transmittal or Class A Shares to reach the Exchange Agent before the Expiration Date or the procedure for book-entry transfer cannot be completed on a timely basis, a tender may be effected if the Exchange Agent has received at one of the addresses set forth herein prior to the Expiration Date, a letter, telegram or facsimile transmission from an Eligible Institution setting forth the name and address of the tendering Holder, the name(s) in which the Class A Shares are registered and, if the Class A Shares are held in certificated form, the certificate numbers of the Class A Shares to be tendered, and stating that the tender is being made thereby and guaranteeing that within three New York Stock Exchange ("NYSE") trading days after the date of execution of such letter, telegram or facsimile transmission by the Eligible Institution, the Class A Shares in proper form for transfer -10- 11 together with a properly completed and duly executed Letter of Transmittal (and any other required documents), or a confirmation of book-entry transfer of such Class A Shares into the Exchange Agent's account at a Depository Institution, will be delivered by such Eligible Institution. Unless the Class A Shares being tendered by the above-described method are deposited with the Exchange Agent within the time period set forth above (accompanied or preceded by a properly completed Letter of Transmittal and any other required documents) or a confirmation of book-entry transfer of such Class A Shares into the Exchange Agent's account at a Depository Institution in accordance with such Depositary Institution's Automated Tender Offer Program ("ATOP") procedures is received, the Trust may, at its option, reject the tender. THE METHOD OF DELIVERY OF CLASS A SHARES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH A DEPOSITORY INSTITUTION, IS AT THE OPTION AND RISK OF THE TENDERING SHAREHOLDER. IF CERTIFICATES FOR CLASS A SHARES ARE SENT BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. No alternative, conditional or contingent tenders will be accepted, and no fractional Class A Shares will be accepted for exchange. By executing this Letter of Transmittal (or facsimile hereof), the tendering holder waives any right to receive any notice of the acceptance of the Class A Shares for exchange. 3. INADEQUATE SPACE. If the space provided herein is inadequate, the certificate numbers and/or the number of Class A Shares should be listed on a separate signed schedule attached hereto. 4. PARTIAL TENDERS. (Not applicable to Book-Entry Shareholders) If fewer than all the Class A Shares represented by any certificate delivered to the Exchange Agent are to be tendered, fill in the number of Class A Shares which are to be tendered in the box entitled "Number of Shares Tendered". In such case, a new certificate for the remainder of the Class A Shares represented by the old certificate will be sent to the person(s) signing this Letter of Transmittal, unless otherwise provided in the appropriate box on this Letter of Transmittal, as promptly as practicable following the Expiration Date. All Class A Shares represented by certificates delivered to the Exchange Agent will be deemed to have been tendered unless otherwise indicated. 5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If this Letter of Transmittal is signed by the registered holder(s) of the Class A Shares tendered hereby, the signature(s) must correspond with the name(s) as written on the face of the certificates without alteration, enlargement or any change whatsoever. If any of the Class A Shares tendered hereby are held of record by two or more persons, all such persons must sign this Letter of Transmittal. If any of the Class A Shares tendered hereby are registered in different names on different certificates, it will be necessary to complete, sign and submit as many separate Letters of Transmittal as there are different registrations of certificates. -11- 12 If this Letter of Transmittal is signed by the registered holder(s) of the Class A Shares tendered hereby, no endorsements of certificates or separate stock powers are required unless Preferred Securities issued in exchange therefor are to be issued, or Class A Shares not tendered or not exchanged are to be returned, in the name of any person other than the registered holder(s). Signatures on any such certificates or stock powers must be guaranteed by an Eligible Institution. If this Letter of Transmittal is signed by a person other than the registered holder(s) of the Class A Shares tendered hereby, certificates must be endorsed or accompanied by appropriate stock powers, in either case, signed exactly as the name(s) of the registered holder(s) appear(s) on the certificates for such Class A Shares. Signature(s) on any such certificates or stock powers must be guaranteed by an Eligible Institution. If this Letter of Transmittal or any certificate or stock power is signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, such person should so indicate when signing, and proper evidence satisfactory to the Trust of the authority of such person so to act must be submitted. 6. STOCK TRANSFER TAXES. Ohio Edison will pay all stock transfer taxes, if any, applicable to the exchange of any Class A Shares pursuant to the Offer. If, however, certificates representing Preferred Securities or Class A Shares not tendered or accepted for exchange are to be delivered to, or are to be issued in the name of, any person other than the registered holder of the Class A Shares tendered or if a transfer tax is imposed for any reason other than the exchange of Class A Shares pursuant to the Offer, then the amount of any such transfer taxes (whether imposed on the registered holder or any other persons) will be payable by the tendering holder. If satisfactory evidence of payment of such taxes or exemption therefrom is not submitted with this Letter of Transmittal, the amount of such transfer taxes will be billed directly to such tendering holder. 7. SPECIAL EXCHANGE AND DELIVERY INSTRUCTIONS. If certificates representing Preferred Securities are to be issued in the name of, or any Class A Shares not tendered or not accepted for exchange are to be issued or to be returned to, a person other than the person(s) signing this Letter of Transmittal or any certificates for Preferred Securities or certificates for Class A Shares not tendered or not accepted for exchange are to be mailed to someone other than the person(s) signing this Letter of Transmittal or to the person(s) signing this Letter of Transmittal at an address other than that shown above, the appropriate boxes on this Letter of Transmittal should be completed. 8. SUBSTITUTE FORM W-9. Under the federal income tax laws, the Trust may be required to withhold 31% of the amount of any payments made to certain shareholders with respect to the Preferred Securities. In order to avoid such backup withholding, each tendering shareholder, and, if applicable, each other payee, must provide such shareholder's or payee's correct taxpayer identification number and certify that such shareholder or payee is not subject to such backup withholding by completing the Substitute Form W-9 set forth below. In general, if a shareholder or payee is an individual, the taxpayer identification number is the Social Security number of such individual. If the Trust is not provided with the correct -12- 13 taxpayer identification numbers, the shareholder or payee may be subject to a $50 penalty imposed by the Internal Revenue Service. Certain shareholders or payees (including, among others, all corporations and certain foreign individual(s)) are not subject to backup withholding. In order to satisfy the Trust that a foreign individual qualifies as an exempt recipient, such shareholder or payee must submit a statement, signed under penalties of perjury, attesting to that individual's exempt status. Such statements can be obtained from the Exchange Agent. For further information concerning backup withholding and instructions for completing the Substitute Form W-9 (including how to obtain a taxpayer identification number if you do not have one and how to complete the Substitute Form W-9 if Class A Shares are held in more than one name), consult the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. 9. WITHHOLDING FOR NON-UNITED STATES HOLDERS. United States federal income tax generally will be withheld from the gross proceeds payable to a Non-United States Holder pursuant to the Offer (including Preferred Securities that such holder would otherwise be entitled to receive) unless such holder certifies, under penalties of perjury, that such holder owns either (i) solely Class A Shares or (ii) not more than one percent of the Class A Shares outstanding and not more than one percent of any other class of Ohio Edison stock. Such certification may be provided by signing the "Certificate for Non-United States Holders For No United States Federal Income Tax Withholding" below. The withholding rate is ordinarily 30% unless the Non-United States Holder is eligible for a reduced tax treaty rate with respect to dividend income, in which case withholding will be made at the reduced tax treaty rate, or the Non-United States Holder establishes to the satisfaction of the withholding agent that such holder is exempt from tax (e.g., by certifying to the withholding agent on IRS Form 8709 as to such holder's status as a foreign government). For these purposes, a "Non-United States Holder" is a holder that is not (a) a citizen or resident of the United States, (b) a corporation, partnership or other entity created or organized in or under the law of the United States or any state, or (c) an estate or trust the income of which is subject to United States federal income tax regardless of its source. A holder's status as a Non-United States Holder will be determined by reference to the holder's address and to any outstanding certificates (e.g., Form W-8 or substitute) or statements concerning eligibility for a reduced rate of withholding, unless facts and circumstances indicate that reliance is not warranted. A holder that exchanges Class A Shares for Preferred Securities on behalf of a beneficial owner that is a Non-United States Holder will be responsible for determining whether or not, and at what rate, withholding is required and for obtaining any required forms or certifications from such beneficial owner. A Non-United States Holder subject to withholding of United States federal income tax may be eligible to obtain from the Internal Revenue Service a refund of any tax withheld if such holder meets one of the tests for sale or exchange treatment under the Internal -13- 14 Revenue Code of 1986, as amended, or is otherwise able to establish that no tax (or a reduced amount of tax) was due. EACH NON-UNITED STATES HOLDER SHOULD CONSULT WITH SUCH HOLDER'S TAX ADVISOR REGARDING THE FOREGOING. 10. WAIVER OF CONDITIONS. The conditions of the Offer may be waived by the Trust from time to time in accordance with, and subject to the limitations described in, the Prospectus, provided that acceptance of Class A Shares validly tendered in the Offer is subject to the condition that as of the Expiration Date there be at least 400 record or beneficial holders of at least 1,000,000 Preferred Securities to be issued in exchange for such Class A Shares, which condition may not be waived. 11. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance or additional copies of the Prospectus and this Letter of Transmittal may be obtained from the Dealer Manager or the Information Agent at their respective addresses or telephone numbers set forth below. 12. SOLICITED TENDERS. Ohio Edison will pay to a Soliciting Dealer (as defined herein) a solicitation fee of $[___] per Class A Share validly tendered and accepted for exchange pursuant to the Offer. For purposes of this Instruction 12, "Soliciting Dealer" includes (i) any broker or dealer in securities, including the Dealer Manager in its capacity as a dealer or broker, who is a member of any national securities exchange or of the National Association of Securities Dealers, Inc. (the "NASD"), (ii) any foreign broker or dealer not eligible for membership in the NASD who agrees to conform to the NASD's Rules of Fair Practice in soliciting tenders outside the United States to the same extent as though it were an NASD member, or (iii) any bank or trust company, any one of whom has solicited and obtained a tender pursuant to the Offer. No such fee shall be payable to a Soliciting Dealer in respect of Class A Shares registered in the name of such Soliciting Dealer unless such Class A Shares are held by such Soliciting Dealer as nominee and such Class A Shares are being tendered for the benefit of one or more beneficial owners identified on the Letter of Transmittal or on the Notice of Solicited Tenders (included in the materials provided to brokers and dealers). No solicitation fee shall be payable to a Soliciting Dealer with respect to the tender of Class A Shares unless the Letter of Transmittal accompanying such tender designates such Soliciting Dealer as such in the box captioned "Solicited Tenders". If tendered Class A Shares are being delivered by book-entry transfer made to an account maintained by the Exchange Agent with a Depository Institution, the Soliciting Dealer must return a Notice of Solicited Tenders to the Exchange Agent within three NYSE trading days after the Expiration Date in order to receive a solicitation fee. No solicitation fee shall be payable to a Soliciting Dealer in respect of Class A Shares (i) beneficially owned by such Soliciting Dealer or (ii) registered in the name of such Soliciting Dealer unless such Class A Shares are held by such Soliciting Dealer as nominee and such Class A Shares are being tendered for the benefit of one or more beneficial owners identified on the Letter of Transmittal or the Notice of Solicited Tenders. No solicitation fee shall be payable to the Soliciting Dealer with respect to the tender of Class A Shares by the holder of record, for the benefit of the beneficial owner, unless the beneficial owner has designated such Soliciting Dealer. -14- 15 SUBSTITUTE FORM W-9 REQUEST FOR TAXPAYER IDENTIFICATION NUMBER AND CERTIFICATION SEE THE ENCLOSED "GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9" FOR ADDITIONAL INSTRUCTIONS. - - ----------------------------------------------------------------------------------------------------------------------------- PAYER'S NAME: THE BANK OF NEW YORK - - ----------------------------------------------------------------------------------------------------------------------------- Substitute Part 1 - PLEASE PROVIDE YOUR TIN IN ---------------------------------------------------- Form W-9 THE BOX AT RIGHT AND CERTIFY BY Social Security Number (See instruction 9) SIGNING AND DATING BELOW OR Please fill in your name and address below ---------------------------------------------------- Employer Identification Number ---------------------------------------------------------------------------------------------- Part 2 - Certification - Under Penalties of Perjury, I certify that: Part 3 - (1) The number shown in this form is my correct Taxpayer Identification Number (or I am waiting for a number to be Awaiting TIN / / issued to me) and - - ------------------------ (2) I am not subject to backup withholding because (a) I am Name exempt from backup withholding or (b) I have not been -------------------- notified by the Internal Revenue Service ("IRS") that I am Part 4 - - - ------------------------ subject to backup withholding as a result of failure to report Address (number and street) all interest or dividends or (c) the IRS has notified me that Exempt / / I am no longer subject to backup withholding. -------------------- - - ------------------------ City, State and Zip Code ---------------------------------------------------------------------------------------------- Department of the Treasury Internal Revenue Service Certification Instructions - You must cross out item (2) in Part 2 above if you have been notified by the IRS that you are subject to backup withholding because of underreporting interest or dividends on your tax return. However, if after being notified by the IRS you Payer's Request for were subject to backup withholding you received another notification from the IRS stating Taxpayer Identification that you are no longer subject to backup withholding, do not cross out item (2). If you Number (TIN) are exempt from backup withholding, check the box in Part 4 above. SIGNATURE DATE , 1996 --------------------------------------------------- ----------- - - -----------------------------------------------------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY GROSS PROCEEDS PAID TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED "GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9" FOR ADDITIONAL DETAILS. YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF THE SUBSTITUTE FORM W-9. CERTIFICATE OF TAXPAYER AWAITING TIN I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (a) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office, or (b) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number within 60 days, 31% of all reportable payments made to me thereafter will be withheld until I provide a number. - - -------------------------------------------------------------------------------- Signature - - -------------------------------------------------------------------------------- Date -15- 16 - - -------------------------------------------------------------------------------- CERTIFICATE FOR NON-UNITED STATES HOLDERS* FOR NO UNITED STATES FEDERAL INCOME TAX WITHHOLDING HOLDERS OF CLASS A SHARES WITH A MAILING ADDRESS OUTSIDE OF THE UNITED STATES MUST CERTIFY TO ONE OF THE FOLLOWING STATEMENTS TO AVOID THE WITHHOLDING OF UNITED STATES FEDERAL INCOME TAX AT A RATE OF 30% (OR LOWER TREATY RATE, IF APPLICABLE) OF THE GROSS PROCEEDS PAYABLE TO SUCH HOLDERS PURSUANT TO THE OFFER. A. I certify under penalties of perjury that I own either (i) solely Class A Shares or (ii) not more than one percent of the Class A Shares outstanding and not more than one percent of any other class of Ohio Edison stock. I understand that if I certify to either clause (i) or clause (ii) of the preceding sentence, Ohio Edison will not withhold United States federal income tax with respect to the gross proceeds payable to me pursuant to the Offer. SIGNATURE: DATE: ------------------------------- --------------------- B. I certify under penalties of perjury that I am not a Non-United States Holder. SIGNATURE: DATE: ------------------------------- --------------------- * A "Non-United States Holder" is a holder that is not (a) a citizen or resident of the United States, (b) a corporation, partnership or other entity created or organized in or under the law of the United States or any state, or (c) an estate or trust the income of which is subject to United States federal income tax regardless of its source. - - -------------------------------------------------------------------------------- OHIO EDISON FINANCING TRUST II c/o Ohio Edison Company 76 South Main Street Akron, Ohio 44308 THE INFORMATION AGENT FOR THE OFFER IS: [GEORGESON & COMPANY INC. LOGO] Wall Street Plaza New York, New York 10005 (800) 223-2064 (TOLL-FREE) Banks and Brokers Call Collect: (212) 440-9800 THE DEALER MANAGER FOR THE OFFER IS: MERRILL LYNCH & CO. World Financial Center North Tower -- Seventh Floor New York, New York 10281 (212) 236-4565 (Collect) [_________], 1996 -16- EX-99.2 19 FORM OF NOTICE OF GUARANTEED DELIVERY 1 EXHIBIT 99.2 NOTICE OF GUARANTEED DELIVERY This form, or a form substantially equivalent to this form, must be used to accept the Offer (as defined below) if (i) certificates for shares of 7.75% Class A Preferred Stock, $25 par value per share (the "Preferred Shares"), of Ohio Edison Company ("Ohio Edison") cannot be delivered to the Exchange Agent by the Expiration Date (as defined in the Prospectus of Ohio Edison and Ohio Edison Financing Trust II dated [________], 1996 (the "Prospectus")), (ii) the procedure for book-entry transfer of Preferred Shares (as set forth in the Prospectus) cannot be completed by the Expiration Date or (iii) the Letter of Transmittal (or a facsimile thereof) and all other required documents cannot be delivered to the Exchange Agent prior to the Expiration Date. This form, properly completed and duly executed, may be delivered by hand or facsimile transmission or mail to the Exchange Agent. See the Prospectus. To: THE BANK OF NEW YORK, EXCHANGE AGENT BY HAND: Tender and Exchange Department 101 Barclay Street Receive and Deliver Window New York, New York 10286 BY OVERNIGHT COURIER: Tender and Exchange Department 101 Barclay Street Receive and Deliver Window New York, New York 10286 BY MAIL: Tender and Exchange Department P.O. Box 11248 Church Street Station New York, New York 10286-1248 BY FACSIMILE TRANSMISSION: (For Eligible Institutions Only) (212) 815-6213 FOR INFORMATION TELEPHONE: (800) 507-9357 DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. 2 Ladies and Gentlemen: The undersigned hereby tenders to Ohio Edison Financing Trust II (the "Trust"), upon the terms and conditions set forth in the Prospectus and the related Letter of Transmittal (which together constitute the "Offer"), receipt of which is hereby acknowledged, the number of Preferred Shares set forth below, pursuant to the guaranteed delivery procedure set forth in the Prospectus. SIGN HERE Number of Preferred Shares tendered: X ----------------- --------------------------------------------------- X - - ----------------------------------------------------- --------------------------------------------------- (Signature(s)) Certificate Nos. (if available): ---------------------------------------------------- (Name(s)) (Please Print) - - ----------------------------------------------------- ---------------------------------------------------- (Address) - - ----------------------------------------------------- ---------------------------------------------------- (Zip Code) ---------------------------------------------------- (Area Code and Telephone No.) If Preferred Shares will be tendered by book-entry transfer: Name of Tendering Institution: ----------------------- - - ----------------------------------------------------- Check Box of Book-Entry Transfer Facility: / / The Depository Trust Company / / Philadelphia Depository Trust Company Account No.: - - -----------------------------------------------------
-2- 3 SIGN HERE (Please complete Substitute Form W-9 below) - - -------------------------------------------------------------------------------- - - -------------------------------------------------------------------------------- Dated , 1996 --------------- - - -------------------------------------------------------------------------------- (Name(s)) - - -------------------------------------------------------------------------------- (Capacity (full title)) - - -------------------------------------------------------------------------------- (Address, including Zip Code) - - -------------------------------------------------------------------------------- (Area Code and Telephone No.) GUARANTEE (Not to be used for signature guarantee) The undersigned, a firm that is a member of a registered national securities exchange or the National Association of Securities Dealers, Inc., or a commercial bank or trust company having an office, branch or agency in the United States, guarantees (a) that the above named person(s) "own(s)" the Preferred Shares tendered hereby within the meaning of Rule 14e-4 under the Securities Exchange Act of 1934, as amended, (b) that such tender of Preferred Shares complies with Rule 14e-4 and (c) to deliver to the Exchange Agent either the Preferred Shares tendered hereby, in proper form for transfer, or confirmation of the book-entry transfer of the Preferred Shares tendered hereby into the account of the Exchange Agent at the Depository Trust Company or Philadelphia Depository Trust Company, in each case together with a properly completed and duly executed Letter(s) of Transmittal (or facsimile(s) thereof), with any required signature guarantees (or an Agent's Message (as defined in the Prospectus)) and any other required documents within three New York Stock Exchange trading days after the date of execution of this Notice. - - -------------------------------------------------------------------------------- (Name of Firm) - - -------------------------------------------------------------------------------- (Authorized Signature) - - -------------------------------------------------------------------------------- (Name) - - -------------------------------------------------------------------------------- -3- 4 - - -------------------------------------------------------------------------------- (Address) - - -------------------------------------------------------------------------------- (Zip Code) - - -------------------------------------------------------------------------------- (Area Code and Telephone No.) Dated: , 1996 --------------- DO NOT SEND STOCK CERTIFICATES WITH THIS FORM. YOUR STOCK CERTIFICATES MUST BE SENT WITH THE LETTER OF TRANSMITTAL. -4- EX-99.3 20 FORM OF LETTER TO BROKERS, DEALERS 1 EXHIBIT 99.3 OHIO EDISON FINANCING TRUST II OFFER TO EXCHANGE ITS [___]% TRUST ORIGINATED PREFERRED SECURITIES(SM) ("TOPrS(SM)") (LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY AND GUARANTEED TO THE EXTENT SET FORTH IN THE PROSPECTUS BY OHIO EDISON COMPANY) FOR UP TO 3,600,000 OUTSTANDING SHARES OF 7.75% CLASS A PREFERRED STOCK, $25 PAR VALUE PER SHARE (CUSIP 677347 76 7), OF OHIO EDISON COMPANY [________], 1996 To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees: We have been appointed by Ohio Edison Company, an Ohio corporation ("Ohio Edison"), and Ohio Edison Financing Trust II, a Delaware statutory business trust (the "Trust"), to act as Dealer Manager in connection with the offer by the Trust to exchange, upon the terms and subject to the conditions set forth in the Prospectus referred to below and the related Letter of Transmittal (which together constitute the "Offer"), its [___]% Trust Originated Preferred Securities(SM) ("TOPrS(SM)") (the "Preferred Securities") for up to 3,600,000 shares of 7.75% Class A Preferred Stock, $25 par value per share (the "Class A Shares"), of Ohio Edison, that are validly tendered and accepted for exchange pursuant to the Offer. In connection with the Offer, Ohio Edison will deposit in the Trust as trust assets its [___]% Junior Subordinated Debentures due 2016 as set forth in the Prospectus referred to below. Pursuant to the Offer, exchanges will be made on the basis of one Preferred Security for each Class A Share validly tendered and accepted for exchange in the Offer. Class A Shares not accepted for exchange because of proration will be returned. The Trust will accept for exchange all Class A Shares validly tendered and not withdrawn, upon the terms and subject to the conditions of the Offer, including the provisions thereof relating to proration described in the Prospectus dated [________], 1996 (the "Prospectus"). - - ---------------- (SM) "Trust Originated Preferred Securities" and "TOPrS" are service marks of Merrill Lynch & Co. 2 For your information and for forwarding to your clients for whom you hold Class A Shares registered in your name or in the name of your nominee, we are enclosing the following documents: 1. Prospectus; 2. Letter of Transmittal for your use and for the information of your clients, together with Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 providing information relating to backup federal income tax withholding; 3. Notice of Guaranteed Delivery to be used to accept the Offer if the Class A Shares and all other required documents cannot be delivered to the Exchange Agent by the Expiration Date (as defined in the Prospectus), or the book-entry transfer of the Class A Shares cannot be completed by the Expiration Date; 4. A form of letter that may be sent to your clients for whose accounts you hold Class A Shares registered in your name or in the name of your nominee, with space provided for obtaining such clients' instructions and designation of Soliciting Dealer with regard to the Offer; 5. A letter from the President and Chief Executive Officer of Ohio Edison to holders of Class A Shares that may be sent to your clients; 6. A Question and Answers pamphlet that may be sent to your clients; and 7. A return envelope addressed to The Bank of New York, the Exchange Agent. WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. THE OFFER, THE PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON [__________], 1996, UNLESS THE OFFER IS EXTENDED. NEITHER THE BOARD OF DIRECTORS OF OHIO EDISON, OHIO EDISON, THE TRUSTEES NOR THE TRUST MAKES ANY RECOMMENDATION TO HOLDERS OF CLASS A SHARES AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING IN THE OFFER. HOLDERS OF CLASS A SHARES ARE URGED TO CONSULT THEIR FINANCIAL AND TAX ADVISORS IN MAKING THEIR DECISIONS ON WHAT ACTION TO TAKE IN LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES. -2- 3 Ohio Edison will pay a solicitation fee of $[_____] per Class A Share for any Class A Shares validly tendered and accepted for exchange and exchanged pursuant to the Offer and covered by a Letter of Transmittal which designates, as having solicited and obtained the tender, the name of (i) any broker or dealer in securities, including each Dealer Manager in its capacity as a broker or dealer, which is a member of any national securities exchange or of the National Association of Securities Dealers, Inc. (the "NASD"), (ii) any foreign broker or dealer not eligible for membership in the NASD which agrees to conform to the NASD's Rules of Fair Practice in soliciting tenders outside the United States to the same extent as though it were an NASD member, or (iii) any bank or trust company (each of which is referred to herein as a "Soliciting Dealer"). No solicitation fee shall be payable to a Soliciting Dealer with respect to the tender of Class A Shares by a holder unless the Letter of Transmittal accompanying such tender designates such Soliciting Dealer as such in the box captioned "Solicited Tenders". If tendered Class A Shares are being delivered by book-entry transfer made to an account maintained by the Exchange Agent with The Depository Trust Company, Midwest Securities Trust Company or Philadelphia Depository Trust Company, the Soliciting Dealer must return a Notice of Solicited Tenders to the Exchange Agent within three New York Stock Exchange trading days after the Expiration Date in order to receive a solicitation fee. Such Notice of Solicited Tenders is attached hereto on page 5. No solicitation fee shall be payable to a Soliciting Dealer in respect of Class A Shares (i) beneficially owned by such Soliciting Dealer or (ii) registered in the name of such Soliciting Dealer unless such Class A Shares are held by such Soliciting Dealer as nominee and such Class A Shares are being tendered for the benefit of one or more beneficial owners identified on the Letter of Transmittal or the Notice of Solicited Tenders. No solicitation fee shall be payable to the Soliciting Dealer with respect to the tender of Class A Shares by the holder of record, for the benefit of the beneficial owner, unless the beneficial owner has designated such Soliciting Dealer. No solicitation fee shall be payable to a Soliciting Dealer if such Soliciting Dealer is required for any reason to transfer any portion of such fee to a tendering holder (other than itself). No broker, dealer, bank, trust company or fiduciary shall be deemed to be the agent of Ohio Edison, the Trust, the Trustees, the Exchange Agent, the Information Agent or the Dealer Manager for purposes of the Offer. Ohio Edison will, upon request, reimburse brokers, dealers, commercial banks and trust companies for reasonable and necessary costs and expenses incurred by them in forwarding materials to their customers. Ohio Edison will pay all stock transfer taxes applicable to the acceptance of Class A Shares pursuant to the Offer, subject to Instruction 6 of the Letter of Transmittal. Soliciting Dealers should take care to ensure proper record-keeping to document their entitlement to any solicitation fee. -3- 4 Any inquiries you may have with respect to the Offer should be addressed to, and additional copies of the enclosed materials may be obtained from, the Information Agent or the undersigned at the addresses and telephone numbers set forth on the back cover of the Prospectus. Very truly yours, MERRILL LYNCH & CO. NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU THE AGENT OF OHIO EDISON, THE TRUST, THE TRUSTEES OF THE TRUST, THE DEALER MANAGER, THE INFORMATION AGENT OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED THEREIN. -4- 5 NOTICE OF SOLICITED TENDERS List below the number of Class A Shares whose tender you have solicited. All Class A Shares beneficially owned by a beneficial owner, whether in one account or several, and in however many capacities, must be aggregated for purposes of completing the tables below. Any questions as to what constitutes beneficial ownership should be directed to the Exchange Agent. If the space below is inadequate, list the Class A Shares on a separate signed schedule and affix the list to this Notice of Solicited Tenders. PLEASE DO NOT COMPLETE THE SECTIONS OF THE TABLE HEADED "TO BE COMPLETED ONLY BY EXCHANGE AGENT". ALL NOTICES OF SOLICITED TENDERS SHOULD BE RETURNED TO THE EXCHANGE AGENT WITHIN THREE NYSE TRADING DAYS AFTER THE EXPIRATION DATE AT THE ADDRESS SET FORTH ON THE BACK COVER OF THE PROSPECTUS. ALL QUESTIONS CONCERNING THE NOTICES OF SOLICITED TENDERS SHOULD BE DIRECTED TO THE INFORMATION AGENT AT THE TELEPHONE NUMBER SET FORTH ON THE BACK COVER OF THE PROSPECTUS. SOLICITED TENDERS OF CLASS A SHARES NOT BENEFICIALLY OWNED BY SOLICITING DEALER EXCHANGED FOR PREFERRED SECURITIES
To be Completed To be Completed by To be Completed by To be Completed Only Only by the Soliciting Dealer the Soliciting Dealer by Exchange Agent Exchange Agent Number of Shares VOI Ticket Number of Shares Fee $[___] per Beneficial Owners Tendered Number* Accepted Share - - ----------------- -------- ------ -------- ----- Beneficial Owner No. 1 Beneficial Owner No. 2 Beneficial Owner No. 3 Beneficial Owner No. 4 Beneficial Owner No. 5 Total
- - ------------------------ * Complete if Class A Shares delivered by book-entry transfer. PLEASE INDICATE ANY ACCOUNT WHOSE SOLICITING DEALER FEE WILL BE DIRECTED TO ANOTHER BROKER DEALER. All questions as to the validity, form and eligibility (including time of receipt) of Notices of Solicited Tenders will be determined by the Exchange Agent, in its sole discretion, which determination will be final and binding. Neither the Exchange Agent nor any other person will be under any duty to give notification of any defects or irregularities in any Notice of Solicited Tenders or incur any liability for failure to give such notification. -5- 6 The undersigned hereby confirms that: (i) it has complied with the applicable requirements of the Securities Exchange Act of 1934, and the applicable rules and regulations thereunder, in connection with such solicitation; (ii) it is entitled to such compensation for such solicitation under the terms and conditions of the Prospectus; (iii) in soliciting tenders of Class A Shares, it has used no soliciting materials other than those furnished by Ohio Edison or the Trust; and (iv) if it is a foreign broker or dealer not eligible for membership in the NASD, it has agreed to conform to the NASD's Rules of Fair Practice in making solicitations outside the United States to the same extent as though it were an NASD member. - - -------------------------------------------------------------------------------- (Printed Firm Name) - - -------------------------------------------------------------------------------- (Authorized Signature) - - -------------------------------------------------------------------------------- (Address) - - -------------------------------------------------------------------------------- (City, State, Zip Code) - - -------------------------------------------------------------------------------- (Area Code and Telephone Number) - - -------------------------------------------------------------------------------- (Attention) Date: ------------------------ DO NOT SEND STOCK CERTIFICATES WITH THIS FORM. YOUR STOCK CERTIFICATES MUST BE SENT WITH THE LETTER OF TRANSMITTAL. -6- EX-99.4 21 FORM OF LETTER TO CLIENTS 1 EXHIBIT 99.4 OHIO EDISON FINANCING TRUST II OFFER TO EXCHANGE ITS [___]% TRUST ORIGINATED PREFERRED SECURITIES(SM) ("TOPrS(SM)") (LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY AND GUARANTEED TO THE EXTENT SET FORTH IN THE PROSPECTUS BY OHIO EDISON COMPANY) FOR UP TO 3,600,000 OUTSTANDING SHARES OF 7.75% CLASS A PREFERRED STOCK, $25 PAR VALUE PER SHARE (CUSIP 677347 76 7), OF OHIO EDISON COMPANY [________], 1996 To Our Clients: Enclosed for your consideration are the Prospectus dated [________], 1996 (the "Prospectus") and the related Letter of Transmittal (which together constitute the "Offer") in connection with the Offer by Ohio Edison Financing Trust II, a Delaware statutory business trust (the "Trust"), to exchange its [___]% Trust Originated Preferred Securities(SM) ("TOPrS(SM)") (the "Preferred Securities") for up to 3,600,000 shares of 7.75% Class A Preferred Stock, $25 par value per share (the "Class A Shares"), of Ohio Edison Company, an Ohio corporation ("Ohio Edison"), that are validly tendered and accepted for exchange pursuant to the Offer. In connection with the Offer, Ohio Edison will deposit in the Trust as trust assets its [___]% Junior Subordinated Debentures due 2016 as set forth in the Prospectus. Pursuant to the Offer, exchanges will be made on the basis of one (1) Preferred Security for each Class A Share validly tendered and accepted for exchange in the Offer. Class A Shares not accepted for exchange because of proration will be returned. The Trust will accept for exchange up to 3,600,000 Class A Shares validly tendered and not withdrawn, upon the terms and subject to the conditions of the Offer, including the provisions thereof relating to proration described in the Prospectus. We are the holder of record of Class A Shares held for your account. A tender of such Class A Shares can be made only by us as the holder of record and pursuant to your instructions. The Letter of Transmittal is furnished to you for your information only and cannot be used by you to tender Class A Shares held by us for your account. - - ---------------- (SM) "Trust Originated Preferred Securities" and "TOPrS" are service marks of Merrill Lynch & Co. 2 We request instructions as to whether you wish us to tender any or all of the Class A Shares held by us for your account, upon the terms and subject to the conditions set forth in the Prospectus and the Letter of Transmittal. We also request that you designate, in the box captioned "Soliciting Tenders", any Soliciting Dealer who solicited your tender of Class A Shares. Your attention is invited to the following: 1.The Offer, the proration period and withdrawal rights expire at 12:00 Midnight, New York City time, on [___________], 1996, unless the Offer is extended. 2.Consummation of the Offer is conditioned on, among other things, (i) receipt of at least 1,200,000 validly tendered Class A Shares (which condition may be waived by the Trust) and (ii) tenders by a sufficient number of holders of Class A Shares such that there be at least 400 record or beneficial holders of at least 1,000,000 Preferred Securities to be issued in exchange for such Class A Shares (the "Minimum Distribution Condition") (which condition may not be waived). 3.The Trust expressly reserves the right, in its sole discretion, subject to applicable law, to (i) terminate the Offer and not accept for exchange any Class A Shares and promptly return all Class A Shares upon the failure of any of the conditions specified above and in "The Offer -- Conditions to the Offer" in the Prospectus, (ii) waive any condition to the Offer (other than the Minimum Distribution Condition) and accept all Class A Shares previously tendered pursuant to the Offer, (iii) extend the Expiration Date of the Offer, and retain all Class A Shares tendered pursuant to such Offer until the Expiration Date, subject, however, to all withdrawal rights of holders; see "The Offer -- Withdrawal of Tenders" in the Prospectus, (iv) amend the terms of the Offer or (v) modify the form of the consideration to be paid pursuant to the Offer. Any amendment applicable to the Offer will apply to all Class A Shares tendered pursuant to the Offer. The minimum period during which the Offer must remain open following material changes in the terms of the Offer or the information concerning the Offer, other than a change in the amount of Class A Shares sought for exchange or an increase or decrease in the consideration offered to holders of Class A Shares, depends upon the facts and circumstances, including the relative materiality of such terms or information. See "The Offer - - -- Expiration Date; Extensions; Amendments; Termination" in the Prospectus. 4.Any stock transfer taxes applicable to the exchange of Class A Shares pursuant to the Offer will be paid by Ohio Edison, except as otherwise provided in Instruction 6 of the Letter of Transmittal. Please note that a Question and Answer pamphlet regarding the Preferred Securities is enclosed for your information. If you wish to have us tender any or all of your Class A Shares, please so instruct us by completing, executing, detaching and returning to us the instruction form on the detachable part hereof. An envelope to return your instructions to us is enclosed. If you authorize tender of your Class A Shares, all such Class A Shares will be tendered unless -2- 3 otherwise specified on the detachable part hereof. Your instructions should be forwarded to us in ample time to permit us to submit a tender on your behalf by the Expiration Date. As described in the Prospectus, if fewer than all Class A Shares validly tendered prior to the Expiration Date are to be accepted by the Trust, the Trust will accept Class A Shares from each tendering holder on a pro rata basis, subject to adjustment to avoid the acceptance for exchange of fractional shares. THE OFFER IS NOT BEING MADE TO, NOR WILL TENDERS BE ACCEPTED FROM OR ON BEHALF OF, HOLDERS OF CLASS A SHARES IN ANY JURISDICTION IN WHICH THE MAKING OF THE OFFER OR ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION. IN THOSE JURISDICTIONS THE LAWS OF WHICH REQUIRE THAT THE OFFER BE MADE BY A LICENSED BROKER OR DEALER, THE OFFER SHALL BE DEEMED TO BE MADE ON BEHALF OF THE TRUST BY MERRILL LYNCH & CO., OR ONE OR MORE REGISTERED BROKERS OR DEALERS LICENSED UNDER THE LAWS OF SUCH JURISDICTION. INSTRUCTIONS WITH RESPECT TO THE OFFER The undersigned acknowledge(s) receipt of your letter and the enclosed Prospectus dated [________], 1996 and the related Letter of Transmittal in connection with the Offer by the Trust to exchange its Preferred Securities for up to 3,600,000 Class A Shares of Ohio Edison that are validly tendered and accepted for exchange. Pursuant to the Offer, exchanges will be made on the basis of one Preferred Security for each Class A Share validly tendered and accepted for exchange in the Offer. Class A Shares not accepted for exchange because of proration will be returned. This will instruct you to tender the number of Class A Shares indicated below held by you for the account of the undersigned, upon the terms and subject to the conditions set forth in the Prospectus and the related Letter of Transmittal. / / By checking this box, all Class A Shares held by you for our account, including fractional shares, will be tendered in the Offer. If fewer than all Class A Shares are to be tendered, we have checked the box below and indicated the aggregate number of Class A Shares to be tendered by you. / / shares* - - ------------------- * Unless otherwise indicated, it will be assumed that all Class A Shares held by us for your account are to be tendered. [SEE OTHER SIDE] -3- 4 Please designate in the box below any Soliciting Dealer who solicited your tender. - - -------------------------------------------------------------------------------- SOLICITED TENDERS The undersigned represents that the Soliciting Dealer who solicited and obtained this tender is: Name of Firm: ---------------------------------------------------------------- (PLEASE PRINT) Name of Individual Broker or Financial Consultant: --------------------------------------------------- Identification Number (if known): -------------------------------------------- Address: --------------------------------------------------------------------- ----------------------------------------------------------------------------- (INCLUDE ZIP CODE) SIGN HERE: X ---------------------------------------------------------------------------- X ---------------------------------------------------------------------------- SIGNATURE(S) DATED: ---------------------------------- PLEASE PRINT NAME(S) AND ADDRESSES HERE: ------------------------------------------------------------- ----------------------------------------------------------------------------- ----------------------------------------------------------------------------- - - -------------------------------------------------------------------------------- -4- EX-99.5 22 FORM OF EXCHANGE AGENT AGREEMENT 1 EXHIBIT 99.5 _________ __, 1996 EXCHANGE AGENT AGREEMENT The Bank of New York Corporate Trust Trustee Administration 101 Barclay Street -- 21st Floor New York, New York 10286 Ladies and Gentlemen: Ohio Edison Financing Trust II, a Delaware business trust (the "Trust") proposes to make an offer (the "Exchange Offer") to exchange up to [3,000,000] outstanding shares of the 7.75% Class A Preferred Stock, $25 par value, of Ohio Edison Company (the "Old Securities") for its ___% Trust Originated Preferred Securities (the "New Securities"). The terms and conditions of the Exchange Offer as currently contemplated are set forth in a Prospectus, dated _______ __, 1996 (the "Prospectus"), proposed to be distributed to all record holders of the Old Securities. The Old Securities and the New Securities are collectively referred to herein as the "Securities." The Trust hereby appoints The Bank of New York to act as exchange agent (the "Exchange Agent") in connection with the Exchange Offer. References hereinafter to "you", shall refer to The Bank of New York. The Exchange Offer is expected to be commenced by the Trust on or about _________ __, 1996. The Letter of Transmittal accompanying the Prospectus are to be used by the holders of the Old Securities to accept the Exchange Offer, and contain instructions with respect to the delivery of certificates for Old Securities tendered. The Exchange Offer shall expire at [12:00 Midnight], New York City time, on ________ __, 1996 or on such later date or time to which the Trust may extend the Exchange Offer (the "Expiration Date"). Subject to the terms and conditions set forth in the Prospectus, the Trust expressly reserves the right to extend the Exchange Offer from time to time and may extend the Exchange Offer by giving oral (confirmed in writing) or written notice to you before 9:00 A.M., New York City time, on the business day following the previously scheduled Expiration Date. The Trust expressly reserves the right to amend or terminate the Exchange Offer, and not to accept for exchange any Old Securities and promptly return all Old Securities, upon the 2 failure of any of the conditions of the Exchange Offer specified in the Prospectus under the caption "The Offer -- Conditions to the Offer." The Trust will give oral (confirmed in writing) or written notice of any amendment, termination or nonacceptance to you as promptly as practicable. In carrying out your duties as Exchange Agent, you are to act in accordance with the following instructions: 1. You will perform such duties and only such duties as are specifically set forth in the section of the Prospectus captioned "The Offer" or as specifically set forth herein; provided, however, that in no way will your general duty to act in good faith be discharged by the foregoing. 2. You will establish an account with respect to the Old Securities at The Depository Trust Company (the "Book-Entry Transfer Facility") for purposes of the Exchange Offer within two business days after the date of the Prospectus, and any financial institution that is a participant in the Book-Entry Transfer Facility's systems may make book-entry delivery of the Old Securities by causing the Book-Entry Transfer Facility to transfer such Old Securities into your account in accordance with the Book-Entry Transfer Facility's procedure for such transfer. 3. You are to examine each of the Letters of Transmittal and certificates for Old Securities (or confirmation of book-entry transfer into your account at the Book-Entry Transfer Facility) and any other documents delivered or mailed to you by or for holders of the Old Securities to ascertain whether: (i) the Letters of Transmittal and any such other documents are duly executed and properly completed in accordance with instructions set forth therein and (ii) the Old Securities have otherwise been properly tendered. In each case where the Letter of Transmittal or any other document has been improperly completed or executed or any of the certificates for Old Securities are not in proper form for transfer or some other irregularity in connection with the acceptance of the Exchange Offer exists, you will endeavor to inform the presenters of the need for fulfillment of all requirements and to take any other action as may be necessary or advisable to cause such irregularity to be corrected. 4. With the approval of any Regular Trustee (as defined in the Prospectus) of the Trust (such approval, if given orally, to be confirmed in writing) or any other party designated by such a trustee in writing, you are authorized to waive any irregularities in connection with any tender of Old Securities pursuant to the Exchange Offer. 5. Tenders of Old Securities may be made only as set forth in the Letter of Transmittal and in the section of the Prospectus captioned "The Offer - - -- Procedures for Tendering" and Old Securities shall be considered properly tendered to you only -2- 3 when tendered in accordance with the procedures set forth therein. Notwithstanding the provisions of this paragraph 5, Old Securities which any Regular Trustee of the Trust shall approve as having been properly tendered shall be considered to be properly tendered (such approval, if given orally, shall be confirmed in writing). 6. You shall advise the Trust with respect to any Old Securities received subsequent to the Expiration Date and accept its instructions with respect to disposition of such Old Securities. 7. You shall accept tenders: (a) in cases where the Old Securities are registered in two or more names only if signed by all named holders; (b) in cases where the signing person (as indicated on the Letter of Transmittal) is acting in a fiduciary or a representative capacity only when proper evidence of his or her authority so to act is submitted; and (c) from persons other than the registered holder of Old Securities provided that customary transfer requirements, including any applicable transfer taxes, are fulfilled. You shall accept partial tenders of Old Securities where so indicated and as permitted in the Letter of Transmittal and deliver certificates for Old Securities to the transfer agent for split-up and return any untendered Old Securities to the holder (or such other person as may be designated in the Letter of Transmittal) as promptly as practicable after expiration or termination of the Exchange Offer. 8. Upon satisfaction or waiver of all of the conditions to the Exchange Offer, the Trust will notify you (such notice if given orally, to be confirmed in writing) of its acceptance, promptly after the Expiration Date, of all Old Securities properly tendered and accepted for exchange and you, on behalf of the Trust, will exchange such Old Securities for New Securities and cause such old securities to be cancelled. Delivery of New Securities will be made on behalf of the Trust by you at the rate one New Security for each Old Security tendered promptly after notice (such notice if given orally, to be confirmed in writing) of acceptance of said Old Securities by the Trust; provided, however, that in all cases, Old Securities tendered pursuant to the Exchange Offer will be exchanged only after timely receipt by you of certificates for such Old Securities (or confirmation of book-entry transfer into your account at the Book-Entry Transfer Facility), a properly completed and duly executed Letter of Transmittal (or facsimile - 3 - 4 thereof) with any required signature guarantees and any other required documents. 9. Tenders pursuant to the Exchange Offer are irrevocable, except that, subject to the terms and upon the conditions set forth in the Prospectus and the Letter of Transmittal, Old Securities tendered pursuant to the Exchange Offer may be withdrawn at any time prior to the Expiration Date. 10. The Trust shall not be required to exchange any Old Securities tendered if any of the conditions set forth in the Exchange Offer are not met. Notice of any decision by the Trust not to exchange any Old Securities tendered shall be given (and confirmed in writing) by the Trust to you. 11. If, pursuant to the Exchange Offer, the Trust does not accept for exchange all or part of the Old Securities tendered because of an invalid tender, the occurrence of certain other events set forth in the Prospectus under the caption "The Offer -- Conditions to the Offer" or otherwise, you shall as soon as practicable after the expiration or termination of the Exchange Offer return those certificates for unaccepted Old Securities (or effect appropriate book-entry transfer), together with any related required documents and the Letters of Transmittal relating thereto that are in your possession, to the persons who deposited them. 12. All certificates for reissued Old Securities, unaccepted Old Securities or for New Securities shall be forwarded by (a) first-class certified mail, return receipt requested under a blanket surety bond protecting you and the Trust from loss or liability arising out of the non-receipt or non-delivery of such certificates or (b) by registered mail insured separately for the replacement value of each of such certificates. 13. You are not authorized to pay or offer to pay any concessions, commissions or solicitation fees to any broker, dealer, bank or other persons or to engage or utilize any person to solicit tenders. 14. As Exchange Agent hereunder you: (a) shall have no duties or obligations other than those specifically set forth herein or in the section of the Prospectus captioned "The Offer" or as may be subsequently agreed to in writing by you and the Trust; (b) will be regarded as making no representations and having no responsibilities as to the validity, sufficiency, value or genuineness of any of the certificates of the Old Securities represented thereby deposited with you pursuant to the Exchange Offer, and will not be required to and will make no representation as to the validity, value or genuineness of the -4- 5 Exchange Offer; provided, however, that in no way will your general duty to act in good faith be discharged by the foregoing; (c) shall not be obligated to take any legal action hereunder which might in your reasonable judgment involve any expense or liability, unless you shall have been furnished with reasonable indemnity; (d) may reasonably rely on and shall be protected in acting in reliance upon any certificate, instrument, opinion, notice, letter, telegram or other document or security delivered to you and reasonably believed by you to be genuine and to have been signed by the proper party or parties; (e) may reasonably act upon any tender, statement, request, comment, agreement or other instrument whatsoever not only as to its due execution and validity and effectiveness of its provisions, but also as to the truth and accuracy of any information contained therein, which you shall in good faith believe to be genuine or to have been signed or represented by a proper person or persons; (f) may rely on and shall be protected in acting upon written or oral instructions from any officer of the Trust; (g) may consult with your counsel with respect to any questions relating to your duties and responsibilities and the advice or opinion of such counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted to be taken by you hereunder in good faith and in accordance with the advice or opinion of such counsel; and (h) shall not advise any person tendering Old Securities pursuant to the Exchange Offer as to the wisdom of making such tender or as to the market value or decline or appreciation in market value of any Old Securities. 15. You shall take such action as may from time to time be requested by the Trust or its counsel (and such other action as you may reasonably deem appropriate) to furnish copies of the Prospectus, Letter of Transmittal and the Notice of Guaranteed Delivery (as defined in the Prospectus) or such other forms as may be approved from time to time by the Trust, to all persons requesting such documents and to accept and comply with telephone requests for information relating to the Exchange Offer, provided that such information shall relate only to the procedures for accepting (or withdrawing from) the Exchange Offer. The Trust will furnish you with copies of such documents at your request. All other requests for information relating to the Exchange Offer shall be directed to Ohio Edison Company, Attention: Investor Services. 16. You shall advise by facsimile transmission or telephone, and promptly thereafter confirm in writing to the -5- 6 Regular Trustees of the Trust and such other person or persons as it may request, daily (and more frequently during the week immediately preceding the Expiration Date and if otherwise requested) up to and including the Expiration Date, as to the number of Old Securities which have been tendered pursuant to the Exchange Offer and the items received by you pursuant to this Agreement, separately reporting and giving cumulative totals as to items properly received and items improperly received. In addition, you will also inform, and cooperate in making available to, the Trust or any such other person or persons upon oral request made from time to time prior to the Expiration Date of such other information as it or he or she reasonably requests. Such cooperation shall include, without limitation, the granting by you to the Trust and such person as the Trust may request of access to those persons on your staff who are responsible for receiving tenders, in order to ensure that immediately prior to the Expiration Date the Trust shall have received information in sufficient detail to enable it to decide whether to extend the Exchange Offer. You shall prepare a final list of all persons whose tenders were accepted, the aggregate number of Old Securities tendered, the aggregate number of Old Securities accepted and deliver said list to the Trust. 17. Letters of Transmittal and Notices of Guaranteed Delivery shall be stamped by you as to the date and the time of receipt thereof and shall be preserved by you for a period of time at least equal to the period of time you preserve other records pertaining to the transfer of securities. You shall dispose of unused Letters of Transmittal and other surplus materials by returning them to the Trust. 18. You hereby expressly waive any lien, encumbrance or right of set-off whatsoever that you may have with respect to funds deposited with you for the payment of transfer taxes by reasons of amounts, if any, borrowed by the Trust, or any of its subsidiaries or affiliates pursuant to any loan or credit agreement with you or for compensation owed to you hereunder. 19. For services rendered as Exchange Agent hereunder, you shall be entitled to such compensation as set forth on Schedule I attached hereto. 20. You hereby acknowledge receipt of the Prospectus and the Letter of Transmittal attached hereto and further acknowledge that you have examined each of them. Any inconsistency between this Agreement, on the one hand, and the Prospectus and the Letter of Transmittal (as they may be amended from time to time), on the other hand, shall be resolved in favor of the latter two documents, except with respect to the duties, liabilities and indemnification of you as Exchange Agent, which shall be controlled by this Agreement. 21. The Trust covenants and agrees to indemnify and hold you harmless in your capacity as Exchange Agent hereunder - 6 - 7 against any loss, liability, cost or expense, including reasonable attorneys' fees and expenses arising out of or in connection with any act, omission, delay or refusal made by you in reliance upon any signature, endorsement, assignment, certificate, order, request, notice, instruction or other instrument or document reasonably believed by you to be valid, genuine and sufficient and in accepting any tender or effecting any transfer of Old Securities reasonably believed by you in good faith to be authorized, and in delaying or refusing in good faith to accept any tenders or effect any transfer of Old Securities; provided, however, that the Trust shall not be liable for indemnification or otherwise for any loss, liability, cost or expense to the extent arising out of your gross negligence or willful misconduct. In no cash shall the Trust be liable under this indemnity with respect to any claim against you unless the Trust shall be notified by you, by letter or cable or by facsimile confirmed by letter, of the written assertion of a claim against you or of any other action commenced against you, promptly after you shall have received any such written assertion or commencement of action. The Trust shall be entitled to participate at its own expense in the defense of any such claim or other action, and, if the Trust so elects, the Trust shall assume the defense of any suit brought to enforce any such claim. In the event that the Trust shall assume the defense of any such suit, the Trust shall not be liable for the fees and expenses of any counsel thereafter incurred by you so long as the Trust shall retain counsel reasonably satisfactory to you to defend such suit. 22. You shall arrange to comply with all requirements under the tax laws of the United States, including those relating to missing Tax Identification Numbers, and shall file any appropriate reports with the Internal Revenue Service. The Trust understands that you are required to deduct 31% on payments to holders who have not supplied their correct Taxpayer Identification Number or required certification. Such funds will be turned over to the Internal Revenue Service in accordance with applicable regulations. 23. You shall deliver or cause to be delivered, in a timely manner to each governmental authority to which any transfer taxes are payable in respect of the exchange of Old Securities, your check in the amount of all transfer taxes so payable, and the Trust shall reimburse you for the amount of any and all transfer taxes payable in respect of the exchange of Old Securities; provided, however, that you shall reimburse the Trust for amounts refunded to you in respect of your payment of any such transfer taxes, at such time as such refund is received by you and, provided further, that if New Securities and/or substitute Old Securities not exchanged are to be delivered to, or are to be registered or issued in the name of, any person other than the registered holder of the Old Securities tendered in the Exchange Offer, or if tendered Old Securities are registered in the name of any person other than the person -7- 8 signing the Letter of Transmittal, or if a transfer tax is imposed for any reason other than the transfer of Old Securities to the Trust or its order pursuant to the Exchange Offer, the amount of any such transfer taxes (whether imposed on the registered holder or any other persons) will be payable by the tendering holder and will not be reimbursed to you by the Trust. In no event, however, will the Exchange Agent be responsible for the payment of any applicable transfer tax imposed for any reason other than the exchange of Old Securities. 24. This Agreement and your appointment as Exchange Agent hereunder shall be construed and enforced in accordance with the laws of the State of New York applicable to agreements made and to be performed entirely within such state, and without regard to conflicts of law principles, and shall inure to the benefit of, and the obligations created hereby shall be binding upon, the successors and assigns of each of the parties hereto. 25. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original and, all of which taken together shall constitute one and the same agreement. 26. In case any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 27. This Agreement shall not be deemed or construed to be modified, amended, rescinded, cancelled or waived, in whole or in part, except by a written instrument signed by a duly authorized representative of the party to be charged. This Agreement may not be modified orally. 28. Unless otherwise provided herein, all notices, requests and other communications to any party hereunder shall be in writing (including facsimile or similar writing) and shall be given to such party, addressed to it, at its address or telecopy number set forth below: If to the Trust: Ohio Edison Financing Trust II c/o Ohio Edison Company 76 South Main Street Akron, Ohio 44308 Facsimile: Attention: -8- 9 If to the Exchange Agent: The Bank of New York 101 Barclay Street Floor 21 West New York, New York 10286 Facsimile: (212) 815-5915 Attention: Corporate Trust Trustee Administration 29. Unless terminated earlier by the parties hereto, this Agreement shall terminate after all obligations of the parties hereunder shall have been fulfilled. Notwithstanding the foregoing, Paragraphs 19 and 21 shall survive the termination of this Agreement. Upon any termination of this Agreement, you shall promptly deliver to the Trust any certificates for Securities, funds or property then held by you as Exchange Agent under this Agreement. 30. This Agreement shall be binding and effective as of the date hereof. -9- 10 Please acknowledge receipt of this Agreement and confirm the arrangements herein provided by signing and returning the enclosed copy. OHIO EDISON FINANCING TRUST II By:___________________________ Name: Title: Accepted as the date first above written: THE BANK OF NEW YORK, as Exchange Agent By:_______________________________ Name: Robert F. McIntyre Title: Assistant Vice President EX-99.6 23 FORM OF INFORMATION AGENT AGREEMENT 1 Exhibit 99.6 Form of Information Agent Agreement March __, 1996 Ohio Edison Company 76 South Main Street Akron, OH 44308 LETTER OF AGREEMENT This Letter of Agreement (the "Agreement") sets forth the terms and conditions under which Georgeson & Company Inc. ("Georgeson") has been retained by Ohio Edison Company ("Ohio Edison") as Information Agent for its upcoming exchange offer (the "Offer"). The term of the Agreement shall be the term of the Offer, including any extensions thereof. 1. During the term of the Agreement, Georgeson will: provide advice and consultation with respect to the planning and execution of the Offer; assist in the preparation and placement of newspaper ads; assist in the distribution of Offer documents to brokers, banks, nominees, institutional investors, and other shareholders and investment community accounts; answer collect telephone inquiries from shareholders and their representatives; and, if requested, call individuals who are registered holders. 2. Ohio Edison will pay Georgeson a fee of $10,000.00, of which half is payable in advance per the enclosed invoice and the balance at the expiration of the offer, plus an additional fee to be mutually agreed upon if the offer is extended more than thirty days beyond the initial expiration date or if there is a competing offer. If Georgeson is requested to call individuals who are holders of the issue, Ohio Edison Company will pay Georgeson an additional sum computed on the basis of $4.50 per call for all incoming and/or outgoing calls. In addition, Ohio Edison will reimburse Georgeson for reasonable costs and expenses incurred by Georgeson in fulfilling the Agreement, including but not limited to: expenses incurred by Georgeson in the preparation and placement of newspaper ads, including typesetting and space charges; postage and freight charges incurred by Georgeson in the delivery of Offer documents; printing costs; charges for the production of shareholder lists (paper, computer cards, etc.), statistical analyses, mailing labels, or other forms of information requested by Ohio Edison or its agents and other expenses or disbursements authorized by Ohio Edison or its agents. 3. If requested, we will check, itemize and pay, on your behalf, from funds provided by you, the charges of brokers and banks for forwarding Offer material to beneficial owners. To ensure that we have sufficient funds in your account to pay these bills promptly, you agree to provide us, at the time we complete the initial delivery of this material, with a preliminary payment equal to 75% of the anticipated broker and bank charges for distributing this material. For this service, you will pay us five dollars and fifty cents ($5.50) for each broker and bank invoice paid by us. If you 2 Ohio Edison Company March __, 1996 Page 2 prefer to pay these bills directly, please strike out and initial this clause before returning the Agreement to us. 4. Georgeson hereby agrees not to make any representations not included in the Offer documents. 5. Ohio Edison agrees to indemnify and hold Georgeson harmless against any loss, damage, expense (including, without limitation, legal and other related fees and expenses), liability or claim arising out of Georgeson's fulfillment of the Agreement (except for any loss, damage, expense, liability or claim arising out of Georgeson's own negligence or misconduct). At its election, Ohio Edison may assume the defense of any such action. Georgeson hereby agrees to advise Ohio Edison of any such liability or claim promptly after receipt of any notice thereof. The indemnification contained in this paragraph will survive the term of the Agreement. 6. Georgeson agrees to preserve the confidentiality of all non-public information provided by Ohio Edison or its agents for our use in providing services under this Agreement, or information developed by Georgeson based upon such non-public information. By executing the Agreement below the undersigned agrees to be bound by its terms. ACCEPTED: Sincerely, OHIO EDISON COMPANY GEORGESON & COMPANY INC. By: By: -------------------------------- --------------------------------- Managing Director Title: ------------------------------ Date: ------------------------------ EX-99.7 24 FORM OF NEWSPAPER ANNOUNCEMENT 1 EXHIBIT 99.7 [NEWSPAPER ANNOUNCEMENT] This is neither an offer to exchange or sell nor a solicitation of an offer to exchange or buy any of these securities. The Offer is made only by the Prospectus and the related Letter of Transmittal and the Offer is not being made to, nor will tenders be accepted from or on behalf of, holders of the securities in any jurisdiction in which the making or acceptance thereof would not be in compliance with the securities or blue sky laws of such jurisdiction. In any jurisdiction where the securities or blue sky laws require the Offer to be made by a licensed broker or dealer, the Offer is being made on behalf of the Trust by Merrill Lynch & Co., or one or more other brokers or dealers which are licensed under the laws of such jurisdiction. Notice of Offer to Holders of OHIO EDISON COMPANY Shares of 7.75% Class A Preferred Stock Ohio Edison Financing Trust II, a Delaware statutory business trust (the "Trust"), is offering, upon the terms and subject to the conditions set forth in its Prospectus dated [________], 1996 (the "Prospectus") and the accompanying Letter of Transmittal (the "Letter of Transmittal" which, together with the Prospectus, constitute the "Offer"), to exchange its [___]% Trust Originated Preferred Securities(SM) ("TOPrS(SM)") (the "Preferred Securities") for up to 3,600,000 of the outstanding shares of 7.75% Class A Preferred Stock, $25 par value per share (the "Class A Shares"), of Ohio Edison Company, an Ohio corporation ("Ohio Edison"). Exchanges will be made on the basis of one Preferred Security for each Class A Share validly tendered and accepted for exchange in the Offer. Class A Shares not accepted for exchange because of proration will be returned. In connection with the Offer, Ohio Edison will deposit in the Trust as trust assets its [___]% Junior Subordinated Debentures due 2016, as set forth in the Prospectus. THE OFFER, THE PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON [___________], 1996, UNLESS THE OFFER IS EXTENDED. - - ------------------------ (SM) "Trust Originated Preferred Securities" and "TOPrS" are service marks of Merrill Lynch & Co. 2 NEITHER THE BOARD OF DIRECTORS OF OHIO EDISON, OHIO EDISON, THE TRUSTEES NOR THE TRUST MAKES ANY RECOMMENDATION TO HOLDERS OF CLASS A SHARES AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING IN THE OFFER. HOLDERS OF CLASS A SHARES ARE URGED TO CONTACT THEIR FINANCIAL AND TAX ADVISORS IN MAKING THEIR DECISION ON WHAT ACTION TO TAKE IN LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES. Upon the terms and conditions of the Offer, including the provisions relating to proration described in the Prospectus, the Trust will accept for exchange up to 3,600,000 Class A Shares, validly tendered and not withdrawn prior to 12:00 midnight, New York City time, on [___________], 1996, or if the Offer is extended by the Trust, in its sole discretion, the latest date and time to which the Offer has been extended (the "Expiration Date"). Tenders of Class A Shares pursuant to the Offer may be withdrawn at any time prior to the Expiration Date and, unless accepted for exchange by the Trust, may be withdrawn at any time after 40 business days after the date of the Prospectus. Class A Shares not accepted because of proration will be returned to the tendering holders at the expense of the Trust as promptly as practicable following the Expiration Date. Consummation of the Offer is conditioned on, among other things, (i) receipt of at least 1,200,000 validly tendered Class A Shares (which condition may be waived by the Trust) and (ii) tenders by a sufficient number of holders of Class A Shares such that, as of the Expiration Date, there be at least 400 record or beneficial owners of at least 1,000,000 Preferred Securities to be issued in exchange for such Class A Shares (which condition may not be waived)(the "Minimum Distribution Condition"). The Trust expressly reserves the right, in its sole discretion, subject to applicable law, to (i) terminate the Offer, and not accept for exchange any Class A Shares and promptly return all Class A Shares upon the failure of any of the conditions specified above or in "The Offer--Conditions to the Offer" in the Prospectus, (ii) waive any condition to the Offer (other than the Minimum Distribution Condition) and accept all Class A Shares previously tendered pursuant to the Offer, (iii) extend the Expiration Date of the Offer and retain all Class A Shares tendered pursuant to such Offer until the Expiration Date, subject, however, to all withdrawal rights of holders, see "The Offer--Withdrawal of Tenders" in the Prospectus, (iv) amend the terms of the Offer or (v) modify the form of the consideration to be paid pursuant to the Offer. Any amendment applicable to the Offer will apply to all Class A Shares tendered pursuant to the Offer. The minimum period during which the Offer must remain open following material changes in the terms of the Offer or the information concerning the Offer, other than a change in the percentage of securities sought or the price, depends upon the facts and circumstances, including the relative materiality of such terms or information. See "The Offer--Expiration Date; Extensions; Amendments; Termination" in the Prospectus. The purpose of the Offer is to refinance the Class A Shares with the Preferred Securities to achieve certain tax efficiencies while preserving Ohio Edison's flexibility with respect to future financings. -2- 3 The Prospectus and Letter of Transmittal contain important information which should be read before any action is taken by holders of Class A Shares. Tenders may be made only by a properly completed and executed Letter of Transmittal and in conformance with the terms thereof and of the Prospectus. Ohio Edison will pay to Soliciting Dealers (as defined in the Prospectus) designated by the record or beneficial owner, as appropriate, of Class A Shares a solicitation fee of $[_____] per Class A Share validly tendered and accepted for exchange pursuant to the Offer, subject to certain conditions. Soliciting Dealers are not entitled to a solicitation fee for Class A Shares beneficially owned by such Soliciting Dealer. The information required to be disclosed by paragraph (d)(1) of Rule 13e-4 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended, is contained in the Prospectus and is incorporated herein by reference. The Prospectus and the related Letter of Transmittal are first being sent to holders of Class A Shares on [__________], 1996 and are being furnished to brokers, dealers, banks and similar persons whose names, or names of whose nominees, appear on the lists of holders of the Class A Shares or, if applicable, who are listed as participants in a clearing agency's security position listing for subsequent transmittal to beneficial owners of Class A Shares. Any questions or requests for assistance may be directed to the Information Agent and the Dealer Manager at the addresses and telephone numbers set forth below. Requests for copies of the Prospectus, the Letter of Transmittal or the Notice of Guaranteed Delivery may be directed to Georgeson & Company Inc., the Information Agent, at (800) 223-2064, and copies will be forwarded promptly at Ohio Edison's expense. Shareholders may also contact their broker, dealer, commercial bank or trust company for assistance concerning the Offer. -3- 4 The Information Agent for the Offer is: [insert logo] Georgeson & Company Inc. Wall Street Plaza New York, New York 10005 (800) 223-2064 (TOLL-FREE) Banks and Brokers Call Collect: (212) 440-9800 The Dealer Manager for the Offer is: Merrill Lynch & Co. World Financial Center North Tower New York, New York 10281 (212) 236-4565 (Collect) [_____________], 1996 -4- EX-99.8 25 FORM OF LETTER TO HOLDERS OF 7.75% CLASS A STOCK 1 EXHIBIT 99.8 LETTER TO CLASS A HOLDERS (OHIO EDISON LOGO) Ohio Edison Company 76 South Main Street Akron, Ohio 44308 [___________], 1996 Dear Shareholder: A special purpose trust formed by Ohio Edison is offering to exchange its [___]% Trust Originated Preferred Securities (TOPrS) for up to 3,600,000 outstanding shares of Ohio Edison 7.75% Class A Preferred Stock. The exchange will be made on the basis of one TOPrS for one share of Class A Preferred Stock. This exchange offer makes good economic sense for Ohio Edison. Replacing the Class A Shares with TOPrS will improve Ohio Edison's after-tax cash flow. The cash flow benefit arises because interest payable by Ohio Edison to the TOPrS' trust is deductible for federal income tax purposes, while the dividends payable by Ohio Edison on the Class A Shares are not. Neither Ohio Edison nor its Board makes any recommendation as to whether you should exchange your Preferred Shares. That's your decision. I encourage you to read the enclosed Prospectus before deciding. If you choose to participate in the exchange offer, please follow the instructions in the enclosed materials. If you have any questions, please call Georgeson & Company Inc. or the Dealer Manager at the phone numbers on the back cover of the enclosed Prospectus. Thank you. Very truly yours, ----------------------------------------- President and Chief Executive Officer EX-99.9 26 QUESTIONS AND ANSWERS 1 EXHIBIT 99.9 QUESTIONS AND ANSWERS RELATING TO THE OFFER (THE "OFFER") BY OHIO EDISON FINANCING TRUST II (THE "TRUST") TO EXCHANGE ITS [___]% TRUST ORIGINATED PREFERRED SECURITIES(SM) ("TOPrS(SM)") FOR CLASS A SHARES OF OHIO EDISON COMPANY (THE "COMPANY") Please note that the following information does not purport to be complete and is subject in all respects to the provisions of, and is qualified in its entirety by reference to, the Prospectus dated [________], 1996 (the "Prospectus") and the Letter of Transmittal (which together constitute the Offer). Please refer to the Prospectus for details of the Offer and defined terms used herein. 1. Q: WHAT ARE THE TERMS OF THE OFFER? A: The Trust will exchange one TOPrS for each Class A Share issued by the Company. See "The Offer" in the Prospectus. 2. Q: WHAT ARE TOPrS? A: TOPrS represent preferred undivided beneficial interests in the Trust's assets, consisting solely of Junior Subordinated Debentures due 2016 issued by the Company. TOPrS securities pay quarterly distributions corresponding to the interest rate and the payment dates for the Junior Subordinated Debentures. See "Description of the Preferred Securities" in the Prospectus. 3. Q: WHAT IS THE PURPOSE OF THE OFFER? A: The principal purpose is to refinance the Class A Shares with the TOPrS to achieve certain tax efficiencies and to preserve flexibility with respect to future financings. The refinancing will permit the Company to deduct interest payable on the Junior Subordinated Debentures for United States federal income tax purposes, while the dividends payable on the Class A Shares are not deductible. - - ------------------- (SM) "Trust Originated Preferred Securities" and "TOPrS" are service marks of Merrill Lynch & Co. 2 4. Q: WILL THE TOPrS BE LISTED ON THE NEW YORK STOCK EXCHANGE? A: Yes. The ticker symbol will be "[_____]". 5. Q: ARE THE TOPrS RATED? A: [As of the date of the Prospectus, the TOPrS have been rated by Moody's and by Standard & Poor's and have the same ratings as the Class A Shares.] 6. Q: HOW ARE THE TOPrS GUARANTEED? A: Payments of dividends on the TOPrS and on liquidation or redemption are guaranteed on a subordinated basis by the Company, only if and to the extent payments have been made on the Junior Subordinated Debentures. See "Description of the Preferred Securities Guarantee" in the Prospectus. 7. Q: ARE THE REDEMPTION PROVISIONS OF THE TOPrS DIFFERENT FROM THE CLASS A SHARES? A: Yes. While the Class A Shares have no maturity date, the TOPrS will be redeemed following repayment of the Junior Subordinated Debentures upon their [____________], 2016 final maturity date or earlier redemption. The Junior Subordinated Debentures and the Class A Shares (under certain circumstances) are redeemable at the option of the Company after April 1, 1998. The redemption price of $25 per share is the same for the Junior Subordinated Debentures and the Class A Shares. See "Description of the Preferred Securities", "Description of the Preferred and Class A Shares", and "Prospectus Summary - Potential Risks to Exchanging Holders" in the Prospectus. DISTRIBUTION AND DIVIDEND MATTERS 8. Q: HOW DOES THE DISTRIBUTION RATE ON THE TOPrS COMPARE TO THE DIVIDEND RATE ON THE CLASS A SHARES? A: The distribution rate on the TOPrS is [___]% per annum, while the dividend rate for the Class A Shares is 7.75% per annum. 9. Q: WILL DISTRIBUTIONS ON THE TOPrS BE PAID ON THE SAME SCHEDULE AS DIVIDENDS ON THE CLASS A SHARES? -2- 3 A: No, there is a different payment schedule. Distributions on the TOPrS will be paid on March 31, June 30, September 30 and December 31, while dividends are paid on the Class A Shares on January 1, April 1, July 1 and October 1. 10. Q: THE NEXT SCHEDULED DIVIDEND PAYMENT DATE ON THE CLASS A SHARES IS [________], 1996. WILL THAT DIVIDEND BE PAID ON CLASS A SHARES THAT ARE EXCHANGED IN THE OFFER? A: Yes. However, holders who exchange their Class A Shares in the Offer will not be paid dividends on those Class A Shares for any period after [___________], 1996. Instead, such holders will be entitled to receive distributions on their new TOPrS at the rate of 7.75% per annum from [__________], 1996 up to and including the Expiration Date of the Offer, and [___]% per annum thereafter, with the first payment to be made on [__________], 1996. See "Description of the Preferred Securities - Distributions" in the Prospectus. 11. Q: EXPLAIN THE 20 QUARTER DIVIDEND DEFERRAL PROVISION OF THE TOPrS? A: Quarterly interest payments on the Junior Subordinated Debentures may be deferred for one or more periods of up to 20 consecutive quarters each, at the option of the Company. In the case of any such deferral, distributions on the TOPrS will be similarly deferred. The Junior Subordinated Debentures have a maturity date which may not be extended. See "Description of the Preferred Securities - Distributions" in the Prospectus. Quarterly dividend payments on the Class A Shares are payable only if declared by the Company's Board of Directors and such dividends may be deferred indefinitely. To date, the Company has made each quarterly dividend payment with respect to the Class A Shares on the scheduled dividend payment date. The Class A Shares have no maturity date. Deferred TOPrS distributions continue to accrue and, if in arrears for more than one quarter will accrue interest at the rate of [___]% per annum and the interest so accrued at the end of each quarter and remaining unpaid will itself bear interest (to the extent permitted by applicable law) thereafter until paid on the same basis. However, while dividends on the Class A Shares accrue if dividends are suspended, no interest will accrue on such accrued but unpaid dividends. During such a deferral, the Trust will continue to accrue interest income (as original issue discount) in respect of the Junior Subordinated Debentures which will be taxable to beneficial owners of TOPrS. As a result, beneficial owners of TOPrS during such a deferral will include their pro rata share of the interest in gross income in advance of the receipt of cash. -3- 4 TAX ISSUES 12. Q: WILL THE EXCHANGE OF TOPrS FOR CLASS A SHARES CONSTITUTE A TAXABLE EVENT? A: Yes. The Company recommends that each holder read the section entitled "Taxation" in the Prospectus and consult their own tax advisor. 13. Q: WHAT WILL BE THE INITIAL TAX BASIS FOR THE TOPrS? A: The initial tax basis of TOPrS acquired in the Offer will be equal to the fair market value of the TOPrS on the Expiration Date of the Offer. See "Taxation" in the Prospectus. 14. Q: HOW WILL DISTRIBUTIONS ON THE TOPrS BE REPORTED TO THE IRS? A: Distribution on the TOPrS will be reported on Form 1099-OID. 15. Q: CORPORATE HOLDERS CAN CLAIM THE DIVIDENDS RECEIVED DEDUCTION ON DIVIDENDS ON THE CLASS A SHARES. ARE DISTRIBUTIONS ON THE TOPrS ELIGIBLE FOR THAT DEDUCTION FOR CORPORATE HOLDERS? A: No. PROCEDURES FOR EXCHANGING CLASS A SHARES 16. Q: IF CLASS A SHARES ARE REGISTERED IN MY NAME, HOW DO I PARTICIPATE IN THE OFFER? A: You should have received a package from Georgeson & Company Inc. consisting of this Question and Answer sheet and: * Prospectus dated [________], 1996, * Letter of Transmittal (printed on blue paper) bearing a pre-printed label with your account name and address, * Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9, * Notice of Guaranteed Delivery, * Letter from the President and Chief Executive Officer of Ohio Edison Company, and * Return envelope addressed to The Bank of New York. If, after reviewing these materials carefully, you decide to participate in the Offer, complete the Letter of Transmittal and send it with your certificate(s) -4- 5 representing Class A Shares to The Bank of New York as Exchange Agent at either of the addresses shown on the Letter of Transmittal. It is recommended that you use registered or certified mail. Holders of record may also contact their broker to exchange their Class A Shares on their behalf. And if you cannot deliver your certificate(s) to the Exchange Agent before the Expiration Date, then you must arrange for your broker to guarantee delivery of your Class A Shares. See "The Offer - Procedures for Tendering" in the Prospectus. 17. Q: IF MY CLASS A SHARES ARE HELD BY A BROKER OR BANK FOR MY ACCOUNT, HOW DO I PARTICIPATE IN THE OFFER? A: If your Class A Shares are held by a broker or bank for your account, you should have received a package from them as holder of record containing, along with this Question and Answer sheet, the following: * Prospectus dated [________], 1996, * Letter of Transmittal for information only, * Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9, * Notice of Guaranteed Delivery, * Letter from the President and Chief Executive Officer of Ohio Edison Company, and * Cover letter or notice from your broker or bank. If you decide to participate in the Offer, you must contact your broker or bank to tender your Class A Shares on your behalf. See "The Offer - Procedures for Tendering - Special Procedure for Beneficial Owners" in the Prospectus. 18. Q: ONCE I HAVE TENDERED MY CLASS A SHARES (OR INSTRUCTED MY BROKER OR BANK TO TENDER THEM ON MY BEHALF), MAY I WITHDRAW THEM FROM THE OFFER? A: Yes, tenders of Class A Shares may be withdrawn at any time prior to the Expiration date and, unless accepted for exchange by the Trust, may be withdrawn at any time after 40 business days from the date of the Prospectus. See "The Offer - Withdrawal of Tenders" in the Prospectus. 19. Q: WHEN DOES THE OFFER EXPIRE? A: At 12:00 midnight, New York City Time, on [_______], [___________], 1996 unless extended by the Trust. The Trust may also amend or terminate the Offer as described in the Prospectus. -5- 6 FOR ADDITIONAL DETAILS, OR IF YOU HAVE ANY QUESTIONS, PLEASE CALL THE INFORMATION AGENT. GEORGESON & COMPANY INC. (800) 223-2064 (TOLL-FREE) BANKS AND BROKERS, CALL COLLECT: (212) 440-9800 -6- 7 NOTES -7- EX-99.10 27 FORM OF DESIGNATION OF SOLICITING DEALERS 1 EXHIBIT 99.10 FORM OF DESIGNATION OF SOLICITING DEALERS For those investors designating a firm other than their bank or broker to receive solicitation fees, please complete the following information to direct such fees accordingly. - - -------------------------------------------------------------------------------- SOLICITED TENDERS The undersigned represents that the Soliciting Dealer who solicited and obtained this tender is: Name of Firm: ---------------------------------------------------------------- (PLEASE PRINT) Number of Tendered Shares: --------------------------------------------------- Name of Individual Broker or Financial Consultant: --------------------------------------------------- Identification Number (if known): -------------------------------------------- Address: --------------------------------------------------------------------- ----------------------------------------------------------------------------- (INCLUDE ZIP CODE) SIGN HERE: X ---------------------------------------------------------------------------- X ---------------------------------------------------------------------------- SIGNATURE(S) DATED: ---------------------------------- PLEASE PRINT NAME(S) AND ADDRESSES HERE: ------------------------------------------------------------- ----------------------------------------------------------------------------- ----------------------------------------------------------------------------- - - -------------------------------------------------------------------------------- cc: ---------------------------- Soliciting Dealer ---------------------------- Bank Broker Custodian Bank -----END PRIVACY-ENHANCED MESSAGE-----